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

FORM 10-K

|(Mark One)                                                    |                                                                                         
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                             | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the year ended December 31, 2004                         
|OR                                                           
|o                                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from                             to

Commission file numbers: 333-99587
                                         
     333-99589

H&E EQUIPMENT SERVICES L.L.C.(Exact name of registrant as specified in its charter)

|Louisiana(State of incorporation)                                                                                    |  | 72-1287046(I.R.S. employer identification no.)                   
|-------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------
|11100 Mead Road, Suite 200,
Baton Rouge, Louisiana 70816(Address of principal executive offices, including zip code) |  | (225) 298-5200Registrant's telephone number, including area code)

Securities
registered pursuant to Section 12(b) of the Act:
NONE

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

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 the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.    ý

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act
Rule 12b-2). Yes o    No ý

The aggregate market value of the Registrant's voting stock held by non-affiliates of the Registrant:
Not applicable

H&E Holdings L.L.C.
owns 100% of the registrant's limited liability company interests.

DOCUMENTS INCORPORATED BY REFERENCE

Certain exhibits filed with the Registrant's Registration Statements on Form S-4 (File Nos. 333-99587
and 333-99589, as amended) are incorporated by reference into Part III of the Report on Form 10-K.



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TABLE OF CONTENTS

|PART I   |          | 3 
|-------- | -------- | --
|         | Item 1.  |   
|         | Item 2.  |   
|         | Item 3.  |   
|         | Item 4.  |   
|PART II  |          | 14
|         | Item 5.  |   
|         | Item 6.  |   
|         | Item 7.  |   
|         | Item 7A. |   
|         | Item 8.  |   
|         | Item 9.  |   
|         | Item 9A. |   
|PART III |          | 35
|         | Item 10. |   
|         | Item 11. |   
|         | Item 12. |   
|         | Item 13. |   
|         | Item 14. |   
|PART IV  |          | 47
|         | Item 15. |   

2

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Forward-Looking Statements

Certain statements contained in this report are forward-looking in nature. These statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "projects," "forecasts," "may," "will," "should," "seeks," "on-track," "plans," "intends," or "anticipates" or the negative
thereof or comparable terminology, or by discussions of strategy or outlook. The Company's business and operations are subject to a variety of risks and uncertainties and, consequently, actual results
may materially differ from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to, the following:
(1) unfavorable economic and industry conditions can reduce demand and prices for the Company's products and services, (2) governmental funding for highway and other construction
projects may not reach expected levels, (3) the Company may not have access to the capital that it may require, (4) intense competition and (5) costs may increase more than
anticipated. Certain of these risks and uncertainties as well as others, are discussed in greater detail in the Company's filings with the SEC. We make no commitment to revise or update any
forward-looking statements in order to reflect events or circumstances after the date any such statement is made.

We make available on our internet website free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and the amendments to such reports as soon as practicable after we electronically file such reports with the SEC. Our website address is
www.he-equipment.com. The information contained in our website is not incorporated by reference in this Annual Report.

Restatement of Financial Statements

On August 26, 2005, we announced that we would restate previously filed audited financial results to correct accounting primarily relating to the treatment
of deferred taxes in connection with our combination with ICM Equipment Company on June 17, 2002. We have restated our consolidated financial statements for the fiscal years ended
December 31, 2002 and 2003. All applicable financial information contained in this Annual Report on Form 10-K gives effect to these restatements. Consequently, you should not
rely upon the financial statements currently on file with the SEC in our Forms 10-K for the fiscal years ended December 31, 2003 and 2002 and the related auditor's report therein,
our unaudited financial statements for all interim periods through September 30, 2004 and any financial statements for above mentioned fiscal periods that have been included in previous
announcements.

For
information concerning the background of the restatements and the specific adjustments made on an annual and quarterly basis, see "Item 6. Selected Financial
DataRestatement" and the Notes to Consolidated Financial Statements included in "Item 15. Exhibits and Financial Statement Schedules."

PART I

Item 1.    Business

The Company

We are one of the largest integrated equipment services companies in the United States focused on heavy construction and industrial equipment. We rent, sell and
provide parts and service support for four core categories of specialized equipment: (1) hi-lift or aerial platform equipment; (2) cranes; (3) earthmoving equipment;
and (4) industrial lift trucks. We engage in five principal business activities in these equipment categories:



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By
providing rental, sales and parts, repair and maintenance functions under one roof, we offer our customers a one-stop solution for their equipment needs. This full service
approach provides us with (1) multiple points of customer contact; (2) cross-selling opportunities among our rental, used and new equipment sales, parts sales and services operations;
(3) an effective method to manage our rental fleet through efficient maintenance and profitable distribution of used equipment; and (4) a mix of business activities that enables us to
operate effectively throughout economic cycles. We believe that the operating experience and extensive infrastructure we have developed throughout our history as an integrated services company provide
us with a competitive advantage over rental-focused companies and equipment distributors. In addition, our focus on four core categories of heavy construction and industrial equipment enables us to
offer specialized knowledge and support to our customers. For the year ended December 31, 2004, we generated total revenues of approximately $478.2 million. The pie charts below
illustrate a breakdown of our revenues and gross profit for the year ended December 31, 2004, respectively, by business segment (as reported, see Notes to the Consolidated Financial Statements
included in "Item 15. Exhibit and Financial Statement Schedules."):

|Revenue by Segment
($ in millions) |  | Gross Profit by Segment
($ in millions)
|---------------------------------- |  | ---------------------------------------
|                                   |  |                                        
|GRAPHIC                            |  | GRAPHIC                                

Our
rental equipment operation has an extremely well-maintained, optimally aged rental fleet and its own dedicated sales force focused by equipment type. In new equipment
sales, we are a leading distributor for nationally-recognized suppliers of equipment and sell through a specialized retail sales force that is distinct from our rental sales force. Our used equipment
sales are generated primarily from sales of used equipment from our rental fleet and are an effective and profitable way for us to manage and dispose of equipment in our rental fleet. We also sell
used equipment that we acquire through trade-ins from our new equipment customers and through selective purchases of high quality used equipment. Our parts business primarily sells new and
used parts for the equipment we sell, maintains an extensive in-house inventory in order to provide timely parts and service support to our customers and is an on-site source
of parts for our own rental fleet. Our services operation provides on-site maintenance and repair services for our customers' equipment and for our own fleet, and has approximately 490
service technicians. These complementary rental, sales and service offerings collectively leverage our specialized knowledge and infrastructure to provide an integrated platform of heavy construction
and industrial equipment products and services.

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We
have operated, through our predecessor companies, as an integrated equipment services company for approximately 44 years and have built an extensive infrastructure that
includes 41 full service facilities located throughout the high growth Intermountain, Southwest, Gulf Coast and Southeast
regions of the United States. Our management, from the corporate level down to the branch store level, has extensive industry experience. We focus our rental and equipment sales activities on, and
organize our personnel principally, by our four equipment categories. We believe this allows us to provide specialized equipment knowledge, improve the effectiveness of our rental and sales forces and
strengthen our customer relationships. In addition, we operate our day-to-day business on a branch basis which we believe allows us to more closely service our customers,
fosters management accountability at local levels, and strengthens our local and regional relationships.

Products and Services

Equipment Rentals.We rent our heavy construction and industrial equipment to our customers on a daily, weekly and monthly
basis. We have an extremely well-maintained rental fleet that, at December 31, 2004, consisted of approximately 13,100 pieces of equipment having an original acquisition cost of
approximately $470 million and an average age of approximately 44 months. Approximately 64% of the fleet consisted of hi-lift or aerial equipment, 17% consisted of cranes,
11% consisted of earthmoving equipment, 5% consisted of industrial lift trucks, and the remainder consisted of miscellaneous equipment. We actively manage the size, quality, age and composition of our
rental fleet, employing a "cradle through grave" approach. During the life of our rental equipment, we:



During
2004, we reduced our overall gross rental fleet, through normal course business activities by approximately $23.7 million as measured by original acquisition cost.
Approximately 70% of our fleet was "on-rent," reflecting the percentage of our rental fleet that was actually rented on average during our 2004 fiscal year. We rent our equipment through a
dedicated rental sales force focused by product type that is separate from our retail sales force. We continuously monitor and adjust rental rates, and we have a rental rate initiative driven by
management to increase rental rates. Our regional focus and active management also allows us to share equipment, where appropriate, among branches within our regions to optimize utilization and rental
rates. Our rental business creates cross-selling opportunities for us in sales and services.

New Equipment Sales.We sell new heavy construction and industrial equipment in all four equipment categories, and are a
leading distributor for nationally-recognized suppliers including JLG Industries, Gehl, Genie Industries (Terex), Komatsu, Bobcat and Yale Material Handling. In addition, we are the world's largest
distributor of Grove and Manitowoc crane equipment. We believe that this strong distribution network provides us with a higher level of partnering with key suppliers and improves our purchasing power.
We sell new equipment through our professional in-house retail sales force focused by product type. By organizing our sales and purchase activities based on specialized equipment
knowledge, we believe we are able to improve the effectiveness of our sales force, better serve our customers, and more efficiently manage purchase terms. Our new equipment sales operation is a source
of new customers for our parts sales and service support activities, as well as for used equipment sales.

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Used Equipment Sales.We sell used equipment primarily from our rental fleet, as well as inventoried equipment that we
acquire through trade-ins from our equipment customers and selective purchases of high-quality used equipment. For the year ended December 31, 2004, approximately 77% of
our used equipment sales revenues were derived from sales of rental fleet equipment. Selling used equipment is an effective way for us to manage the size and composition of our rental fleet and
provides a profitable distribution channel for disposal of rental equipment. We sell used equipment through our retail sales force and we do not rely on auction houses or other wholesale channels for
disposition like many of our competitors. We believe this allows us to generally realize higher prices on average for our used rental equipment, which enhances the lifetime profitability of our rental
fleet and, consequently, our return on capital. For the year ended December 31, 2004, we sold approximately $65.4 million of used equipment from our rental fleet at an average selling
price of 130.3% of book value. Used equipment sales, like new equipment sales, generates parts and service business for us.

Parts Sales.We sell new and used parts to customers and also provide parts to our own rental fleet. We sell a range of
maintenance and replacement parts from original equipment manufacturers on equipment we sell, as well as for makes of equipment that we do not sell or rent. We maintain an extensive
in-house parts inventory in order to provide timely parts and service support to our customers as well as to our own rental fleet. We generally are able to acquire non-stock or
out-of-stock parts directly from
manufacturers within one to two business days. Our product support sales representatives are specialists by equipment type. Our parts sales provide us with a relatively stable revenue stream that is
less sensitive to economic cycles than our rental and equipment sales operations. In addition, our parts operation enable us to maintain a high quality rental fleet and provide additional support to
our end users.

Service Support.We provide maintenance and repair services for our customers' owned equipment and to our own rental fleet.
In addition to repair and maintenance on an as-needed or scheduled basis, we provide ongoing preventative maintenance services and warranty repairs for our customers. We have approximately
490 technicians and over 600 field service and delivery trucks. As part of our commitment to a well-maintained rental fleet and to provide customers with high-quality service
and repair options, we devote significant resources to training these technical service employees and over time have built a full-scale services infrastructure that would be difficult for
companies without the requisite resources and lead time to replicate. Our after-market service provides a high-margin, relatively stable source of revenue through changing economic cycles.

In
addition to our principal business activities mentioned above, we provide ancillary equipment support activities including transportation, hauling, parts shipping and loss damage
waivers.

Our Competitive Strengths

Integrated Platform of Products and Services.We believe that the operating experience and extensive infrastructure we have
developed through years of operating as an integrated equipment services company provides us with a competitive advantage over rental-focused companies and equipment distributors. Our integrated
platform of products and services provides us with multiple points of customer contact and cross-selling opportunities among our rental, used and new equipment sales, parts sales and services
operations. As a result of our integrated approach, our five reporting segments generally derive their revenue from the same customer base. Key strengths of our integrated equipment services platform
include:



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Complementary, High Margin Parts and Service Operations.Our parts and service businesses allow us to maintain our rental
fleet in excellent condition and to offer our customers top quality rental equipment. Through our operating history, we have invested a significant amount of capital and management resources in our
parts and services operations. Our large staff of trained technicians, wide range of stocked parts, and the significant investment and infrastructure at the branch level required to establish our
service operations provide us with an advantage over potential competitors who do not have the requisite resources and lead time to build a full-scale parts and service business. Our
after-market parts and service businesses together provide us with a high-margin revenue source that has proven to be stable throughout a range of economic cycles. While large capital
expenditures may be reduced by economic downturns, customers generally continue to repair and maintain their existing equipment. Parts sales and service revenues on a combined basis represented
approximately 19.2% of our total revenues and 30.2% of our gross profit for the year ended December 31, 2004.

Specialized, High Quality Equipment Fleet.Our focus on four core types of heavy construction and industrial equipment allows
us to better provide the specialized knowledge and support that our customers demand when renting and purchasing equipment. These four types of equipment are attractive because they have a long useful
life, high residual value and strong industry demand. We offer customers a comprehensive selection of equipment within these categories from leading manufacturers around the world. In addition, our
parts and service operations allow us to optimally maintain our rental equipment fleet. We actively manage our rental fleet quality through regional quality control managers and our parts and service
support.

Well-Developed Infrastructure.We have built an infrastructure that includes a network of 41
full-service facilities, and a workforce that includes a highly-skilled group of approximately 490 service technicians and an aggregate of approximately 150 sales people in our
specialized rental and equipment sales forces. Our integrated platform is the result of many years of strategic development, while many rental-focused equipment companies have only recently begun to
devote resources to providing full-service capabilities. In addition, we have strategically expanded our network to solidify our presence in the attractive, contiguous regions where we
operate. We believe that our well-developed infrastructure helps us to better serve large multi-regional customers than our historically rental-focused competitors and provides an
advantage when competing for lucrative fleet and project management business.

Leading Distributor for Suppliers.We are a leading distributor for nationally-recognized equipment suppliers, including JLG
Industries, Gehl, Genie Industries (Terex), Komatsu, Bobcat and Yale Material Handling. In addition, we are the world's largest distributor of Grove and Manitowoc crane equipment. These relationships
improve our ability to negotiate equipment acquisition pricing and allow us to purchase parts at wholesale costs. As an authorized distributor for a wide range of suppliers, we are also able to
provide our customers parts and service that in many cases are covered under the manufacturer's warranty.

Customized Information Technology Systems.Our customized information systems provide management and employees with the data
and reports that facilitate our ability to make rapid and informed decisions. These systems allow us to actively manage our business and our rental fleet. Our customer relationship management system,
which is currently being implemented, will provide our sales force with real-time access to customer and sales information. We have an in-house team of information technology
specialists that support our systems.

Experienced Management Team.Our senior management, led by John M. Engquist, our President and Chief Executive Officer, has
31 years of industry experience. Our senior and regional managers

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have
an average of approximately 21 years of industry experience. Our branch managers have extensive knowledge and industry experience as well.

Our Business Strategy

Leverage our Integrated Business Model.We intend to continue to actively leverage our integrated business model to offer a
one-stop solution to our customers' varied needs with respect to the four categories of heavy construction and industrial equipment on which we focus. Our platform of
full-service, complementary rental, sales, and on-site parts, repair and maintenance functions provides us with multiple points of customer contact, enables us to offer
specialized equipment knowledge and support to our customers, and allows us to foster strong customer relationships. We will continue to cross-sell our services to expand and deepen our
customer relationships. We believe that our integrated equipment services model provides us with a strong platform for additional growth.

Managing the Life Cycle of our Rental Equipment.We actively manage the size, quality, age and composition of our rental
fleet, employing a "cradle through grave" approach. During the life of our rental equipment, we (1) aggressively negotiate on purchase price; (2) use our customized information
technology systems to closely monitor and analyze, among other things, time utilization (equipment usage based on customer demand), rental rate trends and targets and equipment demand;
(3) continuously adjust our fleet mix and pricing; (4) maintain fleet quality through regional quality control managers and our on-site parts and services support; and
(5) dispose of rental equipment through our retail sales force. This allows us to purchase our rental equipment at competitive prices, optimally utilize our fleet, cost-effectively
maintain our equipment quality and maximize the value of our equipment at the end of its useful life.

Grow our Parts and Service Operations.Our strong parts and services operations are keystones of our integrated equipment
services platform and together provide us with a relatively stable high-margin revenue source. We have built an extensive infrastructure that enables us to provide parts and service
support to our end-users as well as our own rental fleet. We intend to grow this product support side of our business and further penetrate our customer base. Our parts and services
operation helps us develop strong, on-going customer relationships, attract new customers and maintain a high-quality rental fleet.

Enter Carefully Selected New Markets.We intend to continue to strategically expand our network to solidify our presence in
the attractive, contiguous regions where we operate. The regions in which we operate are attractive because they are among the highest growth areas in the United States and are minimally impacted by
seasonality. We have a proven track record of successfully entering new markets and currently have 41 full-service facilities located in 15 states. We look to add locations that offer
attractive growth opportunities, high demand for construction and heavy equipment, and contiguity to our existing markets.

Make Selective Acquisitions.The equipment industry is fragmented and consists of a large number of relatively small,
independent businesses servicing discrete local markets. Some of these businesses may represent attractive acquisition candidates. We intend to evaluate and pursue acquisitions on an opportunistic
basis, with an objective of increasing our revenues, improving our profitability, entering additional attractive markets and strengthening our competitive position.

History

Through our predecessor companies, we have been in the equipment services business for approximately 44 years. We were formed in June 2002 through
the combination of Head & Engquist Equipment L.L.C. (a wholly-owned subsidiary of Gulf Wide Industries, L.L.C.) ("H&E") and ICM Equipment Company L.L.C. ("ICM"). H&E, founded in 1961, and ICM,
founded in 1971, were two

8

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leading
regional, integrated equipment service companies operating in contiguous geographic markets. In the combination, H&E and ICM were merged with and into H&E's parent company, Gulf Wide
Industries LLC, which was renamed H&E Equipment Services L.L.C. Prior to the combination, H&E operated 25 facilities in the Gulf Coast region, and ICM operated 16 facilities in the Intermountain
region of the United States.

Customers

We serve more than 26,000 customers in the United States, primarily in the Intermountain, Southwest, Gulf Coast and Southeast regions. Our customers include a
wide range of industrial and commercial companies, construction contractors, manufacturers, public utilities, municipalities, maintenance contractors and a variety of other large industrial accounts.
They vary from small, single machine owners to large contractors and industrial and commercial companies who typically operate under equipment and maintenance budgets. Our branches enable us to
closely service local and regional customers, while our well developed full service infrastructure enables us to effectively service multi-regional and national accounts. Our integrated strategy
enables us to satisfy customer requirements and increase revenues from customers through cross-selling opportunities presented by the various products and services that we offer. As a result, our five
reporting segments generally derive their revenue from the same customer base. In 2004, no single customer accounted for more than 1.0% of our revenues, and our top ten customers combined accounted
for less than 6.0% of our total revenues.

Sales and Marketing

We have two distinct, focused sales forces; one specializing in equipment rentals and one focused specifically on new and used equipment sales. We believe
maintaining separate sales forces for equipment rental and sales is important to our customer service, allowing us to effectively meet the demands of different types of customers.

Both
our rental sales force and equipment sales force, together comprising over 150 sales people, are divided into smaller, product focused teams which enhances the development of
in-depth product application and technical expertise. To further develop knowledge and experience, we provide our sales force with extensive training, including frequent factory and
in-house training by manufacturer representatives regarding the operational features, operator safety training and maintenance of new equipment. This training is essential, as our sales
personnel regularly call on contractors' job sites often assisting customers in assessing their immediate and ongoing equipment needs. In addition, we have a commission-based compensation program for
our sales force.

We
recently began to implement a company wide customer relationship management system. We believe that this comprehensive customer and sales management tool will enhance our territory
management program by increasing the productivity and efficiency of our sales representatives and branch managers as they are provided real-time access to sales and customer information.

We
have developed strategies to identify target customers for our equipment services in all markets. These strategies allow our sales force to identify frequent rental users, function as
advisors and problem solvers for our customers and accelerate the sale process in new operations.

While
our specialized, well-trained sales force strengthens our customer relationships and fosters customer loyalty, we also promote our business through marketing and
advertising, including industry publications, direct mail campaigns, the Internet and Yellow Pages.

We
have implemented a national accounts program in order to develop national relationships and increase awareness of our extensive offering of industrial and construction equipment,
ancillary products, parts and services. Under this program, a portion of our sales force is assigned to call on

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corporate
headquarters of our large customers, particularly those with a national or multi-regional presence.

Suppliers

We purchase a significant amount of equipment from the same manufacturers with whom we have distribution agreements. These relationships improve our ability to
negotiate equipment acquisition pricing. As an authorized distributor for a wide range of suppliers, we are also able to provide our customers parts and service that in many cases are covered under
the manufacturer's warranty. We are
a leading distributor for nationally-recognized equipment suppliers including JLG Industries, Gehl, Genie Industries (Terex), Komatsu, Bobcat, Yale Material Handling, Grove and Manitowoc. While we
believe that we have alternative sources of supply for the equipment we purchase in each of our principal product categories, termination of one or more of our relationships with any of our major
suppliers of equipment could have a material adverse effect on our business, financial condition or results of operation if we were unable to obtain adequate or timely rental and sales equipment.

Information Technology Systems

We have specialized information systems that track (i) rental inventory utilization statistics; (ii) maintenance and repair costs;
(iii) returns on investment for specific equipment types; and (iv) detailed operational and financial information for each piece of equipment. These systems enable us to closely monitor
our performance and actively manage our business, and include features that were custom designed to support our integrated services platform. The point-of-sale aspect of our
systems enables us to link all of our facilities, permitting universal access to real-time data concerning equipment located at the individual facility locations and the rental status and
maintenance history for each piece of equipment. In addition, our systems include, among other features, on-line contract generation, automated billing, local sales tax computation and
automated rental purchase option calculation. We customized our customer relationship management system to enable us to more effectively manage our business. This customer relationship management
system, which is currently being implemented, provides real-time sales and customer information, a quote system, a territory mapping feature and other organizational tools to assist our
sales forces. In addition, we maintain an extensive customer database which allows us to monitor the status and maintenance history of our customers' owned-equipment and enables us to more effectively
provide parts and service to meet their needs. All of our critical systems run on servers and other equipment that is less than three years old.

Competition

The equipment industry is generally comprised of either pure rental equipment companies or manufacturer dealer/distributorship companies. We are an integrated
equipment services company and rent, sell and provide parts and service support. Despite consolidation, the equipment industry is still fragmented and consists mainly of a small number of
multi-location regional or national operators and a large number of relatively small, independent businesses serving discrete local markets. Many of the markets in which we operate are served by
numerous competitors, ranging from national and multi-regional equipment rental companies to small, independent businesses with a limited number of locations.

We
believe that participants in the equipment rental industry compete on the basis of availability, quality, reliability, delivery and price. In general, large operators enjoy
substantial competitive advantages over small, independent rental businesses due to a distinct price advantage. Although many rental equipment companies have now announced plans to provide parts and
service support to customers, their service offerings are typically limited and may prove difficult to expand due to the training, infrastructure and management resources necessary to develop the
breadth of service offerings and depth of knowledge our service technicians are able to provide.

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The
retail sales and distribution industry continues to be redefined through consolidation and competition. Traditionally, equipment manufacturers distributed their equipment and parts
through a network of independent dealers with exclusive distribution agreements. As a result of the consolidation and competition, both manufacturers and distributors sought to streamline their
operations, improve their costs and gain market share. Our established, integrated infrastructure enables us to compete directly with our competitors on either a local, regional or national basis. We
believe customers place a greater emphasis on value-added services, teaming with equipment rental and sales companies who can meet all of their equipment, parts and service needs.

Environmental and Safety Regulations

Our facilities and operations are subject to comprehensive and frequently changing federal, state and local environmental and occupational health and safety laws.
These laws regulate (i) the handling, storage, use and disposal of hazardous materials and wastes and, if any, the associated cleanup of properties affected by pollutants; (ii) air
quality; and (iii) wastewater. We do not currently anticipate any material adverse effect on our business or financial condition or competitive position as a result of our efforts to comply
with such requirements. Although we have made and will continue to make capital and other expenditures to comply with environmental requirements, we do not expect to incur material capital
expenditures for environmental controls or compliance.

In
the future, federal, state or local governments could enact new or more stringent laws or issue new or more stringent regulations concerning environmental and worker health and safety
matters, or effect a change in their enforcement of existing laws or regulations, that could affect our operations. Also, in the future, contamination may be found to exist at our facilities or
off-site locations where we have sent wastes. There can be no assurance that we will not discover previously unknown environmental non-compliance or contamination. We could be
held liable for such newly-discovered non-compliance or contamination. It is possible that changes in environmental and worker health and safety laws or liabilities from newly-discovered
non-compliance or contamination could have a material adverse effect on our business, financial condition and results of operations.

Employees

As of December 31, 2004, we had approximately 1,318 employees. The total number of employees does not significantly fluctuate throughout the year. Of these
employees, 445 are salaried personnel and 873 are hourly personnel. Our employees perform the following functions: sales operations, parts operations, rental operations, technical service and office
and administrative support. Collective bargaining agreements relating to three separate locations cover approximately 83 of our employees. We believe our relations with our employees are good, and we
have never experienced a work stoppage.

Seasonality

Our business is seasonal with demand for our rental equipment tending to be lower in the winter months. The level of equipment rental activities are directly
related to commercial and industrial construction and maintenance activities. Therefore, equipment rental performance will be correlated to the levels of current construction activities. The severity
of weather conditions can have a temporary impact on the level of construction activities.

Equipment
sales cycles are also subject to seasonality with the peak selling period during the spring season and extending through the summer. Parts and service activities are less
affected by changes in demand caused by seasonality.

Item 2.    Properties

Properties

We currently have a network of 41 full-service facilities, serving more than 26,000 customers across 15 states in the Intermountain, Southwest, Gulf Coast and
Southeast regions of the United States.

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In our facilities, we rent, display and sell equipment, including tools and supplies, and provide maintenance and basic repair work. We own four of our locations and lease 37 locations.
Our leases provide for varying terms and renewal options. The number of branch locations in each city is indicated by parentheses. The following table provides data on our locations:

|City/State       |  | Leased/Owned      
|---------------- |  | ------------------
|Alabama          |  |                   
|Birmingham       |  | Leased            
|Arizona          |  |                   
|Phoenix          |  | Leased            
|Tucson           |  | Leased            
|Arkansas         |  |                   
|Little Rock      |  | Owned             
|Springdale       |  | Owned             
|Colorado         |  |                   
|Denver           |  | Leased            
|Colorado Springs |  | Leased            
|Florida          |  |                   
|Fort Myers       |  | Leased            
|Orlando          |  | Leased            
|Tampa            |  | Leased            
|Georgia          |  |                   
|Atlanta          |  | Leased            
|Idaho            |  |                   
|Boise            |  | Leased            
|Coeur D'Alene    |  | Leased            
|Louisiana        |  |                   
|Alexandria       |  | Leased            
|Baton Rouge      |  | Leased            
|Belle Chasse(2)  |  | Leased(1)/Owned(1)
|Gonzales         |  | Leased            
|Kenner           |  | Leased            
|Lake Charles     |  | Leased            
|Shreveport(2)    |  | Leased(2)         
|Mississippi      |  |                   
|Jackson          |  | Leased            
|Montana          |  |                   
|Billings         |  | Leased            
|Belgrade         |  | Leased            
|Missoula         |  | Leased            
|New Mexico       |  |                   
|Albuquerque      |  | Leased            
|Nevada           |  |                   
|Las Vegas        |  | Leased            
|Reno             |  | Leased            
|North Carolina   |  |                   
|Charlotte        |  | Leased            
|Oklahoma         |  |                   
|Oklahoma City    |  | Leased            
|Tulsa            |  | Leased            
|Texas            |  |                   
|Dallas(2)        |  | Leased(2)         
|Houston(3)       |  | Leased(3)         
|San Antonio      |  | Owned             
|Utah             |  |                   
|Ogden            |  | Leased            
|Salt Lake City   |  | Leased            
|St. George       |  | Leased            

Each
facility location has a branch manager who is responsible for day-to-day operations. In addition, facilities are typically staffed with
approximately 10 to 100 people, who may include technicians, salesmen, rental operations staff and parts specialists. While facility offices are typically open five days a week, we provide
24 hour, seven day per week service.

Our
corporate headquarters are located in Baton Rouge, Louisiana, where we occupy approximately 18,400 square feet under a lease that extends until February 28, 2007. We believe
that our existing facilities will be sufficient for the conduct of our business during the next fiscal year.

Item 3.    Legal Proceedings

Other than the legal proceeding referred to below, we are not currently a party to any material pending legal proceeding that could have a materially adverse
effect on our business or financial condition. In July 2000, one of our competitors, Sunbelt Rentals, Inc., brought claims against us in the General Court of Justice, Superior Court
Division, State of North Carolina, County of Mecklenburg, alleging, among other things, that in connection with our hiring of former employees of the plaintiff there occurred a breach of fiduciary
duty, misappropriation of trade secrets, unfair trade practices and interference with prospective advantages. In May 2003, the court ruled in favor of the plaintiff in the amount of
$17.4 million. We subsequently appealed the judgment. In conjunction with the appeal and in accordance with the court's ruling, we have an irrevocable standby letter of credit for
$19.8 million,

12

---



representing
the amount of the judgment plus $2.4 million in anticipated statutory interest for the twenty-four months while the judgment is being appealed. For additional
information on our standby letter of credit, you should refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations." Oral arguments took place on March 3,
2005 and the appeal was then submitted for the appellate court's decision. While we are appealing this judgment, we believe that even if there is a reduction in the amount of damages awarded to the
plaintiff on appeal, the judgment could have a material adverse effect on our business or financial condition.

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

No matter was submitted to a vote of our security holders.

13

---



PART II

Item 5.    Market for Common Equity and Related Stockholder Matters

Not Applicable.

Item 6.    Selected Financial Data

You should read the consolidated historical financial data together with our consolidated financial statements and related notes included elsewhere in this Report
and Item 7. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the related notes thereto and other financial data
included elsewhere in this Report.

Certain
amounts in the prior-year consolidated historical financial data have been reclassified for comparative purposes to conform to the presentation in the current-year consolidated
financial data (see Notes to the Consolidated Financial Statements included in "Item 15. Exhibits and Financial Statement Schedules.").

|                                             |                                | For the Year Ended December 31, |       
|-------------------------------------------- | ------------------------------ | ------------------------------- | ------
|
|
|Statement of operations data:                |                                |                                 |       
|Revenues:                                    |                                |                                 |       
|                                             | Equipment rentals              |                                 | $     
|                                             | New equipment sales            |                                 |       
|                                             | Used equipment sales           |                                 |       
|                                             | Parts sales                    |                                 |       
|                                             | Service revenue                |                                 |       
|                                             | Other                          |                                 |       
|                                             |                                |                                 |       
|                                             |                                | Total revenues                  |       
|                                             |                                |                                 |       
|Cost of revenues:                            |                                |                                 |       
|                                             | Rental depreciation            |                                 |       
|                                             | Rental expense                 |                                 |       
|                                             | New equipment sales            |                                 |       
|                                             | Used equipment sales           |                                 |       
|                                             | Parts sales                    |                                 |       
|                                             | Service revenue                |                                 |       
|                                             | Other                          |                                 |       
|                                             |                                |                                 |       
|                                             |                                | Total cost of revenues          |       
|                                             |                                |                                 |       
|Gross profit:                                |                                |                                 |       
|                                             | Equipment rentals              |                                 |       
|                                             | New equipment sales            |                                 |       
|                                             | Used equipment sales           |                                 |       
|                                             | Parts sales                    |                                 |       
|                                             | Service revenue                |                                 |       
|                                             | Other                          |                                 |       
|                                             |                                |                                 |       
|                                             |                                | Total gross profit              |       
|                                             |                                |                                 |       
|Selling, general and administrative expenses |                                |                                 | 97,525
|Loss from litigation                         |                                |                                 |      
|Related party expense                        |                                |                                 |      
|Gain on sale of property and equipment       |                                |                                 | 207   
|                                             |                                |                                 |       
|                                             | Income (loss) from operations  |                                 |       
|                                             |                                |                                 |       
|Other income (expense):                      |                                |                                 |       
|                                             | Interest expense               |                                 |       
|                                             | Other, net                     |                                 |       
|                                             |                                |                                 |       
|                                             |                                | Total other expense, net        |       
|                                             |                                |                                 |       
|                                             | Income (loss) before taxes     |                                 |       
|                                             | Income tax provision (benefit) |                                 |       
|                                             |                                |                                 |       
|                                             |                                | Net income (loss)               |       
|                                             |                                |                                 |       

14

---



|                                 |                                                     | For the Year Ended December 31, |       
|-------------------------------- | --------------------------------------------------- | ------------------------------- | ------
|
|
|Other financial data:            |                                                     |                                 |       
|Depreciation and amortization(2) |                                                     | $                               | 53,526
|Statement of cash flows:         |                                                     |                                 |       
|                                 | Net cash (used in) provided by
operating activities |                                 |       
|                                 | Net cash (used in) provided by
investing activities |                                 |       
|                                 | Net cash provided by (used in)
financing activities |                                 |       

|                          |  | As of December 31, |        
|------------------------- |  | ------------------ | -------
|
|
|Balance sheet data:       |  |                    |        
|Cash                      |  | $                  | 3,358  
|Rental equipment, net     |  |                    | 243,630
|Goodwill, net             |  |                    | 8,572  
|Deferred financing costs  |  |                    | 10,251 
|Total assets              |  |                    | 408,669
|Total debt                |  |                    | 299,392
|Members' equity (deficit) |  |                    | (33,300

---

Restatement and Reclassifications

We announced on August 26, 2005, that we would restate our audited financial results for the fiscal years ended December 31, 2003 and 2002 to
correct errors primarily related to the treatment of deferred taxes in connection with our combination with ICM Equipment Company on June 17, 2002. As a result of the restatements, we also made
corrections to the recorded amount of rental fleet, property and equipment and goodwill associated with purchase accounting for the acquisition of ICM Equipment Company. For further discussion of the
restatements, see the Notes to the Consolidated Financial Statements included in "Item 15. Exhibits and Financial Statement Schedules."

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

The following discussion should be read in conjunction with the "Selected Financial Data" and our consolidated financial statements and the accompanying notes
thereto included elsewhere herein. The
following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain factors.

Overview

As more fully described in the notes to our consolidated financial statements, we have restated our previously issued consolidated financial statements to
primarily correct our accounting treatment of deferred taxes in connection with our combination with ICM Equipment Company on June 17, 2002.

15

---



All
financial information contained herein has been revised to reflect the restatements and reclassifications.



As one of the largest integrated equipment services companies in the United States focused on heavy construction and industrial equipment, we rent, sell and
provide parts and service support for four core categories of specialized equipment: (1) hi-lift or aerial platform equipment, (2) cranes, (3) earthmoving equipment,
and (4) industrial lift trucks. By providing equipment rental, sales, on-site parts, repair and maintenance functions under one roof, we are a one-stop provider for our
customers' varied equipment needs. This full service approach provides us with multiple points of customer contact, enables us to maintain an extremely high quality rental fleet, as well as an
effective distribution channel for fleet disposal and provides cross-selling opportunities among our new and used equipment sales, rental, parts sales and service operations.

We
operate 41 full-service facilities throughout the Intermountain, Southwest, Gulf Coast and Southeast regions of the United States. Our work force includes distinct,
focused sales forces for our new and used equipment sales and rental operations, highly-skilled service technicians, product specialists and regional managers. We focus our sales and rental activities
on, and organize our personnel principally by, our four equipment categories. We believe this allows us to provide specialized equipment knowledge, improve the effectiveness of our rental and sales
force and strengthen our customer relationships. In addition, we have branch managers at each location who are responsible for managing their assets and financial results. We believe this fosters
accountability in our business, and strengthens our local and regional relationships.

Through
our predecessor companies, we have been in the equipment services business for approximately 44 years. We were formed in June 2002 through the combination of
Head & Engquist Equipment, L.L.C. (H&E) (a wholly-owned subsidiary of Gulf Wide Industries, L.L.C.) and ICM Equipment Company L.L.C. (ICM). H&E, founded in 1961, and ICM, founded in 1971, were
two leading regional, integrated rental, sales and equipment service companies operating in contiguous geographic markets. H&E and ICM were merged into H&E's parent company, Gulf Wide Industries,
L.L.C., which was renamed H&E Equipment Services L.L.C. Prior to the combination, H&E operated 25 facilities in the Gulf Coast region, and ICM operated 16 facilities in the Intermountain region of the
United States.



We have five reportable segments because we derive our revenues from five principal business activities: (1) equipment rentals; (2) new equipment
sales; (3) used equipment sales; (4) parts sales and (5) services. These segments are based upon how we allocate resources and assess performance. In addition, we also have
non-segmented revenues and costs that relate to equipment support activities.



16

---









Our
non-segmented revenues and costs relate to equipment support activities that we provide, such as transportation, hauling, parts freight, and damage waivers, and are not
generally allocated to reportable segments.

You
can read more about our business segments under "Item 1. Business" in this Form 10-K and in footnote 18 of the financial statements.



Total Revenues.We generate all of our total revenues from our five business segments and our non-segmented
equipment support activities. Equipment rentals and new equipment sales account for more than half of our total revenues. For the year end December 31, 2004, approximately 33.5% of our total
revenues were attributable to equipment rentals, 24.4% of our total revenues were attributable to new equipment sales, 17.8% were attributable to used equipment sales, 12.1% were attributable to parts
sales, 7.0% were attributable to our service revenues and 5.2% were attributable to non-segmented other revenues.

Revenue by Segment
($ in millions) GRAPHIC

Gross Profit by Segment
($ in millions) GRAPHIC


The
equipment that we sell, rent and service is principally used in the construction industry, as well as by companies for commercial and industrial uses such as plant maintenance and
turnarounds. As a result, our total revenues are affected by several factors including, but not limited to, the demand for

17

---



and
availability of rental equipment, rental rates, the demand for new and used equipment, the level of construction and industrial activities, spending levels by our customers, adverse weather
conditions and general economic conditions. For a discussion of the impact of seasonality on our revenues, see "Seasonality" below.



18

---





Our largest expenses are the cost to purchase the new equipment we sell, the costs associated with the used equipment we sell, rental expense, rental depreciation
and costs associated with parts sales and services, which are all included in costs of revenues. For the fiscal year ended December 31, 2004, our total cost of revenues was approximately
$354.9 million. Our operating expenses consist principally of selling, general and administrative expense, and, in the case of fiscal year 2003, loss from litigation. For the fiscal year ended
December 31, 2004, our operating expenses were approximately $97.5 million. In addition, we have interest expense related to our debt instruments. Operating expenses and all other income
and expense items below gross profit are not generally allocated to our reportable segments.

Cost
of Revenues:



19

---





We generate cash primarily from our operating activities and historically we have used cash flows from operating activities, and our revolving credit facility as
the primary sources of funds to purchase our inventory, and fund working capital and capital expenditures.



A significant portion of our overall value is in our rental fleet equipment. Our rental fleet (including rental equipment financed with operating leases) as of
December 31, 2004, consists of 13,092 units having an original acquisition cost (which is the cost originally paid to manufacturers or the original amount financed under operating leases) of
approximately $470 million. As of December 31, 2004, our rental fleet composition was as follows (dollars in millions):

|                      |  | Units  |  | % of
Total
Units |   | Original
Acquisition
Cost |       | % of Original
Acquisition Cost |     | Average
Age in
Months
|--------------------- |  | ------ |  | ---------------- | - | ------------------------- | ----- | ------------------------------ | --- | ---------------------
|Aerial Work Platforms |  | 9,903  |  | 76               | % | $                         | 298.9 |                                | 64  | %                    
|Cranes                |  | 395    |  | 3                | % |                           | 81.8  |                                | 17  | %                    
|Earthmoving           |  | 696    |  | 5                | % |                           | 53.3  |                                | 11  | %                    
|Lift Trucks           |  | 987    |  | 8                | % |                           | 23.6  |                                | 5   | %                    
|Other                 |  | 1,111  |  | 8                | % |                           | 12.2  |                                | 3   | %                    
|                      |  |        |  |                  |   |                           |       |                                |     |                      
|Total                 |  | 13,092 |  | 100              | % | $                         | 469.8 |                                | 100 | %                    
|                      |  |        |  |                  |   |                           |       |                                |     |                      

Determining
the optimal age and mix for our rental fleet equipment is subjective and requires considerable estimates by management. We constantly evaluate the mix, age and quality of the
equipment in our rental fleet in response to current economic conditions, competition and customer demand. On average, we aged our rental fleet approximately 2.9 months during 2004. We reduced
our overall gross rental fleet, through the normal course of business activities, by approximately $23.7 million during 2004. While we reduced the size of our rental fleet, we have been able to
increase our utilization, average rental rate and rental revenue. The mix among our four core product lines remained consistent with that of prior years. As a result of our in-house
service capabilities and extensive maintenance program, our fleet is extremely well-maintained.

The
mix and age of our rental fleet, as well as our cash flows, are impacted by the normal sales of equipment from the rental fleet and the capital expenditures to acquire new rental
fleet equipment. In making acquisition decisions, we evaluate current market conditions, competition, manufacturers' availability, pricing and return on investment over the estimated life of the
specific equipment, among other things.



We are subject to a number of external factors that may adversely affect our businesses. These factors, which are discussed below and under the headings
"Forward-Looking Statements," and elsewhere in this Form 10-K, include:



20

---





We
believe that our integrated business tempers the effects to us of downturns in a particular segment. For a discussion of seasonality, see "Seasonality."

Critical Accounting Policies; Use of Estimates

We prepare our financial statements in accordance with accounting principles generally accepted in the United States. In applying many accounting principles, we
need to make assumptions, estimates and/or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements. We base our estimates and
judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and/or judgments, however, are often subjective and they
and our actual results may change based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from our estimates, the revisions are included in our results
of operations for the period in which the actual amounts become known. We believe the following critical accounting policies could potentially produce materially different results if we were to change
underlying assumptions, estimates and/or judgments. (See our notes to our consolidated financial statements for a summary of our significant accounting policies.)

Revenue Recognition.Our revenue recognition varies by segment. Our policy is to recognize revenue from equipment rentals in
the period earned, over the contract term, regardless of the timing of the billing to customers. A rental contract term can be daily, weekly or monthly. Because the term of the contracts can extend
across financial reporting periods, we record unbilled rental revenue and deferred rental revenue at the end of reporting periods so rental revenue is appropriately reported in the periods presented.
We recognize revenue from new equipment sales, used equipment sales and parts sales at the time of delivery to, or pick-up by, the customer and when all obligations under the sales
contract have been fulfilled and collectibility is reasonably assured. We recognize services revenues at the time services are rendered. We recognize other revenues for support services at the time we
generate an invoice including the charge for such services.

Allowance for Doubtful Accounts.We maintain an allowance for doubtful accounts that reflects our estimate of the amount of
our receivables that we will be unable to collect. Our largest exposure to doubtful accounts is in our rental operations. We perform credit evaluations of customers and establish credit limits based
on reviews of current credit information and payment histories. Our credit risk is mitigated by our geographically diverse customer base and our credit evaluation procedures. The rate of future credit
losses, however, may not be similar to past experience. Our estimate of doubtful accounts could change based on changing circumstances, including changes in the economy or in the particular
circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowance.

Useful Lives of Rental Equipment and Property and Equipment.We depreciate rental equipment and property and equipment over
their estimated useful lives (generally three to ten years), after giving effect to an estimated salvage value of 0% to 25% of cost. The useful life of rental equipment is determined based on our
estimate of the period the asset will generate revenues, and the salvage value is determined based on our estimate of the minimum value we could realize from the asset after such period. We routinely
review the assumptions utilized in computing rates of depreciation. We may be

21

---



required
to change these estimates based on changes in our industry or other changing circumstances. If these estimates change in the future, we may be required to recognize increased or decreased
depreciation expense for these assets.

Impairment of Long-Lived Assets.Long-lived assets are recorded at the lower of amortized cost or
fair value. We review long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset
over the remaining useful life. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair
value of the assets.

Inventories.We state our new and used equipment inventories at the lower of cost or market by specific identification. Parts
and supplies are stated on the lower of the weighted average cost or market. We maintain allowances for damaged, slow-moving and unmarketable inventory to reflect the difference between
the cost of the inventory and the estimated market value. Changes in product demand may affect the value of inventory on hand and may require higher inventory allowances. Uncertainties with respect to
inventory valuation are inherent in the preparation of financial statements.

Results of Operations

The tables included in the period comparisons below provide summaries of revenues and gross profits for our business segments. The
period-to-period comparisons of financial results are not necessarily indicative of future results.

Because
the combination of H&E and ICM occurred in June 2002, period comparisons that include the fiscal year ended December 31, 2002 do not reflect the effect of the ICM
acquisition on results of operations for the full fiscal year and are not indicative of future results. The results of operations for the fiscal year 2002 only include results from the ICM acquisition
from June 17, 2002 through December 31, 2002.

Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003



|                  |                        | For the
Year Ended
December 31, |   |       |       |   |      
|----------------- | ---------------------- | ------------------------------- | - | ----- | ----- | - | -----
|
|
|
|Segment Revenues: |                        |                                 |   |       |       |   |      
|                  | Equipment rentals      |                                 | $ | 160.3 |       | $ | 153.9
|                  | New equipment sales    |                                 | $ | 116.9 |       | $ | 81.7 
|                  | Used equipment sales   |                                 |   | 85.0  |       |   | 70.9 
|                  | Parts sales            |                                 |   | 58.0  |       |   | 53.7 
|                  | Services               |                                 |   | 33.7  |       |   | 33.3 
|                  | Non-segmented revenues |                                 |   | 24.3  |       |   | 20.5 
|                  |                        |                                 |   |       |       |   |      
|                  |                        | Total revenues                  |   | $     | 478.2 |   | $    
|                  |                        |                                 |   |       |       |   |      

Total Revenues.Our total revenues were $478.2 million in 2004 compared to $414.0 million in
2003, an increase of $64.2 million or 15.5%. Revenues increased for all reportable segments as a result of increased customer demand for our products and services combined with rental and
support activity rate increases.

22

---





|                      |                            | For the
Year Ended December 31 |   |      |       |   |     
|--------------------- | -------------------------- | ------------------------------ | - | ---- | ----- | - | ----
|
|
|
|Segment Gross Profit: |                            |                                |   |      |       |   |     
|                      | Equipment rentals          |                                | $ | 60.0 |       | $ | 48.9
|                      | New equipment sales        |                                |   | 12.8 |       |   | 8.5 
|                      | Used equipment sales       |                                |   | 17.1 |       |   | 12.8
|                      | Parts sales                |                                |   | 16.5 |       |   | 14.5
|                      | Services                   |                                |   | 20.8 |       |   | 20.3
|                      | Non-segmented gross profit |                                |   | (3.9 | )     |   | (5.9
|                      |                            |                                |   |      |       |   |     
|                      |                            | Total gross profit             |   | $    | 123.3 |   | $   
|                      |                            |                                |   |      |       |   |     

23

---



Total Gross Profit.Our total gross profit was $123.3 million in 2004 compared to
$99.1 million in 2003, an
increase of $24.2 million or 24.3%. Gross profit increased primarily as a result of the reduction of the overall rental fleet combined with an increase in rental revenues. In addition, due to
the increase in customer demand for new and well-maintained used equipment, we were able to sell our equipment at a higher gross margin. Total gross profit margin for 2004 was 25.8%
compared to 23.9% in 2003. Gross profit margins also increased primarily due to the decreased costs associated with the reduced fleet and the improved margins in equipment sales. Our gross profit was
attributable to:



Selling, General and Administrative Expenses.Selling, general and administrative (SG&A) expenses
increased $4.4 million, or 4.7%, to $97.5 million in 2004 from $93.1 million in 2003. Approximately $3.5 million of the increase related to higher sales commissions,
performance incentives, benefits and other costs associated with increased revenues. Rising insurance, facility, depreciation and transportation and hauling costs accounted for the remaining
$1.0 million of the total increase. As a percent of total revenues, SG&A expenses were 20.4% in 2004 compared to 22.5% in the prior year.

Loss from Litigation.In July 2000, one of our competitors, Sunbelt Rentals, Inc.,
brought claims against us in the General Court of Justice, Superior Court Division, State of North Carolina, County of Mecklenburg alleging, among other things, that in connection with our hiring of
former employees of the plaintiff there occurred a breach of fiduciary duty, misappropriation of trade secrets, unfair trade practices and interference with prospective advantages. In May 2003,
the Court ruled in favor of the plaintiff in the amount of $17.4 million. Consequently, we recorded a $17.4 million loss in 2003. We subsequently appealed the judgment. In conjunction
with the appeal and in accordance with the Court's ruling, we issued an irrevocable standby letter of credit for $19.8 million, representing the amount of the judgment plus $2.4 million
in anticipated statutory interest (8%) for the twenty-four months while the judgment is being appealed. Going forward, we intend to expense any statutory interest as interest expense in
the statement of operations. As of December 31, 2004, we paid a 300 basis point fee on the

24

---



amount
available for issuance. Currently, we pay a 225 basis point fee on the amount available for issuance. Oral arguments took place on March 3, 2005 and the appeal was then submitted for the
appellate court's decision. While we are appealing this judgment, we believe that even if there is a reduction in the amount of damages awarded to the plaintiff on appeal, the judgment could have a
material adverse effect on our business or financial condition.

Related Party Expense.On June 29, 1999, we entered into a $3.0 million consulting and
non-competition agreement with Mr. Thomas Engquist, a related party. The agreement provided for total payments over a ten-year term, payable in increments of $25,000 per
month. Mr. Engquist was obligated to provide us consulting services and was to comply with the non-competition provision set forth in a Recapitalization Agreement between us and
others dated June 19, 1999. The parties specifically acknowledged and agreed that in the event of the death of Mr. Engquist during the term of the agreement, the payments that otherwise
would have been payable to Mr. Engquist under the agreement shall be paid to his heirs.

Due
to Mr. Engquist's passing away during 2003, we will not be provided with any further consulting services. Therefore, we have recorded a $1.3 million expense for the
present value of the remaining future payments.

Other Income (Expense).Our 2004 other expense increased by $0.5 million to
$39.7 million in 2004 from $39.2 million in 2003. Our interest expense for 2004 increased $0.4 million this year compared to last year. The annual interest rates on our senior
secured credit facility averaged 7.1% in 2004 compared to 5.4% in 2003.

Income Taxes.We are a limited liability company that has elected to be treated as a C Corporation
for income tax purposes. For 2004, income taxes increased by $5.7 million to a provision of approximately $0 million from a benefit of $5.7 million. The increase is a result of
our loss in 2003 and the establishment of a valuation allowance against our net deferred tax assets. At the end of 2004 and 2003, we have recorded a tax valuation allowance for the entire amount of
our net deferred income tax assets. The valuation allowance was recorded given the cumulative losses we have incurred and our belief that it is more likely than not that we will be unable to recover
the net deferred income tax assets.

Year Ended December 31, 2003 Compared to the Year Ended December 31, 2002



The following table indicates the impact on operations attributable to the ICM locations acquired in 2002:

For the
Year Ended
December 31,Dollar Change
Attributable
to ICM
Acquisition

Dollar Change
Excluding
the ICM
Acquisition2003
(Restated)

2002
(Restated)

Total
Dollar
Change

Total
Percent
Change(in millions, except percentages)Segment Revenues:Equipment rentals

$
153.9

$
136.6

$
17.3

12.7
%
$
26.1

$
(8.8
)New equipment sales


81.7


72.1


9.6

13.3
%

6.9


2.7Used equipment sales


70.9


52.5


18.4

35.0
%

11.2


7.2Parts sales


53.7


47.2


6.5

13.8
%

7.8


(1.3
)Services


33.3


27.8


5.5

19.8
%

6.4


(0.9
)Non-segmented revenues


20.5


14.8


5.7

38.5
%

4.9


0.8Total revenues

$
414.0

$
351.0

$
63.0

17.9
%
$
63.3

$
(0.3
)


25

---



Total Revenues.Our 2003 total revenues were $414.0 million compared to $351.0 million in 2002, an increase of
$63.0 million or 17.9%. Total revenues attributable to the locations associated with the ICM acquisition were $63.3 million. Our ability to increase revenues was hampered by lower
customer demand due to a weak economy.



Included in the following table is the impact on operations attributable to the ICM locations acquired in 2002:

For the
Year Ended
December 31,Dollar Change
Attributable
to ICM
Acquisition

Dollar Change
Excluding
the ICM
Acquisition2003
(Restated)

2002
(Restated)

Total
Dollar
Change

Total
Percent
Change(in millions, except percentages)Segment Gross Profit:Equipment rentals

$
48.9

$
52.3

$
(3.4
)
(6.5
)%
$
6.3

$
(9.7
)New equipment sales


8.5


6.8


1.7

25.0
%

1.3


0.4Used equipment sales


12.8


8.7


4.1

47.1
%

2.6


1.5Parts sales


14.5


13.2


1.3

9.8
%

2.2


(0.9
)Services


20.3


16.4


3.9

23.8
%

4.0


(0.1
)Non-segmented gross profit


(5.9
)

(5.0
)

(0.9
)
18.0
%

0.5


(1.4
)Total gross profit

$
99.1

$
92.4

$
6.7

7.3
%
$
16.9

$
(10.2
)


26

---



Total Gross Profit.Our 2003 total gross profit was $99.1 million compared to $92.4 million in
2002, an increase of $6.7 million or 7.3%. Total gross profit attributable to the locations associated with the ICM acquisition was $16.9 million.



Selling, General and Administrative Expenses.Our 2003 selling, general and administrative (SG&A)
expenses were $93.1 million compared to $78.4 million for 2002. Included in the total $14.7 million increase in SG&A expense was $26.1 million related to the ICM locations.
The remaining $11.4 million decrease was primarily the result of our work force reductions, additional cost controlling initiatives implemented by management and continued integration of the
merged companies. Depreciation and amortization expense on property and equipment is recorded in SG&A expense and was $3.9 million for 2003 compared to $3.0 million for 2002 (the ICM
acquisition accounted for $0.5 million of the increase.)

Loss from Litigation.In July 2000, one of our competitors, Sunbelt Rentals, Inc.,
brought claims against us in the General Court of Justice, Superior Court Division, State of North Carolina, County of Mecklenburg alleging, among other things, that in connection with our hiring of
former employees of the plaintiff there occurred a breach of fiduciary duty, misappropriation of trade secrets, unfair trade practices and interference with prospective advantages. In May 2003,
the Court ruled in favor of the plaintiff in the amount of $17.4 million. Consequently, we recorded a $17.4 million loss in 2003. We subsequently appealed the judgment. In conjunction
with the appeal and in accordance with the Court's ruling, we issued an irrevocable standby letter of credit for $19.8 million, representing the amount of

27

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the
judgment plus $2.4 million in anticipated statutory interest (8%) for the twenty-four months while the judgment is being appealed. Going forward, we intend to expense any
statutory interest as interest expense in the statement of operations. As of December 31, 2003, we paid a 300 basis point fee on the amount available for issuance. Currently, we pay a 225 basis
point fee on the amount available for issuance. Oral arguments took place on March 3, 2005 and the appeal was then submitted for the appellate court's decision. While we are appealing this
judgment, we believe that even if there is a reduction in the amount of damages awarded to the plaintiff on appeal, the judgment could have a material adverse effect on our business or financial
condition.

Related Party Expense.On June 29, 1999, we entered into a $3.0 million consulting and
non-competition agreement with Mr. Thomas Engquist, a related party. The agreement provided for total payments over a ten-year term, payable in increments of $25,000 per
month. Mr. Engquist was obligated to provide us consulting services and was to comply with the non-competition provision set forth in a Recapitalization Agreement between us and
others dated June 19, 1999. The parties specifically acknowledged and agreed that in the event of the death of Mr. Engquist during the term of the agreement, the payments that otherwise
would have been payable to Mr. Engquist under the agreement shall be paid to his heirs.

Due
to Mr. Engquist's passing away during 2003, we will not be provided any further consulting services. Therefore, we have recorded a $1.3 million expense for the present
value of the remaining future payments.

Other Income (Expense).Our 2003 other expense increased by $10.6 million to
$39.2 million from $28.6 million for 2002. Our interest expense for 2003 increased $10.4 million this year compared to last year as a result of refinancing our total debt and
acquiring ICM during 2002. The annual interest rates on our senior secured credit facility averaged 5.4% in 2003 compared to 5.8% in 2002.

Provision (Benefit) from Income Taxes.We are a limited liability company that has elected to be
treated as a C Corporation for income tax purposes. For 2003, income taxes decreased by $0.6 million to a benefit of approximately $5.7 million from a benefit $6.3 million for the
year ended December 31, 2002. The increase is a result of our losses in 2003 and 2002 and the establishment of a valuation allowance against our net deferred tax assets. At the end of 2003, we
have recorded a tax valuation allowance for the entire amount of our net deferred income tax assets. The valuation allowance was recorded given the cumulative losses we have incurred and our belief
that it is more likely than not that we will be unable to recover the net deferred income tax assets.

Liquidity and Capital Resources

Cash flow from operating activities.For 2004, our cash provided by operating activities was $5.6 million. Our cash
flows from operations were primarily attributable to our reported net loss of $13.7 million which, when adjusted for non-cash expense items, such as depreciation, taxes and
amortization, and gains on the sale of long-lived assets, provided positive cash flows of $28.4 million. This amount was principally offset by increases in our receivables of
$7.7 million and an increase in our inventories of $22.3 million. Our receivables increased during 2004 due to higher sales volume. The increase in our inventories reflects our strategy
of taking advantage of available inventory during a time when original equipment manufacturers were experiencing significantly increased lead
times. Our cash flows from operations were positively impacted by an increase in insurance reserves, accrued commissions, accrued property taxes and accrued sales tax payables.

For
2003, our cash provided by operating activities was $19.3 million. Our cash flows from operations were primarily attributable to our reported net loss of $46.1 million
which, when adjusted for non-cash expense items, such as depreciation, taxes and amortization, and gains on the sale of long-lived assets used cash flows of
$0.2 million. Other uses of operating cash flow were an increase in inventories of $4.4 million. This amount was offset by a $1.3 million decrease in accounts receivable, an

28

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increase
in accounts payable and accrued expenses payable of $5.1 million, and the $17.4 million estimated loss from litigation.

Cash flow from investing activities.For 2004, cash used in our investing activities was $11.8 million. This is a
result of proceeds from the sale of rental and non-rental equipment of $65.7 million offset by purchasing $77.5 million in rental and non-rental equipment. For
2003, cash provided by our investing activities was $20.9 million. This is a result of proceeds from the sale of rental and non-rental equipment of $54.0 million offset by
purchasing $33.1 million in rental and non-rental equipment.

Cash flow from financing activities.For 2004, cash provided by our financing activities was $5.6 million. For the
year, our total borrowings under the amended senior secured credit facility were $479.8 million and total payments under the amended senior secured credit facility were $468.4 million.
Financing costs paid in cash for the refinancing totaled $0.9 million and payment of related party obligation was $0.3 million. Payments on capital leases and other notes were
$4.5 million.

For
2003, cash used in our financing activities was $39.8 million. For the year, our total borrowings under the amended senior secured credit facility were $385.5 million
and total payments under the amended senior secured credit facility were $418.3 million. Financing costs paid in cash for the refinancing totaled $1.1 million. Payments on capital leases
and other notes were $5.8 million.



During the first quarter of 2004, we amended the senior secured credit agreement dated June 17, 2002, governing our senior secured credit facility.
Principally, this amendment:



We
paid a loan amendment fee of $0.8 million that is being amortized over the remaining term of the loan.

On
October 26, 2004, we amended the senior secured credit agreement to eliminate the requirement to provide separate collateral reports for our wholly-owned subsidiary, Great
Northern Equipment, Inc. We also further amended the senior secured credit agreement on January 13, 2005 to increase capital expenditures from $5.0 million to $8.5 during any
fiscal year. No amendment fees were paid relating to these amendments.

On
March 11, 2005, we amended the senior secured credit agreement dated June 17, 2002, governing our senior secured credit facility. Principally, the amendment:



29

---





The
Company paid no amendment fee relating to this amendment.

On
March 29, 2005, we further amended the senior secured credit agreement dated June 17, 2002, governing our senior secured credit facility to extend the delivery of
audited financial statements until September 30, 2005. The Company did not pay a fee associated with this amendment.

As
of August 26, 2005, we were granted a waiver under our senior secured credit agreement, pursuant to which our lenders have waived our non-compliance with, and the
effects of our non-compliance under, various representations and non-financial covenants contained in the senior secured credit agreement affected by the accounting adjustments
in connection with the restatement described in "Item 6. Selected Financial DataRestatement" and the Notes to Consolidated Financial Statements included in "Item 15. Exhibits and
Financial Statement Schedules." As a result of the restatement, among other things, we would no longer be able to make the representations under the senior secured credit agreement concerning the
conformity with GAAP of our previously delivered financial statements, or confirm our prior compliance with certain obligations concerning the maintenance of our books and records in accordance with
GAAP. Because the restatement is not expected to result in our having breached any of the financial covenants in the senior secured credit agreement, the waiver does not
waive or modify any such financial covenants. As a result of the waiver, we continue to have full access to our revolving credit facility under the senior secured credit agreement.

Our
availability under the amended senior secured credit facility as of December 31, 2004 was approximately $67.6 million. As of December 31, 2004, we were in
compliance with the financial covenants in place at that time.



Our principal sources of liquidity have been from cash provided by operations and the sales of new, used and rental fleet equipment, proceeds from the issuance of
debt, and borrowings available under our amended senior secured credit facility. As of December 31, 2004, the total balance outstanding on the amended senior secured credit facility was
$55.3 million with $67.6 million available in additional borrowings net of $27.1 million in standby letters of credit. Also on December 31, 2004, our total balance payable
on capital lease obligations and notes payable were $1.1 million and $0.7 million, respectively.

Our
principal uses of cash have been to fund operating activities and working capital, finance the purchase of rental fleet equipment, fund payments due under operating leases and
manufacturer flooring plans payable, and to meet debt service requirements. In the future, we may also pursue strategic acquisitions. We anticipate that these uses will be the principal demands on our
cash in the future.

The
amount of our future capital expenditures will depend on a number of factors including general economic conditions and growth prospects. We anticipate our 2005 gross rental fleet
capital expenditures to be approximately $160 million, primarily to replace the rental fleet equipment we

30

---



anticipate
selling during 2005. We anticipate that we will fund these rental fleet capital expenditures with the proceeds from the sales of new, used and rental fleet equipment, cash from operations
and, if required, from borrowings under our amended senior secured credit facility. In response to changing economic conditions, we believe we have the flexibility to modify our capital expenditures
by adjusting them (either up or down) to match our actual performance. We anticipate our 2005 gross property and equipment capital expenditures to be approximately $8.5 million. If we pursue
any strategic acquisitions, we may need to incur additional debt.

To
service our debt, we will require a significant amount of cash. Our ability to pay interest and principal on our indebtedness (including the senior subordinated and senior secured
notes and
obligations under the amended senior secured credit facility) and to satisfy our other debt obligations will depend upon our future operating performance and the availability of refinancing
indebtedness, which will be affected by prevailing economic conditions and financial, business and other factors, some of which are beyond our control. Based on our current level of operations, we
believe our cash flow from operations, available cash and available borrowings under the amended senior secured credit facility will be adequate to meet our future liquidity needs for at least the
next twelve months.

We
cannot assure that our future cash flow will be sufficient to meet our long-term obligations and commitments. If we are unable to generate sufficient cash flow from
operations in the future to service our indebtedness and to meet our other commitments, we will be required to adopt one or more alternatives, such as refinancing or restructuring our indebtedness,
selling material assets or operations or seeking to raise additional debt or equity capital. We cannot assure that any of these actions could be affected on a timely basis or on satisfactory terms or
at all, or that these actions would enable us to continue to satisfy our capital requirements. In addition, our existing or future debt agreements, including the indentures and the amended senior
secured credit facility, may contain restrictive covenants prohibiting us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which,
if not cured or waived, could result in the accelerations of all of our debt.

Certain Information Concerning Off-Balance Sheet Arrangements

At December 31, 2004, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited
purposes. We are, therefore, not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

In
the normal course of our business activities, we lease real estate, rental equipment and non-rental fleet equipment under operating leases. See "Contractual and Commercial
Commitments Summary" below.

31

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Contractual and Commercial Commitments Summary

Our contractual obligations and commercial commitments principally include obligations associated with our outstanding indebtedness and interest payments as of
December 31, 2004.

|                                                                           |  | Payments Due by Year
|-------------------------------------------------------------------------- |  | --------------------
|
|
|Long-term debt (including [senior secured and] subordinated notes payable) |  | $                   
|Interest payments on senior secured notes                                  |  |                     
|Interest payments on senior subordinated notes                             |  |                     
|Senior secured credit facility                                             |  |                     
|Interest payments on senior secured credit facility(1)                     |  |                     
|Capital lease obligations (including interest)                             |  |                     
|Related party obligation (including interest)(2)                           |  |                     
|Operating leases(3)                                                        |  |                     
|Other long-term obligations(4)                                             |  |                     
|                                                                           |  |                     
|Total contractual cash obligations                                         |  | $                   
|                                                                           |  |                     

---

Additionally,
as of December 31, 2004, we have standby letters of credit totaling $27.1 million that expire in September 2005 and
January 2006.

Seasonality

Our business is seasonal with demand for our rental equipment tending to be lower in the winter months. The level of equipment rental activities are directly
related to commercial and industrial construction and maintenance activities. Therefore, equipment rental performance will be correlated to the levels of current construction activities. The severity
of weather conditions can have a temporary impact on the level of construction activities.

Equipment
sales cycles are also subject to seasonality with the peak selling period during the spring season and extending through the summer. Parts and service activities are less
affected by changes in demand caused by seasonality.

Inflation

Although we cannot accurately anticipate the effect of inflation on our operations, we believe that inflation has not had for the three most recent fiscal years,
and is not likely in the foreseeable future to have, a material impact on our results of operations.

32

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Acquisitions

We periodically engage in evaluations of potential acquisitions and start-up facilities. Currently, there are no definitive agreements with respect to
any material acquisition. We are party to a non-binding letter of intent that contemplates a potential material acquisition by the Company. The success of our growth strategy depends, in part, on
selecting strategic acquisition candidates at attractive prices and identifying strategic start-up locations. We expect to face competition for acquisition candidates, which may limit the
number of acquisition opportunities and lead to higher acquisition costs. We may not have the financial resources necessary to consummate any acquisitions or to successfully open any new facilities in
the future or the ability to obtain the necessary funds on satisfactory terms.

Impact of Recent Natural Disaster

The Company has three facilities located in the area most significantly affected by Hurricane Katrina. None of these facilities were forced to close for any
extended period of time, and all of them are currently open and fully operational. While the financial impact of Hurricane Katrina relating to these three facilities is not expected to be material to
the Company, the Company remains in the process of assessing the potential overall impact of the hurricane on the Company's business.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued SFAS No. 123(R), "Share-Based Payment", which is a revision of SFAS No. 123
and supersedes APB Opinion No. 25. SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of
grant, and to be expensed over the applicable vesting period. SFAS No. 123(R) is effective for all stock-based awards granted on or after July 1, 2005. In addition, companies must also
recognize compensation expense related to any awards that are not fully vested as of the effective date. Compensation expense for the unvested awards will be measured based on the fair value of the
awards previously calculated in developing the pro forma disclosures in accordance with the provisions of SFAS No. 123. Historically, we have not used share-based compensation schemes for
compensating our employees. Therefore, the adoption of SFAS No. 123(R) is not expected to have any impact on our reported results of operations upon adoption. However, should we determine to
employ share-based compensation schemes in the future, SFAS No. 123(R) would have a currently indeterminate impact on us.

In
May 2005, the FASB issued Statement No. 154, "Accounting Changes and Error Corrections" (SFAS 154). SFAS 154 replaces APB Opinion No. 20. "Accounting Changes" and FASB Statement No.
3. "Reporting Accounting Charges in Interim Financial Statements," SFAS 154 requires that a voluntary
change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. SFAS 154 also
provides that a correction of errors in previously issued financial statements should be termed a "restatement." The new standard is effective for accounting changes and correction of errors beginning
July 1, 2005. The Company has incorporated the provisions of SFAS 154 in the presentation of our December 31, 2004 financial statements.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

Our earnings are affected by changes in interest rates due to the fact that interest on the amended senior secured credit facility is calculated based upon LIBOR
plus 300 basis points as of December 31, 2004. Currently, interest on the amended senior secured credit facility is calculated based upon LIBOR plus 225 basis points. We are also required to
pay the lenders a commitment fee equal to 0.5% per annum in respect of undrawn commitments under the amended senior secured credit facility. At December 31, 2004, we had variable rate debt
representing 18.5% of total debt. A portion of our indebtedness bears interest at variable rates that are linked to changing market interest rates. Based upon the balances outstanding at
December 31, 2004, a one percent increase in market rates would

33

---



increase
our annual interest expense approximately $1.1 million. We do not have significant exposure to the changing interest rates on our fixed-rate senior secured notes, senior
subordinated notes or the capital lease obligations, which represented 81.5% of our total debt. The annual interest rates on our senior secured credit facility average 7.1% in 2004 compared to 5.4% in
2003.

Item 8.    Consolidated Financial Statements and Supplementary Data

Our consolidated financial statements and supplementary data are listed in the index appearing under Item 15(a).

Item 9.    Change In Accountants

On October 27, 2004, upon recommendation of the Company's Audit Committee and approval of the Board of Directors, the Company dismissed KPMG LLP ("KPMG")
as its independent auditors. Effective as of the date, the Company has appointed BDO Seidman L.L.P. ("BDO") to serve as the Company's independent auditors for the current fiscal year, which ends on
December 31, 2004. During each of the Company's two most recent fiscal years, there were: (i) no disagreements with KPMG on
any matter of accounting principles or practices, financial statement disclosure, or auditing scope and procedure which, if not resolved to the satisfaction of KPMG, would have caused KPMG to make
reference to the matter in their report; and (ii) no reportable events as defined in Item 304(a) (1) (v) of Regulation S-K. For more details regarding our change in
accountants, see our Form 8-K filed on November 2, 2004 as amended by Amendment No. 1 thereto filed on November 17, 2004.

Item 9A.    Controls and Procedures

Our
Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) have evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report on
Form 10K. As part of their evaluation, they reviewed the circumstances surrounding the delay in filing this annual report on Form 10K and the restatement of our previously issued
financial statements for the years ended December 31, 2002 and 2003. As we previously reported, we delayed filing this Form 10K and our Form 10Q's for the quarters ended
March 31, 2005 and June 30, 2005 pending completion by our accountants, BDO Seidman LLP, of the re-audits of our 2002 and 2003 financial statements that were audited by our
prior accountants.

During
these re-audits, we discovered that we incorrectly recognized the deferred tax components related to the tax basis of carryover goodwill acquired in our combination
with ICM Equipment Company in 2002. After internal review and consultation with our Audit Committee, we determined to restate our 2002 and 2003 financial statements to reflect the proper accounting
treatment of deferred income taxes. Our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2004
to properly record and report the correct accounting treatment of deferred taxes from our 2002 transaction. However, after discovery of this issue, we revisited and reassessed, in consultation with
our accountants and our tax manager (who joined us in 2003), the tax treatment, including deferred tax components, for the 2002 transaction to ensure that there were no additional corrections
necessary in this regard. To the extent we engage in acquisition transactions in the future, our disclosure controls and procedures now include the involvement of our tax manager in the appropriate
tax analysis and related financial disclosure. Our Chief Executive Officer and our Chief Financial Officer have concluded that our current disclosure controls and procedures are effective as of the
filing date of this annual report to provide reasonable assurance that material information required to be included in our periodic SEC reports is recorded, processed, summarized and reported within
the time periods specified in the SEC rules and forms.

There
have been no significant changes in our internal controls over financial reporting that occurred during the fiscal year ended December 31, 2004 that have materially affected, or
are reasonably likely to materially affect the Company's internal control over financial reporting.

34

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PART III

Item 10.    Directors and Executive Officers

The following table sets forth the names, ages and titles, as well as a brief account of the business experience, of each person who is a director or executive
officer of H&E Equipment Services.

|Name                  |  | Age |  | Title                                          
|--------------------- |  | --- |  | -----------------------------------------------
|Gary W. Bagley        |  | 58  |  | Chairman and Director                          
|John M. Engquist      |  | 51  |  | President, Chief Executive Officer and Director
|Leslie S. Magee       |  | 37  |  | Chief Financial Officer and Assistant Secretary
|William W. Fox        |  | 61  |  | Vice President, Cranes and Earthmoving         
|Kenneth R. Sharp, Jr. |  | 60  |  | Vice President, Lift Trucks                    
|John D. Jones         |  | 47  |  | Vice President, Product Support                
|Dale W. Roesener      |  | 48  |  | Vice President, Fleet Management               
|Bradley W. Barber     |  | 32  |  | Vice President, Rental Operations              
|Keith E. Alessi       |  | 50  |  | Director, Audit Committee Chairman             
|J. Rice Edmonds(a)    |  | 34  |  | Director, Audit Committee Member               
|Bruce C. Bruckmann    |  | 51  |  | Director, Compensation Committee Chairman      
|Lawrence C. Karlson   |  | 62  |  | Director, Compensation Committee Member        
|John T. Sawyer        |  | 61  |  | Director, Audit Committee Member               

---

Gary W. Bagley, Chairman and Director, retired from the company during 2002 and currently serves as Chairman. Mr. Bagley served as
President of ICM since 1996 and Chief Executive Officer since 1998 until H&E Equipment Services was formed in June 2002, when he became Executive Chairman and Director of the Company. Prior to 1996,
he held various positions at ICM, including Salesman, Sales Manager, and General Manager. Prior to that, Mr. Bagley serviced as Vice President and ICM General Manager of Wheeler Machinery Co.
Mr. Bagley serves on a number of dealer advisory boards and industry association boards.

John M. Engquist, President, Chief Executive Officer and Director, served as President and Chief Executive Officer of Head & Engquist
Equipment, LLC since 1990 and as a director of Gulf Wide since 1995. He has held the position of President, Chief Executive Officer and Director of H&E
Equipment Services since its formation in June 2002. From 1975 to 1990, he held various operational positions at H&E. Mr. Engquist serves on the Board of Directors of St. Jude Children's
Hospital in Memphis, Tennessee, and Cajun Constructors, Inc.

Leslie S. Magee, Chief Financial Officer and Assistant Secretary,has served as Chief Financial Officer and Assistant Secretary since
August 2005. Ms. Magee served as Acting Chief Financial Officer from December 2004 through August 2005. Prior to that, Ms. Magee served as Corporate Controller for H&E Equipment Services
and H&E. Prior to joining H&E in 1995, Ms. Magee spent 5 years working for Hawthorn, Waymouth & Carroll, L.L.P., an accounting firm based in Baton Rouge, Louisiana. Ms. Magee is a
Certified Public Accountant and is a member of the American Institute of Certified Public Accountants and the Louisiana Society of Certified Public Accountants.

William W. Fox, Vice President, Cranes and Earthmoving, served as Executive Vice President and General Manager of H&E since 1995 and has
served as Vice President, Cranes and Earthmoving of H&E Equipment Services since its formation in June 2002. Mr. Fox served as President of South Texas Equipment Co., a subsidiary of H&E, from
1995 to 1997. Prior to that, Mr. Fox held various executive and managerial positions with the Manitowoc Engineering Company and its subsidiary North Central Crane. He was Executive Vice
President/General Manager from 1989 to 1995, Vice President Sales from 1988 to 1989, and General Manager from 1986 to 1988 of Manitowoc Engineering Company. Mr. Fox was Executive Vice
President/General Manager at North Central Crane from 1980 to 1986.

35

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Kenneth R. Sharp, Jr., Vice President, Lift Trucks, began his career at ICM in 1973 and served as Executive Vice President of ICM since
1996 and has served as Vice President, Lift Trucks of H&E Equipment Services since its formation in June 2002. From 1989 to 1996, Mr. Sharp served as General Manager of the ICM Power Systems
Division. From 1983 to 1989, he held various positions at ICM including Salesman, Sales Manager and Product Support Manager.

John D. Jones, Vice President, Product Support, served as Vice President of Product Support Services at H&E since 1994 and has served as
Vice President, Product Support of H&E Equipment Services since its formation in June 2002. From 1991 to 1994, he was General Manager of Product Support at Louisiana Machinery. From 1987 to 1991 he
served as General Manager of the Parts Operation at Holt Company of Louisiana. From 1976 to 1987, Mr. Jones worked in Product Support and Marketing for Boyce Machinery.

Dale W. Roesener, Vice President, Fleet Management, founded Southern Nevada Equipment Company in 1983 and served as its President and
Chief Executive Officer until 1998 when he joined ICM as Senior Vice President, Secretary and Fleet Manager. He has served as Vice President, Fleet Management of H&E Equipment Services since its
formation in June 2002.

Bradley W. Barber, Vice President, Rental Operations, was appointed Vice President of Rental Operations in February 2003. Prior to
that, Mr. Barber served as Director of Rental Operations for H&E Equipment Services and H&E. Mr. Barber has previous experience in both outside sales and branch management for a regional
equipment company.

Bruce C. Bruckmann, Director, joined as a Director in 1999 with both predecessor companies, Head & Engquist Equipment, LLC and ICM
Equipment Company L.L.C. and was appointed as a Director of H&E Equipment Services at the inception in June of 2002. Mr. Bruckmann is a founder and has been a Managing Director of BRS since its
formation in 1995. He served as an officer of Citigroup Venture Capital, Ltd from 1983 through 1994. Prior to joining Citicorp Venture Capital, Mr. Bruckmann was an associate at the New York
law firm of Patterson, Belknap, Webb & Tyler. He is also Director of Anvil Knitwear, Inc., Town Sports International, Inc., MWI Veterinary Supply, Inc., Mohawk Industries, Inc. and a number of private
companies.

J. Rice Edmonds, Director, was appointed as Director in 1999 for both predecessor companies, Head & Engquist Equipment, LLC and ICM
Equipment Company L.L.C. and was appointed as a Director of H&E Equipment Services at its inception in June 2002. Mr. Edmonds is also a Principal of BRS. Prior to joining BRS in 1996 he worked
in the high yield finance group of Bankers Trust. Mr. Edmonds is a director of McCormick & Schmick Restaurant Corporation, Penhall International, Inc., Real Mex Restaurants, Inc., The
Sheridan Group, Inc., Town Sports International, Inc., and several other private companies. Mr. Edmonds resigned as Director effective March 4, 2005.

John T. Sawyer, Director, joined as a Director in September 2002. Mr. Sawyer is President of Penhall Company. He joined
Penhall in 1978 as the Estimating Manager of the Anaheim Division. In 1980, Mr. Sawyer was appointed Manager of Penhall's National Contracting Division, and in 1984, he assumed the position of
Vice President and became responsible for managing all construction services divisions. Mr. Sawyer has been President of Penhall since 1989.

Keith E. Alessi, Director, joined as a Director and Chairman of the Audit Committee in November 2002. Mr. Alessi has been
Chairman and Chief Executive Officer (and owner) of Lifestyles Improvement Centers LLC, since February 2003. Mr. Alessi has also been an Adjunct Professor of Law at The Washington and Lee
University School of Law since 1999 and Adjunct Professor at The University of Michigan Graduate School of Business Administration since 2001. He is a director and the chairman of the audit committees
for Town Sports International, Inc., MWI Veterinary Supply, Inc., and O'Sullivan Industries LLC. He is the former Chairman and CEO of Telespectrum Worldwide from April 1998 to February 2000 and
Jackson Hewitt from May 1996 to April 1998. Mr. Alessi is a Certified Public Accountant.

Lawrence C. Karlson,Director, joined as a Director in September 2002. In 1983,
Mr. Karlson formed Nobel Electronics, Inc. In 1986, Nobel Electronics was reverse-merged into Pharos AB and

36

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Mr. Karlson
became President and Chief Executive Officer. In 1990 he was named Chairman. He retired in 1993. Mr. Karlson provides consulting services to a wide variety of business. He
currently sits on the Board of Directors of CDI Corporation and Mikron Infrared, Inc.

Committees of Our Board of Directors

Audit Committee.The Audit Committee consists of Messrs. Alessi and Sawyer. The board of directors has determined that
Mr. Alessi qualifies as an "audit committee financial expert" within the meaning of SEC rules and regulations. All committee members are independent as defined in applicable SEC rules and under
the director independence standards specified in our Corporate Governance Guidelines.

The
Audit Committee is responsible for, among other things:



Code of Ethics

We have adopted a Standard of Conduct and Ethics for executive officers and directors. A copy of the Standard of Conduct and Ethics is available upon written
request, free of charge, by writing to:

H&E
Equipment Services, L.L.C.
Attention: Mr. Raymond Jones
Corporate Compliance Officer
4899 West 2100 South
Salt Lake City, Utah 84120

Item 11.    Executive Compensation

The following tables summarize, for the periods indicated, the principal components of compensation for the Chief Executive Officer and the four highest
compensated executive officers of H&E LLC (collectively, the "named executive officers") for the years ended December 31, 2004, 2003 and 2002:

Summary Compensation Table

|                                                                 |  | Annual Compensation
|---------------------------------------------------------------- |  | -------------------
|
|John M. Engquist
Chief Executive Officer, President and Director |  | 2004               
|                                                                 |  | 2003               
|                                                                 |  | 2002               
|                                                                 |  |                    

37

---



|William W. Fox
Vice President                          |  | 2004 |  | $ | 237,000 |  | $ | 100,000 |  |   |        |     | $ | 4,041  
|------------------------------------------------------ |  | ---- |  | - | ------- |  | - | ------- |  | - | ------ | --- | - | -------
|                                                       |  | 2003 |  |   | 208,000 |  |   | 62,000  |  |   |        |     |   | 4,041  
|                                                       |  | 2002 |  |   | 193,000 |  |   | 50,000  |  |   |        |     |   | 3,041  
|Dale W. Roesener
Vice President                        |  | 2004 |  | $ | 182,000 |  | $ | 71,000  |  |   |        |     | $ | 4,041  
|                                                       |  | 2003 |  |   | 175,000 |  |   |        |  |   |        |     |   | 4,041  
|                                                       |  | 2002 |  |   | 175,000 |  |   |        |  |   |        |     |   | 1,041  
|Bradley W. Barber
Vice President                       |  | 2004 |  | $ | 188,000 |  | $ | 75,000  |  |   |        |     | $ | 4,041  
|                                                       |  | 2003 |  |   | 148,000 |  |   | 35,000  |  |   |        |     |   | 2,041  
|                                                       |  | 2002 |  |   | 125,000 |  |   | 10,000  |  |   |        |     |   | 2,041  
|Kenneth R. Sharp, Jr.
Vice President                   |  | 2004 |  | $ | 192,000 |  | $ | 60,000  |  |   |        |     | $ | 280,041
|                                                       |  | 2003 |  |   | 185,000 |  |   |        |  |   |        |     |   | 176,041
|                                                       |  | 2002 |  |   | 185,000 |  |   |        |  |   |        |     |   | 142,041
|Former Officers                                        |  |      |  |   |         |  |   |         |  |   |        |     |   |        
|Lindsay C. Jones
Chief Financial Officer and Secretary |  | 2004 |  | $ | 208,000 |  | $ | 50,000  |  |   |        |     | $ | 3,041  
|                                                       |  | 2003 |  |   | 200,000 |  |   | 40,000  |  |   |        |     |   | 4,041  
|                                                       |  | 2002 |  |   | 156,000 |  |   |        |  |   |        |     |   | 1,041  
|Gary W. Bagley
Chairman and Director                   |  | 2004 |  | $ | 244,000 |  |   |        |  | $ | 67,000 | (c) | $ | 375,041
|                                                       |  | 2003 |  |   | 290,000 |  |   |        |  |   |        |     |   | 323,041
|                                                       |  | 2002 |  |   | 200,000 |  |   |        |  |   |        |     |   | 283,041

---



Name

401(k) Matching
Contribution

Insurance
Premiums

Deferred Compensation
Plan Above Market InterestJohn M. Engquist

$
2,000

41


William W. Fox


4,000

41


Dale W. Roesener


4,000

41


Bradley W. Barber


4,000

41


Kenneth R. Sharp, Jr.


3,000

41

$
277,000Lindsay C. Jones


3,000

41


Gary W. Bagley




41

$
375,000


38

---



Executive Employment Agreements

On July 31, 2004, H&E Equipment Services entered into a consulting and noncompetition agreement with Gary W. Bagley. Such agreement provides for, among
other things:



H&E
assumed an employment agreement with each of Gary W. Bagley and Kenneth R. Sharp, Jr. dated as of February 4, 1998. Such agreements, as amended on May 26, 1999, and
further amended on December 6, 1999 and June 14, 2002, provide for, among other things:



The
employment agreement with Mr. Bagley was terminated on July 31, 2004 when the consulting and non-compete agreement became effective.

In
connection with the acquisition of ICM, H&E Holdings assumed a liability for subordinated deferred compensation for Mr. Bagley and Mr. Sharp. The deferred compensation
agreements provided for, among other things, deferred signing bonuses in the amount of $3,638,000 and $1,882,000, which are included in deferred compensation accounts for Mr. Bagley and
Mr. Sharp, respectively. As of December 31, 2004, the aggregate deferred compensation (including accrued interest of $2,521,000) was $7,521,000.

H&E
Holdings is obligated to pay Mr. Bagley and Mr. Sharp a cash payment in the amount equal to the then balance in their deferred compensation accounts 11 and
one-half years after June 17, 2002. Payments may also be made upon the occurrence of certain events including, cash distributions on the Series D Preferred Units of H&E
Holdings and an Approved Company Sale (as defined in the security holders agreement).

39

---





In connection with the acquisition of ICM, H&E Equipment Services assumed a nonqualified employee deferred compensation plan under which Mr. Bagley and Mr. Sharp had
previously elected to defer a portion of their annual compensation. Participants in the plan can no longer defer compensation. Compensation deferred under the plan is payable upon the termination,
disability, or death of the participants. The plan accrues interest at 8.5% per annum. As of December 31, 2004, the aggregate deferred compensation (included accrued interest of $265,000) was
$451,000.

In
connection with the acquisition of ICM, H&E Equipment Services assumed a nonqualified employee deferred compensation plan under which certain employees had previously elected to defer
a portion of their annual compensation. Participants in the plan can no longer defer compensation. Compensation deferred under the plan is payable upon the termination, disability, or death of the
participants. The plan accumulates interest each year at a bank's prime rate in effect as of the beginning of January. This rate remains constant throughout the year. The effective rate for the 2004
plan year was 4.0 percent. As of December 31, 2004, the aggregate deferred compensation (including accrued interest of $1,559,000) was $2,598,000.

On
June 29, 1999, H&E, formerly Gulf Wide, entered into an employment agreement with John M. Engquist. Such agreement, as amended on August 10, 2001, provides for, among
other things:



Compensation of Directors

We reimburse directors for any out-of-pocket expenses incurred by them in connection with services provided in such capacity. Directors
who are also our employees do not receive compensation for service on our board of directors. Each of our directors received in 2004 and will receive in 2005 an annual board fee of $20,000,
chairperson fees if applicable, meeting fees and other normal and customary compensation for their service on our board of directors.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee currently consists of Messrs. Bruckmann and Karlson. None of the members of the Compensation Committee are currently or have
been, one of our officers or

40

---



employees.
None of our executive officers currently serve, or in the past has served, as a member of the board of directors or compensation committee of any entity that has one or more executive
officers serving on our board of directors or compensation committee.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

H&E Holdings owns 100% of our limited liability company interests. The following tables set forth certain information with respect to the beneficial ownership of
H&E Holdings' Common Units and Voting Preferred Units by (1) each person or entity that is the beneficial owner of more than 5% of any class of the voting securities of H&E Holdings;
(2) each named executive officer; (3) each of our directors; and (4) all of our directors and executive officers as a group. These limited liability company interests constituted
5% of each class of the total outstanding limited liability company interests in H&E Holdings.

Common Units Beneficial Ownership Table

|Name                                                         |  | Class A
Common Units
Beneficially
Owned |  | Percentage of
Class A
Common Units
Outstanding |   | Class B
Common Units
Beneficially
Owned |  | Percentage of
Class B
Common Units
Outstanding |   | Series A
Preferred Units
Beneficially
Owned |  | Percentage of
Series A
Preferred Units
Outstanding |  
|------------------------------------------------------------ |  | --------------------------------------- |  | ---------------------------------------------- | - | --------------------------------------- |  | ---------------------------------------------- | - | ------------------------------------------- |  | -------------------------------------------------- | -
|Bruckmann, Rosser, Sherrill & Co., LP(1)(2)                  |  | 731,845                                 |  | 34.2                                           | % |                                        |  |                                               |   | 9,789                                       |  | 88.6                                               | %
|Bruckmann, Rosser, Sherrill & Co., Inc.(1)                   |  | 4,126                                   |  | *                                              |   |                                        |  |                                               |   | 16                                          |  | *                                                  |  
|Bruckmann, Rosser, Sherrill & Co. II, L.P.(1)(3)             |  | 1,241,815                               |  | 58.1                                           | % |                                        |  |                                               |   |                                            |  |                                                   |  
|Bruce C. Bruckmann(4)                                        |  | 2,002,127                               |  | 93.7                                           | % | 4,783                                   |  | *                                              |   | 10,071                                      |  | 91.1                                               | %
|J. Rice Edmonds(5)(11)                                       |  | 1,256                                   |  | *                                              |   |                                        |  |                                               |   | 17                                          |  | *                                                  |  
|John M. Engquist(6)                                          |  |                                        |  |                                               |   | 1,170,300                               |  | 56.4                                           | % |                                            |  |                                                   |  
|Gary W. Bagley(6)                                            |  |                                        |  |                                               |   | 85,814                                  |  | 4.1                                            | % |                                            |  |                                                   |  
|Dale W. Roesener(6)                                          |  |                                        |  |                                               |   | 164,326                                 |  | 7.9                                            | % |                                            |  |                                                   |  
|Kristan Engquist Dunne(7)                                    |  |                                        |  |                                               |   | 74,700                                  |  | 3.6                                            | % |                                            |  |                                                   |  
|Don M. Wheeler(8)                                            |  |                                        |  |                                               |   | 263,736                                 |  | 12.7                                           | % |                                            |  |                                                   |  
|Lindsay C. Jones(9)                                          |  |                                        |  |                                               |   |                                        |  |                                               |   |                                            |  |                                                   |  
|John D. Jones(6)                                             |  |                                        |  |                                               |   |                                        |  |                                               |   |                                            |  |                                                   |  
|Bradley Barber(6)                                            |  |                                        |  |                                               |   |                                        |  |                                               |   |                                            |  |                                                   |  
|William W. Fox(6)                                            |  |                                        |  |                                               |   |                                        |  |                                               |   |                                            |  |                                                   |  
|All executive officers and directors as a group (10 persons) |  | 2,003,383                               |  | 93.8                                           | % | 1,425,223                               |  | 68.7                                           | % | 10,088                                      |  | 91.3                                               | %

---

Voting Preferred Units Beneficial Ownership Table

The holders of the Common Units listed in the Common Units Beneficial Ownership Table are also the holders of H&E Holdings' Voting Preferred Units. For ease of
presentation we have not duplicated the names in the Voting Preferred Units Beneficial Ownership Table below and have presented the beneficial ownership information of such holders in the same order
as it appears in the

41

---



Common
Units Beneficial Ownership Table. The numbers presented in the table below reflect the beneficial ownership of H&E Holdings' Voting Preferred Units and have been rounded to the nearest whole
number. These limited liability company interests constituted 5% of each class of the total outstanding limited liability company interests in H&E Holdings.

|                                                             |  | Series B
Preferred
Units
Beneficially
Owned |  | Percentage of
Series B
Preferred
Units
Outstanding |   | Series C
Preferred
Units
Beneficially
Owned |  | Percentage of
Series C
Preferred
Units
Outstanding |   | Series D
Preferred
Units
Beneficially
Owned |  | Percentage of
Series D
Preferred
Combined
Units
Outstanding |   | Percentage of
Voting
Power(11) |  
|------------------------------------------------------------ |  | ------------------------------------------- |  | -------------------------------------------------- | - | ------------------------------------------- |  | -------------------------------------------------- | - | ------------------------------------------- |  | ----------------------------------------------------------- | - | ------------------------------ | -
|Bruckmann, Rosser, Sherrill & Co., LP(1)(2)                  |  | 8,577                                       |  | 29.1                                               | % | 19,405                                      |  | 22.9                                               | % |                                            |  |                                                            |   | 23.0                           | %
|Bruckmann, Rosser, Sherrill & Co., Inc.(1)                   |  | 40                                          |  | *                                                  |   | 132                                         |  | *                                                  |   | 40                                          |  | *                                                           |   | *                              |  
|Bruckmann, Rosser, Sherrill & Co. II, L.P.(1)(3)             |  | 10,854                                      |  | 36.8                                               | % | 42,376                                      |  | 50                                                 | % | 17,156                                      |  | 36.7                                                        | % | 39.2                           | %
|Bruce C. Bruckmann(4)                                        |  | 19,764                                      |  | 67.0                                               | % | 62,617                                      |  | 73.9                                               | % | 17,317                                      |  | 37.1                                                        | % | 63.2                           | %
|J. Rice Edmonds(5)                                           |  | 15                                          |  | *                                                  |   | 33                                          |  | *                                                  |   |                                            |  |                                                            |   | *                              |  
|John M. Engquist(6)                                          |  |                                            |  |                                                   |   | 3,500                                       |  | 4.1                                                | % | 15,714                                      |  | 33.6                                                        | % | 18.2                           | %
|Gary W. Bagley(6)                                            |  |                                            |  |                                                   |   | 1,250                                       |  | 1.5                                                | % |                                            |  |                                                            |   | 1.3                            | %
|Dale W. Roesener(6)                                          |  | 800                                         |  | 2.7                                                | % | 1,607                                       |  | 1.9                                                | % |                                            |  |                                                            |   | 2.6                            | %
|Kristan Engquist Dunne(7)                                    |  | 1,756                                       |  | 5.9                                                | % |                                            |  |                                                   |   | 822                                         |  | 1.8                                                         | % | 1.2                            | %
|Don M. Wheeler(8)                                            |  | 5,400                                       |  | 18.3                                               | % | 8,135                                       |  | 9.6                                                | % | 10,390                                      |  | 22.2                                                        | % | 4.4                            | %
|Lindsay C. Jones(9)                                          |  |                                            |  |                                                   |   | 1,500                                       |  | 1.8                                                | % |                                            |  |                                                            |   | *                              |  
|John D. Jones(6)                                             |  |                                            |  |                                                   |   |                                            |  |                                                   |   |                                            |  |                                                            |   | *                              |  
|Bradley Barber(6)                                            |  |                                            |  |                                                   |   |                                            |  |                                                   |   |                                            |  |                                                            |   | *                              |  
|William W. Fox(6)                                            |  |                                            |  |                                                   |   |                                            |  |                                                   |   |                                            |  |                                                            |   | *                              |  
|All executive officers and directors as a group (10 persons) |  | 20,579                                      |  | 69.7                                               | % | 70,507                                      |  | 83.2                                               | % | 33,031                                      |  | 70.7                                                        | % | 90.9                           | %

---

42

---





Item 13.    Certain Relationships and Related Transactions

Management Agreements and Transaction Fees

Each of H&E and ICM were acquired by affiliates of BRS in 1999 pursuant to separate recapitalizations. In connection with the recapitalizations of H&E and ICM, we
entered into management agreements with each of BRS and Bruckmann, Rosser, Sherrill & Co., L.L.C. (BRS L.L.C.), affiliates of BRS Equipment Company and BRSEC Co-Investment II, L.L.C.
(BRS Co-Investment II) pursuant to which BRS and BRS L.L.C. have agreed to provide certain advisory and consulting services to us, relating to business and organizational strategy, financial
and investment management and merchant and investment banking. In exchange for such services we agreed to pay BRS and BRS L.L.C. (i) $7.2 million of transaction fees in connection with
the ICM and H&E recapitalizations; (ii) an annual fee during the term of these agreements equal to the lesser of $2.0 million or 1.75% of our yearly EBITDA, excluding operating lease
expense, plus all reasonable out-of-pocket fees and expenses; and (iii) a transaction fee in connection with each material acquisition, divestiture or financing or
refinancing we enter into in an amount equal
to 1.25% of the aggregate value of such transaction plus all reasonable out-of-pocket fees and expenses.

Contribution Agreement

The contribution agreement contains customary provisions for such agreements, including representations and warranties with respect to each of Gulf Wide and ICM
equityholders, covenants with respect to the consummation of the combination of H&E and ICM and various closing conditions, including the execution of a registration rights agreement.

Securityholders Agreement

In connection with the offering of senior subordinated and senior secured notes, H&E Holdings entered into a securityholders agreement with BRS
Co-Investment, L.L.C. (BRS Co-Investment), BRS Co-Investment II certain members of management and other members of H&E Holdings. The securityholders agreement (i) restricts the
transfer of the equity interests of H&E Holdings; (ii) grants

43

---



tag-along
rights on certain transfers of the equity interests of H&E Holdings; (iii) requires the securityholders to consent to a sale of H&E Holdings to an independent third party
if such sale is approved by the holders of a majority of the then-outstanding common equity interests held by BRSEC Co-Investment and BRSEC Co-Investment II; and
(iv) grants preemptive rights on certain issuances of the equity interests of H&E Holdings. The securityholders agreement will terminate upon a sale of H&E Holdings approved by the holders of a
majority of the then-outstanding common equity interests held by BRS Co-Investment and BRSEC Co-Investment II.

Registration Rights Agreement

In connection with the offering of senior subordinated and senior secured notes, H&E Holdings entered into a registration rights agreement with BRS
Co-Investment, BRSEC Co-Investment II, certain members of management and other members of H&E Holdings. Pursuant to the terms of the registration rights agreement, the holders
of a majority of the then-outstanding common equity interests held by BRS Co-Investment and BRSEC Co-Investment II have the right to require H&E Holdings, subject
to
certain conditions, to register any or all of their common equity interests under the Securities Act at H&E Holdings' expense. In addition, all holders of the common equity interests of H&E Holdings
are entitled to request the inclusion of any common equity interests subject to the registration rights agreement in any registration statement at the expense of H&E Holdings whenever H&E Holdings
proposes to register any of its common equity interests under the Securities Act. In connection with all such registrations, H&E Holdings has agreed to indemnify all holders of its common equity
interests against certain liabilities, including liabilities under the Securities Act.

Limited Liability Company Agreement

In connection with the offering of senior subordinated and senior secured notes, BRS Co-Investment, BRSEC Co-Investment II, certain
members of management and the other members of H&E Holdings entered into a limited liability company agreement of H&E Holdings. This operating agreement governs the relative rights and duties of the
members of H&E Holdings.

Membership Interests.The ownership interests of the members in H&E Holdings consist of Preferred Units and Common Units. The
Common Units represent the common equity of H&E Holdings and consist of Class A Common Units and Class B Common Units. The Preferred Units consist of Series A Preferred Units.
Series B Preferred Units, Series C Preferred Units and Series D Preferred Units (the "Voting Preferred Units"). Each member is entitled to (x) two votes per Class A
Common Unit held by such member, (y) one vote per Class B Common Unit held by such member and (z) one vote for each Voting Preferred Unit held by such member. Holders of the
Preferred Units are entitled to return of capital contributions prior to any distributions made to holders of the Common Units.

Distributions.Subject to any restrictions contained in any agreements involving payments to third parties, the board of
directors of H&E Holdings (the "Board") may make distributions, whether in available cash or other assets of H&E Holdings, at any time or from time to time in the following order of priority:



44

---





The
limited liability company agreement places certain restrictions on the ability of H&E Holdings to make distributions attributable to the Preferred Units prior to June 30,
2022.

Board of Directors.Pursuant to the securityholders agreement, the holders of a majority of the common equity units held by
BRS Co-Investment and BRSEC Co-Investment II designate a majority of the directors of the Board. The Board consists of "Class A Directors" and "Class B
Directors." Each Class A Director is entitled to two votes and each Class B Director is entitled to one vote. At no time will the authorized number of Class B Directors exceed
that number which would provide all of the then authorized Class B Directors with a number of votes that exceeds 50% of the number of votes of the then authorized number of Class A
Directors. The Class A Directors are elected by the members which own a majority of the number of votes of all Common Units then-outstanding. The Class B Directors are
elected by the members which own a majority of the number of votes of all of the Voting Preferred Units then-outstanding.

The BRS Purchase

In connection with the senior subordinated note offering, BRS was paid $7.2 million by H&E Equipment Services on account of $7.2 million of
obligations payable to BRS and its affiliates in connection with the recapitalizations of H&E and ICM and BRS purchased a portion of the securities issued in the senior subordinated note offering. In
connection with the senior subordinated note
offering, BRS purchased notes having an accreted value of $7.2 million and a corresponding pro rata share of the limited liability company interests included in the securities offered thereby.

Other Related Party Transactions

John M. Engquist, our Chief Executive Officer and President, and his sister, Kristan Engquist Dunne, each have a 16.6% ownership interest in a joint venture, from
which we lease our Baton Rouge, Louisiana and Kenner, Louisiana facilities. Mr. Engquist's mother beneficially owns 50% of such joint venture. In 2004, we paid the joint venture a total of
approximately $329,000 in lease payments.

Mr. Engquist
has a 50% ownership interest in T&J Partnership and J&T Company, from which we lease our Shreveport, Louisiana and Lake Charles, Louisiana facilities.
Mr. Engquist's mother beneficially owns the other 50% of such entities. In 2004, we paid such entities a total of approximately $207,000 in lease payments. In January 2005, J&T Company
sold the Lake Charles, Louisiana parcel to an unaffiliated third party.

Mr. Engquist
and his wife each hold a 50% ownership interest in John Engquist LLC, from which we lease our Alexandria, Louisiana facility. In 2004, we paid such entity a total of
approximately $53,000 in lease payments.

We
charter an aircraft from Gulf Wide Aviation, in which Mr. Engquist and his mother each have a 50% ownership interest. We pay an hourly rate to Gulf Wide Aviation for the use of
the aircraft by various members of our management. In addition, a portion of one pilot's salary is paid by us. In 2004,

45

---



our
payments in respect of charter costs to Gulf Wide Aviation and salary to the pilot totaled approximately $273,000.

Mr. Engquist
has a 25% ownership interest in Perkins-McKenzie Insurance Agency, Inc. ("Perkins-McKenzie"), an insurance brokerage. Perkins-McKenzie brokers a substantial
portion of our liability insurance. As the broker, Perkins-McKenzie receives from our insurance provider as commission a portion of the premiums we paid to our insurance provider in 2004.

We
purchase products and services from, and sell products and services to a company, B-C Equipment Sales, Inc., in which Mr. Engquist has a 50% ownership
interest. In 2004, our purchases totaled approximately $129,000 and our sales totaled approximately $64,000.

Don
M. Wheeler, an equity holder, has an ownership interest and controls Silverado Investments, Wheeler Investments and WG LLC, from which we lease our Salt Lake City, Utah, Colorado
Springs, Colorado, Phoenix, Arizona, Tucson, Arizona and Denver, Colorado facilities. In 2004, our lease payments to such entities totaled approximately $1,358,000.

Dale
W. Roesener, Vice President, Fleet Management, has a 47.6% ownership interest in Aero SRD LLC, from which we lease our Las Vegas, Nevada facility. In 2004, our lease payments to
such entity totaled approximately $489,000.

In
connection with the recapitalization of H&E in 1999, we entered into a $3.0 million consulting and non-competition agreement with Thomas R. Engquist, the father of
John M. Engquist, our Chief Executive Officer and President. The agreement provided for total payments over a ten-year term, payable in increments of $25,000 per month. Mr. Engquist
was obligated to provide us consulting services and was to comply with the non-competition provision set forth in the Recapitalization Agreement between us and others dated June 19,
1999. The parties specifically acknowledged and agreed that in the event of the death of Mr. Engquist during the term of the agreement, the payments that otherwise would have been payable to
Mr. Engquist under the agreement shall be paid to his heirs (including John M. Engquist). Due to Mr. Engquist's passing away during 2003, he will not be providing any further consulting
services. Therefore, we recorded a $1.3 million during 2003 for the present value of the remaining future payments. As of December 31, 2004, the balance for this obligation amounted to
$1,062,000.

We
expensed $612,000 and $363,000 in 2004 to the deferred compensation accounts of Gary W. Bagley, our Chairman, and Kenneth R. Sharp, Jr., an executive officer, respectively.

Mr. Engquist's
son is one of our employees and received compensation of approximately $83,000 in 2004.

Bradley
W. Barber's brother is one of our employees and received compensation of approximately $63,000 in 2004.

Item 14.    Principal Accountant Fees and Services

In October 2004, the Company dismissed KPMG LLP ("KPMG") as its principal independent auditors and appointed BDO Seidman LLP ("BDO") to serve as the
Company's independent auditors for the current fiscal year, which ends on December 31, 2004.

Accordingly,
the aggregate fees incurred by the Company during the years ended December 31, 2004 and 2003 by its principal accounting firm BDO Seidman, LLP in 2004 and KPMG LLP in
2004 and 2003 are set forth below. The Audit Committee of the Company's Board of Directors has considered whether the provision of the non-audit services described below is compatible with

46

---



maintaining
the principal accountant's independence. All services performed by the independent auditors have been approved by the Audit Committee of the Board of Directors prior to performance.

2004

2003BDOAudit fees(1)

$
932,291

$
Audit related fees(2)





Tax fees(3)





All other fees(4)





KPMGAudit fees(1)


474,433


556,645Audit related fees(2)


5,500


15,700Tax fees(3)


16,560


140,075All other fees(4)





Total aggregate fees billed

$
1,428,784

$
712,420


---

PART IV

Item 15.    Exhibits and Financial Statement Schedules



The
following consolidated financial statements of H&E Equipment Services L.L.C. are included in Part II, Item 8:

PageReport of Independent Registered Public Accounting Firm

F-1Consolidated Balance Sheets as of December 31, 2004 and 2003

F-2Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002

F-3Consolidated Statements of Members' Equity (Deficit) for the years ended December 31, 2004, 2003 and 2002

F-4Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002

F-5Notes to Consolidated Financial Statements

F-7




Schedule II Valuation and Qualifying Accounts



47

---





|3.2   |  | Amended and Restated Articles of Organization of Gulf Wide Industries, L.L.C. (incorporated by reference to Exhibit 3.2 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File
No. 333-99589), filed September 13, 2002).                                                                                                                                                                                                                           
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.3   |  | Amended Articles of Organization of Gulf Wide Industries, L.L.C., Changing Its Name To H&E Equipment Services L.L.C. (incorporated by reference to Exhibit 3.3 to Registration Statement on Form S-4 of
H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                                                                                                    
|3.4   |  | Amended and Restated Operating Agreement of H&E Equipment Services L.L.C. (incorporated by reference to Exhibit 3.8 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File
No. 333-99589), filed September 13, 2002).                                                                                                                                                                                                                               
|3.5   |  | Certificate of Incorporation of H&E Finance Corp. (incorporated by reference to Exhibit 3.4 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed
September 13, 2002).                                                                                                                                                                                                                                                       
|3.6   |  | Certificate of Incorporation of Great Northern Equipment, Inc. (incorporated by reference to Exhibit 3.5 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589),
filed September 13, 2002).                                                                                                                                                                                                                                          
|3.7   |  | Articles of Incorporation of Williams Bros. Construction, Inc. (incorporated by reference to Exhibit 3.6 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589),
filed September 13, 2002).                                                                                                                                                                                                                                          
|3.8   |  | Articles of Amendment to Articles of Incorporation of Williams Bros. Construction, Inc. Changing its Name to GNE Investments, Inc. (incorporated by reference to Exhibit 3.7 to Registration Statement on Form S-4
of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                                                                                      
|3.10  |  | Bylaws of H&E Finance Corp. (incorporated by reference to Exhibit 3.9 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13,
2002).                                                                                                                                                                                                                                                                             
|3.11  |  | Bylaws of Great Northern Equipment, Inc. (incorporated by reference to Exhibit 3.10 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed
September 13, 2002).                                                                                                                                                                                                                                                               
|3.12  |  | Bylaws of Williams Bros. Construction, Inc. (incorporated by reference to Exhibit 3.11 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed
September 13, 2002).                                                                                                                                                                                                                                                            
|4.1   |  | Indenture, among H&E Equipment Services L.L.C., H&E Finance Corp., the guarantors party thereto and The Bank of New York, dated as of June 17, 2002 (incorporated by reference to Exhibit 4.1 to
Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                                                                     
|4.2   |  | Registration Rights Agreement, among H&E Equipment Services L.L.C., H&E Finance Corp., the guarantors party thereto and Credit Suisse First Boston Corporation, dated as of June 17, 2002 (incorporated by
reference to Exhibit 4.2 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                               
|10.1  |  | Credit Agreement among H&E Equipment Services L.L.C., Great Northern Equipment, Inc., H&E Holdings, L.L.C., GNE Investments, Inc., H&E Finance Corp., General Electric Capital Corporation, and the Lenders party
thereto dated as of June 17, 2002 (incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                    
|10.1a |  | Amendment No. 1 to Credit Agreement among H&E Equipment Services L.L.C., Great Northern Equipment, Inc., H&E Holdings, L.L.C., GNE Investments, Inc., H&E Finance Corp., General Electric Capital
Corporation and the Lenders party thereto dated as of March 31, 2003 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q of H&E Equipment Services L.L.C. for the quarter ended March 31, 2003 (File
No. 333-99587), filed November 14, 2003).  
|10.1b |  | Amendment No. 2 to Credit Agreement among H&E Equipment Services L.L.C., Great Northern Equipment, Inc., H&E Holdings, L.L.C., GNE Investments, Inc., H&E Finance Corp., General Electric Capital
Corporation and the Lenders party thereto dated as of May 14, 2003 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q of H&E Equipment Services L.L.C. for the quarter ended September 30, 2003 (File
No. 333-99587), filed November 14, 2003).
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

48

---



|10.1c |  | Amendment No. 3 to Credit Agreement among H&E Equipment Services L.L.C., Great Northern Equipment, Inc., H&E Holdings, L.L.C., GNE Investments, Inc., H&E Finance Corp., General Electric Corporation and
the Lenders party thereto dated as of February 10, 2004 (incorporated by reference to Exhibit 10.1(c) to Current Report on Form 8-K of H&E Equipment Services L.L.C. File No. 333-99587 filed February 11, 2004).   
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1d |  | Amendment No. 4 to Credit Agreement among H&E Equipment Services L.L.C., Great Northern Equipment, Inc., H&E Holdings, L.L.C., GNE Investments, Inc., H&E Finance Corp., General Electric Capital
Corporation and the Lenders party thereto dated as of October 26, 2004.*                                                                                                                                                    
|10.1e |  | Amendment No. 5 to Credit Agreement among H&E Equipment Services L.L.C., Great Northern Equipment, Inc., H&E Holdings, L.L.C., GNE Investments, Inc., H&E Finance Corp., General Electric Capital
Corporation and the Lenders party thereto dated as of January 13, 2005.*                                                                                                                                                    
|10.1f |  | Amendment No. 6 to Credit Agreement among H&E Equipment Services L.L.C., Great Northern Equipment, Inc., H&E Holdings, L.L.C, GNE Investments, Inc., H&E Finance Corp., General Electric Capital Corporation
and the Lenders party, thereto dated as of March 11, 2005, (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K of H&E Equipment Services L.L.C. (File No. 333-99587), filed March 14, 2005).
|10.1g |  | Amendment No. 7 to Credit Agreement among H&E Equipment Services L.L.C, Great Northern Equipment, Inc., H&E Holdings, L.L.C., GNE Investments, Inc., H&E Finance Corp., General Electric Capital Corporation
and the Lenders party, thereto dated as of March 29, 2005.*                                                                                                                                                      
|10.2  |  | Contribution Agreement and Plan of Reorganization, dated as of June 14, 2002, by and among H&E Holdings, L.L.C., BRSEC Co-Investment II, LLC (incorporated by reference to Exhibit 10.2 to Registration
Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                               
|10.3  |  | Securityholders Agreement, dated as of June 17, 2002, by and among H&E Holdings L.L.C., BRSEC Co-Investment, LLC, BRSEC Co-Investment II, LLC, certain members of management and other members of H&E Holdings
L.L.C. (incorporated by reference to Exhibit 10.3 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                      
|10.4  |  | Registration Rights Agreement, dated as of June 17, 2002, by and among H&E Holdings L.L.C., BRSEC Co-Investment, LLC, BRSEC Co-Investment II, LLC, certain members of management and other members of H&E
Holdings L.L.C. (incorporated by reference to Exhibit 10.4 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                  
|10.7  |  | First Amended and Restated Management Agreement, dated as of June 17, 2002, Bruckmann, Rosser, Sherrill & Co., Inc., Bruckmann, Rosser, Sherrill & Co., L.L.C., H&E Holdings L.L.C. and H&E
Equipment Services, L.L.C. (incorporated by reference to Exhibit 10.7 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                     
|10.8  |  | Employment Agreement, dated as of June 29, 1999, by and between Gulf Wide Industries, L.L.C., and John M. Engquist (incorporated by reference to Exhibit 10.8 to Registration Statement on Form S-4 of
H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                                                         
|10.9  |  | First Amendment to the Employment Agreement, dated as of August 10, 2001, by and among Gulf Wide Industries, L.L.C. and John M. Engquist (incorporated by reference to Exhibit 10.9 to Registration Statement on
Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                                   
|10.14 |  | Employment Agreement, dated as of February 4, 1998, by and between ICM Equipment Company L.L.C. and Kenneth R. Sharp, Jr. (incorporated by reference to Exhibit 10.14 to Registration Statement on
Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                                                 
|10.15 |  | First Amendment to the Employment Agreement, dated as of May 26, 1999, between ICM Equipment Company L.L.C. and Kenneth R. Sharp, Jr. (incorporated by reference to Exhibit 10.15 to Registration Statement on
Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                                     
|10.16 |  | Second Amendment to the Employment Agreement, dated as of December 6, 1999, between ICM Equipment Company L.L.C. and Kenneth Sharp, Jr. (incorporated by reference to Exhibit 10.16 to Registration Statement on
Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                               

49

---



|10.17  |  | Third Amendment to the Employment Agreement, dated as of June 14, 2002, between ICM Equipment Company L.L.C. and Kenneth Sharp, Jr. (incorporated by reference to Exhibit 10.17 to Registration Statement on
Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                               
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.18  |  | Deferred Compensation Agreement made and entered into as of June 17, 2002, by and between Gary Bagley and H&E Holdings L.L.C. (incorporated by reference to Exhibit 10.18 to Registration Statement on
Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                                     
|10.19  |  | Deferred Compensation Agreement made and entered into as of June 17, 2002, by and between Kenneth Sharp, Jr. and H&E Holdings, L.L.C. (incorporated by reference to Exhibit 10.19 to Registration Statement on
Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                             
|10.20  |  | Consulting and Noncompetition Agreement, dated as of June 29, 1999, between Head & Engquist Equipment, L.L.C. and Thomas R. Engquist (incorporated by reference to Exhibit 10.20 to Registration Statement on
Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).                                                              
|10.21  |  | Purchase Agreement by and among H&E Equipment Services L.L.C., H&E Finance Corp., the guarantors party thereto and Credit Suisse First Boston Corporation, dated June 3, 2002 (incorporated by reference to
Exhibit 10.21 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99587), filed September 13, 2002).                     
|10.21a |  | Purchase Agreement, among H&E Equipment Services L.L.C., H&E Finance Corp., H&E Holdings L.L.C., the guarantors party thereto and Credit Suisse First Boston Corporation, Inc. dated June 17, 2002
(incorporated by reference to Exhibit 10.21 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).
|10.22  |  | Investor Rights Agreement by and among H&E Holdings, L.L.C., BRSEC Co-Investment, LLC, BRSEC Co-Investment II, LLC and Credit Suisse First Boston Corporation, dated as of June 17, 2002 (incorporated by reference
to Exhibit 10.22 to Registration Statement on Form S-4 of H&E Equipment Services L.L.C. (File No. 333-99589), filed September 13, 2002).          
|10.24  |  | Security Agreement, dated June 17, 2002, between H&E Equipment Services L.L.C. and The Bank of New York (incorporated by reference to Exhibit 10.24 to Annual Report on Form 10-K of H&E Equipment
Services L.L.C. for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).                                                                  
|10.25  |  | Pledge Agreement, dated June 17, 2002, between H&E Equipment Services L.L.C. and The Bank of New York (incorporated by reference to Exhibit 10.25 to Annual Report on Form 10-K of H&E Equipment
Services L.L.C. for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).                                                                    
|10.26  |  | Trademark Security Agreement, dated June 17, 2002, between H&E Equipment Services L.L.C. and The Bank of New York (incorporated by reference to Exhibit 10.26 to Annual Report on Form 10-K of H&E
Equipment Services L.L.C. for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).                                                        
|10.27  |  | Security Agreement, dated June 17, 2002, between H&E Finance Corp. and The Bank of New York (incorporated by reference to Exhibit 10.27 to Annual Report on Form 10-K of H&E Equipment Services L.L.C.
for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).                                                                              
|10.28  |  | Security Agreement, dated June 17, 2002, between GNE Investments, Inc. and The Bank of New York (incorporated by reference to Exhibit 10.28 to Annual Report on Form 10-K of H&E Equipment Services L.L.C.
for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).                                                                          
|10.29  |  | Pledge Agreement, dated June 17, 2002, between GNE Investments, Inc. and The Bank of New York (incorporated by reference to Exhibit 10.29 to Annual Report on Form 10-K of H&E Equipment Services L.L.C.
for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).                                                                            
|10.30  |  | Security Agreement, dated June 17, 2002, between Great Northern Equipment, Inc. and The Bank of New York (incorporated by reference to Exhibit 10.30 to Annual Report on Form 10-K of H&E Equipment
Services L.L.C. for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).                                                                 
|10.31  |  | Trademark Security Agreement, dated June 17, 2002, between Great Northern Equipment, Inc. and The Bank of New York (incorporated by reference to Exhibit 10.31 to Annual Report on Form 10-K of H&E
Equipment Services L.L.C. for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                                                       

50

---



|10.32 |  | Patent Security Agreement, dated June 17, 2002, between Great Northern Equipment, Inc. and The Bank of New York (incorporated by reference to Exhibit 10.32 to Annual Report on Form 10-K of H&E Equipment
Services L.L.C. for the year ended December 31, 2002 (File No. 333-99587), filed April 14, 2003).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.33 |  | Severance and Consulting Agreement, dated March 1, 2004, between H&E Equipment Services, L.L.C. and Robert W. Hepler.*                                                                                                                                                                                      
|10.34 |  | Consulting and Non-competition Agreement, dated July 31, 2004, between H&E Equipment Services, L.L.C. and Gary W. Bagley.*                                                                                                                                                                                  
|31.1  |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                   
|31.2  |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                   
|32.1  |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                        
|32.2  |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                        

---

51

---





Report of Independent Registered Public Accounting Firm

The
Board of Directors
H&E Equipment Services L.L.C.:

We
have audited the accompanying consolidated balance sheets of H&E Equipment Services L.L.C. and subsidiaries as of December 31, 2004 and 2003 and the related consolidated
statements of operations, members' deficit and cash flows for each of the three years in the period ended December 31, 2004. We have also audited the schedule listed in Item 15(a)(2) of
the Form 10-K. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements
based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits
included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement and schedule presentation. We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of H&E Equipment Services L.L.C. and subsidiaries
as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with
accounting principles generally accepted in the United States of America.

Also,
in our opinion, the schedule presents fairly, in all material respects, the information set forth herein.

As
discussed in Note 20 to the consolidated financial statements the fiscal 2003 and 2002 financial statements have been restated to correct errors in the accounting for deferred
taxes in connection with the Company's combination with ICM Equipment Company on June 17, 2002.

/s/
BDO Seidman, LLP

Dallas,
Texas
September 28, 2005

F-1

---





H&E EQUIPMENT SERVICES L.L.C.        CONSOLIDATED BALANCE SHEETS        AS OF DECEMBER 31, 2004 AND 2003 (RESTATED)        (Dollars in thousands)

|                                                                                                              |                                                | 2004              |         | 2003
(restated) |        
|------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ----------------- | ------- | --------------- | -------
|Assets                                                                                                        |                                                |                   |         |                 |        
|Cash                                                                                                          |                                                | $                 | 3,358   |                 | $      
|Receivables, net of allowance for doubtful accounts of $2,732
and $3,188, respectively                        |                                                |                   | 68,902  |                 |        
|Inventories, net of reserve for obsolescence of $1,490 and $1,235, respectively                               |                                                |                   | 56,811  |                 |        
|Prepaid expenses and other assets                                                                             |                                                |                   | 1,044   |                 |        
|Rental equipment, net of accumulated depreciation of $124,411 and $114,014, respectively                      |                                                |                   | 243,630 |                 |        
|Property and equipment, net of accumulated depreciation and amortization of $17,674 and $13,942, respectively |                                                |                   | 16,101  |                 |        
|Deferred financing costs, net of accumulated amortization of $5,092 and $2,751, respectively                  |                                                |                   | 10,251  |                 |        
|Goodwill, net                                                                                                 |                                                |                   | 8,572   |                 |        
|                                                                                                              |                                                |                   |         |                 |        
|                                                                                                              | Total assets                                   |                   | $       | 408,669         |        
|                                                                                                              |                                                |                   |         |                 |        
|Liabilities and Members' Deficit                                                                              |                                                |                   |         |                 |        
|Liabilities:                                                                                                  |                                                |                   |         |                 |        
|                                                                                                              | Amount due on senior secured credit facility   |                   | $       | 55,293          |        
|                                                                                                              | Accounts payable                               |                   |         | 92,592          |        
|                                                                                                              | Accrued expenses payable and other liabilities |                   |         | 20,919          |        
|                                                                                                              | Accrued loss from litigation                   |                   |         | 17,434          |        
|                                                                                                              | Related party obligation                       |                   |         | 1,062           |        
|                                                                                                              | Notes payable                                  |                   |         | 727             |        
|                                                                                                              | Senior secured notes, net of discount          |                   |         | 198,761         |        
|                                                                                                              | Senior subordinated notes, net of discount     |                   |         | 43,491          |        
|                                                                                                              | Capital lease obligations                      |                   |         | 1,120           |        
|                                                                                                              | Deferred compensation payable                  |                   |         | 10,570          |        
|                                                                                                              |                                                |                   |         |                 |        
|                                                                                                              |                                                | Total liabilities |         |                 | 441,969
|                                                                                                              |                                                |                   |         |                 |        
|Commitments and contingent liabilities (see note 14 of Consolidated Financial Statements)                     |                                                |                   |         |                 |        
|Members' deficit                                                                                              |                                                |                   | (33,300 | )               |        
|                                                                                                              |                                                |                   |         |                 |        
|                                                                                                              | Total liabilities and members' deficit         |                   | $       | 408,669         |        
|                                                                                                              |                                                |                   |         |                 |        

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

F-2

---





H&E EQUIPMENT SERVICES L.L.C.        CONSOLIDATED STATEMENTS OF OPERATIONS        FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 (RESTATED) AND 2002 (RESTATED)        (Dollars in
thousands)

|                                             |                      | 2004                          |         | 2003
(Restated) |         | 2002
(Restated) |        
|-------------------------------------------- | -------------------- | ----------------------------- | ------- | --------------- | ------- | --------------- | -------
|Revenues:                                    |                      |                               |         |                 |         |                 |        
|                                             | Equipment rentals    |                               | $       | 160,342         |         | $               | 153,851
|                                             | New equipment sales  |                               |         | 116,907         |         |                 | 81,692 
|                                             | Used equipment sales |                               |         | 84,999          |         |                 | 70,926 
|                                             | Parts sales          |                               |         | 58,014          |         |                 | 53,658 
|                                             | Service revenue      |                               |         | 33,696          |         |                 | 33,349 
|                                             | Other                |                               |         | 24,214          |         |                 | 20,510 
|                                             |                      |                               |         |                 |         |                 |        
|                                             |                      | Total revenues                |         |                 | 478,172 |                 |        
|                                             |                      |                               |         |                 |         |                 |        
|Cost of Revenues:                            |                      |                               |         |                 |         |                 |        
|                                             | Rental depreciation  |                               |         | 49,590          |         |                 | 55,244 
|                                             | Rental expense       |                               |         | 50,666          |         |                 | 49,696 
|                                             | New equipment sales  |                               |         | 104,111         |         |                 | 73,228 
|                                             | Used equipment sales |                               |         | 67,906          |         |                 | 58,145 
|                                             | Parts sales          |                               |         | 41,500          |         |                 | 39,086 
|                                             | Service revenue      |                               |         | 12,865          |         |                 | 13,043 
|                                             | Other                |                               |         | 28,246          |         |                 | 26,433 
|                                             |                      |                               |         |                 |         |                 |        
|                                             |                      | Total cost of revenues        |         |                 | 354,884 |                 |        
|                                             |                      |                               |         |                 |         |                 |        
|                                             |                      | Gross profit                  |         |                 | 123,288 |                 |        
|Selling, general and administrative expenses |                      |                               | 97,525  |                 |         | 93,054          |        
|Loss from litigation                         |                      |                               |        |                 |         | 17,434          |        
|Related party expense                        |                      |                               |        |                 |         | 1,275           |        
|Gain on sale of property and equipment       |                      |                               | 207     |                 |         | 80              |        
|                                             |                      |                               |         |                 |         |                 |        
|                                             |                      | Income (loss) from operations |         |                 | 25,970  |                 |        
|                                             |                      |                               |         |                 |         |                 |        
|Other income (expense):                      |                      |                               |         |                 |         |                 |        
|                                             | Interest expense     |                               |         | (39,856         | )       |                 | (39,394
|                                             | Other, net           |                               |         | 149             |         |                 | 221    
|                                             |                      |                               |         |                 |         |                 |        
|                                             |                      | Total other expense, net      |         |                 | (39,707 | )               |        
|                                             |                      |                               |         |                 |         |                 |        
|Loss before income taxes                     |                      |                               | (13,737 | )               |         | (51,745         | )      
|Income tax provision (benefit)               |                      |                               |        |                 |         | (5,694          | )      
|                                             |                      |                               |         |                 |         |                 |        
|                                             |                      | Net loss                      |         | $               | (13,737 | )               | $      
|                                             |                      |                               |         |                 |         |                 |        

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

F-3

---





H&E EQUIPMENT SERVICES L.L.C.        CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY (DEFICIT)        FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 (RESTATED) AND 2002 (RESTATED)    
(Dollars in thousands)

|                                                                                                                                                                                    |                  | Series A
Senior
Preferred |        | Junior
Preferred |   | Class A
Common |   | Class B
Common |        | Additional
Paid-in
Capital |   | Accumulated
Deficit |   | Member's
Interest |         | Total
Members'
Equity
(Deficit) |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------- | ------------------------- | ------ | ---------------- | - | -------------- | - | -------------- | ------ | -------------------------- | - | ------------------- | - | ----------------- | ------- | ------------------------------- | -
|January 1, 2002 (as previously reported)                                                                                                                                            |                  | $                         | 1,235  |                  | $ | 5,000          |   | $              | 1,152  |                            | $ | 1,152               |   | $                 | 50,090  |                                 | $
|Prior period adjustment                                                                                                                                                             |                  |                           |        |                  |   |                |   |                |        |                            |   |                     |   |                   |         |                                 |  
|Net lossJanuary 1, 2002                                                                                                                                                            |                  |                           |        |                  |   |                |   |                |        |                            |   |                     |   |                   |         |                                 |  
|                                                                                                                                                                                    | to June 17, 2002 |                           |        |                 |   |                |  |                |        |                           |   |                     |  |                   |         |                                |  
|Accretion of liquidation value on Preferred Units outside of equity through June 17, 2002                                                                                           |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|Members' equity issued with Senior Subordinated Notes at June 17, 2002                                                                                                              |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|Conversion of Senior Exchangeable Preferred Units at June 17, 2002                                                                                                                  |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|Conversion of Senior Subordinated Preferred Units at June 17, 2002                                                                                                                  |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|Conversion of series A Senior Preferred, Junior Preferred, Class A Common, Class B Common, Additional Paid-in Capital and accumulated deficit to members' interest at June 17, 2002 |                  |                           | (1,235 | )                |   | (5,000         | ) |                | (1,152 | )                          |   | (1,152              | ) |                   | (50,090 | )                               |  
|Net lossJune 17, 2002 to December 31, 2002                                                                                                                                         |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|                                                                                                                                                                                    |                  |                           |        |                  |   |                |   |                |        |                            |   |                     |   |                   |         |                                 |  
|December 31, 2002 (restated)                                                                                                                                                        |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|Net loss                                                                                                                                                                            |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|                                                                                                                                                                                    |                  |                           |        |                  |   |                |   |                |        |                            |   |                     |   |                   |         |                                 |  
|December 31, 2003 (restated)                                                                                                                                                        |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|Net loss                                                                                                                                                                            |                  |                           |       |                  |   |               |   |                |       |                            |   |                    |   |                   |        |                                 |  
|                                                                                                                                                                                    |                  |                           |        |                  |   |                |   |                |        |                            |   |                     |   |                   |         |                                 |  
|December 31, 2004                                                                                                                                                                   |                  | $                         |       |                  | $ |               |   | $              |       |                            | $ |                    |   | $                 |        |                                 | $
|                                                                                                                                                                                    |                  |                           |        |                  |   |                |   |                |        |                            |   |                     |   |                   |         |                                 |  

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

F-4

---





H&E EQUIPMENT SERVICES L.L.C.    CONSOLIDATED STATEMENTS OF CASH FLOWS    FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 (RESTATED) AND 2002 (RESTATED)    (Dollars in thousands)

|                                                                                |                                                                           | 2004                                                |                                           | 2003
(Restated) |         | 2002
(Restated) |         
|------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------- | --------------- | ------- | --------------- | --------
|Cash flows from operating activities:                                           |                                                                           |                                                     |                                           |                 |         |                 |         
|Net loss                                                                        |                                                                           | $                                                   | (13,737                                   | )               | $       | (46,051         | )       
|Adjustments to reconcile net loss to net cash provided by operating activities: |                                                                           |                                                     |                                           |                 |         |                 |         
|                                                                                | Depreciation on property and equipment                                    |                                                     |                                           | 3,642           |         |                 | 3,915   
|                                                                                | Depreciation on rental equipment                                          |                                                     |                                           | 49,590          |         |                 | 55,244  
|                                                                                | Amortization of other intangible assets                                   |                                                     |                                           | 295             |         |                 |        
|                                                                                | Amortization of loan discounts and deferred financing costs               |                                                     |                                           | 2,627           |         |                 | 2,394   
|                                                                                | Provision for losses on accounts receivable                               |                                                     |                                           | 1,395           |         |                 | 1,269   
|                                                                                | Provision for obsolescence                                                |                                                     |                                           | 240             |         |                 | 612     
|                                                                                | Gain on sale of property and equipment                                    |                                                     |                                           | (207            | )       |                 | (80     
|                                                                                | Gain on sale of rental equipment                                          |                                                     |                                           | (15,230         | )       |                 | (11,161 
|                                                                                | Deferred income taxes                                                     |                                                     |                                           |                |         |                 | (5,717  
|                                                                                | Changes in operating assets and liabilities, net of business combination: |                                                     |                                           |                 |         |                 |         
|                                                                                |                                                                           | Receivables, net                                    |                                           |                 | (7,682  | )               |         
|                                                                                |                                                                           | Inventories, net                                    |                                           |                 | (22,263 | )               |         
|                                                                                |                                                                           | Prepaid expenses and other assets                   |                                           |                 | 1,477   |                 |         
|                                                                                |                                                                           | Accounts payable                                    |                                           |                 | 1,146   |                 |         
|                                                                                |                                                                           | Accrued expenses payable and other liabilities      |                                           |                 | 4,674   |                 |         
|                                                                                |                                                                           | Accrued loss from litigation                        |                                           |                 |        |                 |         
|                                                                                |                                                                           | Deferred compensation payable                       |                                           |                 | (328    | )               |         
|                                                                                |                                                                           |                                                     |                                           |                 |         |                 |         
|                                                                                |                                                                           |                                                     | Net cash provided by operating activities |                 |         | 5,639           |         
|                                                                                |                                                                           |                                                     |                                           |                 |         |                 |         
|Cash flows from investing activities:                                           |                                                                           |                                                     |                                           |                 |         |                 |         
|                                                                                | Purchases of property and equipment                                       |                                                     |                                           | (4,558          | )       |                 | (2,483  
|                                                                                | Purchases of rental equipment                                             |                                                     |                                           | (72,940         | )       |                 | (30,588 
|                                                                                | Proceeds from sale of property and equipment                              |                                                     |                                           | 349             |         |                 | 2,700   
|                                                                                | Proceeds from sale of rental equipment                                    |                                                     |                                           | 65,396          |         |                 | 51,279  
|                                                                                | Cash acquired in ICM business combination                                 |                                                     |                                           |                |         |                 |        
|                                                                                |                                                                           |                                                     |                                           |                 |         |                 |         
|                                                                                |                                                                           | Net cash (used in) provided by investing activities |                                           |                 | (11,753 | )               |         
|                                                                                |                                                                           |                                                     |                                           |                 |         |                 |         
|Cash flows from financing activities:                                           |                                                                           |                                                     |                                           |                 |         |                 |         
|                                                                                | Net proceeds from issuance of senior secured notes                        |                                                     |                                           |                |         |                 |        
|                                                                                | Net proceeds from issuance of senior subordinated notes                   |                                                     |                                           |                |         |                 |        
|                                                                                | Payments of amounts due to members                                        |                                                     |                                           |                |         |                 |        
|                                                                                | Payment of deferred financing costs                                       |                                                     |                                           | (887            | )       |                 | (1,089  
|                                                                                | Borrowings on senior secured credit facility                              |                                                     |                                           | 479,756         |         |                 | 385,504 
|                                                                                | Payments on senior secured credit facitily                                |                                                     |                                           | (468,421        | )       |                 | (418,270
|                                                                                | Payments of related party obligation                                      |                                                     |                                           | (300            | )       |                 | (75     
|                                                                                | Principal payments on notes payable                                       |                                                     |                                           | (336            | )       |                 | (339    
|                                                                                | Payments of capital lease obligations                                     |                                                     |                                           | (4,231          | )       |                 | (5,490  
|                                                                                |                                                                           |                                                     |                                           |                 |         |                 |         
|                                                                                |                                                                           | Net cash provided by (used in) financing activities |                                           |                 | 5,581   |                 |         
|                                                                                |                                                                           |                                                     |                                           |                 |         |                 |         
|Net increase (decrease) in cash                                                 |                                                                           |                                                     | (533                                      | )               |         | 493             |         
|Cash, beginning of year                                                         |                                                                           |                                                     | 3,891                                     |                 |         | 3,398           |         
|                                                                                |                                                                           |                                                     |                                           |                 |         |                 |         
|Cash, end of year                                                               |                                                                           | $                                                   | 3,358                                     |                 | $       | 3,891           |         
|                                                                                |                                                                           |                                                     |                                           |                 |         |                 |         

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

F-5

---





|                                                                     |                                | 2004                                                           |  | 2003
(Restated) |        | 2002
(Restated)
|-------------------------------------------------------------------- | ------------------------------ | -------------------------------------------------------------- |  | --------------- | ------ | ---------------
|Supplemental schedule of noncash investing and financing activities: |                                |                                                                |  |                 |        |                
|                                                                     | Noncash asset purchases:       |                                                                |  |                 |        |                
|                                                                     |                                | Assets transferred from new and used inventory to rental fleet |  | $               | 9,292  |                
|                                                                     |                                | Members' equity issued with the senior subordinated notes      |  |                 |       |                
|                                                                     |                                | Rental equipment financed under capital lease obligations      |  |                 |       |                
|Supplemental disclosures of cash flow information:                   |                                |                                                                |  |                 |        |                
|                                                                     | Cash paid during the year for: |                                                                |  |                 |        |                
|                                                                     |                                | Interest                                                       |  | $               | 33,648 |                
|                                                                     |                                | Income taxes                                                   |  |                 | 19     |                

Supplemental Disclosures of Non-Cash Investing and Financing Activities:

As of December 31, 2004 and 2003, the Company had $51.2 million and $51.8 million, respectively, in manufacturer flooring plans payable
outstanding, which were used to finance purchases of inventory and rental equipment.

On
June 17, 2002, the Company entered into a business combination acquiring substantially all the assets and assuming certain liabilities of ICM Equipment Company L.L.C. The
following table sets forth information relating to the acquisition (in thousands)

Fair value of assets acquired

$
187,781Fair value of liabilities assumed


(187,781
)Excess of liabilities assumed over fair value of assets acquired





During
the first quarter of 2004, the Company entered into a twelve month non-competition agreement with a former vice-president. Accordingly, the Company recorded a $0.3 million
intangible asset and accrued liability. The intangible asset was valued at the present value of the future payments discounted at the Company's weighted average cost over the term of the agreement and
is being amortized using the straight-line method over the term of the agreement.

During
the third quarter of 2004, the Company entered into a three year non-competition agreement with a former officer. Accordingly, the Company recorded a $0.1 million
intangible asset and accrued liability. The intangible asset was valued at the present value of the future payments discounted at the Company's weighted average cost over the term of the agreement and
is being amortized using the straight-line method over the term of the agreement.

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

F-6

---





H&E EQUIPMENT SERVICES L.L.C.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (Dollars in thousands, except share amounts)

(1)    Organization and Nature of Operations

Basis of Presentation

H&E Equipment Services L.L.C. (H&E Equipment Services or the Company) is a wholly-owned subsidiary of H&E Holdings L.L.C. (H&E Holdings). H&E Holdings is
principally a holding company conducting all of its operations through H&E Equipment Services (see Note 3). The consolidated financial statements include the results of operations of H&E
Equipment Services and its wholly-owned subsidiaries H&E Finance Corp., GNE Investments, Inc. and Great Northern Equipment, Inc., collectively referred to herein as the "Company".

The
nature of the Company's business is such that short-term obligations are typically met by cash flows generated from long-term assets. Consequently, consistent with
industry practice, the accompanying consolidated balance sheets are presented on an unclassified basis.

Nature of Operations

As one of the largest integrated equipment services companies in the United States focused on heavy construction and industrial equipment, we rent, sell and
provide parts and service support for four core categories of specialized equipment: (1) hi-lift or aerial platform equipment, (2) cranes, (3) earthmoving equipment,
and (4) industrial lift trucks. By providing equipment sales, rental, on-site parts, and repair and maintenance functions under one roof, we are a one-stop provider for
our customers' varied equipment needs. This full service approach provides us with multiple points of customer contact, enables us to maintain an extremely high quality rental fleet, as well as an
effective distribution channel for fleet disposal and provides cross-selling opportunities among our new and used equipment sales, rental, parts sales and service operations.

(2)    Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of H&E Equipment Services and its subsidiaries. All intercompany balances and transactions
have been eliminated in consolidation.

Revenue Recognition

The Company's policy is to recognize revenue from equipment rentals in the period earned, over the contract term, regardless of the timing of the billing to
customers. A rental contract term can be daily, weekly or monthly. Because the term of the contracts can extend across financial reporting periods, the Company records unbilled rental revenue and
deferred revenue at the end of reporting periods so rental revenue is appropriately stated in the periods presented. Revenue from the sale of equipment and parts is recognized at the time of delivery
to, or pick-up by, the customer and when all obligations under the sales contract have been fulfilled and collectability is reasonably assured. Service revenue is recognized at the time
the services are rendered. Other revenues consist primarily of billings to customers for rental equipment delivery and damage waiver charges.

F-7

---



Cash and Cash Equivalents

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

Inventories

New and used equipment is stated at the lower of cost or market, with cost determined by specific-identification. Parts and supplies are stated at the lower of
the average cost or market.

Rental Equipment

Rental equipment purchased by the Company is stated at cost and is depreciated over the estimated useful lives of the equipment using the
straight-line method. Estimated useful lives vary based upon type of equipment. Generally, the Company depreciates cranes and aerial work platforms over a ten year useful life, earthmoving
equipment over a five year useful life with a 25% salvage value, and industrial lift trucks over a seven year useful life. Attachments and other smaller type equipment are fully depreciated over a
three year life.

Ordinary
repair and maintenance costs and property taxes are charged to operations as incurred. Expenditures for additions or improvements that extend the useful life of the asset are
capitalized in the period incurred. When rental equipment is sold or disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is
included in the Company's consolidated results of operations. Rental fleet is held for sale at all times and is not transferred to inventory held for sale prior to disposal. The Company periodically
reviews the carrying value of its long-lived assets for possible impairment. In management's opinion, there is no impairment of long lived assets at December 31, 2004.

Property and Equipment

Property and equipment are recorded at cost and are depreciated over the assets' estimated useful lives using the straight-line method. Ordinary
repair and maintenance costs are charged to
operations as incurred. The Company periodically reviews the carrying value of its long-lived assets for possible impairment. In management's opinion, there is no impairment of long-lived assets at
December 31, 2004. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining life of the lease, whichever is shorter.
Generally, the Company assigns the following useful lives to these categories:

Category

Estimated
Useful LifeTransportation equipment

5 yearsBuildings

39 yearsOffice equipment

5 yearsComputer equipment

3 yearsMachinery and equipment

7 years


F-8

---



Deferred Financing Costs and Initial Purchasers' Discounts

Deferred financing costs and initial purchasers' discounts were recorded in 2003 and 2002 in connection with entering into the new senior secured credit facility
and issuing senior secured notes and senior subordinated notes (see Note 12). The Company paid a $0.4 million and $0.8 million amendment fee in May 2003 and February 2004,
respectively, in connection with amending the senior secured credit facility. The amounts are being amortized over the terms of the related debt, utilizing the effective interest method. The
amortization expense of deferred financing costs and initial purchasers' discounts is included with interest expense as an overall cost of the financing. During the years ended December 31,
2004, 2003 and 2002, interest expense related to the amortization of these costs totaled $2,627, $2,394 and $1,091, respectively.

Goodwill

Goodwill recorded in the accompanying consolidated balance sheets was $8.6 million. The goodwill was established in connection with two separate
acquisitions in 1999 and 2002. Prior to the adoption of Statement of Financial Accounting Standards No. 142,"Goodwill and Other Intangible
Assets"(SFAS No. 142) on January 1, 2002, $3.2 million of goodwill recorded as a result of the 1999 acquisition was being amortized over 40 years.

The
Company adopted the provisions of SFAS No. 142, effective January 1, 2002. The provisions of SFAS No. 142 eliminate the amortization of goodwill
and certain intangible assets that are deemed to have indefinite lives and require such assets to be tested for impairment annually and to be written down to fair value, if necessary. Accordingly, the
Company does not have goodwill amortization subsequent to December 31, 2001.

The
Company made an assessment of its goodwill for impairment during the year ended December 31, 2004 in accordance with SFAS No. 142. Based on the assessment, the Company
was not required to adjust the carrying value of its goodwill.

Advertising

Advertising costs are expensed as incurred and totaled $1,024, $1,046, and $993 for the years ended December 31, 2004, 2003 and 2002, respectively.

Legal Costs

Legal costs are expensed as incurred. A significant portion of our legal costs are associated with the litigation as described in Note 14.

Shipping and Handling Fees and Costs

Shipping and handling fees billed to customers are recorded as revenues while the related shipping and handling costs are included in other cost of revenues.

F-9

---



Income Taxes

The Company files a consolidated federal income tax return with its wholly owned subsidiaries. As a Limited Liability Corporation, the Company has elected to be
taxed as a C Corporation under the provisions of the Internal Revenue Code (IRC). Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income
tax assets are reviewed for recoverability and valuation allowances are provided, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

Fair Value of Financial Instruments

The carrying amounts reported in the accompanying consolidated balance sheets for accounts receivable, accounts payable, accrued liabilities, and deferred
compensation payable approximate fair value due to the immediate or short-term maturity of these financial instruments. The carrying amount of the amended senior secured credit facility
approximates fair value due to the fact that the underlying instruments include provisions to adjust interest rates to approximate fair market value. The estimated

F-10

---



fair
value of the Company's notes payable, senior secured and senior subordinated notes payable at December 31, 2004 and 2003 are as follows (in thousands):

|                                                                                    |  | December 31, 2004
|----------------------------------------------------------------------------------- |  | -----------------
|
|Cash and cash equivalents                                                           |  | $                
|Senior secured notes with interest computed at 111/8%                               |  |                  
|Senior subordinated notes with interest computed at 121/2%                          |  |                  
|Notes payable to financial institution with interest computed at 41/4%              |  |                  
|Notes payable to suppliers with interest computed at 2.9%                           |  |                  
|Notes payable to finance companies with interest rates ranging from
91/2% to 101/2% |  |                  
|                                                                                    |  |                  
|                                                                                    |  | $                
|                                                                                    |  |                  

|                                                                                    |  | December 31, 2003
|----------------------------------------------------------------------------------- |  | -----------------
|
|Cash and cash equivalents                                                           |  | $                
|Senior secured notes with interest computed at 111/8%                               |  |                  
|Senior subordinated notes with interest computed at 121/2%                          |  |                  
|Notes payable to financial institution with interest computed at 41/4%              |  |                  
|Notes payable to suppliers with interest computed at 2.9%                           |  |                  
|Notes payable to finance companies with interest rates ranging from
91/2% to 101/2% |  |                  
|                                                                                    |  |                  
|                                                                                    |  | $                
|                                                                                    |  |                  

Concentrations of Credit and Supplier Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts
receivable. Cash and cash equivalents consist primarily of money market accounts which are maintained with high credit quality financial institutions. Cash and cash equivalents are in excess of
Federal Deposit Insurance Corporation ("FDIC") insurance limits. Credit risk with respect to trade accounts receivable is mitigated by the large number of geographically diverse customers and the
Company's credit evaluation procedures. Although generally no collateral is required, when feasible, mechanics' liens are filed and personal guarantees are signed to protect the Company's interests.
The Company maintains reserves for potential losses.

The
Company records trade receivables at sales value and establishes specific reserves for certain customer accounts identified as known collection problems due to insolvency, disputes
or other collection issues. The amounts of the specific reserves estimated by management are based on the following assumptions and variables: the customer's financial position, age of the customer's
receivables and changes in payment schedules. In addition to the specific reserves, management establishes a non-specific allowance for doubtful accounts by applying specific percentages
to the different receivable

F-11

---



aging
categories (excluding the specifically reserved accounts). The percentage applied against the aging categories increases as the accounts become further past due. The allowance for doubtful
accounts is charged with the write-off of uncollectible customer accounts.

The
Company purchases a significant amount of equipment from the same manufacturers with whom it has distribution agreements. The Company believes that while there are alternative
sources of supply for the equipment it purchases in each of the principal product categories, termination of one or more of our relationships with any of its major suppliers of equipment could have a
material adverse effect on the Company's business, financial condition or results of operation if it is unable to obtain adequate or timely rental and sales equipment.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and
assumptions. The use of estimates and assumptions may affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates include the allowance for
doubtful accounts, useful lives for depreciation, goodwill and other asset impairments, loss contingencies and fair values of financial instruments. Actual results could differ from those estimates.

Reclassifications

Certain amounts in the prior years' consolidated financial statements have been reclassified for comparative purposes to conform to the presentation in the
current-year consolidated financial statements. See Note 20 for further discussion of reclassifications.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued SFAS No. 123(R), "Share-Based Payment", which is a revision of SFAS No. 123
and supersedes APB Opinion No. 25. SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of
grant, and to be expensed over the applicable vesting period. SFAS No. 123(R) is effective for all stock-based awards granted on or after July 1, 2005. In addition, companies must also
recognize compensation expense related to any awards that are not fully vested as of the effective date. Compensation expense for the unvested awards will be measured based on the fair value of the
awards previously calculated in developing the pro forma disclosures in accordance with the provisions of SFAS No. 123. Historically, we have not used share-based compensation schemes for
compensating our employees. Therefore, the adoption of SFAS No. 123(R) is not expected to have any impact on our reported results of operations upon adoption. However, should we determine to
employ share-based compensation schemes in the future, SFAS No. 123(R) would have a currently indeterminate impact on us.

In
May 2005, the FASB issued Statement No. 154, "Accounting Changes and Error Corrections" (SFAS 154). SFAS 154 replaces APB Opinion No. 20. "Accounting Changes" and FASB
Statement No. 3. "Reporting Accounting Charges in Interim Financial Statements," SFAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all
prior period financial

F-12

---



statements
presented on the new accounting principle, unless it is impracticable to do so. SFAS 154 also provides that a correction of errors in previously issued financial statements should be
termed a "restatement." The new standard is effective for accounting changes and correction of errors beginning July 1, 2005. The Company has incorporated the provisions of SFAS 154 in
the presentation of our December 31, 2004 financial statements.

(3)    Reorganization and Acquisition of ICM Equipment Company L.L.C.

On June 17, 2002, the equity holders of H&E Equipment Services L.L.C. (formerly Gulf Wide Industries L.L.C.) and ICM Equipment Company L.L.C. (ICM) formed
H&E Holdings by executing a Limited Liability Company Agreement of H&E Holdings and by contributing to H&E Holdings all of the outstanding equity securities and certain outstanding subordinated debt
of the two companies to the members of H&E Holdings in exchange for certain equity securities of H&E Holdings. H&E Holdings issued cancellation certificates for the previously issued outstanding
shares. Pursuant to a Contribution Agreement and Plan of Reorganization, H&E Holdings contributed all of the outstanding equity securities of ICM to H&E Equipment Services, merging ICM out of
existence.

Pursuant
to the Contribution Agreement and Plan of Reorganization, H&E Holdings issued a series of preferred and common units in exchange for all the outstanding stock of ICM. The
acquisition was based upon a strategic plan to achieve market penetration in contiguous territories. In addition, the combined companies incurred significant operating synergies. The acquisition was
accounted for under the purchase method of accounting. H&E Equipment Services was considered the acquirer for accounting purposes. Under the purchase method of accounting, the acquired assets and
assumed liabilities have been recorded at their fair values at the date of acquisition. The operating results of ICM have been included in the accompanying consolidated financial statements from the
date of the acquisition.

The
following table summarizes the fair value of assets acquired and liabilities assumed as allocated in purchase accounting (in thousands):

Fair value of assets acquired:Cash

$
3,643Accounts receivable


27,020Inventories


12,082Rental equipment


131,894Property and equipment


5,201Deferred tax assets


1,512Other assets


1,062Goodwill


5,367$
187,781Fair value of liabilities assumed:Outstanding borrowings on senior secured credit facility

$
117,493Accounts payable and accrued liabilities


50,092Amounts due to members


10,147Deferred compensation payable


9,743Capital lease obligations


306$
187,781


F-13

---



The
consolidated results of operations data shown below is presented on an unaudited pro forma basis and represents the results of H&E Equipment Services had the business
combination occurred at the beginning of 2002 (in thousands):

Year Ended
December 31,
2002Revenues

$
431,721Net loss

$
(18,597
)


The
unaudited pro forma financial information is presented for informational purposes only and is based upon certain assumption and estimates, which are subject to change. The results
are not necessarily indicative of the operating results that would have occurred had the transaction been consummated at the beginning of the period presented, nor are they necessarily indicative of
future operating results.

(4)    Receivables

Receivables consisted of the following at December 31, 2004 and 2003 (in thousands):

2004

2003Trade receivables

$
68,704

$
62,039Unbilled rental revenue


2,628


2,756Income tax receivables


218


149Advances to employees


21


115Affiliated companies


63


295Sales-type leases





397Other





5271,634


65,803Less allowance for doubtful accounts


(2,732
)

(3,188
)$
68,902

$
62,615


(5)    Inventories

Inventories consisted of the following at December 31, 2004 and 2003 (in thousands):

2004

2003New equipment

$
33,598

$
20,517Used equipment


6,331


8,574Parts, supplies and other


16,882


14,987$
56,811

$
44,078


As
of December 31, 2004, the Company had reserves for inventory obsolescence totalling $1,490.

F-14

---





(6)    Property and Equipment

Property and equipment consisted of the following at December 31, 2004 and 2003 (in thousands):

2004

2003Land

$
1,331

$
1,334Transportation equipment


11,780


9,913Building and leasehold improvements


8,295


8,250Office and computer equipment


7,528


6,271Machinery and equipment


4,841


3,50133,775


29,269Less accumulated depreciation and amortization


(17,674
)

(13,942
)$
16,101

$
15,327


(7)    Accounts Payable

Accounts payable consisted of the following at December 31, 2004 and 2003 (in thousands):

2004

2003Trade accounts payable

$
41,393

$
39,677Manufacturer flooring plans payable


51,199


51,769$
92,592

$
91,446


Manufacturer
flooring plans payable are financing arrangements for inventory and rental equipment. The interest paid on the manufacturer flooring plans ranges between zero percent and
Prime Interest Rate plus 6.9 percent. Certain manufacturer flooring plans provide for a one to twelve-month reduced interest rate term or a deferred payment period. The Company makes payments
in accordance with the original terms of the financing agreements. However, the Company routinely sells equipment that is financed under manufacturer flooring plans prior to the original maturity date
of the financing agreement. The payable is paid at the time equipment being financed is sold. The manufacturer flooring plans payable are secured by the equipment being financed.

Maturities
(based on original financing terms) of the manufacturer flooring plans payable as of December 31, 2004 for each of the next five years ending December 31 are as
follows (in thousands):

2005


12,6482006


12,6002007


7,5562008


14,4522009


1,447Thereafter


2,496$
51,199


F-15

---



(8)    Accrued Expenses Payable and Other Liabilities

Accrued expenses payable and other liabilities consisted of the following at December 31, 2004 and 2003 (in thousands):

2004

2003Payroll and related liabilities

$
6,788

$
7,129Sales, use and property taxes


3,969


2,824Accrued interest


3,088


1,862Accrued insurance


2,532


1,560Deferred revenue


2,139


1,616Other


2,403


910$
20,919

$
15,901


(9)    Notes Payable

A summary of notes payable as of December 31, 2004 and 2003 are as follows (in thousands):

2004

2003Notes payable to a financial institution maturing through 2008.Payable in monthly installments of approximately $19. Interest is at 4.25%. Notes are collateralized by real estate.

$
654

$
838Notes payable to suppliers maturing through 2005.Payable in monthly installments of approximately $11. Interest is at 2.9%. Notes are collateralized by equipment.


55


175Notes payable to finance companies maturing through 2006.Payable in monthly installments of approximately $3. Interest ranges from 9.5% to 10.5%. Notes are collateralized by equipment.


18


50$
727

$
1,063


Maturities
of notes payable as of December 31, 2004 for each of the next four years ending December 31, are as follows (in thousands):

2005


2652006


1842007


1812008


97$
727


(10)    Convertible and Preferred Securities

Senior Exchangeable Preferred Units

In connection with a recapitalization completed in 2001, Bruckmann, Rosser, Sherrill & Co. L.P. (BRS) purchased for $10.0 million in cash 10,000 units of
$1,000 par value Senior Exchangeable

F-16

---



Preferred
Units. These units included a 10% liquidation value compounded semi-annually from their issuance date. The liquidation value was to include the par value plus any accreted value
to be paid. At any time prior to July 31, 2006, the holders of the Senior Exchangeable Preferred Units could have exchanged any part of the liquidation value of these units into a senior
subordinated promissory note of either the Company or its subsidiary, at the election of the holder. The difference between the carrying value and liquidation value was accreted through periodic
charges to accumulated deficit.

Senior Subordinated Preferred Units.

In
connection with the August 10, 2001 recapitalization, the Company issued 36,286,902 shares of $1,000 par value Senior Subordinated Preferred Units. These units included an 8%
liquidation value compounded semi-annually from their issuance date. The liquidation value as of December 31, 2001 included the par value plus any accreted value to be paid under
the terms of the agreement. The Senior Subordinated Preferred Units could be redeemed at the discretion of the Company's Board of Directors. The Company's Board of Directors is subject to voting
control of BRS, who have voting control of the Company. The differences between the carrying value and the liquidation value was accreted through periodic charges to accumulated deficit.

Series A Senior Preferred Units

In connection with the August 10, 2001 recapitalization, the Company issued 1,235,229 shares of $1,000 par value Senior Series A Preferred Units.
These units included a 12% liquidation value compounded semi-annually from their issuance date. The liquidation value was to include the par value plus any accreted value to be paid under
the terms of the agreement. These units could be redeemed at the discretion of the Company's Board of Directors.

Junior Preferred Units

In connection with the August 10, 2001 recapitalization, the Company issued 5,000 shares of $1,000 par value Junior Preferred Units. These units included
an 8% liquidation value compounded semi-annually from their issuance date. The liquidation value was to include the par value plus any accreted value to be paid under the terms of the
agreement. These units could be redeemed at the discretion of the Company's Board of Directors.

In
connection with the Company's reorganization and acquisition of ICM in June 2002 (see Note 3), the Senior Exchangeable Preferred Units, the Senior Subordinated Preferred
Units, the Series A Senior Preferred Units and the Junior Preferred Units were converted to member's interest.

(11)    Capital Lease Obligations

The Company leases various equipment under capital leases expiring in various years through 2005. The assets and liabilities under capital leases are recorded at
the lower of the present value of the future minimum lease payments or the fair value of the assets. The assets are amortized over their estimated useful lives. Amortization of assets under capital
leases is included in depreciation expense.

F-17

---



Following
is a summary of assets held under capital leases at December 31, 2004 and 2003 (in thousands):

2004

2003Rental equipment

$
4,182

$
18,879Less accumulated amortization


(1,471
)

(5,308
)$
2,711

$
13,571


Future
minimum lease payments under capital leases as of December 31, 2004 are as follows (in thousands):

Total minimum lease payments for 2005

$
1,401Less amount representing interest


(281
)Total present value of future minimum payments with interest at 9.5%

$
1,120


(12)    Senior Secured Notes, Senior Subordinated Notes and Senior Secured Credit Facility

In connection with the reorganization of the Company and acquisition of ICM (see Note 3), the Company issued $200.0 million aggregate principal
amount of 111/8% senior secured notes and $53.0 million aggregate principal amount of 121/2% senior subordinated notes and entered into a new senior secured credit
facility. The senior secured credit facility is comprised of a $150.0 million revolving line of credit. The proceeds from the senior secured notes, senior subordinated notes and senior secured
credit facility were used to payoff the existing credit facilities of the two companies which had aggregate outstanding balances of approximately $306.4 million, repay senior subordinated
promissory notes of approximately $13.3 million, and pay for financing costs of approximately $13.5 million. The deferred financing costs are being amortized to interest expense over the
life of the respective related debt using the effective interest rate method.

Senior Secured Notes

On June 17, 2002, the Company issued $200.0 million aggregate principal amount of 111/8% Senior Secured Notes due 2012. The following
table reconciles the $200.0 million Senior Secured Notes to the balance (in thousands):

2004

2003Aggregate principal amount issued

$
200,000

$
200,000Initial purchasers' discount


(1,474
)

(1,474
)Initial purchasers' discount amortization (June 17, 2002 through December 31, 2004)


235


134Senior Secured Notes balance at December 31, 2004

$
198,761

$
198,660


The
net proceeds from the sale of the notes were approximately $190.7 million (after deducting the initial purchasers' discount and related financing costs). Interest on the notes
is paid semi-annually

F-18

---



on
June 15 and December 15 of each year, commencing on December 15, 2002. The notes mature on June 15, 2012 and are guaranteed by the Company's domestic subsidiaries (see
Note 21). The notes are secured by junior security interests in substantially all of the assets of H&E Equipment Services. The Company, at its option, may redeem the notes on or after
June 15, 2007, at specified redemption prices, which range from 105.563% in 2007 to 100.0% in 2010 and thereafter. In addition, at any time on or prior to June 15, 2005, the Company may
redeem up to 35% of the outstanding notes at a redemption price of 111.125% with the net proceeds of certain equity offerings. The indenture governing the notes contains certain restrictive covenants
including limitations on (i) additional indebtedness; (ii) restricted payments; (iii) liens and guarantees; (iv) dividends and other payments; (v) preferred stock of
subsidiaries; (vi) transactions with affiliates; (vii) sale and leaseback transactions; and (viii) the Company's ability to consolidate, merge or sell all or substantially all of
its assets.

Senior Subordinated Notes

On June 17, 2002, the Company issued $53.0 million aggregate principal amount of 121/2% Senior Subordinated Notes due 2013. The
following table reconciles the $53.0 million Senior Subordinated Notes to the balance (in thousands):

2004

2003Aggregate principal amount issued

$
53,000

$
53,000Initial purchasers' discount


(10,591
)

(10,591
)Initial purchasers' discount amortization (June 17, 2002 through December 31, 2004)


1,082


601Senior Subordinated Notes balance at December 31, 2004

$
43,491

$
43,010


The
net proceeds from the sale of the notes were approximately $40.7 million (after deducting the initial purchasers' discount and related financing costs). Interest on the notes
is paid semi-annually on June 15 and December 15 of each year, commencing on December 15, 2002. The notes mature on June 15, 2013 and are guaranteed by the
Company's domestic subsidiaries (see Note 21). The notes are senior to all other subordinated debt and are unsecured. The Company, at its option, may redeem the notes on or after
June 15, 2007, at specified redemption prices which range from 106.250% in 2007 to 100.0% in 2010 and thereafter. In addition, at any time prior to June 15, 2005, the Company may redeem
up to 35% of the outstanding notes at a redemption price of 112.50% with the net proceeds of certain equity offerings. The indenture governing the notes contains certain restrictive covenants
including limitations on (i) additional indebtedness, (ii) restricted payments, (iii) liens and guarantees, (iv) dividends and other payments, (v) preferred stock of
subsidiaries, (vi) transactions with affiliates, (vii) sale and leaseback transactions, and (viii) the Company's ability to consolidate, merge or sell all or substantially all of
its assets.

In
connection with and attached to the issuance of the senior subordinated notes, H&E Holdings issued approximately 553 shares of Series A preferred stock, 1,476 shares of
Series B preferred stock, 4,239 shares of Series C preferred stock, 2,613 shares of Series D preferred stock, 106,842 shares of

F-19

---



Class A
common stock, and 103,684 shares of Class B common stock, all of which are limited liability company interests in H&E Holdings.

Also
in connection with the issuances of the senior secured notes and the senior subordinated notes, the Company recorded original issue discounts of $1.5 million and
$3.0 million, respectively. Additionally, $7.6 million of value was allocated to the H&E Holdings' limited liability company interests issued as part of the offering of the senior
subordinated notes. The value allocated to these interests has been accounted for as additional original issue discount. The value allocated to the limited liability interests was based on an estimate
of the relative fair values of these interests and the senior subordinated notes at the date of issuance. The original issue discounts are being amortized to interest expense over the lives of the
respective notes using the effective interest rate method.

Senior Secured Credit Facility

In accordance with the amended senior secured credit facility, the Company may borrow up to $150 million depending upon the availability of borrowing base
collateral consisting of eligible trade receivables, inventories, property and equipment, and other assets. The amended senior secured credit facility bears interest at LIBOR plus 300 basis points and
matures February 10, 2009. The credit facility is senior to all other outstanding debt, secured by substantially all the assets of the Company, and is
guaranteed by the Company's domestic subsidiaries (see Note 21). The balance outstanding on the amended senior secured credit facility as of December 31, 2004 was approximately
$55.3 million. Additional borrowings available under the terms of the amended senior secured credit facility as of December 31, 2004, taking into account the standby letters of credit
outstanding, totaled $67.6 million based on the borrowing base collateral value of assets. The average interest rate on outstanding borrowings for the year ended December 31, 2004 was
7.1%.

If
at any time an event of default exists, the interest rate on the amended senior secured credit facility will increase by 2.0% per annum. The Company is also required to pay a
commitment fee equal to 0.5% per annum in respect of undrawn commitments under the revolving credit facility.

In
accordance with the terms of the amended senior secured credit facility, the Company must comply with certain restrictive financial covenants and must maintain certain financial
ratios. The Company is required to, among other things, satisfy certain financial tests relating to (a) the maximum senior debt to tangible assets ratio, (b) maximum leverage ratio,
(c) maximum adjusted leverage ratio, (d) minimum utilization rate of equipment inventory ratio, (e) minimum adjusted interest coverage ratio and (f) maximum property and
equipment capital expenditures.

As
a result of the Company recording the estimated loss from litigation (see Note 14), on May 14, 2003, the Company's senior secured credit agreement was amended to modify
certain restrictive financial covenants and financial ratios. The credit agreement was amended to:



F-20

---





On
May 14, 2003, the Company paid a loan amendment fee of $0.4 million that will be amortized over the remaining term of the loan.

On
February 10, 2004, the Company's senior secured credit agreement was amended to extend the maturity date and to modify certain restrictive financial covenants and financial
ratios, providing additional liquidity. Principally, the amendment:



On
February 10, 2004, the Company paid a loan amendment fee of $0.8 million that is being amortized over the remaining term of the loan.

On
October 26, 2004, the Company's senior secured credit agreement was further amended to eliminate the requirement to provide separate collateral reports for the Company's
wholly-owned subsidiary, Great Northern Equipment, Inc. No amendment fee was paid related to this amendment.

F-21

---



On
January 13, 2005, the Company further amended its senior secured credit agreement to increase the maximum amount of property and equipment capital expenditures from
$5.0 million to $8.5 million during any fiscal year. No amendment fee was paid relating to this amendment.

On
March 11, 2005, we amended the senior secured credit agreement dated June 17, 2002, governing our senior secured credit facility. Principally, the amendment:

On
March 29, 2005, we also amended the senior secured credit agreement to extend the requirement of the delivery of annual audited financial statements from March 31, 2005
until September 30, 2005. The Company paid no amendment fee relating to this amendment.

As
of August 26, 2005, we were granted a waiver under our senior secured credit agreement, pursuant to which, our lenders have waived our non-compliance with, and the
effects of our non-compliance under, various representations and non-financial covenants contained in the senior secured credit agreement affected by the accounting adjustments
in connection with the restatement described in "Item 6. Selected Financial DataRestatement" and the Notes to Consolidated Financial Statements included in "Item 15. Exhibits and
Financial Statement Schedules." As a result of the restatement, among other things, we would no longer be able to make the representations under the senior secured credit agreement concerning the
conformity with GAAP of our previously delivered financial statements, or confirm our prior compliance with certain obligations concerning the maintenance of our books and records in accordance with
GAAP. Because the restatement is not expected to result in our having breached any of the financial covenants in the senior secured credit agreement, the waiver does not waive or modify any such
financial covenants. As a result of the waiver, we continue to have full access to our revolving credit facility under the senior secured credit agreement.

As
of December 31, 2004, the Company was in compliance with all covenants associated with its debt.

F-22

---





(13)    Income Taxes

Income tax provision (benefit) for the years ended December 31, 2004, 2003 and 2002, consists of (in thousands):

Current

Deferred

TotalYear ended December 31, 2004:U.S. Federal

$


$


$
State








$


$


$
Year ended December 31, 2003:U.S. Federal

$
67

$
(5,717
)
$
(5,650
)State


(44
)




(44
)$
23

$
(5,717
)
$
(5,694
)Year ended December 31, 2002:U.S. Federal

$


$
(6,108
)
$
(6,108
)State


20


(200
)

(180
)$
20

$
(6,308
)
$
(6,288
)


Significant
components of the Company's deferred income tax assets and liabilities as of December 31, 2004 and 2003 are as follows (in thousands):

2004

2003Deferred tax assets:Accounts receivable

$
1,038

$
1,212Inventories


566


469Net operating losses


52,473


55,227AMT credit


832


832Sec 263A costs


629


489Accrued liabilities


8,906


8,411Deferred compensation


2,366


2,595Accrued interest


1,651


1,546Interest expense-high yield debt





1,013Other assets


520


40868,981


72,202Valuation allowance


(19,099
)

(13,456
)49,882


58,746Deferred tax liabilities:Property and equipment


(47,901
)

(56,950
)Investments


(1,520
)

(1,520
)Goodwill


(461
)

(276
)(49,882
)

(58,746
)Net deferred tax assets

$


$



F-23

---



The
difference between income taxes computed using statutory federal income tax rates and the effective corporate rates are as follows for the years ended
December 31, 2004, 2003 and 2002 (in thousands):

2004

2003

2002Computed tax at statutory rates

$
(4,670
)
$
(17,593
)
$
(4,934
)Permanent item


(629
)

411


312State income taxnet of federal tax effect


(594
)

(1,446
)

(119
)Increase in valuation allowance


5,643


13,456


Other


250


(522
)

(1,547
)$


$
(5,694
)
$
(6,288
)


At
December 31, 2004, the Company had available net operating loss carryforwards of approximately $147.2 million, which expire in varying amounts from 2019 through 2023.
The Company also had federal alternative minimum tax credit carryforwards at December 31, 2004 of approximately $.8 million which do not expire. The utilization of all or some of these
loss carryforwards will be limited pursuant to Internal Revenue Code Section 382 as a result of ownership changes.

Management
has concluded that it is more likely than not that the Company will not have sufficient taxable income within the carryback and carryforward periods permitted by the current
law to allow for the utilization of certain carryforwards and other tax attributes. Therefore, a valuation allowance of $19.1 million has been established to reduce the deferred tax assets as
of December 31, 2004.

(14)    Commitments and Contingencies

Operating Leases

The Company leases certain property and rental equipment under non-cancelable operating lease agreements expiring at various dates through 2018. Rent
expense on property and rental equipment under non-cancelable operating lease agreements for the years ended December 31, 2004, 2003 and 2002 amounted to approximately $23,324,
$24,343 and $21,023, respectively.

Future
minimum operating lease payments, in the aggregate, existing at December 31, 2004 for each of the next five years ending December 31 are as follows (in thousands):

2005


21,4922006


16,3592007


8,2202008


2,9762009


1,753Thereafter


8,211$
59,011


F-24

---



Legal Matters

In July 2000, one of our competitors, Sunbelt Rentals, Inc., brought claims against us in the General Court of Justice, Superior Court Division,
State of North Carolina, County of Mecklenburg alleging, among other things, that in connection with our hiring of former employees of the plaintiff there occurred a breach of fiduciary duty,
misappropriation of trade secrets, unfair trade practices and interference with prospective advantages. In May 2003, the Court ruled in favor of the plaintiff in the amount of
$17.4 million. Consequently, we recorded a $17.4 million loss in 2003. We subsequently appealed the judgment. In conjunction with the appeal and in accordance with the Court's ruling, we
issued an irrevocable standby letter of credit for $19.8 million, representing the amount of the judgment plus $2.4 million in anticipated statutory interest (8%) for the
twenty-four months while the judgment is being appealed. Going forward, we intend to expense any statutory interest as interest expense in the statement of operations. As of
December 31, 2004, we paid a 300 basis point fee on the amount available for issuance. Currently, we pay a 225 basis point fee on the amount available for issuance. Oral arguments took place on
March 3, 2005, and the appeal was then submitted for the appellate court's decision. While we are appealing this judgment, we believe that even if there is a reduction in the amount of damages
awarded to the plaintiff on appeal, the judgment could have a material adverse effect on our business or financial condition.

The
Company is also involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the
ultimate disposition of these various matters will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

Employment Contracts

The Company has entered into employment contracts with various officers and members, which provide for annual payments to the officers and members, subject to
their continued employment with the Company. The employment contracts mature on December 31, 2006 and require aggregate annual payments of approximately $500 with bonuses at the discretion of
the Board of Directors.

Letters of Credit

The Company had outstanding letters of credit totaling $27,067 and $24,338 as of December 31, 2004 and 2003, respectively.

(15)    Employee Benefit Plan

The Company offers its employees participation in a qualified 401(k)/profit-sharing plan which requires the Company to match employee contributions up to
predetermined limits for qualified employees as defined by the plan. For the years ended December 31, 2004, 2003 and 2002, the Company contributed $739, $657 and $609, respectively, to this
plan.

(16)    Deferred Compensation Plans

In connection with the acquisition of ICM, the Company assumed nonqualified employee deferred compensation plans under which certain employees had previously
elected to defer a portion of their

F-25

---



annual
compensation. Participants in the plans can no longer defer compensation. Compensation previously deferred under the plans is payable upon the termination, disability or death of the
participants. One of the plans accumulates interest each year at a bank's prime rate in effect as of the beginning of January. This rate remains constant throughout the year. The effective rate for
the 2004 plan year was 4.0 percent. The aggregate deferred compensation payable (including accrued interest of $1,559) at December 31, 2004 was $2,598. The other plan accumulates
interest each year at 8.50%. The aggregate deferred compensation payable (including accrued interest of $265) at December 31, 2004 was $451.

The
Company also assumed, in connection with the acquisition of ICM, a liability for subordinated deferred compensation for certain officers and members of the Company. Compensation
deferred is payable in December 2013 and is subordinate to all other debt. Interest is accrued quarterly at a rate of 13 percent per annum. The aggregate deferred compensation payable
(including accrued interest of $2,521) at December 31, 2004 was $7,521.

(17)    Related Party Transactions

John M. Engquist, our Chief Executive Officer and President, has a 16.6% ownership interest in a joint venture, from which we lease our Baton Rouge, Louisiana and
Kenner, Louisiana facilities. In 2004, 2003 and 2002, we paid such entity a total of approximately $329, $297, and $397, respectively, in lease payments.

Mr
Engquist has a 50% ownership interest in T&J Partnership and J&T Company, from which we lease our Shreveport, Louisiana and Lake Charles, Louisiana facilities. In 2004, 2003 and 2002,
we paid such entities a total of approximately $207, $186 and $171, respectively, in lease payments. In January 2005, J&T Company sold the Lake Charles, Louisiana parcel to an unaffiliated
third party.

Mr. Engquist
and his wife, Martha Engquist, each hold a 50% ownership interest in John Engquist LLC, from which we lease our Alexandria, Louisiana facility. In 2004, 2003 and
2002, we paid such entity a total of approximately $53, $48 and $48, respectively, in lease payments.

We
charter an aircraft from Gulf Wide Aviation, in which Mr. Engquist and his mother, Rubye Engquist, each have a 50% ownership interest. We pay an hourly rate to Gulf Wide
Aviation for the use of the aircraft by various members of our management. In addition, a portion of one pilot's salary is paid by us. In 2004, 2003 and 2002, our payments in respect of charter costs
to Gulf Wide Aviation and salary to the pilot totaled approximately $273, $244 and $294, respectively. The Company had a receivable from the charter aircraft company of approximately $63 and $66 as of
December 31, 2004 and 2003, respectively.

Mr. Engquist
has a 25% ownership interest in Perkins-McKenzie Insurance Agency, Inc. ("Perkins-McKenzie"), an insurance brokerage. Perkins-McKenzie brokers a substantial
portion of our liability insurance. As the broker, Perkins-McKenzie receives from our insurance provider as a commission a portion of the premiums we paid to our insurance provider in 2002, 2003 and
2004. In 2004, 2003 and 2002, our payments to Perkins-McKenzie totaled approximately $5,531, $5,694 and $3,096, respectively.

We
purchase products and services from, and sell products and services to, B-C Equipment Sales, Inc., in which Mr. Engquist has a 50% ownership interest. In
2004, 2003 and 2002, our purchases

F-26

---



totaled
approximately $129, $573 and $606, respectively, and our sales totaled approximately $64, $194 and $170, respectively. Amounts owed this equipment company were $9 and $21, and amounts due from
this equipment company were $21 and $11 as of December 31, 2004 and 2003, respectively.

The
Company owed companies related through common ownership $7 at December 31, 2003 and 2002. The Company had no sales transactions with these affiliated companies during 2004,
2003 and 2002.

Don
M. Wheeler, an equity holder, has an ownership interest and controls Silverado Investments, Wheeler Investments and WG LLC, from which we lease our Salt Lake City, Utah, Colorado
Springs,
Colorado, Phoenix, Arizona, Tucson, Arizona and Denver, Colorado facilities. In 2004, 2003 and 2002, our lease payments to such entities totaled approximately $1,358, $1,437 and $1,270, respectively.

Dale
W. Roesener, Vice President, Fleet Management, has a 47.6% ownership interest in Aero SRD LLC, from which we lease our Las Vegas, Nevada facility. In 2004, 2003 and 2002, our lease
payments to such entity totaled approximately $489, $519 and $471, respectively.

In
connection with the recapitalization of H&E in 1999, we entered into a $3.0 million consulting and non-competition agreement with Thomas R. Engquist, the father of
John M. Engquist, our Chief Executive Officer and President. The agreement provided for total payments over a ten-year term, payable in increments of $25,000 per month. Mr. Engquist
was obligated to provide us consulting services and was to comply with the non-competition provision set forth in the Recapitalization Agreement between us and others dated June 19,
1999. The parties specifically acknowledged and agreed that in the event of the death of Mr. Engquist during the term of the agreement, the payments that otherwise would have been payable to
Mr. Engquist under the agreement shall be paid to his heirs (including John M. Engquist). Due to Mr. Engquist's passing away during 2003, he will not be providing any further consulting
services. Therefore, we recorded a $1.3 million during 2003 for the present value of the remaining future payments. The total amount paid under this agreement was $300 for each of the years
ended December 31, 2004, 2003 and 2002. As of December 31, 2004, the balance for this obligation amounted to $1,062.

The
Company had a management agreement with BRS and its affiliates, under which the Company was obligated to pay the lesser of $500 or 1% of earnings before interest, taxes, depreciation
and amortization. The total paid for the year ended December 31, 2002 was $670. The management agreement terminated on June 17, 2002.

In
connection with the acquisition of ICM, the Company entered into a management agreement with BRS and its affiliates payable in the lesser of $2 million annually or 1.75% of
annual earnings before interest, taxes, depreciation and amortization, excluding operating lease expense, plus all reasonable out-of-pocket expenses. The total amount paid to
BRS and its affiliates under the management agreement for the years ended December 31, 2004, 2003 and 2002 was $1,537, $1,549 and $1,085, respectively. The Company had a receivable from BRS and
its affiliates of $229 as of December 31, 2003.

The
Company has consulting and noncompetition agreements with two former stockholders of Coastal Equipment, Inc., acquired in 1999, for $1,000, payable in four annual installments
of $250 beginning March 1, 2000 and ending March 31, 2003.

F-27

---



During
the years ended December 31, 2004, 2003 and 2002, the Company expensed a combined total of $975, $766, and $360, respectively for interest earned under a deferred
compensation plan for Gary W. Bagley, our Chairman, and Kenneth R. Sharp, Jr., an executive officer.

Mr. Engquist's
son is an employee and received compensation of approximately $83 and $64 in 2004 and 2003, respectively.

Bradley
W. Barber's brother is an employee and received compensation of approximately $63 in 2004.

(18)    Segment Information

The Company has identified five reportable segments: equipment rentals, new equipment sales, used equipment sales, parts sales and service revenue. These segments
are based upon how management of the Company allocates resources and assesses performance. Non-segmented revenues and non-segmented costs relate to equipment support activities
including transportation, hauling, parts freight and damage-waiver charges and are not allocated to the other reportable segments. There were no sales between segments for any of the periods
presented. Selling, general, and administrative expenses as well as all other income and expense items below gross profit are not generally allocated to reportable segments. The Company does not
compile discrete financial information by its segments other than the information presented below. The following table presents information about the Company's reportable segments (in thousands):

Years Ended December 31,2004

2003
(Restated)

2002
(Restated)Revenues:Equipment rentals

$
160,342

$
153,851

$
136,624New equipment sales


116,907


81,692


72,143Used equipment sales


84,999


70,926


52,487Parts sales


58,014


53,658


47,218Service revenue


33,696


33,349


27,755Total segmented revenues


453,958


393,476


336,227Non-segmented revenues


24,214


20,510


14,778Total revenues

$
478,172

$
413,986

$
351,005


F-28

---



Gross Profit:Equipment rentals

$
60,086

$
48,911

$
52,291New equipment sales


12,796


8,464


6,838Used equipment sales


17,093


12,781


8,711Parts sales


16,514


14,572


13,207Service revenue


20,831


20,306


16,317Total gross profit from revenues


127,320


105,034


97,364Non-segmented gross profit (loss)


(4,032
)

(5,923
)

(4,996
)Total gross profit

$
123,288

$
99,111

$
92,368


Years Ended
December 31,2004

2003
(Restated)Segment identified assets:Equipment sales

$
39,928

$
29,091Equipment rentals


243,630


261,154Parts and service


16,882


14,987Total segment identified assets


300,441


305,232Non-segment identified assets


108,229


104,161Total assets

$
408,669

$
409,393


The
Company operates primarily in the United States and had minimal international sales for any of the periods presented. No one customer accounted for more than 10% of the Company's sales on an
overall or segment basis for any of the periods presented.

F-29

---





(19)    Impact of Recent Natural Disaster

The Company has three facilities located in the area most significantly affected by Hurricane Katrina. None of these facilities were forced to close for any
extended period of time, and all of them are currently open and fully operational. While the financial impact of Hurricane Katrina relating to these three facilities is not expected to be material to
the Company, the Company remains in the process of assessing the potential overall impact of the hurricane on the Company's business.

(20)    Restatements of Previously Issued Consolidated Financial Statements

Our previous accountants, KPMG LLP ("KPMG"), refused to give its consent to the inclusion, in our annual report on Form 10-K for 2004, of its
audit opinion on our financial statements for fiscal years 2002 and 2003, notwithstanding that KPMG consented to the inclusion of their audit opinions in our prior Forms 10-K for those
years. KPMG informed us that it refused to furnish its consent due to a pending lawsuit against KPMG brought by John M. Engquist, our President and Chief Executive Officer. The lawsuit relates to a
personal matter between KPMG and Mr. Engquist, and it does not involve in any manner us or our business or financial results or condition. KPMG's refusal to issue its consent is not based on
any disagreement on accounting principles or practices, financial statement disclosure, or auditing scope and procedure involving the Company.

As
a result, we asked BDO Seidman LLP to re-audit our 2002 and 2003 annual financial statements and issue new audit opinions thereon. During the re-audits of the
Company's consolidated financial statements as of and for the years ended December 31, 2003 and 2002, we discovered errors related to the treatment of deferred taxes in connection with the
Company's combination with ICM Equipment Company on June 17, 2002. Based on the Company's internal review, and after consultation with the Audit Committee of the Company's Board of Directors on
August 24, 2005, the Company's Board of Directors concluded to restate its previously issued consolidated financial statements as of and for the years ended December 31, 2003 and 2002 to
reflect the proper accounting treatment of deferred income taxes.

In
accounting for the business combination on June 17, 2002, the Company incorrectly recognized the deferred tax components related to the tax basis of carryover goodwill acquired
in the business combination. Financial Accounting Standard Board No. 109, Accounting for Income Taxes, provides that a deferred tax asset should not be recognized as a result of carryover
goodwill in a business combination. As a result, the Company reduced the deferred tax asset of approximately $9.5 million, net of a $17.3 valuation allowance, to $1.5 million.

The
primary effect of the correction discussed above resulted in a change to the original purchase accounting for the business combination. The Company restated its rental equipment and
property and equipment to their fair values at the time of the combination and recorded goodwill of $5.4 million. In addition, depreciation expense on rental equipment and property and
equipment was restated. The effect of these changes also resulted in the Company's adjustment to its valuation allowance and income tax benefit.

The
Company also made certain reclassifications to prior years' consolidated financial statements unrelated to the restatements discussed above. Primarily, these reclassifications were
made to reflect transportation costs associated with field service trucks as other cost of revenues rather than the historical presentation as selling, general and administrative expenses. Following
is a summary of the effects of the restatement adjustments and reclassifications on the Company's consolidated statements

F-30

---



of
operations for the years ended December 31, 2003 and 2002 and the Company's consolidated balance sheet as of December 31, 2003:

|                              |                                              | Consolidated Statements of Operations |        
|----------------------------- | -------------------------------------------- | ------------------------------------- | -------
|
|Year Ended December 31, 2003: |                                              |                                       |        
|                              | Other revenues                               |                                       | 20,206 
|                              | Total revenues                               |                                       | 413,682
|                              | Rental depreciation                          |                                       | 54,931 
|                              | Rental expense                               |                                       | 49,345 
|                              | New equipment cost of revenues               |                                       | 74,166 
|                              | Used equipment cost of revenues              |                                       | 57,207 
|                              | Other cost of revenues                       |                                       | 19,638 
|                              | Total cost of revenues                       |                                       | 307,416
|                              | Selling, general and administration expenses |                                       | 99,872 
|                              | Income from operations                       |                                       | (12,235
|                              | Loss before income taxes                     |                                       | (51,408
|                              | Income tax provision                         |                                       | 24     
|                              | Net loss                                     |                                       | (51,432
|Year Ended December 31, 2002: |                                              |                                       |        
|                              | Other revenues                               |                                       | 15,473 
|                              | Total revenues                               |                                       | 351,700
|                              | Rental depreciation                          |                                       | 46,471 
|                              | Rental expense                               |                                       | 37,408 
|                              | New equipment cost of revenues               |                                       | 66,055 
|                              | Used equipment cost of revenues              |                                       | 43,026 
|                              | Other cost of revenues                       |                                       | 16,813 
|                              | Total cost of revenues                       |                                       | 255,222
|                              | Selling, general and administration expenses |                                       | 82,294 
|                              | Income from operations                       |                                       | 14,243 
|                              | Loss before income taxes                     |                                       | (14,340
|                              | Income tax benefit                           |                                       | (1,271 
|                              | Net loss                                     |                                       | (13,069

|                   |                                                         | Consolidated Balance Sheet |        
|------------------ | ------------------------------------------------------- | -------------------------- | -------
|
|December 31, 2003: |                                                         |                            |        
|                   | Rental equipment, net of accumulated depreciation       |                            | 259,282
|                   | Property and equipment, net of accumulated depreciation |                            | 15,128 
|                   | Goodwill, net                                           |                            | 3,204  
|                   | Total assets                                            |                            | 401,954
|                   | Members' deficit                                        |                            | (27,002
|                   | Total liabilities and members' deficit                  |                            | 401,954

F-31

---



(21)    Condensed Consolidating Financial Information of Guarantor Subsidiaries

All of the indebtedness of H&E Equipment Services is guaranteed by GNE Investments, Inc. and its wholly-owned subsidiary Great Northern
Equipment, Inc. The guarantor subsidiaries are all wholly-owned and the guarantees, made on a joint and several basis, are full and unconditional (subject to subordination provisions and
subject to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under
fraudulent conveyance laws). There are no restrictions on H&E Equipment Services' ability to obtain funds from the guarantor subsidiaries by dividend or loan.

The
condensed consolidating financial statements of H&E Equipment Services and its subsidiaries are included below. The condensed financial statements for H&E Finance Corp., the
subsidiary co-issuer, is not presented because H&E Finance Corp. has no assets or operations.

CONDENSED CONSOLIDATING BALANCE SHEET  (in thousands)

|                                           |                                                | As of December 31, 2004                         |  
|------------------------------------------ | ---------------------------------------------- | ----------------------------------------------- | -
|
|Assets:                                    |                                                |                                                 |  
|                                           | Cash                                           |                                                 | $
|                                           | Receivables, net                               |                                                 |  
|                                           | Inventories, net                               |                                                 |  
|                                           | Prepaid expenses and other assets              |                                                 |  
|                                           | Rental equipment, net                          |                                                 |  
|                                           | Property and equipment, net                    |                                                 |  
|                                           | Deferred financing costs, net                  |                                                 |  
|                                           | Investment in guarantor subsidiaries           |                                                 |  
|                                           | Goodwill, net                                  |                                                 |  
|                                           |                                                |                                                 |  
|                                           |                                                | Total assets                                    |  
|                                           |                                                |                                                 |  
|Liabilities and Member's Equity (Deficit): |                                                |                                                 |  
|                                           | Amount due on senior secured credit facility   |                                                 |  
|                                           | Accounts payable                               |                                                 |  
|                                           | Accrued expenses payable and other liabilities |                                                 |  
|                                           | Intercompany balance                           |                                                 |  
|                                           | Accrued loss from litigation                   |                                                 |  
|                                           | Related party obligation                       |                                                 |  
|                                           | Notes payable                                  |                                                 |  
|                                           | Senior secured notes, net of discount          |                                                 |  
|                                           | Senior subordinated notes, net of discount     |                                                 |  
|                                           | Capital lease obligations                      |                                                 |  
|                                           | Deferred compensation payable                  |                                                 |  
|                                           |                                                |                                                 |  
|                                           |                                                | Total liabilities                               |  
|                                           |                                                |                                                 |  
|                                           | Members' equity (deficit)                      |                                                 |  
|                                           |                                                |                                                 |  
|                                           |                                                | Total liabilities and members' equity (deficit) |  
|                                           |                                                |                                                 |  

F-32

---



|                                           |                                                | As of December 31, 2003 (Restated)              |  
|------------------------------------------ | ---------------------------------------------- | ----------------------------------------------- | -
|
|Assets:                                    |                                                |                                                 |  
|                                           | Cash                                           |                                                 | $
|                                           | Receivables, net                               |                                                 |  
|                                           | Inventories, net                               |                                                 |  
|                                           | Prepaid expenses and other assets              |                                                 |  
|                                           | Rental equipment, net                          |                                                 |  
|                                           | Property and equipment, net                    |                                                 |  
|                                           | Deferred financing costs, net                  |                                                 |  
|                                           | Investment in guarantor subsidiaries           |                                                 |  
|                                           | Goodwill, net                                  |                                                 |  
|                                           |                                                |                                                 |  
|                                           |                                                | Total assets                                    |  
|                                           |                                                |                                                 |  
|Liabilities and Member's Equity (Deficit): |                                                |                                                 |  
|                                           | Amount due on senior secured credit facility   |                                                 | $
|                                           | Accounts payable                               |                                                 |  
|                                           | Accrued expenses payable and other liabilities |                                                 |  
|                                           | Intercompany balance                           |                                                 |  
|                                           | Accrued loss from litigation                   |                                                 |  
|                                           | Related party obligation                       |                                                 |  
|                                           | Notes payable                                  |                                                 |  
|                                           | Senior secured notes, net of discount          |                                                 |  
|                                           | Senior subordinated notes, net of discount     |                                                 |  
|                                           | Capital lease obligations                      |                                                 |  
|                                           | Deferred compensation payable                  |                                                 |  
|                                           |                                                |                                                 |  
|                                           |                                                | Total liabilities                               |  
|                                           |                                                |                                                 |  
|                                           | Members' equity (deficit)                      |                                                 |  
|                                           |                                                |                                                 |  
|                                           |                                                | Total liabilities and members' equity (deficit) |  
|                                           |                                                |                                                 |  

F-33

---





CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS  (in thousands)

|                                             |                          | Year Ended December 31, 2004  |       
|-------------------------------------------- | ------------------------ | ----------------------------- | ------
|
|Revenues:                                    |                          |                               |       
|                                             | Equipment rentals        |                               | $     
|                                             | New equipment sales      |                               |       
|                                             | Used equipment sales     |                               |       
|                                             | Parts sales              |                               |       
|                                             | Service revenue          |                               |       
|                                             | Other                    |                               |       
|                                             |                          |                               |       
|                                             |                          | Total revenues                |       
|                                             |                          |                               |       
|Cost of Revenues:                            |                          |                               |       
|                                             | Rental depreciation      |                               |       
|                                             | Rental expense           |                               |       
|                                             | New equipment sales      |                               |       
|                                             | Used equipment sales     |                               |       
|                                             | Parts sales              |                               |       
|                                             | Service revenue          |                               |       
|                                             | Other                    |                               |       
|                                             |                          |                               |       
|                                             |                          | Total cost of revenues        |       
|                                             |                          |                               |       
|Gross Profit:                                |                          |                               |       
|                                             | Equipment rentals        |                               |       
|                                             | New equipment sales      |                               |       
|                                             | Used equipment sales     |                               |       
|                                             | Parts sales              |                               |       
|                                             | Service revenue          |                               |       
|                                             | Other                    |                               |       
|                                             |                          |                               |       
|                                             |                          | Gross profit                  |       
|                                             |                          |                               |       
|Selling, general and administrative expenses |                          |                               | 93,499
|Equity in loss of guarantor subsidiaries     |                          |                               | 774   
|Gain on sale of property and equipment       |                          |                               | 183   
|                                             |                          |                               |       
|                                             |                          | Income (loss) from operations |       
|                                             |                          |                               |       
|Other income (expense):                      |                          |                               |       
|                                             | Interest expense         |                               |       
|                                             | Other, net               |                               |       
|                                             |                          |                               |       
|                                             |                          | Total other expense, net      |       
|                                             |                          |                               |       
|                                             | Loss before income taxes |                               |       
|Income tax provision                         |                          |                               |      
|                                             |                          |                               |       
|                                             | Net loss                 |                               | $     
|                                             |                          |                               |       

F-34

---



|                                             |                          | Year Ended December 31, 2003 (Restated) |       
|-------------------------------------------- | ------------------------ | --------------------------------------- | ------
|
|Revenues:                                    |                          |                                         |       
|                                             | Equipment rentals        |                                         | $     
|                                             | New equipment sales      |                                         |       
|                                             | Used equipment sales     |                                         |       
|                                             | Parts sales              |                                         |       
|                                             | Service revenue          |                                         |       
|                                             | Other                    |                                         |       
|                                             |                          |                                         |       
|                                             |                          | Total revenues                          |       
|                                             |                          |                                         |       
|Cost of Revenues:                            |                          |                                         |       
|                                             | Rental depreciation      |                                         |       
|                                             | Rental expense           |                                         |       
|                                             | New equipment sales      |                                         |       
|                                             | Used equipment sales     |                                         |       
|                                             | Parts sales              |                                         |       
|                                             | Service revenue          |                                         |       
|                                             | Other                    |                                         |       
|                                             |                          |                                         |       
|                                             |                          | Total cost of revenues                  |       
|                                             |                          |                                         |       
|Gross Profit:                                |                          |                                         |       
|                                             | Equipment rentals        |                                         |       
|                                             | New equipment sales      |                                         |       
|                                             | Used equipment sales     |                                         |       
|                                             | Parts sales              |                                         |       
|                                             | Service revenue          |                                         |       
|                                             | Other                    |                                         |       
|                                             |                          |                                         |       
|                                             |                          | Gross profit                            |       
|                                             |                          |                                         |       
|Selling, general and administrative expenses |                          |                                         | 89,379
|Loss from litigation                         |                          |                                         | 17,434
|Related party expense                        |                          |                                         | 1,275 
|Equity in loss of guarantor subsidiaries     |                          |                                         | (377  
|Gain on sale of property and equipment       |                          |                                         | 42    
|                                             |                          |                                         |       
|                                             |                          | Income (loss) from operations           |       
|                                             |                          |                                         |       
|Other income (expense):                      |                          |                                         |       
|                                             | Interest expense         |                                         |       
|                                             | Other, net               |                                         |       
|                                             |                          |                                         |       
|                                             |                          | Total other expense, net                |       
|                                             |                          |                                         |       
|                                             | Loss before income taxes |                                         |       
|Income tax provision                         |                          |                                         | (5,694
|                                             |                          |                                         |       
|                                             | Net loss                 |                                         | $     
|                                             |                          |                                         |       

F-35

---





CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS  (in thousands)

|                                                                                |                                                             | Year Ended December 31, 2004                        |      
|------------------------------------------------------------------------------- | ----------------------------------------------------------- | --------------------------------------------------- | -----
|
|Cash flows from operating activities:                                           |                                                             |                                                     |      
|                                                                                | Net loss                                                    |                                                     | $    
|Adjustments to reconcile net loss to net cash provided by operating activities: |                                                             |                                                     |      
|                                                                                | Depreciation on property and equipment                      |                                                     |      
|                                                                                | Depreciation on rental equipment                            |                                                     |      
|                                                                                | Amortization of other intangible assets                     |                                                     |      
|                                                                                | Amortization of loan discounts and deferred financing costs |                                                     |      
|                                                                                | Provision for losses on accounts receivable                 |                                                     |      
|                                                                                | Provision for obsolescence                                  |                                                     |      
|                                                                                | Gain on sale of property and equipment                      |                                                     |      
|                                                                                | Gain on sale of rental equipment                            |                                                     |      
|                                                                                | Equity in earnings of guarantor subsidiaries                |                                                     |      
|Changes in operating assets and liabilities:                                    |                                                             |                                                     |      
|                                                                                | Receivables, net                                            |                                                     |      
|                                                                                | Inventories, net                                            |                                                     |      
|                                                                                | Prepaid expenses and other assets                           |                                                     |      
|                                                                                | Accounts payable                                            |                                                     |      
|                                                                                | Accrued expenses payable and other liabilities              |                                                     |      
|                                                                                | Intercompany balance                                        |                                                     |      
|                                                                                | Deferred compensation payable                               |                                                     |      
|                                                                                |                                                             |                                                     |      
|                                                                                |                                                             | Net cash provided by operating activities           |      
|                                                                                |                                                             |                                                     |      
|Cash flows from investing activities:                                           |                                                             |                                                     |      
|                                                                                | Purchases of property and equipment                         |                                                     |      
|                                                                                | Purchases of rental equipment                               |                                                     |      
|                                                                                | Proceeds from sale of property and equipment                |                                                     |      
|                                                                                | Proceeds from sale of rental equipment                      |                                                     |      
|                                                                                |                                                             |                                                     |      
|                                                                                |                                                             | Net cash used in investing activities               |      
|                                                                                |                                                             |                                                     |      
|Cash flows from financing activities:                                           |                                                             |                                                     |      
|                                                                                | Payment of deferred financing costs                         |                                                     |      
|                                                                                | Borrowings on senior secured credit facility                |                                                     |      
|                                                                                | Payments on senior secured credit facility                  |                                                     |      
|                                                                                | Payment of related party obligation                         |                                                     |      
|                                                                                | Principal payments of notes payable                         |                                                     |      
|                                                                                | Payments on capital lease obligations                       |                                                     |      
|                                                                                |                                                             |                                                     |      
|                                                                                |                                                             | Net cash provided by (used in) financing activities |      
|                                                                                |                                                             |                                                     |      
|Net (decrease) increase in cash                                                 |                                                             |                                                     | (534 
|Cash, beginning of year                                                         |                                                             |                                                     | 3,868
|                                                                                |                                                             |                                                     |      
|Cash, end of year                                                               |                                                             | $                                                   | 3,334
|                                                                                |                                                             |                                                     |      

F-36

---



|                                                                                |                                                             | Year Ended December 31, 2003 (Restated)             |      
|------------------------------------------------------------------------------- | ----------------------------------------------------------- | --------------------------------------------------- | -----
|
|Cash flows from operating activities:                                           |                                                             |                                                     |      
|                                                                                | Net loss                                                    |                                                     | $    
|Adjustments to reconcile net loss to net cash provided by operating activities: |                                                             |                                                     |      
|                                                                                | Depreciation on property and equipment                      |                                                     |      
|                                                                                | Depreciation on rental equipment                            |                                                     |      
|                                                                                | Amortization of loan discounts and deferred financing costs |                                                     |      
|                                                                                | Provision for losses on accounts receivable                 |                                                     |      
|                                                                                | Provision for obsolescence                                  |                                                     |      
|                                                                                | Provision for deferred taxes                                |                                                     |      
|                                                                                | Gain on sale of property and equipment                      |                                                     |      
|                                                                                | Gain on sale of rental equipment                            |                                                     |      
|                                                                                | Equity in loss of guarantor subsidiaries                    |                                                     |      
|Changes in operating assets and liabilities:                                    |                                                             |                                                     |      
|                                                                                | Receivables, net                                            |                                                     |      
|                                                                                | Inventories, net                                            |                                                     |      
|                                                                                | Prepaid expenses and other assets                           |                                                     |      
|                                                                                | Accounts payable                                            |                                                     |      
|                                                                                | Accrued expenses payable and other liabilities              |                                                     |      
|                                                                                | Intercompany balance                                        |                                                     |      
|                                                                                | Accrued loss from litigation                                |                                                     |      
|                                                                                | Deferred compensation payable                               |                                                     |      
|                                                                                |                                                             |                                                     |      
|                                                                                |                                                             | Net cash provided by operating activities           |      
|                                                                                |                                                             |                                                     |      
|Cash flows from investing activities:                                           |                                                             |                                                     |      
|                                                                                | Purchases of property and equipment                         |                                                     |      
|                                                                                | Purchases of rental equipment                               |                                                     |      
|                                                                                | Proceeds from sale of property and equipment                |                                                     |      
|                                                                                | Proceeds from sale of rental equipment                      |                                                     |      
|                                                                                |                                                             |                                                     |      
|                                                                                |                                                             | Net cash provided by (used in) investing activities |      
|                                                                                |                                                             |                                                     |      
|Cash flows from financing activities:                                           |                                                             |                                                     |      
|                                                                                | Payment of deferred financing costs                         |                                                     |      
|                                                                                | Borrowings on senior secured credit facility                |                                                     |      
|                                                                                | Payments on senior secured credit facility                  |                                                     |      
|                                                                                | Payment of related party obligation                         |                                                     |      
|                                                                                | Principal payments of notes payable                         |                                                     |      
|                                                                                | Payments on capital lease obligations                       |                                                     |      
|                                                                                |                                                             |                                                     |      
|                                                                                |                                                             | Net cash used in financing activities               |      
|                                                                                |                                                             |                                                     |      
|Net increase (decrease) in cash                                                 |                                                             |                                                     | 537  
|Cash, beginning of year                                                         |                                                             |                                                     | 3,331
|                                                                                |                                                             |                                                     |      
|Cash, end of year                                                               |                                                             | $                                                   | 3,868
|                                                                                |                                                             |                                                     |      

F-37

---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) or the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on September 28, 2005.

| |  | H&E EQUIPMENT SERVICES L.L.C.
| |  | -----------------------------
| |  | By:                          

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

|    |  | Signature                                 |  | Capacity                                                                      |  | Date              
|--- |  | ----------------------------------------- |  | ----------------------------------------------------------------------------- |  | ------------------
|    |  |                                           |  |                                                                               |  |                   
|By: |  | /s/JOHN M. ENGQUISTJohn M. Engquist       |  | President, Chief Executive Officer and Director
(Principal Executive Officer) |  | September 28, 2005
|By: |  | /s/LESLIE S. MAGEELeslie S. Magee         |  | Chief Financial Officer
(Principal Financial and Accounting Officer)          |  | September 28, 2005
|By: |  | /s/GARY W. BAGLEYGary W. Bagley           |  | Chairman and Director                                                         |  | September 28, 2005
|By: |  | /s/BRUCE C. BRUCKMANNBruce C. Bruckmann   |  | Director                                                                      |  | September 28, 2005
|By: |  | /s/JOHN T. SAWYERJohn T. Sawyer           |  | Director                                                                      |  | September 28, 2005
|By: |  | /s/KEITH E. ALESSIKeith E. Alessi         |  | Director                                                                      |  | September 28, 2005
|By: |  | /s/LAWRENCE C. KARLSONLawrence C. Karlson |  | Director                                                                      |  | September 28, 2005

---



SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS  FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002  (Dollars in thousands)

|Description                  |                                            | Balance at
Beginning
of Year |       | Additions
Charged to
Costs and
Expenses |   | Recoveries
(Deductions) |       | Impact of
Acquisition |        | Balance at
End
of Year
|---------------------------- | ------------------------------------------ | ---------------------------- | ----- | --------------------------------------- | - | ----------------------- | ----- | --------------------- | ------ | ----------------------
|Year Ended December 31, 2004 |                                            |                              |       |                                         |   |                         |       |                       |        |                       
|                             | Allowance for doubtful accounts receivable |                              | $     | 3,188                                   |   | $                       | 1,395 |                       | $      | (1,851                
|                             | Allowance for inventory obsolescence       |                              |       | 1,235                                   |   |                         | 240   |                       |        | 15                    
|                             |                                            |                              |       |                                         |   |                         |       |                       |        |                       
|                             |                                            | $                            | 4,423 |                                         | $ | 1,635                   |       | $                     | (1,836 | )                     
|                             |                                            |                              |       |                                         |   |                         |       |                       |        |                       
|Year Ended December 31, 2003 |                                            |                              |       |                                         |   |                         |       |                       |        |                       
|                             | Allowance for doubtful accounts receivable |                              | $     | 3,609                                   |   | $                       | 1,269 |                       | $      | (1,690                
|                             | Allowance for inventory obsolescence       |                              |       | 1,139                                   |   |                         | 612   |                       |        | (516                  
|                             |                                            |                              |       |                                         |   |                         |       |                       |        |                       
|                             |                                            | $                            | 4,748 |                                         | $ | 1,881                   |       | $                     | (2,206 | )                     
|                             |                                            |                              |       |                                         |   |                         |       |                       |        |                       
|Year Ended December 31, 2002 |                                            |                              |       |                                         |   |                         |       |                       |        |                       
|                             | Allowance for doubtful accounts receivable |                              | $     | 708                                     |   | $                       | 1,517 |                       | $      | (1,524                
|                             | Allowance for inventory obsolescence       |                              |       | 533                                     |   |                         | 121   |                       |        | (6                    
|                             |                                            |                              |       |                                         |   |                         |       |                       |        |                       
|                             |                                            | $                            | 1,241 |                                         | $ | 1,638                   |       | $                     | (1,530 | )                     
|                             |                                            |                              |       |                                         |   |                         |       |                       |        |                       

See
accompanying independent registered public accounting firm.

---



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