<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K

                       FOR ANNUAL AND TRANSITION REPORTS
                    PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

   For the fiscal year ended December 31, 2000.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

   For the transition period from          to

                        Commission File Number 1-14387
                             United Rentals, Inc.
                        Commission File Number 1-13663
                     United Rentals (North America), Inc.
          (Exact Names of Registrants as Specified in Their Charters)

                     Delaware                                 06-1522496
                     Delaware                                 06-1493538
          State or Other Jurisdiction of                   (I.R.S. Employer
           Incorporation or Organization                 Identification Nos.)

            Five Greenwich Office Park,
              Greenwich, Connecticut                            06830
     (Address of Principal Executive Offices)                 (Zip code)

   Registrants' telephone number, including area code: (203) 622-3131

   Securities registered pursuant to Section 12(b) of the Act:

              Title of Each Class                      Name of Each Exchange on
                                                           Which Registered
Common Stock, $.01 par value, of United Rentals, Inc.  New York Stock Exchange

    Securities registered pursuant to Section 12(g) of the Act: None

    Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.                       [X] Yes  [ ] No

    Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

    As of March 12, 2001, there were 69,799,819 shares of United Rentals, Inc.
common stock outstanding. The aggregate market value of such common stock held
by non-affiliates of the registrant at March 12, 2001 was approximately $800.0
million. Such aggregate market value was calculated by using the closing price
of such common stock as of such date on the New York Stock Exchange of $18.67.
There is no market for the common stock of United Rentals (North America),
Inc., all outstanding shares of which are owned by United Rentals, Inc.

    Documents incorporated by reference: Certain sections of the Proxy
Statement of United Rentals, Inc. to be filed pursuant to Regulation 14A under
the Securities Exchange Act of 1934 within 120 days of the registrant's fiscal
year are incorporated by reference into Part III of this Form 10-K.

    This combined Form 10-K is separately filed by (i) United Rentals, Inc. and
(ii) United Rentals (North America), Inc. (which is a wholly owned subsidiary
of United Rentals, Inc.). United Rentals (North America), Inc. meets the
conditions set forth in general instruction (I)(1) (a) and (b) of Form 10-K and
is therefore filing this form with the reduced disclosure format permitted by
such instruction.
<PAGE>

                            FORM 10-K REPORT INDEX

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<CAPTION>
 10-K Part
and Item No.                                                                            Page No.
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<C>          <S>                                                                        <C>

PART I





Item 1       Business..................................................................        1
Item 2       Properties................................................................        7
Item 3       Legal Proceedings.........................................................        8
Item 4       Submission of Matters to a Vote of Security Holders.......................        8

PART II





Item 5       Market for the Registrant's Common Equity and Related Stockholder Matters.        8
Item 6       Selected Financial Data...................................................       10
Item 7       Management's Discussion and Analysis of Financial Condition and Results of
             Operations................................................................       11
Item 7A      Quantitative and Qualitative Disclosures About Market Risk................       25
Item 8       Financial Statements and Supplementary Data...............................       27
Item 9       Changes in and Disagreements with Accountants on Accounting and Financial
             Disclosure................................................................       75

PART III





Item 10      Directors and Executive Officers of the Registrant........................       75
Item 11      Executive and Director Compensation.......................................       75
Item 12      Security Ownership of Certain Beneficial Owners and Management............       75
Item 13      Certain Relationships and Related Transactions............................       75

PART IV





Item 14      Exhibits, Financial Statement Schedules, and Reports on Form 8-K..........       75
</TABLE>
<PAGE>

    Certain statements contained in this Report are forward-looking in nature.
Such statements can be identified by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "on-track" or
"anticipates" or the negative thereof or comparable terminology, or by
discussions of strategy. You are cautioned that our business and operations are
subject to a variety of risks and uncertainties and, consequently, our actual
results may materially differ from those projected by any forward-looking
statements. Certain of such risks and uncertainties are discussed below under
Item 7--"Management's Discussion and Analysis of Financial Condition and Result
of Operations--Factors that May Influence Future Results and Accuracy of
Forward-Looking Statements." We make no commitment to revise or update any
forward-looking statements in order to reflect events or circumstances after
the date any such statement is made.

                                    PART I

    Unless otherwise indicated, the information under Items 1 and 2 is as of
March 1, 2001.

Item 1. Business

General

    United Rentals is the largest equipment rental company in North America
with 755 locations in 47 states, seven Canadian provinces and Mexico. We offer
for rent over 600 different types of equipment to more than 1.2 million
customers, including construction and industrial companies, manufacturers,
utilities, municipalities, homeowners and others. During 2000, we completed
more than 8.4 million rental transactions.

    We have the largest fleet of rental equipment in the world, with over
500,000 units having an original purchase price of approximately $3.4 billion.
Our fleet includes:

    .   light to heavy construction and industrial equipment, such as aerial
        lifts, backhoes, skid-steer loaders, forklifts, earth moving equipment,
        material handling equipment, compressors, pumps and generators;

    .   traffic control equipment, such as barricades, cones, warning lights,
        message boards and pavement marking systems;

    .   trench safety equipment for below ground work, such as trench shields,
        aluminum hydraulic shoring systems, slide rails, crossing plates,
        construction lasers, and line testing equipment;

    .   special event equipment used for sporting, corporate and other large
        events, such as light towers, air conditioning units, portable power
        units, electrical cable, temporary kitchens and tents; and

    .   general tools and equipment, such as power washers, water pumps,
        heaters and hand tools.

    In addition to renting equipment, we sell used rental equipment, act as a
dealer for new equipment, and sell related merchandise, parts and service.

Competitive Advantages

    We believe that we benefit from the following competitive advantages:

    Large and Diverse Rental Fleet. We have the largest and most comprehensive
equipment rental fleet in the industry, which helps us to:

    .   attract customers by providing "one-stop" shopping;

                                       1
<PAGE>

    .   serve a diverse customer base and reduce our dependence on any
        particular customer or group of customers; and

    .   serve customers that require assurance that substantial quantities of
        different types of equipment will be available on a continuing basis.

   Operating Efficiencies. We generally group our branches into clusters of 10
to 30 locations that are in the same geographic area. Our information
technology systems allow each branch to access all available equipment within a
cluster. We believe that our cluster strategy produces significant operating
efficiencies by enabling us to: (1) market equipment within a cluster through
multiple branches, (2) cross-market equipment specialties of different branches
within each cluster, and (3) reduce costs by centralizing common functions such
as payroll, accounts payable and credit and collection into 26 credit offices
and three service centers. In 2000, approximately 10.7% of our rental revenue
was attributable to equipment sharing among branches.

   Geographic Diversity. We have branches in 47 states, seven Canadian
provinces and Mexico. We believe that our geographic diversity reduces the
impact that fluctuations in regional economic conditions have on our overall
financial performance. Our geographic diversity and large network of branch
locations also give us the ability to better serve National Account customers,
better serve customers that operate at multiple locations, and access used
equipment re-sale markets across the country.

   Customer Diversity. Our customer base is highly diversified and ranges from
Fortune 500 companies to small companies and homeowners. We estimate that our
top ten customers accounted for approximately 2% of our revenues during 2000.

   Strong and Motivated Branch Management. Each of our branches has a full-time
branch manager who is supervised by one of our 66 district managers and nine
regional vice presidents. We believe that our managers are among the most
knowledgeable and experienced in the industry, and we empower them--within
budgetary guidelines--to make day-to-day decisions concerning staffing,
pricing, equipment purchasing and other branch matters. Management closely
tracks branch, district and region performance with extensive systems and
controls, including performance benchmarks and detailed monthly operating
reviews. We promote equipment sharing among branches through our incentive
compensation program, which links the compensation of branch personnel to their
branch's financial performance and return on assets.

   Significant Purchasing Power. We purchase large amounts of equipment and
other items, which enables us to negotiate favorable terms with our vendors.
Our purchasing power is further increased by our ongoing efforts to narrow our
vendor base. For example, we reduced the number of our primary equipment
suppliers from 111 to 28 in 2000. This allowed us to lower our equipment
purchase costs by approximately $150 million in 2000 and should enable us to
save additional amounts in 2001. We expect to realize additional savings by
similarly consolidating our merchandise suppliers and negotiating more
favorable warranty terms with key vendors.

   National Account Program. Our National Account sales force is dedicated to
establishing and expanding relationships with larger companies, particularly
those with a national or multi-regional presence. We offer our National Account
customers the benefits of a consistent level of service across North America
and a single point of contact for all their equipment needs. Our National
Account team currently includes 39 professionals. We currently have over 1,300
National Account customers, including more than 700 new accounts added in 2000.
Our revenues from National Account customers increased to approximately $244.8
million in 2000 from $89.1 million in the prior year.

                                       2
<PAGE>

   Information Technology Systems. Our information technology systems
facilitate rapid and informed decision making and permit us to respond quickly
to changing market conditions. Our systems provide management with a wide range
of operating and financial data, enable our branches to manage a wealth of
information, such as customer requirements, equipment availability, and
maintenance histories, and give our customers online access to their accounts.
Our systems also enable branch personnel to search for needed equipment
throughout a geographic region, determine its closest location and arrange for
delivery to a customer's work site. We have an in-house team of approximately
100 information technology specialists that supports our systems and extends
them to new locations. We also have a subsidiary that is the leading provider
of proprietary software to the equipment rental industry for use in managing
and operating multiple branch locations. Our software includes the
Rentalman(TM) system developed by this subsidiary.

   Risk Management and Safety Programs. We place great emphasis on risk
reduction and safety and believe that we have one of the most comprehensive
risk management and safety programs in the industry. Our risk management
department is staffed by 43 experienced professionals and is responsible for
implementing our safety programs and procedures, developing our employee and
customer training programs, and managing any claims against us. Our insurance
and claims costs were approximately 48% below the national average for
comparable industries in 2000, resulting in significant cost savings.

Industry Background

    Industry Size and Growth. The U.S. equipment rental industry has grown from
about $6 billion in annual rental revenues in 1990 to over $25 billion in 2000,
representing a compound annual growth rate of approximately 14.5%. This
information is based on data reported by Manfredi & Associates, Inc. In
addition to reflecting general economic growth, we believe that the growth in
the equipment rental industry is being driven by the following trends:

        Recognition of Advantages of Renting. Equipment users are increasingly
    recognizing the many advantages that equipment rental may offer compared
    with ownership. They recognize that by renting they can:

         .   avoid the large capital investment required for equipment
             purchases;

         .   access a broad selection of equipment and select the equipment
             best suited for each particular job;

         .   reduce storage and maintenance costs; and

         .   access the latest technology without investing in new equipment.

        Outsourcing. Although growth in the equipment rental industry has to
    date been largely driven by an increase in rentals by the construction
    industry, we believe that the cost and other advantages of renting,
    together with the general trend toward the corporate outsourcing of
    non-core competencies, are increasingly leading industrial companies,
    municipalities, government agencies, utilities and others to rent
    equipment.

Corporate Background

    We began operations in October 1997 and have grown through a combination of
internal growth, acquisitions and the opening of new rental locations. In
September 1998, we merged with U.S. Rentals, Inc. At the time of the merger,
U.S. Rentals was the second largest equipment rental company in the United
States based on 1997 rental revenues.


                                       3
<PAGE>

Products and Services

    We offer for rent a wide variety of equipment to customers that include
construction and industrial companies, manufacturers, utilities,
municipalities, homeowners and others. We also sell used equipment, act as a
dealer for many types of new equipment, and sell related merchandise, parts and
service. In addition, we have a subsidiary that develops and markets software
for use by equipment rental companies in managing and operating multiple branch
locations.

    For financial information concerning our foreign and domestic operations,
see Note 14 of the Notes to Consolidated Financial Statements included
elsewhere in this report.

    Equipment Rental

    We offer for rent over 600 different types of equipment on a daily, weekly
or monthly basis. The types of equipment that we offer include light to heavy
construction and industrial equipment; traffic control equipment; trench safety
equipment; equipment for sporting, corporate and other special events; and
general tools and equipment.

    We believe that our equipment rental fleet is the largest in the world and
one of the newest and best maintained. As of March 1, 2001, our fleet included
over 500,000 units and had an original purchase price of approximately $3.4
billion and a weighted average age of approximately 26 months. We estimate that
each of the following categories accounted for 10% or more of our equipment
rental revenues in 2000: (i) aerial lift equipment (approximately 24%), (ii)
earth moving equipment (approximately 13%) and (iii) forklifts (approximately
10%).

    We vary our equipment mix from branch to branch in response to local market
conditions and customer requirements. Most of our branches offer a general mix
of equipment, while some specialize in specific equipment categories such as
aerial work platforms and traffic control equipment.

    Used Equipment Sales

    In order to maintain a modern fleet and optimize our equipment mix, we
routinely sell used rental equipment and invest in new equipment. We have
generally been able to achieve favorable prices due to our comprehensive
maintenance program and our national sales force that can access many resale
markets across North America.

    We principally sell used equipment through our sales force and our web site
(www.unitedrentals.com) which includes an online database of used equipment
available for sale. We also sell our used equipment to used equipment dealers
and through public auctions. In addition, we sometimes trade in used equipment
to our vendors when we buy new equipment.

    New Equipment Sales

    We are a dealer for many leading equipment manufacturers. These include
Genie Industries, Inc., JLG Industries, Inc., and SkyJack, Inc. (aerial lifts);
Multiquip, Inc. (compaction equipment, generators, pumps and concrete
equipment); Bomag and Wacker (compaction equipment); Sullair Corporation
(compressors); Omniquip International (forklifts, skid-steer loaders and
mini-excavators); Terex Corporation (off-road dump trucks and telehandlers);
and Honda USA (pumps and generators). Typically, dealership agreements do not
have a specific term and may be terminated at any time. The type of new
equipment that we sell varies by location.


                                       4
<PAGE>

    Related Merchandise, Parts and Other Services

    At most of our locations, we sell equipment parts and a variety of supplies
and merchandise that may be used with our rental equipment, such as saw blades,
fasteners, drill bits, hard hats, gloves and other safety equipment. At some of
our branches, we also offer repair and maintenance services for equipment that
is owned by our customers.

    Our Rentalman(TM) Software

    We have a subsidiary that develops and markets software for use by
equipment rental companies in managing and operating multiple branch locations.
Seven of the ten largest equipment rental companies, including United Rentals,
use the Rentalman(TM) software package developed by our subsidiary.

Customers

    Our customer base is highly diversified and ranges from Fortune 500
companies to small businesses and homeowners. We estimate that no single
customer accounted for more than 0.5% of our revenues during 2000 and that our
top 10 customers accounted for approximately 2% of our revenues in 2000.

    Our customer base varies by branch and is determined by several factors,
including the equipment mix and marketing focus of the particular branch and
the business composition of the local economy. Our customers include:

    .   construction companies that use equipment for building and renovating
        commercial buildings, warehouses, industrial and manufacturing plants,
        office parks, airports, residential developments and other facilities;


    .   industrial companies--such as manufacturers, chemical companies, paper
        mills, railroads, ship builders, and utilities--that use equipment for
        plant maintenance, upgrades, expansion and construction;

    .   municipalities that require equipment for a variety of purposes such as
        traffic control and highway construction and maintenance;

    .   sponsors of sporting, corporate, entertainment and other large special
        events--including events such as the Super Bowl, the U. S. Open Golf
        Championship, the NASCAR Brickyard 400, the PGA Championship, the Ryder
        Cup, concerts and charity events; and

    .   homeowners and other individuals that use equipment for projects that
        range from simple repairs to major renovations.

Sales and Marketing

    We market our products and services through multiple channels as described
below.

    Sales Force. As of March 1, 2001, we had a total of 2,495 salespeople,
including 1,314 store-based customer service representatives and 1,181
field-based salespeople. Our sales force calls on existing and potential
customers and assists our customers in planning for their equipment needs.

    National Account Program. Our National Account sales force is dedicated to
establishing and expanding relationships with large customers, particularly
those with a national or multi-regional presence. The National Account team
closely coordinates its efforts with the local sales force in each area. Our
National Account team currently includes 39 sales professionals.


                                       5
<PAGE>

    E-Rental Store(TM). Our customers can rent or buy equipment online 24 hours
a day seven days a week at our E-Rental Store(TM), which is part of our web
site. Our customers can also use our URdata(TM) application to access
up-to-the-minute reports on their business activity with us.

    Advertising. We promote our business through local and national advertising
in various media, including trade publications, yellow pages, the Internet, and
direct mail. We also regularly participate in industry trade shows and
conferences and sponsor a variety of local promotional events.

Suppliers

    We have been making ongoing efforts to narrow our vendor base in order to
further increase our purchasing power. We estimate that our largest supplier
accounted for approximately 24% of our equipment purchases in 2000, and that
our top 10 largest suppliers accounted for approximately 73% of our equipment
purchases during that period.

Information Technology Systems

    We have advanced information technology systems which facilitate rapid and
informed decision making and enable us to respond quickly to changing market
conditions. Each branch is equipped with one or more workstations that are
electronically linked to our other locations and to our AS/400 system located
at our data center. All rental transactions are entered at these workstations
and processed on a real-time basis. Personnel at each location are able to
access the system 24 hours a day in order to determine equipment availability,
monitor business activity on a real-time basis, and obtain a wide range of
operating and financial data.

    Our information technology systems and our web site are supported by our
in-house group of approximately 100 information technology specialists. This
group trains our personnel at the branch location; upgrades and customizes our
systems; provides hardware and technology support; operates a support desk to
assist branch personnel in the day-to-day use of the systems; extends the
systems to newly acquired locations; and manages our web site.

Competition

    The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We believe
that, in general, large companies enjoy significant competitive advantages
compared to smaller operators, including greater purchasing power, a lower cost
of capital, the ability to provide customers with a broader range of equipment
and services and with newer and better maintained equipment, and greater
flexibility to transfer equipment among locations in response to customer
demand. For additional information, see "Competitive Advantages".

Environmental and Safety Regulations

    There are numerous federal, state and local laws and regulations governing
environmental protection and occupational health and safety. Under these laws,
an owner or lessee of real estate may be liable on a no-fault basis for, among
other things, (1) the costs of removal or remediation of hazardous or toxic
substances located on, in, or emanating from, the real estate, as well as
related costs of investigation and property damage and substantial penalties,
and (2) environmental contamination at facilities where its waste is or has
been disposed. Activities that are or may be affected by these laws include our
use of hazardous materials to clean and maintain equipment and

                                       6
<PAGE>

our disposal of solid and hazardous waste and wastewater from equipment
washing. We also dispense petroleum products from underground and above-ground
storage tanks located at certain locations, and at times we must remove or
upgrade tanks to comply with applicable laws. We have acquired or lease certain
locations which have or may have been contaminated by leakage from underground
tanks or other sources, and we are in the process of assessing the nature of
the required remediation. Based on the conditions currently known to us, we
believe that any unreserved environmental remediation and compliance costs
required with respect to those conditions will not have a material adverse
effect on our business. However, we cannot be certain that we will not identify
adverse environmental conditions that are not currently known to us, that all
potential releases from underground storage tanks removed in the past have been
identified, or that environmental and safety requirements will not become more
stringent or be interpreted and applied more stringently in the future. If we
are required to incur environmental compliance or remediation costs that are
not currently anticipated by us, our business could be adversely affected
depending on the magnitude of the cost.

Employees

    As of March 1, 2001, we had 14,795 employees. Of these employees, 4,163 are
salaried personnel and 10,632 are hourly personnel. Collective bargaining
agreements relating to 65 separate locations cover approximately 827 of our
employees.

Item 2. Properties

    We currently operate 755 branch locations. Of these locations, 676 are in
the United States, 78 are in Canada and one is in Mexico. The number of
locations in each state or province is shown below.

      United States
<TABLE>
<CAPTION>
          <S>               <C>                  <C>
          .Alabama (12)     .Louisiana (8)       .Oklahoma (7)
          .Alaska (4)       .Maine (2)           .Oregon (26)
          .Arizona (22)     .Maryland (19)       .Pennsylvania (18)
          .Arkansas (3)     .Massachusetts (11)  .Rhode Island (2)
          .California (102) .Michigan (6)        .South Carolina (11)
          .Colorado (17)    .Minnesota (15)      .South Dakota (9)
          .Connecticut (11) .Mississippi (1)     .Tennessee (9)
          .Delaware (5)     .Missouri (11)       .Texas (58)
          .Florida (38)     .Montana (1)         .Utah (11)
          .Georgia (20)     .Nebraska (8)        .Virginia (12)
          .Idaho (2)        .Nevada (16)         .Washington (33)
          .Illinois (17)    .New Hampshire (2)   .Wisconsin (9)
          .Indiana (12)     .New Jersey (9)      .Wyoming (2)
          .Iowa (12)        .New Mexico (5)
          .Kansas (5)       .New York (19)
          .Kentucky (7)     .North Carolina (24)
                            .North Dakota (10)
                            .Ohio (13)
</TABLE>

<TABLE>
<CAPTION>
                  <S>                    <C>             <C>
                  Canada                 Mexico
                  .Alberta (2)           .Nuevo Leon (1)
                  .British Columbia (16)
                  .Manitoba (2)
                  .Newfoundland (9)
                  .Ontario (35)
                  .Quebec (12)
                  .Saskatchewan (2)
</TABLE>


                                       7
<PAGE>

    Our branch locations generally include facilities for displaying equipment
and, depending on the location, may include separate equipment service areas
and storage areas.

    We own 98 of our rental locations and lease the other locations. Our leases
provide for varying terms and include 24 leases that are on a month-to-month
basis and 42 leases that provide for a remaining term of less than one year and
do not provide a renewal option. We are currently negotiating renewals for most
of the leases that provide for a remaining term of less than one year.

    We maintain a fleet of approximately 13,440 vehicles that is used for
delivery, maintenance and sales functions. We own a portion of this fleet and
lease a portion.

    Our corporate headquarters are located in Greenwich, Connecticut, where we
occupy approximately 28,000 square feet under (1) a lease for approximately
12,000 square feet that extends until 2003 and (2) a lease for approximately
16,000 square feet that extends until 2004 (subject to extension rights).

Item 3. Legal Proceedings

    The Company is party to various litigation matters, in most cases involving
ordinary and routine claims incidental to our business. The Company cannot
estimate with certainty its ultimate legal and financial liability with respect
to such pending litigation matters. However, the Company believes, based on its
examination of such matters, that the Company's ultimate liability will not
have a material adverse effect on its financial position, results of operations
or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders

    During the fourth quarter of 2000, no matter was submitted to a vote of the
security holders of the Company.

                                    PART II

Item 5. Market For Registrant's Common Equity and Related Stockholder Matters

Price Range of Common Stock

    The Company's Common Stock trades on the New York Stock Exchange under the
symbol "URI." The following table sets forth, for the periods indicated, the
high and low sales prices for the Common Stock, as reported by the New York
Stock Exchange.

<TABLE>
<CAPTION>
                                            High   Low
                                           ------ ------
                        <S>                <C>    <C>
                        1999:
                           First Quarter.. $35.69 $26.13
                           Second Quarter.  33.25  25.13
                           Third Quarter..  31.00  21.75
                           Fourth Quarter.  21.94  14.31
                        2000:
                           First Quarter.. $21.25 $13.75
                           Second Quarter.  19.69  13.25
                           Third Quarter..  24.13  17.38
                           Fourth Quarter.  24.31  12.00
</TABLE>


    As of March 12, 2001, there were approximately 246 holders of record of the
Common Stock. The Company believes that the number of beneficial owners is
substantially greater than the number of record holders, because a large
portion of the Common Stock is held of record in broker "street names."


                                       8
<PAGE>

Dividend Policy

    The Company intends to retain all earnings for the foreseeable future for
use in the operation and expansion of its business and, accordingly, the
Company currently has no plans to pay dividends on its Common Stock. The
payment of any future dividends will be determined by the Board of Directors in
light of conditions then existing, including the Company's earnings, financial
condition and capital requirements, restrictions in financing agreements,
business conditions and other factors. Under the terms of certain agreements
governing the Company's outstanding indebtedness, the Company is prohibited or
restricted from paying dividends on its Common Stock. In addition, under
Delaware law, the Company is prohibited from paying any dividends unless it has
capital surplus or net profits available for this purpose. See Item
7--"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Certain Information Concerning the Credit Facility and Other
Indebtedness."

Sales of Unregistered Securities During the Fourth Quarter of 2000

    Set forth below is a listing of all sales by the Company of unregistered
equity securities during the fourth quarter of 2000. Unless otherwise
indicated, (i) such sales were exempt from registration under the Securities
Act of 1933, as amended (the "Act"), pursuant to Section 4(2) of the Act, as
they were transactions not involving a public offering and (ii) the sales were
made by the Company without the assistance of any underwriters.

   1. In November 2000, the Company issued 2,459 shares of Common Stock to an
      executive officer pursuant to an employment agreement.

   2. In December 2000, the Company issued 761,905 shares of Common Stock as
      partial consideration for an acquisition.


                                       9
<PAGE>

Item 6. Selected Financial Data

    The data presented below with respect to the Company should be read in
conjunction with the Consolidated Financial Statements and related Notes
thereto of the Company included elsewhere in this Report and Item
7--"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

    During the periods presented below, the Company completed certain
acquisitions that were accounted for as poolings-of-interests (including a
merger in September 1998 with U.S. Rentals) and others that were accounted for
as purchases. The selected financial data presented below has been restated for
all periods presented to include the accounts of the businesses acquired in
transactions accounted for as poolings-of-interests (excluding one such
transaction which was not material) as if the Company and these businesses
acquired were combined for all periods presented. The accounts of businesses
acquired in transactions accounted for as purchases are included from their
respective acquisition dates. In view of the fact that the Company's operating
results for the periods presented below were impacted by acquisitions that were
accounted for as purchases, the Company believes that its results of operations
for the years presented are not directly comparable. See Note 3 of the Notes to
the Consolidated Financial Statements of the Company included elsewhere in this
Report.

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                          ------------------------------------------------------
                                                                            1996      1997       1998        1999       2000
                                                                          --------  --------  ----------  ---------- ----------
                                                                              (dollars in thousands, except per share data)
<S>                                                                       <C>       <C>       <C>         <C>        <C>
Income statement data:
Total revenues........................................................... $354,478  $489,838  $1,220,282  $2,233,628 $2,918,861
Total cost of revenues...................................................  241,445   340,546     796,834   1,408,710  1,830,291
                                                                          --------  --------  ----------  ---------- ----------
Gross profit.............................................................  113,033   149,292     423,448     824,918  1,088,570
Selling, general and administrative expenses.............................   54,721    70,835     195,620     352,595    454,330
Merger-related expenses..................................................                         47,178
Non-rental depreciation and amortization.................................    9,387    13,424      35,248      62,867     86,301
Termination cost of deferred compensation agreements.....................             20,290
                                                                          --------  --------  ----------  ---------- ----------
Operating income.........................................................   48,925    44,743     145,402     409,456    547,939
Interest expense.........................................................   11,278    11,847      64,157     139,828    228,779
Preferred dividends of a subsidiary trust................................                          7,854      19,500     19,500
Other (income) expense, net..............................................     (499)   (2,021)     (4,906)      8,321     (1,836)
                                                                          --------  --------  ----------  ---------- ----------
Income before provision for income taxes and extraordinary items.........   38,146    34,917      78,297     241,807    301,496
Provision for income taxes...............................................      420    29,508      43,499      99,141    125,121
                                                                          --------  --------  ----------  ---------- ----------
Income before extraordinary items........................................   37,726     5,409      34,798     142,666    176,375
Extraordinary items, net (1).............................................              1,511      21,337
                                                                          --------  --------  ----------  ---------- ----------
Net income............................................................... $ 37,726  $  3,898  $   13,461  $  142,666 $  176,375
                                                                          ========  ========  ==========  ========== ==========
Pro forma provision for income taxes before extraordinary items (2)...... $ 15,487  $ 14,176  $   44,386
Pro forma income before extraordinary items (2)..........................   22,659    20,741      33,911
Basic earnings before extraordinary items per share...................... $   1.67  $   0.12  $     0.53  $     2.00 $     2.48
Diluted earnings before extraordinary items per share.................... $   1.67  $   0.11  $     0.48  $     1.53 $     1.89
Basic earnings per share (3)............................................. $   1.67  $   0.08  $     0.20  $     2.00 $     2.48
Diluted earnings per share (3)........................................... $   1.67  $   0.08  $     0.18  $     1.53 $     1.89

Other financial data:
EBITDA (4)............................................................... $123,606  $160,554  $  403,738  $  761,230 $  962,371
Depreciation and amortization............................................   74,681    95,521     211,158     343,508    414,432
Dividends on common stock................................................
                                                                                               December 31,
                                                                          ------------------------------------------------------
                                                                            1996      1997       1998        1999       2000
                                                                          --------  --------  ----------  ---------- ----------
                                                                                          (dollars in thousands)
Balance sheet data:
Cash and cash equivalents................................................ $  2,906  $ 72,411  $   20,410  $   23,811 $   34,384
Rental equipment, net....................................................  235,055   461,026   1,143,006   1,659,733  1,732,835
Total assets.............................................................  381,228   826,010   2,634,663   4,497,738  5,123,933
Total debt...............................................................  214,337   264,573   1,314,574   2,266,148  2,675,367
Company-obligated mandatorily redeemable convertible preferred securities
 of a subsidiary trust...................................................                        300,000     300,000    300,000
Stockholders' equity.....................................................  105,420   446,388     726,230   1,397,486  1,545,943
</TABLE>

                                      10
<PAGE>

--------
(1) The Company recorded an extraordinary item (net of income taxes) of $1.5
    million in 1997 and an extraordinary item (net of income taxes) of $21.3
    million in 1998. Such charge in 1997 resulted from the prepayment of
    certain debt by U.S. Rentals. Such charge in 1998 resulted from the early
    extinguishment of certain debt and primarily reflected prepayment penalties
    on certain debt of U.S. Rentals.
(2) U.S. Rentals was taxed as a Subchapter S Corporation until its initial
    public offering in February 1997, and another company acquired in a
    pooling-of-interests transaction was taxed as a Subchapter S Corporation
    until being acquired by the Company in 1998. In general, the income or loss
    of a Subchapter S Corporation is passed through to its owners rather than
    being subjected to taxes at the entity level. Pro forma provision for
    income taxes before extraordinary items and pro forma income before
    extraordinary items reflect a provision for income taxes as if all such
    companies were liable for federal and state income taxes as taxable
    corporate entities for all periods presented.
(3) The Company's earnings during 1997 were impacted by $20.3 million of
    expenses relating to the termination of certain deferred compensation
    expenses in connection with U.S. Rentals' initial public offering, a $7.5
    million charge to recognize deferred tax liabilities of U.S. Rentals and an
    extraordinary item (net of income taxes) of $1.5 million. The Company's
    earnings during 1998 were impacted by merger-related expenses of $47.2
    million ($33.2 million net of taxes), a $4.8 million charge to recognize
    deferred tax liabilities of a company acquired in a pooling-of-interests
    transaction and an extraordinary item (net of income taxes) of $21.3
    million. The Company's earnings during 1999 were impacted by $18.2 million
    ($10.8 million net of taxes) of expenses incurred related to a terminated
    tender offer. Excluding such amounts, (i) basic earnings per share for the
    years ended 1997, 1998 and 1999 would have been $0.70, $1.10 and $2.15,
    respectively, and (ii) diluted earnings per share for the years ended 1997,
    1998 and 1999 would have been $0.66, $1.00 and $1.65, respectively.
(4) EBITDA is defined as net income (excluding (i) non-operating income and
    expense, (ii) a $20.3 million non-recurring charge incurred by U.S. Rentals
    in 1997 arising from the termination of deferred compensation agreements
    with certain executives, (iii) $47.2 million in merger-related expenses in
    1998 related to the three acquisitions accounted for as
    poolings-of-interests, including the merger with U.S. Rentals, and (iv)
    $8.3 million of expenses that are included in selling, general and
    administrative expenses for 1999 and which related to a terminated tender
    offer), plus interest expense, income taxes and depreciation and
    amortization. EBITDA data is presented to provide additional information
    concerning the Company's ability to meet its future debt service
    obligations and capital expenditure and working capital requirements.
    However, EBITDA is not a measure of financial performance under generally
    accepted accounting principles. Accordingly, EBITDA should not be
    considered an alternative to net income or cash flows as indicators of the
    Company's operating performance or liquidity.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
       of Operations

    The following discussion should be read in conjunction with the
Consolidated Financial Statements and related Notes thereto included elsewhere
in this Report. Certain of the statements contained in such discussion are
forward looking in nature. Such statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "on-track" or "anticipates" or the negative thereof or comparable
terminology, or by discussions of strategy. You are cautioned that our business
and operations are subject to a variety of risks and uncertainties and,
consequently, our actual results may materially differ from those projected by
any forward-looking statements. Certain of these factors are discussed below
under "--Factors that May Influence Future Results and Accuracy of
Forward-Looking Statements." We make no commitment to revise or update any
forward-looking statements in order to reflect events or circumstances after
the date any such statement is made.

                                      11
<PAGE>

Introduction

    The Company commenced equipment rental operations in October 1997 and has
completed 245 acquisitions (through March 1, 2001), including the merger with
U.S. Rentals (the "U.S. Rentals Merger") which was completed in September 1998.

    Three of the acquisitions completed by the Company (including the U.S.
Rentals Merger) were accounted for as "poolings-of-interests," and the
Company's financial statements have been restated to include the accounts of
two of the companies acquired in such transactions (but were not restated for
one that was not material, which has been combined with the Company effective
July 1, 1998). See Note 3 to the Notes to the Consolidated Financial Statements
of the Company included elsewhere in this Report.

    The other 242 acquisitions completed by the Company were accounted for as
"purchases". The results of operations of the businesses acquired in these
acquisitions are included in the Company's financial statements only from their
respective dates of acquisition. In view of the fact that the Company's
operating results for 2000, 1999 and 1998 were impacted by acquisitions that
were accounted for as purchases, the Company believes that the results of its
operations for such periods are not directly comparable.

    United Rentals, Inc. ("Holdings") is principally a holding company and
primarily conducts its operations through its wholly owned subsidiary, United
Rentals (North America), Inc. ("URI"), and subsidiaries of URI.

General

    The Company primarily derives revenues from the following sources: (i)
equipment rental (including additional fees that may be charged for equipment
delivery, fuel, repair of rental equipment, and damage waivers), (ii) the sale
of rental equipment, (iii) the sale of equipment, and (iv) the sale of related
merchandise and parts and other revenue.

    Cost of operations consists primarily of depreciation costs associated with
rental equipment, the cost of repairing and maintaining rental equipment, the
cost of rental equipment and equipment and other merchandise sold, personnel
costs, occupancy costs and supplies.

    The Company records rental equipment expenditures at cost and depreciates
equipment using the straight-line method over the estimated useful life (which
ranges from 2 to 10 years), after giving effect to an estimated salvage value
of 0% to 10% of cost.

    Selling, general and administrative expenses primarily include sales
commissions, advertising and marketing expenses, management salaries, and
clerical and administrative overhead.

    Non-rental depreciation and amortization includes (i) depreciation expense
associated with equipment that is not offered for rent (such as vehicles,
computers and office equipment) and amortization expense associated with
leasehold improvements, (ii) the amortization of deferred financing costs and
(iii) the amortization of intangible assets. The Company's intangible assets
include non-compete agreements and goodwill, which represents the excess of the
purchase price of acquired companies over the estimated fair market value of
the net assets acquired.

                                      12
<PAGE>

Results of Operations

   Years Ended December 31, 2000 and 1999

    Revenues. Total revenues for 2000 were $2,918.9 million, representing an
increase of 30.7% over total revenues of $2,233.6 million in 1999. The
Company's revenues in 2000 and 1999 were attributable to: (i) equipment rental
($2,056.7 million, or 70.5% of revenues, in 2000 compared to $1,581.0 million,
or 70.8% of revenues, in 1999), (ii) sales of rental equipment ($347.7 million,
or 11.9% of revenues, in 2000 compared to $235.7 million, or 10.6% of revenues,
in 1999) and (iii) sales of equipment and merchandise and other revenues
($514.5 million, or 17.6% of revenues, in 2000 compared to $416.9 million, or
18.7% of revenues, in 1999).

    The 30.7% increase in total revenues in 2000 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 12.9 percentage points) and (ii) the net effect of new rental
locations acquired through acquisitions and the opening of start-up locations
partially offset by locations sold or closed (which accounted for approximately
17.8 percentage points). The increase in revenues at locations open more than
one year primarily reflected (a) an increase in the volume of rental
transactions, (b) an increase in the sale of related merchandise and parts
which was driven by the increase in equipment rental and sales transactions and
(c) an increase in the sale of used equipment.

    Gross Profit. Gross profit increased to $1,088.6 million in 2000 from
$824.9 million in 1999. This increase in gross profit was primarily
attributable to the increase in revenues described above. The Company's gross
profit margin by source of revenue in 2000 and 1999 was: (i) equipment rental
(39.9% in 2000 and 39.4% in 1999), (ii) sales of rental equipment (40.1% in
2000 and 42.0% in 1999) and (iii) sales of equipment and merchandise and other
revenues (24.9% in 2000 and 24.6% in 1999). The increase in the gross profit
margin from rental revenues in 2000 was primarily attributable to greater
equipment utilization rates and to economies of scale. The decrease in the
gross profit margin from the sales of rental equipment in 2000 reflected the
sale of more late-model used equipment which generally generates lower gross
profit margins than older equipment.

    Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $454.3 million, or 15.6% of total
revenues, during 2000 and $352.6 million, or 15.8% of total revenues, during
1999. SG&A in 1999 included an $8.3 million charge primarily due to
professional fees incurred in connection with a terminated tender offer.
Excluding this charge, SG&A as a percentage of revenues was 15.4% in 1999.

    Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $86.3 million, or 3.0% of total revenues, in 2000 and $62.9
million, or 2.8% of total revenues, in 1999.

    Interest Expense. Interest expense increased to $228.8 million in 2000 from
$139.8 million in 1999. This increase primarily reflected (i) an increase in
the Company's indebtedness, principally to fund acquisitions, and (ii) an
increase in the interest rates applicable to the Company's variable rate debt.

    Preferred Dividends of a Subsidiary Trust. During 2000 and 1999, preferred
dividends of a subsidiary trust of Holdings were $19.5 million.

    Other (Income) Expense. Other income was $1.8 million in 2000 compared to
$8.3 million of other expense in 1999. The other expense in 1999 was
attributable to a $9.9 million charge that principally related to fees paid by
the Company for a $2.0 billion financing commitment that was subsequently
cancelled upon termination of a tender offer made by the Company in 1999.

                                      13
<PAGE>

    Income Taxes. Income taxes increased to $125.1 million, or an effective
rate of 41.5%, in 2000 from $99.1 million, or an effective rate of 41.0%, in
1999.
   Years ended December 31, 1999 and 1998

    Revenues. Total revenues for 1999 were $2,233.6 million, representing an
increase of 83.0% over total revenues in 1998 of $1,220.3 million. The
Company's revenues in 1999 and 1998 were attributable to: (i) equipment rental
($1,581.0 million, or 70.8% of revenues, in 1999 compared to $895.5 million, or
73.4% of revenues, in 1998), (ii) sales of rental equipment ($235.7 million, or
10.6% of revenues, in 1999 compared to $119.6 million, or 9.8% of revenues, in
1998) and (iii) sales of equipment and merchandise and other revenues ($416.9
million, or 18.6% of revenues, in 1999 compared to $205.2 million, or 16.8% of
revenues, in 1998).

    The 83.0% increase in total revenues in 1999 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 21.2 percentage points) and (ii) new rental locations acquired
through acquisitions and the opening of start-up locations (which accounted for
approximately 61.8 percentage points). The increase in revenues at locations
open more than one year primarily reflected (a) an increase in the volume of
rental transactions, (b) expansion of the product lines offered by the Company
for sale, (c) an increase in the sale of related merchandise and parts which
was driven by the increase in equipment rental and sales transactions and (d)
an increase in the sale of used equipment.

    Gross Profit. Gross profit increased to $824.9 million in 1999 from $423.4
million in 1998. This increase in gross profit was primarily attributable to
the increase in revenues described above. The Company's gross profit margin by
source of revenue in 1999 and 1998 was: (i) equipment rental (39.4% in 1999 and
36.3% in 1998), (ii) sales of rental equipment (42.0% in 1999 and 44.7% in
1998) and (iii) sales of equipment and merchandise and other revenues (24.6% in
1999 and 22.0% in 1998). The increase in the gross profit margin from rental
revenues in 1999 was primarily attributable to greater equipment utilization
rates and to economies of scale. The decrease in the gross profit margin from
the sales of rental equipment in 1999 primarily reflected a shift in mix
towards the sale of more late-model used equipment which generally generates
lower gross profit margins than older equipment. The increase in the gross
profit margin from sales of equipment and merchandise and other revenue in 1999
primarily reflected the benefits of greater purchasing power.

    Selling, General and Administrative Expenses. SG&A was $352.6 million, or
15.8% of total revenues, during 1999 and $195.6 million, or 16.0% of total
revenues, during 1998. SG&A in 1999 includes an $8.3 million charge primarily
due to professional fees incurred in connection with a terminated tender offer.
Excluding this charge, SG&A as a percentage of revenues decreased to 15.4% in
1999, primarily due to certain economies of scale relating to the increase in
revenues described above.

    Merger-related Expenses. The Company incurred merger-related expenses in
1998 of $47.2 million ($33.2 million after-tax) in connection with three
acquisitions completed by the Company in 1998 that were accounted for as
poolings-of-interests. These expenses consisted of: (i) $18.5 million for
investment banking, legal and accounting services and other merger costs, (ii)
$14.5 million of expenses relating to the closing of duplicate facilities,
(iii) $8.2 million for employee severance and related matters, (iv) $2.1
million for the write down of the computer systems acquired through the U.S.
Rentals Merger and one of the other acquisitions accounted for as a
pooling-of-interests and (v) $3.9 million in other expenses.

    Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $62.9 million, or 2.8% of total revenues, in 1999 and $35.2
million, or 2.9% of total revenues, in 1998.

                                      14
<PAGE>

    Interest Expense. Interest expense increased to $139.8 million in 1999 from
$64.2 million in 1998. This increase primarily reflected the fact that the
Company's indebtedness significantly increased in 1999, primarily to fund
acquisitions.

    Preferred Dividends of a Subsidiary Trust. Preferred dividends of a
subsidiary trust of Holdings were $19.5 million in 1999 compared with $7.9
million in 1998.

    Other (Income) Expense. Other expense was $8.3 million in 1999 compared
with other income of $4.9 million in 1998. The increase in other expense in
1999 primarily reflected a $9.9 million charge that principally related to fees
paid by the Company for a $2.0 billion financing commitment that was
subsequently cancelled upon termination of a tender offer.

    Income Taxes. Income taxes increased to $99.1 million, or an effective rate
of 41.0%, in 1999 from $43.5 million, or an effective rate of 55.6%, in 1998.
During 1998, the Company's high effective tax rate reflected (i) the
non-deductibility of $7.4 million for income tax purposes of certain
merger-related expenses and (ii) a $4.8 million charge to recognize deferred
tax liabilities of an acquired business, which was a Subchapter S Corporation
prior to being acquired by the Company.

    Extraordinary Item. The Company recorded an extraordinary charge of $35.6
million ($21.3 million net of taxes) in 1998. This charge was incurred in
connection with the early extinguishment of certain debt and primarily
reflected prepayment penalties on certain debt of U.S. Rentals.

Liquidity and Capital Resources

    Financing Transactions in 2000

    Set forth below is certain information concerning certain financing
transactions entered into by the Company during 2000.

    Term Loan D. URI obtained a $200.0 million term loan from a group of
financial institutions. For additional information concerning this loan, see
"--Certain Information Concerning the Credit Facility and Other
Indebtedness--Term Loan D."

    Receivables Securitization. In December 2000, the Company obtained $100.0
million through the securitization of certain of its accounts receivable. For
additional information concerning this transaction, see "--Certain Information
Concerning the Credit Facility and Other Indebtedness--Certain Other Secured
Debt."

    Sale and Lease-Back Transactions. In 2000, the Company received an
aggregate of $218.8 million of proceeds from equipment sale and lease-back
transactions. For additional information concerning these transactions, see
"--Certain Information Concerning Operating Leases."

    Sources and Uses of Cash

    During 2000, the Company (i) generated cash from operations of
approximately $512.7 million, (ii) generated cash from the sale of rental
equipment of approximately $347.7 million and (iii) generated cash from
financing activities of approximately $468.1 million. The Company used cash
during this period principally to (i) pay consideration for acquisitions
(approximately $347.3 million), (ii) purchase rental equipment (approximately
$808.2 million), (iii) purchase other property and equipment (approximately
$153.8 million) and (iv) purchase and retire the Company's Common Stock
(approximately $31.0 million).

                                      15
<PAGE>

    Certain Balance Sheet Changes

    The Company's asset and liability accounts were all higher at December 31,
2000 than at December 31, 1999, other than accrued expenses and other
liabilities which was lower. The general increase in the Company's asset and
liability accounts primarily reflected the acquisitions and the equipment
purchases made by the Company in 2000. The decrease in accrued expenses and
other liabilities primarily reflected the refund of certain income tax
payments.

    The decrease in additional paid-in capital at December 31, 2000 compared
with December 31, 1999, primarily reflected the purchase and retirement of
Common Stock offset in part by the issuance of Common Stock in connection with
an acquisition.

    Cash Requirements Related to Operations

    The Company's principal existing sources of cash are borrowings available
under its revolving credit facility ($407.1 million available as of March 6,
2001), cash generated from operations and cash generated from the sale of used
equipment. For additional information concerning the Company's credit facility
(the "Credit Facility"), see "--Certain Information Concerning the Credit
Facility and Other Indebtedness--Credit Facility."

    The Company expects that its principal needs for cash relating to its
existing operations over the next 12 months will be to fund (i) operating
activities and working capital, (ii) the purchase of rental equipment and
inventory items offered for sale and (iii) debt service. The Company plans to
fund such cash requirements relating to its existing operations from its
existing sources of cash described above.

    The Company estimates that equipment expenditures over the next 12 months
will be approximately $400 million for the existing operations of the Company.
These expenditures are comprised of approximately (i) $150 million of
expenditures in order to replace rental equipment sold, (ii) $200 million of
discretionary expenditures to increase the size of the Company's rental fleet
and (iii) $50 million of expenditures for the purchase of non-rental equipment.
The Company expects that it will fund such expenditures from a combination of
approximately $100 million of proceeds expected to be generated from the sale
of used equipment, cash generated from operations and, if required, borrowings
available under the Credit Facility.

    While emphasizing internal growth, the Company may also continue to expand
through a disciplined acquisition program. The Company expects to pay for
future acquisitions using cash, capital stock, notes and/or assumption of
indebtedness. To the extent that the Company's existing sources of cash
described above are not sufficient to fund such future acquisitions, the
Company will require additional financing and, consequently, the Company's
indebtedness may increase as the Company implements its growth strategy. There
can be no assurance, however, that any additional financing will be available
or, if available, will be on terms satisfactory to the Company.

    Based upon the terms of the Company's currently outstanding indebtedness,
the Company is scheduled to repay debt principal of approximately $33.8 million
during 2001.

    Certain Measures to Reduce Cash Requirements

    The Company, in response to softening economic conditions, has been
focusing on measures to cut costs and reduce cash outlays. Some of the
principal initiatives are discussed below.

    Reduce equipment purchases and supplement new equipment with used
equipment. The Company, as described above, has budgeted $400 million for
rental and other equipment expenditures over the next 12 months. This reflects
a significant reduction from the $962 million that was expended in 2000.


                                      16
<PAGE>

    The Company believes that it may have the opportunity to purchase
late-model used equipment at attractive prices. Accordingly, while continuing
to purchase new equipment, the Company will also selectively purchase
late-model used equipment. The Company estimates that over the next 12 months
used equipment will account for 15-20% of its total equipment purchases.

    The Company plans to reduce the rate at which it invests in new equipment
in 2001, which will cause the weighted average age of its fleet to increase
from approximately 26 months to approximately 32 months. The Company believes
that, because of the young age of its fleet, the Company's operations will not
be adversely affected by this six month increase in average age. The Company
also plans to reduce the rate at which it sells its used rental equipment in
2001 and, as a result, revenues from the sale of rental equipment are expected
to be 70-75% lower in 2001 than in 2000.

    Close or Consolidate Under-Performing Branches. The Company is in the
process of reviewing under-performing branches and expects that, over the next
several months, a number of locations will be closed or consolidated with
existing locations.

    Continue to Consolidate Suppliers. The Company reduced the number of its
primary equipment suppliers from 111 to 28 in 2000. This allowed the Company to
lower its purchase costs by approximately $150 million in 2000 and should
enable the Company to save additional amounts in 2001. The Company is currently
in the process of similarly consolidating its merchandise suppliers.

    Other Cost-Cutting Measures. The Company is seeking to reduce costs in a
number of other ways, including reducing administrative expenses, consolidating
credit and collection centers, and streamlining advertising.

Certain Projected Charges

    Branch Consolidation

    The Company, as described above, expects that over the next several months
a number of underperforming locations will be closed or consolidated with other
locations. The Company estimates that, as a result, it will incur a pre-tax
charge in 2001 in the range of $20 million to $40 million, primarily relating
to employee severance and vacating facilities.

    Debt Refinancing

    The Company is currently negotiating with various lenders to replace its
existing credit facility and term loans. If this refinancing is completed, the
Company estimates that it would record a pretax extraordinary charge in 2001 in
the range of $16 million to $27 million, primarily relating to the write-off of
financing fees.

Relationship Between Holdings and URI

    Holdings is principally a holding company and primarily conducts its
operations through its wholly owned subsidiary URI and subsidiaries of URI.
Holdings provides certain services to URI in connection with its operations.
These services principally include: (i) senior management services, (ii)
finance related services and support, (iii) information technology systems and
support and (iv) acquisition related services. In addition, Holdings leases
certain equipment and real property that are made available for use by URI and
its subsidiaries. URI has made, and expects to continue to make, certain
payments to Holdings in respect of the services provided by Holdings to the
Company. The expenses relating to URI's payments to Holdings are reflected on
URI's financial statements as selling, general and administrative expenses. In
addition, although not legally obligated to do so, URI has in the past,

                                      17
<PAGE>

and expects that it will in the future, make distributions to Holdings to,
among other things, enable Holdings to pay dividends on the Trust Preferred
Securities (as described under "--Certain Information Concerning Preferred
Securities").

    The Trust Preferred Securities are the obligation of a subsidiary trust of
Holdings and are not the obligation of URI. As a result, the dividends payable
on these securities are reflected as an expense on the consolidated financial
statements of Holdings, but are not reflected as an expense on the consolidated
financial statements of URI.

Certain Information Concerning the Credit Facility and Other Indebtedness

    Credit Facility. URI has a credit facility (the "Credit Facility") which
enables URI to borrow up to $827.5 million on a revolving basis and permits a
Canadian subsidiary of URI (the "Canadian Subsidiary") to directly borrow up to
$40.0 million under the Credit Facility (provided that the aggregate borrowings
of URI and the Canadian Subsidiary do not exceed $827.5 million). Up to $50.0
million of the Credit Facility is available in the form of letters of credit.
The agreement governing the Credit Facility requires that the aggregate
commitment shall be reduced on the last day of each calendar quarter, beginning
September 30, 2001 and continuing through June 30, 2003, by an amount equal to
$20.7 million. The Credit Facility terminates on September 26, 2003, at which
time all outstanding indebtedness is due. As of March 6, 2001, there was $414.0
million of indebtedness outstanding under the Credit Facility (not including
undrawn outstanding letters of credit in the amount of $6.4 million).

    Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i) the
Federal Funds Rate plus 0.5% or (ii) Bank of America's reference rate) or (b)
the Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted Eurodollar Rate) plus a margin ranging from 1.200% to 1.875%
per annum. Borrowings by the Canadian Subsidiary under the Credit Facility
accrue interest, at such subsidiary's option, at either (x) the Prime Rate
(which is equal to Bank of America Canada's prime rate), (y) the BA Rate (which
is equal to Bank of America Canada's BA Rate) plus a margin ranging from 1.200%
to 1.875% per annum or (z) the Eurodollar Rate (which for borrowing by the
Canadian Subsidiary is equal to Bank of America Canada's reserve adjusted
Eurodollar Rate) plus a margin ranging from 1.200% to 1.875% per annum. If at
any time an event of default (as defined in the agreement governing the Credit
Facility) exists, the interest rate applicable to each loan will increase by 2%
per annum. The Company is also required to pay the banks an annual facility fee
equal to 0.375% of the banks' $827.5 million aggregate lending commitment under
the Credit Facility (which fee may be reduced to 0.300% for periods during
which the Company maintains a specified funded debt to cash flow ratio).

    The obligations of URI under the Credit Facility are (i) secured by
substantially all of its assets, the stock of its United States subsidiaries
and a portion of the stock of URI's Canadian subsidiaries and (ii) guaranteed
by Holdings and secured by the stock of URI. The obligations of the Canadian
Subsidiary under the Credit Facility are guaranteed by URI and secured by
substantially all of the assets of the Canadian Subsidiary and the stock of the
subsidiaries of the Canadian Subsidiary.

    The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a) maximum
leverage, (b) the ratio of senior debt to cash flow, (c) minimum interest
coverage ratio, (d) the ratio of funded debt to cash flow, and (e) the ratio of
senior debt to tangible assets. The agreements governing the Credit Facility
also contain various other covenants that restrict the Company's ability to,
among other things, (i) incur additional indebtedness, (ii) permit liens to
attach to its assets, (iii) pay dividends or make other restricted payments on
its common stock and certain other securities and (iv) make acquisitions unless
certain financial conditions are satisfied. In addition, the agreement
governing the Credit Facility provides that failure by

                                      18
<PAGE>

any two of Messrs. Jacobs, Milne, Nolan and Miner to continue to hold executive
positions with the Company for a period of 30 consecutive days constitutes an
event of default unless replacement officers satisfactory to the lenders are
appointed.

    Term Loan B. In July 1998, URI obtained a $250.0 million term loan (the
"Term Loan B") from a group of financial institutions. The Term Loan B matures
on June 30, 2005. Prior to maturity, quarterly installments of principal in the
amount of $0.6 million are due on the last day of each calendar quarter,
commencing September 30, 1999. The amount due at maturity is $235.6 million.
The Term Loan B accrues interest, at the Company's option, at either (a) the
Base Rate (as defined with respect to the Credit Facility) plus a margin of
0.375% per annum, or (b) the Eurodollar Rate (as defined with respect to the
Credit Facility for borrowings by URI) plus a margin of 2.25% per annum. If at
any time an event of default exists, the interest rate applicable to the Term
Loan B will increase by 2% per annum. The Term Loan B is secured pari passu
with the Credit Facility, Term Loan C and Term Loan D (described below). The
agreement governing the Term Loan B contains restrictive covenants
substantially similar to those provided under the Credit Facility.

    Term Loan C. In July 1999, URI obtained a $750.0 million term loan (the
"Term Loan C") from a group of financial institutions. The Term Loan C matures
in June 2006. Prior to maturity, quarterly installments of principal in the
amount of $1.9 million are due on the last day of each calendar quarter,
commencing September 30, 2000. The amount due at maturity is $706.3 million.
The Term Loan C accrues interest, at URI's option, at either (a) the Base Rate
(as defined with respect to the Credit Facility) plus a margin of 0.625% per
annum, or (b) the Eurodollar Rate (as defined with respect to the Credit
Facility for borrowings by URI) plus a margin of 2.5% per annum. If at any time
an event of default exists, the interest rate applicable to the Term Loan C
will increase by 2% per annum. The Term Loan C is secured pari passu with the
Credit Facility, Term Loan B and Term Loan D. The agreement governing the Term
Loan C contains restrictive covenants substantially similar to those provided
under the Credit Facility.

    Term Loan D. In June 2000, URI obtained a $100.0 million term loan from a
financial institution (the "Term Loan D"). In October 2000, URI obtained an
additional $100.0 million under the existing Term Loan D. The Term Loan D
matures in June 2006. Prior to maturity, quarterly installments of principal
are due on the last day of each calendar quarter, in the amount of $0.25
million on September 30, 2000 and in the amount of $0.5 million commencing
December 31, 2000 to maturity. The amount due at maturity is $188.5 million.
The Term Loan D accrues interest, at URI's option, at either (a) the Base Rate
(as defined above with respect to the Credit Facility) plus a margin of 0.625%
per annum, or (b) the Eurodollar Rate (as defined above with respect to the
Credit Facility) plus a margin of 2.5% per annum. If at any time an event of
default exists, the interest rate applicable to the Term Loan D will increase
by 2% per annum. The Term Loan D is secured pari passu with the Credit
Facility, Term Loan B and Term Loan C. The agreement governing the Term Loan D
contains restrictive covenants substantially similar to those provided under
the Credit Facility.

    Receivables Securitization. In December 2000, the Company obtained $100.0
million through the securitization of certain of its accounts receivable. In
the securitization, the Company transferred $203.0 million of its accounts
receivable to a special purpose subsidiary (the "SPV") which in turn pledged
those receivables to secure $100.0 million of borrowings that the SPV incurred
to finance its acquisition of those receivables from the Company. These
borrowings accrue interest at Credit Lyonnais' blended commercial paper rate
plus a margin of 0.75% per annum. These borrowings are an obligation of the SPV
and not of Holdings or URI, and the lenders' recourse in respect of the
borrowings is generally limited to collections that the SPV receives on the
receivables. Collections on the receivables are used to service the borrowings.
Subject to certain conditions, collections from the receivables may also be
used by the SPV from time to time until December 2003 to acquire additional
accounts receivables from the Company that the SPV will pledge to the lenders
to secure the borrowings.

    9 1/2% Senior Subordinated Notes. In May 1998, URI issued $200.0 million
aggregate principal amount of 9 1/2% senior subordinated notes (the "9 1/2%
Notes"), which are due June 1, 2008. The

                                      19
<PAGE>

9 1/2% Notes are unsecured. URI may, at its option, redeem the 9 1/2% Notes on
or after June 1, 2003 at specified redemption prices which range from 104.75%
in 2003 to 100.0% in 2006 and thereafter. In addition, on or prior to June 1,
2001, URI may, at its option, use the proceeds of a public equity offering to
redeem up to 35% of the outstanding 9 1/2% Notes, at a redemption price of
109.5%. The indenture governing the 9 1/2% Notes contains certain restrictive
covenants, including (i) limitations on additional indebtedness, (ii)
limitations on restricted payments, (iii) limitations on liens, (iv)
limitations on dividends and other payment restrictions, (v) limitations on
preferred stock of certain subsidiaries, (vi) limitations on transactions with
affiliates, (vii) limitations on the disposition of proceeds of asset sales and
(viii) limitations on the ability of the Company to consolidate, merge or sell
all or substantially all of its assets.

    8.80% Senior Subordinated Notes. In August 1998, URI issued $205.0 million
aggregate principal amount of 8.80% senior subordinated notes (the "8.80%
Notes"), which are due August 15, 2008. The 8.80% Notes are unsecured. URI may,
at its option, redeem the 8.80% Notes on or after August 15, 2003 at specified
redemption prices which range from 104.4% in 2003 to 100.0% in 2006 and
thereafter. In addition, on or prior to August 15, 2001, URI may, at its
option, use the proceeds of a public equity offering to redeem up to 35% of the
outstanding 8.80% Notes, at a redemption price of 108.8%. The indenture
governing the 8.80% Notes contains restrictions substantially similar to those
applicable to the 9 1/2% Notes.

    9 1/4% Senior Subordinated Notes. In December 1998, URI issued $300.0
million aggregate principal amount of 9 1/4% senior subordinated notes (the "9
1/4% Notes"), which are due January 15, 2009. The 9 1/4% Notes are unsecured.
URI may, at its option, redeem the 9 1/4% Notes on or after January 15, 2004 at
specified redemption prices which range from 104.625% in 2004 to 100.0% in 2007
and thereafter. In addition, on or prior to January 15, 2002, URI may, at its
option, use the proceeds of a public equity offering to redeem up to 35% of the
outstanding 9 1/4% Notes, at a redemption price of 109.25%. The indenture
governing the 9 1/4% Notes contains restrictions substantially similar to those
applicable to the 9 1/2% Notes.

    9% Senior Subordinated Notes. In March 1999, URI sold $250.0 million
aggregate principal amount of 9% senior subordinated notes, (the "9% Notes")
which are due on April 1, 2009. The 9% Notes are unsecured. URI may, at its
option, redeem the 9% Notes on or after April 1, 2004 at specified redemption
prices which range from 104.5% in 2004 to 100.0% in 2007 and thereafter. In
addition, on or prior to April 1, 2002, URI may, at its option, use the
proceeds of a public equity offering to redeem up to 35% of the outstanding 9%
Notes, at a redemption price of 109.0%. The indenture governing the 9% Notes
contains restrictions substantially similar to those applicable to the 9 1/2%
Notes.

    Other Debt. In addition to the debt described above, the Company had
approximately $94.1 million of other debt outstanding as of December 31, 2000.

Certain Information Concerning Operating Leases

    The Company, from time to time, has entered into operating leases pursuant
to which it leases, as lessee, equipment or real estate. Certain of these
leases were entered into as part of sale and lease-back transactions, where the
Company sells its equipment and then enters into an operating lease that
provides for the Company to lease the equipment for a specified period. Sale
and lease-back transactions in 2000 generated gross proceeds of $218.8 million
and gave rise to $12.5 million of recognized gain and $4.0 million of deferred
gain. For information concerning the lease payment obligations under the
Company's operating leases, see Note 13 of the Notes to the Consolidated
Financial Statements included elsewhere in this Report.

                                      20
<PAGE>

Certain Information Concerning Preferred Securities

    Trust Preferred Securities

    In August 1998, a subsidiary trust (the "Trust") of Holdings sold $300.0
million of 6 1/2% Convertible Quarterly Income Preferred Securities (the "Trust
Preferred Securities"). The net proceeds from the sale of the Trust Preferred
Securities were approximately $290.0 million. The Trust used such proceeds to
purchase convertible subordinated debentures from Holdings which resulted in
Holdings receiving all of the proceeds from the sale of the Trust Preferred
Securities. Holdings in turn contributed the net proceeds from the sale of the
Trust Preferred Securities to its wholly owned subsidiary URI. The Trust
Preferred Securities are convertible into common stock of Holdings at a
conversion price equivalent to $43.63 per share.

   Other Preferred Securities

    In January 1999, Holdings sold 300,000 shares of its Series A Preferred.
The outstanding shares of Series A Preferred are convertible into an aggregate
of 12,000,000 shares of Holdings common stock, subject to adjustment
(equivalent to a conversion price of $25 per share based upon the liquidation
preference of $1,000 per share of Series A Preferred).

    In September 1999, Holdings sold 150,000 shares of its Series B Preferred.
The outstanding shares of Series B Preferred are convertible into an aggregate
of 5,000,000 shares of Holdings common stock, subject to adjustment (equivalent
to a conversion price of $30 per share based upon the liquidation preference of
$1,000 per share of Series B Preferred).

Fluctuations in Operating Results

    The Company expects that its revenues and operating results may fluctuate
from quarter to quarter or over the longer term. Certain of the general factors
that may cause such fluctuations are discussed under "--Factors that May
Influence Future Results and Accuracy of Forward Looking
Statements--Fluctuations of Operating Results." In addition, information
concerning certain projected charges that may impact quarterly results over the
near term is set forth under "--Certain Projected Charges."

    The Company is continually involved in the investigation and evaluation of
potential acquisitions. In accordance with accounting principles generally
accepted in the United States, the Company capitalizes certain direct
out-of-pocket expenditures (such as legal and accounting fees) relating to
potential or pending acquisitions. Indirect acquisition costs, such as
executive salaries, general corporate overhead, public affairs and other
corporate services, are expensed as incurred. The Company's policy is to charge
against earnings any capitalized expenditures relating to any potential or
pending acquisition that the Company determines will not be consummated. There
can be no assurance that the Company in future periods will not be required to
incur a charge against earnings in accordance with such policy, which charge,
depending upon the magnitude thereof, could adversely affect the Company's
results of operations.

    The Company will be required to incur significant start-up expenses in
connection with establishing each start-up location. Such expenses may include,
among others, pre-opening expenses related to setting up the facility, and
expenses in connection with training employees, installing information systems
and marketing. The Company expects that, in general, start-up locations will
initially operate at a loss or at less than normalized profit levels.
Consequently, the opening of a start-up location may negatively impact the
Company's margins until the location achieves normalized profitability.

                                      21
<PAGE>

    There may be a lag between the time that the Company purchases new
equipment and begins to incur the related depreciation and interest expenses
and the time that the equipment begins to generate revenues at normalized
rates. As a result, the purchase of new equipment, particularly equipment
purchased in connection with expanding and diversifying the Company's rental
equipment, may periodically reduce margins.

Seasonality

    The Company's business is seasonal with demand for the Company's rental
equipment tending to be lower in the winter months. The seasonality of the
Company's business has been heightened by the Company's acquisition of
businesses that specialize in renting traffic control equipment. These
businesses tend to generate most of their revenues and profits in the second
and third quarters of the year, slow down during the fourth quarter and operate
at a loss during the first quarter.

Inflation

    Although the Company cannot accurately anticipate the effect of inflation
on its operations, the Company believes that inflation has not had, and is not
likely in the foreseeable future to have, a material impact on its results of
operations.

Impact of Recently Issued Accounting Standards

    In June 1999, the Financial Accounting Standards Board (''FASB") issued
Statement of Financial Accounting Standards (''SFAS") No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133". This standard delays the effective date of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities", for one
year, to fiscal years beginning after June 15, 2000. SFAS No. 133 establishes a
new model for accounting for derivatives and hedging activities. The adoption
of SFAS No. 133 on January 1, 2001 is not expected to have a material effect on
the Company's consolidated financial position or results of operations.

    In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities". This standard amends
SFAS No. 133 and addresses a limited number of issues causing implementation
difficulties. The Company will adopt SFAS No. 138 on January 1, 2001 and it is
not expected to have a material effect on the Company's consolidated financial
position or results of operations.

    In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities--a
replacement of FASB Statement No. 125". This standard revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures. This standard is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001 and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000.
The adoption of SFAS No. 140 is not expected to have a material effect on the
Company's consolidated financial position or results of operations.

Factors that May Influence Future Results and Accuracy of Forward-Looking
Statements

    Sensitivity to Changes in Construction and Industrial Activities

    Our equipment is principally used in connection with construction and
industrial activities. Consequently, a downturn in construction or industrial
activity may lead to a decrease in demand for

                                      22
<PAGE>

our equipment, which could adversely affect our business. We have identified
below certain of the factors which may cause such a downturn, either
temporarily or long-term:

    .   the recent slow-down of the economy worsens or continues over the
        long-term;

    .   an increase in interest rates; or

    .   adverse weather conditions which may temporarily affect a particular
        region.

    In addition, demand for our traffic control equipment may not reach
projected levels in the event that funding for highway and other construction
projects under government programs, such as the Transportation Equity Act for
the 21st Century ("TEA-21"), does not reach expected levels.

    Fluctuations of Operating Results

    We expect that our revenues and operating results may fluctuate from
quarter to quarter or over the longer term due to a number of factors,
including:

    .   seasonal rental patterns of our customers--with rental activity tending
        to be lower in the winter;

    .   our recent acquisitions of businesses that specialize in renting
        traffic control equipment, which tend to operate at a loss during the
        first quarter;

    .   the timing of expenditures for new equipment and the disposition of
        used equipment;

    .   changes in demand for our equipment or the prices therefor due to
        changes in economic conditions, competition or other factors;

    .   changes in the interest rates applicable to our floating rate debt;

    .   if we determine that a potential acquisition will not be consummated,
        the need to charge against earnings any expenditures relating to such
        transaction (such as financing commitment fees, merger and acquisition
        advisory fees and professional fees) previously capitalized; and

    .   the possible need, from time to time, to take other write-offs or
        special charges due to a variety of occurrences, such as store
        consolidations or closings or the refinancing of existing indebtedness.

    Dependence on Additional Capital

    We may require additional capital for, among other purposes, purchasing
rental equipment, completing acquisitions, and establishing new rental
locations. If the cash that we generate from our business, together with cash
that we may borrow under our credit facility, is not sufficient to fund our
capital requirements, we will require additional debt and/or equity financing.
We cannot, however, be certain that any additional financing will be available
or, if available, will be available on terms that are satisfactory to us. If we
are unable to obtain sufficient additional capital in the future, our business
could be adversely affected.

    Certain Risks Relating to Acquisitions

    The making of acquisitions entails certain risks, including:

    .   acquired companies could have unrecorded liabilities that we fail to
        discover during our due diligence investigations;

                                      23
<PAGE>

    .   we may have difficulty in assimilating the operations and personnel of
        the acquired company with our existing operations;

    .   we may lose key employees of the acquired company; and

    .   we may have difficulty maintaining uniform standards, controls,
        procedures and policies.

    Dependence on Management

    We are highly dependent upon our senior management team. Consequently, our
business could be adversely affected in the event that we lose the services of
any member of senior management. Furthermore, if we lose the services of
certain members of senior management, it is an event of default under the
agreements governing our credit facility and certain of our other indebtedness,
unless we appoint replacement officers satisfactory to the lenders within 30
days. We do not maintain "key man" life insurance with respect to members of
senior management.

    Competition

    The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We may in the
future encounter increased competition from our existing competitors or from
new companies. In addition, certain equipment manufacturers may commence (or
increase their existing efforts relating to) renting and selling equipment
directly to our customers.

    Liability and Insurance

    We are exposed to various possible claims relating to our business. These
include claims relating to (1) personal injury or death caused by equipment
rented or sold by us, (2) motor vehicle accidents involving our delivery and
service personnel and (3) employment related claims. We carry a broad range of
insurance for the protection of our assets and operations. However, such
insurance may not fully protect us for a number of reasons, including:

    .   our coverage is subject to a deductible of $1.0 million and limited to
        a maximum of $98 million per occurrence;

    .   we do not maintain coverage for environmental liability, since we
        believe that the cost for such coverage is high relative to the benefit
        that it provides; and

    .   certain types of claims, such as claims for punitive damages or for
        damages arising from intentional misconduct, which are often alleged in
        third party lawsuits, might not be covered by our insurance.

    We cannot be certain that insurance will continue to be available to us on
economically reasonable terms, if at all.

    Environmental and Safety Regulations

    There are numerous federal, state and local laws and regulations governing
environmental protection and occupational health and safety matters. These
include laws and regulations that govern wastewater discharges, the use,
treatment, storage and disposal of solid and hazardous wastes and materials,
air quality and the remediation of contamination associated with the release of
hazardous substances. Under these laws, an owner or lessee of real estate may
be liable for, among other things,

                                      24
<PAGE>

(1) the costs of removal or remediation of hazardous or toxic substances
located on, in, or emanating from, the real estate, as well as related costs of
investigation and property damage and substantial penalties, and (2)
environmental contamination at facilities where its waste is or has been
disposed. These laws often impose liability whether or not the owner or lessee
knew of the presence of the hazardous or toxic substances and whether or not
the owner or lessee was responsible for these substances. Our activities that
are or may be affected by these laws include our use of hazardous materials to
clean and maintain equipment and our disposal of solid and hazardous waste and
wastewater from equipment washing. We also dispense petroleum products from
underground and above-ground storage tanks located at certain rental locations,
and at times we must remove or upgrade tanks to comply with applicable laws.
Furthermore, we have acquired or lease certain locations which have or may have
been contaminated by leakage from underground tanks or other sources and are in
the process of assessing the nature of the required remediation. Based on the
conditions currently known to us, we believe that any unreserved environmental
remediation and compliance costs required with respect to those conditions will
not have a material adverse effect on our business. However, we cannot be
certain that we will not identify adverse environmental conditions that are not
currently known to us, that all potential releases from underground storage
tanks removed in the past have been identified, or that environmental and
safety requirements will not become more stringent or be interpreted and
applied more stringently in the future. If we are required to incur
environmental compliance or remediation costs that are not currently
anticipated by us, our business could be adversely affected depending on the
magnitude of the cost.

    Risks Related to International Operations

    Our operations outside the United States are subject to risks normally
associated with international operations. These include the need to convert
currencies, which could result in a gain or loss depending on fluctuations in
exchange rates, and the need to comply with foreign laws.

    Dependence on Information Technology Systems

    Our ability to monitor and control our operations depends to a large extent
on the proper functioning of our information technology systems. Any disruption
in these systems or the failure of these systems to operate as expected could,
depending on the magnitude and duration of the problem, adversely affect our
business.

    Labor Matters

    Certain of our employees are represented by unions and covered by
collective bargaining agreements. If we should experience a prolonged labor
dispute involving a significant number of our employees, our business could be
adversely affected.

    Restrictive Covenants

    The agreements governing our existing long-term indebtedness contain, and
future agreements governing our long-term indebtedness may also contain,
certain restrictive financial and operating covenants which affect, and in many
respects significantly limit or prohibit, among other things, our ability to
incur indebtedness, make prepayments of certain indebtedness, make investments,
create liens, make acquisitions, sell assets and engage in mergers and
consolidations. These covenants may significantly limit our operating and
financial flexibility.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

    Our exposure to market risk primarily consists of (1) interest rate risk
associated with our variable rate debt and (2) foreign currency exchange rate
risk primarily associated with our Canadian operations.

                                      25
<PAGE>

    Interest Rate Risk. The Company periodically utilizes interest rate swap
agreements to manage and mitigate its exposure to changes in interest rates. At
December 31, 2000, the Company had interest rate protection in the form of swap
agreements with an aggregate notional amount of $200.0 million. The effect of
these agreements is to limit the interest rate exposure to 8.75% on $200.0
million of Term Loan B.

    All borrowings under our $827.5 million Credit Facility bear interest at a
variable rate of interest. The outstanding indebtedness under the Credit
Facility was $337.0 million as of December 31, 2000. Our other variable rate
debt primarily consists of a $246.9 million Term Loan B, a $748.1 million Term
Loan C, a $198.1 Term Loan D and $100.0 million of receivables securitization
described earlier. The weighted average interest rates applicable to our
variable rate debt as of December 31, 2000 were (i) 7.8% for the Credit
Facility, (ii) 8.80% for the Term Loan B, (iii) 9.26% for the Term Loan C, (iv)
9.18% for the Term Loan D and (v) 7.44% for the receivables securitization
described earlier. Based upon the amount of variable debt that we had
outstanding as of December 31, 2000 (approximately $1.63 billion in the
aggregate), our net income would decrease by approximately $9.5 million for
each one percentage point increase in the interest rates applicable to our
variable rate debt. The amount of our variable rate indebtedness may fluctuate
significantly as a result of changes in the amount of indebtedness outstanding
under the Credit Facility from time to time. For additional information
concerning the terms of our variable rate debt, see Note 7 of the Notes to the
Consolidated Financial Statements included elsewhere herein.

    Currency Exchange Risk. The functional currency for our Canadian operations
is the Canadian dollar. As a result, our future earnings could be affected by
fluctuations in the exchange rate between the U.S. and Canadian dollars. Based
upon the current level of our Canadian operations, a 10% change in this
exchange rate would not have a material impact on our earnings. In addition,
the Company periodically enters into foreign exchange contracts to hedge its
transaction exposures. At December 31, 2000, the Company had no outstanding
foreign exchange contracts. The Company does not engage in purchasing forward
exchange contracts for speculative purposes.

                                      26
<PAGE>

Item 8. Financial Statements and Supplementary Data

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>                                                                                          <C>
(1) Consolidated Financial Statements:

   Report of Independent Auditors...........................................................   28

   United Rentals, Inc. Consolidated Balance Sheets--December 31, 2000 and 1999.............   29

   United Rentals, Inc. Consolidated Statements of Operations for the years ended
     December 31, 2000, 1999 and 1998.......................................................   30

   United Rentals, Inc. Consolidated Statements of Stockholders' Equity for the years ended
     December 31, 2000, 1999 and 1998.......................................................   31

   United Rentals, Inc. Consolidated Statements of Cash Flows for the years ended
     December 31, 2000, 1999 and 1998.......................................................   32

   Notes to Consolidated Financial Statements...............................................   34

   Report of Independent Auditors...........................................................   55

   United Rentals (North America), Inc. Consolidated Balance Sheets--December 31, 2000
     and 1999...............................................................................   56

   United Rentals (North America), Inc. Consolidated Statements of Operations for the years
     ended December 31, 2000, 1999 and 1998.................................................   57

   United Rentals (North America), Inc. Consolidated Statements of Stockholder's Equity for
     the years ended December 31, 2000, 1999 and 1998.......................................   58

   United Rentals (North America), Inc. Consolidated Statements of Cash Flows for the years
     ended December 31, 2000, 1999 and 1998.................................................   59

   Notes to Consolidated Financial Statements...............................................   60

(2) Financial Statement Schedules:

   Report of Independent Auditors on Financial Statement Schedules..........................   69

   Schedule I Condensed Financial Information of the Registrant.............................   70

   Schedule II Valuation and Qualifying Accounts............................................   74

</TABLE>

    Schedules other than those listed are omitted as they are not applicable or
the required or equivalent information has been included in the financial
statements or notes thereto.

                                      27
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS

Board of Directors
United Rentals, Inc.

    We have audited the accompanying consolidated balance sheets of United
Rentals, Inc. as of December 31, 2000 and 1999 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2000. These consolidated financial
statements are the responsibility of the management of United Rentals, Inc. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of United Rentals, Inc. at December 31, 2000 and 1999, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.

                                          /s/ ERNST & YOUNG LLP

MetroPark, New Jersey
February 23, 2001

                                      28
<PAGE>

                             UNITED RENTALS, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                             December 31
                                                                        ----------------------
                                                                           2000        1999
                                                                        ----------  ----------
                                                                        (In thousands, except
                                                                             share data)

<S>                                                                     <C>         <C>
Assets
Cash and cash equivalents.............................................. $   34,384  $   23,811
Accounts receivable, net of allowance for doubtful accounts of $55,624
  and $58,376 at 2000 and 1999, respectively...........................    469,594     434,985
Inventory..............................................................    133,380     129,473
Prepaid expenses and other assets......................................    104,493      81,457
Rental equipment, net..................................................  1,732,835   1,659,733
Property and equipment, net............................................    422,239     304,907
Intangible assets, net of accumulated amortization of $108,066 and
  $51,231 at 2000 and 1999, respectively...............................  2,227,008   1,863,372
                                                                        ----------  ----------
                                                                        $5,123,933  $4,497,738
                                                                        ==========  ==========
Liabilities and Stockholders' Equity
Liabilities:
   Accounts payable.................................................... $  260,155  $  242,946
   Debt................................................................  2,675,367   2,266,148
   Deferred taxes......................................................    206,243      81,229
   Accrued expenses and other liabilities..............................    136,225     209,929

                                                                        ----------  ----------
       Total liabilities...............................................  3,277,990   2,800,252
Commitments and contingencies
Company-obligated manditorily redeemable convertible preferred
  securities of a subsidiary trust.....................................    300,000     300,000
Stockholders' equity:
   Preferred stock--$.01 par value, 5,000,000 shares authorized:
     Series A perpetual convertible preferred stock--$300,000
       liquidation preference, 300,000 shares issued and outstanding
       in 2000 and 1999................................................          3           3
     Series B perpetual convertible preferred stock--$150,000
       liquidation preference, 150,000 shares issued and outstanding
       in 2000 and 1999................................................          2           2
   Common stock--$.01 par value, 500,000,000 shares authorized,
     71,065,707 shares issued and outstanding in 2000 and
     72,051,095 shares issued and outstanding in 1999..................        711         721
   Additional paid-in capital..........................................  1,196,324   1,216,968
   Retained earnings...................................................    355,850     179,475
   Accumulated other comprehensive (loss) income.......................     (6,947)        317

                                                                        ----------  ----------
       Total stockholders' equity......................................  1,545,943   1,397,486

                                                                        ----------  ----------
                                                                        $5,123,933  $4,497,738

                                                                        ==========  ==========
</TABLE>

                            See accompanying notes.

                                      29
<PAGE>

                             UNITED RENTALS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                         Year Ended December 31
                                                                ----------------------------------------
                                                                    2000          1999         1998
                                                                 ----------    ----------   ----------
                                                                (in thousands, except per share amounts)
<S>                                                             <C>           <C>          <C>
Revenues:
 Equipment rentals.............................................   $2,056,683    $1,581,026   $  895,466
 Sales of rental equipment.....................................      347,678       235,678      119,620
 Sales of equipment and merchandise and other revenues.........      514,500       416,924      205,196
                                                                ----------    ----------   ----------
Total revenues.................................................    2,918,861     2,233,628    1,220,282
Cost of revenues:
 Cost of equipment rentals, excluding depreciation.............      907,477       676,972      394,750
 Depreciation of rental equipment..............................      328,131       280,641      175,910
 Cost of rental equipment sales................................      208,182       136,678       66,136
 Cost of equipment and merchandise sales and other
   operating costs.............................................      386,501       314,419      160,038
                                                                ----------    ----------   ----------
Total cost of revenues.........................................    1,830,291     1,408,710      796,834
                                                                ----------    ----------   ----------
Gross profit...................................................    1,088,570       824,918      423,448
Selling, general and administrative expenses...................      454,330       352,595      195,620
Merger-related expenses........................................                                  47,178
Non-rental depreciation and amortization.......................       86,301        62,867       35,248
                                                                ----------    ----------   ----------
Operating income...............................................      547,939       409,456      145,402
Interest expense...............................................      228,779       139,828       64,157
Preferred dividends of a subsidiary trust......................       19,500        19,500        7,854
Other (income) expense, net....................................       (1,836)        8,321       (4,906)
                                                                ----------    ----------   ----------
Income before provision for income taxes and extraordinary item      301,496       241,807       78,297
Provision for income taxes.....................................      125,121        99,141       43,499
                                                                ----------    ----------   ----------
Income before extraordinary item...............................      176,375       142,666       34,798
Extraordinary item, net of tax benefit of $14,255..............                                  21,337
                                                                ----------    ----------   ----------
Net income.....................................................   $  176,375    $  142,666   $   13,461
                                                                ==========    ==========   ==========
Earnings per share--basic:
 Income before extraordinary item..............................   $     2.48    $     2.00   $     0.53
 Extraordinary item, net.......................................                                    0.33
                                                                ----------    ----------   ----------
 Net income....................................................   $     2.48    $     2.00   $     0.20
                                                                ==========    ==========   ==========
Earnings per share--diluted:
 Income before extraordinary item..............................   $     1.89    $     1.53   $     0.48
 Extraordinary item, net.......................................                                    0.30
                                                                ----------    ----------   ----------
 Net income....................................................   $     1.89    $     1.53   $     0.18
                                                                ==========    ==========   ==========
</TABLE>

                            See accompanying notes.

                                      30
<PAGE>

                             UNITED RENTALS, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                       Series A        Series B
                                       Perpetual       Perpetual
                                      Convertible     Convertible
                                    Preferred Stock Preferred Stock    Common Stock
                                    --------------- --------------- ------------------

                                     Number          Number           Number           Additional             Compre-
                                       of              of               of               Paid-in   Retained   hensive
                                     Shares  Amount  Shares  Amount   Shares    Amount   Capital   Earnings   Income
                                    -------  ------ -------  ------ ----------  -----  ----------  --------  --------
                                                                  (In thousands, except share amounts)
<S>                                 <C>      <C>    <C>      <C>    <C>         <C>    <C>         <C>       <C>
Balance, December 31, 1997.........                                 56,239,375   $562  $  401,758  $ 44,068
  Comprehensive income:
   Net income......................                                                                  13,461  $ 13,461
   Other comprehensive income:
    Foreign currency translation
     adjustments...................                                                                              (281)
                                                                                                             --------
  Comprehensive income.............                                                                          $ 13,180
                                                                                                             ========
  Issuance of common stock and
   warrants........................                                 10,813,255    108     267,214
  Conversion of convertible notes..                                     30,947                461
  Cancellation of common stock.....                                   (137,600)    (1)          1
  Reclassification of Subchapter S
   accumulated earnings to paid-
   in-capital......................                                                        18,979   (18,979)
  Pooling-of-interests.............                                  1,456,997     15         (14)    1,795
  Exercise of common stock
   options.........................                                     25,025                619
  Subchapter S distributions of a
   pooled entity...................                                                                  (3,536)
                                                                    ----------  -----  ----------  --------
Balance, December 31, 1998.........                                 68,427,999    684     689,018    36,809
  Comprehensive income:
   Net income......................                                                                 142,666  $142,666
   Other comprehensive income:
    Foreign currency translation
     adjustments...................                                                                               598
                                                                                                             --------
  Comprehensive income.............                                                                          $143,264
                                                                                                             ========
  Issuance of Series A perpetual
   convertible preferred stock.....  300,000     $3                                       286,997
  Issuance of Series B perpetual
   convertible preferred stock.....                  150,000     $2                       143,798
  Issuance of common stock.........                                  2,291,568     23      64,678
  Exercise of common stock
   options.........................                                  1,331,528     14      32,477
                                    -------  ------ -------  ------ ----------  -----  ----------  --------
Balance, December 31, 1999.........  300,000      3  150,000      2 72,051,095    721   1,216,968   179,475
  Comprehensive income:
   Net income......................                                                                 176,375  $176,375
   Other comprehensive income:
    Foreign currency translation
     adjustments...................                                                                            (7,264)
                                                                                                             --------
  Comprehensive income.............                                                                          $169,111
                                                                                                             ========
  Issuance of common stock.........                                    773,320      8       9,867
  Exercise of common stock
   options.........................                                     26,307                421
  Shares repurchased and retired...                                 (1,785,015)   (18)    (30,932)
                                    -------  ------ -------  ------ ----------  -----  ----------  --------
Balance, December 31, 2000.........  300,000     $3  150,000     $2 71,065,707   $711  $1,196,324  $355,850
                                    =======  ====== =======  ====== ==========  =====  ==========  ========





                                     Accumulated
                                        Other
                                    Comprehensive
                                    (Loss) Income
                                    ------------

<S>                                 <C>
Balance, December 31, 1997.........
  Comprehensive income:
   Net income......................
   Other comprehensive income:
    Foreign currency translation
     adjustments...................      $  (281)

  Comprehensive income.............

  Issuance of common stock and
   warrants........................
  Conversion of convertible notes..
  Cancellation of common stock.....
  Reclassification of Subchapter S
   accumulated earnings to paid-
   in-capital......................
  Pooling-of-interests.............
  Exercise of common stock
   options.........................
  Subchapter S distributions of a
   pooled entity...................
                                    ------------
Balance, December 31, 1998.........         (281)
  Comprehensive income:
   Net income......................
   Other comprehensive income:
    Foreign currency translation
     adjustments...................          598

  Comprehensive income.............

  Issuance of Series A perpetual
   convertible preferred stock.....
  Issuance of Series B perpetual
   convertible preferred stock.....
  Issuance of common stock.........
  Exercise of common stock
   options.........................
                                    ------------
Balance, December 31, 1999.........          317
  Comprehensive income:
   Net income......................
   Other comprehensive income:
    Foreign currency translation
     adjustments...................       (7,264)

  Comprehensive income.............

  Issuance of common stock.........
  Exercise of common stock
   options.........................
  Shares repurchased and retired...
                                    ------------
Balance, December 31, 2000.........      $(6,947)
                                    ============
</TABLE>

                            See accompanying notes.

                                      31
<PAGE>

                             UNITED RENTALS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31
                                                                                  ------------------------------------
                                                                                     2000        1999         1998
                                                                                  ---------  -----------  -----------
                                                                                             (In thousands)
<S>                                                                               <C>        <C>          <C>
Cash Flows From Operating Activities:
Net income....................................................................... $ 176,375  $   142,666  $    13,461
Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation and amortization..................................................   414,432      343,508      212,311
  Gain on sales of rental equipment..............................................  (139,496)     (99,000)     (53,484)
  Gain on sales of businesses....................................................    (4,084)      (1,842)      (4,189)
  Write down of assets held for sale.............................................                               4,040
  Extraordinary item.............................................................                              35,592
  Deferred taxes.................................................................   109,280       41,820       27,345
Changes in operating assets and liabilities:
  Accounts receivable............................................................     8,613      (93,716)     (53,368)
  Inventory......................................................................    69,706       (6,544)      (6,392)
  Prepaid expenses and other assets..............................................   (29,848)       7,257       (3,526)
  Accounts payable...............................................................   (16,091)      64,453       39,251
  Accrued expenses and other liabilities.........................................   (76,166)      22,758        5,088
                                                                                  ---------  -----------  -----------
   Net cash provided by operating activities.....................................   512,721      421,360      216,129
                                                                                  ---------  -----------  -----------

Cash Flows From Investing Activities:
Purchases of rental equipment....................................................  (808,204)    (718,112)    (479,534)
Purchases of property and equipment..............................................  (153,770)    (123,649)     (84,617)
Proceeds from sales of rental equipment..........................................   347,678      235,678      119,620
Proceeds from sales of businesses................................................    19,246        6,521       10,640
Purchases of other companies.....................................................  (347,337)    (986,790)    (911,837)
Payments of contingent purchase price............................................   (16,266)      (8,216)      (3,956)
In-process acquisition costs.....................................................    (4,285)      (1,002)        (241)
                                                                                  ---------  -----------  -----------
   Net cash used in investing activities.........................................  (962,938)  (1,595,570)  (1,349,925)
                                                                                  ---------  -----------  -----------

Cash Flows From Financing Activities:
Proceeds from issuance of common stock, net of issuance costs....................                 64,701      207,005
Proceeds from the issuance of Series A Preferred, net of issuance costs..........                287,000
Proceeds from the issuance of Series B Preferred, net of issuance costs..........                143,800
Proceeds from debt...............................................................   456,202    1,083,616    1,263,637
Payments on debt.................................................................  (134,599)    (497,650)    (685,667)
Proceeds from sale-leaseback.....................................................   193,478       88,000       35,000
Proceeds from the issuance of redeemable convertible preferred securities........                             300,000
Payments of financing costs......................................................   (16,408)     (19,443)     (34,982)
Proceeds from the exercise of common stock options...............................       331       26,989          619
Subchapter S distributions of a pooled entity....................................                              (3,536)
Shares repurchased and retired...................................................   (30,950)
                                                                                  ---------  -----------  -----------
   Net cash provided by financing activities.....................................   468,054    1,177,013    1,082,076
Effect of foreign exchange rates.................................................    (7,264)         598         (281)
                                                                                  ---------  -----------  -----------
Net increase (decrease) in cash and cash equivalents.............................    10,573        3,401      (52,001)
Cash and cash equivalents at beginning of year...................................    23,811       20,410       72,411
                                                                                  ---------  -----------  -----------
Cash and cash equivalents at end of year......................................... $  34,384  $    23,811  $    20,410
                                                                                  =========  ===========  ===========
</TABLE>

                            See accompanying notes.

                                      32
<PAGE>

                             UNITED RENTALS, INC.

              CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)

<TABLE>
<CAPTION>
                                                                                   Year Ended December 31
                                                                             ----------------------------------
                                                                                2000       1999        1998
                                                                             ---------  ----------  ----------
                                                                                       (In thousands)
<S>                                                                          <C>        <C>         <C>
Supplemental disclosure of cash flow information:
Cash paid for interest...................................................... $ 248,763  $  124,285  $   43,157
Cash paid for taxes, net of refunds......................................... $  23,746  $   17,509  $   10,224

Supplemental schedule of non-cash investing and financing activities
The Company acquired the net assets and assumed certain liabilities of other
 companies as follows:
  Assets, net of cash acquired.............................................. $ 565,114  $1,468,567  $1,501,467
  Liabilities assumed.......................................................  (142,277)   (472,382)   (518,861)
  Less:
   Amounts paid in common stock and warrants................................   (10,000)                (60,304)
   Amounts paid through issuance of debt....................................   (65,500)     (9,395)    (10,465)
                                                                             ---------  ----------  ----------
Net cash paid............................................................... $ 347,337  $  986,790  $  911,837
                                                                             =========  ==========  ==========
</TABLE>




                            See accompanying notes.

                                      33
<PAGE>

                             UNITED RENTALS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

    United Rentals, Inc. is principally a holding company ("Holdings") and
conducts its operations primarily through its wholly owned subsidiary United
Rentals (North America), Inc. ("URI") and subsidiaries of URI. Holdings was
incorporated in July 1998 and became the parent of URI on August 5, 1998,
pursuant to the reorganization of the legal structure of URI described in Note
9. Prior to such reorganization, the name of URI was United Rentals, Inc.
References herein to the "Company" refer to Holdings and its subsidiaries, with
respect to periods following the reorganization, and to URI and its
subsidiaries, with respect to periods prior to the reorganization. As a result
of the reorganization, Holdings' primary asset is its sole ownership of all
issued and outstanding shares of common stock of URI. URI's various credit
agreements and debt instruments place restrictions on its ability to transfer
funds to its shareholder.

    The Company rents a broad array of equipment to a diverse customer base
that includes construction industry participants, industrial companies,
homeowners and others in the United States, Canada and Mexico. The Company also
engages in related activities such as selling rental equipment, acting as a
distributor for certain new equipment and selling related merchandise and
parts. The nature of the Company's business is such that short-term obligations
are typically met by cash flow generated from long-term assets. Therefore, the
accompanying balance sheets are presented on an unclassified basis.

    The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, giving retroactive effect for
the reorganization for all periods presented. All significant intercompany
accounts and transactions have been eliminated. The accompanying consolidated
financial statements for the year ended December 31, 1998 include the accounts
of certain acquisitions completed in 1998 that were accounted for as
poolings-of-interests, as described in Note 3.

2. Summary of Significant Accounting Policies

Cash Equivalents

    The Company considers all highly liquid instruments with a maturity of
three months or less when purchased to be cash equivalents.

Inventory

    Inventory consists of equipment, tools, parts, fuel and related supply
items. Inventory is stated at the lower of cost or market and is net of a
reserve for obsolescence and shrinkage of $15.5 million and $16.8 million at
December 31, 2000 and 1999, respectively. Cost is determined on either a
weighted average or first-in, first-out method.

Rental Equipment

    Rental equipment is recorded at cost and depreciated over the estimated
useful lives of the equipment using the straight-line method. The range of
estimated useful lives for rental equipment is two to ten years. Rental
equipment is depreciated to a salvage value of zero to ten percent of cost.
Ordinary repair and maintenance costs are charged to operations as incurred.

                                      34
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Property and Equipment

    Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method. The range of estimated
useful lives for property and equipment is two to thirty-nine years. Ordinary
repair and maintenance costs are charged to operations as incurred. Leasehold
improvements are amortized using the straight-line method over their estimated
useful lives or the remaining life of the lease, whichever is shorter.

Intangible Assets

    Intangible assets consist of the excess of cost over the fair value of
identifiable net assets of businesses acquired and non-compete agreements. The
non-compete agreements are being amortized on a straight-line basis for a
period ranging from three to eight years. The remaining intangible assets are
being amortized on a straight-line basis over forty years.

Long-Lived Assets

    Long-lived assets are recorded at the lower of amortized cost or fair
value. As part of an ongoing review of the valuation of long-lived assets, the
Company assesses the carrying value of such assets if facts and circumstances
suggest they may be impaired. If this review indicates that the carrying value
of these assets may not be recoverable, as determined by a nondiscounted cash
flow analysis over the remaining useful life, the carrying value would be
reduced to its estimated fair value. There have been no material impairments
recognized in these financial statements.

Derivative Financial Instruments

    Derivative financial instruments, which are periodically used by the
Company in the management of its interest rate and foreign currency exposures,
are accounted for on an accrual basis. Income and expense are recorded in the
same category as that arising from the related asset or liability. The fair
value of these agreements are not recognized in the financial statements.
Derivative financial instruments are not used for trading purposes.

Fair Value of Financial Instruments

    The carrying amounts reported in the balance sheets for accounts
receivable, accounts payable, accrued expenses and other liabilities
approximate fair value due to the immediate to short-term maturity of these
financial instruments. The fair values of the Credit Facility, Term Loan B,
Term Loan C, Term Loan D, receivables securitization and certain other debt are
determined using current interest rates for similar instruments as of December
31, 2000 and 1999 and approximate the carrying value of these financial
instruments due to the fact that the underlying instruments include provisions
to adjust interest rates to approximate fair market value. The estimated fair
value of the Company's other financial instruments at December 31, 2000 and
1999 are based upon available market information and are as follows:

<TABLE>
<CAPTION>
                                            2000                       1999
                                 -------------------------- --------------------------
                                 Carrying Amount Fair Value Carrying Amount Fair Value
                                 --------------- ---------- --------------- ----------
                                                    (In thousands)
<S>                              <C>             <C>        <C>             <C>
Redeemable convertible preferred
  securities....................        $300,000   $133,125        $300,000   $192,375
Senior subordinated notes.......         951,153    702,500         950,653    906,400
Other debt......................          94,086     94,086          73,745     73,745
</TABLE>

Revenue Recognition

    Revenue related to the sale of equipment and merchandise is recognized at
the time of delivery to, or pick-up by, the customer. Revenue related to rental
equipment is recognized over the contract term.

                                      35
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Advertising Expense

    The Company advertises primarily through trade publications and yellow
pages. Advertising costs are expensed as incurred and totaled $23.8 million,
$19.0 million and $13.5 million for the years ended December 31, 2000, 1999 and
1998, respectively.

Income Taxes

    The Company uses the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on the
differences between financial statement and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse. Recognition of deferred
tax assets is limited to amounts considered by management to be more likely
than not realized in future periods.

Use of Estimates

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Concentrations of Credit Risk

    Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
accounts receivable. The Company maintains cash and cash equivalents with high
quality financial institutions.

    Concentration of credit risk with respect to accounts receivable are
limited because a large number of geographically diverse customers make up the
Company's customer base. No single customer represents greater than 10% of
total accounts receivable. The Company controls credit risk through credit
approvals, credit limits, and monitoring procedures.

Stock-Based Compensation

    The Company accounts for its stock based compensation arrangements under
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees". Since stock options are granted by
the Company with exercise prices at or greater than the fair value of the
shares at the date of grant, no compensation expense is recognized.

Insurance

    The Company is insured for general liability, workers' compensation, and
group medical claims up to a specified claim and aggregate amounts (subject to
a deductible of one million dollars). Insured losses subject to this deductible
are accrued based upon the aggregate liability for reported claims incurred and
an estimated liability for claims incurred but not reported. These liabilities
are not discounted.

Impact of Recently Issued Accounting Standards

    In June 1999, the Financial Accounting Standards Board ("FASB'') issued
Statement of Financial Accounting Standards ("SFAS'') No. 137, "Accounting for
Derivative Instruments and Hedging

                                      36
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Activities--Deferral of the Effective Date of FASB Statement No. 133". This
standard delays the effective date of SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", for one year, to fiscal years beginning
after June 15, 2000. SFAS No. 133 establishes a new model for accounting for
derivatives and hedging activities. The adoption of SFAS No. 133 on January 1,
2001 is not expected to have a material effect on the Company's consolidated
financial position or results of operations.

    In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities". This standard amends
SFAS No. 133 and addresses a limited number of issues causing implementation
difficulties. The Company will adopt SFAS No. 138 on January 1, 2001 and it is
not expected to have a material effect on the Company's consolidated financial
position or results of operations.

    In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities--a
replacement of FASB Statement No. 125". This standard revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures. This standard is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001 and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000.
The adoption of SFAS No. 140 is not expected to have a material effect on the
Company's consolidated financial position or results of operations.

Reclassifications

    Certain prior year balances have been reclassified to conform to the 2000
presentation.

3. Acquisitions

Acquisitions Accounted for as Poolings-of-Interests

    On August 24, 1998, the Company issued 2,744,368 shares of its common stock
for all of the outstanding shares of common stock of Rental Tools.

    On September 24, 1998, the Company issued 1,456,997 shares of its common
stock for all of the outstanding shares of common stock of Wynne Systems, Inc.
This transaction was accounted for as a pooling-of-interests; however, this
transaction was not material to the Company's consolidated operations and
financial position and, therefore, the Company's financial statements have not
been restated for this transaction but have been combined beginning July 1,
1998.

    On September 29, 1998, a merger (the "Merger") of United Rentals, Inc. and
U.S. Rentals was completed. The Merger was effected by having a wholly owned
subsidiary of United Rentals, Inc. merge with and into U.S. Rentals. Following
the Merger, United Rentals, Inc. contributed the capital stock of U.S. Rentals
to URI, a wholly owned subsidiary of United Rentals, Inc. Pursuant to the
Merger, each outstanding share of common stock of U.S. Rentals was converted
into the right to receive 0.9625 of a share of common stock of United Rentals,
Inc. An aggregate of approximately 29.6 million shares of United Rentals, Inc.
common stock were issued in the Merger in exchange for the outstanding shares
of U.S. Rentals common stock.


                                      37
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    The table below shows the separate revenue and net income (loss) of the
Company prior to the above mergers ("United"), U.S. Rentals and Rental Tools
for periods prior to combination:

<TABLE>
<CAPTION>
                                                          U.S.   Rental
                                               United   Rentals   Tools  Combined
                                              --------  -------- ------- --------
                                                         (In thousands)
<S>                                           <C>       <C>      <C>     <C>
For the nine months ended September 30, 1998:
   Revenues.................................. $311,919  $451,101 $41,242 $804,262
   Net income (loss).........................  (53,178)   43,670   4,695   (4,813)
</TABLE>

Acquisitions Accounted for as Purchases

    The acquisitions completed during the years ended December 31, 2000, 1999
and 1998 include 53, 102 and 81 acquisitions, respectively, that were accounted
for as purchases. The results of operations of the businesses acquired in these
acquisitions have been included in the Company's results of operations from
their respective acquisition dates.

    During 2000, the Company purchased the outstanding stock and certain assets
of (i) Liddell Brothers Inc., in February, (ii) Safety Lites Sales and Leasing,
Inc., in March, (iii) Durante Equipment Corp., Inc., in June, (iv) Horizon High
Reach, Inc., in September, and (v) Wiese Planning & Engineering Inc., in
December. The aggregate initial consideration paid for these five acquisitions
that were accounted for as purchases was approximately $153.1 million and
consisted of $83.8 million in cash and 761,905 shares of common stock and $59.3
million in seller notes. In addition, the Company repaid or assumed outstanding
indebtedness of these companies acquired in the aggregate amount of
approximately $5.5 million.

    The aggregate initial consideration paid by the Company for other 2000
acquisitions that were accounted for as purchases was $210.2 million and
consisted of approximately $184.6 million in cash and $6.2 million in seller
notes. In addition, the Company repaid or assumed outstanding indebtedness of
the companies acquired in the other 2000 acquisitions in the aggregate amount
of $77.5 million.

    During 1999, the Company purchased the outstanding stock and certain assets
of (i) National Equipment Finance Company, in June, (ii) Mi-Jack Products, Inc.
and related entities, in May, (iii) Elmen Rent All, Inc., in June (iv) Forte,
Inc., in March, and (v) Arayco, Inc. in June. The aggregate initial
consideration paid for these five acquisitions that were accounted for as
purchases was approximately $275.4 million and consisted of $270.4 million in
cash and $5.0 million in seller notes. In addition, the Company repaid or
assumed outstanding indebtedness of these companies acquired in the aggregate
amount of approximately $99.8 million.

    The aggregate initial consideration paid by the Company for other 1999
acquisitions accounted for as purchases was $663.6 million and consisted of
approximately $659.2 million in cash and $4.4 million in seller notes. In
addition, the Company repaid or assumed outstanding indebtedness of the
companies acquired in the other 1999 acquisitions in the aggregate amount of
approximately $239.3 million.

    In January 1998 the Company purchased the outstanding stock and certain
assets of (i) Access Rentals, Inc. and Affiliate, (ii) the BNR Group of
Companies and (iii) Mission Valley Rentals, Inc. The aggregate initial
consideration paid by the Company for these three acquisitions that were
accounted for as purchases was $88.7 million and consisted of approximately
$81.4 million in cash and 370,231

                                      38
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

shares of common stock and warrants to purchase an aggregate of 30,000 shares
of the Company's common stock. In addition, the Company repaid or assumed
outstanding indebtedness of these three companies acquired in the aggregate
amount of $64.0 million.

    Also during 1998, the Company purchased the outstanding stock and certain
assets of (i) Power Rental Co., Inc., in June (ii) Equipment Supply Co., Inc.
and Affiliates in June and (iii) McClinch Inc. and Subsidiaries and McClinch
Equipment Services, Inc. in September. The aggregate initial consideration paid
by the Company for these three acquisitions that were accounted for as
purchases was $298.4 million and consisted of approximately $278.0 million in
cash and 496,063 shares of common stock. In addition, the Company repaid or
assumed outstanding indebtedness of these three companies acquired in the
aggregate amount of $155.4 million.

    The aggregate initial consideration paid by the Company for other 1998
acquisitions that were accounted for as purchases was $550.4 million and
consisted of approximately $507.3 million in cash and 1,083,997 shares of
common stock, and seller notes of $10.5 million. In addition, the Company
repaid or assumed outstanding indebtedness of the other companies acquired in
1998 in the aggregate amount of $211.8 million.

    The purchase prices for all acquisitions accounted for as purchases have
been allocated to the assets acquired and liabilities assumed based on their
respective fair values at their respective acquisition dates. However, the
Company has not completed its valuation of all of its purchases and,
accordingly, the purchase price allocations are subject to change when
additional information concerning asset and liability valuations are completed.

    The following table summarizes, on an unaudited pro forma basis, the
combined results of operations of the Company for the years ended December 31,
2000 and 1999 as though each acquisition described above was made on January 1,
for each of the periods.

<TABLE>
<CAPTION>
                                              2000       1999
                                           ---------- ----------
                                           (In thousands, except
                                              per share data)
                <S>                        <C>        <C>
                Revenues.................. $3,095,872 $2,956,543
                Net income................    182,342    154,084
                Basic earnings per share.. $     2.54 $     2.14
                                           ========== ==========
                Diluted earnings per share $     1.94 $     1.64
                                           ========== ==========
</TABLE>

    The unaudited pro forma results are based upon certain assumptions and
estimates which are subject to change. These results are not necessarily
indicative of the actual results of operations that might have occurred, nor
are they necessarily indicative of expected results in the future.

Merger-Related Expenses, Extraordinary Item and Other Costs

    The results of operations for the year ended December 31, 1999 include
pre-tax expenses related to a terminated tender offer totaling approximately
$18.2 million ($10.8 million after tax), primarily consisting of $8.3 million
in professional fees recorded in selling, general and administrative expense
and $9.9 million in financing commitment fees recorded in other (income)
expense, net.

    The results of operations for the year ended December 31, 1998, include
pre-tax expenses related to three acquisitions accounted for as
poolings-of-interests totaling approximately $47.2 million

                                      39
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

($33.2 million after-tax), consisting of (i) $18.5 million for investment
banking, legal, accounting services and other merger costs, (ii) $14.5 million
of expenses relating to the closing of duplicate facilities, (iii) $8.2 million
for employee severance and related matters, (iv) $2.1 million for the write
down of computer systems acquired through the U.S. Rentals merger and one of
the other acquisitions accounted for as a pooling-of-interests and (v) $3.9
million in other expenses.

    The Company recorded a pre-tax extraordinary item of $35.6 million ($21.3
million after-tax) in 1998. The charge related to the early extinguishment of
debt primarily related to the Merger with U.S. Rentals.

4. Rental Equipment

    Rental equipment consists of the following:

<TABLE>
<CAPTION>
                                    December 31
                              -----------------------
                                 2000        1999
                              ----------  ----------
                                  (In thousands)
<S>                           <C>         <C>
Rental equipment............. $2,281,994  $2,098,624
Less accumulated depreciation   (549,159)   (438,891)
                              ----------  ----------
Rental equipment, net........ $1,732,835  $1,659,733
                              ----------  ----------
</TABLE>

5. Property and Equipment

    Property and equipment consist of the following:

<TABLE>
<CAPTION>

                                                   December 31
                                               --------------------
                                                  2000      1999
                                               ---------  --------
                                                  (In thousands)
<S>                                            <C>        <C>
Land.......................................... $  53,612  $ 50,143
Buildings.....................................   104,925    91,934
Transportation equipment......................   228,265   139,944
Machinery and equipment.......................    36,587    31,484
Furniture and fixtures........................    56,109    46,507
Leasehold improvements........................    48,952    26,387
                                               ---------  --------
                                                 528,450   386,399
Less accumulated depreciation and amortization  (106,211)  (81,492)
                                               ---------  --------
Property and equipment, net................... $ 422,239  $304,907
                                               =========  ========
</TABLE>

6. Accrued Expenses and Other Liabilities

    Accrued expenses and other liabilities consist of the following:

<TABLE>
<CAPTION>
                          December 31
                       -----------------
                         2000     1999
                       -------- --------
                        (In thousands)
<S>                    <C>      <C>
Accrued profit sharing $ 39,485 $ 39,052
Accrued insurance.....   15,428   22,738
Accrued interest......   36,993   37,477
Other.................   44,319  110,662
                       -------- --------
                       $136,225 $209,929
                       ======== ========
</TABLE>

                                      40
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7. Debt

    Debt consists of the following:

<TABLE>
<CAPTION>
                                                                  December 31
                                                             ---------------------
                                                                2000       1999
                                                             ---------- ----------
                                                                (In thousands)
<S>                                                          <C>        <C>
Credit Facility, interest payable at a weighted average rate
  of 7.8% and 6.9% at December 31, 2000 and 1999,
  respectively.............................................. $  337,000 $  243,000
Term Loan B, interest payable at 8.89% and 8.71% at
  December 31, 2000 and 1999, respectively..................    246,875    248,750
Term Loan C, interest payable at 9.26% and 8.96% at
  December 31, 2000 and 1999, respectively..................    748,125    750,000
Term Loan D, interest payable at a weighted average rate of
  9.18% at December 31, 2000................................    198,128
Senior Subordinated Notes, interest payable semi-annually,
  (9 1/2% at December 31, 2000 and 1999)....................    200,000    200,000
Senior Subordinated Notes, interest payable semi-annually,
  (8.80% at December 31, 2000 and 1999).....................    201,153    200,653
Senior Subordinated Notes, interest payable semi-annually,
  (9 1/4% at December 31, 2000 and 1999)....................    300,000    300,000
Senior Subordinated Notes, interest payable semi-annually,
  (9% at December 31, 2000 and 1999)........................    250,000    250,000
Receivables securitization, interest payable at 7.44% at
  December 31, 2000.........................................    100,000
Other debt, interest payable at various rates ranging from
  4% to 11% and 6% to 12.3% at December 31, 2000 and
  1999, respectively, due through 2007......................     94,086     73,745

                                                             ---------- ----------
                                                             $2,675,367 $2,266,148

                                                             ========== ==========
</TABLE>

    Credit Facility. The Company has a credit facility (the "Credit Facility")
which enables URI to borrow up to $827.5 million on a revolving basis and
permits a Canadian subsidiary of URI (the "Canadian Subsidiary") to directly
borrow up to $40.0 million under the Credit Facility (provided that the
aggregate borrowings of URI and the Canadian Subsidiary do not exceed $827.5
million). Up to $50.0 million ($1.4 million outstanding at December 31, 2000)
of the Credit Facility is available in the form of letters of credit. The
agreement governing the Credit Facility requires that the aggregate commitment
shall be reduced on the last day of each calendar quarter, beginning September
30, 2001 and continuing through June 30, 2003, by an amount equal to $20.7
million. The Credit Facility terminates on September 26, 2003, at which time
all outstanding indebtedness is due.

    Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i) the
Federal Funds Rate plus 0.5% or (ii) Bank of America's reference rate) or (b)
the Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted eurodollar rate) plus a margin ranging from 1.200% to 1.875%
per annum. Borrowings by the Canadian Subsidiary under the Credit Facility
accrue interest, at such subsidiary's option, at either (x) the Prime Rate
(which is equal to Bank of America Canada's prime rate), (y) the BA Rate (which
is equal to Bank of America Canada's BA Rate) plus a margin ranging from 1.200%
to 1.875% per annum or (z) the Eurodollar Rate (which for borrowing by the
Canadian Subsidiary is equal

                                      41
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

to Bank of America Canada's reserve adjusted Eurodollar Rate) plus a margin
ranging from 1.200% to 1.875% per annum. If at any time an event of default (as
defined in the agreement governing the Credit Facility) exists, the interest
rate applicable to each loan will increase by 2% per annum. The Company is also
required to pay the banks an annual facility fee equal to 0.375% of the banks'
$827.5 million aggregate lending commitment under the Credit Facility (which
fee may be reduced to 0.300% for periods during which the Company maintains a
specified funded debt to cash flow ratio).

    The obligations of URI under the Credit Facility are (i) secured by
substantially all of its assets, the stock of its United States subsidiaries
and a portion of the stock of URI's Canadian subsidiaries and (ii) guaranteed
by Holdings and secured by the stock of URI. The obligations of the Canadian
Subsidiary under the Credit Facility are guaranteed by URI and secured by
substantially all of the assets of the Canadian Subsidiary and the stock of the
subsidiaries of the Canadian Subsidiary.

    The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a) maximum
leverage, (b) the ratio of senior debt to cash flow, (c) minimum interest
coverage ratio, (d) the ratio of funded debt to cash flow, and (e) the ratio of
senior debt to tangible assets. The agreements governing the Credit Facility
also contain various other covenants that restrict the Company's ability to,
among other things, (i) incur additional indebtedness, (ii) permit liens to
attach to its assets, (iii) pay dividends or make other restricted payments on
its common stock and certain other securities and (iv) make acquisitions unless
certain financial conditions are satisfied. In addition, the agreement
governing the Credit Facility (a) requires the Company to maintain certain
financial ratios and (b) provides that failure by any two of certain of the
Company's executive officers to continue to hold executive positions with the
Company for a period of 30 consecutive days constitutes an event of default
unless replacement officers satisfactory to the lenders are appointed.

    Term Loan B. URI obtained a $250.0 million term loan (the "Term Loan B")
from a group of financial institutions. The Term Loan B matures on June 30,
2005. Prior to maturity, quarterly installments of principal in the amount of
$0.6 million are due on the last day of each calendar quarter, commencing
September 30, 1999. The amount due at maturity is $235.6 million. The Term Loan
B accrues interest, at URI's option, at either (a) the Base Rate (as defined
above with respect to the Credit Facility) plus a margin of 0.375% per annum,
or (b) the Eurodollar Rate (as defined above with respect to the Credit
Facility for borrowings by the Company) plus a margin of 2.25% per annum. The
Term Loan B is secured pari passu with the Credit Facility and the agreement
governing the Term Loan B contains restrictive covenants substantially similar
to those provided under the Credit Facility.

    Term Loan C. URI obtained a $750.0 million term loan from a group of
financial institutions (the "Term Loan C"). The Term Loan C matures in June
2006. Prior to maturity, quarterly installments of principal in the amount of
$1.9 million are due on the last day of each calendar quarter, commencing
September 30, 2000. The amount due at maturity is $706.3 million. The Term Loan
C accrues interest, at URI's option, at either (a) the Base Rate (as defined
above with respect to the Credit Facility) plus a margin of 0.625% per annum,
or (b) the Eurodollar Rate (as defined above with respect to the Credit
Facility) plus a margin of 2.50% per annum. The Term Loan C is secured pari
passu with the Credit Facility and the agreement governing the Term Loan C
contains restrictive covenants substantially similar to those provided under
the Credit Facility.

    Term Loan D. URI obtained a $200.0 million term loan from a financial
institution (the "Term Loan D"). The Term Loan D matures in June 2006. Prior to
maturity, quarterly installments of principal

                                      42
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

are due on the last day of each calendar quarter, in the amount of $0.25
million on September 30, 2000 and in the amount of $0.5 million commencing
December 31, 2000 to maturity. The amount due at maturity is $188.5 million.
The Term Loan D accrues interest, at URI's option, at either (a) the Base Rate
(as defined above with respect to the Credit Facility) plus a margin of 0.625%
per annum, or (b) the Eurodollar Rate (as defined above with respect to the
Credit Facility) plus a margin of 2.5% per annum. The Term Loan D is secured
pari passu with the Credit Facility, and the agreement governing the Term Loan
D contains restrictive covenants substantially similar to those provided under
the Credit Facility.

    At December 31, 2000, the Company had interest rate protection in the form
of swap agreements with an aggregate notional amount of $200.0 million. The
effect of these agreements is to limit the interest rate exposure to 8.75% on
$200.0 million of Term Loan B. The overall weighted average interest rate on
the Term Loan B was 8.80% at December 31, 2000. While it is not the Company's
intention to terminate the interest rate swap agreements, the fair values were
estimated by obtaining quotes from brokers which represented the amounts that
the Company would receive or pay if the agreements were terminated. These fair
values indicated that termination of the agreements at December 31, 2000, would
have resulted in a pretax loss of $4.3 million.

    9 1/2% Senior Subordinated Notes. URI issued $200.0 million aggregate
principal amount of 9 1/2% senior subordinated notes, (the "9 1/2 Notes") which
are due June 1, 2008. The 9 1/2% Notes are unsecured. URI may, at its option,
redeem the 9 1/2% Notes on or after June 1, 2003 at specified redemption prices
which range from 104.75% in 2003 to 100.0% in 2006 and thereafter. In addition,
on or prior to June 1, 2001, URI may, at its option, use the proceeds of a
public equity offering to redeem up to 35% of the outstanding 9 1/2% Notes, at
a redemption price of 109.5%. The indenture governing the 9 1/2% Notes contains
certain restrictive covenants, including (i) limitations on additional
indebtedness, (ii) limitations on restricted payments, (iii) limitations on
liens, (iv) limitations on dividends and other payment restrictions, (v)
limitations on preferred stock of certain subsidiaries, (vi) limitations on
transactions with affiliates, (vii) limitations on the disposition of proceeds
of asset sales and (viii) limitations on the ability of the Company to
consolidate, merge or sell all or substantially all of its assets.

    8.80% Senior Subordinated Notes. URI issued $205.0 million aggregate
principal amount of 8.80% senior subordinated notes, (the "8.80% Notes") which
are due August 15, 2008. The 8.80% Notes are unsecured. URI may, at its option,
redeem the 8.80% Notes on or after August 15, 2003 at specified redemption
prices which range from 104.4% in 2003 to 100.0% in 2006 and thereafter. In
addition, on or prior to August 15, 2001, URI may, at its option, use the
proceeds of a public equity offering to redeem up to 35% of the outstanding
8.80% Notes, at a redemption price of 108.8%. The indenture governing the 8.80%
Notes contains restrictions substantially similar to those applicable to the 9
1/2% Notes.

    9 1/4% Senior Subordinated Notes. URI issued $300.0 million aggregate
principal amount of 9 1/4% senior subordinated notes, (the "9 1/4% Notes")
which are due January 15, 2009. The 9 1/4% Notes are unsecured. URI may, at its
option, redeem the 9 1/4% Notes on or after January 15, 2004 at specified
redemption prices which range from 104.625% in 2004 to 100.0% in 2007 and
thereafter. In addition, on or prior to January 15, 2002, URI may, at its
option, use the proceeds of a public equity offering to redeem up to 35% of the
outstanding 9 1/4% Notes, at a redemption price of 109.25%. The indenture
governing the 9 1/4% Notes contains restrictions substantially similar to those
applicable to the 9 1/2% Notes.

                                      43
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


    9% Senior Subordinated Notes. URI issued $250.0 million aggregate principal
amount of 9% senior subordinated notes, (the "9% Notes") which are due April 1,
2009. The 9% Notes are unsecured. URI may, at its option, redeem the 9% Notes
on or after April 1, 2004 at specified redemption prices which range from
104.5% in 2004 to 100.0% in 2007 and thereafter. In addition, on or prior to
April 1, 2002, URI may, at its option, use the proceeds of a public equity
offering to redeem up to 35% of the outstanding 9% Notes, at a redemption price
of 109.0%. The indenture governing the 9% Notes contains restrictions
substantially similar to those applicable to the 9 1/2% Notes.

    Receivables Securitization. In December 2000, the Company obtained $100.0
million through the securitization of certain of its accounts receivable. In
the securitization, the Company transferred $203.0 million of its accounts
receivable to a special purpose subsidiary (the "SPV") which in turn pledged
those receivables to secure $100.0 million of borrowings that the SPV incurred
to finance its acquisition of those receivables from the Company. These
borrowings accrue interest at Credit Lyonnais' blended commercial paper rate
plus a margin of 0.75% per annum. These borrowings are an obligation of the SPV
and not of Holdings or URI, and the lenders' recourse in respect of the
borrowings is generally limited to collections that the SPV receives on the
receivables. Collections on the receivables are used to service the borrowings.
Subject to certain conditions, collections from the receivables may also be
used by the SPV from time to time until December 2003 to acquire additional
accounts receivables from the Company that the SPV will pledge to the lenders
to secure the borrowings.

    Maturities of the Company's debt for each of the next five years at
December 31, 2000 are as follows (In thousands):

<TABLE>
<CAPTION>
<S>        <C>
2001...... $   33,787
2002......     29,512
2003......    464,498
2004......     33,984
2005......    250,043
Thereafter  1,863,543
</TABLE>

                                      44
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


8. Income Taxes

    The provision for historical federal and state income taxes is as follows:

<TABLE>
<CAPTION>
                                          Year ended December 31
                                         -------------------------
                                           2000    1999     1998
                                         -------- ------- -------
                                              (In thousands)
              <S>                        <C>      <C>     <C>
              Historical:
                 Domestic federal:
                     Current............ $ 10,419 $39,643 $14,291
                     Deferred...........   97,756  37,598  21,047
                                         -------- ------- -------
                                          108,175  77,241  35,338
                 Domestic state:
                     Current............    3,587  10,405   1,067
                     Deferred...........    6,815   3,437   7,020
                                         -------- ------- -------
                                           10,402  13,842   8,087
                                         -------- ------- -------
                     Total domestic.....  118,577  91,083  43,425

                 Foreign federal:
                     Current............    1,061   4,917     519
                     Deferred...........    3,590     465    (492)
                                         -------- ------- -------
                                            4,651   5,382      27
                 Foreign provincial:
                     Current............      774   2,356     277
                     Deferred...........    1,119     320    (230)
                                         -------- ------- -------
                                            1,893   2,676      47
                                         -------- ------- -------
                     Total foreign......    6,544   8,058      74
                                         -------- ------- -------
                                         $125,121 $99,141 $43,499
                                         ======== ======= =======
</TABLE>

    A reconciliation of the provision for income taxes and the amount computed
by applying the statutory federal income tax rate of 35% to income before
provision for income taxes is as follows:

<TABLE>
<CAPTION>
                                                              Year ended December 31
                                                            --------------------------
                                                              2000     1999     1998
                                                            -------- -------  -------
                                                                  (In thousands)
<S>                                                         <C>      <C>      <C>
Computed tax rate at statutory tax rate.................... $105,524 $84,632  $27,404
State income taxes, net of federal tax benefit.............    6,762   8,997    4,177
Non-deductible expenses....................................    9,992   6,265    7,400
Provision for deferred taxes of Subchapter S Corporation at
  time of pooling..........................................                     4,750
Other......................................................    2,843    (753)    (232)
                                                            -------- -------  -------
                                                            $125,121 $99,141  $43,499
                                                            ======== =======  =======
</TABLE>

                                      45
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


    The components of deferred income tax assets (liabilities) are as follows:

<TABLE>
<CAPTION>
                                                 December 31
                                            ---------------------
                                               2000       1999
                                            ---------  ---------
                                               (In thousands)
<S>                                         <C>        <C>
Property and equipment..................... $(298,058) $(175,180)
Intangibles................................   (32,518)   (13,188)
Reserves and allowances....................    37,460     48,577
Net operating loss and credit carryforwards    84,257     56,266
Other......................................     2,616      2,296

                                            ---------  ---------
                                            $(206,243) $ (81,229)

                                            =========  =========
</TABLE>

    The current and deferred tax assets and liabilities at December 31, 2000
include the effects of certain reclassifications related to differences between
the income tax provisions and tax returns for prior years. These
reclassifications had no effect on net income.

    For financial reporting purposes, income before income taxes and
extraordinary items for the Company's foreign subsidiaries was $15.6 million
and $19.9 million for the years ended December 31, 2000 and 1999, respectively.
At December 31, 2000 and 1999, unremitted earnings of foreign subsidiaries were
approximately $22.9 million and $13.8 million, respectively. Since it is the
Company's intention to indefinitely reinvest these earnings, no United States
taxes have been provided. Determination of the amount of unrecognized deferred
tax liability on these unremitted taxes is not practicable.

    The Company has net operating loss carryforwards ("NOL's") of $138.2
million for federal income tax purposes that expire through 2018.

9. Holding Company Reorganization

    URI was formerly named United Rentals, Inc. On August 5, 1998, a
reorganization was effected pursuant to which (i) URI became a wholly owned
subsidiary of Holdings, a newly formed holding company, (ii) the name of URI
was changed from United Rentals, Inc. to United Rentals (North America), Inc.,
(iii) the name of the new holding company became United Rentals, Inc., (iv) the
outstanding common stock of URI was automatically converted, on a
share-for-share basis, into common stock of Holdings and (v) the common stock
of Holdings commenced trading on the New York Stock Exchange under the symbol
"URI" instead of the common stock of URI. The purpose of the reorganization was
to facilitate certain financings. The business operations of the Company did
not change as a result of the new legal structure. The stockholders of Holdings
have the same rights, privileges and interests with respect to Holdings as they
had with respect to URI immediately prior to the reorganization.

10. Company-Obligated Mandatorily Redeemable Convertible Preferred Securities
    of a Subsidiary Trust

    In August 1998, a subsidiary trust (the "Trust") of Holdings issued and
sold in a private offering (the "Preferred Securities Offering") $300.0 million
of 30 year, 6 1/2% Convertible Quarterly Income Preferred Securities (the
"Preferred Securities"). The net proceeds from the Preferred Securities
Offering were approximately $290.0 million. The Trust used the proceeds from
the Preferred Securities Offering to purchase 6 1/2% convertible subordinated
debentures due 2028 (the "Debentures") from Holdings which resulted in Holdings
receiving all of the net proceeds of the Preferred Securities Offering.
Holdings in turn contributed the net proceeds of the Preferred Securities
Offering to URI. The Preferred Securities are non-voting securities, carry a
liquidation value of $50 per security and are

                                      46
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

convertible into the Company's common stock at an initial rate of 1.146 shares
per security (equivalent to an initial conversion price of $43.63 per share).
They are convertible at any time at the holders' option and are redeemable, at
the Company's option, after three years, subject to certain conditions.

    Holders of the Preferred Securities are entitled to preferential cumulative
cash distributions from the Trust at an annual rate of 6 1/2% of the
liquidation value, accruing from the original issue date and payable quarterly
in arrears beginning February 1, 1999. The distribution rate and dates
correspond to the interest rate and payments dates on the Debentures. Holdings
may defer interest payments on the Debentures for up to twenty consecutive
quarters, but not beyond the maturity date of the Debentures. If interest
payments on the Debentures are deferred, so are the payments on the Preferred
Securities. Under this circumstance, Holdings will be prohibited from paying
dividends on any of its capital stock or making payments with respect to its
debt that rank pari passu with or junior to the Debentures.

    Holdings has executed a guarantee with regard to payment of the Preferred
Securities to the extent that the Trust has sufficient funds to make the
required payments.

11. Capital Stock

    Series A Perpetual Convertible Preferred Stock. On January 7, 1999,
Holdings sold 300,000 shares of its Series A Perpetual Convertible Preferred
Stock ("Series A Preferred"). Subject to certain thresholds related to the
aggregate number of shares issuable upon conversion of Series A Preferred, the
holders of the Series A Preferred, voting separately as a single class, have
the right, on an as-converted basis, to elect up to two directors. Currently,
holders of the Series A Preferred may elect two directors. Except for the
election of directors, the holders of the Series A Preferred have the same
voting rights as those belonging to holders of Holdings common stock. The net
proceeds from the sale of the Series A Preferred were approximately $287.0
million. Holdings contributed such net proceeds to URI. The Series A Preferred
is convertible into 12,000,000 shares of Holdings common stock at $25 per share
based upon a liquidation preference of $1,000 per share of Series A Preferred,
subject to adjustment. The Series A Preferred has no stated dividend. However,
in the event Holdings declares or pays any dividends on, or distributions of,
its common stock, it must (subject to certain exceptions) also declare and pay
to the holders of Series A Preferred the dividends and distributions which
would have been declared and paid upon conversion of the Series A Preferred.

    Series B Perpetual Convertible Preferred Stock. On September 30, 1999,
Holdings sold 150,000 shares of its Series B Perpetual Convertible Preferred
Stock ("Series B Preferred"). The Series B Preferred is divided into two
classes designated as Class B-1 and Class B-2. Other than voting rights, the
classes are substantially the same. The holders of the 105,252 shares of Class
B-1 are entitled to the same voting rights, on an as-converted basis, as those
belonging to holders of Holdings common stock. The holders of the 44,748 shares
of Class B-2 have no such voting rights. The net proceeds from the sale of the
Series B Preferred were approximately $143.8 million. Holdings contributed such
net proceeds to URI. The Series B Preferred is convertible into 5,000,000
shares of Holding's common stock at $30 per share based upon a liquidation
preference of $1,000 per share of Series B Preferred, subject to adjustment.
The Series B Preferred has no stated dividend. However, in the event Holdings
declares or pays any dividends on, or distributions of, its common stock, it
must (subject to certain exceptions) also declare and pay to the holders of
Series B Preferred the dividends and distributions which would have been
declared and paid upon conversion of the Series B Preferred.

                                      47
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


    Warrants. As of December 31, 2000 there are outstanding warrants to
purchase an aggregate of 7,094,296 shares of common stock. The weighted average
exercise price of the warrants is $11.76 per share. All warrants are currently
exercisable and may be exercised at any time through 2009.

    Common Stock. On March 9, 1999, Holdings completed a public offering of
2,290,000 shares of common stock. The net proceeds to the Company from this
offering were approximately $64.7 million (after deducting underwriting
discounts and offering expenses). Holdings contributed such net proceeds to
URI. During 2000, the Company approved a share repurchase program to acquire up
to $200 million of its issued and outstanding common stock. Share repurchases
under the program may be made from time to time, continuing through May 2002.
During 2000, the Company repurchased and retired 1,785,015 shares of common
stock.

    1997 Stock Option Plan. The Company's 1997 Stock Option Plan provides for
the granting of options to purchase not more than an aggregate of 5,000,000
shares of common stock. Some or all of such options may be "incentive stock
options" within the meaning of the Internal Revenue Code. All officers,
directors and employees of the Company and other persons who perform services
on behalf of the Company are eligible to participate in this plan. Each option
granted pursuant to this plan must provide for an exercise price per share that
is at least equal to the fair market value per share of common stock on the
date of grant. No options may be granted under this plan after August 31, 2007.
As of December 31, 2000 and 1999, options to purchase an aggregate of 4,950,536
shares and 4,731,183 shares of common stock, respectively, were outstanding
under this plan. The exercise price of each option, the period during which
each option may be exercised and other terms and conditions of each option are
determined by the Board of Directors (or by a committee appointed by the Board
of Directors).

    1998 Stock Option Plan. The Company's 1998 Stock Option Plan provides for
the granting of options to purchase not more than an aggregate of 4,200,000
shares of common stock. Some or all of the options issued under the 1998 Stock
Option Plan may be "incentive stock options" within the meaning of the Internal
Revenue Code. All officers and directors of the Company and its subsidiaries
are eligible to participate in the 1998 Stock Option Plan. Each option granted
pursuant to the 1998 Stock Option Plan must provide for an exercise price per
share that is at least equal to the fair market value per share of common stock
on the date of grant. No options may be granted under the 1998 Stock Option
Plan after August 20, 2008. As of December 31, 2000 and 1999, options to
purchase an aggregate of 4,200,000 shares of common stock were outstanding
pursuant to this plan to executive officers and directors. The exercise price
of each option, the period during which each option may be exercised and other
terms and conditions of each option are determined by the Board of Directors
(or by a committee appointed by the Board of Directors).

    1998 Supplemental Stock Option Plan. The Company has adopted a stock option
plan pursuant to which options, for up to an aggregate of 5,600,000 shares of
common stock, may be granted to employees who are not officers or directors and
to consultants and independent contractors who perform services for the Company
or its subsidiaries. As of December 31, 2000 and 1999, options to purchase an
aggregate of 5,373,509 shares and 4,140,384 shares of common stock,
respectively, were outstanding pursuant to this plan. The exercise price of
each option, the period during which each option may be exercised and other
terms and conditions of each option are determined by the Board of Directors
(or by a committee appointed by the Board of Directors).

    1997 Performance Award Plan. Effective February 20, 1997, U.S. Rentals
adopted the 1997 Performance Award Plan under which stock options and other
awards could be granted to key employees and directors at prices and terms
established by U.S. Rentals at the date of grant. The options expire in 2007.
As a result of the Merger, all outstanding options to purchase shares of U.S.

                                      48
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Rentals common stock became fully vested and were converted into options to
purchase the Company's common stock. As of December 31, 2000 and 1999, options
to purchase an aggregate of 2,572,050 shares and 2,581,675 shares of common
stock , respectively, were outstanding pursuant to this plan.

   A summary of the transactions within the Company's stock option plans
follows:

<TABLE>
<CAPTION>
                                             Weighted
                                             Average
                                             Exercise
                                   Shares     Price
                                 ----------  --------
<S>                              <C>         <C>
Outstanding at January 1, 1998..  4,825,699    $19.52
   Granted......................  9,453,718     19.78
   Exercised....................    (25,025)    20.78
   Canceled.....................   (209,578)    22.94
                                 ----------  --------

Outstanding at December 31, 1998 14,044,814     19.60
   Granted......................  3,092,462     26.77
   Exercised.................... (1,331,528)    20.74
   Canceled.....................   (152,506)    26.70
                                 ----------  --------

Outstanding at December 31, 1999 15,653,242     20.86
   Granted......................  1,921,125     16.56
   Exercised....................    (26,307)    16.91
   Canceled.....................   (451,965)    27.03
                                 ----------  --------
Outstanding at December 31, 2000 17,096,095    $20.23
                                 ==========  ========
Exercisable at December 31, 2000 11,906,938    $19.58
                                 ==========  ========
</TABLE>

<TABLE>
<CAPTION>
                               Options Outstanding        Options Exercisable
                         -------------------------------- --------------------
                                      Weighted
                                       Average   Weighted             Weighted
                                      Remaining  Average              Average
                           Amount    Contractual Exercise   Amount    Exercise
Range of Exercise Prices Outstanding    Life      Price   Exercisable  Price
------------------------ ----------- ----------- -------- ----------- --------
<S>                      <C>         <C>         <C>      <C>         <C>
$10.00 - $15.00.........   4,722,077   7.7 years   $12.38   4,317,980   $12.30
 15.01 -  20.00.........   1,995,359   9.0 years    16.79     293,787    18.72
 20.01 -  25.00.........   7,146,663   7.1 years    21.77   5,543,191    21.64
 25.01 -  30.00.........   1,821,230   8.2 years    27.33     888,666    27.27
 30.01 -  50.00.........   1,410,766   7.4 years    34.67     863,314    35.08
                         -----------                      -----------
                         17,096,095.   7.6 years    20.23  11,906,938    19.58
                         ===========                      ===========
</TABLE>

    The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees" in accounting for stock-based employee compensation arrangements
whereby no compensation cost related to stock options is deducted in
determining net income. Had compensation cost for the Company's stock option
plans been determined pursuant to SFAS No. 123, "Accounting for Stock-Based
Compensation", the Company's net income and earnings per share would have
differed. The weighted average fair value of options granted was $7.70, $10.99
and $11.94 during 2000, 1999 and 1998, respectively. The fair value is
estimated on the date of grant using the Black-Scholes option pricing model
which uses subjective assumptions which can materially affect fair value
estimates and, therefore, does not necessarily provide a single measure of fair
value of options. Using the Black-Scholes option pricing model and a risk-free
interest rate average of 5.15%, 6.29% and 4.6% in 2000,

                                      49
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

1999 and 1998, respectively, a volatility factor for the market price of the
Company's common stock of 69%, 52% and 85% in 2000, 1999 and 1998,
respectively, and a weighted-average expected life of options of approximately
three years in 2000, 1999 and 1998, the Company's net income (loss), basic
earnings (loss) per share and diluted earnings (loss) per share would have been
$156.4 million, $2.20 and $1.69, respectively, for the year ended December 31,
2000, $104.3 million, $1.46 and $1.12, respectively, for the year ended
December 31, 1999, and $(13.3 million), $(0.20) and $(0.20), respectively, for
the year ended December 31, 1998. For purposes of these pro forma disclosures,
the estimated fair value of options is amortized over the options' vesting
period. Since the number of options granted and their fair value may vary
significantly from year to year, the pro forma compensation expense in future
years may be materially different.

    At December 31, 2000 there are (i) 7,094,296 shares of common stock
reserved for the exercise of warrants, (ii) 17,338,256 shares of common stock
reserved for issuance pursuant to options granted and that may be granted in
the future under the Company's stock option plans, (iii) 6,875,580 shares of
common stock reserved for the issuance of outstanding preferred securities of a
subsidiary trust, (iv) 17,000,000 shares of common stock reserved for the
issuance of Series A and Series B preferred stock and (v) 232,586 shares of
common stock reserved for the conversion of convertible debt.

                                      50
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


12. Earnings Per Share

    The following table sets forth the computation of historical basic and
diluted earnings per share:

<TABLE>
<CAPTION>
                                                    Year Ended December 31
                                              -----------------------------------
                                                 2000        1999        1998
                                              ----------- ----------- -----------
                                                (In thousands, except share and
                                                        per share data)
<S>                                           <C>         <C>         <C>
Numerator:
 Income before extraordinary item............ $   176,375 $   142,666 $    34,798
 Plus: preferred dividends of a subsidiary
   trust, net of taxes.......................      11,406
                                              ----------- ----------- -----------
 Income available to common stockkholders.... $   187,781 $   142,666 $    34,798
                                              =========== =========== ===========
Denominator:
 Denominator for basic earnings per share-
   weighted-average shares...................  71,069,174  71,353,127  66,225,492
 Effect of dilutive securities:
   Employee stock options....................   1,517,015   4,651,237   2,641,194
   Warrants..................................   2,791,387   3,978,536   4,208,434
   Series A Preferred........................  12,000,000  11,802,740
   Series B Preferred........................   5,000,000   1,250,000
   Company-obligated mandatorily
     redeemable convertible preferred
     securities of a subsidiary trust........   6,876,003
                                              ----------- ----------- -----------
 Denominator for dilutive earnings per share-
   adjusted weighted-average shares..........  99,253,579  93,035,640  73,075,120
                                              =========== =========== ===========
Earnings per share-basic:
 Income before extraordinary item............ $      2.48 $      2.00 $      0.53
 Extraordinary item, net.....................                                0.33
                                              ----------- ----------- -----------
 Net income.................................. $      2.48 $      2.00 $      0.20
                                              =========== =========== ===========
Earnings per share-diluted:
 Income before extraordinary item............ $      1.89 $      1.53 $      0.48
 Extraordinary item, net.....................                                0.30
                                              ----------- ----------- -----------
 Net income.................................. $      1.89 $      1.53 $      0.18
                                              =========== =========== ===========
</TABLE>

                                      51
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13. Commitments and Contingencies

Operating Leases

    The Company leases rental equipment, real estate and certain office
equipment under operating leases. Certain real estate leases require the
Company to pay maintenance, insurance, taxes and certain other expenses in
addition to the stated rentals. Future minimum lease payments, by year and in
the aggregate, for noncancellable operating leases with initial or remaining
terms of one year or more are as follows at December 31, 2000:

<TABLE>
<CAPTION>
             Real    Rental     Other
            Estate  Equipment Equipment
            Leases   Leases    Leases
           -------- --------- ---------
                  (In thousands)
<S>        <C>      <C>       <C>
2001...... $ 51,815  $ 98,158   $17,318
2002......   46,464    93,864    15,372
2003......   42,739    77,597    12,076
2004......   39,706    55,889    10,827
2005......   34,153    43,352     2,487
Thereafter  108,175    34,830
           -------- --------- ---------
           $323,052  $403,690   $58,080
           ======== ========= =========
</TABLE>

    The Company was the seller-lessee in sale-leaseback transactions in 2000
where it sold rental equipment for aggregate proceeds of $218.8 million, in
1999 where it sold rental equipment for aggregate proceeds of $88.0 million and
in 1998 where it sold rental equipment for aggregate proceeds of $35.0 million.
For the 2000 transactions, the Company agreed to lease back the rental
equipment over periods ranging from eight months to five years. In connection
with the 2000 transactions, the Company recognized a gain of $12.5 million and
recorded deferred gains on the sales of approximately $4.0 million. For the
1999 transaction, the Company agreed to lease back the rental equipment over a
five year period beginning December 1999 and will recognize a deferred gain on
the sale of approximately $6.3 million over the five year period. For the 1998
transaction, the Company agreed to lease back the rental equipment over a five
year period beginning December 1998 and will recognize a deferred gain on the
sale of approximately $0.6 million over the five year period. The future
payments under these leases are included in the table above.

    Rent expense under non-cancelable operating leases totaled $137.3 million,
$65.5 million and $20.5 million for the years ended December 31, 2000, 1999 and
1998, respectively. The Company's real estate leases provide for varying terms
and include 24 leases that are on a month-to-month basis and 42 leases that
provide for a remaining term of less than one year and do not provide a renewal
option.

Employee Benefit Plans

    The Company currently sponsors one defined contribution 401(k) retirement
plan which is subject to the provisions of ERISA. The Company also sponsors a
deferred profit sharing plan for the benefit of the full time employees of its
Canadian subsidiaries. Under these plans, the Company matches a percentage of
the participants contributions up to a specified amount. Company contributions
to the plans were $6.2 million, $4.6 million and $1.0 million for the years
ended December 31, 2000, 1999 and 1998, respectively.

Legal Matters

    The Company is party to legal proceedings and potential claims arising in
the ordinary course of its business. In the opinion of management, the Company
has adequate legal defenses, reserves, or

                                      52
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

insurance coverage with respect to these matters so that the ultimate
resolution will not have a material adverse effect on the Company's financial
position, results of operations, or cash flows. The Company had accrued $7.6
million and $13.7 million at December 31, 2000 and 1999, respectively, to cover
the uninsured portion of possible costs arising from these pending claims and
other potential unasserted claims.

Environmental Matters

    The Company and its operations are subject to various laws and related
regulations governing environmental matters. Under such laws, an owner or
lessee of real estate may be liable for the costs of removal or remediation of
certain hazardous or toxic substances located on or in, or emanating from, such
property, as well as investigation of property damage. The Company incurs
ongoing expenses associated with the removal of underground storage tanks and
the performance of appropriate remediation at certain of its locations. The
Company believes that such removal and remediation will not have a material
adverse effect on the Company's financial position, results of operations, or
cash flows.

14. Segment Information

    The Company operates in one industry segment consisting of the rental and
sales of equipment and related merchandise and parts. The Company's operations
are managed as one segment, or strategic unit, because it offers similar
products and services in similar markets and the factors determining strategic
decisions are comparable for all products and services.

    The Company operates in the United States, Canada and Mexico. Revenues are
attributable to countries based upon the location of the customers. Geographic
area information for the years ended December 31, 2000, 1999 and 1998 is as
follows:

<TABLE>
<CAPTION>
                                                    Year ended December 31
                                               --------------------------------
                                                  2000       1999       1998
                                               ---------- ---------- ----------
                                                        (In thousands)
<S>                                            <C>        <C>        <C>
Revenues from external customers
 Domestic..................................... $2,753,266 $2,086,808 $1,168,071
 Foreign......................................    165,595    146,820     52,211
                                               ---------- ---------- ----------
Total revenues from external customers........ $2,918,861 $2,233,628 $1,220,282
                                               ========== ========== ==========

Rental equipment, net
 Domestic..................................... $1,604,191 $1,537,199 $1,099,539
 Foreign......................................    128,644    122,534     43,467
                                               ---------- ---------- ----------
Total consolidated rental equipment, net...... $1,732,835 $1,659,733 $1,143,006
                                               ========== ========== ==========

Property and equipment, net
 Domestic..................................... $  405,873 $  285,456 $  180,777
 Foreign......................................     16,366     19,451      4,734
                                               ---------- ---------- ----------
Total consolidated property and equipment, net $  422,239 $  304,907 $  185,511
                                               ========== ========== ==========

Intangible assets, net
 Domestic..................................... $2,092,882 $1,740,326 $  867,090
 Foreign......................................    134,126    123,046     54,975
                                               ---------- ---------- ----------
Total consolidated intangible assets, net..... $2,227,008 $1,863,372 $  922,065
                                               ========== ========== ==========
</TABLE>

                                      53
<PAGE>

                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


15. Quarterly Financial Information (Unaudited)

Selected Financial Data

    The following table of quarterly financial information has been prepared
from unaudited financial statements of the Company, and reflects adjustments
which are, in the opinion of management, necessary for a fair presentation of
the interim periods presented.

<TABLE>
<CAPTION>
                                        First    Second    Third    Fourth
                                       Quarter   Quarter  Quarter  Quarter
                                      --------  --------  -------- --------
                                      (In thousands, except per share data)
<S>                                   <C>       <C>       <C>      <C>
For the year ended December 31, 2000:
 Total revenues......................  $578,962  $729,946 $859,033 $750,920
 Gross profit........................   205,984   271,798  340,704  270,084
 Net income..........................    17,411    47,199   75,391   36,374
 Basic earnings per share............  $   0.24  $   0.66 $   1.07 $   0.51
 Diluted earnings per share..........      0.19      0.51     0.79     0.40

For the year ended December 31, 1999:
 Total revenues......................  $392,309  $503,662 $668,618 $669,039
 Gross profit........................   133,991   184,064  256,979  249,884
 Net income..........................    16,225    25,886   56,208   44,347
 Basic earnings per share............  $   0.24  $   0.36 $   0.78 $   0.62
 Diluted earning per share...........      0.18      0.28     0.60     0.48
</TABLE>


                                      54
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS

Board of Directors
United Rentals, Inc. (Parent Company of United Rentals (North America), Inc.)

    We have audited the accompanying consolidated balance sheets of United
Rentals (North America), Inc. as of December 31, 2000 and 1999 and the related
consolidated statements of operations, stockholder's equity, and cash flows for
each of the three years in the period ended December 31, 2000. These
consolidated financial statements are the responsibility of the management of
United Rentals (North America), Inc. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of United Rentals (North America), Inc. at December 31, 2000 and 1999, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States.

                                          /S/ ERNST & YOUNG LLP

MetroPark, New Jersey
February 23, 2001

                                      55
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                December 31
                                                                           ----------------------
                                                                              2000        1999
                                                                           ----------  ----------
                                                                               (In thousands,
                                                                             except share data)
<S>                                                                        <C>         <C>
Assets
Cash and cash equivalents................................................. $   34,384  $   23,811
Accounts receivable, net of allowance for doubtful accounts of $55,624 and
  $58,376 at 2000 and 1999, respectively..................................    469,594     434,985
Inventory.................................................................    133,380     129,473
Prepaid expenses and other assets.........................................    104,493      37,125
Rental equipment, net.....................................................  1,732,835   1,659,733
Property and equipment, net...............................................    387,432     276,524
Intangible assets, net of accumulated amortization of $108,066 and
  $51,231 at 2000 and 1999, respectively..................................  2,227,008   1,863,372
                                                                           ----------  ----------
                                                                           $5,089,126  $4,425,023
                                                                           ==========  ==========
Liabilities and Stockholder's Equity
Liabilities:
   Accounts payable....................................................... $  260,155  $  212,565
   Debt...................................................................  2,675,367   2,266,148
   Deferred taxes.........................................................    206,243      81,229
   Accrued expenses and other liabilities.................................    119,172     171,807
                                                                           ----------  ----------
       Total liabilities..................................................  3,260,937   2,731,749
Commitments and contingencies
Stockholder's equity:
   Common stock--$.01 par value, 3,000 shares authorized, 1,000
     shares issued and outstanding........................................
   Additional paid-in capital.............................................  1,507,661   1,507,330
   Retained earnings......................................................    327,475     185,627
   Accumulated other comprehensive (loss) income..........................     (6,947)        317
                                                                           ----------  ----------
       Total stockholder's equity.........................................  1,828,189   1,693,274
                                                                           ----------  ----------
                                                                           $5,089,126  $4,425,023
                                                                           ==========  ==========
</TABLE>

                            See accompanying notes.

                                      56
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                             Year Ended December 31
                                                       -----------------------------------
                                                          2000        1999        1998
                                                       ----------  ----------  ----------
                                                                 (In thousands)
<S>                                                    <C>         <C>         <C>
Revenues:
 Equipment rentals.................................... $2,056,683  $1,581,026  $  895,466
 Sales of rental equipment............................    347,678     235,678     119,620
 Sales of equipment and merchandise and other revenues    514,500     416,924     205,196
                                                       ----------  ----------  ----------
Total revenues........................................  2,918,861   2,233,628   1,220,282
Cost of revenues:
 Cost of equipment rentals, excluding depreciation....    907,477     676,972     394,750
 Depreciation of rental equipment.....................    328,131     280,641     175,910
 Cost of rental equipment sales.......................    208,182     136,678      66,136
 Cost of equipment and merchandise sales and other
   operating costs....................................    386,501     314,419     160,038
                                                       ----------  ----------  ----------
Total cost of revenues................................  1,830,291   1,408,710     796,834
                                                       ----------  ----------  ----------
Gross profit..........................................  1,088,570     824,918     423,448
Selling, general and administrative expenses..........    454,330     344,328     195,620
Merger-related expenses...............................                             47,178
Non-rental depreciation and amortization..............     78,583      57,941      34,684
                                                       ----------  ----------  ----------
Operating income......................................    555,657     422,649     145,966
Interest expense......................................    228,779     139,828      64,157
Other (income) expense, net...........................     (1,836)     (1,646)     (5,097)
                                                       ----------  ----------  ----------
Income before provision for income taxes and
  extraordinary item..................................    328,714     284,467      86,906
Provision for income taxes............................    136,416     116,628      46,971
                                                       ----------  ----------  ----------
Income before extraordinary item......................    192,298     167,839      39,935
Extraordinary item, net of tax benefit of $14,255.....                             21,337
                                                       ----------  ----------  ----------
Net income............................................ $  192,298  $  167,839  $   18,598
                                                       ==========  ==========  ==========
</TABLE>

                            See accompanying notes.

                                      57
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                          Common Stock                                       Accumulated
                                        ---------------- Additional                             Other
                                         Number           Paid-in   Retained  Comprehensive Comprehensive
                                        of Shares Amount  Capital   Earnings     Income     (Loss) Income
                                        --------- ------ ---------- --------  ------------  ------------
                                                       (In thousands except share amounts)
<S>                                     <C>       <C>    <C>        <C>       <C>           <C>
Balance, December 31, 1997.............     1,000        $  402,320 $ 44,068
   Comprehensive Income:
   Net income..........................                               18,598      $ 18,598
   Other comprehensive income:
      Foreign currency translation
       adjustments-....................                                               (281)      $  (281)
                                                                              ------------
   Comprehensive income................                                           $ 18,317
                                                                              ============
   Contributed capital from Parent.....                     563,045
   Reclassification of Subchapter S
      accumulated earnings to
    capital from Parent................                      18,979  (18,979)
   Pooling-of-interests................                           1    1,795
    Subchapter S distributions of a
    pooled entity......................                               (3,536)
   Dividend distribution to Parent.....                               (4,658)
                                        --------- ------ ---------- --------                ------------
Balance, December 31, 1998.............     1,000           984,345   37,288                        (281)
   Comprehensive income:
   Net income..........................                              167,839      $167,839
   Other comprehensive income:
      Foreign currency translation
       adjustments.....................                                                598           598
                                                                              ------------
   Comprehensive income................                                           $168,437
                                                                              ============
   Contributed capital from parent.....                     522,985
   Dividend distributions to parent....                              (19,500)
                                        --------- ------ ---------- --------                ------------
Balance, December 31, 1999.............     1,000         1,507,330  185,627                         317
   Comprehensive income:
   Net income..........................                              192,298       192,298
   Other comprehensive income:
      Foreign currency translation
       adjustments.....................                                             (7,264)       (7,264)
                                                                              ------------
   Comprehensive income................                                           $185,034
                                                                              ============
   Contributed capital from parent.....                         331
   Dividend distributions to parent....                              (50,450)
                                        --------- ------ ---------- --------                ------------
Balance, December 31, 2000.............     1,000        $1,507,661 $327,475                     $(6,947)
                                        ========= ====== ========== ========                ============
</TABLE>


                            See accompanying notes.

                                      58
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31
                                                                                  ------------------------------------
                                                                                     2000        1999         1998
                                                                                  ---------  -----------  -----------
                                                                                             (In thousands)
<S>                                                                               <C>        <C>          <C>
Cash Flows From Operating Activities:
Net income....................................................................... $ 192,298  $   167,839  $    18,598
Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation and amortization..................................................   406,714      342,403      211,747
  Gain on sales of rental equipment..............................................  (139,496)     (99,000)     (53,484)
  Gain on sale of businesses.....................................................    (4,084)      (1,842)      (4,189)
  Write down of assets held for sale.............................................                               4,040
  Extraordinary item.............................................................                              35,592
  Deferred taxes.................................................................   109,280       41,820       27,345
  Changes in operating assets and liabilities:
   Accounts receivable...........................................................     8,613      (93,716)     (53,368)
   Inventory.....................................................................    69,706       (6,544)      (6,392)
   Prepaid expenses and other assets.............................................   (77,579)      34,701       12,693
   Accounts payable..............................................................    14,290       47,586       25,737
   Accrued expenses and other liabilities........................................   (65,062)      (8,065)      (7,713)
                                                                                  ---------  -----------  -----------
      Net cash provided by operating activities..................................   514,680      425,182      210,606
                                                                                  ---------  -----------  -----------
Cash Flows From Investing Activities:
Purchases of rental equipment....................................................  (808,204)    (718,112)    (479,534)
Purchases of property and equipment..............................................  (140,699)    (109,468)     (69,643)
Proceeds from sales of rental equipment..........................................   347,678      235,678      119,620
Proceeds from sale of businesses.................................................    19,246        6,521       10,640
Purchases of other companies.....................................................  (347,337)    (986,790)    (911,837)
Payments of contingent purchase price............................................   (16,266)      (8,216)      (3,956)
                                                                                  ---------  -----------  -----------
      Net cash used in investing activities......................................  (945,582)  (1,580,387)  (1,334,710)
                                                                                  ---------  -----------  -----------
Cash Flows From Financing Activities:
Capital contributions by Parent..................................................       331      522,985      492,590
Proceeds from debt...............................................................   456,202    1,083,616    1,263,637
Payments on debt.................................................................  (134,599)    (497,650)    (685,667)
Proceeds from sale-leaseback.....................................................   193,478       88,000       35,000
Dividend distributions to Parent.................................................   (50,450)     (19,500)      (4,658)
Subchapter S distributions of a pooled entity....................................                              (3,536)
Payments of financing costs......................................................   (16,223)     (19,443)     (24,982)
                                                                                  ---------  -----------  -----------
      Net cash provided by financing activities..................................   448,739    1,158,008    1,072,384
Effect of foreign exchange rates.................................................    (7,264)         598         (281)
                                                                                  ---------  -----------  -----------
Net increase (decrease) in cash and cash equivalents.............................    10,573        3,401      (52,001)
Cash and cash equivalents at beginning of year...................................    23,811       20,410       72,411
                                                                                  ---------  -----------  -----------
Cash and cash equivalents at end of year......................................... $  34,384  $    23,811  $    20,410
                                                                                  =========  ===========  ===========
Supplemental disclosure of cash flow information:
Cash paid for interest........................................................... $ 229,263  $   104,785  $    38,499
Cash paid for taxes, net of refunds.............................................. $  23,746  $    17,509  $    10,224

Supplemental schedule of non cash investing and financing activities:
The Company acquired the net assets and assumed certain liabilities of other
 companies as follows:
  Assets, net of cash acquired................................................... $ 565,114  $ 1,468,567  $ 1,501,467
  Liabilities assumed............................................................  (142,277)    (472,382)    (518,861)
  Less:
   Amounts paid in common stock and warrants of the Parent.......................   (10,000)                  (60,304)
   Amounts paid through issuance of debt.........................................   (65,500)      (9,395)     (10,465)
                                                                                  ---------  -----------  -----------
Net cash paid.................................................................... $ 347,337  $   986,790  $   911,837
                                                                                  =========  ===========  ===========
</TABLE>

                            See accompanying notes.

                                      59
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

    United Rentals (North America), Inc., ("URI") and subsidiaries is a wholly
owned subsidiary of United Rentals, Inc., which is principally a holding
company ("Holdings" or "Parent"). Holdings was incorporated in July 1998 and
became the parent of URI on August 5, 1998, pursuant to the reorganization of
the legal structure of URI. Prior to such reorganization, the name of URI was
United Rentals, Inc. References herein to the "Company" refer to URI and its
subsidiaries.

    Certain footnotes are not provided for the accompanying financial
statements as the information in Notes 1 through 9, 11 and 13 through 15 to the
consolidated financial statements of United Rentals, Inc. included elsewhere in
this report is substantially equivalent to that required for the consolidated
financial statements of URI and its subsidiaries. Earnings per share data is
not provided for the operating results of URI and subsidiaries, as they are
wholly owned subsidiaries of Holdings. URI's various credit agreements and debt
instruments place restrictions on its ability to transfer funds to its
shareholder.

    Holdings provides certain services to URI in connection with its
operations. These services principally include: (i) senior management services,
(ii) finance related services and support, (iii) information technology systems
and support and (iv) acquisition related services. In addition, Holdings leases
certain equipment and real property that are made available for use by URI and
its subsidiaries. URI has made, and expects to continue to make, certain
payments to Holdings in respect of the services provided by Holdings to the
Company. The expenses relating to URI's payments to Holdings are reflected on
URI's financial statements as selling, general and administrative expenses. In
addition, although not legally obligated to do so, URI has in the past, and
expects that it will in the future, make distributions to Holdings for, among
other things, enabling Holdings to pay dividends on its preferred securities.

2. Capital Stock and Contributions

    At December 31, 2000, the Company has authorized 3,000 shares of its $0.01
par value common stock of which 1,000 shares are issued and outstanding. All of
the issued and outstanding common shares are owned by its Parent.

    Pursuant to the reorganization described in Note 1, the net proceeds from
the Company's initial public offering completed in December 1997 and the public
offering completed in March 1998 have been reflected as Contributed Capital
from the Parent in the accompanying statement of stockholder's equity. Holdings
also contributed the net proceeds from the issuance of redeemable convertible
preferred securities in August 1998 to URI. During 1999, Holdings contributed
the net proceeds from the issuance of common stock in a public offering and the
net proceeds from the issuance of perpetual convertible preferred stock to URI.

3. Condensed Consolidating Financial Information of Guarantor Subsidiaries

    Certain indebtedness of URI is guaranteed by URI's United States
subsidiaries (the "guarantor subsidiaries") but is not guaranteed by URI's
foreign subsidiaries (the "non-guarantor subsidiaries"). The guarantor
subsidiaries are all wholly-owned and the guarantees are made on a joint and
several basis and are full and unconditional (subject to subordination
provisions and subject to a standard limitation which provides that the maximum
amount guaranteed by each guarantor will not exceed the maximum amount that can
be guaranteed without making the guarantee void under fraudulent

                                      60
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

conveyance laws). All expenses incurred by URI have been charged by URI to its
guarantor and non-guarantor subsidiaries. Separate consolidated financial
statements of the guarantor subsidiaries have not been presented because
management believes that such information would not be material to investors.
However, condensed consolidating financial information as of December 31, 2000
and 1999, and for each of the three years in the period ended December 31,
2000, are presented. The condensed consolidating financial information of URI
and its subsidiaries are as follows:

                     CONDENSED CONSOLIDATING BALANCE SHEET

                               December 31, 2000

<TABLE>
<CAPTION>
                                                        Guarantor   Non-Guarantor              Consolidated
                                               URI     Subsidiaries Subsidiaries  Eliminations    Total
                                            ---------- -----------  ------------  -----------  -----------
                                                                    (In thousands)
<S>                                         <C>        <C>          <C>           <C>          <C>
Assets
Cash and cash equivalents..................             $   29,733    $    4,651                $   34,384
Accounts receivable, net................... $  216,444     143,295       109,855                   469,594
Intercompany receivable (payable)..........    319,423     (55,187)     (264,236)
Inventory..................................     54,022      73,979         5,379                   133,380
Prepaid expenses and other assets..........     28,263      75,633           597                   104,493
Rental equipment, net......................    837,972     766,219       128,644                 1,732,835
Property and equipment, net................    139,871     231,195        16,366                   387,432
Investment in subsidiaries.................  2,257,692                            $(2,257,962)
Intangible assets, net.....................    960,444   1,132,438       134,126                 2,227,008
                                            ---------- -----------  ------------  -----------  -----------
                                            $4,814,131  $2,397,305    $  135,382  $(2,257,962)  $5,089,126
                                            ========== ===========  ============  ===========  ===========

Liabilities and Stockholder's Equity
Liabilities:
   Accounts payable........................ $   78,623  $  165,677    $   15,855                $  260,155
   Debt....................................  2,647,144       3,484        24,739                 2,675,367
   Deferred taxes..........................    186,091      20,702          (550)                  206,243
   Accrued expenses and other liabilities..     86,560      18,862        13,750                   119,172
                                            ---------- -----------  ------------  -----------  -----------
      Total liabilities....................  2,998,418     208,725        53,794                 3,260,937

Commitments and contingencies
Stockholder's equity:
   Common stock............................
   Additional paid-in capital..............  1,488,238   1,830,500        65,657   (1,876,734)   1,507,661
   Retained earnings.......................    327,475     358,080        22,878     (380,958)     327,475
    Accumulated other comprehensive
    loss...................................                               (6,947)                   (6,947)
                                            ---------- -----------  ------------  -----------  -----------
      Total stockholder's equity...........  1,815,713   2,188,580        81,588  $(2,257,692)   1,828,189
                                            ---------- -----------  ------------  -----------  -----------
                                            $4,814,131  $2,397,305    $  135,382  $(2,257,692)  $5,089,126
                                            ========== ===========  ============  ===========  ===========
</TABLE>

                                      61
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                     CONDENSED CONSOLIDATING BALANCE SHEET

<TABLE>
<CAPTION>
                                                                   December 31, 1999
                                            ---------------------------------------------------------------
                                                        Guarantor   Non-Guarantor              Consolidated
                                               URI     Subsidiaries Subsidiaries  Eliminations    Total
                                            ---------- ------------ ------------  -----------  ------------
                                                                    (In thousands)
<S>                                         <C>        <C>          <C>           <C>          <C>
Assets
Cash and cash equivalents.................. $    3,689   $   16,414    $   3,708                 $   23,811
Accounts receivable, net...................    200,419      199,981       34,585                    434,985
Intercompany receivable (payable)..........    142,156       42,906     (185,062)
Inventory..................................     56,086       64,253        9,134                    129,473
Prepaid expenses and other assets..........      1,020       18,296       17,809                     37,125
Rental equipment, net......................    747,232      789,967      122,534                  1,659,733
Property and equipment, net................    150,841      106,232       19,451                    276,524
Investment in subsidiaries.................  2,072,115                            $(2,072,115)
Intangible assets, net.....................    792,198      948,128      123,046                  1,863,372
                                            ---------- ------------ ------------  -----------  ------------
                                            $4,165,756   $2,186,177    $ 145,205  $(2,072,115)   $4,425,023
                                            ========== ============ ============  ===========  ============

Liabilities and Stockholder's Equity
Liabilities:
   Accounts payable........................ $   71,995   $  120,511    $  20,059                 $  212,565
   Debt....................................  2,231,923          380       33,845                  2,266,148
   Deferred income taxes...................     80,476                       753                     81,229
   Accrued expenses and other liabilities..    107,828       53,177       10,802                    171,807
                                            ---------- ------------ ------------  -----------  ------------
      Total liabilities....................  2,492,222      174,068       65,459                  2,731,749
Commitments and contingencies
Stockholder's equity:
   Common stock............................
   Additional paid-in capital..............  1,487,907    1,830,182       65,644  $(1,876,403)    1,507,330
   Retained earnings.......................    185,627      181,927       13,785     (195,712)      185,627
    Accumulated other comprehensive
    income.................................                                  317                        317
                                            ---------- ------------ ------------  -----------  ------------
      Total stockholder's equity...........  1,673,534    2,012,109       79,746   (2,072,115)    1,693,274
                                            ---------- ------------ ------------  -----------  ------------
                                            $4,165,756   $2,186,177    $ 145,205  $(2,072,115)   $4,425,023
                                            ========== ============ ============  ===========  ============
</TABLE>

                                      62
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                     For the Year Ended December 31, 2000

<TABLE>
<CAPTION>
                                                         Guarantor   Non-Guarantor              Consolidated
                                                URI     Subsidiaries Subsidiaries  Eliminations    Total
                                             ---------- -----------  ------------- -----------  -----------
                                                                     (In thousands)
<S>                                          <C>        <C>          <C>           <C>          <C>
Revenues:
  Equipment rentals......................... $  851,541  $1,094,613     $  110,529               $2,056,683
  Sales of rental equipment.................    145,519     178,576         23,583                  347,678
  Sales of equipment and merchandise and
   other revenues...........................    253,798     229,219         31,483                  514,500
                                             ---------- -----------  ------------- -----------  -----------
Total revenues..............................  1,250,858   1,502,408        165,595                2,918,861
Cost of revenues:
  Cost of equipment rentals, excluding
   depreciation.............................    364,047     494,350         49,080                  907,477
  Depreciation of rental equipment..........    152,640     155,239         20,252                  328,131
  Cost of rental equipment sales............     87,161     106,617         14,404                  208,182
  Cost of equipment and merchandise sales
   and other operating costs................    197,190     164,186         25,125                  386,501

                                             ---------- -----------  ------------- -----------  -----------
Total cost of revenues......................    801,038     920,392        108,861                1,830,291

                                             ---------- -----------  ------------- -----------  -----------
Gross profit................................    449,820     582,016         56,734                1,088,570
Selling, general and administrative expenses    184,135     245,431         24,764                  454,330
Non-rental depreciation and amortization....     33,692      39,618          5,273                   78,583
                                             ---------- -----------  ------------- -----------  -----------
Operating income............................    231,993     296,967         26,697                  555,657
Interest expense............................    217,904         135         10,740                  228,779
Other (income) expense, net.................      2,129      (4,285)           320                   (1,836)
                                                                                   ------------
                                             ---------- -----------  -------------              -----------
Income before provision for income taxes....     11,960     301,117         15,637                  328,714
Provision for income taxes..................      4,908     124,964          6,544                  136,416
                                             ---------- -----------  ------------- -----------  -----------
Income before equity in net earnings of
 subsidiaries...............................      7,052     176,153          9,093  $ (185,246)       7,052
Equity in net earnings of subsidiaries......    185,246                                             185,246
                                             ---------- -----------  ------------- -----------  -----------
Net income.................................. $  192,298  $  176,153     $    9,093  $ (185,246)  $  192,298
                                             ========== ===========  ============= ===========  ===========
</TABLE>

                                      63
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                     For the Year Ended December 31, 1999

<TABLE>
<CAPTION>
                                                        Guarantor   Non-Guarantor              Consolidated
                                                URI    Subsidiaries Subsidiaries  Eliminations    Total
                                             --------  -----------  ------------- -----------  -----------
                                                                     (In thousands)
<S>                                          <C>       <C>          <C>           <C>          <C>
Revenues:
  Equipment rentals......................... $600,431   $  880,182       $100,413               $1,581,026
  Sales of rental equipment.................  113,982      106,737         14,959                  235,678
  Sales of equipment and merchandise and
   other revenues...........................  195,647      189,829         31,448                  416,924
                                             --------  -----------  ------------- -----------  -----------
Total revenues..............................  910,060    1,176,748        146,820                2,233,628
Cost of revenues:
  Cost of equipment rentals, excluding
   depreciation.............................  250,959      381,718         44,295                  676,972
  Depreciation of rental equipment..........  116,385      146,622         17,634                  280,641
  Cost of rental equipment sales............   62,972       64,945          8,761                  136,678
  Cost of equipment and merchandise sales
   and other operating costs................  161,902      128,328         24,189                  314,419

                                             --------  -----------  ------------- -----------  -----------
Total cost of revenues......................  592,218      721,613         94,879                1,408,710

                                             --------  -----------  ------------- -----------  -----------
Gross profit................................  317,842      455,135

                                                                           51,941                  824,918
Selling, general and administrative expenses  144,341      177,456         22,531                  344,328
Non-rental depreciation and amortization....   29,667       24,617          3,657                   57,941
                                             --------  -----------  ------------- -----------  -----------
Operating income............................  143,834      253,062         25,753                  422,649
Interest expense............................  132,929        1,428          5,471                  139,828
Other (income) expense, net.................   (1,549)        (524)           427                   (1,646)
                                             --------  -----------  ------------- -----------  -----------
Income before provision for income taxes....   12,454      252,158         19,855                  284,467
Provision for income taxes..................    3,039      105,531          8,058                  116,628
                                             --------  -----------  ------------- -----------  -----------
Income before equity in net earnings of
 subsidiaries...............................    9,415      146,627         11,797   $(158,424)       9,415
Equity in net earnings of subsidiaries......  158,424                                              158,424
                                             --------  -----------  ------------- -----------  -----------
Net income.................................. $167,839   $  146,627       $ 11,797   $(158,424)  $  167,839
                                             ========  ===========  ============= ===========  ===========
</TABLE>

                                      64
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                     For the Year Ended December 31, 1998

<TABLE>
<CAPTION>
                                                          Guarantor   Non-Guarantor              Consolidated
                                                  URI    Subsidiaries Subsidiaries  Eliminations    Total
                                               --------  -----------  ------------  -----------  -----------
                                                                       (In thousands)
<S>                                            <C>       <C>          <C>           <C>          <C>
Revenues:
   Equipment rentals.......................... $213,823     $649,508       $32,135                $  895,466
   Sales of rental equipment..................   17,992       96,739         4,889                   119,620
   Sales of equipment and merchandise and
    other revenues............................   58.582      131,427        15,187                   205,196

                                               --------  -----------  ------------  -----------  -----------
Total revenues................................  290,397      877,674        52,211                 1,220,282
Cost of revenues:
   Cost of equipment rentals, excluding
    depreciation..............................   91,100      289,892        13,758                   394,750
   Depreciation of rental equipment...........   45,602      125,810         4,498                   175,910
   Cost of rental equipment sales.............    8,586       54,805         2,745                    66,136
   Cost of equipment and merchandise sales
    and other operating costs.................   49,754       98,332        11,952                   160,038

                                               --------  -----------  ------------  -----------  -----------
Total cost of revenues........................  195,042      568,839        32,953                   796,834

                                               --------  -----------  ------------  -----------  -----------
Gross profit..................................   95,355      308,835        19,258                   423,448
Selling, general and administrative expenses..   31,092      155,512         9,016                   195,620
Merger-related expenses.......................                47,178                                  47,178
Non-rental depreciation and amortization......    8,682       24,769         1,233                    34,684

                                               --------  -----------  ------------  -----------  -----------
Operating income..............................   55,581       81,376         9,009                   145,966
Interest expense..............................   33,006       24,193         6,958                    64,157
Other (income) expense, net...................   (2,481)      (2,605)          (11)                   (5,097)

                                               --------  -----------  ------------  -----------  -----------
Income before provision for income taxes and
 extraordinary item...........................   25,056       59,788         2,062                    86,906
Provision for income taxes....................   13,850       33,047            74                    46,971

                                               --------  -----------  ------------  -----------  -----------
Income before extraordinary item and equity in
 net earnings of subsidiaries.................   11,206       26,741         1,988                    39,935
Extraordinary item, net.......................                21,337                                  21,337

                                               --------  -----------  ------------  -----------  -----------
Income before equity in net earnings of
 subsidiaries.................................   11,206        5,404         1,988      $(7,392)      11,206
Equity in net earnings of subsidiaries........    7,392                                                7,392

                                               --------  -----------  ------------  -----------  -----------
Net income.................................... $ 18,598     $  5,404       $ 1,988      $(7,392)  $   18,598

                                               ========  ===========  ============  ===========  ===========
</TABLE>

                                      65
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                 CONDENSED CONSOLIDATING CASH FLOW INFORMATION
                     For the Year Ended December 31, 2000

<TABLE>
<CAPTION>
                                                         Guarantor   Non-Guarantor              Consolidated
                                                URI     Subsidiaries Subsidiaries  Eliminations    Total
                                             ---------  -----------  ------------  ------------ -----------
                                                                     (In thousands)
<S>                                          <C>        <C>          <C>           <C>          <C>
Net cash provided by operating activities... $ 243,759    $ 227,855      $ 43,066                 $ 514,680
Cash Flows From Investing Activities:
   Purchases of rental equipment............  (489,259)    (283,488)      (35,457)                 (808,204)
   Purchases of property and equipment......   (34,477)    (102,510)       (3,712)                 (140,699)
   Proceeds from sales of rental equipment..   145,519      178,576        23,583                   347,678
   Proceeds from sale of businesses.........    16,246        3,000                                  19,246
   Payments of contingent purchase price....    (3,030)     (13,236)                                (16,266)
   Purchases of other companies.............  (337,257)                   (10,080)                 (347,337)
                                             ---------  -----------  ------------  ------------ -----------
       Net cash used in investing
       activities...........................  (702,258)    (217,658)      (25,666)                 (945,582)
Cash Flows from Financing Activities:
   Dividend distributions to Parent.........   (50,450)                                             (50,450)
   Proceeds from debt.......................   452,912        3,290                                 456,202
   Repayments of debt.......................  (125,238)        (168)       (9,193)                 (134,599)
   Proceeds from sale-leaseback.............   193,478                                              193,478
   Payments of financing costs..............   (16,223)                                             (16,223)
   Capital contributions by parent..........       331                                                  331
                                             ---------  -----------  ------------  ------------ -----------

       Net cash provided by financing
       activities...........................   454,810        3,122        (9,193)                  448,739
   Effect of foreign exchange rates.........                               (7,264)                   (7,264)
                                             ---------  -----------  ------------  ------------ -----------

 Net increase (decrease) in cash and cash
 equivalents................................    (3,689)      13,319           943                    10,573
 Cash and cash equivalents at beginning of
 period.....................................     3,689       16,414         3,708                    23,811
                                             ---------  -----------  ------------  ------------ -----------
 Cash and cash equivalents at end of
 period.....................................              $  29,733      $  4,651                 $  34,384
                                             =========  ===========  ============  ============ ===========

Supplemental disclosure of cash flow
 information:
Cash paid for interest...................... $ 218,346    $     135      $ 10,782                 $ 229,263
Cash paid for income taxes.................. $  19,833                   $  3,913                 $  23,746

Supplemental disclosure of non-cash
 investing and financing activities:
The Company acquired the net assets and
 assumed certain liabilities of other
 companies as follows:
   Assets, net of cash acquired............. $ 554,077                   $ 11,037                 $ 565,114
   Liabilities assumed......................  (141,320)                      (957)                 (142,277)
   Less:
    Amounts paid in common stock and
    warrants of Parent......................   (10,000)                                             (10,000)
    Amounts paid through issuance
    of debt.................................   (65,500)                                             (65,500)
                                             ---------  -----------  ------------  ------------ -----------
   Net cash paid............................ $ 337,257                   $ 10,080                 $ 347,337
                                             =========  ===========  ============  ============ ===========
</TABLE>

                                      66
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                 CONDENSED CONSOLIDATING CASH FLOW INFORMATION
                     For the Year Ended December 31, 1999

<TABLE>
<CAPTION>
                                                         Guarantor   Non-Guarantor              Consolidated
                                               URI      Subsidiaries Subsidiaries  Eliminations    Total
                                           -----------  -----------  ------------  ------------ -----------
                                                                    (In thousands)
<S>                                        <C>          <C>          <C>           <C>          <C>
Net cash provided by operating activities. $   292,412     $ 13,185     $ 119,585               $   425,182
Cash Flows From Investing Activities:
   Purchases of rental equipment..........    (539,775)     (99,365)      (78,972)                 (718,112)
   Purchases of property and equipment....     (74,634)     (20,366)      (14,468)                 (109,468)
   Proceeds from sales of rental
    equipment.............................     113,982      106,737        14,959                   235,678
   Proceeds from sale of businesses.......       1,040        2,354         3,127                     6,521
   Payments of contingent purchase price..      (2,387)      (4,265)       (1,564)                   (8,216)
   Purchases of other companies...........    (915,937)                   (70,853)                 (986,790)
                                           -----------  -----------  ------------  ------------ -----------
      Net cash used in investing
       activities.........................  (1,417,711)     (14,905)     (147,771)               (1,580,387)
Cash Flows from Financing Activities:
   Dividend distributions to Parent.......     (19,500)                                             (19,500)
   Proceeds from debt.....................   1,025,843       26,524        31,249                 1,083,616
   Repayments of debt.....................    (474,808)     (20,958)       (1,884)                 (497,650)
   Proceeds from sale-leaseback...........      88,000                                               88,000
   Payments of financing costs............     (18,995)                      (448)                  (19,443)
   Capital contributions by parent........     522,985                                              522,985
                                           -----------  -----------  ------------  ------------ -----------

      Net cash provided by financing
       activities.........................   1,123,525        5,566        28,917                 1,158,008
   Effect of foreign exchange rates.......                                    598                       598
                                           -----------  -----------  ------------  ------------ -----------

Net increase (decrease) in cash and cash
 equivalents..............................      (1,774)       3,846         1,329                     3,401
Cash and cash equivalents at beginning of
 period...................................       1,774       16,257         2,379                    20,410
                                           -----------  -----------  ------------  ------------ -----------
Cash and cash equivalents at end of
 period...................................                 $ 20,103     $   3,708               $    23,811
                                           ===========  ===========  ============  ============ ===========

Supplemental disclosure of cash flow
 information:
Cash paid for interest.................... $    98,728     $  1,194     $   4,863               $   104,785
Cash paid for income taxes................ $    16,372                  $   1,137               $    17,509

Supplemental disclosure of non-cash
 investing and financing activities:
The Company acquired the net assets and
 assumed certain liabilities of other
 companies as follows:
   Assets, net of cash acquired........... $ 1,371,807                  $  96,760               $ 1,468,567
   Liabilities assumed....................    (448,685)                   (23,697)                 (472,382)
   Less:
   Amounts paid through issuance of
    debt..................................      (7,185)                    (2,210)                   (9,395)
                                           -----------  -----------  ------------  ------------ -----------
   Net cash paid.......................... $   915,937                  $  70,853               $   986,790
                                           ===========  ===========  ============  ============ ===========
</TABLE>

                                      67
<PAGE>

                     UNITED RENTALS (NORTH AMERICA), INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                 CONDENSED CONSOLIDATING CASH FLOW INFORMATION
                     For the Year Ended December 31, 1998

<TABLE>
<CAPTION>
                                                                              Non-
                                                              Guarantor    Guarantor                Consolidated
                                                    URI      Subsidiaries Subsidiaries Eliminations    Total
                                                -----------  -----------  -----------  ------------ -----------
                                                                         (In thousands)
<S>                                             <C>          <C>          <C>          <C>          <C>
Net cash provided by (used in) operating
 activities.................................... $   (63,760)   $ 206,996     $ 67,370               $   210,606
Cash Flows From Investing Activities:
   Purchases of rental equipment...............    (415,140)     (50,494)     (13,900)                 (479,534)
   Purchases of property and equipment.........     (65,742)      (2,851)      (1,050)                  (69,643)
   Proceeds from sales of rental
    equipment..................................      17,992       96,739        4,889                   119,620
   Proceeds from sale of businesses............      10,640                                              10,640
   Payments of contingent purchase price.......                   (2,800)      (1,156)                   (3,956)
   Purchases of other companies................    (840,730)     (12,510)     (58,597)                 (911,837)
                                                -----------  -----------  -----------  ------------ -----------
      Net cash used in investing
       activities..............................  (1,292,980)      28,084      (69,814)               (1,334,710)
Cash Flows from Financing Activities:
   Dividend distributions to Parent............      (4,658)                                             (4,658)
   Proceeds from debt..........................   1,225,586       10,187       27,864                 1,263,637
   Repayments of debt..........................    (432,222)    (230,685)     (22,760)                 (685,667)
   Proceeds from sale-leaseback................      35,000                                              35,000
   Payments of financing costs.................     (24,982)                                            (24,982)
   Capital contributions by parent.............     492,590                                             492,590
   Distributions to stockholders...............                   (3,536)                                (3,536)
                                                -----------  -----------  -----------  ------------ -----------

      Net cash provided by (used in)
       financing activities....................   1,291,314     (224,034)       5,104                 1,072,384
   Effect of foreign exchange rates............                                  (281)                     (281)
                                                -----------  -----------  -----------  ------------ -----------

Net increase (decrease) in cash and cash
 equivalents...................................     (65,426)      11,046        2,379                   (52,001)
Cash and cash equivalents at beginning of
 period........................................      67,200        5,211                                 72,411
                                                -----------  -----------  -----------  ------------ -----------
Cash and cash equivalents at end of period..... $     1,774    $  16,257     $  2,379               $    20,410
                                                ===========  ===========  ===========  ============ ===========

Supplemental disclosure of cash flow
 information:
Cash paid for interest......................... $    27,085    $  11,098     $    316               $    38,499
Cash paid for income taxes..................... $     8,034                  $  2,190               $    10,224

Supplemental disclosure of non-cash
 investing and financing activities:
The Company acquired the net assets and
 assumed certain liabilities of other companies
 as follows:
   Assets, net of cash acquired................ $ 1,409,516    $  12,510     $ 79,441               $ 1,501,467
   Liabilities assumed.........................    (500,228)                  (18,633)                 (518,861)
   Less:
   Amounts paid in common stock and
    warrants of Parent.........................     (58,093)                   (2,211)                  (60,304)
   Amounts paid through issuance of debt.......     (10,465)                                            (10,465)
                                                -----------  -----------  -----------  ------------ -----------
   Net cash paid............................... $   840,730    $  12,510     $ 58,597               $   911,837
                                                ===========  ===========  ===========  ============ ===========
</TABLE>

                                      68
<PAGE>

        REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES

Board of Directors
United Rentals, Inc.

    We have audited the consolidated financial statements of United Rentals,
Inc. as of December 31, 2000 and 1999, and for each of the three years in the
period ended December 31, 2000, and have issued our report thereon dated
February 23, 2001, included elsewhere in this Form 10-K. Our audits also
included the financial statement schedules listed in Item 14(a)(2). These
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

    In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.

                                          /s/ ERNST & YOUNG LLP

MetroPark, New Jersey
February 23, 2001

                                      69
<PAGE>

           SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                             UNITED RENTALS, INC.

                            CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
                                                       December 31
                                                  ----------------------
                                                     2000        1999
                                                  ----------  ----------
                                                      (In thousands)
<S>                                               <C>         <C>
Assets
Prepaid expenses and other assets................             $   31,554
Property and equipment, net...................... $   34,807      28,383
Investment in and advances to subsidiaries.......  1,839,952   1,702,802
                                                  ----------  ----------
                                                  $1,874,759  $1,762,739
                                                  ==========  ==========

Liabilities and Stockholders' Equity
Liabilities:
   Accounts payable..............................             $   30,381
   Debt.......................................... $  300,000     300,000
   Accrued expenses and other liabilities........     28,816      34,872
                                                  ----------  ----------
       Total liabilities.........................    328,816     365,253

Commitments and contingencies
Stockholders' equity:
   Preferred stock...............................          5           5
   Common stock..................................        711         721
   Additional paid-in capital....................  1,196,324   1,216,968
   Retained earnings.............................    355,850     179,475
   Accumulated other comprehensive (loss) income.     (6,947)        317
                                                  ----------  ----------
       Total stockholders' equity................  1,545,943   1,397,486
                                                  ----------  ----------
                                                  $1,874,759  $1,762,739
                                                  ==========  ==========
</TABLE>


                            See accompanying notes.

                                      70
<PAGE>

           SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                             UNITED RENTALS, INC.

                       CONDENSED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                      Year Ended December 31
                                                   ----------------------------
                                                     2000      1999      1998
                                                   --------  --------  -------
                                                          (In thousands)
<S>                                                <C>       <C>       <C>
Selling, general and administrative expenses......           $  8,267
Non-rental depreciation and amortization.......... $  7,718     4,926  $   561
                                                   --------  --------  -------
Operating loss....................................   (7,718)  (13,193)    (561)
Interest expense..................................   19,500    19,500    7,854
Other (income) expense, net.......................              9,689
                                                   --------  --------  -------
Loss before benefit for income taxes..............  (27,218)  (42,382)  (8,415)
Benefit for income taxes..........................   11,295    17,487    3,472
                                                   --------  --------  -------
Net loss before equity in earnings of subsidiaries  (15,923)  (24,895)  (4,943)
Equity in earnings of subsidiaries................  192,298   167,561   18,404
                                                   --------  --------  -------
Net income........................................ $176,375  $142,666  $13,461
                                                   ========  ========  =======
</TABLE>



                            See accompanying notes.

                                      71
<PAGE>

           SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                             UNITED RENTALS, INC.

                        CONDENSED CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                                      -------------------------------
                                                        2000       1999       1998
                                                      --------  ---------  ---------
                                                              (In thousands)
<S>                                                   <C>       <C>        <C>
Net cash used in operating activities................ $(37,379) $  (4,824) $  (4,157)
Cash Flows from Investing Activities:
   Purchase of property and equipment................  (13,071)   (14,181)   (15,535)
   Capital contributed to subsidiary.................     (331)  (522,985)  (492,590)
                                                      --------  ---------  ---------
       Net cash used in investing activities.........  (13,402)  (537,166)  (508,125)
Cash Flows from Financing Activities:
     Proceeds from issuance of common stock and
     warrants, net of issuance costs.................              64,701    207,005
     Proceeds from the issuance of preferred
     stock, net of issuance costs....................             430,800
   Proceeds from debt................................                        300,000
   Proceeds from the exercise of stock options.......      331     26,989        619
   Proceeds from dividends from subsidiary...........   50,450     19,500      4,658
                                                      --------  ---------  ---------
       Net cash provided by financing activities.....   50,781    541,990    512,282
                                                      --------  ---------  ---------
   Net increase in cash and cash equivalents.........
     Cash and cash equivalents at beginning of
     period..........................................
                                                      --------  ---------  ---------
         Cash and cash equivalents at end of
         period......................................
                                                      ========  =========  =========
</TABLE>



                            See accompanying notes.

                                      72
<PAGE>

           SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                             UNITED RENTALS, INC.

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Basis of Presentation

    United Rentals, Inc. is principally a holding company ("Holdings") and
conducts its operations primarily through its wholly owned subsidiary United
Rentals (North America), Inc. ("URI") and subsidiaries. In the parent
company-only financial statements, Holdings, investment in subsidiaries is
stated at cost plus equity in undistributed earnings of subsidiaries since the
date of acquisition. Holdings share of net income of its unconsolidated
subsidiaries is included in consolidated income using the equity method. The
parent company-only financial statements should be read in conjunction with the
Company's consolidated financial statements.

2. Debt

    See Note 10 to the Consolidated Financial Statements for information
concerning debt.

3. Guarantee

    See Note 10 to the Consolidated Financial Statements for information
concerning the guarantee.

                                      73
<PAGE>

                SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

                             UNITED RENTALS, INC.
                                (In thousands)

<TABLE>
<CAPTION>
                                                                     Additions
                                                               ---------------------
                                                    Balance at Charged to                        Balance
                                                    Beginning  Costs and                         at End
                   Description                      of Period   Expenses    Other    Deductions of Period
                    -----------                     ---------- ----------  -------    -------   ---------
<S>                                                 <C>        <C>        <C>        <C>        <C>

Year ended December 31, 2000:
  Allowance for doubtful accounts..................    $58,376    $38,431 $14,791(a) $55,974(c)   $55,624
  Reserve for inventory obsolescence and shrinkage.     16,782      9,124  11,302(b)  21,747(d)    15,461
  Insurance reserves...............................     22,750     30,027             37,333(e)    15,444
Year ended December 31, 1999:
  Allowance for doubtful accounts..................     43,481     46,121  23,568(a)  54,794(c)    58,376
  Reserve for inventory obsolescence and shrinkage.      9,288      6,857  11,975(b)  11,338(d)    16,782
  Insurance reserves...............................     20,553     49,223             47,026(e)    22,750
Year ended December 31, 1998:
  Allowance for doubtful accounts..................     11,085     24,810  19,079(a)  11,493(c)    43,481
  Reserve for inventory obsolescence and shrinkage.        620      3,254   6,068(b)     654(d)     9,288
  Insurance reserves...............................     11,665     16,456              7,568(e)    11,665
</TABLE>



--------
(a) Represents allowance for doubtful accounts established through
    acquisitions.
(b) Represents reserve for inventory obsolescence and shrinkage assumed through
    acquisitions.
(c) Represents write-offs of accounts, net of recoveries.
(d) Represents write-offs of inventory items.
(e) Represents payments.

                                      74
<PAGE>

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

    None.

                                   PART III

Item 10. Directors and Executive Officers of the Registrant

    The information required by this Item is incorporated by reference to the
applicable information in the 2001 Proxy Statement, including the information
set forth under the captions "Election of Directors" and "Compliance with
Section 11(A) of the Securities Exchange Act of 1934". The "2001 Proxy
Statement" refers to the Company's definitive Proxy Statement for its 2001
Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended, prior to April 30, 2001.

Item 11. Executive and Director Compensation

    The information required by this Item is incorporated by reference to the
applicable information in the 2001 Proxy Statement, including the information
set forth under the captions "Executive and Director Compensation" and
"Compensation Committee Interlocks and Insider Participation".

Item 12. Security Ownership of Certain Beneficial Owners and Management

    The information required by this Item is incorporated by reference to the
applicable information in the 2001 Proxy Statement, including the information
set forth under the caption "Security Ownership of Certain Beneficial Owners
and Management".

Item 13. Certain Relationships and Related Transactions

    The information required by this Item is incorporated by reference to the
applicable information in the 2001 Proxy Statement, including the information
set forth under the caption "Certain Transactions".

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(1) Consolidated Financial Statements:

      Report of Independent Auditors

      United Rentals, Inc. Consolidated Balance Sheets--December 31, 2000 and
        1999

      United Rentals, Inc. Consolidated Statements of Operations for the years
        ended December 31, 2000, 1999 and 1998

      United Rentals, Inc. Consolidated Statements of Stockholders' Equity for
        the years ended December 31, 2000, 1999 and 1998

      United Rentals, Inc. Consolidated Statements of Cash Flows for the years
        ended December 31, 2000, 1999 and 1998

      Notes to Consolidated Financial Statements

      Report of Independent Auditors

      United Rentals (North America), Inc. Consolidated Balance
        Sheets--December 31, 2000 and 1999

      United Rentals (North America), Inc. Consolidated Statements of
        Operations for the years ended December 31, 2000, 1999 and 1998

                                      75
<PAGE>

     United Rentals (North America), Inc. Consolidated Statements of
      Stockholder's Equity for the years ended December 31, 2000, 1999 and 1998

     United Rentals (North America), Inc. Consolidated Statements of Cash Flows
      for the years ended December 31, 2000, 1999 and 1998

     Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules:

     Report of Independent Auditors on Financial Statement Schedules

     Schedule I Condensed Financial Information of Registrant

     Schedule II Valuation and Qualifying Accounts

     Schedules other than those listed are omitted as they are not applicable
or the required or equivalent information has been included in the financial
statements or notes thereto.

(a)(3) Exhibits

<TABLE>
<CAPTION>
Exhibit
Number                                       Description of Exhibit
------                                       ----------------------
<C>     <S>
 2(a)   Amended and Restated Agreement and Plan of Merger dated as of August 31, 1998,
        among United Rentals, Inc., UR Acquisition Corporation and U.S. Rentals, Inc.
        (incorporated by reference to Exhibit 2 of United Rentals, Inc. Registration Statement on
        Form S-4, Registration No. 333-63171)

 3(a)   Amended and Restated Certificate of Incorporation of United Rentals, Inc., in effect as of
        the date hereof (incorporated by reference to exhibit 3.1 of United Rentals, Inc. Report on
        Form 10-Q for the quarter ended June 30, 1998)

 3(b)   Certificate of Amendment to the United Rentals, Inc. Certificate of Incorporation dated
        September 29, 1998 (incorporated by reference to Exhibit 4.2 to the United Rentals, Inc.
        Registration Statement on Form S-3, No. 333-70151)

 3(c)   By-laws of United Rentals, Inc., in effect as of the date hereof (incorporated by reference to
        exhibit 3.2 of United Rentals, Inc. Report on Form 10-Q for the quarter ended June 30, 1998)

 3(d)   Form of Certificate of Designation for Series A Perpetual Convertible Preferred Stock
        (incorporated by reference to Exhibit 4(k) to the United Rentals, Inc. Registration Statement
        on Form S-3, No. 333-64463) together with a certificate of amendment thereto (incorporated
        by reference to exhibit A of the United Rentals, Inc. Proxy Statement dated July 22, 1999)

 3(e)   Form of Certificate of Designation for Series B Perpetual Convertible Preferred Stock
        (incorporated by reference to exhibit B of the United Rentals, Inc. Proxy Statement on
        Schedule 14A dated July 22, 1999)

 3(f)   Amended and Restated Certificate of Incorporation of United Rentals (North America), Inc.,
        in effect as of the date hereof (incorporated by reference to Exhibit 3.3 of the United
        Rentals (North America), Inc. Report on Form 10-Q for the quarter ended June 30, 1998)

 3(g)   By-laws of United Rentals (North America), Inc., in effect as of the date hereof
        (incorporated by reference to Exhibit 3.4 of the United Rentals (North America), Inc. Report
        on Form 10-Q for the quarter ended June 30, 1998)

 4(a)   Form of certificate representing United Rentals, Inc. Common Stock (incorporated by
        reference to Exhibit 4 of United Rentals, Inc. Registration Statement on Form S-1,
        Registration No. 333-39117)

 4(b)   Certificate of Trust of United Rentals Trust I (incorporated by reference to Exhibit 4(a) of the
        United Rentals, Inc. Registration Statement on Form S-1, Registration No. 333-64463)-
</TABLE>


                                      76
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                      Description of Exhibit
------                                      ----------------------
<C>     <S>
   4(c) Amended and Restated Trust Agreement dated August 5, 1998 among United Rentals,
        Inc., The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as
        Delaware Trustee, and the Administrative Trustees named therein (incorporated by
        reference to Exhibit 10(ii) of United Rentals, Inc. Registration Statement on Form S-4,
        Registration No. 333-63171)

   4(d) Indenture dated August 5, 1998 by and between United Rentals, Inc. and The Bank of New
        York, as Trustee (incorporated by reference to Exhibit 10(hh) of United Rentals, Inc.
        Registration Statement on Form S-4, Registration No. 333-63171)

   4(e) Guarantee Agreement dated August 5, 1998 between United Rentals, Inc. and The Bank of
        New York (incorporated by reference to Exhibit 10(jj) of United Rentals, Inc. Registration
        Statement on Form S-4, Registration No. 333-63171)

   4(f) Form of Certificate representing 6 1/2% Convertible Quarterly Income Preferred Securities
        (incorporated by reference to Exhibit 4(e) of the United Rentals, Inc. Registration Statement
        on Form S-1, Registration No. 333-64463)-

   4(g) Form of Certificate representing 6 1/2% Convertible Subordinated Debentures (incorporated
        by reference to Exhibit 4(f) of the United Rentals, Inc. Registration Statement on Form S-1,
        Registration No. 333-64463)-

   4(h) Indenture dated May 22, 1998, among United Rentals (North America), Inc., the Guarantors
        named therein and State Street Bank and Trust Company, as trustee (incorporated by
        reference to Exhibit 4(b) of the Registration Statement on Form S-4 filed by United Rentals
        (North America), Inc., Registration No. 333-60467)

   4(i) Indenture dated August 12, 1998, among United Rentals (North America), Inc., the
        Guarantors named therein and State Street Bank and Trust Company, as trustee
        (incorporated by reference to Exhibit 10(bb) of United Rentals, Inc. Registration Statement
        on Form S-4, Registration No. 333-63171)

   4(j) Form of Registration Rights Agreement with certain affiliates of U.S. Rentals (incorporated
        by reference to Exhibit 10(gg) of United Rentals, Inc. Registration Statement on Form S-4,
        Registration No. 333-63171)

   4(k) Indenture dated December 15, 1998, among United Rentals (North America), Inc., the
        Guarantors named therein and State Street Bank and Trust Company, as trustee
        (incorporated by reference to Exhibit 10(uu) to Amendment No. 1 to the United Rentals
        (North America), Inc. Registration Statement on Form S-4, No. 333-64227)

4(l)    Amended and Restated Registration Rights Agreement relating to Series A Perpetual
        Convertible Preferred Stock and Series B Perpetual Convertible Preferred Stock among
        United Rentals, Inc., Bradley S. Jacobs, Apollo Investment Fund IV, LP and Apollo
        Overseas Partners IV, LP (incorporated by reference to exhibit D of the United Rentals, Inc.
        Proxy Statement dated July 22, 1999)

4(m)    Indenture dated March 23, 1999 among United Rentals (North America), Inc., the
        Guarantors named therein and The Bank of New York, as trustee (incorporated by
        reference to exhibit 4(q) of the United Rentals, Inc. Annual Report on Form 10-K for the
        Year Ended December 31, 1998)

4(n)    Notes Registration Rights Agreement dated as of March 23, 1999 among United Rentals
        (North America), Inc., the subsidiaries of United Rentals (North America), Inc. named therein,
        and the initial purchasers named therein (incorporated by reference to exhibit 4(r) of the
        United Rentals, Inc. Annual Report on Form 10-K for the Year Ended December 31, 1998)
</TABLE>

                                      77
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                       Description of Exhibit
------                                       ----------------------
<C>     <S>

4(o)    Form of Registration Rights Agreement relating to the Series B Perpetual Convertible
        Preferred Stock between United Rentals, Inc. and Chase Equity Associates, LP (incorporated
        by reference to exhibit 10(c) of the United Rentals, Inc. Quarterly Report on Form 10-Q for the
        quarter ended June 30, 1999)

10(a)   The following agreements (i) Second Amended and Restated Credit Agreement dated as of
        March 30, 1998, between United Rentals (North America), Inc., various financial institutions,
        Bank of America Canada, as Canadian agent, and Bank of America National Trust and
        Savings Association, as U.S. agent (incorporated by reference to Exhibit 10.1 to United
        Rentals, Inc. Report on Form 10-Q for the quarterly period ended March 31, 1998), (ii) Third
        Amended and Restated Credit Agreement dated as of May 12, 1998, between United Rentals
        (North America), Inc., various financial institutions, Bank of America Canada, as Canadian
        agent, and Bank of America National Trust and Savings Association, as U.S. agent
        (incorporated by reference to Exhibit 10(a)(ii) to the Registration Statement on Form S-4 filed
        by United Rentals (North America), Inc., Registration No. 333-60467) and (iii) First
        Amendment to Third Amended and Restated Credit Agreement dated as of July 10, 1998
        (incorporated by reference to Exhibit 10(a)(iii) to the Registration Statement on Form S-4 filed
        by United Rentals (North America), Inc., Registration No. 333-60467)-

10(b)   Credit Agreement dated as of September 29, 1998, between United Rentals (North America),
        Inc., various financial institutions, Bank of America Canada, as Canadian agent, and Bank of
        America National Trust, as U.S. Agent (incorporated by reference to exhibit 10.2 of United
        Rentals, Inc. Report on From 10-Q for the quarter ended September 30, 1998).

10(c)   Term Loan Agreement dated as of July 10, 1998 among United Rentals (North America), Inc.,
        various financial institutions and Bank of America National Trust and Savings Association, as
        Agent---- (incorporated by reference to Exhibit 10(cc) of the Registration Statement on Form S-4
        filed by United Rentals (North America), Inc., Registration No. 333-60467)

10(d)   First Amendment to the Term Loan Agreement dated as of September 29, 1998 among
        United Rentals (North America), Inc., various financial institutions and Bank of America
        National Trust and Savings Association, as Agent (incorporated by reference to exhibit 10.3
        of United Rentals, Inc. Report on Form 10-Q for the quarter ended September 30, 1998).

10(e)   Term Loan Agreement dated as of July 15, 1999 among United Rentals, Inc., United
        Rentals (North America), Inc., various financial institutions, Goldman Sachs Credit Partners
        L.P., as Syndication Agent and Bank of America National Trust and Savings Association, as
        Administrative Agent (incorporated by reference to exhibit 10(d) of the United Rentals, Inc.
        Quarterly Report on Form 10-Q for the quarter ended June 30, 1999)
10(f)   First Amendment dated as of August 12, 1999, to Term Loan Agreement dated as of
        July 15, 1999 among United Rentals, Inc., United Rentals (North America), Inc., various
        financial institutions, Goldman Sachs Credit Partners L.P., as syndication Agent and Bank
        of America National Trust and Savings Association, as administrative Agent (incorporated
        by reference to exhibit 10(e) of the United Rentals, Inc. Quarterly Report on Form 10-Q for
        the quarter ended June 30, 1999)

10(g)   Second Amendment dated as of July 14, 1999, to Term Loan Agreement dated as of July 10,
        1998 among United Rentals, Inc., United Rentals (North America), Inc., various financial
        institutions and Bank of America National Trust and -Savings Association, as Agent
        (incorporated by reference to exhibit 10(f) of the United Rentals, Inc. Quarterly Report on
        Form 10-Q for the quarter ended June 30, 1999) -
</TABLE>

                                      78
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                     Description of Exhibit
------                                     ----------------------
<C>     <S>

10(h)   Second Amendment dated as of July 14, 1999, to Credit Agreement dated as of
        September 29, 1998, between United Rentals, Inc., United Rentals (North America), Inc.,
        various financial institutions, Bank of America Canada, as Canadian agent, and Bank of
        America National Trust and Savings Association, as U.S. Agent (incorporated by reference
        to exhibit 10(g) of the United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter
        ended June 30, 1999)

10(i)   Third Amendment dated as of December 15, 1999, to Credit Agreement dated as of
        September 29, 1998, between United Rentals, Inc., United Rentals (North America), Inc.,
        various financial institutions, Bank of America Canada, as Canadian agent, and Bank of
        America, N.A. (formerly known as Bank of America National Trust and Savings
        Association), as U.S. Agent (incorporated by reference to exhibit 10(i) of the United Rentals
        Annual Report on Form 10-K for the year ended December 31, 1999)

10(j)   Form of Warrant Agreement (incorporated by reference to exhibit 10(c) of United Rentals,
        Inc. Registration Statement on Form S-1, Registration No. 333-39117)(1)++

10(k)   Form of Indemnification Agreement for Officers and Directors (incorporated by reference to
        exhibit 10(f) of United Rentals, Inc. Registration Statement on Form S-1, Registration
        No. 333-39117)++

10(l)   1997 Stock Option Plan (incorporated by reference to exhibit 10(b) of United Rentals, Inc.
        Registration Statement on Form S-1, Registration No. 333-39117)++

10(m)   1998 Stock Option Plan of United Rentals, Inc. (incorporated by reference to Exhibit 99.1 to
        United Rentals, Inc. Registration Statement on Form S-4, Registration No. 333-63171)++

10(n)   1998 Supplemental Stock Option Plan of United Rentals, Inc. (incorporated by reference to
        Exhibit 4.6 to the United Rentals, Inc. Registration Statement on Form S-8, No. 333-70345)

10(o)   Employment Agreement with Bradley S. Jacobs, dated as of September 19, 1997
        (incorporated by reference to exhibit 10(g) of United Rentals, Inc. Registration Statement
        on Form S-1, Registration No. 333-39117)++

10(p)   Amendment No. 1 to Employment Agreement with Bradley S. Jacobs, dated as of
        December 24, 1999 (incorporated by reference to exhibit 10(p) of the United Rentals
        Annual Report on Form 10-K for the year ended December 31, 1999)++

10(q)   Employment Agreement with John N. Milne, dated as of September 19, 1997 (incorporated
        by reference to exhibit 10(h) of United Rentals, Inc. Registration Statement on Form S-1,
        Registration No. 333-39117)++

10(r)   Amendment No. 1 to Employment Agreement with John N. Milne, dated as of
        December 24, 1999 (incorporated by reference to exhibit 10(r) of the United Rentals Annual
        Report on Form 10-K for the year ended December 31, 1999)++

10(s)   Employment Agreement with Michael J. Nolan, dated as of October 14, 1997 (incorporated
        by reference to exhibit 10(i) of United Rentals, Inc. Registration Statement on Form S-1,
        Registration No. 333-39117)++

10(t)   Amendment No. 1 to Employment Agreement with Michael J. Nolan, dated as of December
        24, 1999 (incorporated by reference to exhibit 10(t) of the United Rentals Annual Report on
        Form 10-K for the year ended December 31, 1999)++

10(u)   Employment Agreement with Robert P. Miner, dated as of October 10, 1997 (incorporated by
        reference to exhibit 10(j) of United Rentals, Inc. Registration Statement on Form S-1,
        Registration No. 333-39117)++
</TABLE>

                                      79
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                     Description of Exhibit
------                                     ----------------------
<C>     <S>

10(v)   Amendment No. 1 to Employment Agreement with Robert Miner, dated as of December 24,
        1999 (incorporated by reference to exhibit 10(v) of the United Rentals Annual Report on
        Form 10-K for the year ended December 31, 1999)++

10(w)   Subscription Agreement dated November 14, 1997, from Wayland R. Hicks (Incorporated
        by reference to exhibit 10(r) of United Rentals, Inc. Registration Statement on Form S-1,
        Registration No. 333-39117)++

10(x)   Agreement dated November 14, 1997, with Wayland R. Hicks (incorporated by reference to
        exhibit 10(s) of United Rentals, Inc., Registration Statement on Form S-1, Registration No.
        333-39117)++

10(y)   Amendment No. 1 to Employment Agreement with Wayland R. Hicks, dated as of
        December 24, 1999 (incorporated by reference to exhibit 10(y) of the United Rentals
        Annual Report on Form 10-K for the year ended December 31, 1999)++

10(z)*  Amendment No. 2 to Employment Agreement with Wayland R. Hicks, dated as of
        November 14, 2000++

10(aa)  Form of Employment Agreement with William Berry (incorporated by reference to Exhibit
        10(ee) of United Rentals, Inc. Registration Statement on Form S-4, Registration No. 333-
        63171)++

10(bb)  Form of Employment Agreement with John McKinney (incorporated by reference to Exhibit
        10(ff) of United Rentals, Inc. Registration Statement on Form S-4, Registration No.
        333-63171)++

10(cc)  Form of Private Placement Purchase Agreement entered into by certain officers in
        connection with purchasing shares and warrants from United Rentals, Inc., together with
        the form of Amendment No. 1 thereto (the Private Placement Purchase Agreement is
        incorporated by reference to exhibit 10(d) of United Rentals, Inc. Registration Statement on
        Form S-1, Registration No. 333-39117; and Amendment No. 1 is incorporated by reference
        to Exhibit 10.2 to United Rentals, Inc. Report on Form 10-Q for the quarterly period ended
        March 31, 1998)(2)++

10(dd)  Form of Subscription Agreement for September 1997 Private Placement (incorporated by
        reference to exhibit 10(e) of United Rentals, Inc. Registration Statement on Form S-1,
        Registration No. 333-39117)(3)

10(ee)  Preferred Stock Purchase Agreement dated December 21, 1998 between United Rentals,
        Inc., Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. (incorporated
        by reference to exhibit 10(y) of the United Rentals, Inc. Annual Report on Form 10-K for the
        Year Ended December 31, 1998)

10(ff)  Form of U.S. Underwriting Agreement for the public offering completed on March 9, 1999
        (incorporated by reference to Exhibit 1(a) to the United Rentals, Inc. Registration Statement
        on Form S-3, No. 333-71775)

10(gg)  Purchase Agreement dated March 16, 1999 relating to the initial sale by United Rentals
        (North America), Inc. of $250 million aggregate principal amount of 9% Senior Subordinated
        Notes due 2009 (incorporated by reference to exhibit 10(dd) of the United Rentals, Inc.
        Annual Report on Form 10-K for the Year Ended December 31, 1998)

10(hh)  Preferred Stock Purchase Agreement, Series B Perpetual Convertible Preferred Stock,
        dated June 28, 1999, among United Rentals, Inc., Apollo Investment Fund IV, L.P. and
        Apollo Overseas Partners IV, L.P., together with an Amendment dated as of July 16, 1999
        (incorporated by reference to exhibit C of the United Rentals, Inc. Proxy Statement dated
        July 22, 1999)
</TABLE>

                                      80
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                    Description of Exhibit
------                                    ----------------------
<C>     <S>

10(ii)  Preferred Stock Purchase Agreement, Series B Perpetual Convertible Preferred Stock
        dated July 16, 1999 between United Rentals, Inc. and Chase Equity Associates, L.P.
        (incorporated by reference to exhibit 10(c) of the United Rentals, Inc. Quarterly Report on
        Form 10-Q for the quarter ended June 30, 1999)

21*     Subsidiaries of United Rentals, Inc.

23*     Consent of Ernst & Young LLP
</TABLE>
--------
*   Filed herewith.
+   Filed without exhibits and schedules (to be provided supplementally upon
    request of the Commission).
++  This document is a management contract or compensatory plan or arrangement.
(1) United Rentals, Inc. issued a warrant in this form to the following
    officers and other employees of United Rentals, Inc. (or in certain cases
    to an entity controlled by such officer) for the number of shares
    indicated: Bradley S. Jacobs (5,000,000); John N. Milne (714,286); Michael
    J. Nolan (285,715); Robert P. Miner (142,857); Sandra E. Welwood (50,000);
    Joseph J. Kondrup, Jr. (50,000); Kai E. Nyby (50,000); and Richard A.
    Volonino (50,000).
(2) Each officer or other employee of United Rentals, Inc. who purchased
    securities of United Rentals, Inc. prior to December 18, 1997, other than
    Messrs. Jacobs and Hicks, entered into a Private Placement Purchase
    Agreement in this form (modified, in the case of Messrs. Barker and Imig,
    to reflect the fact that said officers did not purchase warrants) with
    respect to the shares of Common Stock and warrants purchased by such
    individual from United Rentals, Inc. United Rentals, Inc. entered into
    Amendment No. 1 with each of Mr. Milne, Mr. Nolan and Mr. Miner.
(3) Each purchaser of shares of Common Stock in United Rentals, Inc.'s
    September 1997 private placement entered into a Subscription Agreement in
    this form with respect to the shares purchased.

(b) Reports on Form 8-K:

   1.  Form 8-K dated December 18, 2000 (earliest event reported December 18,
       2000); Item 5 was reported.

   2.  Form 8-K dated December 18, 2000 (earliest event reported December 18,
       2000); Item 5 was reported.

                                      81
<PAGE>

                                  SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          UNITED RENTALS, INC.

Date: March 21, 2001
                                                    /S/ MICHAEL J. NOLAN
                                          By: _________________________________
                                             Michael J. Nolan
                                             Chief Financial Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

      Signatures                   Title                   Date
      ----------                   -----                   ----

/S/ BRADLEY S. JACOBS  Chairman of the Board          March 21, 2001
----------------------   of Directors and Chief
  Bradley S. Jacobs      Executive Officer (Principal
                         Executive Officer)

 /S/ WAYLAND R. HICKS  Director                       March 21, 2001
----------------------
   Wayland R. Hicks

  /S/ JOHN N. MILNE    Director                       March 21, 2001
----------------------
    John N. Milne

 /S/ JOHN S. MCKINNEY  Director                       March 21, 2001
----------------------
   John S. McKinney

  /S/ LEON D. BLACK    Director                       March 21, 2001
----------------------
    Leon D. Black

/S/ RICHARD D. COLBURN Director                       March 21, 2001
----------------------
  Richard D. Colburn

 /S/ RONALD M. DEFEO   Director                       March 21, 20001
----------------------
   Ronald M. DeFeo

 /S/ MICHAEL S. GROSS  Director                       March 21, 2001
----------------------
   Michael S. Gross

                                      82
<PAGE>

      Signatures                      Title                     Date
      ----------                      -----                     ----

/S/ RICHARD J. HECKMANN Director                           March 21, 2001
-----------------------
  Richard J. Heckmann

 /S/ GERALD TSAI, JR.   Director                           March 21, 2001
-----------------------
   Gerald Tsai, Jr.

/S/ CHRISTIAN M. WEYER  Director                           March 21, 2001
-----------------------
  Christian M. Weyer

 /S/ MICHAEL J. NOLAN   Chief Financial Officer (Principal March 21, 2001
-----------------------   Financial Officer)
   Michael J. Nolan

/S/ PETER R. BORZILLERI Vice President, Corporate          March 21, 2001
-----------------------   Controller (Principal
  Peter R. Borzilleri     Accounting Officer)

                                      83
<PAGE>

                                  SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          UNITED RENTALS (NORTH AMERICA), INC.

Date: March 21, 2001                                /s/ MICHAEL J. NOLAN
                                          By: _________________________________
                                             Michael J. Nolan
                                             Chief Financial Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

            Signatures                   Title                   Date
            ----------                   -----                   ----

      /S/ BRADLEY S. JACOBS  Chairman of the Board          March 21, 2001
      ----------------------   of Directors and Chief
        Bradley S. Jacobs      Executive Officer (Principal
                               Executive Officer)

       /S/ WAYLAND R. HICKS  Director                       March 21, 2001
      ----------------------
         Wayland R. Hicks

        /S/ JOHN N. MILNE    Director                       March 21, 2001
      ----------------------
          John N. Milne

       /S/ JOHN S. MCKINNEY  Director                       March 21, 2001
      ----------------------
         John S. McKinney

        /S/ LEON D. BLACK    Director                       March 21, 2001
      ----------------------
          Leon D. Black

      /S/ RICHARD D. COLBURN Director                       March 21, 2001
      ----------------------
        Richard D. Colburn

       /S/ RONALD M. DEFEO   Director                       March 21, 2001
      ----------------------
         Ronald M. DeFeo

       /S/ MICHAEL S. GROSS  Director                       March 21, 2001
      ----------------------
         Michael S. Gross


                                      84
<PAGE>

      Signatures                      Title                     Date
      ----------                      -----                     ----

/S/ RICHARD J. HECKMANN Director                           March 21, 2001
-----------------------
  Richard J. Heckmann

   /s/ DAVID C. KATZ    Director                           March 21, 2001
-----------------------
     David C. Katz

 /S/ GERALD TSAI, JR.   Director                           March 21, 2001
-----------------------
   Gerald Tsai, Jr.

/S/ CHRISTIAN M. WEYER  Director                           March 21, 2001
-----------------------
  Christian M. Weyer

 /s/ MICHAEL J. NOLAN   Chief Financial Officer (Principal March 21, 2001
-----------------------   Financial Officer)
   Michael J. Nolan

/s/ PETER R. BORZILLERI Vice President, Corporate          March 21, 2001
-----------------------   Controller (Principal
  Peter R. Borzilleri     Accounting Officer)

                                      85