##### Table of Contents



FORM 10-Q
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-33485
 RSC Holdings Inc.
 
 Delaware (State or other jurisdiction of 
incorporation or organization)
    
    22-1669012(I.R.S. Employer Identification Number)6929 E. Greenway Pkwy. 
Scottsdale, Arizona (Address of principal executive offices)
    
    85254(Zip code)
 (480) 905-3300
 N/A
  o þ
  o o þ
  o þ




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##### 



Table of Contents
 Cautionary Note Regarding Forward-Looking Information
    
    
    1PART I.Financial Information
    
    
    2ITEM 1.
    
    Unaudited Condensed Consolidated Financial Statements
    
    
    2Condensed Consolidated Balance Sheets at June 30, 2007 and December 31, 2006Condensed Consolidated Statements of Income for the three and six months ended June 30, 2007 and June 30, 2006Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and June 30, 2006Notes to Condensed Consolidated Financial StatementsITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18ITEM 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    29ITEM 4.
    
    Controls and Procedures
    
    
    29PART II.Other Information
    
    
    31ITEM 1.
    
    Legal Proceedings
    
    
    31ITEM 1A.
    
    Risk Factors
    
    
    31ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31ITEM 3.
    
    Defaults Upon Senior Securities
    
    
    32ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    32ITEM 5.
    
    Other Information
    
    
    32ITEM 6.
    
    Exhibits
    
    
    32SIGNATURESEX-3.1EX-3.2EX-10.2EX-10.6EX-31.1EX-31.2EX-32.1




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##### Table of Contents



Cautionary Note Regarding Forward-Looking Information
    
    
    the effect of an economic downturn or other factors resulting in a decline in
non-residential construction and capital investment;
    
    increased competition from other companies in our industry and our inability to
increase or maintain our prices;
    
    our ability to obtain equipment at competitive prices;
    
    changes in the attitude of our customers toward renting, as compared with purchasing, equipment;
    
    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 ability and willingness of Atlas Copco AB (ACAB) and Atlas Copco Finance
S.à.r.l (ACF) to continue to meet and/or perform their obligations under the
Recapitalization Agreement (as defined herein) to indemnify and defend us against
various matters, including, but not limited to, litigation relating to alleged exposure
to silica and asbestos;
    
    the effect of changes in laws and regulations, including those relating to the
environment and customer privacy, among others;
    
    risks related to our substantial amount of indebtedness;
    
    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 INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 June 30,
    
    
    December 31,2007
    
    
    2006AssetsCash and cash equivalents
    
    $
    3,345
    
    
    $
    46,188Accounts receivable, net
    
    
    282,830
    
    
    
    268,383Inventory
    
    
    19,065
    
    
    
    18,489Rental equipment, net
    
    
    1,873,102
    
    
    
    1,738,670Property and equipment, net
    
    
    189,526
    
    
    
    170,192Goodwill
    
    
    925,621
    
    
    
    925,621Deferred financing costs
    
    
    59,493
    
    
    
    67,915Other assets
    
    
    76,557
    
    
    
    90,498Total assets
    
    $
    3,429,539
    
    
    $
    3,325,956Liabilities and Stockholders DeficitAccounts payable
    
    $
    333,109
    
    
    $
    296,086Accrued expenses and other liabilities
    
    
    174,558
    
    
    
    163,996Debt
    
    
    2,746,400
    
    
    
    3,006,426Deferred income taxes
    
    
    304,243
    
    
    
    294,081Total liabilities
    
    
    3,558,310
    
    
    
    3,760,589Commitments and contingenciesStockholders deficitPreferred stock, no par value, (500,000 shares authorized, no shares issued and
outstanding at June 30, 2007 and December 31, 2006)
    
    
    
    
    
    
    Common stock, no par value, (300,000,000 shares authorized, 103,147,591 shares
issued and outstanding at June 30, 2007 and 90,647,591 shares issued and
outstanding at December 31, 2006)
    
    
    817,918
    
    
    
    556,482Accumulated deficit
    
    
    (962,231
    )
    
    
    (999,899
    )Accumulated other comprehensive income
    
    
    15,542
    
    
    
    8,784Total stockholders deficit
    
    
    (128,771
    )
    
    
    (434,633
    )Total liabilities and stockholders deficit
    
    $
    3,429,539
    
    
    $
    3,325,956
  2




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RSC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Equipment rental revenue
    
    $
    384,646
    
    
    $
    340,102
    
    
    $
    732,621
    
    
    $
    642,226Sale of merchandise
    
    
    20,389
    
    
    
    23,537
    
    
    
    40,987
    
    
    
    48,188Sale of used rental equipment
    
    
    37,793
    
    
    
    50,183
    
    
    
    75,567
    
    
    
    109,299Total revenues
    
    
    442,828
    
    
    
    413,822
    
    
    
    849,175
    
    
    
    799,713Cost of revenues:Cost of equipment rentals, excluding depreciation
    
    
    159,974
    
    
    
    144,751
    
    
    
    315,983
    
    
    
    285,207Depreciation  rental equipment
    
    
    71,517
    
    
    
    63,690
    
    
    
    140,068
    
    
    
    120,289Cost of merchandise sales
    
    
    12,448
    
    
    
    14,096
    
    
    
    24,800
    
    
    
    29,601Cost of used rental equipment sales
    
    
    26,949
    
    
    
    38,389
    
    
    
    53,892
    
    
    
    83,411Total cost of revenues
    
    
    270,888
    
    
    
    260,926
    
    
    
    534,743
    
    
    
    518,508Gross profit
    
    
    171,940
    
    
    
    152,896
    
    
    
    314,432
    
    
    
    281,205Operating expenses:Selling, general, and administrative
    
    
    38,100
    
    
    
    33,158
    
    
    
    70,689
    
    
    
    65,004Management fees
    
    
    21,500
    
    
    
    
    
    
    
    23,000
    
    
    
    Depreciation and amortization  non-rental
equipment
    
    
    11,453
    
    
    
    9,341
    
    
    
    22,309
    
    
    
    18,433Total operating expenses
    
    
    71,053
    
    
    
    42,499
    
    
    
    115,998
    
    
    
    83,437Operating income
    
    
    100,887
    
    
    
    110,397
    
    
    
    198,434
    
    
    
    197,768Interest expense, net
    
    
    72,689
    
    
    
    24,628
    
    
    
    136,889
    
    
    
    47,276Other income, net
    
    
    (291
    )
    
    
    (48
    )
    
    
    (202
    )
    
    
    (209
    )Income before provision for income taxes
    
    
    28,489
    
    
    
    85,817
    
    
    
    61,747
    
    
    
    150,701Provision for income taxes
    
    
    11,064
    
    
    
    32,105
    
    
    
    24,079
    
    
    
    55,819Net income
    
    $
    17,425
    
    
    $
    53,712
    
    
    $
    37,668
    
    
    $
    94,882Preferred dividends
    
    
    
    
    
    
    (3,998
    )
    
    
    
    
    
    
    (7,997
    )Net income available for common stockholders
    
    $
    17,425
    
    
    $
    49,714
    
    
    $
    37,668
    
    
    $
    86,885Weighted average shares outstanding used in
computing net income per common share:Basic
    
    
    96,005
    
    
    
    330,697
    
    
    
    93,326
    
    
    
    330,697Diluted
    
    
    97,471
    
    
    
    330,697
    
    
    
    94,829
    
    
    
    330,697Net income per common share:Basic and diluted
    
    $
    0.18
    
    
    $
    0.15
    
    
    $
    0.40
    
    
    $
    0.26
  3




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RSC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months Ended June 30,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    37,668
    
    
    $
    94,882Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    162,377
    
    
    
    138,722Amortization of deferred financing costs
    
    
    8,945
    
    
    
    Share-based compensation expense
    
    
    1,872
    
    
    
    959Gain on sales of rental and non-rental property and equipment, net of non-cash writeoffs
    
    
    (23,388
    )
    
    
    (25,888
    )Deferred income taxes
    
    
    10,450
    
    
    
    39,208Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (14,426
    )
    
    
    (9,356
    )Inventory
    
    
    100
    
    
    
    (152
    )Other assets
    
    
    2,827
    
    
    
    2,672Accounts payable
    
    
    73,868
    
    
    
    85,538Accrued expenses and other liabilities
    
    
    23,078
    
    
    
    22,373Net cash provided by operating activities
    
    
    283,371
    
    
    
    348,958Cash flows from investing activities:Purchases of rental equipment
    
    
    (329,974
    )
    
    
    (461,322
    )Purchases of property and equipment
    
    
    (13,696
    )
    
    
    (12,466
    )Proceeds from sales of rental equipment
    
    
    75,567
    
    
    
    109,299Proceeds from sales of property and equipment
    
    
    7,079
    
    
    
    9,737Net cash used in investing activities
    
    
    (261,024
    )
    
    
    (354,752
    )Cash flows from financing activities:Cash consideration paid to Atlas
    
    
    (17,995
    )
    
    
    Proceeds from senior ABL revolver
    
    
    20,458
    
    
    
    Payments on senior ABL term revolver
    
    
    (61,166
    )
    
    
    Payments on senior ABL term loan
    
    
    (1,250
    )
    
    
    Payments on Senior Term Facility
    
    
    (230,700
    )
    
    
    Payments on capital leases and other
    
    
    (19,099
    )
    
    
    (19,743
    )Net proceeds (payments on) affiliated debt
    
    
    
    
    
    
    25,791Deferred financing costs
    
    
    (186
    )
    
    
    Proceeds from the issuance of common stock
    
    
    255,064
    
    
    
    Dividends paid
    
    
    
    
    
    
    (7,997
    )Capital contributions from Atlas
    
    
    4,500
    
    
    
    1,108Decrease in outstanding checks in excess of cash balances
    
    
    (14,774
    )
    
    
    Net cash used in financing activities
    
    
    (65,148
    )
    
    
    (841
    )Effect of foreign exchange rates on cash
    
    
    (42
    )
    
    
    154Net decrease in cash and cash equivalents
    
    
    (42,843
    )
    
    
    (6,481
    )Cash and cash equivalents at beginning of period
    
    
    46,188
    
    
    
    7,134Cash and cash equivalents at end of period
    
    $
    3,345
    
    
    $
    653Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    128,803
    
    
    $
    15,131Supplemental schedule of non-cash investing and financing activities:Purchase of assets under capital lease obligations
    
    $
    31,731
    
    
    $
    38,786
  4




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (1) Organization
 Business and Basis of Presentation
 Description of Business
  Basis of Presentation
     Prior to the Recapitalization
   5




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(2) Summary of Significant Accounting Policies




Use of Estimates




Cash Equivalents




Foreign Currency Translation


Foreign Currency Translation


Reporting
Comprehensive Income


Fair Value of Financial Instruments


6




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


Accounts Receivable




Inventory




Rental Equipment








June 30,
    
    
    December 31,2007
    
    
    2006(in 000s)Rental equipment
    
    $
    2,606,325
    
    
    $
    2,399,109Less accumulated depreciation
    
    
    (733,223
    )
    
    
    (660,439
    )Rental equipment, net
    
    $
    1,873,102
    
    
    $
    1,738,670


Property and Equipment


7




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Long-Lived Assets and Goodwill
    Revenue Recognition
   Reporting Revenue
Gross as a Principal versus Net as an Agent
 Cost of Revenues
  8




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Selling, General and Administrative Expenses
  Reserves for Claims
  Earnings per Share
 Earnings Per Share
 9




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(in 000s except per share data)Numerator:Net income
    
    $
    17,425
    
    
    $
    53,712
    
    
    $
    37,668
    
    
    $
    94,882Less preferred dividends
    
    
    
    
    
    
    (3,998
    )
    
    
    
    
    
    
    (7,997
    )Net income available for common stockholders
    
    $
    17,425
    
    
    $
    49,714
    
    
    $
    37,668
    
    
    $
    86,885Denominator:Weighted average shares  basic
    
    
    96,005
    
    
    
    330,697
    
    
    
    93,326
    
    
    
    330,697Employee stock options
    
    
    1,466
    
    
    
    
    
    
    
    1,503
    
    
    
    Weighted average shares  diluted
    
    
    97,471
    
    
    
    330,697
    
    
    
    94,829
    
    
    
    330,697Net income per common share  basic and
diluted
    
    $
    0.18
    
    
    $
    0.15
    
    
    $
    0.40
    
    
    $
    0.26Anti dilutive securities excluded
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Income Taxes
  Accounting for Income Taxes
  Consideration Received from Vendors
 Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor
 10




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)






Marketing and Advertising costs




Share-Based Compensation


Accounting for Stock Issued to
Employees Accounting for Certain
Transactions involving Stock Compensation


Share Based Payment.


Deferred Financing Costs




Concentration of Credit Risk




New Accounting Pronouncements


Accounting for Uncertainty in Income Taxes  an interpretation of FASB
Statement No. 109


Fair Value Measurements . 11




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements
 The Fair Value Option for Financial Assets and
Financial LiabilitiesIncluding an amendment of FASB Statement No. 115 .
 (3) Comprehensive Income
 Six Months Ended June 30,2007
    
    
    2006(in 000s)Net income
    
    $
    37,668
    
    
    $
    94,882Currency translation adjustments
    
    
    6,758
    
    
    
    2,379Comprehensive income
    
    $
    44,426
    
    
    $
    97,261
 12




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (4) Debt
  June 30,
    
    
    December 31,2007
    
    
    2006(in 000s)Senior ABL revolving credit facility
    
    $
    837,583
    
    
    $
    878,291Senior ABL term loan
    
    
    248,125
    
    
    
    249,375Senior Term Facility
    
    
    899,300
    
    
    
    1,130,000Senior Notes
    
    
    620,000
    
    
    
    620,000Capitalized lease obligations
    
    
    141,335
    
    
    
    128,688Other
    
    
    57
    
    
    
    72Total
    
    $
    2,746,400
    
    
    $
    3,006,426
    (5) Common and Preferred Stock
 Common Stock
   13




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   Preferred Stock
   (6) Income Taxes
   14




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)




(7) Commitments and Contingencies








(8) Legal and Insurance Matters




(9) Affiliated Company Transactions




15




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
    (10) Business Segment and Geographic Information
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(in 000s)
    
    
    (in 000s)Revenues from external customers:Domestic
    
    $
    422,222
    
    
    $
    398,784
    
    
    $
    811,117
    
    
    $
    770,642Foreign
    
    
    20,606
    
    
    
    15,038
    
    
    
    38,058
    
    
    
    29,071Total
    
    $
    442,828
    
    
    $
    413,822
    
    
    $
    849,175
    
    
    $
    799,713
 16




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  June 30,
    
    
    December 31,2007
    
    
    2006(in 000s)Rental equipment, netDomestic
    
    $
    1,796,484
    
    
    $
    1,670,181Foreign
    
    
    76,618
    
    
    
    68,489Total
    
    $
    1,873,102
    
    
    $
    1,738,670Property and equipment, netDomestic
    
    $
    180,618
    
    
    $
    163,049Foreign
    
    
    8,908
    
    
    
    7,143Total
    
    $
    189,526
    
    
    $
    170,192
 (11) Subsequent Event
 1 2 1 2
 17




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our results of operations and financial condition
includes periods prior to the Recapitalization discussed below under The Recapitalization.
Accordingly, the discussion and analysis of prior periods does not reflect the significant impact
of the Recapitalization. Statements in the discussion and analysis regarding industry outlook, our
expectations regarding the performance of our business and other non-historical statements in the
discussion and analysis are forward-looking statements. These forward-looking statements are
subject to numerous risks and uncertainties. See Cautionary Note Regarding Forward-Looking
Information on page 1 of this 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 company
operations and present business environment. It should be read in conjunction with the section
entitled Risk Factors in Item 1A and our unaudited condensed consolidated financial statements
for the period ended June 30, 2007 included in this report.
 Overview
    Factors Affecting Our Results of Operations
   18




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Critical Accounting Policies and Estimates
   Accounts Receivable
  Rental Equipment
   Long-Lived Assets and Goodwill
  19




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Revenue Recognition
   Reporting Revenue Gross as a Principal versus Net as
an Agent
 Cost of Revenues
  Selling, General and Administrative Expenses
  Reserve for Claims
 20
    Table of Contents    Income Taxes
    Consideration Received from Vendors
   21    Table of Contents  The Recapitalization
    22
    Table of Contents  Results of Operations
  Percent of RevenueThree Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,
    
    
    Increase (decrease)2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007 versus 2006(unaudited)Revenues:Equipment rental revenue
    
    $
    384,646
    
    
    $
    340,102
    
    
    
    86.9
    %
    
    
    82.2
    %
    
    $
    44,544
    
    
    
    13.1
    %Sale of merchandise
    
    
    20,389
    
    
    
    23,537
    
    
    
    4.6
    
    
    
    5.7
    
    
    
    (3,148
    )
    
    
    (13.4
    )Sale of used rental equipment
    
    
    37,793
    
    
    
    50,183
    
    
    
    8.5
    
    
    
    12.1
    
    
    
    (12,390
    )
    
    
    (24.7
    )Total revenues
    
    
    442,828
    
    
    
    413,822
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    29,006
    
    
    
    7.0Cost of revenues:Cost of equipment rentals,
excluding depreciation
    
    
    159,974
    
    
    
    144,751
    
    
    
    36.1
    
    
    
    35.0
    
    
    
    15,223
    
    
    
    10.5Depreciation  rental equipment
    
    
    71,517
    
    
    
    63,690
    
    
    
    16.2
    
    
    
    15.4
    
    
    
    7,827
    
    
    
    12.3Cost of merchandise sales
    
    
    12,448
    
    
    
    14,096
    
    
    
    2.8
    
    
    
    3.4
    
    
    
    (1,648
    )
    
    
    (11.7
    )Cost of used rental equipment sales
    
    
    26,949
    
    
    
    38,389
    
    
    
    6.1
    
    
    
    9.3
    
    
    
    (11,440
    )
    
    
    (29.8
    )Total cost of revenues
    
    
    270,888
    
    
    
    260,926
    
    
    
    61.2
    
    
    
    63.1
    
    
    
    9,962
    
    
    
    3.8Gross profit
    
    
    171,940
    
    
    
    152,896
    
    
    
    38.8
    
    
    
    36.9
    
    
    
    19,044
    
    
    
    12.5Operating expenses:Selling, general, and administrative
    
    
    38,100
    
    
    
    33,158
    
    
    
    8.6
    
    
    
    8.0
    
    
    
    4,942
    
    
    
    14.9Management fees
    
    
    21,500
    
    
    
    
    
    
    
    4.9
    
    
    
    
    
    
    
    21,500
    
    
    
    Depreciation and amortization 
nonrental equipment
    
    
    11,453
    
    
    
    9,341
    
    
    
    2.6
    
    
    
    2.3
    
    
    
    2,112
    
    
    
    22.6Total operating expenses
    
    
    71,053
    
    
    
    42,499
    
    
    
    16.0
    
    
    
    10.3
    
    
    
    28,554
    
    
    
    67.2Operating income
    
    
    100,887
    
    
    
    110,397
    
    
    
    22.8
    
    
    
    26.7
    
    
    
    (9,510
    )
    
    
    (8.6
    )Interest expense, net
    
    
    72,689
    
    
    
    24,628
    
    
    
    16.4
    
    
    
    6.0
    
    
    
    48,061
    
    
    
    195.1Other income, net
    
    
    (291
    )
    
    
    (48
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    (243
    )
    
    
    506.3Income before provision for
income taxes
    
    
    28,489
    
    
    
    85,817
    
    
    
    6.4
    
    
    
    20.7
    
    
    
    (57,328
    )
    
    
    (66.8
    )Provision for income taxes
    
    
    11,064
    
    
    
    32,105
    
    
    
    2.5
    
    
    
    7.8
    
    
    
    (21,041
    )
    
    
    (65.5
    )Net income
    
    $
    17,425
    
    
    $
    53,712
    
    
    
    3.9
    %
    
    
    13.0
    %
    
    $
    (36,287
    )
    
    
    (67.6
    )
 23
    Table of Contents  Six Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    Increase (decrease)2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007 versus 2006(unaudited)Revenues:Equipment rental revenue
    
    $
    732,621
    
    
    $
    642,226
    
    
    
    86.3
    %
    
    
    80.3
    %
    
    $
    90,395
    
    
    
    14.1
    %Sale of merchandise
    
    
    40,987
    
    
    
    48,188
    
    
    
    4.8
    
    
    
    6.0
    
    
    
    (7,201
    )
    
    
    (14.9
    )Sale of used rental equipment
    
    
    75,567
    
    
    
    109,299
    
    
    
    8.9
    
    
    
    13.7
    
    
    
    (33,732
    )
    
    
    (30.9
    )Total revenues
    
    
    849,175
    
    
    
    799,713
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    49,462
    
    
    
    6.2Cost of revenues:Cost of equipment rentals,
excluding depreciation
    
    
    315,983
    
    
    
    285,207
    
    
    
    37.2
    
    
    
    35.7
    
    
    
    30,776
    
    
    
    10.8Depreciation  rental equipment
    
    
    140,068
    
    
    
    120,289
    
    
    
    16.5
    
    
    
    15.0
    
    
    
    19,779
    
    
    
    16.4Cost of merchandise sales
    
    
    24,800
    
    
    
    29,601
    
    
    
    2.9
    
    
    
    3.7
    
    
    
    (4,801
    )
    
    
    (16.2
    )Cost of used rental equipment sales
    
    
    53,892
    
    
    
    83,411
    
    
    
    6.3
    
    
    
    10.4
    
    
    
    (29,519
    )
    
    
    (35.4
    )Total cost of revenues
    
    
    534,743
    
    
    
    518,508
    
    
    
    63.0
    
    
    
    64.8
    
    
    
    16,235
    
    
    
    3.1Gross profit
    
    
    314,432
    
    
    
    281,205
    
    
    
    37.0
    
    
    
    35.2
    
    
    
    33,227
    
    
    
    11.8Operating expenses:Selling, general, and administrative
    
    
    70,689
    
    
    
    65,004
    
    
    
    8.3
    
    
    
    8.1
    
    
    
    5,685
    
    
    
    8.7Management fees
    
    
    23,000
    
    
    
    
    
    
    
    2.7
    
    
    
    
    
    
    
    23,000
    
    
    
    Depreciation and amortization 
nonrental equipment
    
    
    22,309
    
    
    
    18,433
    
    
    
    2.6
    
    
    
    2.3
    
    
    
    3,876
    
    
    
    21.0Total operating expenses
    
    
    115,998
    
    
    
    83,437
    
    
    
    13.7
    
    
    
    10.4
    
    
    
    32,561
    
    
    
    39.0Operating income
    
    
    198,434
    
    
    
    197,768
    
    
    
    23.4
    
    
    
    24.7
    
    
    
    666
    
    
    
    0.3Interest expense, net
    
    
    136,889
    
    
    
    47,276
    
    
    
    16.1
    
    
    
    5.9
    
    
    
    89,613
    
    
    
    189.6Other income, net
    
    
    (202
    )
    
    
    (209
    )
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    (3.3
    )Income before provision for
income taxes
    
    
    61,747
    
    
    
    150,701
    
    
    
    7.3
    
    
    
    18.8
    
    
    
    (88,954
    )
    
    
    (59.0
    )Provision for income taxes
    
    
    24,079
    
    
    
    55,819
    
    
    
    2.8
    
    
    
    7.0
    
    
    
    (31,740
    )
    
    
    (56.9
    )Net income
    
    $
    37,668
    
    
    $
    94,882
    
    
    
    4.4
    %
    
    
    11.9
    %
    
    $
    (57,214
    )
    
    
    (60.3
    )
 Three and Six Months Ended June 30, 2007, Compared to Three and Six Months Ended June 30, 2006
 Revenues.
 24
    Table of Contents  25
    Table of Contents  Operating Income
 Interest Expense, net
 Provision for Income Taxes
 26
    Table of Contents  Liquidity and Capital Resources
 Cash and Cash Flows.
    Indebtedness and Liquidity
 27
    Table of Contents  New Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
 Fair Value Measurements
 28
    Table of Contents  Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements
 The Fair Value Option for Financial Assets and
Financial LiabilitiesIncluding an amendment of FASB Statement No. 115
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
  Currency Exchange Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  29
    Table of Contents  Changes in Internal Control Over Financial Reporting
  30
    Table of Contents  PART II. Other Information
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   31
    Table of Contents  Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibits and Financial Statement Schedules
 ExhibitNumber
    
    Description2.1
    
    Recapitalization Agreement, dated as of October 6, 2006, by and among 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 (Incorporated by reference to Exhibit 2.1 to
RSC Holdings Inc.s Form S-1, dated February 13, 2007 (file no. 333-140644))3.1
    
    Amended and Restated Certificate of Incorporation3.2
    
    Amended and Restated By-Laws4.1
    
    Indenture, dated as of November 27, 2006, by and among RSC Equipment Rental,
Inc., RSC Holdings III, LLC and Wells Fargo Bank, National Association
(Incorporated by reference to Exhibit 4.1 to RSC Holdings Inc.s Form S-1, dated
February 13, 2007 (file no. 333-140644))4.2
    
    Registration Rights Agreement, dated November 27, 2006, by and among RSC
Equipment Rental, Inc., RSC Holdings III, LLC, Deutsche Bank Securities Inc.,
Citigroup Global Markets Inc. and GE Capital Markets, Inc. (Incorporated by
reference to Exhibit 4.2 to RSC Holdings Inc.s Form S-1, dated February 13, 2007
(file no. 333-140644))4.3
    
    U.S. Guarantee and Collateral Agreement, dated as of November 27, 2006, by and
among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc. 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 (Incorporated by reference to Exhibit 4.5 to RSC
Holdings Inc.s Form S-1, dated February 13, 2007 (file no. 333-140644))
 32
    Table of Contents  ExhibitNumber
    
    Description4.4
    
    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 (Incorporated by reference to Exhibit 4.6 to RSC Holdings Inc.s
Form S-1, dated February 13, 2007 (file no. 333-140644))4.5
    
    Guarantee and Collateral Agreement, dated as of November 27, 2006, by and between
RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., 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 (Incorporated by reference to Exhibit 4.7 to RSC
Holdings Inc.s Form S-1, dated February 13, 2007 (file no. 333-140644))4.6
    
    Intercreditor Agreement, dated as of November 27, 2006, 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 and Deutsche Bank AG,
New York Branch in its capacity as collateral agent under the second-lien loan
documents (Incorporated by reference to Exhibit 4.8 to RSC Holdings Inc.s Form
S-1, dated February 13, 2007 (file no. 333-140644))4.7
    
    Amended and Restated Stockholders Agreement (Incorporated by reference to Exhibit
4.7 to RSC Equipment Rental Inc.s and RSC Holdings III, LLCs Form S-4, dated
July 16, 2007 (file no. 333-144625))10.1
    
    Amended and Restated RSC Holdings Stock Incentive Plan Agreement (Incorporated by
reference to Exhibit 10.2 to RSC Equipment Rental Inc.s and RSC Holdings III,
LLCs Form S-4, dated July 16, 2007 (file no. 333-144625))10.2
    
    Form of Director Restricted Stock Unit Agreement10.3
    
    Termination Agreement, dated as of May 29, 2007, by and among RSC Holdings Inc.,
RSC Equipment Rental, Inc., Ripplewood Holdings L.L.C. and Oak Hill Capital
Management, LLC Agreement (Incorporated by reference to Exhibit 10.8 to RSC
Equipment Rental Inc.s and RSC Holdings III, LLCs Form S-4, dated July 16, 2007
(file no. 333-144625))10.4
    
    Cost Reimbursement Agreement, dated May 29, 2007, with Ripplewood Holdings L.L.C.
Agreement (Incorporated by reference to Exhibit 10.11 to RSC Equipment Rental
Inc.s and RSC Holdings III, LLCs Form S-4, dated July 16, 2007 (file no.
333-144625))10.5
    
    Cost Reimbursement Agreement, dated May 29, 2007, with Oak Hill Capital
Management LLC Agreement (Incorporated by reference to Exhibit 10.12 to RSC
Equipment Rental Inc.s and RSC Holdings III, LLCs Form S-4, dated July 16, 2007
(file no. 333-144625))10.6
    
    Form of Indemnification Agreement21.1
    
    List of subsidiaries (Incorporated by reference to Exhibit 21.1 to RSC Holdings
Inc.s Form S-1, Amendment No. 1, dated April 26,. 2007 (file no. 333-140644))31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer32.1
    
    Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer
 
  33
    Table of Contents  SIGNATURES
  RSC Holdings Inc.
 Signature
    
    Title
    
    Date/s/ Erik Olsson
Erik Olsson
    
    President and Director (Principal Executive Officer)
    
    August 1, 2007/s/ Keith Sawottke
Keith Sawottke
    
    Chief Financial Officer (Principal Financial and
Principal Accounting Officer)
    
    August 1, 2007
 34
    Table of Contents  EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1
    
    Recapitalization Agreement, dated as of October 6, 2006, by and among 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 (Incorporated by reference to Exhibit 2.1 to
RSC Holdings Inc.s Form S-1, dated February 13, 2007 (file no. 333-140644))3.1
    
    Amended and Restated Certificate of Incorporation3.2
    
    Amended and Restated By-Laws4.1
    
    Indenture, dated as of November 27, 2006, by and among RSC Equipment Rental,
Inc., RSC Holdings III, LLC and Wells Fargo Bank, National Association
(Incorporated by reference to Exhibit 4.1 to RSC Holdings Inc.s Form S-1, dated
February 13, 2007 (file no. 333-140644))4.2
    
    Registration Rights Agreement, dated November 27, 2006, by and among RSC
Equipment Rental, Inc., RSC Holdings III, LLC, Deutsche Bank Securities Inc.,
Citigroup Global Markets Inc. and GE Capital Markets, Inc. (Incorporated by
reference to Exhibit 4.2 to RSC Holdings Inc.s Form S-1, dated February 13, 2007
(file no. 333-140644))4.3
    
    U.S. Guarantee and Collateral Agreement, dated as of November 27, 2006, by and
among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc. 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 (Incorporated by reference to Exhibit 4.5 to RSC
Holdings Inc.s Form S-1, dated February 13, 2007 (file no. 333-140644))4.4
    
    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 (Incorporated by reference to Exhibit 4.6 to RSC Holdings Inc.s
Form S-1, dated February 13, 2007 (file no. 333-140644))4.5
    
    Guarantee and Collateral Agreement, dated as of November 27, 2006, by and between
RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., 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 (Incorporated by reference to Exhibit 4.7 to RSC
Holdings Inc.s Form S-1, dated February 13, 2007 (file no. 333-140644))4.6
    
    Intercreditor Agreement, dated as of November 27, 2006, 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 and Deutsche Bank AG,
New York Branch in its capacity as collateral agent under the second-lien loan
documents (Incorporated by reference to Exhibit 4.8 to RSC Holdings Inc.s Form
S-1, dated February 13, 2007 (file no. 333-140644))4.7
    
    Amended and Restated Stockholders Agreement (Incorporated by reference to Exhibit
4.7 to RSC Equipment Rental Inc.s and RSC Holdings III, LLCs Form S-4, dated
July 16, 2007 (file no. 333-144625))10.1
    
    Amended and Restated RSC Holdings Stock Incentive Plan Agreement (Incorporated by
reference to Exhibit 10.2 to RSC Equipment Rental Inc.s and RSC Holdings III,
LLCs Form S-4, dated July 16, 2007 (file no. 333-144625))
 35
    Table of Contents  ExhibitNumber
    
    Description10.2
    
    Form of Director Restricted Stock Unit Agreement10.3
    
    Termination Agreement, dated as of May 29, 2007, by and among RSC Holdings Inc.,
RSC Equipment Rental, Inc., Ripplewood Holdings L.L.C. and Oak Hill Capital
Management, LLC Agreement (Incorporated by reference to Exhibit 10.8 to RSC
Equipment Rental Inc.s and RSC Holdings III, LLCs Form S-4, dated July 16, 2007
(file no. 333-144625))10.4
    
    Cost Reimbursement Agreement, dated May 29, 2007, with Ripplewood Holdings L.L.C.
Agreement (Incorporated by reference to Exhibit 10.11 to RSC Equipment Rental
Inc.s and RSC Holdings III, LLCs Form S-4, dated July 16, 2007 (file no.
333-144625))10.5
    
    Cost Reimbursement Agreement, dated May 29, 2007, with Oak Hill Capital
Management LLC Agreement (Incorporated by reference to Exhibit 10.12 to RSC
Equipment Rental Inc.s and RSC Holdings III, LLCs Form S-4, dated July 16, 2007
(file no. 333-144625))10.6
    
    Form of Indemnification Agreement21.1
    
    List of subsidiaries (Incorporated by reference to Exhibit 21.1 to RSC Holdings
Inc.s Form S-1, Amendment No. 1, dated April 26,. 2007 (file no. 333-140644))31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer32.1
    
    Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer
 
  36