##### 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 March 31, 2008
 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
    
    22-1669012(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification Number)6929 E. Greenway Pkwy. 
Scottsdale, Arizona
    
    85254(Address of principal executive offices)
    
    (Zip code)
 (480) 905-3300
 N/A
  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
    
    3ITEM 1.
    
    Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets at March 31, 2008 and December 31, 2007
    
    
    3Condensed Consolidated Statements of Income for the three months ended March 31,
2008 and March 31, 2007
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
2008 and March 31, 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11ITEM 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    17ITEM 4T.
    
    Controls and Procedures
    
    
    17PART II.Other Information
    
    18ITEM 1.
    
    Legal Proceedings.
    
    
    18ITEM 1A.
    
    Risk Factors
    
    
    18ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18ITEM 3.
    
    Defaults Upon Senior Securities
    
    
    19ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    19ITEM 5.
    
    Other Information
    
    
    19ITEM 6.
    
    Exhibits
    
    
    19SIGNATURES
    
    20EX-31.1EX-31.2EX-32.1
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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
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 Caa1;
    
    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.
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2




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PART I. Financial Information
 
 Item 1. Financial Statements
 
 RSC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 March 31,
    
    
    December 31,2008
    
    
    2007AssetsCash and cash equivalents
    
    $
    985
    
    
    $
    10,039Accounts receivable, net
    
    
    272,072
    
    
    
    284,570Inventory
    
    
    21,630
    
    
    
    21,563Rental equipment, net
    
    
    1,903,663
    
    
    
    1,929,514Property and equipment, net
    
    
    190,006
    
    
    
    191,901Goodwill
    
    
    925,621
    
    
    
    925,621Deferred financing costs
    
    
    53,522
    
    
    
    55,660Other assets
    
    
    44,035
    
    
    
    41,469Total assets
    
    $
    3,411,534
    
    
    $
    3,460,337Liabilities and Stockholders DeficitAccounts payable
    
    $
    149,664
    
    
    $
    264,384Accrued expenses and other liabilities
    
    
    210,376
    
    
    
    179,876Debt
    
    
    2,774,862
    
    
    
    2,736,225Deferred income taxes
    
    
    318,351
    
    
    
    323,950Total liabilities
    
    
    3,453,253
    
    
    
    3,504,435Commitments and contingenciesStockholders deficitPreferred stock, no par value, (500,000
shares authorized, no shares issued and
outstanding at March 31, 2008 and December
31, 2007)
    
    
    
    
    
    
    Common stock, no par value, (300,000,000
shares authorized, 103,147,575 shares issued
and outstanding at March 31, 2008 and
December 31, 2007)
    
    
    821,231
    
    
    
    820,344Accumulated deficit
    
    
    (854,300
    )
    
    
    (876,645
    )Accumulated other comprehensive income (loss)
    
    
    (8,650
    )
    
    
    12,203Total stockholders deficit
    
    
    (41,719
    )
    
    
    (44,098
    )Total liabilities and stockholders deficit
    
    $
    3,411,534
    
    
    $
    3,460,337
  3




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RSC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 Three Months Ended March 31,2008
    
    
    2007Revenues:Equipment rental revenue
    
    $
    372,335
    
    
    $
    347,975Sale of merchandise
    
    
    18,352
    
    
    
    20,598Sale of used rental equipment
    
    
    31,406
    
    
    
    37,774Total revenues
    
    
    422,093
    
    
    
    406,347Cost of revenues:Cost of equipment rentals, excluding
depreciation
    
    
    167,270
    
    
    
    156,009Depreciation  rental equipment
    
    
    78,210
    
    
    
    68,551Cost of merchandise sales
    
    
    11,016
    
    
    
    12,352Cost of used rental equipment sales.
    
    
    22,457
    
    
    
    26,943Total cost of revenues
    
    
    278,953
    
    
    
    263,855Gross profit
    
    
    143,140
    
    
    
    142,492Operating expenses:Selling, general, and administrative
    
    
    39,588
    
    
    
    32,589Management fees
    
    
    
    
    
    
    1,500Depreciation and amortization 
non-rental equipment
    
    
    12,198
    
    
    
    10,856Total operating expenses
    
    
    51,786
    
    
    
    44,945Operating income
    
    
    91,354
    
    
    
    97,547Interest expense, net
    
    
    55,361
    
    
    
    64,200Other (income) expense, net
    
    
    (627
    )
    
    
    89Income before provision for income taxes
    
    
    36,620
    
    
    
    33,258Provision for income taxes
    
    
    14,275
    
    
    
    13,015Net income
    
    $
    22,345
    
    
    $
    20,243Weighted average shares outstanding used in
computing net income per common share:Basic
    
    
    103,152
    
    
    
    90,648Diluted
    
    
    103,881
    
    
    
    92,188Net income per common share:Basic and diluted
    
    $
    0.22
    
    
    $
    0.22
  4




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RSC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months ended March 31,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    22,345
    
    
    $
    20,243Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    90,408
    
    
    
    79,407Amortization of deferred financing costs
    
    
    2,388
    
    
    
    2,051Share-based compensation expense
    
    
    888
    
    
    
    936Gain on sales of rental and non-rental property and
equipment, net of non-cash writeoffs
    
    
    (8,677
    )
    
    
    (12,128
    )Deferred income taxes
    
    
    5,599
    
    
    
    4,228Changes in operating assets and liabilities:Accounts receivable, net
    
    
    11,776
    
    
    
    9,114Inventory
    
    
    (97
    )
    
    
    430Other assets
    
    
    (2,570
    )
    
    
    (1,472
    )Accounts payable
    
    
    (114,059
    )
    
    
    (78,317
    )Accrued expenses and other liabilities
    
    
    2,547
    
    
    
    31,671Net cash provided by operating activities
    
    
    10,548
    
    
    
    56,163Cash flows from investing activities:Purchases of rental equipment
    
    
    (79,419
    )
    
    
    (100,425
    )Purchases of property and equipment
    
    
    (5,808
    )
    
    
    (7,869
    )Proceeds from sales of rental equipment
    
    
    31,406
    
    
    
    37,774Proceeds from sales of property and equipment
    
    
    1,517
    
    
    
    4,164Net cash used in investing activities
    
    
    (52,304
    )
    
    
    (66,356
    )Cash flows from financing activities:Cash consideration paid to Atlas
    
    
    
    
    
    
    (17,995
    )Proceeds from senior ABL revolver
    
    
    73,005
    
    
    
    16,696Payments on senior ABL revolver
    
    
    (29,997
    )
    
    
    (20,885
    )Payments on senior ABL term loan
    
    
    (625
    )
    
    
    (625
    )Payments on capital leases and other debt
    
    
    (9,476
    )
    
    
    (9,266
    )Deferred financing costs
    
    
    (250
    )
    
    
    Capital contributions from Atlas
    
    
    
    
    
    
    4,500Decrease in outstanding checks in excess of cash balances
    
    
    129
    
    
    
    (6,929
    )Net cash provided by (used in) financing activities
    
    
    32,786
    
    
    
    (34,504
    )Effect of foreign exchange rates on cash
    
    
    (84
    )
    
    
    (10
    )Net decrease in cash and cash equivalents
    
    
    (9,054
    )
    
    
    (44,707
    )Cash and cash equivalents at beginning of period
    
    
    10,039
    
    
    
    46,188Cash and cash equivalents at end of period
    
    $
    985
    
    
    $
    1,481Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    42,631
    
    
    $
    47,662Supplemental schedule of non-cash investing and financing activities:Purchase of assets under capital lease obligations
    
    $
    5,819
    
    
    $
    16,481
  5




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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
  Use of Estimates
  New Accounting Pronouncements
 Fair Value Measurements
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RSC HOLDINGS INC. 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) Earnings per Share
 Earnings Per Share
  Three Months EndedMarch 31,2008
    
    
    2007(in 000s except per share data)Numerator:Net income
    
    $
    22,345
    
    
    $
    20,243Denominator:Weighted average shares  basic
    
    
    103,152
    
    
    
    90,648Employee stock options
    
    
    729
    
    
    
    1,540Weighted average shares  diluted
    
    
    103,881
    
    
    
    92,188Net income per common share  basic and diluted
    
    $
    0.22
    
    
    $
    0.22Anti-dilutive securities excluded
    
    
    811
    
    
    
    
 (3) Comprehensive Income
 Three Months EndedMarch 31,2008
    
    
    2007(in 000s)Net income
    
    $
    22,345
    
    
    $
    20,243Currency translation adjustments
    
    
    (3,727
    )
    
    
    713Change in fair value of cash flow hedges, net of tax
    
    
    (17,126
    )
    
    
    Comprehensive income
    
    $
    1,492
    
    
    $
    20,956
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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
  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
    
    
    (3,727
    )
    
    
    
    
    
    
    (3,727
    )Change in fair value of cash flow hedges, net of tax
    
    
    
    
    
    
    (17,126
    )
    
    
    (17,126
    )Balance at March 31, 2008
    
    $
    17,971
    
    
    $
    (26,621
    )
    
    $
    (8,650
    )
 (4) Debt
  March 31,
    
    
    December 31,2008
    
    
    2007DeferredInterest
    
    
    
    
    
    
    FinancingRate (a)
    
    
    Maturity Date
    
    
    Costs
    
    
    Debt
    
    
    Debt(in 000s)Senior ABL
revolving credit
facility
    
    
    6.09
    %
    
    Nov. 2011
    
    $
    15,736
    
    
    $
    870,920
    
    
    $
    828,000Senior ABL term loan
    
    
    6.35
    %
    
    Nov. 2012 (b)
    
    
    3,056
    
    
    
    246,250
    
    
    
    246,875Senior Term Facility
    
    
    8.15
    %
    
    Nov. 2013
    
    
    16,669
    
    
    
    899,300
    
    
    
    899,300Senior Notes
    
    
    9.50
    %
    
    Dec. 2014
    
    
    18,061
    
    
    
    620,000
    
    
    
    620,000Capitalized lease
obligations and
other
    
    
    2.50
    %
    
    Various
    
    
    
    
    
    
    138,392
    
    
    
    142,050Total
    
    
    
    
    
    
    
    
    
    $
    53,522
    
    
    $
    2,774,862
    
    
    $
    2,736,225
 
 (a)
    
    Estimated interest presented is the effective interest rate as of March 31, 2008.(b)
    
    Installments of $0.6 million quarterly ($2.5 million annually) are due through maturity.    (5) Derivative Instruments
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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
    (6) 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.
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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
 
  SignificantFair
    
    Quoted Prices in
    
    OtherValue
    
    Active Markets
    
    Observable
    
    SignificantMarch
    
    for Identical
    
    Inputs
    
    Unobservable31, 2008
    
    Assets (Level 1)
    
    (Level 2)
    
    Inputs (Level 3)Interest rate derivatives (a)
    
    $
    43,572
    
    
    $
    
    
    
    $
    43,572
    
    
    $
    
 
 (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).  10




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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 months ended March 31, 2008 included in this Quarterly Report.
 Overview
    Factors Affecting Our Results of Operations
  Critical Accounting Policies and Estimates
  11




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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.
    
    Merchandise sales 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 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 rental equipment sales represents the net book value of rental equipment at the
date of sale.
  12




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Three Months Ended March 31, 2008, Compared to Three Months Ended March 31, 2007
  Percent of RevenueThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,
    
    
    Increase (decrease)2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008 versus 2007(unaudited)Revenues:Equipment rental revenue
    
    $
    372,335
    
    
    $
    347,975
    
    
    
    88.2
    %
    
    
    85.6
    %
    
    $
    24,360
    
    
    
    7.0
    %Sale of merchandise
    
    
    18,352
    
    
    
    20,598
    
    
    
    4.3
    
    
    
    5.1
    
    
    
    (2,246
    )
    
    
    (10.9
    )Sale of used rental equipment
    
    
    31,406
    
    
    
    37,774
    
    
    
    7.4
    
    
    
    9.3
    
    
    
    (6,368
    )
    
    
    (16.9
    )Total revenues
    
    
    422,093
    
    
    
    406,347
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    15,746
    
    
    
    3.9Cost of revenues:Cost of equipment rentals,
excluding depreciation
    
    
    167,270
    
    
    
    156,009
    
    
    
    39.6
    
    
    
    38.4
    
    
    
    11,261
    
    
    
    7.2Depreciation  rental
equipment
    
    
    78,210
    
    
    
    68,551
    
    
    
    18.5
    
    
    
    16.9
    
    
    
    9,659
    
    
    
    14.1Cost of merchandise sales
    
    
    11,016
    
    
    
    12,352
    
    
    
    2.6
    
    
    
    3.0
    
    
    
    (1,336
    )
    
    
    (10.8
    )Cost of used rental
equipment sales
    
    
    22,457
    
    
    
    26,943
    
    
    
    5.3
    
    
    
    6.6
    
    
    
    (4,486
    )
    
    
    (16.6
    )Total cost of revenues
    
    
    278,953
    
    
    
    263,855
    
    
    
    66.1
    
    
    
    64.9
    
    
    
    15,098
    
    
    
    5.7Gross profit
    
    
    143,140
    
    
    
    142,492
    
    
    
    33.9
    
    
    
    35.1
    
    
    
    648
    
    
    
    0.5Operating expensesSelling, general, and
administrative
    
    
    39,588
    
    
    
    32,589
    
    
    
    9.4
    
    
    
    8.0
    
    
    
    6,999
    
    
    
    21.5Management fee and
recapitalization
    
    
    
    
    
    
    1,500
    
    
    
    
    
    
    
    0.4
    
    
    
    (1,500
    )
    
    
    (100.0
    )Depreciation and
amortization  nonrental
equipment
    
    
    12,198
    
    
    
    10,856
    
    
    
    2.9
    
    
    
    2.7
    
    
    
    1,342
    
    
    
    12.4Total operating expenses
    
    
    51,786
    
    
    
    44,945
    
    
    
    12.3
    
    
    
    11.1
    
    
    
    6,841
    
    
    
    15.2Operating income
    
    
    91,354
    
    
    
    97,547
    
    
    
    21.6
    
    
    
    24.0
    
    
    
    (6,193
    )
    
    
    (6.3
    )Interest expense, net
    
    
    55,361
    
    
    
    64,200
    
    
    
    13.1
    
    
    
    15.8
    
    
    
    (8,839
    )
    
    
    (13.8
    )Other income, net
    
    
    (627
    )
    
    
    89
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (716
    )
    
    
    (804.5
    )Income before provision
for income taxes
    
    
    36,620
    
    
    
    33,258
    
    
    
    8.7
    
    
    
    8.2
    
    
    
    3,362
    
    
    
    10.1Provision for income taxes
    
    
    14,275
    
    
    
    13,015
    
    
    
    3.4
    
    
    
    3.2
    
    
    
    1,260
    
    
    
    9.7Net income
    
    $
    22,345
    
    
    $
    20,243
    
    
    
    5.3
    %
    
    
    5.0
    %
    
    $
    2,102
    
    
    
    10.4
    13




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14




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Liquidity and Capital Resources
 Cash and Cash Flows
     Indebtedness and Liquidity
   15




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New Accounting Pronouncements
 Fair Value Measurements
 Disclosures about Derivative Instruments and
Hedging Activities an amendment of FASB Statement No. 133
 16




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
    Currency Exchange Risk
  
 Item 4T. Controls and Procedures
  17




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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
  18




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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
    
    Description31.1
    
    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.
 19




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##### Table of Contents



SIGNATURES
  RSC Holdings Inc.
 Signature
    
    Title
    
    Date/s/ Erik Olsson

Erik Olsson
    
    President and Director (Principal Executive Officer)
    
    May 1, 2008/s/ David Mathieson

David Mathieson
    
    Chief Financial Officer (Principal Financial and
Principal Accounting Officer)
    
    May 1, 2008
 20




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    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.
 21