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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 June 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 60201(Address of principal executive offices)
(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    o No

There
were 21,151,163 shares of Common Stock ($.01 par value) outstanding as of August 10, 2001.

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NATIONAL EQUIPMENT SERVICES, INC.

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

INDEX

|PART I.    FINANCIAL INFORMATION |  |                                                                                                                                                                                                                                                                                                                                                                         
|-------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1.                          |  | Financial Statements
Consolidated Balance Sheets at June 30, 2001 (Unaudited) and December 31, 2000
Consolidated Statements of Operations for the three and six months ended June 30, 2001 and 2000 (Unaudited)
Consolidated Statements of Cash Flows for the six months ended June 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)

|                                                                         |                                                                                                | June 30, 2001
(Restated) |                                            | December 31, 2000
(Restated) |        
|------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------- | ------------------------ | ------------------------------------------ | ---------------------------- | -------
|
|Assets                                                                   |                                                                                                |                          |                                            |                              |        
|                                                                         | Cash and cash equivalents                                                                      |                          | $                                          | 4,968                        |        
|                                                                         | Accounts receivable, net of allowance for doubtful accounts of $6,812 and $5,484, respectively |                          |                                            | 126,362                      |        
|                                                                         | Inventory, net                                                                                 |                          |                                            | 33,486                       |        
|                                                                         | Rental equipment, net                                                                          |                          |                                            | 566,766                      |        
|                                                                         | Property and equipment, net                                                                    |                          |                                            | 62,523                       |        
|                                                                         | Intangible assets, net                                                                         |                          |                                            | 363,290                      |        
|                                                                         | Loan origination costs, net                                                                    |                          |                                            | 7,672                        |        
|                                                                         | Deferred income taxes                                                                          |                          |                                            | 11,849                       |        
|                                                                         | Prepaid expenses and other assets, net                                                         |                          |                                            | 10,351                       |        
|                                                                         |                                                                                                |                          |                                            |                              |        
|                                                                         |                                                                                                |                          | Total assets                               |                              | $      
|                                                                         |                                                                                                |                          |                                            |                              |        
|Liabilities                                                              |                                                                                                |                          |                                            |                              |        
|                                                                         | Book overdraft                                                                                 |                          | $                                          | 1,440                        |        
|                                                                         | Accounts payable                                                                               |                          |                                            | 31,649                       |        
|                                                                         | Accrued interest                                                                               |                          |                                            | 9,891                        |        
|                                                                         | Deferred income taxes, net                                                                     |                          |                                            | 47,413                       |        
|                                                                         | Accrued expenses and other liabilities                                                         |                          |                                            | 28,380                       |        
|                                                                         |                                                                                                | Debt                     |                                            |                              | 840,357
|                                                                         |                                                                                                |                          |                                            |                              |        
|                                                                         |                                                                                                |                          | Total liabilities                          |                              |        
|                                                                         |                                                                                                |                          |                                            |                              |        
|                                                                         | Senior redeemable convertible preferred stock                                                  |                          |                                            | 96,047                       |        
|                                                                         | 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                                                        |                                                                                                |                          | 28,048                                     |                              |        
|Accumulated other comprehensive loss                                     |                                                                                                |                          | (922                                       | )                            |        
|Stock subscriptions receivable                                           |                                                                                                |                          | (102                                       | )                            |        
|Treasury stock at cost, 3,019 shares                                     |                                                                                                |                          | (19,062                                    | )                            |        
|                                                                         |                                                                                                |                          |                                            |                              |        
|                                                                         |                                                                                                |                          | Total stockholders' equity                 |                              |        
|                                                                         |                                                                                                |                          |                                            |                              |        
|                                                                         |                                                                                                |                          | Total liabilities and stockholders' equity |                              | $      
|                                                                         |                                                                                                |                          |                                            |                              |        

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
June 30, |        | For the Six Months Ended
June 30,
|----------------------------------------------------------- | ------------------------------ | ----------------------------------- | ------ | ---------------------------------
|
|Revenues                                                    |                                |                                     |        |                                  
|                                                            | Rental revenues                |                                     | $      | 118,985                          
|                                                            | New equipment sales            |                                     |        | 15,894                           
|                                                            | Rental equipment sales         |                                     |        | 9,683                            
|                                                            | Parts, service and other       |                                     |        | 20,283                           
|                                                            |                                |                                     |        |                                  
|                                                            |                                | Total revenues                      |        | $                                
|                                                            |                                |                                     |        |                                  
|Cost of revenues                                            |                                |                                     |        |                                  
|                                                            | Rental equipment depreciation  |                                     |        | 24,150                           
|                                                            | Cost of new equipment sales    |                                     |        | 11,870                           
|                                                            | Cost of rental equipment sales |                                     |        | 6,370                            
|                                                            | Other operating expenses       |                                     |        | 60,543                           
|                                                            |                                |                                     |        |                                  
|                                                            |                                | Total cost of revenues              |        |                                  
|                                                            |                                |                                     |        |                                  
|Gross profit                                                |                                |                                     | 61,912 |                                  
|Selling, general and administrative expenses                |                                |                                     | 35,247 |                                  
|Non-rental depreciation and amortization                    |                                |                                     | 7,421  |                                  
|                                                            |                                |                                     |        |                                  
|Operating income                                            |                                |                                     | 19,244 |                                  
|Other income, net                                           |                                |                                     | 166    |                                  
|Interest expense, net                                       |                                |                                     | 19,327 |                                  
|                                                            |                                |                                     |        |                                  
|Income (loss) before income taxes                           |                                |                                     | 83     |                                  
|Income tax expense (benefit)                                |                                |                                     | 1,357  |                                  
|                                                            |                                |                                     |        |                                  
|Net income (loss)                                           |                                | $                                   | (1,274 | )                                
|                                                            |                                |                                     |        |                                  
|Basic income (loss) per common share                        |                                | $                                   | (0.07  | )                                
|                                                            |                                |                                     |        |                                  
|Average number of common shares used in basic calculation   |                                |                                     | 20,924 |                                  
|                                                            |                                |                                     |        |                                  
|Diluted income (loss) per common share                      |                                | $                                   | (0.07  | )                                
|                                                            |                                |                                     |        |                                  
|Average number of common shares used in diluted calculation |                                |                                     | 20,924 |                                  
|                                                            |                                |                                     |        |                                  

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 Six Months Ended
June 30,      |        
|------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------- | -------
|
|Operating Activities:                                                           |                                              |                                        |        
|Net income (loss)                                                               |                                              | $                                      | (9,577 
|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                                       |                                              |                                        | 37,173 
|                                                                                |                                              |                                        |        
|Investing Activities:                                                           |                                              |                                        |        
|Acquisitions, net of cash received                                              |                                              |                                        |       
|Cash received in connection with business combination                           |                                              |                                        |       
|Purchases of rental equipment                                                   |                                              |                                        | (13,839
|Proceeds from sale of rental equipment                                          |                                              |                                        | 16,787 
|Purchases of property and equipment                                             |                                              |                                        | (6,202 
|Proceeds from sale of property and equipment                                    |                                              |                                        | 535    
|                                                                                |                                              |                                        |        
|Net cash used in investing activities                                           |                                              |                                        | (2,719 
|                                                                                |                                              |                                        |        
|Financing Activities:                                                           |                                              |                                        |        
|Proceeds from long-term debt                                                    |                                              |                                        | 38,001 
|Payments on long-term debt and capital leases                                   |                                              |                                        | (68,852
|Book overdrafts                                                                 |                                              |                                        | (1,797 
|Repurchase of treasury stock                                                    |                                              |                                        |       
|Payments of loan origination costs                                              |                                              |                                        |       
|                                                                                |                                              |                                        |        
|Net cash (used in) provided by financing activities                             |                                              |                                        | (32,648
|                                                                                |                                              |                                        |        
|Net increase (decrease) in cash and cash equivalents                            |                                              |                                        | 1,806  
|Cash and cash equivalents at beginning of period                                |                                              |                                        | 3,162  
|                                                                                |                                              |                                        |        
|Cash and cash equivalents at end of period                                      |                                              | $                                      | 4,968  
|                                                                                |                                              |                                        |        

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 June 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.

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 $922 of expense during the period ending June 30, 2001.

Recently
Issued Accounting Standards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 June 30, 2001, the derivative liability totaled $922 on the consolidated balance sheet. Hedge ineffectiveness, determined in accordance with SFAS No. 133, had no
impact on earnings for the three months ended June 30, 2001.

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

6

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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
June 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 June 30,
2001:

|                              |  | Previously
Reported |         | 2001
Adjustments |   | Revised |  
|----------------------------- |  | ------------------- | ------- | ---------------- | - | ------- | -
|Total revenues                |  | $                   | 164,845 |                  | $ |        |  
|Cost of revenues              |  |                     | 102,933 |                  |   |        |  
|Other operating expenses      |  |                     | 41,687  |                  |   | 981     |  
|                              |  |                     |         |                  |   |         |  
|Operating income              |  |                     | 20,225  |                  |   | (981    | )
|Non-operating expenses        |  |                     | 19,161  |                  |   |        |  
|                              |  |                     |         |                  |   |         |  
|Income before income taxes    |  |                     | 1,064   |                  |   | (981    | )
|Income tax expense            |  |                     | 1,685   |                  |   | (328    | )
|                              |  |                     |         |                  |   |         |  
|Net loss                      |  | $                   | (621    | )                | $ | (653    | )
|Basic loss per common share   |  | $                   | (0.04   | )                | $ | (0.03   | )
|                              |  |                     |         |                  |   |         |  
|Diluted loss per common share |  | $                   | (0.04   | )                | $ | (0.03   | )
|                              |  |                     |         |                  |   |         |  

Total
assets as previously reported at June 30, 2001 and 2000 were reduced by $11,965 and $5,110, respectively, due to these revisions as follows:

|                                              |  | Previously
Reported |           | 2001 Adjustments |   | Revised |   | Previously
Reported |           | 2000 Adjustments |   | Revised  
|--------------------------------------------- |  | ------------------- | --------- | ---------------- | - | ------- | - | ------------------- | --------- | ---------------- | - | ---------
|Accounts receivable, net                      |  | $                   | 132,785   |                  | $ | (6,423  | ) | $                   | 126,362   |                  | $ | 126,895  
|Inventory, net                                |  |                     | 34,654    |                  |   | (1,168  | ) |                     | 33,486    |                  |   | 42,669   
|Rental equipment, net                         |  |                     | 573,263   |                  |   | (6,497  | ) |                     | 566,766   |                  |   | 629,979  
|All other assets                              |  |                     | 458,530   |                  |   | 2,123   |   |                     | 460,653   |                  |   | 461,666  
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          
|Total assets                                  |  | $                   | 1,199,232 |                  | $ | (11,965 | ) | $                   | 1,187,267 |                  | $ | 1,261,209
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          
|Total liabilities                             |  | $                   | 962,850   |                  | $ | (3,720  | ) | $                   | 959,130   |                  | $ | 1,022,537
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          
|Senior redeemable convertible preferred stock |  | $                   | 96,047    |                  | $ |        |   | $                   | 96,047    |                  | $ | 95,547   
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          
|Total stockholders' equity                    |  | $                   | 140,335   |                  | $ | (8,245  | ) | $                   | 132,090   |                  | $ | 143,125  
|                                              |  |                     |           |                  |   |         |   |                     |           |                  |   |          

7

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4.    Earnings per share

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

|                                                   |                             | For the Three Months
Ended June 30, |        | For the Six Months
Ended June 30, |  
|-------------------------------------------------- | --------------------------- | ----------------------------------- | ------ | --------------------------------- | -
|
|Net income (loss)                                  |                             | $                                   | (1,274 | )                                 | $
|Less accretion on preferred stock                  |                             |                                     | (125   | )                                 |  
|                                                   |                             |                                     |        |                                   |  
|Net income (loss) available to common stockholders |                             | $                                   | (1,399 | )                                 | $
|Weighted average shares                            |                             |                                     | 21,151 |                                   |  
|                                                   | Less unvested stock         |                                     |        | (227                              | )
|                                                   |                             |                                     |        |                                   |  
|Basic weighted average shares                      |                             |                                     | 20,924 |                                   |  
|Effect of dilutive securities                      |                             |                                     |        |                                   |  
|                                                   | Unvested stock              |                                     |        |                                  |  
|                                                   | Convertible preferred stock |                                     |        |                                  |  
|                                                   |                             |                                     |        |                                   |  
|Diluted weighted average shares                    |                             |                                     | 20,924 |                                   |  
|Basic income (loss) per share                      |                             | $                                   | (0.07  | )                                 | $
|Diluted income (loss) per share                    |                             | $                                   | (0.07  | )                                 | $

The
effect of dilutive securities is omitted from the computation of earnings per share in 2001 because inclusion would be anti-dilutive by reducing the loss per share.

5.    Inventory

Inventory, net consists of the following, at:

|                                           |  | June 30,
2001
(Restated) |        | December 31,
2000
(Restated) |  
|------------------------------------------ |  | ------------------------ | ------ | ---------------------------- | -
|New equipment                              |  | $                        | 11,583 |                              | $
|Used equipment                             |  |                          | 4,930  |                              |  
|Contractor supplies                        |  |                          | 5,853  |                              |  
|Parts                                      |  |                          | 13,938 |                              |  
|Reserves for excess and obsolete inventory |  |                          | (2,818 | )                            |  
|                                           |  |                          |        |                              |  
|                                           |  | $                        | 33,486 |                              | $
|                                           |  |                          |        |                              |  

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 June 30, 2001, the Company had $77,984 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

8

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Credit Facility contains certain covenants that require the Company to maintain certain financial ratios. The Company is currently in compliance with all covenants of the Credit Facility and the
indentures. While the Company expects to be in compliance with the covenants and satisfy the financial ratios and tests related to the Credit Facility and the indentures in the future, there can be no
assurance that the Company will meet such financial ratios and tests.

9

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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
June 30, |    | Six Months Ended
June 30, |  
|-------------------------------------------- |  | --------------------------- | -- | ------------------------- | -
|
|Rental revenues                              |  | 72.2                        | %  | 74.3                      | %
|New equipment sales                          |  | 9.6                         |    | 8.7                       |  
|Rental equipment sales                       |  | 5.9                         |    | 5.2                       |  
|Parts, service and other                     |  | 12.3                        |    | 11.8                      |  
|                                             |  |                             |    |                           |  
|Total revenues                               |  | 100.0                       |    | 100.0                     |  
|Cost of revenues                             |  | 62.4                        |    | 57.2                      |  
|                                             |  |                             |    |                           |  
|Gross margin                                 |  | 37.6                        |    | 42.8                      |  
|Selling, general and administrative expenses |  | 21.4                        |    | 19.5                      |  
|Non-rental depreciation and amortization     |  | 4.5                         |    | 4.2                       |  
|                                             |  |                             |    |                           |  
|Operating income                             |  | 11.7                        |    | 19.1                      |  
|Other income, net                            |  | 0.0                         |    | 0.0                       |  
|Interest expense, net                        |  | 11.7                        |    | 12.9                      |  
|                                             |  |                             |    |                           |  
|Income (loss) before income taxes            |  | 0.0                         |    | 6.2                       |  
|Income tax expense (benefit)                 |  | 0.8                         |    | 2.5                       |  
|                                             |  |                             |    |                           |  
|Net income (loss)                            |  | (0.8                        | )% | 3.7                       | %

Results of Operations

Results of Operations for the Three and Six Months Ended June 30, 2001, and 2000

Revenues.Total revenues increased to $164,845 for the three months ended June 30, 2001 from $158,712 for the three
months ended June 30, 2000 and to $303,627 for the six months ended June 30, 2001 from $293,010 for the six months ended June 30, 2000. Rental revenues increased to $118,985 for
the three months ended June 30, 2001 from $117,860 for the three months ended June 30, 2000. The increase in rental revenues was primarily the result of the increased size of the rental
fleet. New equipment sales for the second quarter increased 14.5% from $13,882 in 2000 to $15,894 in 2001, due primarily to large projects in the Northeast. Rental fleet equipment sales for the second
quarter increased 18.4% from $8,181 in 2000 to $9,683 in 2001, due primarily to opportunities in the Central and Gulf Coast regions.

Gross Profit.Gross profit decreased to $61,912 for the three months ended June 30, 2001 from $67,965 for the three
months ended June 30, 2000 and to $111,100 for the six months ended June 30, 2001 from $121,300 for the six months ended June 30, 2000. Gross margins decreased to 37.6% from 42.8%
and to 36.5% from 41.4% during these respective periods. The decreases in gross margins are

10

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primarily due to overall lower physical utilization rates of the rental fleet resulting from decreased activity among industrial customers primarily in the Central United States. In addition, the
Company experienced an increase in the direct costs of equipment rental due to additional labor and infrastructure necessary to support the increased size of the rental fleet.

Selling, General and Administrative Expenses.Selling, general and administrative expenses increased to $35,247 for the three
months ended June 30, 2001 from $30,879 for the three months ended June 30, 2000 and to $71,657 for the six months ended June 30, 2001 from $62,575 for the six months ended
June 30, 2000. As a percentage of total revenues, selling, general and administrative expenses increased to 21.4% from 19.5% and to 23.6% from 21.4% during these respective periods. These
increases are primarily the result of additional investments in personnel and systems to support the Company's growth 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
$7,421 for the three months ended June 30, 2001 from $6,733 for the three months ended June 30, 2000 and to $14,430 for the six months ended June 30, 2001 from $13,579 for the six
months ended June 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 $19,327 for the three months ended June 30, 2001 from
$20,630 for the three months ended June 30, 2000 and to $39,837 for the six months ended June 30, 2001 from $40,112 for the six months ended June 30, 2000. These decreases were
due primarily to lower interest rates on the Company's variable rate debt in the second quarter of 2001. In addition, the Company maintained a lower average debt level in the second quarter of 2001
compared with the second quarter of 2000.

Income Tax Rate.Due to permanent timing differences of non-deductible goodwill, income tax expense was higher
than pre-tax income in the second quarter of 2001. The effective tax rate was 40.5% for the second 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 $13,839 and $120,188 in the first six months of 2001 and 2000, respectively. The Company's
expenditures for rental fleet are expected to be approximately $22,000 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 six months ended June 30, 2001 and 2000, the Company's net cash provided by operations was $37,173 and $38,737, respectively. The decrease in 2001 was due primarily to
decreased net income and timing of payments for current liabilities offset in part by collections on outstanding accounts receivable. For the six months ended June 30, 2001 and 2000, the
Company's net cash used in investing activities was $2,719 and $108,459, 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 six months ended June 30, 2001 and 2000, the Company's net cash provided by financing activities was ($32,648) and $37,424, 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

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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 million term loan and a revolving credit facility up to a maximum of $550 million (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 million from $650 million. As of June 30, 2001, $567,000 was outstanding under the credit facility. Based upon the
available borrowing base at June 30, 2001, the Company had $77,984 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
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 governing the credit facility. While the Company expects to be in compliance with the covenants
and satisfy the financial ratios and tests related to the credit facility in the future, there can be no assurance that the Company will meet such financial ratios and tests.

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.

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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

The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," as
amended, effective January 1, 2001. Due to the interest rate swap effective April 18, 2001, the Company's consolidated balance sheet includes a derivative liability of $922.

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 August 10, 2001, the Company had total borrowings under the credit facility of $559 million,
$159 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 $1.6 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

The Company held its annual shareholders meeting on May 31, 2001. See exhibit 22.1 for a report of the voting on the matters considered at the
meeting.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

See Index of Exhibits on page 16. The Company did not file any Current Reports on Form 8-K for the quarterly period ended June 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 June 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.
|22.1           |  | Certificate and Report of Inspector of Election. (Previously filed with the original 10-Q relating to the Company's period ended June 30, 2001, which this Amendment No. 1 amends and restates.) 

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