##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM
10-K/A
 Amendment
No. 1
 þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2009
 -OR-
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 333-144625-01 333-144625
 RSC Holdings III, LLC
  RSC Equipment Rental, Inc.
  Delaware 
Arizona
(State or other jurisdiction of incorporation or 
organization)
    
    41-2218971
86-0933835
(I.R.S. Employer Identification No.)6929 E. Greenway Pkwy 
Scottsdale, Arizona
(Address of principal executive offices)
    
    85254
(zip code)
 Registrants telephone number, including area code:  (480) 905-3300
 Securities registered pursuant to Section 12(b) of the Act:  Securities registered pursuant to Section 12(g) of the Act:
 The Registrants meet the conditions set forth in General Instructions I (1)(a) and (b) of Form 10-K
and are therefore filing this Form with the reduced disclosure format as permitted.
 o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non accelerated filer þ
(Do not check if smaller reporting company)
    
    Smaller reporting company o
 o þ
  Documents Incorporated by Reference: None.




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Explanatory Note




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##### 



TABLE OF CONTENTS
 Cautionary Statement for Forward-Looking InformationiiPART I
    
    
    1Item 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    23Item 2. Properties
    
    
    23Item 3. Legal Proceedings
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23PART II
    
    
    24Item 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    24Item 6. Selected Financial Data
    
    
    25Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    49Item 8. Financial Statements and Supplementary Data
    
    
    50Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    50Item 9A. Controls and Procedures
    
    
    50Item 9B. Other Information
    
    
    51PART III
    
    
    51Item 10. Directors, Executive Officers and Corporate Governance
    
    
    51Item 11. Executive Compensation
    
    
    51Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    51Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    51Item 14. Principal Accountant Fees and Services
    
    
    52PART IV
    
    
    53Item 15. Exhibits and Financial Statement Schedules
    
    
    53EX-31.1EX-31.2EX-32.1
  i




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Introductory Note
  
 Cautionary Statement for Forward-Looking Information
    
    
    the effect of an economic downturn or other factors resulting in a decline in
non-residential construction, non-construction maintenance, capital improvements and
capital investment;
    
    intense rental rate price pressure from competitors, some of whom are heavily indebted
and may significantly reduce their prices to generate cash to meet debt covenants; from
contractor customers some of whom are bidding work at cost or below to secure work for
their remaining best employees; from industrial customers who generally are experiencing
profitability shortfalls in the current economic climate and in return are asking all of
their most significant suppliers for price reductions and cost reduction ideas;
    
    the rental industrys ability to continue to sell used equipment through both the
retail and auction markets at prices sufficient to enable us to maintain orderly
liquidation values that support our borrowing base to meet our minimum availability and
to avoid testing springing covenants of leverage and fixed charge coverage contained in
our Senior ABL Revolving Facility credit agreement;
    
    our ability to comply with our debt covenants;
    
    risks related to the credit markets willingness to continue to lend to borrowers
rated B- and C;
    
    our ability to generate cash and/or incur additional indebtedness to finance equipment
purchases;
    
    exposure to claims for personal injury, death and property damage resulting from the
use of equipment rented or sold by us;
 ii




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
    
    the effect of changes in laws and regulations, including those relating to employment
legislation, the environment and customer privacy, among others;
    
    fluctuations in fuel or supply costs;
    
    heavy reliance on centralized information technology systems;
    
    claims that the software products and information systems on which we rely infringe on
the intellectual property rights of others; and
    
    the other factors described in Item 1A of this Annual Report on Form 10-K under the
caption Risk Factors.
  iii




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PART I
 
 Item 1.
    
    Business
 Our Company
 Overview
   Organizational Overview
   1 2
  1




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Business Strategy
 Drive profitable volume growth.
 
    
    continuing to drive the profitability of existing locations and pursuing same store
growth;
    
    investing in and maintaining our high quality fleet to meet local customer demands;
    
    leveraging our reputation for superior customer service to increase our customer
base;
    
    increasing our market penetration by opening new locations in targeted markets to
leverage existing infrastructure and customer relationships;
    
    increasing our presence in complementary rental and service offerings to increase
same store revenues, margins and return on investment;
    
    aligning incentives for local management teams with our strategy; and
    
    pursuing selected acquisitions in attractive markets, subject to economic
conditions.
 Prioritize profit margins, free cash flow generation and return on capital.
 
    
    focus on the higher margin rental business;
    
    actively manage the quality, reliability and availability of our fleet and offer
superior customer service to support our premium pricing strategy;
    
    evaluate each new investment in fleet based on local demand and expected returns;
    
    deploy and allocate fleet among our operating regions based on pre-specified return
thresholds;
    
    use our size and market presence to achieve economies of scale in capital
investment;
    
    actively sell under-utilized fleet to balance supply with demand, thereby
right-sizing the fleet;
    
    close locations with unfavorable long-term prospects; and
 2




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
    
    focus on industrial or non-construction growth by actively investing in people,
branch locations and service offerings.
 Further enhance our industry leading customer service.
 Business
    Operations
    Customers
   3




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
    
    run and maintain, which relates to day to day maintenance;
    
    turnaround, which relates to major planned general overhaul of operations; and
    
    capital projects, which relate to smaller expansion or modification work.
 ®
  Customer Service.
 Industry Overview
    4




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
    
    avoiding the large capital investment required for equipment purchases;
    
    accessing a broad selection of equipment and selecting the equipment best suited for
each particular job;
    
    reducing storage, maintenance and transportation costs; and
    
    accessing the latest technology without investing in new equipment.
 Fleet
  Equipment Rental Fleet Breakdown
 As of December 31, 2009
    
    % of TotalAerial work platform (AWP) booms
    
    
    32.5Fork lifts
    
    
    23.4Earth moving
    
    
    13.5AWP scissors
    
    
    11.5Trucks
    
    
    5.3Air compressors
    
    
    3.2Generators/Light towers
    
    
    3.1Compaction
    
    
    2.0Other
    
    
    5.5
 Fleet Management Process.
   5




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Fleet Procurement.
  Fleet Condition. Fleet Management Process
 Sales and Marketing.
 
    
    a branch-based sales force operating out of our network of locations;
    
    local and national advertising efforts;
    
    our self-service, web-based solution: RSC Online®; and
    
    specialized Business Development Managers focusing on industrial or non-construction
customers.
 Sales Force.
 6




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RSC Online ® . ®
 Information Systems
   
    
    fleet utilization and return on investment by individual asset, equipment category,
location, district or region;
    
    pricing and discounting trends by location, district, region, salesperson, equipment
category or customer;
    
    revenue trends by location, district, region, salesperson, equipment category or
customer; and
    
    financial results and performance of locations, districts, regions and the overall
company.
  Intellectual Property
  Competition
   7




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Business Environment and Outlook
     
    
    closing under-performing locations and redeploying rental fleet to more
profitable locations with higher demand;
    
    expanding and diversifying our presence in industrial or non-construction
markets, which historically tend to place a heightened emphasis on maintenance
during times of economic slowdowns;
    
    minimizing capital expenditures;
    
    reducing headcount;
    
    divesting excess rental fleet, which generates cash and improves fleet
utilization;
    
    slowing sales of used equipment, allowing our average fleet age to increase,
which enables us to retain fleet we will need when the economic situation
improves;
    
    utilizing excess cash flow resulting from our planned reduction in capital
expenditures and the proceeds from the sale of used rental equipment to repay
outstanding amounts on our Senior ABL Revolving Facility and our Second Lien Term
Facility;
    
    evaluating additional opportunities to restructure our debt to extend existing
maturities and replace shorter term obligations with longer term obligations; and
    
    implementing cost reduction measures throughout our business.
 Employees
  8




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Regulatory Matters
 Environmental, Health and Safety Matters
     Transportation, Delivery and Sales Fleet
  Management
  Name
    
    Age
    
    PositionErik Olsson
    
    
    47
    
    
    President, Chief Executive Officer and DirectorKevin Groman
    
    
    39
    
    
    Senior Vice President, General Counsel and Corporate SecretaryPhillip Hobson
    
    
    43
    
    
    Senior Vice President, OperationsDavid Ledlow
    
    
    51
    
    
    Senior Vice President, OperationsDavid Mathieson
    
    
    55
    
    
    Senior Vice President and Chief Financial Officer
 Erik Olsson
 Kevin Groman
 9




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Phillip Hobson
 David Ledlow
 David Mathieson
 Available Information
  www.sec.gov
 10




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Item 1A. Risk Factors.
 Our business is subject to a number of important risks and uncertainties, some of which are
described below. Any of these risks may have a material adverse effect on our business, financial
condition, results of operations and cash flows.
 Risks Related to Our Business
 Our business has been and may continue to be hurt by an economic downturn, a decline in
non-residential construction or industrial or non-construction, activities or a decline in the
amount of equipment that is rented.
  
    
    weakness or a downturn in the overall economy, including the onset of, or prolonged
exposure to, a recession;
    
    reduced access to capital markets for our customers funding of projects due to a
weakness or downturn in the overall economy or otherwise;
    
    an increase in the cost of construction materials;
    
    an increase in interest rates;
    
    adverse weather conditions or natural disasters, including an active hurricane season in
the Gulf of Mexico region, where we have a large concentration of customers; or
    
    terrorism or hostilities involving the United States or Canada.
  We face intense competition that may lead to our inability to increase or maintain our prices,
which could have a material adverse impact on our results of operations.
   11




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Our revenues and operating results may fluctuate and unexpected or sustained periods of decline
have had and may continue to have a material adverse effect on our business, financial condition,
results of operations and cash flows.
  
    
    downturn in the North American economy, including the reduced access to capital
markets for our customers funding of projects, any sustained periods of inflation or
deflation, and the resulting negative impact it has on the financial strength of our
customers;
    
    changes in demand for our equipment or the prices we charge due to changes in
economic conditions, competition or other factors;
    
    the timing of expenditures for new equipment and the disposal of used equipment,
including the ability to effectively and efficiently reduce our fleet size by selling in the
open market for used equipment;
    
    changes in the interest rates applicable to our variable rate debt;
    
    general economic conditions in the markets where we operate;
    
    the cyclical nature of our customers businesses, particularly those operating
in the non-residential construction and industrial or non-construction, sectors;
    
    rental rate changes in response to competitive factors;
    
    our inability to maintain our price levels during long-term periods of economic
decline;
    
    bankruptcy or insolvency of our competitors leading to a larger than expected
amount of used equipment in the open market;
    
    bankruptcy or insolvency of our customers, thereby reducing demand for used
rental equipment;
    
    reduction in the demand for used equipment may result in lower sales prices and
volume for used equipment sales;
    
    aging of our fleet, ultimately resulting in lower sales prices and volume for
used equipment sales;
    
    seasonal rental patterns, with rental activity tending to be lowest in the
winter;
    
    downturn in oil and petrochemical-related sectors from which we derive a large
share of our industrial revenue;
    
    timing of acquisitions of companies and new location openings and related costs;
    
    labor shortages, work stoppages or other labor difficulties;
    
    disruptions of fuel supplies or increases in fuel prices;
    
    possible unrecorded liabilities of acquired companies;
    
    our effectiveness in integrating acquired businesses and new locations into our
existing operations; and
    
    possible write-offs or exceptional charges due to changes in applicable
accounting standards, goodwill impairment, impairment of obsolete or damaged equipment or
other assets, or the refinancing of our existing debt.
 12




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The non-residential construction market is currently experiencing a downturn which, if sustained,
could harm our business, liquidity and results of operations.
  Our reliance on available borrowings under the Senior ABL Revolving Facility and cash from
operating activities is necessary to operate our business and subjects us to a number of risks,
many of which are beyond our control.
   The effects of the recent global economic crisis have had and may continue to have a negative
impact on our revenue, operating results, or financial condition.
  Our expenses could increase and our relationships with our customers could be hurt if there is an
adverse change in our relationships with our equipment suppliers or if our suppliers are unable to
provide us with products we rely on to generate revenues.
  13




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If we are unable to collect on contracts with customers, our operating results would be adversely
affected.
  If our operating costs increase as our rental fleet ages and we are unable to pass along such
costs, our earnings will decrease.
  Our operational and cost reduction measures may not generate the improvements and efficiencies we
expect.
  The cost of new equipment we use in our rental fleet could increase and therefore we may spend more
for replacement equipment, and in some cases we may not be able to procure equipment on a timely
basis due to supplier constraints.
  An impairment of our goodwill could have a material non-cash adverse impact on our results of
operations.
  14




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Our rental fleet is subject to residual value risk upon disposition.
  
    
    the market price for new equipment of a like kind;
    
    wear and tear on the equipment relative to its age and the performance of
preventive maintenance;
    
    the time of year that it is sold;
    
    worldwide and domestic demand for used equipment, including the amount of used
equipment we, along with our competitors, supply to the used equipment market; and
    
    general economic conditions.
  Any failure of Atlas to indemnify us against and defend us from certain claims in accordance with
the terms of the recapitalization agreement could have a material adverse effect on us.
  Disruptions in our information technology systems could limit our ability to effectively monitor
and control our operations and adversely affect our operating results.
  Our business relies to some extent on third-party contractors to provide us with various services
to assist us with conducting our business, which could adversely affect our business upon the
termination or disruption of our third-party contractor relationships.
  15




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Oak Hill or its affiliates may compete directly against us.
  If we acquire any businesses in the future, they could prove difficult to integrate, disrupt our
business, or have an adverse effect on our results of operations.
  
    
    potential disruption of our ongoing business and distraction of management;
    
    difficulty integrating the acquired business; and
    
    exposure to unknown liabilities.
  If we fail to retain or attract key management and personnel, we may be unable to implement our
business plan.
  The impairment of financial institutions may adversely affect us.
  We are exposed to various possible claims relating to our business and our insurance may not fully
protect us against those claims.
  16




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We may be unable to maintain an effective system of internal control over financial reporting and
comply with Section 404 of the Sarbanes-Oxley Act of 2002 and other related provisions of the U.S.
securities laws.
  Environmental, health and safety laws, regulations and requirements and the costs of complying with
them, or any liability or obligation imposed under them, could adversely affect our financial
position, results of operations or cash flow.
    17




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Our costs of doing business could increase as a result of changes in U.S. federal, state or local
regulations.
  We may not be able to adequately protect our intellectual property and other proprietary rights
that are material to our business.
  Certain existing stockholders of RSC Holdings have significant control over our company and large
ownership positions that could be sold, transferred or distributed.
  18




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We face risks related to changes in our ownership.
  Risks Related to Our Indebtedness
 We have substantial debt, which could adversely affect our financial condition, our ability to
obtain financing in the future and our ability to react to changes in our business and make
payments on our indebtedness.
   
    
    make it more difficult for us to satisfy our obligations to the holders of our
Notes and to the lenders under our Senior Credit Facilities, resulting in possible defaults
on and acceleration of such debt;
    
    require us to dedicate a substantial portion of our cash flow from operations to
make payments on our debt, which would reduce the availability of our cash flow from
operations to fund working capital, capital expenditures, acquisitions or other general
corporate purposes;
    
    increase our vulnerability to general adverse economic and industry conditions,
including interest rate fluctuations, because a portion of our borrowings, including under
the Senior Credit Facilities, bears interest at variable rates;
    
    place us at a competitive disadvantage to our competitors with proportionately
less debt or comparable debt at more favorable interest rates;
    
    limit our ability to refinance our existing indebtedness on favorable terms or
at all or borrow additional funds in the future for, among other things, working capital,
capital expenditures, acquisitions or debt service requirements;
    
    limit our flexibility in planning for, or reacting to, changing conditions in
our business and industry; and
    
    limit our ability to react to competitive pressures, or make it difficult for us
to carry out capital spending that is necessary or important to our growth strategy and our
efforts to improve operating margins.
  Despite our current indebtedness levels, we and our subsidiaries may be able to incur substantial
additional debt, which could further exacerbate the risks associated with our current substantial
debt.
  Restrictive covenants in certain of the agreements and instruments governing our indebtedness may
adversely affect our financial and operational flexibility.
 19




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
    
    incur additional indebtedness or provide guarantees;
    
    engage in mergers, acquisitions or dispositions of assets;
    
    enter into sale-leaseback transactions;
    
    make dividends or other restricted payments;
    
    prepay other indebtedness;
    
    engage in certain transactions with affiliates;
    
    make investments;
    
    change the nature of our business;
    
    incur liens;
    
    enter into currency, commodity and other hedging transactions; and
    
    amend specified debt agreements.
   
    
    incur additional debt;
    
    pay dividends or distributions on their capital stock or repurchase their
capital stock;
    
    make certain investments;
    
    create liens on their assets to secure debt;
    
    enter into certain transactions with affiliates;
    
    create limitations on the ability of the restricted subsidiaries to make
dividends or distributions to their respective parents;
    
    merge or consolidate with another company; and
    
    transfer and sell assets.
 20




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We may not be able to generate sufficient cash to make payments on all of our debt, and our ability
to refinance all or a portion of our debt or obtain additional financing depends on many factors
beyond our control. As a result, we may be forced to take other actions to satisfy our obligations
under such indebtedness, which may not be successful.
  A significant portion of our outstanding indebtedness is secured by substantially all of our
consolidated assets. As a result of these security interests, such assets would only be available
to satisfy claims of our general creditors or to holders of our equity securities if we were to
become insolvent to the extent the value of such assets exceeded the amount of our indebtedness and
other obligations. In addition, the existence of these security interests may adversely affect our
financial flexibility.
   21




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An increase in interest rates would increase the cost of servicing our indebtedness and could
reduce our profitability.
  Risks Related to Market and Economic Factors
 Our operating and financial performance in any given period might not meet the guidance we have
provided to the public.
  The certificate of incorporation, by-laws of RSC Holdings and Delaware law may discourage takeovers
and business combinations that its stockholders might consider in their best interests.
  
    
    establishment of a classified Board of Directors, with staggered terms;
    
    granting to the Board of Directors sole power to set the number of directors and to fill
any vacancy on the Board of Directors, whether such vacancy occurs as a result of an increase
in the number of directors or otherwise;
    
    limitations on the ability of stockholders to remove directors;
    
    the ability of the Board of Directors to designate and issue one or more series of
preferred stock without stockholder approval, the terms of which may be determined at the sole
discretion of the Board of Directors;
    
    prohibition on stockholders from calling special meetings of stockholders;
    
    establishment of advance notice requirements for stockholder proposals and nominations
for election to the Board of Directors at stockholder meetings; and
    
    prohibiting our stockholders from acting by written consent
if the Sponsors cease to collectively hold a majority of the
outstanding common stock of RSC Holdings.
  22




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   
 Item 3. Legal Proceedings
   
 Item 4. Submission of Matters to a Vote of Security Holders
  23




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PART II
 
 Item 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Market Information
  Dividends
  24




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Item 6. Selected Financial Data
  Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005($ in thousands, except per share data)Consolidated statements of operations data:Revenues:Equipment rental revenue
    
    $
    1,073,021
    
    
    $
    1,567,254
    
    
    $
    1,543,175
    
    
    $
    1,368,712
    
    
    $
    1,140,329Sale of merchandise
    
    
    51,951
    
    
    
    72,472
    
    
    
    80,649
    
    
    
    92,524
    
    
    
    102,894Sale of used rental equipment
    
    
    158,482
    
    
    
    125,443
    
    
    
    145,358
    
    
    
    191,652
    
    
    
    217,534Total revenues
    
    
    1,283,454
    
    
    
    1,765,169
    
    
    
    1,769,182
    
    
    
    1,652,888
    
    
    
    1,460,757Cost of revenues:Cost of equipment rentals, excluding depreciation
    
    
    548,462
    
    
    
    692,613
    
    
    
    640,992
    
    
    
    591,241
    
    
    
    528,071Depreciation of rental equipment
    
    
    285,668
    
    
    
    317,504
    
    
    
    295,248
    
    
    
    253,379
    
    
    
    212,325Cost of merchandise sales
    
    
    36,743
    
    
    
    49,370
    
    
    
    53,936
    
    
    
    61,675
    
    
    
    73,321Cost of used rental equipment sales
    
    
    148,673
    
    
    
    90,500
    
    
    
    103,076
    
    
    
    145,425
    
    
    
    173,276Total cost of revenues
    
    
    1,019,546
    
    
    
    1,149,987
    
    
    
    1,093,252
    
    
    
    1,051,720
    
    
    
    986,993Gross profit
    
    
    263,908
    
    
    
    615,182
    
    
    
    675,930
    
    
    
    601,168
    
    
    
    473,764Operating expenses:Selling, general and administrative
    
    
    140,646
    
    
    
    168,690
    
    
    
    156,688
    
    
    
    137,995
    
    
    
    122,847Management fees and recapitalization expenses (1)(2)
    
    
    
    
    
    
    
    
    
    
    23,000
    
    
    
    10,836
    
    
    
    Depreciation and amortization of non-rental equipment and intangibles
    
    
    43,984
    
    
    
    49,567
    
    
    
    46,226
    
    
    
    38,783
    
    
    
    33,776Other operating gains, net
    
    
    (517
    )
    
    
    (1,010
    )
    
    
    (4,850
    )
    
    
    (6,968
    )
    
    
    (4,836
    )Total operating expenses, net
    
    
    184,113
    
    
    
    217,247
    
    
    
    221,064
    
    
    
    180,646
    
    
    
    151,787Operating income
    
    
    79,795
    
    
    
    397,935
    
    
    
    454,866
    
    
    
    420,522
    
    
    
    321,977Interest expense, net
    
    
    189,689
    
    
    
    201,849
    
    
    
    243,908
    
    
    
    197,085
    
    
    
    134,556(Gain) loss on extinguishment of debt, net (3)
    
    
    (13,916
    )
    
    
    
    
    
    
    9,570
    
    
    
    
    
    
    
    Other expense (income), net
    
    
    707
    
    
    
    658
    
    
    
    (1,126
    )
    
    
    (311
    )
    
    
    (146
    )(Loss) income before (benefit) provision for income taxes
    
    
    (96,685
    )
    
    
    195,428
    
    
    
    202,514
    
    
    
    223,748
    
    
    
    187,567(Benefit) provision for income taxes (4)
    
    
    (37,325
    )
    
    
    72,939
    
    
    
    79,260
    
    
    
    86,568
    
    
    
    66,488Net (loss) income
    
    $
    (59,360
    )
    
    $
    122,489
    
    
    $
    123,254
    
    
    $
    137,180
    
    
    $
    121,079Preferred dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,997
    )
    
    
    (15,995
    )Net (loss) income available for common stockholders
    
    $
    (59,360
    )
    
    $
    122,489
    
    
    $
    123,254
    
    
    $
    129,183
    
    
    $
    105,084Weighted average shares outstanding used in computing net (loss)
income per common share:Basic and diluted
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Net (loss) income per common share:Basic and diluted (5)
    
    $
    (59.36
    )
    
    $
    122.49
    
    
    $
    123.25
    
    
    $
    129.18
    
    
    $
    105.08
 25




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##### Table of Contents



Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005($ in thousands)Other financial data:Depreciation of rental equipment and
depreciation and amortization of non-rental
equipment and intangibles
    
    $
    329,652
    
    
    $
    367,071
    
    
    $
    341,474
    
    
    $
    292,162
    
    
    $
    246,101Capital expenditures:Rental
    
    $
    46,386
    
    
    $
    258,660
    
    
    $
    580,194
    
    
    $
    721,258
    
    
    $
    691,858Non-rental
    
    
    4,952
    
    
    
    15,319
    
    
    
    20,674
    
    
    
    28,592
    
    
    
    4,641Proceeds from sales of used equipment and
non-rental equipment
    
    
    (170,975
    )
    
    
    (131,987
    )
    
    
    (156,678
    )
    
    
    (207,613
    )
    
    
    (233,731
    )Net capital expenditures
    
    $
    (119,637
    )
    
    $
    141,992
    
    
    $
    444,190
    
    
    $
    542,237
    
    
    $
    462,768Other operational data (unaudited):Fleet utilization (6)
    
    
    57.6
    %
    
    
    70.1
    %
    
    
    72.8
    %
    
    
    72.0
    %
    
    
    70.6
    %Average fleet age at period end (months)
    
    
    40
    
    
    
    33
    
    
    
    26
    
    
    
    25
    
    
    
    30Same store rental revenue growth / (decline) (7)
    
    
    (28.9
    )%
    
    
    2.4
    %
    
    
    11.1
    %
    
    
    18.9
    %
    
    
    17.6
    %Employees (8)
    
    
    4,153
    
    
    
    5,014
    
    
    
    5,486
    
    
    
    5,187
    
    
    
    4,938Original equipment fleet cost (in millions) (9)
    
    $
    2,324
    
    
    $
    2,695
    
    
    $
    2,670
    
    
    $
    2,346
    
    
    $
    1,975Consolidated balance sheet data:Rental equipment, net
    
    $
    1,384,999
    
    
    $
    1,766,978
    
    
    $
    1,929,514
    
    
    $
    1,738,670
    
    
    $
    1,420,545Total assets
    
    
    2,728,266
    
    
    
    3,268,542
    
    
    
    3,454,369
    
    
    
    3,304,976
    
    
    
    2,764,431Debt
    
    
    2,172,109
    
    
    
    2,569,067
    
    
    
    2,736,225
    
    
    
    3,006,426
    
    
    
    2,352,380Total liabilities
    
    
    2,704,625
    
    
    
    3,225,422
    
    
    
    3,498,467
    
    
    
    3,739,609
    
    
    
    2,978,981Total stockholders equity (deficit)
    
    
    23,641
    
    
    
    43,120
    
    
    
    (44,098
    )
    
    
    (434,633
    )
    
    
    (214,550
    )
 26




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##### Table of Contents



(1)
    
    In conjunction with the Recapitalization, we entered into a monitoring agreement whereby we would pay management
fees of $1.5 million per quarter to the Sponsors. The monitoring agreement was terminated in connection with our
initial public offering and a $20.0 million termination fee (also included in management fees) was paid.(2)
    
    The 2006 amount includes recapitalization expenses of approximately $10.3 million for fees and expenses related
to the consummation of the Recapitalization that were not otherwise capitalized or applied to stockholders
equity.(3)
    
    (Gain) loss on extinguishment of debt, net for the year ended December 31, 2009 consists of a $17.6 million net
gain from the repayment of debt outstanding under the Second Lien Term Facility offset by a $3.7 million loss
associated with the repayment of our Senior ABL Term Loan. The $17.6 million net gain associated with the
repayment of our Second Lien Term Facility includes a $26.9 million gain, which represents the difference between
the carrying value of debt repaid under the Second Lien Term Facility and the repurchase price offset by $2.9
million of creditor and third party fees incurred in connection with the repayment and the associated amendments
to our Senior ABL Facilities credit agreement and Second Lien Term Facility agreement as well as $6.4 million of
unamortized deferred financing costs that were expensed. The $3.7 million loss from the extinguishment of our
Senior ABL Term Loan includes $1.4 million of creditor fees incurred to amend the Senior ABL Facilities credit
agreement in connection with the repayment of the Senior ABL Term Loan and $2.3 million of unamortized deferred
financing costs that were expensed.

Loss on extinguishment of debt for the year ended December 31, 2007 includes a $4.6 million prepayment penalty
related to the $230.7 million repayment of Second Lien Term Facility debt and the write-off of $5.0 million of
deferred financing costs associated with the repayment. The $9.6 million loss on extinguishment of debt was
previously included in interest expense and has been reclassified to conform to the current year presentation.(4)
    
    Prior to the Recapitalization, RSC Holdings had other lines of businesses and the consolidated tax return of RSC
Holdings for those periods included the results from those other lines of businesses. Our income taxes as
presented in the consolidated financial statements for the period prior to the Recapitalization are calculated on
a separate tax return basis that does not include the results from those other lines of businesses. Under Atlas
ownership, RSC Holdings managed its tax position and remitted tax payments for the benefit of its entire
portfolio of businesses, and its tax strategies were not necessarily reflective of the tax strategies that we
would have followed or do follow as a stand-alone company. Tax payments were not made for the Company on a
stand-alone basis prior to the Recapitalization.(5)
    
    For purposes of calculating basic and diluted net income per common share, net income for the years ended
December 31, 2006 and 2005 have been adjusted for preferred stock dividends.(6)
    
    Fleet utilization is defined as the average aggregate dollar value of equipment rented by customers (based on
original equipment fleet cost) during the relevant period, divided by the average aggregate dollar value of all
equipment owned (based on original equipment fleet cost) during the relevant period.The following table shows the calculation of fleet utilization for each period presented. For the Years Ended December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005(in millions)Average aggregate
dollar value of all
equipment owned
(original cost)
    
    $
    2,484.7
    
    
    $
    2,731.2
    
    
    $
    2,535.7
    
    
    $
    2,197.8
    
    
    $
    1,861.1Average aggregate dollar
value of equipment on
rent
    
    
    1,431.5
    
    
    
    1,913.9
    
    
    
    1,844.9
    
    
    
    1,582.8
    
    
    
    1,314.7Fleet utilization
    
    
    57.6
    %
    
    
    70.1
    %
    
    
    72.8
    %
    
    
    72.0
    %
    
    
    70.6
    %
 
 (7)
    
    Same store rental revenue growth or decline is calculated as the year over year change in rental revenue for locations that are open at the
end of the period reported and have been operating under our direction for more than 12 months.(8)
    
    Employee count is given as of the end of the period indicated and the data reflects the actual headcount as of each period presented. 27




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##### Table of Contents



(9)
    
    Original Equipment Fleet Cost (OEC) is defined as the original dollar value of rental equipment purchased from the original equipment manufacturer (OEM).
Fleet purchased from non-OEM sources is assigned a comparable OEC dollar value at the time of purchase. 28




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
    Years Ended December 31,2009
    
    
    2008
    
    
    2007Total revenues
    
    $
    1,283,454
    
    
    $
    1,765,169
    
    
    $
    1,769,182(Loss) income before (benefit) provision for income taxes
    
    
    (96,685
    )
    
    
    195,428
    
    
    
    202,514Net (loss) income
    
    
    (59,360
    )
    
    
    122,489
    
    
    
    123,254
  Years Ended December 31,2009
    
    
    2008
    
    
    2007Adjusted EBITDA (in millions) (a)
    
    $
    413.7
    
    
    $
    768.0
    
    
    $
    823.6Fleet utilization (b)
    
    
    57.6
    %
    
    
    70.1
    %
    
    
    72.8
    %Average fleet age at period end (months)
    
    
    40
    
    
    
    33
    
    
    
    26Original equipment fleet cost (in millions) (c)
    
    $
    2,324
    
    
    $
    2,695
    
    
    $
    2,670
 
 (a)

    
    Defined as consolidated net (loss) income before net interest expense, income taxes and
depreciation and amortization and before certain other items, including gain (loss) on
extinguishment of debt, net, share-based compensation, other expense (income), net and
management fees. Adjusted EBITDA is not a recognized measure under U.S. Generally Accepted
Accounting Principles (GAAP). See reconciliation between net (loss) income and Adjusted
EBITDA under Liquidity and Capital Resources  Adjusted EBITDA.(b)

    
    Defined as the average aggregate dollar value of equipment rented by customers (based
on original equipment fleet cost OEC) during the relevant period, divided by the average
aggregate dollar value of all equipment owned (based on OEC) during the relevant period.(c)

    
    Defined as the original dollar value of rental equipment purchased from the original
equipment manufacturer (OEM). Fleet purchased from non-OEM sources is assigned a
comparable OEC dollar value at the time of purchase.
  29




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##### Table of Contents



Business Environment and Outlook
     
    
    closing under-performing locations and redeploying rental fleet to more
profitable locations with higher demand;
    
    expanding and diversifying our presence in industrial or non-construction
markets, which historically tend to place a heightened emphasis on maintenance
during times of economic slowdowns;
    
    minimizing capital expenditures;
    
    reducing headcount;
    
    divesting excess rental fleet, which generates cash and improves fleet
utilization;
    
    slowing sales of used equipment, allowing our average fleet age to increase,
which enables us to retain fleet we will need when the economic situation
improves;
 30




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##### Table of Contents




    
    utilizing excess cash flow resulting from our planned reduction in capital
expenditures and the proceeds from the sale of used rental equipment to repay
outstanding amounts on our Senior ABL Revolving Facility and our Second Lien Term
Facility;
    
    evaluating additional opportunities to restructure our debt to extend existing
maturities and replace shorter term obligations with longer term obligations; and
    
    implementing cost reduction measures throughout our business.
 Recent Developments
 Location Closures and Headcount Reduction
   Industrial Presence
  $400 million Senior Secured Notes Offering and Debt Amendments
  31




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##### Table of Contents



Second Lien Term Facility Amendment and Repurchase Transactions
   $200 million Senior Unsecured Notes Offering and Debt Amendments
   32




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##### Table of Contents



Factors Affecting Our Results of Operations
  Initial Public Offering
  33




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##### Table of Contents



Results of Operations
 Revenues:
 
    
    Equipment rental revenue consists of fees charged to customers for use of equipment
owned by us over the term of the rental as well as other fees charged to customers for
items such as delivery and pickup, fuel and damage waivers.
    
    Sale of merchandise revenues represent sales of contractor supplies, consumables and
ancillary products and, to a lesser extent, new equipment.
    
    Sale of used rental equipment represents revenues derived from the sale of rental
equipment that has previously been included in our rental fleet.
 Cost of revenues:
 
    
    Cost of equipment rentals, excluding depreciation, consists primarily of wages and
benefits for employees involved in the delivery and maintenance of rental equipment, rental
location facility costs and rental equipment repair and maintenance expenses.
    
    Depreciation of rental equipment consists of straight-line depreciation of equipment
included in our rental fleet.
    
    Cost of merchandise sales represents the costs of acquiring those items.
    
    Cost of used rental equipment sales represents the net book value of rental equipment at
the date of sale.
    34




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##### Table of Contents



Year Ended December 31, 2009 Compared with Year Ended December 31, 2008
  Percent of RevenueYears Ended
    
    
    Years EndedDecember 31,
    
    
    December 31,
    
    
    Increase (decrease)2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009 versus 2008Revenues:Equipment rental revenue
    
    $
    1,073,021
    
    
    $
    1,567,254
    
    
    
    83.6
    %
    
    
    88.8
    %
    
    $
    (494,233
    )
    
    
    (31.5
    )%Sale of merchandise
    
    
    51,951
    
    
    
    72,472
    
    
    
    4.0
    
    
    
    4.1
    
    
    
    (20,521
    )
    
    
    (28.3
    )Sale of used rental equipment
    
    
    158,482
    
    
    
    125,443
    
    
    
    12.4
    
    
    
    7.1
    
    
    
    33,039
    
    
    
    26.3Total revenues
    
    
    1,283,454
    
    
    
    1,765,169
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    (481,715
    )
    
    
    (27.3
    )Cost of revenues:Cost of equipment rentals,
excluding depreciation
    
    
    548,462
    
    
    
    692,613
    
    
    
    42.7
    
    
    
    39.2
    
    
    
    (144,151
    )
    
    
    (20.8
    )Depreciation of rental equipment
    
    
    285,668
    
    
    
    317,504
    
    
    
    22.3
    
    
    
    18.0
    
    
    
    (31,836
    )
    
    
    (10.0
    )Cost of merchandise sales
    
    
    36,743
    
    
    
    49,370
    
    
    
    2.9
    
    
    
    2.8
    
    
    
    (12,627
    )
    
    
    (25.6
    )Cost of used rental equipment sales
    
    
    148,673
    
    
    
    90,500
    
    
    
    11.6
    
    
    
    5.1
    
    
    
    58,173
    
    
    
    64.3Total cost of revenues
    
    
    1,019,546
    
    
    
    1,149,987
    
    
    
    79.4
    
    
    
    65.1
    
    
    
    (130,441
    )
    
    
    (11.3
    )Gross profit
    
    
    263,908
    
    
    
    615,182
    
    
    
    20.6
    
    
    
    34.9
    
    
    
    (351,274
    )
    
    
    (57.1
    )Operating expensesSelling, general and administrative
    
    
    140,646
    
    
    
    168,690
    
    
    
    11.0
    
    
    
    9.6
    
    
    
    (28,044
    )
    
    
    (16.6
    )Depreciation and amortization of
non-rental equipment and
intangibles
    
    
    43,984
    
    
    
    49,567
    
    
    
    3.4
    
    
    
    2.8
    
    
    
    (5,583
    )
    
    
    (11.3
    )Other operating gains, net
    
    
    (517
    )
    
    
    (1,010
    )
    
    
    (0.0
    )
    
    
    (0.1
    )
    
    
    493
    
    
    
    (48.8
    )Total operating expenses, net
    
    
    184,113
    
    
    
    217,247
    
    
    
    14.3
    
    
    
    12.3
    
    
    
    (33,134
    )
    
    
    (15.3
    )Operating income
    
    
    79,795
    
    
    
    397,935
    
    
    
    6.2
    
    
    
    22.5
    
    
    
    (318,140
    )
    
    
    (79.9
    )Interest expense, net
    
    
    189,689
    
    
    
    201,849
    
    
    
    14.8
    
    
    
    11.4
    
    
    
    (12,160
    )
    
    
    (6.0
    )Gain on extinguishment of debt, net
    
    
    (13,916
    )
    
    
    
    
    
    
    (1.1
    )
    
    
    
    
    
    
    (13,916
    )
    
    
    n/aOther expense, net
    
    
    707
    
    
    
    658
    
    
    
    0.1
    
    
    
    0.0
    
    
    
    49
    
    
    
    7.4(Loss) income before (benefit)
provision for income taxes
    
    
    (96,685
    )
    
    
    195,428
    
    
    
    (7.5
    )
    
    
    11.1
    
    
    
    (292,113
    )
    
    
    n/a(Benefit) provision for income taxes
    
    
    (37,325
    )
    
    
    72,939
    
    
    
    (2.9
    )
    
    
    4.1
    
    
    
    (110,264
    )
    
    
    n/aNet (loss) income
    
    $
    (59,360
    )
    
    $
    122,489
    
    
    
    (4.6
    )%
    
    
    6.9
    %
    
    $
    (181,849
    )
    
    
    n/a
     35




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##### Table of Contents



Second Lien Term
    
    
    Senior ABLFacility
    
    
    Facilities
    
    
    TotalNet gain from repurchase of debt for less than par value
    
    $
    26,919
    
    
    $
    
    
    
    $
    26,919Fees incurred to repurchase debt
    
    
    (807
    )
    
    
    
    
    
    
    (807
    )Fees incurred to amend credit facilities
    
    
    (2,057
    )
    
    
    (1,448
    )
    
    
    (3,505
    )24,055
    
    
    
    (1,448
    )
    
    
    22,607Write-off of unamortized deferred financing costs
    
    
    (6,414
    )
    
    
    (2,277
    )
    
    
    (8,691
    )Gain (loss) on extinguishment of debt, net
    
    $
    17,641
    
    
    $
    (3,725
    )
    
    $
    13,916
  36




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##### Table of Contents



37




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##### Table of Contents



Year Ended December 31, 2008 Compared with Year Ended December 31, 2007
  Percent of RevenueYears Ended
    
    
    Years EndedDecember 31,
    
    
    December 31,
    
    
    Increase (decrease)2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008 versus 2007Revenues:Equipment rental revenue
    
    $
    1,567,254
    
    
    $
    1,543,175
    
    
    
    88.8
    %
    
    
    87.2
    %
    
    $
    24,079
    
    
    
    1.6
    %Sale of merchandise
    
    
    72,472
    
    
    
    80,649
    
    
    
    4.1
    
    
    
    4.6
    
    
    
    (8,177
    )
    
    
    (10.1
    )Sale of used rental equipment
    
    
    125,443
    
    
    
    145,358
    
    
    
    7.1
    
    
    
    8.2
    
    
    
    (19,915
    )
    
    
    (13.7
    )Total revenues
    
    
    1,765,169
    
    
    
    1,769,182
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    (4,013
    )
    
    
    (0.2
    )Cost of revenues:Cost of equipment rentals,
excluding depreciation
    
    
    692,613
    
    
    
    640,992
    
    
    
    39.2
    
    
    
    36.2
    
    
    
    51,621
    
    
    
    8.1Depreciation of rental equipment
    
    
    317,504
    
    
    
    295,248
    
    
    
    18.0
    
    
    
    16.7
    
    
    
    22,256
    
    
    
    7.5Cost of merchandise sales
    
    
    49,370
    
    
    
    53,936
    
    
    
    2.8
    
    
    
    3.0
    
    
    
    (4,566
    )
    
    
    (8.5
    )Cost of used rental equipment sales
    
    
    90,500
    
    
    
    103,076
    
    
    
    5.1
    
    
    
    5.8
    
    
    
    (12,576
    )
    
    
    (12.2
    )Total cost of revenues
    
    
    1,149,987
    
    
    
    1,093,252
    
    
    
    65.1
    
    
    
    61.8
    
    
    
    56,735
    
    
    
    5.2Gross profit
    
    
    615,182
    
    
    
    675,930
    
    
    
    34.9
    
    
    
    38.2
    
    
    
    (60,748
    )
    
    
    (9.0
    )Operating expensesSelling, general and administrative
    
    
    168,690
    
    
    
    156,688
    
    
    
    9.6
    
    
    
    8.9
    
    
    
    12,002
    
    
    
    7.7Management fees
    
    
    
    
    
    
    23,000
    
    
    
    
    
    
    
    1.3
    
    
    
    (23,000
    )
    
    
    n/aDepreciation and amortization of
non-rental equipment and
intangibles
    
    
    49,567
    
    
    
    46,226
    
    
    
    2.8
    
    
    
    2.6
    
    
    
    3,341
    
    
    
    7.2Other operating gains, net
    
    
    (1,010
    )
    
    
    (4,850
    )
    
    
    (0.1
    )
    
    
    (0.3
    )
    
    
    3,840
    
    
    
    (79.2
    )Total operating expenses, net
    
    
    217,247
    
    
    
    221,064
    
    
    
    12.3
    
    
    
    12.5
    
    
    
    (3,817
    )
    
    
    (1.7
    )Operating income
    
    
    397,935
    
    
    
    454,866
    
    
    
    22.5
    
    
    
    25.7
    
    
    
    (56,931
    )
    
    
    (12.5
    )Interest expense, net
    
    
    201,849
    
    
    
    243,908
    
    
    
    11.4
    
    
    
    13.8
    
    
    
    (42,059
    )
    
    
    (17.2
    )Loss on extinguishment of debt, net
    
    
    
    
    
    
    9,570
    
    
    
    
    
    
    
    0.5
    
    
    
    (9,570
    )
    
    
    n/aOther expense (income), net
    
    
    658
    
    
    
    (1,126
    )
    
    
    0.0
    
    
    
    (0.1
    )
    
    
    1,784
    
    
    
    n/aIncome before provision for income
taxes
    
    
    195,428
    
    
    
    202,514
    
    
    
    11.1
    
    
    
    11.4
    
    
    
    (7,086
    )
    
    
    (3.5
    )Provision for income taxes
    
    
    72,939
    
    
    
    79,260
    
    
    
    4.1
    
    
    
    4.5
    
    
    
    (6,321
    )
    
    
    (8.0
    )Net income
    
    $
    122,489
    
    
    $
    123,254
    
    
    
    6.9
    %
    
    
    7.0
    %
    
    $
    (765
    )
    
    
    (0.6
    )
    38




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39




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40




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flows and Liquidity
   Years Ended December 31,2009
    
    
    2008
    
    
    2007(in 000s)Net cash provided by operating activities
    
    $
    269,956
    
    
    $
    363,439
    
    
    $
    509,554Net cash provided by (used in) investing activities
    
    
    124,904
    
    
    
    (175,230
    )
    
    
    (444,190
    )Net cash used in financing activities
    
    
    (405,194
    )
    
    
    (184,434
    )
    
    
    (101,708
    )Effect of foreign exchange rates on cash
    
    
    1,199
    
    
    
    (144
    )
    
    
    195Net (decrease) increase in cash and cash equivalents
    
    $
    (9,135
    )
    
    $
    3,631
    
    
    $
    (36,149
    )
  Operating activities  .
 Investing activities 
  Financing activities 
 41




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Indebtedness
      Outlook
  42




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##### Table of Contents



Contractual Obligations
  Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(in millions)Contractual ObligationsDebt (1)
    
    $
    2,100.6
    
    
    $
    
    
    
    $
    103.5
    
    
    $
    1,397.1
    
    
    $
    600.0Capital Leases (1)
    
    
    84.8
    
    
    
    27.3
    
    
    
    37.5
    
    
    
    17.5
    
    
    
    2.5Interest on Debt and Capital Leases (2)
    
    
    997.6
    
    
    
    188.7
    
    
    
    347.4
    
    
    
    259.9
    
    
    
    201.6Operating Leases
    
    
    182.2
    
    
    
    51.4
    
    
    
    78.9
    
    
    
    33.5
    
    
    
    18.4Purchase Obligations (3)
    
    
    1.1
    
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    3,366.3
    
    
    $
    268.5
    
    
    $
    567.3
    
    
    $
    1,708.0
    
    
    $
    822.5
 
 (1)
    
    Principal payments are reflected when contractually required, and no early paydowns are reflected.(2)
    
    Estimated interest for debt for all periods presented is calculated using the interest rate available as of December 31, 2009 and
includes calculated payments due under our interest rate swap agreements as well as fees for the unused portion of our Senior ABL
Revolving Facility. See Note 5 to our consolidated financial statements for additional information.(3)
    
    As of December 31, 2009, we had outstanding purchase orders with our equipment suppliers. These purchase orders, which were
negotiated in the ordinary course of business, total approximately $1.1 million. Generally, these purchase orders can be cancelled by
us with 30 days notice and without cancellation penalties.  43




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##### Table of Contents



Capital Expenditures
  Rental Equipment
    
    
    Property and Non-Rental EquipmentGross Capital
    
    
    Disposal
    
    
    Net Capital
    
    
    Gross Capital
    
    
    Disposal
    
    
    Net CapitalExpenditures
    
    
    Proceeds
    
    
    Expenditures
    
    
    Expenditures
    
    
    Proceeds
    
    
    Expenditures(in millions)2009
    
    $
    46.4
    
    
    $
    158.5
    
    
    $
    (112.1
    )
    
    $
    5.0
    
    
    $
    12.5
    
    
    $
    (7.5
    )2008
    
    
    258.7
    
    
    
    125.4
    
    
    
    133.3
    
    
    
    15.3
    
    
    
    6.5
    
    
    
    8.82007
    
    
    580.2
    
    
    
    145.4
    
    
    
    434.8
    
    
    
    20.7
    
    
    
    11.3
    
    
    
    9.4
 Adjusted EBITDA
   Years Ended December 31,2009
    
    
    2008
    
    
    2007(in 000s)Net (loss) income
    
    $
    (59,360
    )
    
    $
    122,489
    
    
    $
    123,254Depreciation of rental equipment and
depreciation and amortization of
non-rental equipment and intangibles
    
    
    329,652
    
    
    
    367,071
    
    
    
    341,474Interest expense, net
    
    
    189,689
    
    
    
    201,849
    
    
    
    243,908(Benefit) provision for income taxes
    
    
    (37,325
    )
    
    
    72,939
    
    
    
    79,260EBITDA
    
    $
    422,656
    
    
    $
    764,348
    
    
    $
    787,896Adjustments:(Gain) loss on extinguishment of debt, net
    
    
    (13,916
    )
    
    
    
    
    
    
    9,570Share-based compensation
    
    
    4,224
    
    
    
    2,993
    
    
    
    4,298Other expense (income), net
    
    
    707
    
    
    
    658
    
    
    
    (1,126
    )Management fees
    
    
    
    
    
    
    
    
    
    
    23,000Adjusted EBITDA
    
    $
    413,671
    
    
    $
    767,999
    
    
    $
    823,638
 Free Cash Flow
  44




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##### Table of Contents



Years Ended December 31,2009
    
    
    2008
    
    
    2007(in 000s)Net cash provided by operating activities
    
    $
    269,956
    
    
    $
    363,439
    
    
    $
    509,554Purchases of rental equipment
    
    
    (46,386
    )
    
    
    (258,660
    )
    
    
    (580,194
    )Purchases of property and equipment
    
    
    (4,952
    )
    
    
    (15,319
    )
    
    
    (20,674
    )Proceeds from sales of rental equipment
    
    
    158,482
    
    
    
    125,443
    
    
    
    145,358Proceeds from sales of property and equipment
    
    
    12,493
    
    
    
    6,544
    
    
    
    11,320Insurance proceeds from rental equipment and property claims
    
    
    5,267
    
    
    
    
    
    
    
    Net capital inflows (expenditures)
    
    
    124,904
    
    
    
    (141,992
    )
    
    
    (444,190
    )Free cash flow
    
    $
    394,860
    
    
    $
    221,447
    
    
    $
    65,364
 Critical Accounting Policies and Estimates
   Rental Equipment
    45




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##### Table of Contents



Impairment of Long-Lived Assets
  Reserve for Claims
  Derivative Instruments and Hedging Activities
  Share-Based Compensation
   46




---



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Business Combinations
  Goodwill
    47




---



##### Table of Contents



Revenue Recognition
   Income Taxes
    Recent Accounting Pronouncements
  48




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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
    Currency Exchange Risk
  49




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##### Table of Contents



Inflation
  
 Item 8. Financial Statements and Supplementary Data
 Consolidated Financial Statements
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
  Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  Managements Report on Internal Control over Financial Reporting
   50




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##### Table of Contents



Internal Control  Integrated Framework
   Item 9B.  Other Information
   PART III
  Item 10. Directors, Executive Officers and Corporate Governance
    Item 11. Executive Compensation
   Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 Equity Compensation Plan Information
  Number of securitiesNumber of
    
    
    
    
    
    
    remaining availablesecurities to be
    
    
    
    
    
    
    for future issuanceissued upon
    
    
    
    
    
    
    under equityexercise of
    
    
    Weighted-average
    
    
    compensation plansoutstanding
    
    
    exercise price of
    
    
    (excluding securitiesoptions, warrants
    
    
    outstanding options,
    
    
    reflected in columnand rights
    
    
    warrants and rights
    
    
    (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
(1)(2)
    
    
    5,952,693
    
    
    $
    7.73
    
    
    
    3,778,256Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    5,952,693
    
    
    $
    7.73
    
    
    
    3,778,256
 
 (1)
    
    Represents the RSC Holdings Inc. Amended and Restated Stock Incentive Plan.(2)
    
    The weighted-average exercise price does not include outstanding restricted stock units.   Item 13. Certain Relationships and Related Transactions, and Director Independence
  51




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##### Table of Contents



Item 14. Principal Accountant Fees and Services
  2009
    
    
    2008Audit fees(1)
    
    $
    1,562,300
    
    
    $
    1,900,000Audit-related fees(2)
    
    
    32,500
    
    
    
    191,000Tax fees (3)
    
    
    40,000
    
    
    
    0All other fees
    
    
    0
    
    
    
    0Total
    
    $
    1,634,800
    
    
    $
    2,091,000
 
 (1)
    
    Audit fees for 2009 were for services rendered in connection with the audit of the financial
statements included in our Annual Report on Form 10-K for 2009 and reviews of the financial
statements included in our Quarterly Reports on Form 10-Q for 2009. Audit fees for 2009 also
included approximately $0.2 million of fees associated with the preparation of comfort letters
issued in connection with our 2009 high-yield debt issuances, which consisted of a $400.0 million
senior secured notes offering and a $200.0 million senior notes offering. Audit fees for 2008 were
for services rendered in connection with the audit of the financial statements included in our
Annual Report on Form 10-K for 2008 and reviews of the financial statements included in our
Quarterly Reports on Form 10-Q for 2008.(2)
    
    Audit-related fees for 2009 were for services rendered in connection with employee benefit plan
audits and a debt covenant compliance review. Audit-related fees for 2008 were for services
rendered in connection with employee benefit plan audits, a debt covenant compliance review and
non-recurring transactional work.(3)
    
    Tax fees for 2009 were for services rendered in connection with an analysis of our tax accounting methods.  52




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    The following documents are filed as part of this Annual Report on Form 10-K.1.
    
    Consolidated Financial Statements: The consolidated financial statements of RSC Holdings III,
LLC are included as Appendix F of this Annual Report on Form 10-K. See Index to Financial
Statements on page F-1.2.
    
    Exhibits: The exhibits which are filed with this Annual Report on Form 10-K or which are
incorporated herein by reference are set forth in the Exhibit Index on page E-1.
 53




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##### Table of Contents



SIGNATURES
  RSC HOLDINGS III, LLCRSC EQUIPMENT RENTAL, INC.By:
    /s/ Erik OlssonName:
    Erik OlssonTitle:
    Chief Executive Officer and President POWER OF ATTORNEY
  Signature
    
    Title
    
    Date/s/ Erik Olsson
Erik Olsson
    
    Chief Executive Officer, President 
and Director*
(Principal Executive Officer)
    
    February 18, 2010/s/ David Mathieson
David Mathieson
    
    Chief Financial Officer (Principal 
Financial and Principal
Accounting Officer)
    
    February 18, 2010+
Denis Nayden
    
    Chairman of the Board, Director*
    
    February 18, 2010+
J. Taylor Crandall
    
    Director*
    
    February 18, 2010+
Edward Dardani
    
    Director*
    
    February 18, 2010+
Pierre Leroy
    
    Director*
    
    February 18, 2010+
John R. Monsky
    
    Director*
    
    February 18, 2010+
James Ozanne
    
    Director*
    
    February 18, 2010+
Donald C. Roof
    
    Director*
    
    February 18, 2010+By: /s/ Erik Olsson
    
    
    
    February 18, 2010Erik OlssonAttorney-in-Fact
 
 *
    
    Member of the Board of Directors of RSC Holdings Inc. and RSC
Equipment Rental, Inc. RSC Holdings III, LLC is an indirect,
wholly-owned subsidiary of RSC Holdings Inc. and the board functions
of RSC Holdings III, LLC are performed by RSC Holdings Inc. 54




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RSC HOLDINGS III, LLC AND SUBSIDIARIES
 ANNUAL REPORT ON FORM 10-K
 EXHIBIT INDEX
 Incorporated By ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1
    
    Recapitalization Agreement, dated as of October 6, 2006, by and among
Atlas Copco AB, Atlas Copco Finance S.à.r.l., Atlas Copco North America Inc., RSC
Acquisition LLC, RSC Acquisition II LLC, OHCP II RSC, LLC, OHCMP II RSC, LLC and
OHCP II RSC COI, LLC
    
    S-1
    
    333-140644
    
    
    2.1
    
    
    2/13/20073.1
    
    Articles of Incorporation of RSC Equipment Rental, Inc.
    
    S-4
    
    333-144615
    
    
    3.1
    
    
    7/16/20073.2
    
    Articles of Amendment to the Articles of Incorporation of RSC Equipment Rental, Inc.
    
    S-4
    
    333-144615
    
    
    3.2
    
    
    7/16/20073.3
    
    Amended and Restated By-Laws of RSC Equipment Rental, Inc.
    
    S-4
    
    333-144615
    
    
    3.3
    
    
    7/16/20073.4
    
    Certificate of Formation of RSC Holdings III, LLC
    
    S-4
    
    333-144615
    
    
    3.4
    
    
    7/16/20073.5
    
    Amended and Restated Limited Liability Company Agreement of RSC Holdings III, LLC
    
    S-4
    
    333-144615
    
    
    3.5
    
    
    7/16/20074.1
    
    Indenture, dated as of November 27, 2006, by and among Rental Service Corporation,
RSC Holdings III, LLC and Wells Fargo Bank, National Association
    
    S-1
    
    333-140644
    
    
    4.1
    
    
    2/13/20074.2
    
    Registration Rights Agreement, dated November 27, 2006, by and among Rental Service
Corporation, RSC Holdings III, LLC, Deutsche Bank Securities Inc., Citigroup Global
Markets Inc. and GE Capital Markets, Inc.
    
    S-1
    
    333-140644
    
    
    4.2
    
    
    2/13/20074.3
    
    U.S. Guarantee and Collateral Agreement, dated as of November 27, 2006, by and
among RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation and
certain domestic subsidiaries of RSC Holdings III, LLC that may become party
thereto from time to time, Deutsche Bank AG, New York Branch, as collateral agent
and administrative agent
    
    S-1
    
    333-140644
    
    
    4.5
    
    
    2/13/20074.4
    
    Canadian Security Agreement, dated as of November 27, 2006, by and among Rental
Service Corporation of Canada Ltd., Deutsche Bank AG, Canada Branch as Canadian
collateral agent
    
    S-1
    
    333-140644
    
    
    4.6
    
    
    2/13/20074.5
    
    Guarantee and Collateral Agreement, dated as of November 27, 2006, by and between
RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation, and
certain domestic subsidiaries of RSC Holdings III, LLC that may become party
thereto from time to time and Deutsche Bank AG, New York Branch as collateral agent
and administrative agent
    
    S-1
    
    333-140644
    
    
    4.7
    
    
    2/13/20074.6
    
    Intercreditor Agreement, dated as of November 27, 2006, by and among RSC Holdings,
II, LLC, RSC Holdings III, LLC, Rental Service Corporation, each other grantor from
time to time party thereto, Deutsche Bank AG, New York Branch as U.S. collateral
agent under the first-lien loan documents and Deutsche Bank AG, New York Branch in
its capacity as collateral agent under the second-lien loan documents
    
    S-1
    
    333-140644
    
    
    4.8
    
    
    2/13/2007
 E-1




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RSC HOLDINGS III, LLC AND SUBSIDIARIES
 ANNUAL REPORT ON FORM 10-K
 EXHIBIT INDEX (CONTINUED)
 Incorporated By ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith4.7
    
    Amended and Restated Stockholders Agreement
    
    S-4
    
    333-144625
    
    
    4.7
    
    
    7/17/20074.7.1
    
    Amendment No. 1 to Amended and Restated Stockholders
Agreement, dated August 24, 2009
    
    8-K
    
    333-144625
    
    
    4.7.1
    
    
    8/24/20094.7.2
    
    Amendment No. 2 to Amended and Restated Stockholders
Agreement, dated January 21, 2010
    
    8-K
    
    333-144625
    
    
    4.7.2
    
    
    1/27/20104.8
    
    Indenture, dated as of July 1, 2009, by and among RSC
Equipment Rental, Inc., RSC Holdings III, LLC, Wells
Fargo Bank, National Association, as Trustee, and
Deutsche Bank AG, New York Branch, as Note Collateral
Agent
    
    8-K
    
    333-144625
    
    
    4.1
    
    
    7/2/20094.9
    
    First Amendment to Intercreditor Agreement, dated as
of July 1, 2009, by and among RSC Holdings II, LLC,
RSC Holdings III, LLC, RSC Equipment Rental, Inc.,
each other grantor from time to time party thereto,
Deutsche Bank AG, New York Branch, as U.S. collateral
agent under the First-Lien Loan Documents (as defined
therein)
    
    8-K
    
    333-144625
    
    
    4.2
    
    
    7/2/20094.10
    
    First Lien Intercreditor Agreement, dated as of July
1, 2009, by and among RSC Holdings III, LLC, RSC
Equipment Rental, Inc., Deutsche Bank AG, New York
Branch, as U.S. collateral agent under the Senior
Loan Documents (as defined therein) and as collateral
agent under the First Lien Last Out Note Documents
(as defined therein
    
    8-K
    
    333-144625
    
    
    4.3
    
    
    7/2/20094.11
    
    Collateral Agreement, dated as of July 1, 2009, by
and between RSC Equipment Rental, Inc., RSC Holdings
III, LLC, certain domestic subsidiaries of RSC
Holdings III, LLC that may become party thereto from
time to time and Deutsche Bank AG, New York Branch,
as Note Collateral Agent
    
    8-K
    
    333-144625
    
    
    4.4
    
    
    7/2/20094.12
    
    Indenture, dated as of November 17, 2009, by and
among RSC Equipment Rental, Inc., RSC Holdings III,
LLC and Wells Fargo Bank, National Association, as
Trustee
    
    8-K
    
    333-144625
    
    
    4.1
    
    
    11/17/20094.13
    
    Registration Rights Agreement, dated as of November
17, 2009, by and among RSC Equipment Rental, Inc.,
RSC Holdings III, LLC and Deutsche Bank Securities
Inc. and the other initial purchasers named therein
    
    8-K
    
    333-144625
    
    
    4.2
    
    
    11/17/200910.1+
    
    Amended and Restated RSC Holdings Stock Incentive Plan
    
    DEF 14A
    
    001-33485
    
    
    B
    
    
    4/18/200810.2+
    
    Form of Employee Stock Option Agreements
    
    S-1
    
    333-140644
    
    
    10.2
    
    
    2/13/200710.3+
    
    Form of Employee Stock Subscription Agreements
    
    S-1
    
    333-140644
    
    
    10.3
    
    
    2/13/200710.4+
    
    Form of Employment Agreement for executive officers
    
    S-1
    
    333-140644
    
    
    10.4
    
    
    2/13/2007
 E-2




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RSC HOLDINGS III, LLC AND SUBSIDIARIES
 ANNUAL REPORT ON FORM 10-K
 EXHIBIT INDEX (CONTINUED)
 Incorporated By ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.5
    
    Indemnification Agreement, dated as of November 27,
2006, by and among Atlas Copco North America Inc.,
Rental Service Corporation, RSC Acquisition LLC,
RSC Acquisition II LLC, OHCP II RSC, LLC, OHCMP OO
RSC, LLC, OHCP II RSC COI, LLC, Ripplewood Holdings
L.L.C., Oak Hill Capital Management and Atlas Copco
Finance S.à.r.l.
    
    S-1
    
    333-140644
    
    
    10.5
    
    
    2/13/200710.6
    
    Monitoring Agreement, dated as of November 27,
2006, by and among RSC Holdings Inc., Rental
Service Corporation, Ripplewood Holdings L.L.C. and
Oak Hill Capital Management, LLC
    
    S-1
    
    333-140644
    
    
    10.6
    
    
    2/13/200710.7
    
    Credit Agreement, dated as of November 27, 2006, by
and among RSC Holdings II, LLC, RSC Holdings III,
LLC, Rental Service Corporation, Rental Service
Corporation of Canada Ltd., Deutsche Bank AG, New
York Branch, Deutsche Bank AG, Canada Branch,
Citicorp North America, Inc., Bank of America,
N.A., LaSalle Business Credit, LLC and Wachovia
Capital Finance Corporation (Western)
    
    S-1/A
    
    333-140644
    
    
    10.7
    
    
    3/27/200710.8
    
    Second Lien Term Loan Credit Agreement, dated as of
November 27, 2006, by and among RSC Holdings II,
LLC, RSC Holdings III, LLC, Rental Service
Corporation, Deutsche Bank AG, New York Branch,
Citicorp North America, Inc., GE Capital markets,
Inc., Deutsche Bank Securities Inc., Citigroup
Global Markets Inc. and General Electric Capital
Corporation
    
    S-1/A
    
    333-140644
    
    
    10.8
    
    
    3/27/200710.9+
    
    RSC Holdings Inc. 2007 Annual Incentive Plan
    
    S-1/A
    
    333-140644
    
    
    10.9
    
    
    4/18/200710.10+
    
    Form of Indemnification Agreement
    
    S-1/A
    
    333-140644
    
    
    10.10
    
    
    5/21/200710.11+
    
    Form of Cost Reimbursement Agreement
    
    S-1/A
    
    333-140644
    
    
    10.11
    
    
    5/21/200710.12+
    
    Form of Director Restricted Stock Unit Agreement
    
    S-1/A
    
    333-140644
    
    
    10.12
    
    
    5/21/200710.13
    
    Executive Employment and Non-competition Agreement
by and between David Mathieson and RSC Holdings
Inc. effective January 2, 2008
    
    8-K
    
    333-144625
    
    
    10.1
    
    
    12/3/200710.14
    
    RSC Non-Qualified Deferred Compensation Savings Plan
    
    10-K
    
    001-33485
    
    
    10.14
    
    
    2/25/200910.15
    
    Form of First Amendment to the Amended and Restated
Executive Employment and Noncompetition Agreement
 President and Chief Executive Officer
    
    8-K
    
    333-144625
    
    
    10.1
    
    
    3/5/200910.16
    
    Form of First Amendment to the Executive Employment
and Noncompetition Agreement  Senior Vice
President
    
    8-K
    
    333-144625
    
    
    10.2
    
    
    3/5/2009
 E-3




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RSC HOLDINGS III, LLC AND SUBSIDIARIES
 ANNUAL REPORT ON FORM 10-K
 EXHIBIT INDEX (CONTINUED)
 Incorporated By ReferenceExhibitNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    FiledHerewith10.17
    
    First Amendment to
Credit Agreement,
dated as of June
26, 2009, by and
among RSC Holdings
II, LLC, RSC
Holdings III, LLC,
RSC Equipment
Rental, Inc., RSC
Equipment Rental of
Canada Ltd.,
Deutsche Bank AG,
New York Branch, as
U.S. administrative
agent, Deutsche
Bank AG, Canada
Branch, as Canadian
administrative
agent, and the
other financial
institutions party
thereto from time
to time
    
    8-K
    
    333-144625
    
    
    10.1
    
    
    7/2/200910.18
    
    Second Amendment to
Credit Agreement,
dated as of July
30, 2009, by and
among RSC Holdings
II, LLC, RSC
Holdings III, LLC,
RSC Equipment
Rental, Inc., RSC
Equipment Rental of
Canada Ltd.,
Deutsche Bank AG,
New York Branch, as
U.S. administrative
agent, Deutsche
Bank AG, Canada
Branch, as Canadian
administrative
agent, and the
other financial
institutions party
thereto from time
to time
    
    8-K
    
    333-144625
    
    
    10.1
    
    
    7/31/200910.19
    
    First Amendment to
Second-Lien Term
Loan Credit
Agreement, dated as
of August 21, 2009,
by and among RSC
Holdings II, LLC,
RSC Holdings III,
LLC, RSC Equipment
Rental, Inc.,
Deutsche Bank AG,
New York Branch, as
administrative
agent, and the
other financial
institutions party
thereto
    
    8-K
    
    333-144625
    
    
    10.1
    
    
    8/24/200910.20
    
    First Amendment to
Amended and
Restated Credit
Agreement, dated as
of November 9,
2009, by and among
RSC Holdings II,
LLC, RSC Holdings
III, LLC, RSC
Equipment Rental,
Inc., RSC Equipment
Rental of Canada
Ltd., Deutsche Bank
AG, New York
Branch, as U.S.
collateral agent
and U.S.
administrative
agent, Deutsche
Bank AG, Canada
Branch, as Canadian
administrative
agent and Canadian
collateral agent,
and the other
financial
institutions party
thereto
    
    8-K
    
    333-144625
    
    
    10.1
    
    
    11/17/200910.21
    
    Second Amendment to
Second-Lien Term
Loan Credit
Agreement, dated as
of November 9,
2009, by and among
RSC Holdings II,
LLC, RSC Holdings
III, LLC, RSC
Equipment Rental,
Inc., Deutsche Bank
AG, New York
Branch, as
administrative
agent, and the
other financial
institutions party
thereto
    
    8-K
    
    333-144625
    
    
    10.2
    
    
    11/17/200931.1
    
    Certification of
Chief Executive
Officer as required
by Rule 13a-14(a)
of the Securities
Exchange Act of
1934, as amended
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of
Chief Financial
Officer as required
by Rule 13a-14(a)
of the Securities
Exchange Act of
1934, as amended
    
    
    
    
    
    
    
    
    
    
    
    X32.1*
    
    Certifications of
Chief Executive
Officer and Chief
Financial Officer
as required by Rule
13a-14(b) of the
Securities Exchange
Act of 1934, as
amended
    
    
    
    
    
    
    
    
    
    
    
    X
 
 +
    
    Compensation plans or arrangements in which directors or executive officers are eligible to
participate. E-4




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
 ANNUAL REPORT ON FORM 10-K
 EXHIBIT INDEX (CONTINUED)
 *
    
    The certifications attached as
Exhibit 32.1 accompany this Annual Report on Form 10-K/A, are
not deemed filed with the Securities and Exchange Commission and are not to be incorporated by
reference into any filing of RSC Holdings III, LLC or RSC Equipment Rental, Inc., under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, whether made before or after the date of
this Annual Report on Form 10-K/A, irrespective of any general incorporation language contained
in such filing. E-5




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
  PageAudited Consolidated Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at December 31, 2009 and 2008
    
    
    F-4Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statements of Stockholders Equity (Deficit) and Comprehensive Income (Loss)
for the years ended December 31, 2009, 2008 and 2007
    
    
    F-6Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-9
 Supplementary Financial Data:
  F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework
 /s/ KPMG LLP 
 F-2




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
    Internal
Control  Integrated Framework
  /s/ KPMG LLP 
 F-3




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2009
    
    
    2008AssetsCash and cash equivalents
    
    $
    4,535
    
    
    $
    13,670Accounts receivable, net
    
    
    181,975
    
    
    
    285,000Inventory
    
    
    14,421
    
    
    
    19,859Rental equipment, net
    
    
    1,384,999
    
    
    
    1,766,978Property and equipment, net
    
    
    123,197
    
    
    
    171,156Goodwill and other intangibles, net
    
    
    940,063
    
    
    
    938,682Deferred financing costs
    
    
    55,539
    
    
    
    46,877Other assets
    
    
    23,537
    
    
    
    26,320Total assets
    
    $
    2,728,266
    
    
    $
    3,268,542Liabilities and Stockholders EquityAccounts payable
    
    $
    46,275
    
    
    $
    109,542Accrued expenses and other liabilities
    
    
    173,496
    
    
    
    200,750Debt
    
    
    2,172,109
    
    
    
    2,569,067Deferred income taxes
    
    
    312,745
    
    
    
    346,063Total liabilities
    
    
    2,704,625
    
    
    
    3,225,422Commitments and contingenciesCommon stock, no par value, (1,000 shares
authorized, issued and outstanding at
December 31, 2009 and December 31, 2008)
    
    
    288,761
    
    
    
    284,403Accumulated deficit
    
    
    (259,315
    )
    
    
    (206,485
    )Accumulated other comprehensive loss
    
    
    (5,805
    )
    
    
    (34,798
    )Total stockholders equity
    
    
    23,641
    
    
    
    43,120Total liabilities and stockholders equity
    
    $
    2,728,266
    
    
    $
    3,268,542
  F-4




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Revenues:Equipment rental revenue
    
    $
    1,073,021
    
    
    $
    1,567,254
    
    
    $
    1,543,175Sale of merchandise
    
    
    51,951
    
    
    
    72,472
    
    
    
    80,649Sale of used rental equipment
    
    
    158,482
    
    
    
    125,443
    
    
    
    145,358Total revenues
    
    
    1,283,454
    
    
    
    1,765,169
    
    
    
    1,769,182Cost of revenues:Cost of equipment rentals, excluding depreciation
    
    
    548,462
    
    
    
    692,613
    
    
    
    640,992Depreciation of rental equipment
    
    
    285,668
    
    
    
    317,504
    
    
    
    295,248Cost of merchandise sales
    
    
    36,743
    
    
    
    49,370
    
    
    
    53,936Cost of used rental equipment sales
    
    
    148,673
    
    
    
    90,500
    
    
    
    103,076Total cost of revenues
    
    
    1,019,546
    
    
    
    1,149,987
    
    
    
    1,093,252Gross profit
    
    
    263,908
    
    
    
    615,182
    
    
    
    675,930Operating expenses:Selling, general and administrative
    
    
    140,646
    
    
    
    168,690
    
    
    
    156,688Management fees
    
    
    
    
    
    
    
    
    
    
    23,000Depreciation and amortization of
non-rental equipment and intangibles
    
    
    43,984
    
    
    
    49,567
    
    
    
    46,226Other operating gains, net
    
    
    (517
    )
    
    
    (1,010
    )
    
    
    (4,850
    )Total operating expenses, net
    
    
    184,113
    
    
    
    217,247
    
    
    
    221,064Operating income
    
    
    79,795
    
    
    
    397,935
    
    
    
    454,866Interest expense, net
    
    
    189,689
    
    
    
    201,849
    
    
    
    243,908(Gain) loss on extinguishment of debt, net
    
    
    (13,916
    )
    
    
    
    
    
    
    9,570Other expense (income), net
    
    
    707
    
    
    
    658
    
    
    
    (1,126
    )(Loss) income before (benefit) provision for income taxes
    
    
    (96,685
    )
    
    
    195,428
    
    
    
    202,514(Benefit) provision for income taxes
    
    
    (37,325
    )
    
    
    72,939
    
    
    
    79,260Net (loss) income
    
    $
    (59,360
    )
    
    $
    122,489
    
    
    $
    123,254Weighted average shares outstanding used in computing
net (loss) income per common share:Basic and diluted
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Net (loss) income per common share:Basic and diluted
    
    $
    (59.36
    )
    
    $
    122.49
    
    
    $
    123. 25
  F-5




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)
 AccumulatedOtherCommon Stock
    
    
    Accumulated
    
    
    Comprehensive
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Income (Loss)
    
    
    TotalBalance, January 1, 2007
    
    
    
    1,000
    
    
    $
    15,955
    
    
    $
    (459,372
    )
    
    
    
    
    
    $
    8,784
    
    
    $
    (434,633
    )Components of comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    123,254
    
    
    $
    123,254
    
    
    
    
    
    
    
    123,254Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,914
    
    
    
    12,914
    
    
    
    12,914Change in fair value of derivatives
qualifying as cash flow hedges, net of
tax of $6,071
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,495
    )
    
    
    (9,495
    )
    
    
    (9,495
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    126,673Capital contributions
    
    
    
    
    
    
    
    259,564
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259,564Share-based compensation
    
    
    
    
    
    
    
    4,298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,298Balance, December 31, 2007
    
    
    
    1,000
    
    
    
    279,817
    
    
    
    (336,118
    )
    
    
    
    
    
    
    12,203
    
    
    
    (44,098
    )Components of comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    122,489
    
    
    $
    122,489
    
    
    
    
    
    
    
    122,489Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,796
    )
    
    
    (19,796
    )
    
    
    (19,796
    )Change in fair value of derivatives
qualifying as cash flow hedges, net of
tax of $16,959
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,205
    )
    
    
    (27,205
    )
    
    
    (27,205
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    75,488Capital contributions
    
    
    
    
    
    
    
    1,471
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,471Excess tax benefits, net
    
    
    
    
    
    
    
    122
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122Recapitalization adjustment
    
    
    
    
    
    
    
    
    
    
    
    7,144
    
    
    
    
    
    
    
    
    
    
    
    7,144Share-based compensation
    
    
    
    
    
    
    
    2,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,993Balance, December 31, 2008
    
    
    
    1,000
    
    
    
    284,403
    
    
    
    (206,485
    )
    
    
    
    
    
    
    (34,798
    )
    
    
    43,120Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    (59,360
    )
    
    $
    (59,360
    )
    
    
    
    
    
    
    (59,360
    )Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,065
    
    
    
    14,065
    
    
    
    14,065Change in fair value of derivatives
qualifying as cash flow hedges, net of
tax of $9,109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,928
    
    
    
    14,928
    
    
    
    14,928Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (30,367
    )Capital contributions
    
    
    
    
    
    
    
    256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256Excess tax benefits, net
    
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (122
    )Recapitalization adjustment
    
    
    
    
    
    
    
    
    
    
    
    6,530
    
    
    
    
    
    
    
    
    
    
    
    6,530Share-based compensation
    
    
    
    
    
    
    
    4,224
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,224Balance, December 31, 2009
    
    
    
    1,000
    
    
    $
    288,761
    
    
    $
    (259,315
    )
    
    
    
    
    
    $
    (5,805
    )
    
    $
    23,641
  F-6




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Cash flows from operating activities:Net (loss) income
    
    $
    (59,360
    )
    
    $
    122,489
    
    
    $
    123,254Adjustments to reconcile net (loss) income to net cash provided by operating activities:Depreciation and amortization
    
    
    329,652
    
    
    
    367,071
    
    
    
    341,474Amortization of deferred financing costs
    
    
    11,768
    
    
    
    9,713
    
    
    
    8,479Amortization of original issue discount
    
    
    453
    
    
    
    
    
    
    
    Share-based compensation expense
    
    
    4,224
    
    
    
    2,993
    
    
    
    4,298Gain on sales of rental and non-rental property and equipment, net of non-cash writeoffs
    
    
    (7,091
    )
    
    
    (26,106
    )
    
    
    (43,284
    )Deferred income taxes
    
    
    (37,332
    )
    
    
    41,772
    
    
    
    35,524(Gain) loss on extinguishment of debt, net
    
    
    (13,916
    )
    
    
    
    
    
    
    9,570Interest expense, ineffective hedge
    
    
    6,832
    
    
    
    
    
    
    
    Excess tax benefits from share-based payment arrangements
    
    
    
    
    
    
    (122
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable, net
    
    
    99,772
    
    
    
    (1,083
    )
    
    
    (13,745
    )Inventory
    
    
    5,519
    
    
    
    1,625
    
    
    
    (2,844
    )Other assets
    
    
    1,191
    
    
    
    (3,221
    )
    
    
    (705
    )Accounts payable
    
    
    (63,068
    )
    
    
    (153,183
    )
    
    
    (1,414
    )Accrued expenses and other liabilities
    
    
    (8,688
    )
    
    
    1,491
    
    
    
    48,947Net cash provided by operating activities
    
    
    269,956
    
    
    
    363,439
    
    
    
    509,554Cash flows from investing activities:Cash paid for acquisition, net of cash acquired
    
    
    
    
    
    
    (33,238
    )
    
    
    Purchases of rental equipment
    
    
    (46,386
    )
    
    
    (258,660
    )
    
    
    (580,194
    )Purchases of property and equipment
    
    
    (4,952
    )
    
    
    (15,319
    )
    
    
    (20,674
    )Proceeds from sales of rental equipment
    
    
    158,482
    
    
    
    125,443
    
    
    
    145,358Proceeds from sales of property and equipment
    
    
    12,493
    
    
    
    6,544
    
    
    
    11,320Insurance proceeds from rental equipment and property claims
    
    
    5,267
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    124,904
    
    
    
    (175,230
    )
    
    
    (444,190
    )Cash flows from financing activities:Cash consideration paid to Atlas
    
    
    
    
    
    
    
    
    
    
    (17,995
    )Proceeds from Senior ABL Revolving Facility
    
    
    321,166
    
    
    
    240,437
    
    
    
    99,457Proceeds from issuance of 2017 Notes
    
    
    389,280
    
    
    
    
    
    
    
    Proceeds from issuance of 2019 Notes
    
    
    196,954
    
    
    
    
    
    
    
    Payments on Senior ABL Revolving Facility
    
    
    (601,193
    )
    
    
    (386,068
    )
    
    
    (150,274
    )Payments on Senior ABL Term Loan
    
    
    (244,375
    )
    
    
    (2,500
    )
    
    
    (2,500
    )Payments on Second Lien Term Facility
    
    
    (392,986
    )
    
    
    
    
    
    
    (230,700
    )Payments on capital leases and other debt
    
    
    (40,427
    )
    
    
    (38,102
    )
    
    
    (39,030
    )Payments for deferred financing costs
    
    
    (28,487
    )
    
    
    (929
    )
    
    
    (842
    )Payments for non-deferred financing costs
    
    
    (4,312
    )
    
    
    
    
    
    
    (4,614
    )Capital contributions from RSC Holdings
    
    
    256
    
    
    
    1,593
    
    
    
    255,064Capital contributions from Atlas
    
    
    
    
    
    
    
    
    
    
    4,500(Decrease) increase in outstanding checks in excess of cash balances
    
    
    (1,070
    )
    
    
    1,135
    
    
    
    (14,774
    )Net cash used in financing activities
    
    
    (405,194
    )
    
    
    (184,434
    )
    
    
    (101,708
    )Effect of foreign exchange rates on cash
    
    
    1,199
    
    
    
    (144
    )
    
    
    195Net (decrease) increase in cash and cash equivalents
    
    
    (9,135
    )
    
    
    3,631
    
    
    
    (36,149
    )Cash and cash equivalents at beginning of year
    
    
    13,670
    
    
    
    10,039
    
    
    
    46,188Cash and cash equivalents at end of year
    
    $
    4,535
    
    
    $
    13,670
    
    
    $
    10,039Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    155,295
    
    
    $
    199,210
    
    
    $
    218,488Cash (received) paid for taxes, net
    
    
    (8,632
    )
    
    
    30,988
    
    
    
    48,730
  F-7




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Supplemental schedule of non-cash investing and financing activities:Purchase of assets under capital lease obligations
    
    $
    1,136
    
    
    $
    20,176
    
    
    $
    52,320Accrued deferred financing costs
    
    
    634
    
    
    
    
    
    
    
    Acquisition of net assets of another company:Assets, net of cash acquired
    
    
    
    
    
    $
    33,421Net cash paid
    
    
    
    
    
    
    (33,238
    )Liabilities assumed
    
    
    
    
    
    $
    183
  F-8




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Organization
 Business and Basis of Presentation
 Description of Business
  Basis of Presentation and Consolidation
   Use of Estimates
  Subsequent Events
  Reclassification
  F-9




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Description
    
    Previously Included In
    
    Currently Included InPrepayment penalty
and deferred
financing costs
write-off
associated with
repayment of Second
Lien Term Facility
debt
    
    Interest expense
    
    Loss on extinguishment of debt
 (2) Summary of Significant Accounting Policies
 Cash Equivalents
  Accounts Receivable
   December 31,2009
    
    
    2008(in 000s)Trade receivables
    
    $
    187,496
    
    
    $
    276,547Other receivables
    
    
    5,220
    
    
    
    17,650Less allowance for doubtful accounts
    
    
    (10,741
    )
    
    
    (9,197
    )Accounts receivable, net
    
    $
    181,975
    
    
    $
    285,000
  F-10




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)
  2009
    
    
    2008
    
    
    2007(in 000s)Beginning balance at January 1,
    
    $
    9,197
    
    
    $
    6,801
    
    
    $
    5,662Provision for bad debt
    
    
    9,962
    
    
    
    8,146
    
    
    
    5,653Charge offs, net
    
    
    (8,418
    )
    
    
    (5,750
    )
    
    
    (4,514
    )Ending balance at December 31,
    
    $
    10,741
    
    
    $
    9,197
    
    
    $
    6,801
 Rental Equipment
    December 31,2009
    
    
    2008(in 000s)Rental equipment
    
    $
    2,401,605
    
    
    $
    2,751,093Less accumulated depreciation
    
    
    (1,016,606
    )
    
    
    (984,115
    )Rental equipment, net
    
    $
    1,384,999
    
    
    $
    1,766,978
 Property and Equipment
   December 31,2009
    
    
    2008(in 000s)Leased equipment
    
    $
    183,225
    
    
    $
    217,739Buildings and leasehold improvements
    
    
    51,003
    
    
    
    51,814Non-rental machinery and equipment
    
    
    40,468
    
    
    
    39,500Data processing hardware and purchased software
    
    
    16,219
    
    
    
    16,978Furniture and fixtures
    
    
    10,581
    
    
    
    11,418Construction in progress
    
    
    1,641
    
    
    
    2,722Land and improvements
    
    
    555
    
    
    
    695303,692
    
    
    
    340,866Less accumulated depreciation and amortization
    
    
    (180,495
    )
    
    
    (169,710
    )Property and equipment, net
    
    $
    123,197
    
    
    $
    171,156
 F-11




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Impairment of Long-Lived Assets
  Goodwill and Other Intangible Assets
     F-12




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Reserves for Claims
  Foreign Currency Translation
  Derivative Instruments and Hedging Activities
  Accumulated Other Comprehensive Income (Loss)
  Fair Value of Financial Instruments
  F-13




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Revenue Recognition
     Marketing and Advertising Costs
  Income Taxes
   Consideration Received from Vendors
  F-14




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Share-Based Compensation
  Earnings per Share
  Recent Accounting Pronouncements
  (3) Accrued Expenses and Other Liabilities
  December 31,2009
    
    
    2008(in 000s)Compensation-related accruals
    
    $
    21,395
    
    
    $
    35,330Accrued income and other taxes
    
    
    24,257
    
    
    
    25,935Reserves for claims
    
    
    30,018
    
    
    
    37,157Accrued interest payable
    
    
    42,525
    
    
    
    31,980Interest rate swap liability
    
    
    42,823
    
    
    
    60,028Other
    
    
    12,478
    
    
    
    10,320Total
    
    $
    173,496
    
    
    $
    200,750
 (4) Closed Location Charges
  F-15




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Lease Exit and
    
    
    EmployeeOther Related
    
    
    Termination Costs
    
    
    Other Exit CostsCosts (a)
    
    
    (b)
    
    
    (c)
    
    
    TotalClosed location reserves at December 31, 2007
    
    $
    (202
    )
    
    $
    
    
    
    $
    
    
    
    $
    (202
    )Charges incurred to close locations
    
    
    (5,087
    )
    
    
    (1,303
    )
    
    
    (866
    )
    
    
    (7,256
    )Cash payments
    
    
    685
    
    
    
    906
    
    
    
    866
    
    
    
    2,457Closed location reserves at December 31, 2008
    
    
    (4,604
    )
    
    
    (397
    )
    
    
    
    
    
    
    (5,001
    )Charges incurred to close locations
    
    
    (8,592
    )
    
    
    (811
    )
    
    
    (56
    )
    
    
    (9,459
    )Cash payments
    
    
    6,704
    
    
    
    1,086
    
    
    
    56
    
    
    
    7,846Closed location reserves at December 31, 2009
    
    $
    (6,492
    )
    
    $
    (122
    )
    
    $
    
    
    
    $
    (6,614
    )
 
 (a)
    
    Lease exit and other related costs are included within cost of equipment rentals in the
consolidated statements of operations.(b)
    
    Employee termination costs primarily consist of severance payments and related
benefits. For the years ended December 31, 2009 and 2008, $0.7 million and $1.2 million,
respectively, of these costs are included within cost of equipment rentals and $0.1
million, of these costs are included in selling, general and administrative expenses in the
consolidated statements of operations.(c)
    
    Other exit costs include costs incurred primarily to transport fleet from closed
locations to other locations. These costs are included within cost of equipment rentals in
the consolidated statements of operations.  F-16




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 (5) Debt
  December 31,
    
    
    December 31,2009
    
    
    2008Interest
    
    
    Maturity
    
    
    DeferredRate (a)
    
    
    Date
    
    
    Financing Costs
    
    
    Debt
    
    
    Debt(in 000s)Senior ABL Revolving Facility
    
    
    4.80
    %
    
    
    (b
    )
    
    $
    20,344
    
    
    $
    401,195
    
    
    $
    681,268Senior ABL Term Loan
    
    
    n/a
    
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    244,375Second Lien Term Facility
    
    
    8.14
    %
    
    Nov. 2013
        
    
    6,897
    
    
    
    479,395
    
    
    
    899,3002014 Notes
    
    
    9.50
    %
    
    Dec. 2014
    
    

        14,322
    
    

        620,000
    
    

    
    620,0002017 Notes
    
    
    10.50
    %
    
    Jul. 2017
    
    

    
    9,186
    
    

        400,000
    
    

    
    2019 Notes
    
    
    10.50
    %
    
    Nov. 2019
    
    

        4,790
    
    

        200,000
    
    

        Capitalized lease obligations
    
    
    0.38
    %
    
    Various
    
    

        
    
    

        84,833
    
    

    
    124,124Total
    
    
    
    
    
    
    
    
    
    $
    55,539
    
    
    
    2,185,423
    
    
    
    2,569,067Original issue discounts (d)
    
    
    n/a
    
    
    
    n/a
    
    
    
    
    
    
    
    (13,314
    )
    
    
    Total, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,172,109
    
    
    $
    2,569,067
 
 (a)
    
    Estimated interest rate presented is the effective interest rate as of December 31, 2009
including the effect of original issue discounts, where applicable, and excluding the
effect of deferred financing costs.(b)
    
    Of the outstanding balance on the Senior ABL Revolving Facility at December 31, 2009,
$103.5 million is due November 2011 with the remaining $297.7 million due August 2013.(c)
    
    The Senior ABL Term Loan was repaid in July 2009.(d)
    
    The original issue discounts represents the unamortized difference between the $400.0
million aggregate principal amount of the 2017 Notes and the proceeds received upon
issuance and the unamortized difference between the $200.0 million aggregate principal
amount of the 2019 Notes and the proceeds received upon issuance.   2010
    
    $
    27,3292011
    
    
    124,9682012
    
    
    16,0032013
    
    
    788,3292014
    
    
    626,252Thereafter
    
    
    602,542Total
    
    $
    2,185,423
  Senior ABL Revolving Facility
    
    $
    401,195Second Lien Term Facility
    
    
    445,8372014 Notes
    
    
    627,7502017 Notes
    
    
    434,0002019 Notes
    
    
    207,000Capitalized lease obligations
    
    
    84,833Total
    
    $
    2,200,615
 F-17




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Senior ABL Facilities.
     F-18




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Second Lien Term Facility
     F-19




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    2014 Notes. 1 2
  Redemption Period
    
    Price2010
    
    
    104.750
    %2011
    
    
    102.375
    %2012 and thereafter
    
    
    100.000
    %
 2017 Notes
  F-20




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Redemption Period
    
    Price2013
    
    
    105.000
    %2014
    
    
    102.500
    %2015 and thereafter
    
    
    100.000
    %
   2019 Notes.
  Redemption Period
    
    Price2014
    
    
    105.125
    %2015
    
    
    103.417
    %2016
    
    
    101.708
    %2017 and thereafter
    
    
    100.000
    %
    Capital leases.
 F-21




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Deferred
financing costs
 (6) Derivative Instruments
      F-22




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008Loss inLoss in
    
    
    accumulated OCLFair Value of
    
    
    Fair Value of
    
    
    accumulated OCL (net
    
    
    (net ofDerivative Type
    
    Swap Liabilities
    
    
    Swap Liabilities
    
    
    of tax)
    
    
    tax)Interest rate swaps (a)
    
    $
    42,823
    
    
    $
    60,028
    
    
    $
    21,772
    
    
    $
    36,700
 
 (a)
    
    See Note 8 for further discussion on measuring fair value of the interest rate swaps. F-23




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Gainrecognized onLoss recognized in
    
    
    Loss reclassified from
    
    
    ineffective portionaccumulated OCL
    
    
    accumulated OCL into
    
    
    ofDerivative Type
    
    (net of tax)
    
    
    expense (net of tax)
    
    
    derivativesInterest rate swaps
    
    $
    8,561
    
    
    $
    23,489
    
    
    $
    236
  Lossrecognized onLoss recognized in
    
    
    Loss reclassified from
    
    
    ineffective portionaccumulated OCL
    
    
    accumulated OCL into
    
    
    ofDerivative Type
    
    (net of tax)
    
    
    expense (net of tax)
    
    
    derivativesInterest rate swaps
    
    $
    30,998
    
    
    $
    3,793
    
    
    $
    123
  2009
    
    
    2008Loss recognized on
    
    
    Loss recognized onDerivatives not designated as hedging instruments
    
    derivative
    
    
    derivativesInterest rate swaps
    
    $
    7,702
    
    
    $
    
 (7) Acquisition
  F-24




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 (8) Fair Value
 Measurements
  
    
    Level 1  Observable inputs such as quoted prices in active markets;
    
    Level 2  Inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly; and
    
    Level 3  Unobservable inputs in which there is little or no market data, which
require the reporting entity to develop its own assumptions.
  Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantFair Value December
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Unobservable Inputs31, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Interest rate derivatives (a)
    
    $
    42,823
    
    
    $
    
    
    
    $
    42,823
    
    
    $
    
 
 (a)
    
    The Companys interest rate derivative instruments are not traded on a market
exchange, the fair values are determined using valuation models which include assumptions about
the Companys credit risk and interest rates based on those observed in the underlying markets
(LIBOR swap rate).  (9) Accumulated Other Comprehensive Income (Loss)
  Accumulated OtherFair Market Value of Cash
    
    
    Comprehensive IncomeForeign Currency Translation
    
    
    Flow Hedges
    
    
    (Loss)(in 000s)Balance at December 31, 2008
    
    $
    1,902
    
    
    $
    (36,700
    )
    
    $
    (34,798
    )Foreign currency
translation
    
    
    14,065
    
    
    
    
    
    
    
    14,065Change in fair value of
cash flow hedges, net of
tax
    
    
    
    
    
    
    14,928
    
    
    
    14,928Balance at December 31, 2009
    
    $
    15,967
    
    
    $
    (21,772
    )
    
    $
    (5,805
    )
 (10) Common and Preferred Stock
 Common Stock
   F-25




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Preferred Stock
  (11) Income Taxes
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(in 000s)Domestic federal:Current
    
    $
    386
    
    
    $
    18,441
    
    
    $
    31,661Deferred
    
    
    (32,521
    )
    
    
    41,032
    
    
    
    31,057(32,135
    )
    
    
    59,473
    
    
    
    62,718Domestic stateCurrent
    
    
    (372
    )
    
    
    8,326
    
    
    
    5,661Deferred
    
    
    (3,930
    )
    
    
    1,583
    
    
    
    3,132Total domestic
    
    
    (36,437
    )
    
    
    69,382
    
    
    
    71,511Foreign federal:Current
    
    
    (7
    )
    
    
    4,399
    
    
    
    6,413Deferred
    
    
    (881
    )
    
    
    (842
    )
    
    
    1,336Total foreign
    
    
    (888
    )
    
    
    3,557
    
    
    
    7,749$
    (37,325
    )
    
    $
    72,939
    
    
    $
    79,260
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(in 000s)Computed tax at statutory tax rate
    
    $
    (33,839
    )
    
    $
    68,400
    
    
    $
    70,880Permanent items
    
    
    735
    
    
    
    1,017
    
    
    
    793State income taxes, net of federal tax benefit
    
    
    (2,625
    )
    
    
    8,076
    
    
    
    7,152Difference between federal statutory and
foreign tax rate
    
    
    (242
    )
    
    
    (862
    )
    
    
    (323
    )Change in tax reserves
    
    
    442
    
    
    
    (489
    )
    
    
    Change in estimated tax rates
    
    
    (2,680
    )
    
    
    (3,241
    )
    
    
    Expiration of stock appreciation rights
    
    
    946
    
    
    
    
    
    
    
    Other
    
    
    (62
    )
    
    
    38
    
    
    
    758(Benefit) provision for income taxes
    
    $
    (37,325
    )
    
    $
    72,939
    
    
    $
    79,260
  F-26




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   December 31,2009
    
    
    2008(in 000s)Deferred tax assets:Accruals
    
    $
    23,028
    
    
    $
    27,481Federal tax benefit of state reserves
    
    
    302
    
    
    
    105Deferred financing costs (derivative)
    
    
    13,920
    
    
    
    23,030State credits
    
    
    839
    
    
    
    610Net operating loss
    
    
    23,653
    
    
    
    Total deferred tax assets
    
    
    61,742
    
    
    
    51,226Deferred tax liabilities:Intangibles
    
    
    55,884
    
    
    
    47,073Capitalized leases
    
    
    1,289
    
    
    
    9,553Property and equipment
    
    
    303,802
    
    
    
    331,707Foreign
    
    
    9,466
    
    
    
    8,956Deferred financing costs
    
    
    4,046
    
    
    
    Total deferred tax liabilities
    
    
    374,487
    
    
    
    397,289Net deferred tax liability
    
    $
    312,745
    
    
    $
    346,063
   F-27




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 UnrecognizedTax Benefits(in 000s)Balance at January 1, 2009
    
    $
    4,653Additions based on tax positions related to the prior year
    
    
    3,134Additions based on tax positions related to the current year
    
    
    1,046Reductions based on tax positions related to prior years
    
    
    (923
    )Reductions for tax positions related to prior years  Settlements
    
    
    (1,250
    )Balance at December 31, 2009
    
    $
    6,660
     (12) Commitments and Contingencies
   F-28




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 (13) Leases
  December 31,2009
    
    
    2008(in 000s)Leased equipment
    
    $
    183,225
    
    
    $
    217,739Less accumulated depreciation and amortization
    
    
    (95,053
    )
    
    
    (90,435
    )Leased equipment
    
    $
    88,172
    
    
    $
    127,304
    December 31,(in 000s)2010
    
    $
    27,6002011
    
    
    21,6922012
    
    
    16,1112013
    
    
    11,2502014
    
    
    6,274Thereafter
    
    
    2,546Total minimum lease payments
    
    $
    85,473Less amount representing interest (0.38% at December 31, 2009)
    
    
    (640
    )Capital lease obligations
    
    $
    84,833
  December 31,(in 000s)2010
    
    $
    51,4422011
    
    
    44,7962012
    
    
    34,1392013
    
    
    21,6892014
    
    
    11,751Thereafter
    
    
    18,422Total minimum lease payments
    
    $
    182,239Less amount representing executed subleases
    
    
    (3,815
    )Total minimum lease payments, net of subleases
    
    $
    178,424
 F-29




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 (14) Legal and Insurance Matters
  (15) Affiliated Company Transactions
     (16) Employee Benefit Plans
   F-30




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 (17) Share-Based Compensation Plans
  Stock Incentive Plan
   Years Ended December 31,2009
    
    
    2008
    
    
    2007Expected volatility
    
    
    68.0
    %
    
    
    51.1
    %
    
    
    40.0
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    Expected term (in years)
    
    
    5.2
    
    
    
    4.4
    
    
    
    4.2Risk-free interest rate
    
    
    2.4
    %
    
    
    1.8
    %
    
    
    3.9
    %Weighted average grant date fair value of options granted
    
    $
    4.55
    
    
    $
    3.43
    
    
    $
    5.19
 F-31




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Weighted-AverageWeighted-
    
    
    Remaining
    
    
    AggregateAverage
    
    
    Contractual
    
    
    IntrinsicExercise
    
    
    Term
    
    
    ValueOptions
    
    Shares
    
    
    Price
    
    
    (Years)
    
    
    (in 000s)Outstanding January 1, 2007
    
    
    4,395,921
    
    
    $
    6.52Granted
    
    
    714,000
    
    
    
    13.82Exercised
    
    
    Forfeited or expired
    
    
    (206,529
    )
    
    
    6.52Outstanding December 31, 2007
    
    
    4,903,392
    
    
    
    7.58Granted
    
    
    2,029,507
    
    
    
    7.99Exercised
    
    
    (225,751
    )
    
    
    6.52Forfeited or expired
    
    
    (982,826
    )
    
    
    7.84Outstanding December 31, 2008
    
    
    5,724,322
    
    
    
    7.72Granted
    
    
    838,400
    
    
    
    7.74Exercised
    
    
    (39,235
    )
    
    
    6.52Forfeited or expired
    
    
    (634,413
    )
    
    
    7.80Outstanding December 31, 2009
    
    
    5,889,074
    
    
    
    7.73
    
    
    
    8.0
    
    
    $
    1,528Exercisable at December 31, 2009
    
    
    1,821,388
    
    
    
    7.85
    
    
    
    7.5
    
    
    $
    603
     F-32




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 (18) Business Segment and Geographic Information
   Years Ended December 31,2009
    
    
    2008
    
    
    2007(in 000s)Revenues from external customers:Domestic
    
    $
    1,216,259
    
    
    $
    1,667,218
    
    
    $
    1,682,279Foreign
    
    
    67,195
    
    
    
    97,951
    
    
    
    86,903Total
    
    $
    1,283,454
    
    
    $
    1,765,169
    
    
    $
    1,769,182
  December 31,2009
    
    
    2008(in 000s)Rental equipment, netDomestic
    
    $
    1,311,775
    
    
    $
    1,688,579Foreign
    
    
    73,224
    
    
    
    78,399Total
    
    $
    1,384,999
    
    
    $
    1,766,978Property and equipment, netDomestic
    
    $
    115,279
    
    
    $
    162,039Foreign
    
    
    7,918
    
    
    
    9,117Total
    
    $
    123,197
    
    
    $
    171,156
 F-33




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##### Table of Contents



RSC HOLDINGS III, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 (19) Selected Unaudited Quarterly Financial Data (in 000s, except per share amounts)
 Three months ending2009
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Total revenues
    
    $
    351,273
    
    
    $
    326,558
    
    
    $
    315,564
    
    
    $
    290,059Gross profit
    
    
    70,739
    
    
    
    70,210
    
    
    
    67,780
    
    
    
    55,179Loss before benefit for income taxes
    
    
    (21,177
    )
    
    
    (16,517
    )
    
    
    (12,869
    )
    
    
    (46,122
    )Net loss available for common
stockholders
    
    
    (13,504
    )
    
    
    (11,490
    )
    
    
    (5,835
    )
    
    
    (28,531
    )Basic and diluted net loss per
common share
    
    
    (13.50
    )
    
    
    (11.49
    )
    
    
    (5.84
    )
    
    
    (28.53
    )
 Three months ending2008
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Total revenues
    
    $
    422,093
    
    
    $
    449,017
    
    
    $
    466,867
    
    
    $
    427,192Gross profit
    
    
    142,256
    
    
    
    167,794
    
    
    
    168,447
    
    
    
    136,685Income before provision for income taxes
    
    
    36,620
    
    
    
    65,712
    
    
    
    61,674
    
    
    
    31,422Net income available for common
stockholders
    
    
    22,345
    
    
    
    40,077
    
    
    
    42,349
    
    
    
    17,718Basic and diluted net income per
common share
    
    
    22.34
    
    
    
    40.08
    
    
    
    42.35
    
    
    
    17.72
  F-34