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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q/A

(Amendment No. 1 to Form 10-Q)

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2001

OR

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission File No. 001-14163

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National Equipment Services, Inc.(Exact name of registrant as specified in its charter)

|DELAWARE                                                                                      |  | 36-4087016                          
|--------------------------------------------------------------------------------------------- |  | ------------------------------------
|(State or other Jurisdiction of
Incorporation or Organization)                                |  | (I.R.S. Employer
Identification No.)
|1603 Orrington Avenue, Suite 1600, Evanston, Illinois(Address of principal executive offices) |  | 60201(Zip code)                     

(847) 733-1000(Registrant's telephone number, including area code)

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. Yes ý    No o

There
were 21,151,163 shares of Common Stock ($.01 par value) outstanding as of November 9, 2001.

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NATIONAL EQUIPMENT SERVICES, INC.

QUARTERLY REPORT ON FORM 10-Q/A
For the Quarter ended
September 30, 2001

INDEX

|PART I.    FINANCIAL INFORMATION |  |                                                                                                                                                                                                                                                                                                                                                                                          
|-------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1.                          |  | Financial Statements
Consolidated Balance Sheets at September 30, 2001 (Unaudited) and December 31, 2000
Consolidated Statements of Operations for the three and nine months ended September 30, 2001 and 2000 (Unaudited)
Consolidated Statements of Cash Flows for the nine months ended September 30, 2001 and 2000 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)
|Item 2.                          |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                                                                                                                                    
|Item 3.                          |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                                                                                                                               
|PART II.    OTHER INFORMATION    |  |                                                                                                                                                                                                                                                                                                                                                                                          
|Item 1.                          |  | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                        
|Item 2.                          |  | Changes in Securities                                                                                                                                                                                                                                                                                                                                                                    
|Item 3.                          |  | Defaults upon Senior Securities                                                                                                                                                                                                                                                                                                                                                          
|Item 4.                          |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                                      
|Item 5.                          |  | Other Information                                                                                                                                                                                                                                                                                                                                                                        
|Item 6.                          |  | Exhibits and Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                         
|SIGNATURE                        |  |                                                                                                                                                                                                                                                                                                                                                                                          
|Index of Exhibits                |  |                                                                                                                                                                                                                                                                                                                                                                                          

2

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NATIONAL EQUIPMENT SERVICES, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

|                                                                         |                                                                                                | September 30, 2001
(Restated)              |         | December 31, 2000
(Restated) |          
|------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ---------------------------- | ---------
|
|Assets                                                                   |                                                                                                |                                            |         |                              |          
|                                                                         | Cash and cash equivalents                                                                      |                                            | $       | 986                          |          
|                                                                         | Accounts receivable, net of allowance for doubtful accounts of $6,502 and $5,484, respectively |                                            |         | 128,282                      |          
|                                                                         | Inventory, net                                                                                 |                                            |         | 32,702                       |          
|                                                                         | Rental equipment, net                                                                          |                                            |         | 543,338                      |          
|                                                                         | Property and equipment, net                                                                    |                                            |         | 58,818                       |          
|                                                                         | Intangible assets, net                                                                         |                                            |         | 360,361                      |          
|                                                                         | Loan origination costs, net                                                                    |                                            |         | 6,967                        |          
|                                                                         | Deferred income taxes                                                                          |                                            |         | 10,416                       |          
|                                                                         | Prepaid expenses and other assets, net                                                         |                                            |         | 12,285                       |          
|                                                                         |                                                                                                |                                            |         |                              |          
|                                                                         |                                                                                                | Total assets                               |         | $                            | 1,154,155
|                                                                         |                                                                                                |                                            |         |                              |          
|Liabilities                                                              |                                                                                                |                                            |         |                              |          
|                                                                         | Book overdraft                                                                                 |                                            | $       | 5,667                        |          
|                                                                         | Accounts payable                                                                               |                                            |         | 21,905                       |          
|                                                                         | Accrued interest                                                                               |                                            |         | 15,725                       |          
|                                                                         | Deferred income taxes, net                                                                     |                                            |         | 47,413                       |          
|                                                                         | Accrued expenses and other liabilities                                                         |                                            |         | 41,767                       |          
|                                                                         | Debt                                                                                           |                                            |         | 802,755                      |          
|                                                                         |                                                                                                |                                            |         |                              |          
|                                                                         |                                                                                                | Total liabilities                          |         |                              | 935,232  
|                                                                         |                                                                                                |                                            |         |                              |          
|                                                                         | Senior redeemable convertible preferred stock                                                  |                                            |         | 96,172                       |          
|                                                                         | Commitments and contingencies                                                                  |                                            |         |                             |          
|Stockholders' equity:                                                    |                                                                                                |                                            |         |                              |          
|Common stock, $0.01 par, 100,000 shares authorized; 24,170 shares issued |                                                                                                |                                            | 241     |                              |          
|Additional paid-in capital                                               |                                                                                                |                                            | 123,887 |                              |          
|Retained earnings                                                        |                                                                                                |                                            | 28,580  |                              |          
|Accumulated other comprehensive loss                                     |                                                                                                |                                            | (10,793 | )                            |          
|Stock subscriptions receivable                                           |                                                                                                |                                            | (102    | )                            |          
|Treasury stock at cost, 3,019 shares                                     |                                                                                                |                                            | (19,062 | )                            |          
|                                                                         |                                                                                                |                                            |         |                              |          
|                                                                         |                                                                                                | Total stockholders' equity                 |         |                              | 122,751  
|                                                                         |                                                                                                |                                            |         |                              |          
|                                                                         |                                                                                                | Total liabilities and stockholders' equity |         | $                            | 1,154,155
|                                                                         |                                                                                                |                                            |         |                              |          

The
accompanying notes are an integral part of the consolidated financial statements.

3

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NATIONAL EQUIPMENT SERVICES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)

|                                                            |                                | For the Three Months Ended
September 30, |        | For the Nine Months Ended
September 30,
|----------------------------------------------------------- | ------------------------------ | ---------------------------------------- | ------ | ---------------------------------------
|
|Revenues                                                    |                                |                                          |        |                                        
|                                                            | Rental revenues                |                                          | $      | 121,674                                
|                                                            | New equipment sales            |                                          |        | 13,669                                 
|                                                            | Rental equipment sales         |                                          |        | 6,469                                  
|                                                            | Parts, service and other       |                                          |        | 21,828                                 
|                                                            |                                |                                          |        |                                        
|                                                            |                                | Total revenues                           |        | $                                      
|                                                            |                                |                                          |        |                                        
|Cost of revenues                                            |                                |                                          |        |                                        
|                                                            | Rental equipment depreciation  |                                          |        | 23,662                                 
|                                                            | Cost of new equipment sales    |                                          |        | 9,865                                  
|                                                            | Cost of rental equipment sales |                                          |        | 5,287                                  
|                                                            | Other operating expenses       |                                          |        | 62,475                                 
|                                                            |                                |                                          |        |                                        
|                                                            |                                | Total cost of revenues                   |        |                                        
|                                                            |                                |                                          |        |                                        
|Gross profit                                                |                                |                                          | 62,351 |                                        
|Selling, general and administrative expenses                |                                |                                          | 35,552 |                                        
|Non-rental depreciation and amortization                    |                                |                                          | 7,296  |                                        
|                                                            |                                |                                          |        |                                        
|Operating income                                            |                                |                                          | 19,503 |                                        
|Other income, net                                           |                                |                                          | 265    |                                        
|Interest expense, net                                       |                                |                                          | 17,955 |                                        
|                                                            |                                |                                          |        |                                        
|Income (loss) before income taxes                           |                                |                                          | 1,813  |                                        
|Income tax expense (benefit)                                |                                |                                          | 1,156  |                                        
|                                                            |                                |                                          |        |                                        
|Net income (loss)                                           |                                | $                                        | 657    |                                        
|Basic income (loss) per common share                        |                                | $                                        | 0.02   |                                        
|                                                            |                                |                                          |        |                                        
|Average number of common shares used in basic calculation   |                                |                                          | 20,989 |                                        
|                                                            |                                |                                          |        |                                        
|Diluted income (loss) per common share                      |                                | $                                        | 0.02   |                                        
|                                                            |                                |                                          |        |                                        
|Average number of common shares used in diluted calculation |                                |                                          | 28,843 |                                        
|                                                            |                                |                                          |        |                                        

The
accompanying notes are an integral part of the consolidated financial statements.

4

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NATIONAL EQUIPMENT SERVICES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

|                                                                                |                                              | For the Nine Months Ended
September 30, |         
|------------------------------------------------------------------------------- | -------------------------------------------- | --------------------------------------- | --------
|
|Operating Activities:                                                           |                                              |                                         |         
|Net income (loss)                                                               |                                              | $                                       | (8,920  
|Adjustments to reconcile net loss to net cash provided by operating activities: |                                              |                                         |         
|                                                                                | Depreciation and amortization                |                                         |         
|                                                                                | Gain on sale of equipment                    |                                         |         
|                                                                                | Deferred income taxes                        |                                         |         
|                                                                                | Changes in operating assets and liabilities: |                                         |         
|                                                                                |                                              | Accounts receivable                     |         
|                                                                                |                                              | Inventory                               |         
|                                                                                |                                              | Prepaid expenses and other assets       |         
|                                                                                |                                              | Accounts payable                        |         
|                                                                                |                                              | Accrued expenses and other liabilities  |         
|                                                                                |                                              |                                         |         
|Net cash provided by operating activities                                       |                                              |                                         | 64,064  
|                                                                                |                                              |                                         |         
|Investing Activities:                                                           |                                              |                                         |         
|Acquisitions, net of cash received                                              |                                              |                                         |        
|Cash received in connection with business combination                           |                                              |                                         |        
|Purchases of rental equipment                                                   |                                              |                                         | (17,418 
|Proceeds from sale of rental equipment                                          |                                              |                                         | 23,255  
|Purchases of property and equipment                                             |                                              |                                         | (6,860  
|Proceeds from sale of property and equipment                                    |                                              |                                         | 1,004   
|                                                                                |                                              |                                         |         
|Net cash used in investing activities                                           |                                              |                                         | (19     
|                                                                                |                                              |                                         |         
|Financing Activities:                                                           |                                              |                                         |         
|Proceeds from long-term debt                                                    |                                              |                                         | 41,001  
|Payments on long-term debt and capital leases                                   |                                              |                                         | (109,652
|Book overdrafts                                                                 |                                              |                                         | 2,430   
|Repurchase of treasury stock                                                    |                                              |                                         |        
|Payments of loan origination costs                                              |                                              |                                         |        
|                                                                                |                                              |                                         |         
|Net cash (used in) provided by financing activities                             |                                              |                                         | (66,221 
|                                                                                |                                              |                                         |         
|Net decrease in cash and cash equivalents                                       |                                              |                                         | (2,176  
|Cash and cash equivalents at beginning of period                                |                                              |                                         | 3,162   
|                                                                                |                                              |                                         |         
|Cash and cash equivalents at end of period                                      |                                              | $                                       | 986     
|                                                                                |                                              |                                         |         

The
accompanying notes are an integral part of the consolidated financial statements.

5

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NATIONAL EQUIPMENT SERVICES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)

1.    Organization

National Equipment Services, Inc. (the "Company") is principally a holding company organized on June 4, 1996 (date of inception) under the laws of
Delaware. The Company conducts its operations through its wholly owned subsidiaries acquired since the date of inception. The Company owns and operates equipment rental, sales and service facilities
primarily located throughout the United States. The Company rents various types of equipment to a diverse customer base, including construction, petro-chemical and other industrial users. The Company
also sells new and used rental equipment and related parts, and provides other services. The nature of the Company's business is such that short-term obligations are typically met by cash
flow generated from long-term assets. Consequently, consistent with industry practice, the accompanying balance sheets are presented on an unclassified basis.

2.    Basis of presentation

GeneralThe accompanying unaudited financial statements as of and for the quarters ended September 30, 2001 and 2000 have been prepared in
accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. The December 31, 2000 consolidated balance sheet was derived from audited financial statements but does not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting only of
normal recurring adjustments, have been included. Results of operations for the interim periods are not necessarily indicative of the results that may be expected for a full year. Due to the
seasonality which impacts a significant portion of the Company's locations, the second and third quarters of the year are typically the most active quarters for the Company.

Derivative
InstrumentStatement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended, became
effective as of January 1, 2001. Currently, the Company's only derivative is an interest rate swap used to hedge a portion of the Company's debt and is designated as a cash flow hedging
instrument. The Company's objective for holding the derivative is to minimize interest rate risks and stabilize cash flows. The derivative is required to be recorded as an asset or liability on the
consolidated balance sheet at fair value, with an offset to other comprehensive income to the extent the hedge is effective. Any ineffectiveness in the hedge will be recorded as an adjustment to
earnings. As of September 30, 2001, the derivative liability totaled $10,793 and was recorded as an accrued liability on the consolidated balance sheet.

Comprehensive
IncomeStatement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", which requires comprehensive income and its
components to be disclosed in the financial statements for all periods presented became effective in 1999. The only item of other comprehensive income applicable to the Company is a change in the fair
value of a derivative instrument, totaling $9,871 and $10,793 of expense during the three and nine-month periods ending September 30, 2001.

Recently
Issued Accounting StandardsIn June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets" that supersede Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations," and APB Opinion No. 17, "Intangible
Assets." The two statements modify the method of accounting for business combinations and address the accounting and reporting for goodwill and intangible assets. SFAS No. 141 is effective for
all business combinations initiated after June 30, 2001 and all business combinations accounted for by the purchase method for which the date of acquisition is after June 30, 2001. SFAS
No. 142 is effective for fiscal years beginning after December 15, 2001. Beginning in fiscal year 2002, the Company will no longer amortize goodwill, but will, however, evaluate goodwill
for impairment annually. The Company is currently reviewing these statements to determine their effect on the Company's financial statements. However, the fair value of the Company's debt and equity
at September 30, 2001 is significantly below the book value of the Company's assets.

6

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In
June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" which amends FASB No. 19, "Financial Accounting and Reporting by Oil and
Gas Producing Companies", and is effective for all companies. This statement addresses the financial accounting and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company is currently reviewing this
statement to determine its effect on the Company's financial statements.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which supersedes SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and the accounting and reporting provisions of APB No. 30, "Reporting the Results of
OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently occurring Events and Transactions." This statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001, and interim
periods within those fiscal years. The Company is currently reviewing this statement to determine its effect on the Company's financial statements.

ReclassificationsCertain
reclassifications of prior year financial statement amounts have been made to conform with the current year reporting.

3.    Revision of Prior Year Consolidated Financial Statements

In the process of closing its books for 2001, the Company became aware that certain assets recorded on the 2000 and prior consolidated balance sheets were
overstated. Following a comprehensive accounting investigation, the Company is, by means of this filing, revising its previously issued consolidated financial statements for the quarter ended
September 30, 2001 to reflect write-downs of receivables, inventory and rental equipment.

The
following table reconciles the amounts previously reported to the amounts currently being reported in the consolidated statements of operations for the quarter ended
September 30, 2001:

|                                         |  | Previously
Reported |         | 2001
Adjustments |   | Revised
|---------------------------------------- |  | ------------------- | ------- | ---------------- | - | -------
|Total revenues                           |  | $                   | 163,640 |                  | $ |       
|Cost of revenues                         |  |                     | 101,289 |                  |   |       
|Other operating expenses                 |  |                     | 44,417  |                  |   | (1,569 
|                                         |  |                     |         |                  |   |        
|Operating income                         |  |                     | 17,934  |                  |   | 1,569  
|Non-operating expenses                   |  |                     | 17,690  |                  |   |       
|                                         |  |                     |         |                  |   |        
|Income before income taxes               |  |                     | 244     |                  |   | 1,569  
|Income tax expense                       |  |                     | 632     |                  |   | 524    
|                                         |  |                     |         |                  |   |        
|Net (loss) income                        |  | $                   | (388    | )                | $ | 1,045  
|Basic (loss) earnings per common share   |  | $                   | (0.02   | )                | $ | 0.04   
|                                         |  |                     |         |                  |   |        
|Diluted (loss) earnings per common share |  | $                   | (0.02   | )                | $ | 0.04   
|                                         |  |                     |         |                  |   |        

Total
assets as previously reported at September 30, 2001 and 2000 were reduced by $10,920 and $5,110, respectively, due to these revisions as follows:

|                                              |  | Previously
Reported |           | 2001
Adjustments |   | Revised |   | Previously
Reported |           | 2000
Adjustments |   | Revised  
|--------------------------------------------- |  | ------------------- | --------- | ---------------- | - | ------- | - | ------------------- | --------- | ---------------- | - | ---------
|Accounts receivable, net                      |  | $                   | 133,136   |                  | $ | (4,854  | ) | $                   | 128,282   |                  | $ | 138,120  
|Inventory, net                                |  |                     | 33,870    |                  |   | (1,168  | ) |                     | 32,702    |                  |   | 39,759   
|Rental equipment, net                         |  |                     | 549,835   |                  |   | (6,497  | ) |                     | 543,338   |                  |   | 640,665  
|All other assets                              |  |                     | 448,234   |                  |   | 1,599   |   |                     | 449,833   |                  |   | 468,061  
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          
|Total assets                                  |  | $                   | 1,165,075 |                  | $ | (10,920 | ) | $                   | 1,154,155 |                  | $ | 1,286,605
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          
|Total liabilities                             |  | $                   | 938,952   |                  | $ | (3,720  | ) | $                   | 935,232   |                  | $ | 1,042,890
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          
|Senior redeemable convertible preferred stock |  | $                   | 96,172    |                  | $ |        |   | $                   | 96,172    |                  | $ | 95,672   
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          
|Total stockholders' equity                    |  | $                   | 129,951   |                  | $ | (7,200  | ) | $                   | 122,751   |                  | $ | 148,043  
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          

7

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4.    Earnings per share

The
Company's earnings per share for the three and nine months ended September 30, 2001 and 2000 are calculated as follows:

|                                                   |  | For the Three Months Ended
September 30, |        | For the Nine Months Ended
September 30, |  
|-------------------------------------------------- |  | ---------------------------------------- | ------ | --------------------------------------- | -
|
|Net income (loss)                                  |  | $                                        | 657    |                                         | $
|Less accretion on preferred stock                  |  |                                          | (125   | )                                       |  
|                                                   |  |                                          |        |                                         |  
|Net income (loss) available to common stockholders |  | $                                        | 532    |                                         | $
|Weighted average shares                            |  |                                          | 21,151 |                                         |  
|Less unvested stock                                |  |                                          | (162   | )                                       |  
|                                                   |  |                                          |        |                                         |  
|Basic weighted average shares                      |  |                                          | 20,989 |                                         |  
|Effect of dilutive securities                      |  |                                          |        |                                         |  
|Unvested stock                                     |  |                                          | 162    |                                         |  
|Convertible preferred stock                        |  |                                          | 7,692  |                                         |  
|                                                   |  |                                          |        |                                         |  
|Diluted weighted average shares                    |  |                                          | 28,843 |                                         |  
|Basic income (loss) per share                      |  | $                                        | 0.02   |                                         | $
|Diluted income (loss) per share                    |  | $                                        | 0.02   |                                         | $

The
effect of dilutive securities is omitted from the computation of earnings per share for the nine months ended September 30, 2001 because inclusion would be
anti-dilutive by reducing the loss per share.

5.    Inventory

Inventory, net consists of the following, at:

|                                           |  | September 30, 2001
(Restated) |        | December 31, 2000
(Restated) |  
|------------------------------------------ |  | ----------------------------- | ------ | ---------------------------- | -
|New equipment                              |  | $                             | 10,395 |                              | $
|Used equipment                             |  |                               | 5,478  |                              |  
|Contractor supplies                        |  |                               | 4,928  |                              |  
|Parts                                      |  |                               | 14,641 |                              |  
|Reserves for excess and obsolete inventory |  |                               | (2,740 | )                            |  
|                                           |  |                               |        |                              |  
|                                           |  | $                             | 32,702 |                              | $
|                                           |  |                               |        |                              |  

6.    Debt

During
the first quarter of 2001, the Company reduced the committed amount under its credit facility with First Union National Bank, as the agent, and certain other financial
institutions from $750,000 down to a maximum amount of $650,000 (subject to availability based on certain financial tests including a borrowing base). Based upon the available borrowing base at
September 30, 2001, the Company had $107,655 available on the revolving credit facility.

The
Company's credit facility and indentures contain a number of covenants that, among other things, set certain limitations on the granting of liens, asset sales, additional
indebtedness, transactions with affiliates, restricted payments, investments and issuances of stock. In addition, the Company's credit facility contains certain covenants that require the Company to
maintain certain financial ratios. The Company is currently in compliance with all covenants under its credit facility and indentures. However, based on current operating projections, the Company
expects that it will violate the leverage ratio covenant under its credit facility at the end of the fourth quarter of 2001. A failure by the Company to comply with this covenant could result in an
event of default under the credit facility, which could have a material adverse effect on the Company. The Company is currently in discussions with its lenders to amend its credit facility to increase
the leverage ratio covenant, which would give the Company additional financial flexibility. The Company expects to finalize the amendment to its credit facility during the fourth quarter.

8

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands)

In
the process of closing its books for 2001, the Company became aware that certain assets recorded on the 2000 and prior consolidated balance sheets were overstated. Following a
comprehensive accounting investigation, the Company is, by means of this filing, revising its previously issued consolidated financial statements to reflect write-downs of receivables, inventory and
rental equipment at two of its subsididaries. The impact of this restatement is disclosed in Note 3 to the Consolidated Financial Statements. All financial information presented herein reflects
these revisions.

The
following table shows information derived from the Company's historical consolidated statements of operations as a percentage of total revenues.

|                                             |  | Three Months Ended
September 30, |   | Nine Months Ended
September 30, |  
|-------------------------------------------- |  | -------------------------------- | - | ------------------------------- | -
|
|Rental revenues                              |  | 74.4                             | % | 76.2                            | %
|New equipment sales                          |  | 8.4                              |   | 8.3                             |  
|Rental equipment sales                       |  | 3.9                              |   | 3.3                             |  
|Parts, service and other                     |  | 13.3                             |   | 12.2                            |  
|                                             |  |                                  |   |                                 |  
|Total revenues                               |  | 100.0                            |   | 100.0                           |  
|Cost of revenues                             |  | 61.9                             |   | 56.7                            |  
|                                             |  |                                  |   |                                 |  
|Gross margin                                 |  | 38.1                             |   | 43.3                            |  
|Selling, general and administrative expenses |  | 21.7                             |   | 19.9                            |  
|Non-rental depreciation and amortization     |  | 4.4                              |   | 4.2                             |  
|                                             |  |                                  |   |                                 |  
|Operating income                             |  | 12.0                             |   | 19.2                            |  
|Other income, net                            |  | 0.2                              |   | 0.1                             |  
|Interest expense, net                        |  | 11.0                             |   | 12.9                            |  
|                                             |  |                                  |   |                                 |  
|Income (loss) before income taxes            |  | 1.2                              |   | 6.4                             |  
|Income tax expense (benefit)                 |  | 0.7                              |   | 3.0                             |  
|                                             |  |                                  |   |                                 |  
|Net income (loss)                            |  | 0.5                              | % | 3.4                             | %

Results of Operations

Results of Operations for the Three and Nine Months Ended September 30, 2001, and 2000

Revenues.Total revenues decreased to $163,640 for the three months ended September 30, 2001 from $167,513 for the
three months ended September 30, 2000 and increased to $467,267 for the nine months ended September 30, 2001 from $460,523 for the nine months ended September 30, 2000. Rental
revenues decreased to $121,674 for the three months ended September 30, 2001 from $127,630 for the three months ended September 30, 2000 and increased to $347,987 for the nine months
ended September 30, 2001 from $345,011 for the nine months ended September 30, 2000. The decrease in rental revenue in the third quarter was primarily the result of a decrease in the
physical utilization rate of the Company's equipment, particularly in the Central United States. New equipment sales for the third quarter decreased 2.2% from $13,976 in 2000 to $13,669 in 2001 and
increased 5.2% from $39,871 to $41,936 for the nine months ended September 30, 2000 and September 30, 2001 respectively. Rental fleet equipment sales for the third quarter increased
15.8% from $5,585 in 2000 to $6,469 in 2001 and increased 12.3% from $20,714 for the period ended September 30, 2000 to $23,255 for the period ended September 30, 2001, as the Company
increased the sale of underperforming assets through its continuous management of the rental equipment fleet.

Gross Profit.Gross profit decreased to $62,351 for the three months ended September 30, 2001 from $72,605 for the
three months ended September 30, 2000 and to $173,451 for the nine months ended September 30, 2001 from $193,905 for the nine months ended September 30, 2000. Gross margins
decreased to 38.1% from 43.3% and to 37.0% from 42.1% during these respective periods. The decreases in gross margins are primarily due to overall lower physical utilization rates of the rental fleet
resulting from decreased activity among industrial customers,

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primarily in the Central United States. In addition, the Company experienced a decrease in rental fleet sales margin, in response to a general softening in the market for used equipment.

Selling, General and Administrative Expenses.Selling, general and administrative expenses increased to $35,552 for the three
months ended September 30, 2001 from $33,340 for the three months ended September 30, 2000 and to $107,209 for the nine months ended September 30, 2001 from $95,915 for the nine
months ended September 30,
2000. As a percentage of total revenues, selling, general and administrative expenses increased to 21.7% from 19.9% and to 22.9% from 20.8% during these respective periods. These increases are
primarily the result of additional investments in management and systems infrastructure necessary to support the Company and increased bad debt expense due to the effect of softening economic
conditions on our customers.

Non-rental Depreciation and Amortization.Non-rental depreciation and amortization increased to
$7,296 for the three months ended September 30, 2001 from $6,985 for the three months ended September 30, 2000 and to $21,726 for the nine months ended September 30, 2001 from
$20,564 for the nine months ended September 30, 2000. These increases were due primarily to additions of non-fleet capital items such as vehicles and shop equipment.

Interest Expense, Net.Interest expense, net, decreased to $17,955 for the three months ended September 30, 2001 from
$21,628 for the three months ended September 30, 2000 and to $57,792 for the nine months ended September 30, 2001 from $61,740 for the nine months ended September 30, 2000. These
decreases were due primarily to lower interest rates on the Company's variable rate debt in the third quarter of 2001. In addition, the Company maintained a lower average debt level in the third
quarter of 2001 compared with the third quarter of 2000.

Income Tax Rate.Due to permanent differences between book and tax treatment of non-deductible goodwill, income
tax expense was higher than pre-tax income in the third quarter of 2001. The effective tax rate was 46.3% for the third quarter of 2000.

Liquidity and Capital Resources

The Company's primary capital requirements are for the purchasing of new rental equipment. The Company's other capital expenditures include buying vehicles used
for delivery and maintenance, and for property and equipment. The Company purchases rental equipment throughout the year to replace equipment that has been sold as well as to maintain adequate levels
of equipment to meet existing and new customer needs. Rental fleet purchases for the Company were $17,418 and $157,676 in the first nine months of 2001 and 2000, respectively. The Company's
expenditures for rental fleet are expected to be approximately $25,000 in 2001 compared to $165,000 in 2000. The Company expects to minimize capital expenditures until such time as the business
environment improves.

For
the nine months ended September 30, 2001 and 2000, the Company's net cash provided by operations was $64,064 and $75,022, respectively. The decrease in 2001 was due primarily
to decreased net income and timing of payments for accounts payable and other current liabilities, offset by collections on outstanding accounts receivable. For the nine months ended
September 30, 2001 and 2000, the Company's net cash used in investing activities was $19 and $148,301, respectively. Net cash used for investing activities consists primarily of business
acquisitions and purchases of rental equipment and property and equipment. The decrease in 2001 was due primarily to reduced purchases of rental equipment and lower acquisition activity. For the nine
months ended September 30, 2001 and 2000, the Company's net cash provided by financing activities was ($66,221) and $46,016, respectively. Net cash provided by financing activities consists
primarily of borrowings under the Company's credit facility and was lower in 2001 due to reduced rental fleet purchasing and the reduction of indebtedness under the Company's credit facility. The
Company intends to continue to reduce the amount of its indebtedness under its credit facility.

The
Company's credit facility provides for a $100,000 term loan and a revolving credit facility up to a maximum of $550,000 (subject to availability based on certain financial tests
including a borrowing base) to meet acquisition needs, as well as seasonal working capital and general corporate requirements. In March 2001 the Company reduced the committed amount under its
revolving credit facility to $550,000 from $650,000. As of September 30, 2001, $530,000 was outstanding under the credit facility. Based upon the available borrowing base at
September 30, 2001, the Company had $107,655 available on the revolving credit facility loan. The credit facility contains certain covenants that require the Company to, among other things,
satisfy certain financial tests relating to 1) the ratio of senior debt to EBITDA, 2) minimum interest coverage ratio and 3) the ratio of funded debt to

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EBITDA. The agreements governing the credit facility also contain various other covenants that restrict the Company's ability to, among other things, 1) incur additional indebtedness,
2) permit liens to attach to its assets, 3) pay dividends or make other restricted payments on its common stock and certain other securities and 4) make acquisitions unless
certain financial conditions are satisfied. The Company is currently in compliance with all covenants under its credit facility. However, based on current operating projections, the Company expects
that it will violate the leverage ratio covenant under its credit facility at the end of the fourth quarter of 2001. A failure by the Company to comply with this covenant could result in an event of
default under the credit facility, which could have a material adverse effect on the Company. The Company is currently in discussions with its lenders to amend its credit facility to increase the
leverage ratio covenant, which would give the Company additional financial flexibility. The Company expects to finalize the amendment to its credit facility during the fourth quarter.

During
1997, the Company issued $100,000 of Senior Subordinated Notes due 2004 (the "Series A Notes") at a discount netting proceeds of $98,767. During 1998, the Company completed
its exchange of $100,000 of Senior Subordinated Notes due 2004, Series B (the "Series B Notes"), which have been registered for public trading, for the Series A Notes.

Also
during 1998, the Company issued $125,000 of Senior Subordinated Notes due 2004, Series C (the "Series C Notes") at a discount netting proceeds of $122,288. During
1999, the Company issued $50,000 of additional Series C Notes, at a discount netting proceeds of $49,000. Later during 1999, the Company completed its exchange of $175,000 of Senior
Subordinated Notes due 2004, Series D (the "Series D Notes"), which have been registered for public trading, for the Series C Notes.

The
Company accretes the original issue discount of the Series B Notes and Series D Notes over the term of the notes using the effective interest rate method. The
indentures for the Series B and Series D Notes contain a number of covenants that, among other things, set certain limitations on the granting of liens, asset sales, additional
indebtedness, transactions with affiliates, restricted payments, investments, issuances of stock and payment of dividends. The Company is currently in compliance with all such covenants under the
indentures.

The
Company believes that its credit facility, together with funds generated by operations, will provide the Company with sufficient liquidity and capital resources in the
near-term to finance its operations and pursue its business strategy. Over the long term, the Company will need to refinance its credit facility, its Series B Notes and its
Series D Notes since the credit facility becomes due and payable in July 2003 and its Series B Notes and Series D Notes in November 2004.

General Economic Conditions, Inflation and Seasonality

The Company's operating results may be adversely affected by 1) changes in general economic conditions, including changes in construction and industrial
activity, or increases in interest rates, or 2) adverse weather conditions that may temporarily decrease construction and industrial activity in a particular geographic area. Although the
Company cannot accurately anticipate the effect of inflation on its operations, management believes that inflation has not had a material impact on the Company's results of operations and is not
likely to in the foreseeable future.

The
Company's revenues and operating results fluctuate due to the seasonal nature of the industry in which the Company operates (with rental activity tending to be lower in winter).

Recently Issued Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and
Other Intangible Assets" that supersede Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations," and APB Opinion No. 17, "Intangible Assets." The two statements
modify the method of accounting for business combinations and address the accounting and reporting for goodwill and intangible assets. SFAS No. 141 is effective for all business combinations
initiated after June 30, 2001 and all business combinations accounted for by the purchase method for which the date of acquisition is after June 30, 2001. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. Beginning in fiscal year 2002, the Company will no longer amortize goodwill, but will, however, evaluate goodwill for impairment
annually. The Company is currently reviewing these statements to determine their effect on the Company's financial statements. However, the fair value of the Company's debt and equity at
September 30, 2001 is significantly below the book value of the Company's assets.

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In
June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" which amends FASB No. 19, "Financial Accounting and Reporting by Oil and
Gas Producing Companies", and is effective for all companies. This statement addresses the financial accounting and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company is currently reviewing this
statement to determine its effect on the Company's financial statements.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which supersedes SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and the accounting and reporting provisions of APB No. 30, "Reporting the Results of
OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently occurring Events and Transactions." This statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001, and interim
periods within those fiscal years. The Company is currently reviewing this statement to determine its effect on the Company's financial statements.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's credit facility, as amended, provides the Company with a $100 million term loan and permits the Company to borrow up to an additional
$550 million of revolving loans provided that certain conditions and financial tests are met, subject to a borrowing base. Borrowings under the credit facility bear interest, at the Company's
option, at a specified base rate or Eurodollar rate plus the applicable borrowing margin. At November 9, 2001, the Company had total borrowings under the credit facility of $518 million,
$118 million of which was subject to interest rate risk after giving effect to the interest rate swap contract discussed below. Each 100 basis point increase in interest rates on the variable
rate debt would decrease pretax earnings by approximately $1.2 million.

The
Company may, from time to time, use interest rate swap contracts to hedge the impact of interest rate fluctuations on certain variable rate debt. The Company does not hold or issue
derivative financial instruments for trading or speculative purposes. Effective April 18, 2001 the Company entered into an interest rate swap contract, which fixes the interest rate at 4.71% on
$400 million of variable rate debt through April 17, 2003. The interest differential is paid or received on a monthly basis and recognized currently as a component of interest expense.
The counterparty to the swap is a major financial institution and management believes that the risk of incurring credit losses is remote.

Forward Looking Statements

Note: This document contains forward-looking statements as encouraged by the Private Securities Litigation Reform Act of 1995. All
statements contained in this document, other than historical information, are forward-looking statements. These statements represent management's current judgment on what the future holds. A variety
of factors could cause business conditions and the Company's actual results to differ materially from those expected by the Company or expressed in the Company's forward-looking statements. These
factors include, without limitation, the Company's ability to successfully integrate acquired businesses; changes in market price or market demand; loss of business from customers; unanticipated
expenses; changes in financial markets; and other factors discussed in the Company's filings with the Securities and Exchange Commission.

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PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

Not applicable.

ITEM 2.    CHANGES IN SECURITIES

Not applicable.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5.    OTHER INFORMATION

Not applicable.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

See Index of Exhibits on page 15. The Company did not file any Current Reports on Form 8-K for the quarterly period ended September 30,
2001.

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SIGNATURE

Pursuant to the requirements 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 on May 13, 2002.

| |  | NATIONAL EQUIPMENT SERVICES, INC.
| |  | ---------------------------------
| |  | By:                              

Form 10-Q:
For the quarter ended September 30, 2001.

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INDEX OF EXHIBITS

|Exhibit
Number |  | Description of Document                                                                                                                                                                          
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|11.1           |  | Statement re Computation of Per Share Earnings. Not required because the relevant computations can be clearly determined from the material contained in the financial statements included herein.

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