UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998   Commission File Number: 001-14145

                                   NEFF CORP.
             (Exact Name of registrant as specified in its charter)


              DELAWARE                                 65-0626400
              --------                                 ----------
    (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)


             3750 N.W. 87th AVENUE, SUITE 400, MIAMI, FLORIDA 33178
             ------------------------------------------------------
              (Address of principal executive offices) (Zip Code)

                 Registrant's telephone number: (305) 513-3350

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

                                            Name of each exchange
           Title of each class               on which registered  
           -------------------              ---------------------
           Class A Common Stock
           Par Value $.01 per share         New York Stock Exchange


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


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

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

As of March 15,  1999,  the  aggregate  market value of the voting stock held by
non-affiliates  of the registrant was approximately  $38.3 million.  As of March
15, 1999, there were 16,065,350 shares of the registrant's  Class A Common Stock
outstanding.

                      Documents incorporated by reference:

Portions of the Company's  Proxy Statement in connection with its Annual Meeting
to be held on May 24,  1999 (the  "1999  Proxy  Statement").  Specifically,  the
sections in the 1999 Proxy  Statement  entitled  "Ownership of Shares of Certain
Beneficial Owners," "Certain Relationships and Related Transactions," "Executive
and Director  Compensation," and "Compensation  Committee Interlocks and Insider
Participation" are incorporated by reference into Part III of this Report.

<PAGE>

Part I

     Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995

     The matters  discussed herein may include  forward-looking  statements that
involve risks and uncertainties which could result in operating performance that
is materially  different  from that implied in the  forward-looking  statements.
Risks that could cause  actual  results to differ  materially  from those in the
forward-looking  statements  include,  but are not limited to, risks inherent in
the Company's growth strategy,  such as the uncertainty that the Company will be
able to identify,  acquire and integrate attractive acquisition candidates;  the
Company's dependence on additional capital for future growth and the high degree
to which the Company is leveraged.  Additional  information concerning these and
other risks and  uncertainties  is contained  from time to time in the Company's
filings with the Securities and Exchange Commission.

     The Company  cautions that the factors  described  above could cause actual
results  or  outcomes  to  differ   materially   from  those  expressed  in  any
forward-looking   statements   made  by  or  on  behalf  of  the  Company.   Any
forward-looking  statements speak only as of the date on which such statement is
made,  and the Company  undertakes no  obligation to update any  forward-looking
statement or statements  to reflect  events or  circumstances  after the date on
which such  statement  is made or to reflect  the  occurrence  of  unanticipated
events.  New  factors  emerge  from  time to time,  and it is not  possible  for
management to predict all of such factors. Further, management cannot assess the
impact of each such factor on the business or the extent to which any factor, or
combinations  of factors,  may cause actual  results to differ  materially  from
those contained in any forward-looking statements.

ITEM 1. BUSINESS

General 

     Neff is one of the fastest growing equipment rental companies in the United
States,  with 87 rental  locations in 17 states and South  America.  The Company
rents a wide variety of equipment, including backhoes, air compressors, loaders,
lifts and compaction  equipment to construction  and industrial  customers.  The
Company also acts as a dealer of new  equipment on behalf of several  nationally
recognized  equipment  manufacturers.   In  addition,  the  Company  sells  used
equipment,   spare  parts  and  merchandise  and  provides  ongoing  repair  and
maintenance services.

     According to industry  sources,  the  equipment  rental  industry grew from
approximately  $600 million in revenues in 1982 to an  estimated  $18 billion in
1997.  This growth has been driven  primarily  by  construction  and  industrial
companies that have increasingly outsourced equipment needs to reduce investment
in  non-core  assets and convert  costs from fixed to  variable.  The  equipment
rental industry is highly fragmented,  with an estimated 17,000 equipment rental
companies in the United States. As a result, the Company believes that there are
substantial consolidation  opportunities for well-capitalized  operators such as
the  Company.   Relative  to  smaller  competitors,   the  Company  has  several
advantages,  including increased purchasing power, larger inventories to service
larger accounts and the ability to transfer  equipment among rental locations in
response to changing patterns of customer demand.



                                       2
<PAGE>

Competitive Strengths 

     The Company believes it has several competitive strengths, which provide it
with the opportunity for continued growth and increased profitability.

     Strong Market Position. Neff is one of the fastest growing construction and
industrial  equipment  rental  companies in the United States,  and is a leading
competitor with a significant  presence in the Southeast and Gulf Coast regions.
We  operate  87 rental  locations  in 17  states,  including  Florida,  Georgia,
Alabama,  Mississippi,  South Carolina,  North Carolina,  Tennessee,  Louisiana,
Texas, Oklahoma,  Arizona,  Nevada, Utah, California,  Oregon,  Washington,  and
Colorado,  and South  America.  From  December 31, 1995 to December 31, 1998, we
increased  our  equipment  rental  locations  from eight to 86 and  expanded our
rental  fleet from $62  million to $430.1  million  based on original  cost.  We
believe  our  size and  geographic  diversity  help  insulate  us from  regional
economic downturns.

     High  Quality  Rental  Fleet.  We believe  our  rental  fleet is one of the
newest,  most comprehensive and  well-maintained  rental fleets in the equipment
rental  industry.  As of December 31, 1998,  the average age of our rental fleet
was  approximately  23  months.  We  make  ongoing  capital  investment  in  new
equipment,  engage in regular  sales of used  equipment  and conduct an advanced
preventative  maintenance program. We believe this maintenance program increases
fleet  utilization,  extends the useful life of equipment  and  produces  higher
resale values.

     Excellent Customer Service. We differentiate ourselves from our competitors
by  providing  high  quality,  responsive  service  to  our  customers.  Service
initiatives   include  (i)  reliable  on-time  equipment  delivery  directly  to
customers' job sites;  (ii) on-site repairs and maintenance of rental  equipment
by factory trained mechanics,  generally  available 24 hours a day, seven days a
week; and (iii) ongoing  training of an experienced  sales force to consult with
customers regarding their equipment needs.

     State-of-the-Art   Management  Information  System.  We  have  developed  a
customized, state-of-the-art management information system capable of monitoring
operations at up to 300 sites. We use this system to maximize fleet  utilization
and determine the optimal fleet  composition by market.  The system links all of
our  rental  locations  and  allows  management  to  track  customer  and  sales
information,  as well as the location,  rental status and maintenance history of
every piece of  equipment  in the rental  fleet.  Rental  location  managers can
search our entire  rental  fleet for needed  equipment,  quickly  determine  the
closest  location of such equipment,  and arrange for delivery to the customer's
work site, thus maximizing equipment utilization.

     Experienced  Management Team. Since 1995, we have  significantly  increased
the  quality  and  depth  of our  management  team to help  oversee  our  growth
strategy.  Our senior management team has extensive  experience in the equipment
rental  industry and our seven regional  managers have, on average,  21 years of
experience  and  substantial  knowledge of the local markets served within their
regions.  We believe  that our  management  team has the ability to continue the
Company's strong growth as well as manage the Company on a much larger scale. We
are not dependent on recruiting  additional operating,  acquisition,  finance or
other personnel to implement our growth strategy.



                                       3
<PAGE>

Business Strategy

     Our  objective  is to  increase  revenue,  cash flow and  profitability  by
building and  maintaining  a leading  market  position in the  equipment  rental
industry. Key elements of our business strategy include:

     Increase Profitability of Recently Opened Rental Locations.  Since March 1,
1995,  we have  opened 26  start-up  rental  equipment  locations  including  11
locations  in 1997 and five  locations  in 1998.  Because  we incur  significant
expenses in connection  with the opening of new locations,  management  believes
that our financial  performance  does not yet fully reflect the benefit of these
rental  locations.  Based on our historical  experience,  a new equipment rental
location  tends to realize  significant  increases  in  revenues,  cash flow and
profitability  during the first three  years of  operation  as more  prospective
customers  become aware of its  operation and as the rental  equipment  fleet is
customized  to  local  market  demand.   Because  there  is  relatively   little
incremental  operating  expense  associated  with such  revenues,  cash flow and
profitability increase significantly as a rental location matures.

     Increase Fleet at Existing  Locations.  We believe we can capitalize on the
demand for rental  equipment  in the markets we serve and  increase  revenues by
increasing the size of the rental fleet and adding new product lines at existing
locations.  We believe that this strategy allows us to attract new customers and
serve as a single  source  supplier  for our  customers.  Because  the  start-up
expenditures associated with increasing the fleet and expanding product lines at
existing locations are relatively modest,  these investments  typically generate
higher and faster returns than investments in new locations.

     Acquire Equipment Rental  Companies.  We intend to expand primarily through
acquisitions of equipment  rental  companies and believe there are a significant
number of acquisition opportunities in North America, which would complement our
existing operations. After completing an acquisition, we generally integrate the
operations  of the acquired  company  into our  management  information  system,
consolidate  equipment  purchasing  and resale  functions and  centralize  fleet
management  as quickly  as  possible  while  assuring  consistent,  high-quality
service to the  acquired  company's  customers.  Since  July 1997,  we have made
several  strategic  acquisitions,  which  have more than  doubled  our number of
rental  locations,  significantly  enhanced our geographic  presence and further
diversified  our  customer  base.  We also  acquired  65% of  Sullair  Argentina
Sociedad  Anonima ("S.A.  Argentina"),  a leading  equipment  rental company and
dealer of new equipment in Argentina.

     Selective  Openings of Start-up  Equipment  Rental  Locations.  Although we
intend to expand our  operations  primarily  through  acquisitions,  we may open
additional  start-up  locations  in  markets  where we are not able to  identify
attractive acquisition  candidates.  We have been successful in opening start-up
equipment rental  locations in existing markets and new markets.  We have opened
26 start-up  equipment rental locations since March 1995. Our decision to open a
start-up  equipment  rental  location  is  based  upon a review  of  demographic
information,  business growth projections and the level of existing competition.
Because our management team has extensive experience opening start-up locations,
our  growth  strategy  is not  dependent  on  the  availability  of  acquisition
candidates on satisfactory terms.

Acquisition Strategy 

     We believe we can successfully  implement our acquisition  strategy because
of (i) our access to  financial  resources;  (ii) the  potential  for  increased
profitability  due to the  centralizing  of  certain  administrative  functions,




                                       4
<PAGE>

enhanced systems capabilities,  greater purchasing power and economies of scale;
and  (iii)  the  potential  for  owners  of the  businesses  being  acquired  to
participate in our planned growth while realizing liquidity. We have developed a
set  of  financial,  geographic  and  management  criteria  designed  to  assist
management in the evaluation of acquisition candidates.  These criteria are used
to evaluate a variety of factors,  including, but not limited to, (i) historical
and  projected  financial   performance;   (ii)  composition  and  size  of  the
candidate's  customer base;  (iii)  relationship of the  candidate's  geographic
location to the Company's market areas; (iv) potential  synergies gained through
acquisition of the candidate;  and (v) liabilities,  contingent or otherwise, of
the candidate.

     In June 1998 we expanded our operations into South America by acquiring 65%
of the  outstanding  stock of S.A.  Argentina.  S.A.  Argentina  rents and sells
industrial  and  construction  equipment  throughout  South  America,  including
Argentina,  Brazil,  Uruguay,  Paraguay,  Chile and  Bolivia.  S.A.  Argentina's
revenues for the year ended December 31, 1998 were approximately  $53.7 million.
The former management of S.A.  Argentina  oversees the day-to-day  operations of
S.A.  Argentina.  We have  the  option  to  purchase  the  remaining  35% of the
outstanding  stock of S.A.  Argentina.  This  option  will be  exercisable  from
January 1, 2001 until June 30,  2003.  In  addition,  the  stockholders  of S.A.
Argentina  have the option  during the same period to require us to purchase the
remaining 35% of the outstanding stock of S.A. Argentina.  The exercisability of
these options is subject to certain  additional terms and conditions,  including
restrictions  imposed by the terms of our  indebtedness  on our  ability to make
acquisitions and incur additional indebtedness.

Operations 

     Our operations  primarily  consist of renting  equipment,  and, to a lesser
extent,  selling used equipment,  complementary  parts and merchandise to a wide
variety of construction and industrial  customers.  In addition,  to service our
customer base more fully,  we also act as a dealer of new equipment on behalf of
several nationally known equipment manufacturers and provide ongoing maintenance
and repair  services  for the  equipment  we sell and rent.  Our  locations  are
grouped together by geographic area and a regional  manager oversees  operations
within each region.

     Equipment  Rentals.  We are one of the  fastest  growing  equipment  rental
companies in the United States,  with 87 rental locations in 17 states and South
America.  Our rental fleet is  comprised  of a complete  line of light and heavy
construction  and  industrial  equipment  from a wide variety of  manufacturers,
including John Deere,  Case, Bomag,  Terex Americas,  JCB, Sullivan  Industries,
Ingersoll-Rand, Gradall, Lull, JLG, Bobcat, MultiQuip and Wacker.



                                       5
<PAGE>
<TABLE>
<CAPTION>
     Major categories of equipment  represented the following percentages (based
on original cost) of the Company's total rental fleet as of December 31, 1998:

                                         Percentage of Total Rental Fleet
       Major Equipment Category              (based on original cost)

     <S>                                <C>  
     Earthmoving .......................               40.1%
     Material Handling .................               16.2
     Aerial ............................               12.9
     Compressors .......................                6.2
     Trucks ............................                5.7
     Compaction ........................                5.3
     Welders ...........................                2.3
     Cranes ............................                2.1
     Generators ........................                2.1
     Pumps .............................                1.4
     Lighting ..........................                1.3
     Other .............................                4.4
</TABLE>

     We attempt to  differentiate  ourselves from our competitors by providing a
broad  selection  of new  and  well-maintained  rental  equipment,  and  through
high-quality,  responsive service to our customers. As of December 31, 1998, our
equipment rental fleet had an original cost of approximately  $430.1 million and
an average age of 23 months,  which management  believes compares favorably with
other leading equipment rental companies. We make ongoing capital investments in
new equipment, engage in regular sales of used equipment and conduct an advanced
preventative  maintenance  program.  This program  increases fleet  utilization,
extends the useful life of equipment and produces higher resale values.

     In  addition  to  providing  a new and  reliable  equipment  rental  fleet,
management  believes providing high quality customer service is essential to our
future success.  The equipment rental business is a service  industry  requiring
quick  response  times to satisfy  customers'  needs.  Though  some  activity is
arranged  with  lead-time,  much of the rental  initiation  process  takes place
within a 48-hour period. Consequently,  equipment availability,  branch location
and  transportation  capabilities  play a major role in earning repeat business.
Rental  customers  prefer a quick  selection  process  and seek  quick,  concise
communication  when ordering  equipment.  Punctuality  and  reliability  are key
components of the servicing process, as well as maintenance performance,  timely
equipment removal at the rental termination and simplified billing.  Our service
initiatives   include  (i)  reliable  on-time  equipment  delivery  directly  to
customers' job sites;  (ii) on-site repairs and maintenance of rental  equipment
by factory  trained  mechanics,  which are  generally  available 24 hours a day,
seven days a week; and (iii) ongoing  training of an experienced  sales force to
consult with customers regarding their equipment needs.

     New Equipment  Sales.  We are a  distributor  of new equipment on behalf of
several  nationally  known equipment  manufacturers.  We are the sole authorized
distributors of John Deere industrial and  construction  equipment in six of our
stores  located  in  central  and  southern  Florida.  We also have  distributor
arrangements  with  Bomag to sell  heavy  compaction  equipment,  and with Terex
Americas to sell off-road  trucks,  in central and southern  Florida.  Our sales
line  consists  of nine  categories  of John  Deere,  Bomag and  Terex  Americas
equipment and a total of 58 different  machines,  including:  John Deere backhoe
loaders,  forklifts,  crawler dozers,  four-wheel-drive loaders,  scrapers, skid
steers, motor graders and excavators;  Bomag vibratory rollers,  static rollers,

                                       6
<PAGE>

recyclers  and trash  compactors;  and a complete line of  articulated  off-road
trucks manufactured by Terex Americas.

     Our ability to sell new equipment  offers  flexibility to our customers and
enhances our customer relations.  In addition, our dealership operations provide
us with several  competitive  advantages,  including the  opportunity to achieve
favorable pricing by combining equipment purchases for our dealership and rental
fleets,  the  reduction  of costs  in  certain  locations  by  sharing  service,
maintenance and  administrative  personnel and better knowledge of local markets
by pooling management information.

     In addition to standard equipment sales, we also offer customers the option
to  rent-to-purchase  equipment for a period of time.  Under this  program,  the
customer  applies a portion of the rental  payment to the purchase  price,  thus
accruing  equity  over  the  term of the  rental  period.  Our  rent-to-purchase
customers generally rent new equipment for a period of six to 18 months with the
option  to  purchase  at  the  end  of  the  rental  period.   Sales  under  our
rent-to-purchase  program  represented  approximately  65% of our new  equipment
sales in 1998.

     We  effectively  compete  against  other dealers by offering John Deere and
other quality  equipment lines for sale, and by providing high quality  service.
All personnel,  from management to mechanics,  are factory trained. The training
of mechanics is continually upgraded as new product lines are introduced. We can
transfer equipment from one store to another based upon a particular  customer's
needs.  Customers  also have the  opportunity  to rent equipment from our rental
fleet if their own  equipment is under  repair.  The parts  department  features
ample stock and maintenance vehicles, which are equipped to handle minor repairs
in the field and limit costly down time.

     Used  Equipment  Sales.  We  maintain a regular  program  of  selling  used
equipment  in order to adjust the size and  composition  of our rental  fleet to
changing  market  conditions  and to maintain the quality and low average age of
our rental  fleet.  Management  attempts to balance the  objective  of obtaining
acceptable prices from equipment sales against the revenues obtainable from used
equipment rentals.  We are generally able to achieve favorable resale prices for
our used equipment due to our strong  preventative  maintenance  program and our
practice of selling used equipment before it becomes obsolete or irreparable. We
believe the  proactive  management  of our rental  fleet allows us to adjust the
rates of new equipment  purchases and used equipment sales to maximize equipment
utilization  rates and respond to changing economic  conditions.  Such proactive
management,  together with our broad geographic diversity,  minimizes the impact
of regional economic downturns.

     Parts  and  Service.  We sell a full  complement  of  parts,  supplies  and
merchandise to our customers in conjunction  with our equipment rental and sales
business.  We also offer maintenance service to our customers that own equipment
and generate revenues from damage waiver charges,  delivery charges and warranty
income.  We believe  that these  revenues are more stable than  equipment  sales
revenues because of the recurring nature of the parts and service  business.  We
also believe that during economic downturns,  the parts and service business may
actually  increase as customers  postpone new  equipment  purchases  and instead
attempt to maintain their existing equipment.

Management Information System 

     We have developed a  state-of-the-art,  customized  management  information
system, capable of monitoring operations on a real-time basis at up to 300 sites
that can be upgraded to support additional locations or terminals.  We currently

                                       7
<PAGE>

employ eight management  information system employees who continually update and
refine  the  system.  We use this  system  to  maximize  fleet  utilization  and
determine the optimal fleet composition by market.  This system links all of our
rental locations and allows management to track customer and sales  information,
as well as the location, rental status and maintenance history of every piece of
equipment  in the rental  fleet.  Using this  system,  rental  equipment  branch
managers  can search  our entire  rental  fleet for  needed  equipment,  quickly
determine the closest location of such equipment and arrange for delivery to the
customer's  work site.  This practice  helps  diminish  "lost  rents,"  improves
utilization and makes equipment available in markets where it can earn increased
revenues. Our communications system can handle multiple protocols and allows the
integration of systems running on different platforms. This feature allows us to
include  systems used by  locations  acquired in an  acquisition  of an existing
equipment rental company in its central  databases while the acquired  locations
are integrated into our system.

Customers 

     Our  customers  include  commercial,   industrial  and  civil  construction
contractors,  manufacturers,  public  utilities,  municipalities,  golf courses,
shipyards,  commercial farmers,  military bases, offshore platform operators and
maintenance  contractors,  refineries and petrochemical facilities and a variety
of other industrial accounts.  During 1998 we served over 75,000 customers.  Our
top 10 customers represented 6.0% of our total revenues in 1998.

     Our  rental  equipment  customers  vary  in size  from  large  Fortune  500
companies who have elected to outsource much of their  equipment  needs to small
construction contractors,  subcontractors, and machine operators whose equipment
needs  are  job-based  and not  easily  measured  in  advance.  Our new and used
equipment  sales  customers are generally  large  construction  contractors  who
regularly  purchase  wholesale goods and annually  budget for fleet  maintenance
purchases.

     We do not currently  provide our own purchase  financing to  customers.  We
rent equipment,  sell parts, and provide repair services on account to customers
who are screened  through a credit  application  process.  Customers can finance
purchases  of  large   equipment   with  a  variety  of   creditors,   including
manufacturers, banks, finance companies and other financial institutions.

Sales and Marketing 

     We  maintain  a strong  sales  and  marketing  orientation  throughout  our
organization  in order to increase our customer base and better  understand  and
serve our  customers.  Managers  at each of our  branches  are  responsible  for
supervising  and training all sales employees at that location and directing the
salesforce by conducting  regular sales  meetings and  participating  in selling
activities.  Managers develop relationships with local customers and assist them
in planning  their  equipment  requirements.Managers  are also  responsible  for
managing  the mix of  equipment  at their  locations,  keeping  abreast of local
construction activity and monitoring competitors in their respective markets.

     To stay informed about their local markets, salespeople track new equipment
sales and construction  projects in the area through Equipment Data Reports,  Fw
Dodge Reports and PEC Reports (Planning,  Engineering and Construction),  follow
up on referrals and visit construction  sites and potential  equipment users who
are  new  to the  local  area.  Our  salespeople  also  use  targeted  marketing
strategies to address the specific needs of local customers.


                                       8
<PAGE>

Purchasing 

     We purchase equipment from vendors with reputations for product quality and
reliability.  Our Vice  President of Asset  Management and  Procurement  directs
fleet  purchasing,  asset  utilization  and  fleet  maintenance  for our  rental
equipment  fleet.  We believe our size and the quantity of equipment we purchase
enables us to purchase  equipment  directly  from  vendors  pursuant to national
purchasing  agreements  at lower  prices and on more  favorable  terms than many
smaller competitors. We seek to maintain close relationships with our vendors to
ensure the timely delivery of new equipment.  We believe that we have sufficient
alternative  sources  of supply for the  equipment  we  purchase  in each of our
principal product categories.

     The following  table  summarizes our principal  categories of equipment and
specifies the Company's major suppliers of such equipment:

<TABLE>
<CAPTION>

Product Category                                    Primary Vendors
<S>                                     <C>  
Air Compressors and Equipment .......  Ingersoll-Rand, Sullivan and Atlas Copco
Earthmoving Equipment (such as 
 Backhoes,Loaders, Dozers, 
 Excavators and Material
 Handling Equipment) ................  John Deere, Case, JCB, Kobelco and Bobcat
Compaction Equipment, Rollers
 and Recyclers ......................  Bomag, Wacker, MultiQuip and Stone
Pumps ...............................  MultiQuip, Wacker and Thompson
Generators ..........................  MultiQuip, Wacker and Atlas Copco
Welders .............................  MultiQuip, Miller and Lincoln
Electric Tools ......................  Bosch, Kango and Hitachi
Light Towers ........................  Specialty Lighting, Coleman and Amida
Forklifts ...........................  JCB, Gradall, Lull and Ingersoll-Rand
Trucking ............................  Terex Americas, Ford and GMC
Aerial ..............................  Skyjack, JLG, Mark Industries and Genie 
                                       Industries
Concrete ............................  Partner, Edco, Whiteman, Miller, 
                                       MultiQuip, Wacker and Stone
Hydraulic Hammers ...................  Kent and Tramac
</TABLE>

Locations 

     Our locations  typically include (i) offices for sales,  administration and
management;  (ii) a customer showroom  displaying  equipment and parts; (iii) an
equipment  service  area;  and (iv) outdoor and indoor  storage  facilities  for
equipment.  Each  location  offers a full range of rental  equipment for rental,
with the mix  designed to meet the  anticipated  needs of the  customers in each
location.

     Each  stand-alone  rental  equipment  location  is staffed  by, on average,
approximately  15  full-time  employees,  including a branch  manager,  a rental
coordinator,  service manager, sales  representatives,  an office administrator,
mechanics and drivers.  Each dealership has approximately 25 full-time employees
including   a  branch   manager,   parts   manager,   service   manager,   sales
representatives, departmental personnel, including mechanics, and administrative
staff. These employees are in addition to the full-time  employees used to staff
the rental equipment operations located at the same sites.

Dealership Agreements 

     Neff  Machinery,  Inc. ("Neff  Machinery"),  one of our  subsidiaries,  has
entered into several  dealership  agreements with each of John Deere,  Bomag and
Terex  Americas in central and southern  Florida.  These  dealership  agreements




                                       9
<PAGE>

appoint Neff  Machinery as the  equipment  manufacturer's  authorized  dealer in
certain  "Areas of  Responsibility,"  which  generally  includes 100% of certain
counties in southern and central Florida. Under the dealership  agreements,  the
equipment  manufacturers agree to sell equipment to Neff Machinery for resale in
these areas.  The dealership  agreements  typically do not have a specific term,
but may be  terminated  by  either  party  upon  120  days  written  notice,  or
immediately by the equipment  manufacturer for cause, which generally  includes,
among other  things,  default by Neff  Machinery  under any  security  agreement
between  Neff   Machinery  and  the  equipment   manufacturer,   dissolution  or
liquidation of Neff Machinery, or a significant change in the control, ownership
or capital  structure of Neff  Machinery  without the  equipment  manufacturer's
prior written consent.

     The John Deere  dealership  agreement  further provides that John Deere may
terminate the agreement for cause if GE Capital's beneficial ownership of equity
in the Company exceeds 25% before  September 25, 1999 or exceeds 20% on or after
September 25, 1999.

     We receive cash incentives and volume-related  discounts from the equipment
manufacturers,  which  we  represent.  We use  most of these  cash  rebates  and
marketing fund  contributions  to give customers price  discounts.  In addition,
John Deere,  Bomag and Terex Americas offer us standard dealer cash discounts or
limited interest-free financing.

Competition 

     Equipment  Rentals.  The equipment rental industry is highly fragmented and
very  competitive.  We  compete  with  independent  third  parties in all of the
markets in which we operate. Most of our competitors in the rental business tend
to  operate  in  specific,   limited  geographic  areas,  although  some  larger
competitors  do compete on a national  basis.  We also  compete  with  equipment
manufacturers,  which sell and rent equipment directly to customers. Some of our
competitors have greater financial resources and name recognition than we have.

     Equipment Sales. The equipment  distribution  market consists of many firms
which  operate  dealerships  representing  equipment   manufacturers,   such  as
Caterpillar,  John Deere,  Case and Komatsu.  As the  authorized  dealer of John
Deere  equipment  in central and southern  Florida,  we compete with dealers who
sell other  manufacturers'  equipment in the same area. Key competitive  factors
include fleet quality, pricing and the ability of a particular dealer to provide
satisfactory service and parts. John Deere provides promotional programs,  which
help the dealerships increase market share against competitors.

Environmental and Safety Regulation 

     Our facilities and  operations  are subject to certain  federal,  state and
local laws and regulations relating to environmental protection and occupational
health  and  safety,  including  those  governing  wastewater  discharges,   the
treatment, storage and disposal of solid and hazardous wastes and materials, and
the  remediation  of  contamination  associated  with the  release of  hazardous
substances. We believe that we are in material compliance with such requirements
and  do  not  currently   anticipate  any  material  capital   expenditures  for
environmental  compliance or  remediation  for the current or succeeding  fiscal
years.  Certain of our present and former  facilities  have used  substances and
generated or disposed of wastes which are or may be considered hazardous, and we
may incur liability in connection therewith. Moreover, there can be no assurance
that environmental and safety  requirements will not become more stringent or be
interpreted and applied more  stringently in the future.  Such future changes or
interpretations,  or the  identification  of  adverse  environmental  conditions
currently unknown to us, could result in additional  environmental compliance or
remediation costs to us. Such compliance and remediation costs could be material
to our financial condition or results of operations.


                                       10
<PAGE>

     In  particular,  at our owned and leased  facilities  we store and dispense
petroleum  products from  aboveground  storage tanks and have in the past stored
and dispensed  petroleum  products from  underground  storage tanks. We also use
hazardous  materials,  including  solvents,  to clean and maintain equipment and
generate and dispose of solid and hazardous  wastes,  including  used motor oil,
radiator  fluid  and  solvents.  In  connection  with such  activities,  we have
incurred capital expenditures and other compliance costs which are expensed on a
current  basis and  which,  to date,  have not been  material  to our  financial
condition. Based on currently available information, we believe that we will not
be  required to incur  material  capital  expenditures  or other  compliance  or
remediation costs on environmental and safety matters in the foreseeable future.

Employees 

     As of February 26, 1999, we had approximately 1,600 employees.  None of our
employees  are  represented  by a union or  covered by a  collective  bargaining
agreement. We believe our relations with our employees are good.

ITEM 2. PROPERTIES 

     We lease 16,000  square feet for our  corporate  headquarters  in an office
building in Miami,  Florida.  We own the buildings  and/or the land at 10 of our
locations.  All other sites are leased,  generally  for terms of five years with
renewal options. Owned and leased sites range from approximately 7,000 to 25,000
square feet on lots  ranging up to 22 acres,  and include  showrooms,  equipment
service  areas and storage  facilities.  We do not consider any specific  leased
location to be material to our  operations.  We believe  that  equally  suitable
alternative locations are available in all areas where we currently do business.

ITEM 3. LEGAL PROCEEDINGS 

     The Company is a party to pending legal proceedings arising in the ordinary
course of business.  While the results of such  proceedings  cannot be predicted
with  certainty,  we do not  believe any of these  matters  are  material to our
financial condition or results of operations.

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

        None. 



                                       11
<PAGE>

                                    PART II
                                    -------

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock

     On May 21,  1998,  our Class A Common  Stock  (the  "Common  Stock")  began
trading on the New York Stock  Exchange  under the symbol  "NFF".  The following
table  sets  forth the high and low  closing  sales  prices  of Common  Stock as
reported on the respective exchange for the periods indicated.

<TABLE>
<CAPTION>

                                               High     Low
                                               ----     ----
     <S>                                      <C>       <C>  
     Year ended December 31, 1998:

          First Quarter ...............         N/A      N/A
          Second Quarter ..............       13.00     9.88
          Third Quarter ...............       14.19     7.75
          Fourth Quarter ..............        8.69     5.38
</TABLE>

     As of March 15,  1999,  the  Company  had 38  shareholders  of record.  The
Company believes the number of beneficial  owners is substantially  greater than
the number of record holders because a large portion of the common stock is held
of record in broker "street names" for the benefit of individual investors.

Dividend Policy

     We have not paid any cash dividends on our common stock during the two-year
period ended  December 31, 1998. We presently  intend to retain all earnings for
the development of our business and do not anticipate  paying any cash dividends
on our Common Stock in the foreseeable future. In addition, our revolving credit
agreement precludes us from purchasing, redeeming or retiring any of our capital
stock or from paying  dividends.  The payment of  dividends  is also  limited by
provisions of the indentures  governing our senior  subordinated notes issued in
May and December 1998 and due 2008.  The  declaration  and payment of any future
cash dividends  will depend on a number of factors  including  future  earnings,
capital  requirements,  the financial condition and prospects of the Company and
any restrictions under credit agreements  existing from time to time, as well as
such other factors as the Board of Directors may deem relevant.  There can be no
assurances that we will pay any dividends in the future.


                                       12
<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

     The following table sets forth selected consolidated  financial data of the
Company for each of the five years ended  December 31, 1998.  The data set forth
below should be read in conjunction with  "Management's  Discussion and Analysis
of Financial Condition and Results of Operations" and the Company's Consolidated
Financial  Statements  and the Notes thereto  included  elsewhere in this Annual
Report.  Certain  amounts in the prior years have been  reclassified  to conform
with the current year presentation.

<TABLE>
<CAPTION>
                                                                        Year Ended December 31, 
                                                         ---------------------------------------------------
                                                           1998      1997       1996       1995       1994   
                                                         --------  --------   --------   ---------  --------
<S>                                                     <C>       <C>        <C>         <C>       <C>    
Statement of Operations                                     (amounts in thousands, except per share data)  
Revenues
  Rental revenue ......................................  $179,014  $ 69,512   $ 35,808   $  20,019  $ 16,226
  Equipment sales .....................................   108,352    50,578     44,160      33,943    22,996
  Parts and service ...................................    36,724    22,132     15,045      13,292    10,304
                                                         --------  --------   --------   ---------  --------
     Total revenues ...................................   324,090   142,222     95,013      67,254    49,526
                                                         --------  --------   --------   ---------  --------
Cost of revenues
  Cost of equipment sold ..............................    83,783    40,766     33,605      26,562    17,111
  Depreciation of rental equipment ....................    56,336    24,231(1)  19,853(1)   11,747     8,911
  Maintenance of rental equipment .....................    49,858    18,752      8,092       3,469     2,806
  Cost of parts and service ...........................    23,690    13,741      8,143       7,504     5,987
                                                         --------  --------   --------   ---------  --------
     Total cost of revenues ...........................   213,667    97,490     69,693      49,282    34,815
                                                         --------  --------   --------   ---------  --------
Gross profit ..........................................   110,423    44,732     25,320      17,972    14,711
                                                         --------  --------   --------   ---------  --------
Selling, general and administrative expenses ..........    60,347    31,329     18,478      10,956     8,493
Other depreciation and amortization ...................     8,833     2,806      1,432         916       225
Officer stock option compensation(2) ..................     3,198     4,400         --          --        --
                                                         --------  --------   --------   ---------  --------
Income from operations ................................    38,045     6,197      5,410       6,100     5,993
                                                         --------  --------   --------   ---------  --------
Other expense .........................................    35,855    14,338      6,337       3,090     1,669
                                                         --------  --------   --------   ---------  --------
Income (loss) before income taxes, minority interest
 and extraordinary item ...............................     2,190    (8,141)      (927)      3,010     4,324
(Provision for) benefit from income taxes(3) ..........       134     1,748       (461)     (1,176)   (1,612)
                                                         --------  --------   --------   ---------  --------
Income (loss) before minority interest and
  extraordinary item ..................................     2,324    (6,393)    (1,388)      1,834     2,712
Minority interest .....................................    (1,111)       --         --          --        --
                                                         --------  --------   --------   ---------  --------
Income (loss) before extraordinary item ...............     1,213    (6,393)    (1,388)      1,834     2,712
Extraordinary loss, net ...............................    (2,675)     (451)      (809)         --        --
                                                         --------  --------   --------   ---------  --------
Net income (loss) .....................................  $ (1,462) $ (6,844)  $ (2,197)  $   1,834  $  2,712
                                                         ========  ========   ========   =========  ========
Basic and diluted earnings per share
Income (loss) before extraordinary item ...............  $  (0.23) $  (1.64)  $  (0.56)  $    0.22  $   0.32
Extraordinary loss, net ...............................     (0.15)    (0.05)     (0.10)         --        --   
                                                         --------  --------   --------   ---------  --------
Net income (loss) .....................................  $  (0.38) $  (1.69)  $  (0.66)  $    0.22  $   0.32
                                                         ========  ========   ========   =========  ========
Basic and diluted weighted average common shares 
 outstanding   ........................................    17,213     8,465      8,465       8,465     8,465
                                                         ========  ========   ========   =========  ========
</TABLE>




                                       13
<PAGE>
<TABLE>
<CAPTION>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA -(continued)

                                                                        Year Ended December 31, 
                                                         ---------------------------------------------------
                                                           1998      1997       1996       1995       1994   
                                                         --------  --------   --------   ---------  --------
                                                            (amounts in thousands, except per share data)  
<S>                                                     <C>        <C>       <C>         <C>        <C>  
Balance Sheet Data (end of period):
Net book value of rental equipment ....................  $321,220  $179,547   $ 76,794   $  45,596  $ 29,602
Total assets ..........................................   572,369   279,654    109,118      68,816    46,851
Total debt ............................................   406,993   226,203     58,250      48,345    37,983
Redeemable preferred stock ............................        --    53,747     46,299      11,430        --   
Total stockholders' equity (deficit) ..................    99,360   (24,735)    (7,508)     (1,931)    4,205

Other Data:
EBITDA(4) .............................................  $103,214  $ 33,234   $ 26,695   $  18,763  $ 15,129
EBITDA margin(5) ......................................      31.8%     23.4%      28.1%       27.9%     30.5%
Rental equipment purchases ............................  $199,198  $143,515   $ 86,886   $  52,795  $ 31,185
Number of locations (end of period) ...................        86        53         16           8         6

</TABLE>

----------
1)   Depreciation  for rental equipment for 1996 and 1997 reflects the Company's
     change in depreciation policy to recognize extended estimated service lives
     and increased residual values of its rental equipment. See the Consolidated
     Financial  Statements  and the Notes  thereto  included  elsewhere  in this
     Annual Report.
2)   Officer stock option compensation  expense represents a noncash charge with
     respect to the change in estimated  market value of the shares to be issued
     to the Chief Executive Officer under an option agreement.
3)   Prior to  December  26,  1995,  the  Company  operated  as a  Subchapter  S
     corporation  under the  provisions  of the Internal  Revenue  Code.  Income
     (loss) before  extraordinary items for 1994 and 1995 is restated to reflect
     what the data would have been if the  Company  had  Subchapter  C status in
     these years.
4)   EBITDA   represents   income  from   operations   plus   depreciation   and
     amortization. EBITDA is not intended to represent cash flow from operations
     and should not be considered as an  alternative  to operating or net income
     computed  in  accordance  with  GAAP,  as an  indicator  of  the  Company's
     operating  performance,  as an  alternative  to cash flows  from  operating
     activities  (as  determined  in  accordance  with  GAAP) or as a measure of
     liquidity.  The Company believes that EBITDA is a standard measure commonly
     reported  and  widely  used by  analysts  and  investors  as a  measure  of
     profitability for companies with significant  depreciation and amortization
     expense.  However,  not all  companies  calculate  EBITDA  using  the  same
     methods;  therefore,  the  EBITDA  figures  set  forth  above  may  not  be
     comparable to EBITDA reported by other companies.
5)   EBITDA margin represents EBITDA as a percentage of total revenues.



                                       14
<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following  discussion and analysis compares the year ended December 31,
1998 to the year ended December 31, 1997 and the year ended December 31, 1997 to
the year ended December 31, 1996.  Consolidated  results of operations should be
read in conjunction with the Company's Consolidated Financial Statements and the
Notes thereto, appearing elsewhere in this Annual Report.

Overview 

     Since  1995,  the  Company  has  pursued  an  aggressive  growth  strategy,
increasing  its  number of  equipment  rental and sales  locations  to 86, as of
December 31, 1998.  The Company has achieved this growth through the addition of
52 equipment rental locations as a result of acquisitions, and the opening of 26
new equipment rental locations primarily  throughout the southeast and southwest
regions of the United  States.  The  Company  intends to  continue to pursue its
aggressive  growth strategy by (i) making  additional  acquisitions of equipment
rental  companies;  (ii)  increasing  fleet  at its  existing  equipment  rental
locations in both existing and new product lines;  (iii)  continuing to open new
equipment rental locations; and (iv) expanding its dealership operations.

     Since March 1, 1995,  the Company has opened 26 start-up  rental  equipment
locations.  Management believes the Company's recent financial  performance does
not fully reflect the benefit of these rental locations.  Based on the Company's
historical  experience,  a new equipment  rental  location  tends to incur costs
during the early period of operations  without the benefit of the revenue stream
of a mature location.  New rental  locations  realize  significant  increases in
revenues and cash flow during the first three years of operation,  and generally
become  profitable in the third year of operation as more  equipment is added to
the rental fleet and as the location matures. Because there is relatively little
incremental operating expense associated with such revenues,  there is a greater
proportionate  increase  in cash  flow and  profitability  as a rental  location
matures.  The Company believes the revenues,  cash flow and profitability of the
26 start-up locations opened since March 1, 1995 will increase  significantly as
these locations mature.

     The Company  primarily  derives  revenue from (i) the rental of  equipment;
(ii) sales of new and used  equipment and (iii) sales of parts and service.  The
Company's  primary source of revenue is the rental of equipment to  construction
and  industrial  customers.  Growth in rental  revenue is dependent upon several
factors,  including  the demand for rental  equipment,  the amount of  equipment
available for rent, rental rates and the general economic environment. The level
of new and used equipment sales is primarily a function of the supply and demand
for such equipment,  price and general economic conditions. The age, quality and
mix of the  Company's  rental fleet also affect  revenues  from the sale of used
equipment.  Revenues  derived  from the sale of parts and  service is  generally
correlated with sales of new equipment.

     Costs  of  revenues  include  cost  of  equipment  sold,  depreciation  and
maintenance  costs of rental  equipment  and cost of parts and service.  Cost of
equipment sold consists of the net book value of rental equipment at the time of
sale  and  cost  for new  equipment  sales.  Depreciation  of  rental  equipment
represents the depreciation costs attributable to rental equipment.  Maintenance
of rental  equipment  represents the costs of servicing and  maintaining  rental
equipment  on an  ongoing  basis.  Cost of parts and  service  represents  costs
attributable to the sale of parts directly to customers and service provided for
the repair of customer owned equipment.



                                       15
<PAGE>

     Depreciation  of rental  equipment is calculated on a  straight-line  basis
over the estimated  service life of the asset (generally two to seven years with
a 10%  residual  value).  Since  January 1, 1996,  the Company has made  certain
changes to its depreciation  assumptions to recognize extended estimated service
lives  and  increased  residual  values of its  rental  equipment.  The  Company
believes that these  changes in estimates  will more  appropriately  reflect its
financial results by better allocating the cost of its rental equipment over the
service lives of these assets.  In addition,  the new lives and residual  values
more closely conform to those prevalent in the industry.

     Selling,  general and  administrative  expenses include sales and marketing
expenses, payroll and related costs, professional fees, property and other taxes
and  other   administrative   overhead.   Other  depreciation  and  amortization
represents the  depreciation  associated with property and equipment (other than
rental equipment) and the amortization of goodwill and intangible assets.

Results of Operations 

     In  view  of  the   Company's   growth,   management   believes   that  the
period-to-period  comparisons  of its  financial  results  are  not  necessarily
meaningful and should not be relied upon as an indication of future performance.
In addition,  the Company's  results of operations  may fluctuate from period to
period in the future as a result of the cyclical nature of the industry in which
the Company operates.

     The  following  table sets forth,  for the periods  indicated,  information
derived from the consolidated  statements of operations of the Company expressed
as a percentage of total revenues.  There can be no assurance that the trends in
the table below will continue in the future.

<TABLE>
<CAPTION>

                                                    Year Ended December 31, 
                                                 -----------------------------
                                                  1998        1997       1996
                                                 ------      ------     ------
<S>                                             <C>         <C>         <C>
Revenues:
  Rental revenue ..............................    55.3%       48.9%      37.7%
  Equipment sales .............................    33.4        35.6       46.5
  Parts and service ...........................    11.3        15.5       15.8
                                                 ------      ------     ------
     Total revenues ...........................   100.0%      100.0%     100.0%
                                                 ------      ------     ------
Cost of revenues:
  Cost of equipment sold ......................    25.8        28.6       35.4
  Depreciation of rental equipment ............    17.4        17.0       20.9
  Maintenance of rental equipment .............    15.4        13.2        8.5
  Cost of parts and services ..................     7.3         9.7        8.6
                                                 ------      ------     ------
     Total cost of revenues ...................    65.9        68.5       73.4
                                                 ------      ------     ------
Gross profit ..................................    34.1        31.5       26.6
  Selling, general and administrative expenses.    18.6        22.0       19.4
  Other depreciation and amortization .........     2.8         2.0        1.5
  Officer stock option compensation ...........     1.0         3.1         --
                                                 ------      ------     ------
Income from operations ........................    11.7%        4.4%       5.7%
                                                 ======      ======     ====== 
EBITDA ........................................    31.8%       23.4%      28.1%
                                                 ======      ======     ====== 
</TABLE>
                
                                                                      

                                       16
<PAGE>
                                            
1998 Compared to 1997 

     Revenues.  Total revenues for 1998 increased  127.9% to $324.1 million from
$142.2  million in 1997.  This growth in revenues is primarily  attributable  to
revenues  generated  by  acquisitions  of  approximately  $114.9  million and an
increase in revenues from the maturation of the 26 new rental  locations  opened
since March 1995 of approximately $47.4 million.

     Gross Profit.  Gross profit for 1998 increased  146.9% to $110.4 million or
34.1% of total  revenues from $44.7 million or 31.5% of total  revenues in 1997.
This  increase is  primarily  attributable  to an  increase  in gross  profit of
approximately  $44.1 million associated with the growth in revenues arising from
acquisitions and approximately  $17.4 million  associated with the maturation of
the 26 new rental  locations  opened  since  March 1995.  The  increase in gross
profit as a percentage of revenue is primarily  attributable  to improved rental
revenue margins.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  increased  92.6%  to $60.3  million  or 18.6% of total
revenues from $31.3 million or 22.0% of total  revenues in 1997. The increase in
selling,  general and administrative  expenses is primarily  attributable to the
increase  in the number of  locations  operated  by the  Company  and  increased
regional and corporate personnel to support the continued growth of the Company.
The Company had 86 locations  at December  31, 1998,  compared to 53 at December
31, 1997.

     Other  Depreciation and Amortization.  Other  depreciation and amortization
expense for 1998 increased 214.8% to $8.8 million or 2.7% of total revenues from
$2.8  million or 2.0% of total  revenues in 1997.  This  increase  is  primarily
attributable  to  amortization of goodwill  resulting from  acquisitions  and to
increased expenditures on computer equipment, management information systems and
property and equipment needed to support the Company's expansion.

     Officer Stock Option  Compensation.  Officer stock option  expense was $3.2
million for 1998 and $4.4 million for 1997.  The expense  represents  changes in
estimated  market  value of the shares to be issued to a key  employee  under an
option agreement.

     Interest  Expense.  Interest  expense  for 1998  increased  172.9% to $32.7
million from $12.0 million in 1997.  This increase is primarily  attributable to
the Company's  borrowings  related to acquisitions and to additional  borrowings
related to the Company's continued investment in rental equipment.

     Extraordinary  Loss.  During  1998,  as a result  of  modifications  to the
Company's Credit Facility,  the Company recorded  extraordinary  losses from the
write-off of debt issue costs associated with the early  extinguishment  of debt
of $2.7 million, net of related income taxes.

     Earnings Before Interest, Taxes,  Depreciation and Amortization.  EBITDA is
not  presented  as an  alternative  to  operating  results  or  cash  flow  from
operations as determined by Generally Accepted Accounting  Principles  ("GAAP"),
but  rather to provide  additional  information  related  to the  ability of the
Company to meet its  capital  requirements  and pursue  its  business  strategy.
EBITDA  should not be  considered  in  isolation  from,  or  construed as having
greater  importance than, GAAP operating income or cash flows from operations as
a measure of an entity's performance.

     EBITDA  for 1998  increased  210.6%  to  $103.2  million  or 31.8% of total
revenues from $33.2 million or 23.4% of total  revenues in 1997. The increase in
EBITDA is primarily  attributable to the maturation of new rental  locations and





                                       17
<PAGE>

acquisitions as discussed  above. In 1998 and 1997,  EBITDA included charges for
officer   stock  option   compensation   of  $3.2  million  and  $4.4   million,
respectively.

1997 Compared to 1996

     Revenues.  Total revenues for 1997  increased  49.7% to $142.2 million from
$95.0  million in 1996.  This  growth in  revenues  primarily  resulted  from an
increase in revenues of (i)  approximately  $12.3  million  attributable  to the
continued  maturation of existing rental  locations;  (ii)  approximately  $16.3
million  associated  with the Company's  acquisition  of 26 rental  locations in
August  1997;  and (iii)  approximately  $9.2 million from the opening of 11 new
rental locations during the period.

     Gross  Profit.  Gross profit for 1997  increased  76.7% to $44.7 million or
31.5% of total  revenues from $25.3 million or 26.6% of total  revenues in 1996.
These  increases  can  primarily be attributed to an increase in gross profit of
(i) approximately $9.3 million from the continued growth of revenues from the 10
locations opened during 1995 and 1996; (ii)  approximately $6.2 million from the
growth in revenues arising from the acquisition of 26 rental locations in August
1997;  and  (iii)  approximately  $3.2  million  from  the  growth  in  revenues
associated  with the  opening  of 11 new rental  locations  during  1997.  These
increases  in gross profit  include  approximately  $3.3 million  related to the
change in the Company's  depreciation policy to recognize extended service lives
and increased salvage values of its rental equipment.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses for 1997  increased  69.5% to $31.3 million or 22.0% of
total  revenues  from $18.5  million  or 19.4% of total  revenues  in 1996.  The
increase  in  selling,  general  and  administrative  expenses  as a percent  of
revenues is primarily attributable to the opening of 11 new rental locations and
the increase in regional and corporate  personnel in  anticipation  of continued
growth through acquisitions and new location openings. In 1996, selling, general
and  administrative  expenses  included  approximately  $0.9 million of expenses
related to the investigation of alternative financing arrangements.

     Other  Depreciation And Amortization.  Other  depreciation and amortization
expense for 1997 increased  95.9% to $2.8 million from $1.4 million in 1996. The
increase in other  depreciation  and  amortization is primarily  attributable to
increased expenditures on computer equipment, management information systems and
property and equipment needed to support the Company's expansion.

     Officer   Stock  Option   Compensation   Expense.   Officer   stock  option
compensation  expense  was $4.4  million  for 1997 and  represents  a change  in
estimated  market  value of the shares to be issued to a key  employee  under an
option agreement.

     Interest Expense. Interest expense for 1997 increased to $12.0 million from
$6.0 million in 1996.  This increase is  attributable  to additional  borrowings
related  to the  Company's  continued  investment  in rental  equipment  and the
Company's acquisition of 26 locations in August 1997.

     Extraordinary  Loss.  During  1997,  as a result  of  modifications  to the
Company's credit facility,  the Company recorded  extraordinary  losses from the
write-off of debt issue costs associated with the early  extinguishment  of debt
of $0.5 million, net of related income taxes.

     Earnings Before Interest, Taxes, Depreciation and Amortization.  EBITDA for
1997  increased  24.4% to $33.2  million or 23.4% of total  revenues  from $26.7



                                       18
<PAGE>

million  or  28.1%  of  total  revenues  in  1996.  In  1997,   EBITDA  included
approximately  $4.4 million of officer stock option  compensation  charges.  The
increase  in  EBITDA  is  primarily  attributable  to  the  growth  in  revenues
associated  with the new  locations  and the growth in revenues  from the August
1997 acquisition previously discussed.

Liquidity and Capital Resources 

     During 1998, the Company  completed an initial public offering of its Class
A  Common  Stock  (the  "Offering")  and  the  sale of $200  million  of  Senior
Subordinated  Notes due 2008  (the  "Senior  Notes")  to  reduce  the  Company's
indebtedness,  extend its debt maturities to reflect the long-term nature of its
assets and provide increased  operational and financial flexibility to allow the
Company to pursue its growth strategy.

     Proceeds  from the  Offering  and Senior  Notes were used to repay a $100.0
million term loan,  redeem the Company's  Series A Cumulative  Preferred  Stock,
repay a mortgage  related to properties the Company owns and reduce  outstanding
borrowings under the Company's revolving credit facility.

     During 1998, the Company's  operating  activities provided net cash flow of
$42.7  million as compared to $8.9 million for 1997.  This increase is primarily
attributable  to the  growth  in the  Company's  operations  resulting  from  an
increase in the number of rental locations operated by the Company.

     Net cash  used in  investing  activities  was  $266.5  million  for 1998 as
compared to $173.3 million in the same period for the prior year.  This increase
is primarily  attributable to an increase in the number of acquisitions  made by
the Company in 1998.

     Net cash provided by financing  activities  was $225.3  million for 1998 as
compared  to  $162.3  million  for  1997.  The net cash  provided  by  financing
activities was primarily attributable to net proceeds received from the Offering
and Senior Notes.

     As of December  31,  1998,  the Company had  approximately  $108.3  million
available under its revolving credit facility.  Based upon current expectations,
the Company  believes  that cash flow from  operations,  together  with amounts,
which may be borrowed under the revolving credit facility,  will be adequate for
it to meet its capital  requirements  and pursue its  business  strategy for the
next 12 months.

Year 2000 

     The Company is aware of the issues  associated with the programming code in
existing   computer  and  software  systems  as  the  millennium  ("Year  2000")
approaches.  The Year 2000 problem is pervasive and complex,  as virtually every
computer  operation  could  be  affected  in  some  way by the  rollover  of the
two-digit  year  value to "00".  The  issue is  whether  systems  will  properly
recognize date sensitive information when the year changes to 2000. Systems that
do not properly  recognize such  information  could  generate  erroneous data or
cause complete system  failures.  The Company has completed an assessment of the
effect of Year 2000 issues on its computer systems.  Based upon this assessment,
management  believes the Company is Year 2000  compliant.  The total cost to the
Company to become Year 2000 compliant was not material. The Company has received
confirmation from all of its current systems' vendors that each of their systems
will  properly  handle the rollover to the Year 2000.  Although  there can be no
assurance,  management  believes  the Year 2000 problem will not have a material
effect on the  financial  position,  results of  operations or cash flows of the


                                       19
<PAGE>

Company.  In  addition,  there can be no  assurance  that the  systems  of other
companies with which the Company does business will properly handle the rollover
to the  Year  2000  and  will  not  have  an  adverse  effect  on the  Company's
operations.

Inflation and General Economic Conditions 

     Although the Company cannot  accurately  anticipate the effect of inflation
on its  operations,  it does not believe that inflation has had, or is likely in
the foreseeable  future to have, a material impact on its results of operations.
The  Company's  operating  results  may  be  adversely  affected  by  events  or
conditions in a particular region, such as regional economic,  weather and other
factors. In addition,  the Company's operating results may be adversely affected
by increases in interest rates that may lead to a decline in economic  activity,
while simultaneously  resulting in higher interest payments by the Company under
its variable rate credit facilities.

     Although  much of the  Company's  business is with  customers in industries
that are cyclical in nature, management believes that certain characteristics of
the equipment rental industry and the Company's operating strategies should help
to mitigate the effects of an economic downturn.  These characteristics  include
(i) the flexibility and low cost offered to customers by renting, which may be a
more attractive alternative to capital purchases;  (ii) the Company's ability to
redeploy  equipment during regional  recessions;  and (iii) the diversity of the
Company's industry and customer base.

Market Risk

     The Company's financial  instruments consist of cash, accounts  receivable,
and debt.  Cash and accounts  receivable  are short term,  non-interest  bearing
instruments and not subject to market risk.

     For fixed rate debt  instruments,  interest rate changes  affect their fair
market value but do not impact  earnings or cash flows.  Conversely for variable
rate debt  instruments,  interest rate changes  generally do not affect the fair
market value but do impact future earnings and cash flows.

     At December 31, 1998, the Company had fixed rate debt of $199.3 million and
variable  rate debt of $207.7  million.  Holding  debt  levels  constant,  a one
percentage point increase in interest rates would decrease the fair market value
of the fixed rate debt by approximately  $10.1 million and decrease earnings and
cash flows for variable rate debt by approximately $1.3 million.

     The Company's  investment in S.A. Argentina is not subject to exchange rate
exposures  because  Argentine law requires that the peso,  Argentina's  official
currency, be exchangeable for not less than one dollar.




                                       20
<PAGE>
<TABLE>
<CAPTION>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                  Index to Financial Statements and Schedules



                                                                   Page Numbers

<S>                                                                <C>
Reports of Independent Certified Public Accountants .............       22

Consolidated Balance Sheets as of December 31, 1998 and 1997 ....       24

Consolidated Statements of Operations for the years ended
 December 31, 1998, 1997 and 1996 ...............................       25

Consolidated Statements of Shareholders' Equity (Deficit) for
 the years ended December 31, 1998, 1997 and 1996 ...............       26

Consolidated Statements of Cash Flows for the years ended
 December 31, 1998, 1997 and 1996 ...............................       27

Notes to Consolidated Financial Statements ......................       28

SCHEDULES:

Report of Independent Certified Public Accountants ..............       49

II-Valuation and Qualifying Accounts and Reserves ...............       50
</TABLE>

     All other  schedules  are omitted  because they are not  applicable  or the
required information is shown in the financial statements or notes thereto


                                       21
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Board of Directors and Stockholders of
Neff Corp.


We have audited the accompanying  consolidated  balance sheets of Neff Corp. and
Subsidiaries (the "Company"),  as of December 31, 1998 and 1997, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1998.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our  audits.  We did not audit the  financial  statements  of Sullair  Argentina
Sociedad Anonima (a consolidated  subsidiary),  which  statements  reflect total
assets of $71,960,577 at December 31, 1998, and total revenues and net income of
$27,138,214  and  $3,175,507,  respectively,  for the  period  from July 1, 1998
through December 31, 1998. Those statements were audited by other auditors whose
report has been  furnished to us, and our opinion,  insofar as it relates to the
amounts included by Sullair Argentina  Sociedad Anonima,  is based solely on the
report of such other auditors.

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

In our opinion,  based on our audits and the report of the other auditors,  such
consolidated  financial statements present fairly, in all material respects, the
financial  position of Neff Corp. and subsidiaries at December 31, 1998 and 1997
and the results of their  operations and their cash flows for the three years in
the period  ended  December  31,  1998 in  conformity  with  generally  accepted
accounting principles.



/s/DELOITTE & TOUCHE LLP


Miami, Florida
February 16,1999




                                       22
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Board of Directors of
Sullair Argentina Sociedad Anonima

1.   We have  audited  the  consolidated  balance  sheet  of  Sullair  Argentina
     Sociedad Anonima and its subsidiary Sullair San Luis Sociedad Anonmia as of
     December 31, 1998, and the related consolidated statements of income and of
     changes in shareholders'  equity and in financial position (cash flows) for
     the six month period ended December 31, 1998. These consolidated  financial
     statements  are  the  responsibility  of  the  Company's  management.   Our
     responsibility  is to express an  opinion of these  consolidated  financial
     statements based on our audits.
2.   We conducted our audit in  accordance  with  auditing  standards  generally
     accepted in the United States of America.  Those standards  require that we
     plan and perform the audit to obtain reasonable assurance about whether the
     financial statements are free of material  misstatement.  An audit includes
     examining, on a test basis, evidence supporting the amounts and disclosures
     in  the  financial  statements.   An  audit  also  includes  assessing  the
     accounting principles used and significant estimates made by management, as
     well as evaluating the overall financial statement  presentation.  An audit
     does not provide assurance that the Company's  computerized  systems or any
     other system,  such as those from customers and suppliers,  are or would be
     year 2000 compliant.  We believe that our audits provide a reasonable basis
     for our opinion.
3.   Accounting  principles  generally  accepted in Argentina  require companies
     with controlling  financial interest in the other companies to present both
     parent company,  where investments in subsidiaries are accounted for by the
     equity  method,  and  consolidated  financial  statements,  as primary  and
     supplementary information,  respectively. Because of the special purpose of
     the financial  statements,  parent  company  financial  statements  are not
     included. This procedure has been adopted for the convenience of the reader
     of the financial statements.
4.   In our opinion, the consolidated financial statements audited by us present
     fairly,  in all  material  respects,  the  financial  position  of  Sullair
     Argentina  Sociedad  Anonima and its  subsidiary  Sullair San Luis Sociedad
     Anonima at December  31,  1998,  and the results of their  operations,  the
     changes in their  shareholders'  equity and the changes in their  financial
     position (cash flows) for the six-month  period ended December 31, 1998, in
     conformity with accounting principles generally accepted in Argentina.
5.   Accounting  principles  generally  accepted  in  Argentina  vary in certain
     important  respects from accounting  principles  generally  accepted in the
     United States of America. The application of the latter would have affected
     the determination of consolidated net income for the mentioned periods, and
     the  determination  of  consolidated  shareholders'  equity  and  financial
     position at December 31, 1998, to the extent  summarized in Notes 10 and 11
     to the  consolidated  financial  statements of Sullair  Argentina  Sociedad
     Anonima.


/s/PRICE WATERHOUSE & CO.


Buenos Aires, Argentina
February 16, 1999





                                       23
<PAGE>
<TABLE>
<CAPTION>
                                   NEFF CORP.
                          CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                                                                   December 31,
                                                                                -----------------
                                                                                  1998      1997 
                                                                                --------  --------
                                  ASSETS                                                                  
<S>                                                                             <C>       <C>    
Cash and cash equivalents ..................................................... $  4,340  $  2,885
Accounts receivable, net of allowance for doubtful accounts of 
 $3,229 in 1998 and $1,092 in 1997..............................................  59,022    25,007
Inventories ....................................................................  29,164    11,312
Rental equipment, net .......................................................... 321,220   179,547
Property and equipment, net ....................................................  45,114    23,737
Goodwill, net ..................................................................  96,722    29,444
Net deferred  tax asset ........................................................   2,780       663
Intangible assets, net .........................................................   1,459       622
Prepaid expenses and other assets ..............................................  12,548     6,437
                                                                                --------  --------
        Total assets ...........................................................$572,369  $279,654
                                                                                ========  ========
              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities
   Accounts payable ............................................................$ 24,405  $ 10,871
   Accrued expenses ............................................................  27,090    11,248
   Credit facility ............................................................. 191,189   161,825
   Term loan payable ...........................................................      --    49,916
   Senior subordinated notes ................................................... 198,522        --
   Notes payable ...............................................................  17,282    14,462
   Capitalized lease obligations ...............................................   1,487     2,320
                                                                                --------  --------
        Total liabilities ...................................................... 459,975   250,642
                                                                                --------  --------
Redeemable preferred stock
   Series A Cumulative Redeemable Preferred Stock, $.01 par value;
    520 shares authorized; 341 shares issued and outstanding in 1997 ...........      --    10,649
   Series B Cumulative Convertible Redeemable Preferred Stock,
    $.01 par value; 800 shares authorized, issued and outstanding in 1997 ......      --     8,336
   Series C Cumulative Convertible Redeemable Preferred Stock,
    $.01 par value; 800 shares authorized, issued and outstanding in 1997 ......      --    31,562
   Preferred stock dividend payable--Series B and C ............................      --     3,200
                                                                                --------  --------
        Total redeemable preferred stock .......................................      --    53,747
                                                                                --------  --------
Commitments and contingencies (Note 12) ........................................      --        --
                                                                                --------  --------
Minority interest ..............................................................  13,034        --
                                                                                --------  --------
Stockholders' equity (deficit)
   Preferred Stock; $.01 par value; 18,350 shares authorized; none issued and 
    outstanding ................................................................      --        --   
   Series B Junior Participating Preferred Stock; $.01 par value; 1,000 shares
    authorized, none issued and outstanding ....................................      --        --   
   Class A Common Stock; $.01 par value; 100,000 shares authorized; 16,065 and
    8,465 shares issued and outstanding in 1998 and 1997, respectively .........     161        85
   Class B special Common Stock; $.01 par value, liquidation preference $11.67; 
    20,000 shares authorized; 5,100 shares issued and outstanding in 1998 ......      51        --
   Additional paid-in capital .................................................. 127,765        --
   Accumulated deficit ......................................................... (28,617)  (24,820)
                                                                                --------  --------
        Total stockholders' equity (deficit) ...................................  99,360   (24,735)
                                                                                --------  --------
        Total liabilities and stockholders' equity (deficit) ...................$572,369  $279,654
                                                                                ========  ========
</TABLE>

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



                                       24
<PAGE>
<TABLE>
<CAPTION>
                                   NEFF CORP.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                                                        
                                                             For the Years Ended December 31,
                                                             --------------------------------
                                                                1998       1997       1996 
                                                             ---------  ---------   ---------
<S>                                                         <C>         <C>         <C>    
Revenues                                                                        
  Rental revenue ........................................... $ 179,014  $  69,512   $  35,808
  Equipment sales ..........................................   108,352     50,578      44,160
  Parts and service ........................................    36,724     22,132      15,045
                                                             ---------  ---------   ---------
      Total revenues .......................................   324,090    142,222      95,013
                                                             ---------  ---------   ---------
Cost of revenues
  Cost of equipment sold ...................................    83,783     40,766      33,605
  Depreciation and rental equipment ........................    56,336     24,231      19,853
  Maintenance of rental equipment ..........................    49,858     18,752       8,092
  Cost of parts and service ................................    23,690     13,741       8,143
                                                             ---------  ---------   ---------
      Total cost of revenues ...............................   213,667     97,490      69,693
                                                             ---------  ---------   ---------
Gross profit ...............................................   110,423     44,732      25,320
                                                             ---------  ---------   ---------
Other operating expenses
  Selling, general and administrative expenses .............    60,347     31,329      18,478
  Other depreciation and amortization ......................     8,833      2,806       1,432
  Officer stock option compensation ........................     3,198      4,400          --   
                                                             ---------  ---------   ---------
      Total other operating expenses .......................    72,378     38,535      19,910
                                                             ---------  ---------   ---------
Income from operations .....................................    38,045      6,197       5,410
                                                             ---------  ---------   ---------
Other expense
  Interest expense .........................................    32,677     11,976       6,012
  Amortization of debt issue costs .........................     3,178      2,362         325
                                                             ---------  ---------   ---------
      Total other expense ..................................    35,855     14,338       6,337
                                                             ---------  ---------   ---------
Income (loss) before income taxes, minority interest and
 extraordinary item ........................................     2,190     (8,141)       (927)
(Provision for) benefit from income taxes ..................       134      1,748        (461)
                                                             ---------  ---------   ---------
Income (loss) before minority interest and extraordinary item    2,324     (6,393)     (1,388)
Minority interest ..........................................    (1,111)        --          --
                                                             ---------  ---------   ---------
Income (loss) before extraordinary item ....................     1,213     (6,393)     (1,388)
Extraordinary loss, net of income taxes ....................    (2,675)      (451)       (809)
                                                             ---------  ---------   ---------
Net loss ................................................... $  (1,462) $  (6,844)  $  (2,197)
                                                             =========  =========   ========= 
Basic and diluted loss per common share
Loss before extraordinary item ............................. $   (0.23) $   (1.64)  $   (0.56)
Extraordinary loss, net ....................................     (0.15)     (0.05)      (0.10)
                                                             ---------  ---------   ---------
Net loss ................................................... $   (0.38) $   (1.69)  $   (0.66)
                                                             =========  =========   ========= 
Basic and diluted weighted average common shares outstanding    17,213      8,465       8,465
                                                             =========  =========   ========= 
</TABLE>

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


                                       25
<PAGE>
<TABLE>
<CAPTION>

                                   NEFF CORP.
                           CONSOLIDATED STATEMENT OF
                 STOCKHOLDERS' EQUITY (DEFICIT) FOR EACH OF THE
                THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1998
                                 (in thousands)
                                                                                
                                                                                                         
                                                        Common Stock A   Common Stock B   Additional     
                                                        ---------------  ---------------   Paid-in    Accumulated
                                                        Shares   Amount   Shares  Amount   Capital      Deficit     Total
                                                        ------  -------  ------- ------- -----------  -----------  -------
<S>                                                    <C>      <C>      <C>     <C>     <C>         <C>           <C>
Balance, December 31, 1995 .........................     8,465  $    85       --      --          --  $   (2,016)  $(1,931)
Net loss ...........................................        --       --       --      --          --      (2,197)   (2,197)
Preferred stock dividend ...........................        --       --       --      --          --        (980)     (980)
Accretion of Series A Preferred 
 Stock and Detachable Stock Purchase Warrant .......        --       --       --      --          --      (2,400)   (2,400)
                                                        ------  -------  ------- ------- -----------  -----------  -------
Balance, December 31, 1996 .........................     8,465       85       --      --          --      (7,593)   (7,508)
Net loss ...........................................        --       --       --      --          --      (6,844)   (6,844)
Adjustment for acquired property and equipment 
 (Note 13), net of taxes ...........................        --       --       --      --          --      (2,936)   (2,936)
Dividends in kind--Series A Preferred Stock ........        --       --       --      --          --        (657)     (657)
Preferred stock dividends accrued--
 Series B and C ....................................        --       --       --      --          --      (3,200)   (3,200)
Accretion of Series A, B and C Preferred Stock .....        --       --       --      --          --      (3,590)   (3,590)
                                                        ------  -------  ------- ------- -----------  -----------  -------
Balance, December 31, 1997 .........................     8,465       85       --      --          --     (24,820)  (24,735)
Net loss ...........................................        --       --       --      --          --      (1,462)   (1,462)
Preferred stock dividends accrued--
 Series A, B and C .................................        --       --       --      --          --      (1,010)   (1,010)
Accretion of Series A, B and C Preferred Stock .....        --       --       --      --          --      (1,325)   (1,325)
Exchange of Preferred Stock Series B and C for Class
 B Common Stock ....................................        --       --    6,000 $    60 $    44,876          --    44,936
Conversion of Class B Common Stock
 to Class A Common Stock ...........................       900        9     (900)     (9)         --          --        --   
Net proceeds from Common Stock Offering ............     6,700       67       --      --      85,663          --    85,730
Redemption of Series A Preferred Stock .............        --       --       --      --      (2,768)         --    (2,768)
Other ..............................................        --       --       --      --          (6)         --        (6)
                                                        ------  -------  ------- ------- -----------  -----------  -------
Balance, December 31, 1998 .......................      16,065  $   161    5,100 $    51 $   127,765  $  (28,617)  $99,360
                                                        ======  =======  ======= ======= ===========  ==========   =======
</TABLE>

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



                                       26
<PAGE>
<TABLE>
<CAPTION>
                                   NEFF CORP.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                                                        
                                                             For the Years Ended December 31,
                                                             --------------------------------
                                                               1998        1997        1996 
                                                             --------    --------    --------
<S>                                                          <C>         <C>        <C>
Cash Flows from Operating Activities                                                                    
Net loss ..................................................  $(1,462)    $(6,844)    $ (2,197)
Adjustments to reconcile net loss to net cash provided by
 operating activities net of acquisitions
   Depreciation and amortization ..........................   68,347      29,399       21,610
   Officer stock option compensation ......................    3,198       4,400           --   
   Accretion of debt discount .............................        6          --           --   
   Gain on sale of equipment ..............................  (24,569)     (9,812)     (10,555)
   Minority interest ......................................    1,111          --           --   
   Extraordinary loss on debt extinguishment ..............    4,280         722        1,298
   Benefit from deferred income taxes .....................     (510)     (1,748)        (596)
   Change in operating assets and liabilities
     Accounts receivable ..................................  (14,488)     (8,341)      (3,329)
     Other assets .........................................     (403)     (2,957)         255
     Accounts payable and accrued expenses ................    7,186       4,104        2,831
     Accrued financing costs ..............................       --          --       (2,143)
                                                             --------    --------    --------
         Net cash provided by operating activities ........   42,696       8,923        7,174
                                                             --------    --------    --------
Cash Flows from Investing Activities
Purchases of equipment .................................... (199,198)   (143,515)     (86,886)
Proceeds from sale of equipment ...........................  108,352      50,578       44,160
Purchases of property and equipment .......................  (15,015)    (16,747)      (1,972)
Cash paid for acquisitions ................................ (160,646)    (63,605)          --   
                                                             --------    --------    --------
         Net cash used in investing activities ............ (266,507)   (173,289)     (44,698)
                                                             --------    --------    --------
Cash Flows from Financing Activities
Debt issue costs ..........................................  (12,277)     (2,425)      (3,989)
Net borrowings under Senior Credit Facility ...............   29,364     103,576           --   
Advances under revolving credit facility ..................       --          --       58,250
Proceeds from issuance of senior subordinated notes .......  198,516          --           --   
Proceeds from common stock offering .......................   85,730          --           --   
Borrowings (repayments) under mortgage note ...............  (13,400)     13,400           --   
Borrowings (repayments) under capitalized lease obligations     (833)        866         (222)
Net repayments under floor plans payable ..................       --          --      (31,493)
Borrowings (repayments) under term loan ...................  (49,916)     49,916           --   
Net borrowings (repayments) under notes payable ...........    1,997        (135)     (16,852)
Redemption of Series A preferred stock ....................  (13,915)         --           --   
Issuance of Series C Preferred Stock, net of costs ........       --         --        31,489
Distribution to stockholders ..............................       --      (2,936)          --   
                                                             --------    --------    --------
         Net cash provided by financing activities ........  225,266     162,262       37,183
                                                             --------    --------    --------
Net increase (decrease) in cash and cash equivalents ......    1,455      (2,104)        (341)
Cash and cash equivalents, beginning of year ..............    2,885       4,989        5,330
                                                             --------    --------    --------
Cash and cash equivalents, end of year ....................  $ 4,340     $ 2,885     $  4,989
                                                             ========    ========    ========
</TABLE>

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


                                       27
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1-GENERAL 

Description of Business 

     Neff Corp. and its subsidiaries  (the "Company") own and operate  equipment
rental  locations  throughout  the  southern  and western  regions of the United
States and in South  America.  In addition to its rental  business,  the Company
acts as a dealer of new  equipment  on behalf of several  nationally  recognized
equipment manufacturers.  The Company also sells used equipment, spare parts and
merchandise and provides ongoing repair and maintenance services.

Principles of Consolidation 

     The accompanying  consolidated financial statements include the accounts of
the Company and its wholly-owned and majority-owned subsidiaries.  The financial
statements of Sullair Argentina Sociedad Anonima ("S.A.  Argentina") included in
the  consolidated  financial  statements  of the Company  have been  adjusted to
reflect  U.S.  Generally  Accepted   Accounting   Principles.   All  significant
intercompany balances and transactions have been eliminated.

Stock Split

     In May 1998,  the  Company  effected  an 84.65 for 1.00  stock  split.  The
accompanying financial statements reflect the stock split on a retroactive basis
from the beginning of the periods presented.

Acquisitions

     In August  1997,  the  Company  purchased  the common  stock of  Industrial
Equipment Rentals,  Inc. ("IER") for approximately $63.6 million.  This purchase
was funded by a $50 million term loan and borrowings  under the Company's Senior
Credit Facility (See Note 5). IER has rental equipment operations similar to the
Company's in Alabama,  Louisiana,  Mississippi  and Texas.  The  transaction was
accounted  for under the purchase  method.  In  connection  with this  purchase,
goodwill of approximately $29.2 million was recorded.

     In January 1998, the Company  acquired  substantially  all of the assets of
Richbourg's Sales and Rentals, Inc. ("Richbourg") for approximately $100 million
(See  Note  5).  Richbourgh  has  rental  equipment  operations  similar  to the
Company's with 15 locations in three states.  This transaction was accounted for
under the  purchase  method.  In  connection  with this  purchase,  goodwill  of
approximately $40.8 million was recorded.

     On June 30, 1998, the Company acquired 65% of the outstanding stock of S.A.
Argentina,  for approximately $36.1 million and earn-out payments equal to 82.8%
of S.A.  Argentina's net income for 1998 and 1999,  with such earn-out  payments
not to exceed $12.6 million in the aggregate.  The Company also has an option to
purchase the remaining 35% of outstanding stock of S.A. Argentina (See Note 12).
S.A. Argentina rents and sells industrial and construction  equipment throughout
South America. In connection with this purchase, goodwill of approximately $14.0
million was recorded.


                                       28
<PAGE>
 
                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Also during 1998,  the Company  acquired the net assets of seven  equipment
rental  companies in separate  transactions  for an aggregate  purchase price of
$25.4 million. The acquisition of these businesses added 4 locations in Texas, 4
in Florida and 3 locations in California.  These transactions were all accounted
for under the purchase method of accounting. In connection with these purchases,
goodwill of approximately $14.6 million was recorded.

     The  following  pro forma  information  has been  prepared  to reflect  the
aforementioned  acquisitions  as if they were  consummated on January 1st of the
year preceding the year of acquisition, after giving effect to certain pro forma
adjustments described below (in thousands, except per share data):
<TABLE>
<CAPTION>

                                                           For the Years Ended             
                                                               December 31,          
                                                          ----------------------
                                                           1998     1997     1996
                                                          ------- -------- --------
<S>                                                       <C>      <C>      <C>    
Revenues ...............................................  358,731  274,500  129,172
                                                          =======  =======  =======
Income (loss) before income taxes and extraordinary item    4,038  (10,151)     (63)
                                                          =======  =======  =======
Net income (loss) ......................................      295   (8,248)  (1,895)
                                                          =======  =======  =======
Basic and diluted loss per common share ................    (0.28)   (1.85)   (0.62)
                                                          =======  =======  =======
</TABLE>


     Pro  forma   adjustments   reflect   amortization  of  intangible   assets,
depreciation  of property and equipment and increased  interest on borrowings to
finance the  acquisitions.  The  unaudited pro forma  information  is based upon
certain  assumptions and estimates and does not necessarily  represent operating
results that would have occurred had the acquisitions been consummated as of the
beginning of the periods presented, nor is it necessarily indicative of expected
future operating results.

Use of Estimates 

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Recognition of Revenue 

     Rental  agreements  are  structured  as  operating  leases and the  related
revenues are recognized over the rental period. Sales of equipment and parts are
recognized  at the time of  shipment  or, if out on  lease,  at the time a sales
contract is  finalized.  Equipment  may at times be delivered to customers for a
trial period.  Revenue on such sales is recognized at the time a sales  contract
is  finalized.  Service  revenues  are  recognized  at the time the services are
rendered.

Cash Equivalents 

     The Company  considers  all highly  liquid  investments  purchased  with an
original maturity of three months or less to be cash equivalents.


                                       29
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Inventories 

     Inventories,  which consist principally of parts and new equipment held for
sale,  are stated at the lower of cost or market,  with cost  determined  on the
first-in,  first-out  basis  for  parts and  specific  identification  basis for
equipment. Substantially all inventory represents finished goods held for sale.

Rental Equipment 

     Rental  equipment  is  stated  at  cost  less   accumulated   depreciation.
Depreciation  is recorded  using the  straight-line  method  over the  estimated
useful  life of the  related  equipment  (generally  two to seven  years with an
estimated 10% residual value).  For certain  equipment,  depreciation is matched
against the related rental income earned by computing depreciation on individual
equipment at the rate of 80% of the rental income  earned.  Routine  repairs and
maintenance are expensed as incurred; improvements are capitalized at cost.

     The  Company  routinely  reviews  the  assumptions  utilized  in  computing
depreciation  of its  rental  equipment.  Changes  to the  assumptions  (such as
service  lives  and/or  residual  values)  are  made  when,  in the  opinion  of
management,  such changes more appropriately  allocate asset costs to operations
over the service life of the assets.  Management utilizes,  among other factors,
historical  experience and industry  comparison in determining  the propriety of
any such changes.

     During 1997 and 1996, the Company made certain changes to its  depreciation
assumptions to recognize extended estimated service lives and increased residual
values of its rental  equipment.  The  Company  believes  that these  changes in
estimates  will more  appropriately  reflect  its  financial  results  by better
allocating  the cost of its  rental  equipment  over the  service  life of these
assets.

     These changes in accounting estimate reduced loss before extraordinary item
and net loss by  approximately  $3.3 million and $5.3 million or $0.39 and $0.63
per common share for the year ended December 31, 1997 and 1996, respectively.

     Rental  fleet  accumulated  depreciation  at December 31, 1998 and 1997 was
approximately $63.4 million and $34.8 million, respectively.

Property and Equipment 

     Property  and  equipment is stated at cost less  accumulated  depreciation.
Depreciation is recorded using  accelerated and  straight-line  methods over the
estimated  useful  lives of the related  assets.  Significant  improvements  are
capitalized at cost. Repairs and maintenance are expensed as incurred.

     The  capitalized  cost of equipment and vehicles  under  capital  leases is
amortized  over the lesser of the lease  term or the  asset's  estimated  useful
life,  and  is  included  in  depreciation  and  amortization   expense  in  the
consolidated statements of operations.



                                       30
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets 

     Intangible  assets primarily result from business  combinations and include
agreements not to compete and other identifiable intangible assets. These assets
are amortized on a straight-line basis over their estimated useful life (five to
15  years).   Accumulated  amortization  at  December  31,  1998  and  1997  was
approximately $2.9 million and $2.5 million, respectively.

     Goodwill  arising from  acquisitions is being amortized over 40 years using
the straight-line method. Accumulated amortization at December 31, 1998 and 1997
was approximately $2.6 million and $0.5 million, respectively.

Prepaid Expenses and Other Assets 

     Prepaid  expenses  and other  assets  primarily  include  debt issue costs,
prepaid  expenses and deposits.  Debt issue costs are amortized over the term of
the debt on a straight-line basis.

Stock Options 

     In October 1995, the FASB issued Statement No. 123 ("SFAS 123"), Accounting
for  Stock-Based  Compensation,  which  requires  companies to either  recognize
expense for stock-based awards based on their fair value on the date of grant or
provide footnote  disclosures  regarding the impact of such changes. The Company
adopted  the  provisions  of SFAS 123 on January 1, 1996,  but will  continue to
account for options issued to employees or directors  under the Company's  stock
option plans in accordance with Accounting Principles Board Opinion No. 25 ("APB
25"), Accounting for Stock Issued to Employees.

Reclassifications 

     Certain amounts for the prior years have been  reclassified to conform with
the current year presentation.

NOTE 3-ACCOUNTS RECEIVABLE 

     The majority of the Company's customers are engaged in the construction and
industrial  business  throughout the southern and western  regions of the United
States and in South America.

     The Company extends credit to its customers based upon an evaluation of the
customer's  financial  condition  and  credit  history.  For  sales  of  certain
construction  equipment,   the  Company's  policy  is  to  secure  its  accounts
receivable by obtaining  liens on the  customer's  projects and issuing  notices
thereof to the projects' owners and general  contractors.  All other receivables
are generally unsecured.



                                       31
<PAGE>
<TABLE>
<CAPTION>
                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4-PROPERTY AND EQUIPMENT 

     Property and equipment consists of the following (dollars in thousands):
                                                        
                                                            
                                                December 31,     Estimated
                                             ----------------   Useful Lives
                                               1998    1997      (in Years)
                                             -------  -------   -------------
<S>                                          <C>      <C>       <C> 
Land ......................................  $ 8,343  $ 5,407            --   
Buildings and improvements ................   15,874    6,540          2-30
Office equipment ..........................    7,083    2,768           2-7
Service equipment and vehicles ............   20,364    9,994           2-5
Shop equipment ............................    4,227    2,075             7
Capitalized lease equipment ...............    1,401    3,230           3-5
                                             -------  -------
                                              57,292   30,014 
Less accumulated depreciation .............  (12,178)  (6,277)
                                             -------  -------
                                            $ 45,114  $23,737 
                                            ========  ======= 
</TABLE>

     The Company has entered into lease  arrangements  for certain  property and
equipment,  which are  classified  as capital  leases.  As of December 31, 1998,
future minimum lease payments under capitalized lease obligations are as follows
(in thousands):
<TABLE>
<CAPTION>
                                                                             
      <S>                                                     <C>   
      1999   ..............................................    $  801
      2000   ..............................................       495
      2001   ..............................................       271
      2002   ..............................................        32
                                                               ------
      Total future minimum lease payments .................     1,599
      Less amounts representing interest (6.00% to 13.5%)..      (112)
                                                               ------
      Present value of net future minimum lease payments ..    $1,487
                                                               ======
</TABLE>




                                     

                                       32
<PAGE>
<TABLE>
<CAPTION>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5-NOTES PAYABLE AND DEBT 

     Notes payable and debt consist of the following (in thousands):

                                                                                       December 31,  
                                                                                    ------------------
                                                                                      1998      1997 
                                                                                    --------  --------
<S>                                                                                 <C>       <C>
$310 million revolving  line of credit with interest ranging from the Lender's
Prime rate plus 1.25% to LIBOR plus up to 2.25%.  At December 31, 1998, the
Lender's  Prime rate was 7.75% and the LIBOR rate was 5.06% ......................  $191,189  $161,825

10.25% Senior Subordinated Notes issued May 1998 due June 2008  ..................   100,000        --   

10.25% Senior Subordinated Notes issued December 1998 due June 2008, 
with an effective interest rate of 10.5%, net of unamortized discount of $1,478...    98,522        --

S.A. Argentina unsecured loans from various banks with interest rates of
LIBOR plus 1.5% to 3.5%  .........................................................    16,541        --

$50 million Term Loan with an interest rate of LIBOR plus 3.5% ...................        --    49,916

Mortgage note payable with an interest rate of LIBOR plus 2%  ....................        --    13,400

Various notes payable assumed through acquisition of IER with interest
rates ranging from 7% to 12% and maturity dates through 2001 .....................       741     1,062
                                                                                    --------  --------
                                                                                    $406,993  $226,203
                                                                                    ========  ========
</TABLE>

     In May 1998,  the Company  amended and restated its $250 million  revolving
credit  facility  (as  amended and  restated,  the "New  Credit  Facility").  In
September  1998,  the  New  Credit  Facility  was  increased  to  $310  million.
Borrowings  under the New  Credit  Facility  are based  upon  eligible  accounts
receivable,  rental fleet and inventory amounts.  The interest rates on balances
outstanding  under the New Credit  Facility  vary based upon the leverage  ratio
maintained by the Company. The New Credit Facility expires in April 2003 and the
Company is charged a commitment  fee on the  aggregated  daily unused balance of
the New Credit Facility which varies between 0.2% and 0.5% based on the leverage
ratio  maintained  by the  Company.  The  New  Credit  Facility  is  secured  by
substantially  all of the  Company's  assets and  contains  certain  restrictive
covenants  which,  among other things,  require the Company to maintain  certain
financial  coverage  ratios and places  certain  restrictions  on the payment of
dividends.

     At  December  31,  1998,  the Company had  approximately  $10.5  million of
standby letters of credit outstanding.

     In  connection  with the  Richbourg  acquisition  (see Note 1), the Company
executed a $100 million term loan (the "Richbourg Term Loan").  In May 1998, the
Company completed the sale of $100 million of Senior Subordinated Notes due 2008
(the " May Notes") as well as the initial public  offering (see Note 6). The net
proceeds of approximately  $182.7 million from the sale of the May Notes and the
initial public  offering were used to repay the Richbourg Term Loan,  redeem the
Series A Cumulative Redeemable Preferred Stock, repay the mortgage notes payable
and reduce the amount outstanding under the New Credit Facility.




                                       33
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The Senior Notes bear  interest at 10 1/4% per annum  payable  semiannually
beginning December 1, 1998. The Senior Notes are senior unsecured obligations of
the  Company and are  redeemable  at the option of the  Company,  in whole or in
part, on or after June 1, 2003, at  pre-established  redemption  prices together
with accrued and unpaid interest to the redemption date.

     In December  1998,  The Company  completed the sale of $100 million  Senior
Subordinated  Notes  due  2008  (the  "December  Notes").  The net  proceeds  of
approximately $95.2 million from the December Notes where used to reduce amounts
outstanding  under the New Credit Facility.  The terms of the December Notes are
substantially the same as the May Notes.

     In  August  1997,  the  Company  entered  into a $50  million  term loan in
connection  with its  acquisition  of IER (see Note 1). During January 1998, the
Company repaid all outstanding  principal  balances due under the Term Loan with
borrowings under its $250 million revolving credit facility.

     During 1998,  1997 and 1996 the Company  recorded  extraordinary  losses of
approximately $2.7 million, $0.5 million and $0.8 million, net of related income
taxes,  from the  write-off  of debt  issue  costs  associated  with  the  early
extinguishment of debt.

     Borrowing  for  S.A.  Argentina's  operation  is  done  through  local  and
international  banks. This debt is not guaranteed by the Company except for S.A.
Argentina and S.A. Argentina is not a guarantor of any other debt of the Company
(see Note 15).

     The aggregate  annual  maturities of the notes payable and debt, based upon
amounts outstanding as of December 31, 1998, are as follows:
<TABLE>
<CAPTION>

<S>            <C>                         <C>     
               1999 ....................   $206,015
               2000 ....................      2,316
               2001 ....................        140
               2002 ....................         --   
               Thereafter ..............    198,522
                                           --------
                                           $406,993
                                           ========
</TABLE>

NOTE 6-REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

     During  December  1995,  the  Company  issued  300,000  shares  of Series A
Cumulative  Redeemable  Preferred  Stock  ("Series  A"), and a detachable  stock
purchase warrant (the "Redeemable Warrant") for $12.0 million ($11.4 million net
of certain  related  costs).  Series A provided  for the  semiannual  payment of
preferential dividends at an annual rate of 8% (5% beginning January 1, 1997) of
the  liquidation  value.  The  dividends  were payable in cash or in  additional
shares.

     The   Redeemable   Warrant   granted   the  holder  the  right  to  acquire
approximately 20% of the common stock of the Company at a purchase price of $.01
per share.




                                       34
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Series  A and the  Redeemable  Warrant  were  recorded  at  their  pro rata
estimated  fair  value  in  relation  to the  proceeds  received  on the date of
issuance  ($8.0  million for the Series A and $3.4  million  for the  Redeemable
Warrant, net of issue costs). Series A was accreted using the effective interest
method  based  on its  liquidation  value at  maturity  of  $12.0  million.  The
Redeemable  Warrant was being accreted to its fair value on a prospective  basis
until the mandatory redemption date in December 2000. Through December 31, 1996,
accretion to the Series A and the Redeemable  Warrant  amounted to approximately
$0.5 million and $1.9 million, respectively.

     During  December  1996, in  connection  with the execution of the Company's
$250 million revolving credit facility, the Company and GE Capital, entered into
certain  agreements,  including an agreement to exercise the Redeemable  Warrant
for  approximately 20% of the Company's common stock.  Simultaneously  with this
exercise,  the  Company and GE Capital  agreed to exchange  the shares of common
stock for 800,000 shares of Series B Cumulative Convertible Redeemable Preferred
Stock ("Series B").

     The accreted balance of the Redeemable Warrant on the date these agreements
were entered into was approximately $5.3 million, which represented the carrying
value of Series B as of December 31, 1996. For the year ended December 31, 1997,
accretion  of Series A and Series B amounted to  approximately  $0.5 million and
$3.0 million, respectively.

     In a  separate  transaction  related  to the Senior  Credit  Facility,  the
Company  issued  800,000  shares of Series C Cumulative  Convertible  Redeemable
Preferred  Stock ("Series C") to GE Capital in exchange for $32.0 million ($31.5
million net of certain  related  costs).  For the year ended  December 31, 1997,
accretion  of Series C amounted to  approximately  $0.1  million.  Similarly  to
Series A,  Series B and  Series C were  accreted  toward  their  ultimate  total
liquidation value of $64 million.

     In March 1998, the holders of Series B and Series C exchanged  their shares
for Class B Common Stock, which has a liquidation preference $11.67 per share.

     In May  1998,  the  Company  completed  an  initial  public  offering  (the
"Offering")  of 6.7 million shares of Class A common stock at a price of $14 per
share. The Company received net proceeds of approximately $85.7 million.

NOTE 7-STOCK OPTION PLANS 

     In December 1996, the Company granted its chief  executive  officer options
to purchase  shares of Class A Common Stock  representing 3% (on a fully diluted
basis)  of the  issued  and  outstanding  Common  Stock  of the  Company  for an
aggregate  purchase price of $1.6 million.  Upon completion of the Offering (see
Note 6) the number of shares  granted under this agreement were fixed at 657,220
shares.  No further  options can be granted  under this  agreement.  The Company
estimated  compensation  expense at each reporting date based upon the estimated
market  value of shares  to be issued  until  the  number of shares  was  fixed.
Compensation expense of $3.2 million and $4.4 million was recognized in 1998 and
1997, respectively.



                                       35
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     No  compensation  expense was  recognized in 1996 since the exercise  price
approximated  the market  value of the shares to be issued.  These  options have
been fully  vested  since  December  1996.  One-third  of the options  expire on
December  1, 2005,  one-third  expire on  December  31,  2005 and the  remaining
one-third expire on December 31, 2006.

     In May 1996,  the Company also granted to another key employee an option to
purchase  84,650  shares of the  Company's  Class A Common  Stock at an exercise
price of  approximately  $0.5 million,  determined  based upon a multiple of the
Company's adjusted earnings.  No compensation expense was recognized at the date
of grant since the exercise  price of these options  approximated  the estimated
market value of the shares to be issued at the date of grant.

     In 1998, the Company  adopted an Incentive  Stock Option plan ("ISO Plan").
Under this plan, designated officers,  employees, and consultants of the Company
will be eligible to receive  awards in the form of options,  stock  appreciation
rights,  restricted stock grants,  performance  awards, and dividend  equivalent
rights.  An aggregate of 1.0 million shares of Class A Common Stock are reserved
for issuance under the ISO Plan. The exercise price of options granted under the
plan may not be less than 100% of the fair market value of the Company's Class A
Common Stock.  Generally,  options vest over a period of three years and are not
exercisable  beyond  10 years  from  date of  grant.  There  have  been no stock
appreciation  rights,  restricted stock grants,  performance  awards or dividend
equivalent rights awarded under the ISO Plan.



                                       36
<PAGE>
<TABLE>
<CAPTION>
                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The following  table  summarizes  stock option activity under the ISO Plan,
for the year ended December 31, 1998 (in thousands, except per share data):

                                                          ISO Plan Options                                                
                                                 ---------------------------------
                                Shares Available   Number of   Weighted Average
                                  For Options       Shares    Exercise Price/Share
                                ---------------- -----------  --------------------
<S>                            <C>              <C>           <C>                                                 
Balance at December 31, 1997                 --          --                  
Authorized ....................           1,000          --                 
Granted .......................            (945)        945                  9.39
                                ---------------- -----------
Forfeited .....................               6          (6)                14.00
Expired .......................              --          -- 
                                ---------------- -----------      
Balance at December 31, 1998 ..              61         939                  9.39
                                ---------------- -----------  
</TABLE>
<TABLE>
<CAPTION>
                                                                                   Exercisable Options
                                                                             ------------------------------
                            Number of    Weighted Average   Weighted Average              Weighted Average
                             Options    Exercise Price Per  Remaining Life    Number of    Exercise Price
                           Outstanding        Share             (Years)        Options        Per Share
                           -----------  ------------------  ---------------- ----------  ------------------
<S>                      <C>           <C>                  <C>             <C>          <C>    
Range of Exercise Prices:

 $6.00-7.88 ..............        553                6.18               10.0        --                 N/A
 $9.75-14.00 .............        386               13.97                9.4       200               14.00
                           -----------
                                  939                9.39                9.7
                           ===========
</TABLE>

     The Company  accounts  for  stock-based  compensation  in  accordance  with
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees"  ("APB 25").  Under APB 25,  compensation  expense is measured as the
excess of market  value of the  underlying  stock on the date of grant  over the
exercise price of the options on the date of grant.

     The following  table sets forth pro forma  information  as if stock options
had been  accounted  for under the fair value method (in  thousands,  except per
share data):
<TABLE>
<CAPTION>                                                         
                                        For the Year Ended 
                                            December 31,
                                    ----------------------------
                                      1998      1997      1996 
                                    --------  --------  -------- 
<S>                                 <C>       <C>       <C>     
Pro forma net loss (in thousands)   $(1,397)  $(4,094)  $(2,439)
                                    =======   =======   ======= 
Pro forma loss per share
    Basic ...................       $ (0.38)  $ (1.36)  $ (0.69)
                                    =======   =======   ======= 
    Diluted .................       $ (0.38)  $ (1.36)  $ (0.69)
                                    =======   =======   ======= 
</TABLE>




                                       37
<PAGE>
         
                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The  weighted  average fair value of options  granted  during 1998 and 1996
estimated on the date of grant using the Black-Scholes  option pricing model was
$5.47  and  $2.91  per  share,  respectively.  The  following  weighted  average
assumptions were used in applying this model for 1998 and 1996, respectively:  a
risk free rate of 5.05% and 6.74%;  dividend yields of 0%; volatility factors of
 .636 and 0; and an expected  life of the options of 5 years and 10 years.  There
were no stock options granted in 1997.

     Effective  January 1, 1997,  the Company  adopted a phantom stock plan (the
"Phantom Plan").  The Phantom Plan is designed to reward employees for increases
in the  Company's  performance.  The Phantom  Plan  enables the Company to award
employees  individual units  representing a hypothetical  share of the Company's
stock (the "Phantom Share"). Each Phantom Share is assigned a share value on the
date granted as determined by the  administrator  of the Phantom Plan.  The cash
award  the  employee  is  entitled  to  receive  on the  redemption  date is the
difference  between  the value  assigned on the date of grant and the greater of
the fair market value of the  Company's  Class A Common Stock or the  calculated
phantom plan share value.  As of December 31, 1998,  the Company had granted 0.2
million  Phantom  Shares with  assigned per share  values  ranging from of $9 to
$11.25,  vesting  over  three  to five  years.  Approximately  $0.1  million  of
compensation  expense was  recorded for the year ended  December  31,  1998.  No
compensation  expense was  recorded  for the years ended  December  31, 1997 and
1996.

     The Company had granted to GE Capital an option to acquire  common stock of
the Company in an amount that would equal 51% ownership after  conversion of the
Series B and  Series C  preferred  stock  (see Note 6). In  connection  with the
conversion  of the  Series B and  Series  C  preferred  stock  this  option  was
canceled.

NOTE 8-RETIREMENT PLAN 

     In February  1996,  the Company  adopted a qualified  401(k) profit sharing
plan (the "401(k) Plan"). The 401(k) Plan covers  substantially all employees of
the Company.  Participating  employees may contribute to the 401(k) Plan through
salary  deductions.  The Company may  contribute,  at its  discretion,  matching
contributions  equal to 50% of the employee's  contribution  not to exceed 3% of
the  employee's  annual  salary.  The  Company  contributed  approximately  $0.6
million,  $0.3  million and $0.2  million to the 401(k) Plan for the years ended
December 31, 1998, 1997 and 1996, respectively.





                                       38
<PAGE>
<TABLE>
<CAPTION>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9-INCOME TAXES

     The  components  of the benefit  from  (provision  for) income  taxes is as
follows (in thousands):
                                        
                                    For the Years Ended             
                                        December 31,
                                  ------------------------
                                   1998     1997    1996 
                                  ------  -------  ------- 
<S>                               <C>     <C>      <C>     
          Current ..............  $(376)  $   --   $(1,057)
          Deferred .............    510    1,748       596
                                  ------  -------  ------- 
          Total ................  $ 134   $1,748   $  (461)
                                  =====   ======   ======= 
</TABLE>
                                        
     The following table summarizes the tax effects comprising the Company's net
deferred tax assets and liabilities (in thousands):
<TABLE>
<CAPTION>

                                                           December 31,
                                                          --------------
                                                           1998    1997 
                                                          ------  ------
<S>                                                      <C>     <C>
Deferred Tax Assets
  Net operating loss carryforwards .....................  $4,582  $4,347
  Alternative minimum tax credits ......................     874     874
  Deferred stock option compensation ...................   2,849   1,672
  Intangible assets, allowance for bad debts and other .   2,548   2,836
                                                          ------  ------
    Total deferred tax assets ..........................  10,853   9,729
  Valuation allowance ..................................    (900) (1,368)
Deferred Tax Liabilities-Depreciation ..................  (7,173) (7,698)
                                                          ------  ------
Net Deferred Tax Asset (Liability) .....................  $2,780  $  663
                                                          ======  ======
</TABLE>
     As of December  31,  1998,  and 1997,  the Company had net  operating  loss
carryforwards  for federal and state income tax purposes of approximately  $12.3
million and $13.6  million,  respectively,  expiring  through 2012 (includes net
operating  loss  carryforwards  for  federal  and state  income tax  purposes of
approximately  $4.4  million  and  $5.6  million,   respectively,   acquired  in
connection with the acquisition of IER described in Note 1). IER's net operating
loss  carryforwards  may only be utilized by Neff Rental,  one of the  Company's
subsidiaries.   In  addition,   the  Company  has  reduced  the   adjustment  to
stockholders'  equity  by  $1.8  million  related  to  the  tax  benefit  of the
acquisition of property from a related party (see Note 13).

     Current accounting standards require that deferred income taxes reflect the
tax consequences on future years of differences  between the tax bases of assets
and liabilities and their bases for financial reporting  purposes.  In addition,
future  tax  benefits,  such as net  operating  loss  (NOL)  carryforwards,  are
required to be  recognized  to the extent that  realization  of such benefits is
more likely than not. A valuation  allowance is  established  for those benefits
that do not meet the more likely than not criteria.



                                       39
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Even  though the  Company  has  incurred  tax  losses for the past three  years,
management  believes  that it is more  likely  than not that  the  Company  will
generate  taxable income  sufficient to realize the majority of the tax benefits
associated with future  deductible  temporary  differences and NOL carryforwards
prior to their expiration.  This belief is based upon, among other factors,  the
fact that all of the Company's taxable temporary differences will reverse within
the period that the  deductible  temporary  differences  will be  realized,  the
availability  of tax  planning  strategies,  and  projection  of future  taxable
income.

     The  following  table  summarizes  the  differences  between the  statutory
federal income tax rate and the Company's  effective income tax rate (dollars in
thousands):
<TABLE>
<CAPTION>                                                                                                       
                                                                          
                                                                       For the Years Ended December 31,
                                                          ----------------------------------------------------------
                                                                 1998                1997               1996           
                                                          ------------------  ------------------  ------------------  
                                                          Amount  Percentage  Amount  Percentage  Amount  Percentage      
                                                          ------  ----------  ------  ----------  ------  ----------
<S>                                                       <C>     <C>        <C>     <C>         <C>     <C>  
(Provision) benefit at statutory federal income tax rate   (745)       34.0%   2,768       34.0%     315       34.0%
State income tax, net of federal income tax benefit ....     --          --      171        2.1       33        3.5
Change in valuation allowance ..........................    468       (21.4)    (559)      (6.9)    (809)     (87.3)
Non-deductible expenses ................................   (467)       21.3     (716)      (8.8)      --         --   
Foreign subsidiary .....................................    831       (37.9)      --         --       --         --   
Other ..................................................     47        (2.1)      84        1.1       --         --   
                                                          ------  ----------  ------  ----------  ------  ----------
                                                          $ 134         6.1%  $1,748       21.5%  $ (461)     (49.8)%
                                                          ======  ==========  ======  ==========  ======= ========== 
</TABLE>
<TABLE>
<CAPTION>

NOTE 10-EARNINGS PER SHARE 

     For the years ended  December 31, 1998,  1997 and 1996,  the treasury stock
method was used to  determine  the  dilutive  effect of options and  warrants on
earnings  per share  data.  Net loss from  continuing  operations  per share and
weighted  average  number of shares  outstanding  used in the  computations  are
summarized as follows (in thousands, except per share data):
                                                
                                                          For the Years Ended December 31,
                                                          --------------------------------
                                                             1998       1997        1996
                                                          ---------   ---------  ---------
<S>                                                       <C>         <C>        <C>      
Net loss ...............................................  $ (1,462)   $  (6,844) $ (2,197)
Deduct:
  Preferred stock dividend .............................    (1,010)      (3,857)     (980)
  Accretion of preferred stock .........................    (4,093)      (3,590)   (2,400)
                                                          ---------   ---------  ---------
Loss (basic and diluted) ...............................  $ (6,565)   $ (14,291) $ (5,577)
                                                          ========    =========  ======== 
Number of shares:
  Weighted average common shares outstanding-basic .....    17,213        8,465     8,465
  Employee stock options(1) ............................        --           --        --   
                                                          ---------   ---------  ---------
Weighted average shares-diluted ........................    17,213        8,465     8,465
                                                          ========    =========  ======== 
Net loss per common share-basic and diluted ............  $  (0.38)   $   (1.69) $  (0.66)
                                                          ========    =========  ======== 
</TABLE>

----------
(1)  The incremental  shares  resulting from the assumed exercise of options for
     the year ended 1998 would be antidilutive and are therefore,  excluded from
     the computation of diluted earnings (loss) per share.



                                       40
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11-FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair  market  value of  financial  instruments  held by the  Company at
December 31, 1998 are based on a variety of factors and  assumptions and may not
necessarily  be  representative  of the  actual  gains or  losses  that  will be
realized in the future and do not include  expenses that could be incurred in an
actual sale or settlement.

     The fair value of the Company's  credit  facility is assumed to be equal to
its carrying value. At December 31, 1998 and 1997  approximately  $191.2 million
and $161.8 million was outstanding under the credit facility, respectively.

     The Company's notes payable and capitalized lease obligations are estimated
to approximate  fair value as determined  based on rates currently  available to
the Company from other lenders.

     The fair value of the Company's Senior  Subordinated Notes was estimated by
obtaining the quoted market price.  The carrying amount of the Company's  Senior
Subordinated  Notes was $198.5  million at December 31, 1998.  The fair value of
the Company's Senior Subordinated Notes as of the same date was $195.0 million.

NOTE 12-COMMITMENTS AND CONTINGENCIES

     The Company has  agreements  with certain  equipment  manufacturers,  which
appoint the Company,  through its subsidiary,  as the manufacturer's  authorized
dealer in certain defined  geographic areas.  These agreements may be terminated
by dealers at any time.  There can be no assurance that the Company will be able
to continue  its  current,  or obtain  additional,  dealership  agreements.  The
Company's  operating results could be materially and adversely impacted if these
dealership agreements were terminated for any reason.

     In connection with the  acquisition of 65% of the outstanding  common stock
of S.A.  Argentina (see Note 1), the Company  entered into an option to purchase
the remaining 35% of the outstanding common stock of S.A. Argentina. This option
is  exercisable  from  January 1, 2001 until June 30,  2003.  In  addition,  the
stockholders of S.A. Argentina have the option during the same period to require
the  Company  to  purchase  the  remaining  35% of  outstanding  stock  of  S.A.
Argentina.  The  ability  to  exercise  these  options  is  subject  to  certain
additional terms and conditions,  including restrictions imposed by the terms of
our  indebtedness  on our  ability  to make  acquisitions  and incur  additional
indebtedness.

     The  Company  is a party to  certain  legal  actions  arising in the normal
course of business.  In the opinion of management,  the ultimate outcome of such
litigation is not expected to have a material effect on the financial  position,
results of operations or cash flows of the Company.




                                       41
<PAGE>


                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13-RELATED PARTY TRANSACTIONS AND OTHER COMMITMENTS

     In May 1997,  the Company  acquired  certain land and buildings used in its
Florida  operations  for  approximately  $13.9 million from Atlantic Real Estate
Holdings  Corp.  ("Atlantic"),  an  affiliate  of  the  Company  through  common
ownership  ("Atlantic  Acquisition").  Prior to the acquisition of these assets,
the  Company  leased  these  properties  from  Atlantic.  The  Company  financed
approximately  $13.4 million of the purchase  price with a mortgage note payable
(see Note 5). The  remaining  purchase  price  consisted of the  forgiveness  of
approximately  $0.5 million in notes  receivable from Atlantic.  The assets have
been recorded at Atlantic's  historical  carrying value and  approximately  $2.9
million,  net of income tax  benefit of  approximately  $1.8  million,  has been
recorded as a distribution  to  stockholders  in the  accompanying  statement of
stockholders' equity (deficit).

     During 1998, 1997, and 1996 revenues from affiliated  companies amounted to
approximately $2.2 million, $0.7 million, and $1.5 million, respectively.

Operating Leases 

     During  1998,   1997,  and  1996  rental  expense  under   operating  lease
arrangements  amounted to  approximately  $4.5 million,  $3.4 million,  and $2.1
million, respectively.

     As of December 31, 1998,  future  minimum rental  payments under  operating
lease  arrangements  are  as  follows  for  the  years  ending  December  31 (in
thousands):
<TABLE>
<CAPTION>

                    <S>                        <C>
                    1999 ....................   4,339
                    2000 ....................   4,057
                    2001 ....................   3,558
                    2002 ....................   2,943
                    2003 ....................   1,469
                    Thereafter ..............   3,450
                                              -------
                                              $19,816
                                              =======
</TABLE>
                                
NOTE 14-SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION 
<TABLE>
<CAPTION>

                                                                  For the Years Ended             
                                                                      December 31,
                                                              ----------------------------
                                                                1998      1997      1996 
                                                              --------  --------  --------
                                                                     (in thousands)
<S>                                                         <C>        <C>       <C>    
Supplemental Disclosure of Cash Flow Information
  Cash paid for interest ...................................  $30,696  $10,367   $  6,012
                                                              =======  =======   ========
  Cash paid for taxes ......................................  $   786  $   711   $     --
                                                              =======  =======   ========
Supplemental Disclosure of Non-Cash Financing Activities
  Purchase of equipment under capitalized lease obligations.  $    --  $    --   $  1,235
                                                              =======  =======   ========      
</TABLE>




                                       42
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - CONDENSED CONSOLIDATING FINANCIAL INFORMATION

     Neff Corp. ("Parent") issued $100 million of senior subordinated  unsecured
notes  in May  1998  and an  additional  $100  million  of  senior  subordinated
unsecured notes in December 1998. On June 30, 1998,  Neff Corp.  acquired 65% of
S.A.  Argentina (See Note 1). S.A. Argentina is not a guarantor of the unsecured
notes of the Parent and financial  information  for this subsidiary is presented
separately.  All of the  Parent's  subsidiaries  other than S.A.  Argentina  are
wholly owned.  Parent and its subsidiaries  other than S.A. Argentina have fully
and unconditionally guaranteed the unsecured notes on a joint and several basis.
The  subsidiaries'  financial  information  is presented on a combined basis and
Parent is shown separately.  Separate financial statements and other disclosures
for the individual  guarantor  subsidiaries  are not presented  because,  in the
opinion of management,  such information is not material to investors.  Prior to
June 30, 1998, there were no non-guarantor subsidiaries and therefore,  separate
comparative statements are not presented for periods prior to July 1, 1998.

 


                                       43
<PAGE>
<TABLE>
<CAPTION>
                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15- CONDENSED CONSOLIDATING FINANCIAL INFORMATION

                      CONDENSED CONSOLIDATING BALANCE SHEET
                             AS OF DECEMBER 31, 1998
                                 (in thousands)
                                                        
                                                       Guarantor    Non-Guarantor                  
                                                      Subsidiaries   Subsidiary    Parent   Eliminations  Consolidated 
                                                      ------------  ------------- --------  ------------  ------------
                  Assets
<S>                                                   <C>           <C>           <C>       <C>           <C>         
Cash and cash equivalents ..........................  $      3,649  $        691  $     --  $         --  $      4,340
Accounts receivable, net ...........................        44,460        14,562        --            --        59,022
Inventories ........................................        16,256        12,908        --            --        29,164
Rental equipment, net  .............................       292,223        28,997        --            --       321,220
Property and equipment, net  .......................        23,035        11,189    10,890            --        45,114
Goodwill, net  .....................................        82,737            --        --        13,985        96,722
Deferred tax asset, net  ...........................        (1,440)           --     4,220            --         2,780
Intangible assets ..................................         1,459            --        --            --         1,459
Prepaid expenses and other assets ..................         1,586         3,614    79,537       (72,189)       12,548
(Due to) from affiliates ...........................      (251,185)           --   251,185            --            --   
                                                      ------------  ------------- --------  ------------  ------------
     Total assets ..................................  $    212,780  $     71,961  $345,832  $    (58,204) $    572,369
                                                      ============  ============  ========  ============  ============
   Liabilities and Stockholders' Equity (Deficit)
Liabilities
  Accounts payable .................................  $      7,421  $     16,834  $    150  $         --  $     24,405
  Accrued expenses .................................        15,544         1,346    10,200            --        27,090
  Senior credit facility ...........................       153,589            --    37,600            --       191,189
  10 1/4% senior subordinated notes ................            --            --   198,522            --       198,522
  Notes payable ....................................           741        16,541        --            --        17,282
  Capitalized lease obligations ....................         1,487            --        --            --         1,487
                                                      ------------  ------------- --------  ------------  ------------
                                                           178,782        34,721   246,472            --       459,975
                                                      ------------  ------------- --------  ------------  ------------
Commitments and contingencies ......................            --            --        --            --            --   
                                                      ------------  ------------- --------  ------------  ------------
Minority interest ..................................            --            --        --        13,034        13,034
                                                      ------------  ------------- --------  ------------  ------------
Stockholders' equity
  Preferred Stock, $.01 par value; 18,350 shares 
   authorized; none issued and outstanding .........            --            --        --            --            --
  Series B Junior Participating Preferred Stock; 
   $.01 par value; 1,000 shares authorized, none 
   issued and outstanding ...........................           --            --        --            --            --
  Class A Common stock; $.01 par value; 100,000 
   shares authorized; 16,065 shares issued and out-
   standing ........................................            --            --       161            --           161
  Class B special common stock; $.01 par value; 
   20,000 shares authorized; 5,100 shares issued 
   and outstanding .................................            --            --        51            --            51

Capital stock ......................................            --            90        --           (90)           --
Additional paid-in capital .........................        37,077         3,009   127,765       (40,086)      127,765
Retained earnings (accumulated deficit) ............        (3,079)       34,141   (28,617)      (31,062)      (28,617)
                                                      ------------  ------------- --------  ------------  ------------
     Total stockholders' equity ....................        33,998        37,240    99,360       (71,238)       99,360
                                                      ------------  ------------- --------  ------------  ------------
     Total liabilities and stockholders' equity ....  $    212,780  $     71,961  $345,832  $    (58,204) $    572,369
                                                      ============  ============  ========  ============  ============
</TABLE>



                                       44
<PAGE>
<TABLE>
<CAPTION>
 
                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 -  CONDENSED CONSOLIDATING FINANCIAL INFORMATION

                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                 (in thousands)
                                                        
                                                       Guarantor    Non-Guarantor                  
                                                      Subsidiaries   Subsidiary    Parent   Eliminations  Consolidated 
                                                      ------------  ------------- --------  ------------  ------------
<S>                                                  <C>           <C>            <C>       <C>           <C> 
Revenues                                                       
    Rental revenue ................................   $    168,403  $      10,611 $     --  $         --  $    179,014
    Equipment sales ...............................         94,264         14,088       --            --       108,352
    Parts and service .............................         34,285          2,439       --            --        36,724
                                                      ------------  ------------- --------  ------------  ------------
       Total revenues .............................        296,952         27,138       --            --       324,090
                                                      ------------  ------------- --------  ------------  ------------
Cost of revenues
    Cost of equipment sold ........................         71,995         11,788       --            --        83,783
    Depreciation of rental equipment ..............         53,686          2,650       --            --        56,336
    Maintenance of rental equipment ...............         46,329          3,529       --            --        49,858
    Cost of parts and service .....................         21,890          1,800       --            --        23,690
                                                      ------------  ------------- --------  ------------  ------------
       Total cost of revenues .....................        193,900         19,767       --            --       213,667
                                                      ------------  ------------- --------  ------------  ------------
Gross profit ......................................        103,052          7,371       --            --       110,423
                                                      ------------  ------------- --------  ------------  ------------
Other operating expenses
    Selling, general and administrative expenses ..         57,102          2,295      950            --        60,347
    Other depreciation and amortization ...........          8,051            432      350            --         8,833
    Officer stock option compensation .............             --             --    3,198            --         3,198
                                                      ------------  ------------- --------  ------------  ------------
       Total other operating expenses .............         65,153          2,727    4,498            --        72,378
                                                      ------------  ------------- --------  ------------  ------------
Income from operations ............................         37,899          4,644   (4,498)           --        38,045

Other expense
    Interest expense ..............................         29,817          1,092    1,768            --        32,677
    Amortization of debt issue costs ..............          2,899             --      279            --         3,178
                                                      ------------  ------------- --------  ------------  ------------
       Total other expense ........................         32,716          1,092    2,047            --        35,855
                                                      ------------  ------------- --------  ------------  ------------
Income (loss) before income taxes, minority interest
 and extraordinary item ...........................          5,183          3,552   (6,545)           --         2,190
(Provision for) benefit from income taxes .........         (1,944)          (376)   2,454            --           134
                                                      ------------  ------------- --------  ------------  ------------
Income (loss) before minority interest and
    Extraordinary item ............................          3,239          3,176   (4,091)           --         2,324
Minority interest .................................             --             --       --        (1,111)       (1,111)
                                                      ------------  ------------- --------  ------------  ------------
Income (loss) before extraordinary item ...........          3,239          3,176   (4,091)       (1,111)        1,213
Extraordinary loss, net  ..........................         (2,675)            --       --            --        (2,675)
                                                      ------------  ------------- --------  ------------  ------------
Net income (loss) .................................   $        564  $       3,176 $ (4,091) $     (1,111) $     (1,462)
                                                      ============  ============= ========  ============  ============ 
</TABLE>



                                       45
<PAGE>
<TABLE>
<CAPTION>
                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 -  CONDENSED CONSOLIDATING FINANCIAL INFORMATION
                    
                      CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                 (in thousands)

   
                                                       
                                                        Guarantor    Non-Guarantor                  
                                                       Subsidiaries   Subsidiary    Parent   Eliminations  Consolidated 
                                                       ------------  ------------- --------  ------------  ------------
 
<S>                                                   <C>           <C>           <C>       <C>          <C>    
Cash Flows from Operating Activities
Net income (loss) .................................... $       564   $      3,176  $ (4,091) $    (1,111)  $    (1,462)
Adjustments to reconcile net income (loss) to net cash 
 provided by operating activities net of acquisitions
  Depreciation and amortization ......................      64,636          3,082       629           --        68,347
  Officer stock option compensation ..................          --             --     3,198           --         3,198
  Accretion of debt discount .........................          --             --         6           --             6
  Gain on sale of equipment ..........................     (22,269)        (2,300)       --           --       (24,569)
  Minority interest ..................................          --             --        --        1,111         1,111
  Extraordinary loss on debt extinguishment ..........       4,280             --        --           --         4,280
  Provision for (benefit from) deferred income taxes .       1,944             --    (2,454)          --          (510)
Change in operating assets and liabilities
  Accounts receivable ................................     (13,529)          (959)       --           --       (14,488)
  Other assets .......................................        (652)          (674)      923           --          (403)
  Accounts payable and accrued expenses ..............      (1,131)         5,565     2,752           --         7,186
                                                      ------------  ------------- --------- ------------  ------------
  Net cash provided by operating activities ..........      33,843          7,890       963           --        42,696
                                                      ------------  ------------- --------- ------------  ------------
Cash Flows from Investing Activities
Purchases of equipment ...............................    (176,273)       (22,925)       --           --      (199,198)
Proceeds from sale of equipment ......................      94,264         14,088        --           --       108,352
Purchases of property and equipment ..................     (12,846)        (1,410)     (759)          --       (15,015)
Cash paid for acquisitions ...........................    (125,325)           730   (36,051)          --      (160,646)
                                                      ------------  ------------- --------  ------------  ------------
     Net cash used in investing activities ...........    (220,180)        (9,517)  (36,810)          --      (266,507)
                                                      ------------  ------------- --------  ------------  ------------
Cash Flows from Financing Activities
Debt  issue costs ....................................     (4,778)             --    (7,499)          --       (12,277)
Net borrowings (repayments) under Senior Credit 
 Facility ............................................     (8,236)             --    37,600           --        29,364
Proceeds from issuance of senior subordinated notes ..         --              --   198,516           --       198,516
Proceeds from common stock offering ..................         --              --    85,730           --        85,730
Repayments under mortgage note .......................         --              --   (13,400)          --       (13,400)
Repayments under capitalized lease obligations .......       (833)             --        --           --          (833)
Repayments under term loan ...........................    (49,916)             --        --           --       (49,916)
Net borrowings (repayments) under notes payable ......       (321)          2,318        --           --         1,997
Redemption of Series A Preferred Stock ...............         --              --   (13,915)          --       (13,915)
Due to (from) affiliates .............................    251,185              --  (251,185)          --            --   
                                                      ------------  ------------- ---------  -----------  ------------
     Net cash provided by financing activities .......    187,101           2,318    35,847           --       225,266
                                                      ------------  ------------- ---------  -----------  ------------
Net increase in cash and cash equivalents ............        764             691        --           --         1,455
Cash and cash equivalents, beginning of period .......      2,885              --        --           --         2,885
                                                      ------------  ------------- ---------  -----------  ------------
Cash and cash equivalents, end of period ............. $    3,649    $        691 $      --  $        --  $      4,340
                                                       ==========    ============ =========  ===========  ============
</TABLE>





                                       46
<PAGE>
<TABLE>
<CAPTION>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16 - SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     A summary of the quarterly  operating  results during 1998 and 1997 were as
follows (in thousands except per share data):

                                                                1998                    
                                          ----------------------------------------------
                                              1st        2nd         3rd          4th
                                          ----------  ----------  ----------  ----------
<S>                                       <C>         <C>         <C>         <C>       
Revenues ..............................   $  61,846   $   73,800  $   89,905  $   98,539
Gross Profit ..........................      19,970       25,082      31,309      34,062
Income (loss) before extraordinary item      (1,946)      (1,189)      1,671       2,677
Extraordinary item ....................          --       (2,675)         --          --   
Net income (loss) .....................   $  (1,946)  $   (3,864) $    1,671  $    2,677

Earnings per share data - Basic:
Income (loss) before extraordinary item   $   (0.46)  $    (0.24) $     0.08  $     0.13
Extraordinary item ....................          --        (0.15)         --          --   
                                          ----------  ----------  ----------  ----------
Net income (loss) .....................   $   (0.46)  $    (0.39) $     0.08  $     0.13
                                          ==========  ==========  ==========  ==========
Earnings per share data - Diluted:
Income (loss) before extraordinary item   $   (0.46)  $    (0.24) $     0.08  $     0.12
Extraordinary item ....................          --        (0.15)         --          --   
                                          ----------  ----------  ----------  ----------
Net income (loss) .....................   $   (0.46)  $    (0.39) $     0.08  $     0.12
                                          ==========  ==========  ==========  ==========

                                                                1997                    
                                          ----------------------------------------------
                                              1st        2nd         3rd          4th
                                          ----------  ----------  ----------  ----------
Revenues ..............................   $   23,924  $   26,542  $   44,938  $   46,818
Gross Profit ..........................        6,163       9,810      13,981      14,778
Income (loss) before extraordinary item          250         137      (1,502)     (5,277)
Extraordinary item ....................           --          --          --        (451)
Net income (loss) .....................   $       --  $      137  $   (1,502) $   (5,728)

Earnings per share data - Basic:
Loss before extraordinary item ........   $    (0.19) $    (0.20) $    (0.40) $    (0.90)
Extraordinary item ....................           --          --          --          --   
                                          ----------  ----------  ----------  ----------
Net loss ..............................   $    (0.19) $    (0.20) $    (0.40) $    (0.90)
                                          ==========  ==========  ==========  ==========
Earnings per share data - Diluted:
Loss before extraordinary item ........   $    (0.19) $    (0.20) $    (0.40) $    (0.90)
Extraordinary item ....................           --          --          --          --   
                                          ----------  ----------  ----------  ----------
Net loss ..............................   $    (0.19) $    (0.20) $    (0.40) $    (0.90)
                                          ==========  ==========  ==========  ==========
</TABLE>
                                                              
     Certain amounts have been reclassified for comparative purposes.



                                       47
<PAGE>

                                   NEFF CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17-SEGMENT INFORMATION

     The  Company  has  three  segments:  Neff  Rental,  Inc.  ("Rental"),  Neff
Machinery, Inc. ("Machinery") and S.A. Argentina. These segments are a result of
the  historical   organization   of  the  Company  and  the  management  of  its
subsidiaries.  All of these segments rent and sell  industrial and  construction
equipment,  sell spare  parts and  merchandise  and provide  ongoing  repair and
maintenance services and have therefore been aggregated for disclosure purposes.
Rental and  Machinery's  operations  are conducted in the United States and S.A.
Argentina's operations are conducted in South America. The information contained
in Note 15 under Non-Guarantor  Subsidiary represents S.A. Argentina operations.
All other information in Note 15 represents  operations  conducted in the United
States.






                                       48
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Board of Directors and Shareholders of Neff Corp.


     We have audited the  consolidated  financial  statements of Neff Corp.  and
Subsidiaries  (the  "Company")  as of December 31, 1998 and 1997 and for each of
the three  years in the period  ended  December  31,  1998,  and have issued our
report thereon dated February 16, 1999; such financial statements and report are
included  elsewhere in your 1998 Annual Report to Stockholders on Form 10-K. Our
audits also included the financial  statement  schedule of Neff Corp.  listed in
Item 14(a)2.  The  financial  statement  schedule is the  responsibility  of the
Company's  management.  Our responsibility is to express an opinion based on our
audits.  In our opinion such financial  statement  schedule,  when considered in
relation to the basic financial statements taken as a whole,  presents fairly in
all material respects the information set forth therein.




/s/DELOITTE & TOUCHE LLP


Miami, Florida
February 16, 1999
 


                                       49
<PAGE>
<TABLE>
<CAPTION>
                                                                     SCHEDULE II
                                   NEFF CORP.
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

                                              Balance       Charged to                           Balance 
                                            at Beginning    Costs and                            at End  
                                             of Period       Expenses    Other   Deductions(1)  of Period
                                           -------------   ----------  -------- -------------  ----------
<S>                                        <C>            <C>          <C>     <C>            <C>  
Classification
Year ended December 31, 1998:
Allowance for doubtful accounts ..........  $      1,092    $   3,487   $    --  $     (1,350)  $   3,229
                                            ============    =========   ======== ============   =========
Deferred tax valuation allowance .........  $      1,368    $      --   $    --  $       (468)  $     900
                                            ============    =========   ======== ============   =========
Year ended December 31, 1997:
Allowance for doubtful accounts ..........  $        375    $     957   $    --  $       (240)  $   1,092
                                            ============    =========   ======== ============   =========
Deferred tax valuation allowance .........  $        809    $     559   $    --  $         --   $   1,368
                                            ============    =========   ======== ============   =========
Year ended December 31, 1996:
Allowance for doubtful accounts ..........  $        297    $     520   $    --  $       (442)  $     375
                                            ============    =========   ======== ============   =========
Deferred tax valuation allowance .........  $         --    $     809   $    --  $         --   $     809
                                            ============    =========   ======== ============   =========
</TABLE>
                                                                                
----------
1)   Deductions  represent bad debt write-offs and adjustments to reflect future
     tax benefits based on their realization being more likely than not.




                                       50
<PAGE>


                                    PART III
                                    --------


ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     None.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item 10 will be contained in the Company's
definitive  proxy  materials  to be  filed  with  the  Securities  and  Exchange
Commission  and is  incorporated  in this  Annual  Report  on Form  10-K by this
reference.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this Item 11 will be contained in the Company's
definitive  proxy  materials  to be  filed  with  the  Securities  and  Exchange
Commission  and is  incorporated  in this  Annual  Report  on Form  10-K by this
reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT

     The information required by this Item 12 will be contained in the Company's
definitive  proxy  materials  to be  filed  with  the  Securities  and  Exchange
Commission  and is  incorporated  in this  Annual  Report  on Form  10-K by this
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item 13 will be contained in the Company's
definitive  proxy  materials  to be  filed  with  the  Securities  and  Exchange
Commission  and is  incorporated  in this  Annual  Report  on Form  10-K by this
reference.




                                       51
<PAGE>

                                    PART IV
                                    -------

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following  documents are filed with,  and as part of, this Annual Report
    on Form 10-K.

     1.   Financial Statements.

          For  a  complete  list of the  Financial  Statements  filed  with this
          Annual Report on Form 10-K, see the Index to Financial Statements and
          Schedules in Item 8 on Page 21.

     2.   Financial Statements Schedules.

          The  following  Supplementary  Schedules  are filed  with this  Annual
          Report on Form 10-K:

          See  Index to Financial Statements and Schedules on Page 21.

     3.   Exhibits

          Information  with  respect  to this item is  contained  in Item  14(c)
          hereof and is incorporated herein by reference.

(b) Reports on Form 8-K.

     (1) A Current  Report on Form 8-K dated December 31, 1998 reported the sale
of $100 million aggregate  principal amount 10.25% Senior Subordinated Notes due
2008.

(c) Exhibits

     27.1 Consolidated Financial Data Schedule


                                       52
<PAGE>

                                   SIGNATURES

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

                                        NEFF CORP.



Date: March 22, 1999                    /s/ Kevin P. Fitzgerald 
                                        -----------------------
                                        KEVIN P. FITZGERALD
                                        Chief Executive Officer

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

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

/s/ Kevin P. Fitzgerald         
-----------------------    President, 
Kevin P. Fitzgerald        Chief Executive Officer, Director    March 22, 1999

/s/ Bonnie S. Biumi                          
-----------------------
Bonnie S. Biumi            Chief Financial Officer              March 22, 1999

/s/ Jorge Mas                                                   
-----------------------
Jorge Mas                  Director                             March 22, 1999

/s/ Arthur B. Laffer                 
-----------------------
Arthur B. Laffer           Director                             March 22, 1999

/s/ Joel-Tomas Citron                                           
-----------------------
Joel-Tomas Citron          Director                             March 22, 1999

/s/ Juan Carlos Mas                                             
-----------------------
Juan Carlos Mas            Director                             March 22, 1999 

/s/ Jose Ramon Mas                                             
-----------------------
Jose Ramon Mas             Director                             March 22, 1999




                                       53