##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 333-144625-01
 333-144625
 RSC Holdings III, LLC
 RSC Equipment Rental, Inc.
  Delaware
    
    41-2218971Arizona
    
    86-0933835(State or other jurisdiction of
    
    (I.R.S. Employer Identification Number)incorporation or organization)6929 E. Greenway Pkwy.Scottsdale, Arizona
    
    85254(Address of principal executive offices)
    
    (Zip code)
 (480) 905-3300
 (Registrants telephone number,
 N/A
 (Former name, or former address and
 The Registrants meet the conditions set forth in General Instructions H(1)(a) and (b) of Form
10-Q and are therefore filing this Form with the reduced disclosure format as permitted.
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



Table of Contents
 Cautionary Note for Forward-Looking Information
    
    
    1PART I.Financial Information
    
    
    2ITEM 1.Financial Statements (unaudited)
    
    
    2Condensed Consolidated Balance Sheets at June 30, 2008 and December 31, 2007
    
    
    2Condensed Consolidated Statements of Income for the three and six months ended June
30, 2008 and June 30, 2007
    
    
    3Condensed Consolidated Statements of Cash Flows for the six months ended June 30,
2008 and June 30, 2007
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10ITEM 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    18ITEM 4T.Controls and Procedures
    
    
    18PART II.Other Information
    
    
    19ITEM 1.Legal Proceedings
    
    
    19ITEM 1A.Risk Factors
    
    
    19ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19ITEM 3.Defaults Upon Senior Securities
    
    
    19ITEM 4.Submission of Matters to a Vote of Security Holders
    
    
    20ITEM 5.Other Information
    
    
    20ITEM 6.Exhibits
    
    
    21SIGNATURES
    
    
    22EX-31.1EX-31.2EX-32.1
  i




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Introductory Note
  
 Cautionary Note for Forward-Looking Information
    
    
    the effect of an economic downturn or other factors resulting in a decline in
industrial, non-residential construction and capital investment;
    
    increased competition from other companies in our industry and our inability to
increase or maintain our prices;
    
    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;
    
    heavy reliance on centralized information systems;
    
    exposure to claims for personal injury, death and property damage resulting from the
use of equipment rented or sold by us;
    
    the effect of changes in laws and regulations, including those relating to the
environment and customer privacy, among others;
    
    fluctuations in fuel or supply costs; and
    
    claims that the software products and information systems on which we rely infringe on
the intellectual property rights of others.
  1




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##### Table of Contents



PART I. Financial Information
 
 Item 1. Financial Statements
 RSC HOLDINGS III, LLC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 (Unaudited)
 June 30,
    
    
    December 31,2008
    
    
    2007AssetsCash and cash equivalents
    
    $
    5,066
    
    
    $
    10,039Accounts receivable, net
    
    
    279,221
    
    
    
    284,570Inventory
    
    
    22,494
    
    
    
    21,563Rental equipment, net
    
    
    1,892,634
    
    
    
    1,929,514Property and equipment, net
    
    
    189,419
    
    
    
    191,901Goodwill
    
    
    925,621
    
    
    
    925,621Deferred financing costs
    
    
    51,123
    
    
    
    55,660Other assets
    
    
    27,806
    
    
    
    35,501Total assets
    
    $
    3,393,384
    
    
    $
    3,454,369Liabilities and Stockholders Equity (Deficit)Accounts payable
    
    $
    182,114
    
    
    $
    264,384Accrued expenses and other liabilities
    
    
    153,543
    
    
    
    173,655Debt
    
    
    2,696,090
    
    
    
    2,736,225Deferred income taxes, net
    
    
    343,445
    
    
    
    324,203Total liabilities
    
    
    3,375,192
    
    
    
    3,498,467Commitments and contingenciesCommon stock, no par value, (1,000 shares authorized,
issued and outstanding at June 30, 2008 and as of
December 31, 2007)
    
    
    282,704
    
    
    
    279,817Accumulated deficit
    
    
    (273,696
    )
    
    
    (336,118
    )Accumulated other comprehensive income
    
    
    9,184
    
    
    
    12,203Total stockholders equity (deficit)
    
    
    18,192
    
    
    
    (44,098
    )Total liabilities and stockholders equity (deficit)
    
    $
    3,393,384
    
    
    $
    3,454,369
  2




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RSC HOLDINGS III, LLC AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except share data)
 (Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Equipment rental revenue
    
    $
    404,843
    
    
    $
    384,646
    
    
    $
    777,178
    
    
    $
    732,621Sale of merchandise
    
    
    18,894
    
    
    
    20,389
    
    
    
    37,246
    
    
    
    40,987Sale of used rental equipment
    
    
    25,280
    
    
    
    37,793
    
    
    
    56,686
    
    
    
    75,567Total revenues
    
    
    449,017
    
    
    
    442,828
    
    
    
    871,110
    
    
    
    849,175Cost of revenues:Cost of equipment rentals, excluding
depreciation
    
    
    172,541
    
    
    
    159,974
    
    
    
    339,811
    
    
    
    315,983Depreciation  rental equipment
    
    
    79,252
    
    
    
    71,517
    
    
    
    157,462
    
    
    
    140,068Cost of merchandise sales
    
    
    11,380
    
    
    
    12,448
    
    
    
    22,396
    
    
    
    24,800Cost of used rental equipment sales
    
    
    17,217
    
    
    
    26,949
    
    
    
    39,674
    
    
    
    53,892Total cost of revenues
    
    
    280,390
    
    
    
    270,888
    
    
    
    559,343
    
    
    
    534,743Gross profit
    
    
    168,627
    
    
    
    171,940
    
    
    
    311,767
    
    
    
    314,432Operating expenses:Selling, general, and administrative
    
    
    41,776
    
    
    
    38,100
    
    
    
    81,364
    
    
    
    70,689Management fees
    
    
    
    
    
    
    21,500
    
    
    
    
    
    
    
    23,000Depreciation and amortization 
non-rental equipment
    
    
    12,413
    
    
    
    11,453
    
    
    
    24,611
    
    
    
    22,309Total operating expenses
    
    
    54,189
    
    
    
    71,053
    
    
    
    105,975
    
    
    
    115,998Operating income
    
    
    114,438
    
    
    
    100,887
    
    
    
    205,792
    
    
    
    198,434Interest expense, net
    
    
    48,742
    
    
    
    72,689
    
    
    
    104,103
    
    
    
    136,889Other income, net
    
    
    (16
    )
    
    
    (291
    )
    
    
    (643
    )
    
    
    (202
    )Income before provision for income taxes
    
    
    65,712
    
    
    
    28,489
    
    
    
    102,332
    
    
    
    61,747Provision for income taxes
    
    
    25,635
    
    
    
    11,064
    
    
    
    39,910
    
    
    
    24,079Net income
    
    $
    40,077
    
    
    $
    17,425
    
    
    $
    62,422
    
    
    $
    37,668Weighted average shares outstanding used in
computing net income per common share:Basic and diluted
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Net income per common share:Basic and diluted
    
    $
    40.08
    
    
    $
    17.43
    
    
    $
    62.42
    
    
    $
    37.67
  3




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RSC HOLDINGS III, LLC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Six Months Ended June 30,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    62,422
    
    
    $
    37,668Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    182,073
    
    
    
    162,377Amortization of deferred financing costs
    
    
    4,787
    
    
    
    8,945Share-based compensation expense
    
    
    1,840
    
    
    
    1,872Gain on sales of rental and non-rental property and equipment, net of
non-cash writeoffs
    
    
    (16,284
    )
    
    
    (23,388
    )Deferred income taxes
    
    
    18,754
    
    
    
    10,450Changes in operating assets and liabilities:Accounts receivable, net
    
    
    4,773
    
    
    
    (14,426
    )Inventory
    
    
    (955
    )
    
    
    100Other assets
    
    
    (1,543
    )
    
    
    2,827Accounts payable
    
    
    (81,588
    )
    
    
    73,868Accrued expenses and other liabilities
    
    
    (10,174
    )
    
    
    23,078Net cash provided by operating activities
    
    
    164,105
    
    
    
    283,371Cash flows from investing activities:Purchases of rental equipment
    
    
    (164,958
    )
    
    
    (329,974
    )Purchases of property and equipment
    
    
    (10,023
    )
    
    
    (13,696
    )Proceeds from sales of rental equipment
    
    
    56,686
    
    
    
    75,567Proceeds from sales of property and equipment
    
    
    3,025
    
    
    
    7,079Net cash used in investing activities
    
    
    (115,270
    )
    
    
    (261,024
    )Cash flows from financing activities:Cash consideration paid to Atlas
    
    
    
    
    
    
    (17,995
    )Proceeds from senior ABL revolver
    
    
    125,992
    
    
    
    20,458Payments on senior ABL revolver
    
    
    (159,982
    )
    
    
    (61,166
    )Payments on senior ABL term loan
    
    
    (1,250
    )
    
    
    (1,250
    )Payments on Senior Term Facility
    
    
    
    
    
    
    (230,700
    )Payments on capital leases and other
    
    
    (19,252
    )
    
    
    (19,099
    )Deferred financing costs
    
    
    (250
    )
    
    
    (186
    )Proceeds from stock option exercises
    
    
    950
    
    
    
    Excess tax benefits from share-based payment arrangements
    
    
    97
    
    
    
    Proceeds from the issuance of common stock
    
    
    
    
    
    
    255,064Capital contributions from Atlas
    
    
    
    
    
    
    4,500Increase (decrease) in outstanding checks in excess of cash balances
    
    
    3
    
    
    
    (14,774
    )Net cash used in financing activities
    
    
    (53,692
    )
    
    
    (65,148
    )Effect of foreign exchange rates on cash
    
    
    (116
    )
    
    
    (42
    )Net decrease in cash and cash equivalents
    
    
    (4,973
    )
    
    
    (42,843
    )Cash and cash equivalents at beginning of period
    
    
    10,039
    
    
    
    46,188Cash and cash equivalents at end of period
    
    $
    5,066
    
    
    $
    3,345Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    107,818
    
    
    $
    128,803Supplemental schedule of non-cash investing and financing activities:Purchase of assets under capital lease obligations
    
    $
    14,403
    
    
    $
    31,731
  4




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RSC HOLDINGS III, LLC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (1) Organization
 Business and Basis of Presentation
 Description of Business
  Basis of Presentation
  Use of Estimates
  New Accounting Pronouncements
 Fair Value Measurements
 5




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RSC HOLDINGS III, LLC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
  Disclosures about Derivative Instruments and
Hedging Activities an amendment of FASB Statement No. 133
 (2) Comprehensive Income
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in 000s)Net income
    
    $
    40,077
    
    
    $
    17,425
    
    
    $
    62,422
    
    
    $
    37,668Currency translation adjustments
    
    
    786
    
    
    
    6,045
    
    
    
    (2,941
    )
    
    
    6,758Change in fair value of cash flow hedges, net of tax
    
    
    17,048
    
    
    
    
    
    
    
    (78
    )
    
    
    Comprehensive income
    
    $
    57,911
    
    
    $
    23,470
    
    
    $
    59,403
    
    
    $
    44,426
  FairMarket
    
    
    AccumulatedForeign
    
    
    Value of
    
    
    OtherCurrency
    
    
    Cash Flow
    
    
    ComprehensiveTranslation
    
    
    Hedge
    
    
    Income(in 000s)Balance at December 31, 2007
    
    $
    21,698
    
    
    $
    (9,495
    )
    
    $
    12,203Foreign currency translation
    
    
    (2,941
    )
    
    
    
    
    
    
    (2,941
    )Change in fair value of cash flow hedges, net of tax
    
    
    
    
    
    
    (78
    )
    
    
    (78
    )Balance at June 30, 2008
    
    $
    18,757
    
    
    $
    (9,573
    )
    
    $
    9,184
 (3) Debt
  June 30,
    
    
    December 31,2008
    
    
    2007DeferredInterest
    
    
    
    
    FinancingRate (a)
    
    
    Maturity Date
    
    Costs
    
    
    Debt
    
    
    Debt(in 000s)Senior ABL
revolving credit
facility
    
    
    4.46
    %
    
    Nov. 2011
    
    $
    14,684
    
    
    $
    793,963
    
    
    $
    828,000Senior ABL term loan
    
    
    4.48
    %
    
    Nov. 2012 (b)
    
    
    2,877
    
    
    
    245,625
    
    
    
    246,875Senior Term Facility
    
    
    6.23
    %
    
    Nov. 2013
    
    
    15,986
    
    
    
    899,300
    
    
    
    899,300Senior Notes
    
    
    9.50
    %
    
    Dec. 2014
    
    
    17,576
    
    
    
    620,000
    
    
    
    620,000Capitalized lease
obligations and
other
    
    
    2.50
    %
    
    Various
    
    
    
    
    
    
    137,202
    
    
    
    142,050Total
    
    
    
    
    
    
    
    $
    51,123
    
    
    $
    2,696,090
    
    
    $
    2,736,225
 
 (a)
    
    Estimated interest rate presented is the effective interest rate as of June 30, 2008.(b)
    
    Installments of $0.6 million quarterly ($2.5 million annually) are due through maturity. 6




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RSC HOLDINGS III, LLC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
    (4) Derivative Instruments
     (5) Fair Value
 Measurements
  7




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RSC HOLDINGS III, LLC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
  
    
    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.
  SignificantFair
    
    Quoted Prices in
    
    OtherValue
    
    Active Markets
    
    Observable
    
    SignificantJune 30,
    
    for Identical
    
    Inputs
    
    Unobservable2008
    
    Assets (Level 1)
    
    (Level 2)
    
    Inputs (Level 3)Interest rate derivatives (a)
    
    $
    3,204
    
    
    $
    
    
    
    $
    3,204
    
    
    $
    
  SignificantFair
    
    Quoted Prices in
    
    OtherValue
    
    Active Markets
    
    Observable
    
    SignificantJune 30,
    
    for Identical
    
    Inputs
    
    Unobservable2008
    
    Assets (Level 1)
    
    (Level 2)
    
    Inputs (Level 3)Interest rate derivatives (a)
    
    $
    18,902
    
    
    $
    
    
    
    $
    18,902
    
    
    $
    
 
 (a)
    
    Since 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
interest rates based on those observed in the underlying markets (LIBOR swap rate).  (6) Income Tax
   8




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RSC HOLDINGS III, LLC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
  9




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Statements in this managements discussion and analysis regarding industry outlook, our
expectations regarding the performance of our business and other non-historical statements are
forward-looking statements. These forward-looking statements are subject to numerous risks and
uncertainties. See Cautionary Note for Forward-Looking Information on page 1 of this Quarterly
Report. Our actual results may differ materially from those contained in, or implied by, any
forward-looking statements.
 The following discussion is intended to enhance the readers understanding of our business
operations and present business environment. It should be read in conjunction with our Annual
Report on Form 10-K for the year ended December 31, 2007 (the 2007 Form 10-K), the section
entitled Risk Factors in Part II, Item 1A herein and our unaudited condensed consolidated
financial statements for the three and six months ended June 30, 2008 included in this Quarterly
Report.
 Overview
    Factors Affecting Our Results of Operations
  Critical Accounting Policies and Estimates
  10




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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 represents 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 revenues for equipment rentals 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  rental equipment consists of straight-line depreciation of equipment
included in our rental fleet.
    
    Cost of sales of merchandise 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.
  11




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Three Months Ended June 30, 2008, Compared to Three Months Ended June 30, 2007
  Percent of RevenueThree Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,
    
    
    Increase (decrease)2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008 versus 2007(unaudited)Revenues:Equipment rental revenue
    
    $
    404,843
    
    
    $
    384,646
    
    
    
    90.2
    %
    
    
    86.9
    %
    
    $
    20,197
    
    
    
    5.3
    %Sale of merchandise
    
    
    18,894
    
    
    
    20,389
    
    
    
    4.2
    
    
    
    4.6
    
    
    
    (1,495
    )
    
    
    (7.3
    )Sale of used rental equipment
    
    
    25,280
    
    
    
    37,793
    
    
    
    5.6
    
    
    
    8.5
    
    
    
    (12,513
    )
    
    
    (33.1
    )Total revenues
    
    
    449,017
    
    
    
    442,828
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    6,189
    
    
    
    1.4Cost of revenues:Cost of equipment rentals,
excluding depreciation
    
    
    172,541
    
    
    
    159,974
    
    
    
    38.4
    
    
    
    36.1
    
    
    
    12,567
    
    
    
    7.9Depreciation 
rental equipment
    
    
    79,252
    
    
    
    71,517
    
    
    
    17.7
    
    
    
    16.2
    
    
    
    7,735
    
    
    
    10.8Cost of merchandise sales
    
    
    11,380
    
    
    
    12,448
    
    
    
    2.5
    
    
    
    2.8
    
    
    
    (1,068
    )
    
    
    (8.6
    )Cost of used rental equipment
sales
    
    
    17,217
    
    
    
    26,949
    
    
    
    3.8
    
    
    
    6.1
    
    
    
    (9,732
    )
    
    
    (36.1
    )Total cost of revenues
    
    
    280,390
    
    
    
    270,888
    
    
    
    62.4
    
    
    
    61.2
    
    
    
    9,502
    
    
    
    3.5Gross profit
    
    
    168,627
    
    
    
    171,940
    
    
    
    37.6
    
    
    
    38.8
    
    
    
    (3,313
    )
    
    
    (1.9
    )Operating expenses:Selling, general, and
administrative
    
    
    41,776
    
    
    
    38,100
    
    
    
    9.3
    
    
    
    8.6
    
    
    
    3,676
    
    
    
    9.6Management fees
    
    
    
    
    
    
    21,500
    
    
    
    
    
    
    
    4.9
    
    
    
    (21,500
    )
    
    
    (100.0
    )Depreciation and amortization
 nonrental equipment
    
    
    12,413
    
    
    
    11,453
    
    
    
    2.8
    
    
    
    2.6
    
    
    
    960
    
    
    
    8.4Total operating expenses
    
    
    54,189
    
    
    
    71,053
    
    
    
    12.1
    
    
    
    16.0
    
    
    
    (16,864
    )
    
    
    (23.7
    )Operating income
    
    
    114,438
    
    
    
    100,887
    
    
    
    25.5
    
    
    
    22.8
    
    
    
    13,551
    
    
    
    13.4Interest expense, net
    
    
    48,742
    
    
    
    72,689
    
    
    
    10.9
    
    
    
    16.4
    
    
    
    (23,947
    )
    
    
    (32.9
    )Other income, net
    
    
    (16
    )
    
    
    (291
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    275
    
    
    
    (94.5
    )Income before provision for
income taxes
    
    
    65,712
    
    
    
    28,489
    
    
    
    14.6
    
    
    
    6.4
    
    
    
    37,223
    
    
    
    130.7Provision for income taxes
    
    
    25,635
    
    
    
    11,064
    
    
    
    5.7
    
    
    
    2.5
    
    
    
    14,571
    
    
    
    131.7Net income
    
    $
    40,077
    
    
    $
    17,425
    
    
    
    8.9
    %
    
    
    3.9
    %
    
    $
    22,652
    
    
    
    130.0
     12




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13




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Six Months Ended June 30, 2008, Compared to Six Months Ended June 30, 2007
  Six Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    Increase (decrease)2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008 versus 2007(unaudited)Revenues:Equipment rental revenueSale of merchandise
    
    $
    777,178
    
    
    $
    732,621
    
    
    
    89.2
    %
    
    
    86.3
    %
    
    $
    44,557
    
    
    
    6.1
    %Sale of used rental equipment
    
    
    37,246
    
    
    
    40,987
    
    
    
    4.3
    
    
    
    4.8
    
    
    
    (3,741
    )
    
    
    (9.1
    )Total revenues
    
    
    56,686
    
    
    
    75,567
    
    
    
    6.5
    
    
    
    8.9
    
    
    
    (18,881
    )
    
    
    (25.0
    )Total revenues
    
    
    871,110
    
    
    
    849,175
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    21,935
    
    
    
    2.6Cost of revenues:Cost of equipment rentals, excluding
depreciation
    
    
    339,811
    
    
    
    315,983
    
    
    
    39.0
    
    
    
    37.2
    
    
    
    23,828
    
    
    
    7.5Depreciation  rental equipment
    
    
    157,462
    
    
    
    140,068
    
    
    
    18.1
    
    
    
    16.5
    
    
    
    17,394
    
    
    
    12.4Cost of merchandise sales
    
    
    22,396
    
    
    
    24,800
    
    
    
    2.6
    
    
    
    2.9
    
    
    
    (2,404
    )
    
    
    (9.7
    )Cost of used rental equipment
sales
    
    
    39,674
    
    
    
    53,892
    
    
    
    4.6
    
    
    
    6.3
    
    
    
    (14,218
    )
    
    
    (26.4
    )Total cost of revenues
    
    
    559,343
    
    
    
    534,743
    
    
    
    64.2
    
    
    
    63.0
    
    
    
    24,600
    
    
    
    4.6Gross profit
    
    
    311,767
    
    
    
    314,432
    
    
    
    35.8
    
    
    
    37.0
    
    
    
    (2,665
    )
    
    
    (0.8
    )Operating expenses:Selling, general, and
administrative
    
    
    81,364
    
    
    
    70,689
    
    
    
    9.3
    
    
    
    8.3
    
    
    
    10,675
    
    
    
    15.1Management fees
    
    
    
    
    
    
    23,000
    
    
    
    
    
    
    
    2.7
    
    
    
    (23,000
    )
    
    
    (100.0
    )Depreciation and amortization 
nonrental equipment
    
    
    24,611
    
    
    
    22,309
    
    
    
    2.8
    
    
    
    2.6
    
    
    
    2,302
    
    
    
    10.3Total operating expenses
    
    
    105,975
    
    
    
    115,998
    
    
    
    12.2
    
    
    
    13.7
    
    
    
    (10,023
    )
    
    
    (8.6
    )Operating income
    
    
    205,792
    
    
    
    198,434
    
    
    
    23.6
    
    
    
    23.4
    
    
    
    7,358
    
    
    
    3.7Interest expense, net
    
    
    104,103
    
    
    
    136,889
    
    
    
    12.0
    
    
    
    16.1
    
    
    
    (32,786
    )
    
    
    (24.0
    )Other income, net
    
    
    (643
    )
    
    
    (202
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    (441
    )
    
    
    218.3Income before provision for income
taxes
    
    
    102,332
    
    
    
    61,747
    
    
    
    11.7
    
    
    
    7.3
    
    
    
    40,585
    
    
    
    65.7Provision for income taxes
    
    
    39,910
    
    
    
    24,079
    
    
    
    4.6
    
    
    
    2.8
    
    
    
    15,831
    
    
    
    65.7Net income
    
    $
    62,422
    
    
    $
    37,668
    
    
    
    7.2
    %
    
    
    4.4
    %
    
    $
    24,754
    
    
    
    65.7
     14




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15




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##### Table of Contents



Liquidity and Capital Resources
 Cash and Cash Flows
    Indebtedness and Liquidity
    16




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##### Table of Contents



New Accounting Pronouncements
 Fair Value Measurements
 Disclosures about Derivative Instruments and
Hedging Activities an amendment of FASB Statement No. 133
 17




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
    Currency Exchange Risk
  
 Item 4T. Controls and Procedures
  18




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##### Table of Contents



Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II. Other Information
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  19




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  20




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##### Table of Contents



Item 6. Exhibits
 Exhibits and Financial Statement Schedules
 ExhibitNumber
    
    Description10.1 (1)
    
    Amended and Restated Stock Incentive Plan31.1
    
    Certification of Chief Executive Officer as required by Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended31.2
    
    Certification of Chief Financial Officer as required by Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended32.1
    
    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
 
 (1)
    
    Incorporated by reference from Exhibit B to RSC Holdings Inc.s definitive proxy statement for
the 2008 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on April
18, 2008. 21




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##### Table of Contents



SIGNATURES
  RSC Holdings III, LLC  RSC Equipment Rental, Inc.
 Signature
    
    Title
    
    Date/s/ Erik Olsson

Erik Olsson
    
    Chief Executive Officer (Principal Executive Officer)
    
    July 31, 2008/s/ David Mathieson

David Mathieson
    
    Chief Financial Officer (Principal Financial and Principal
Accounting Officer)
    
    July 31, 2008
 22




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1 (1)
    
    Amended and Restated Stock Incentive Plan31.1
    
    Certification of Chief Executive Officer as required by Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended31.2
    
    Certification of Chief Financial Officer as required by Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended32.1
    
    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.
 
 (1)
    
    Incorporated by reference from Exhibit B to RSC Holdings Inc.s
definitive proxy statement for the 2008 Annual Meeting of Stockholders filed with the Securities
and Exchange Commission on April 18, 2008.
 23