##### 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 September 30, 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
    
    (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
 þ o
  Large accelerated filer
o
    
    Accelerated filer o


Non-accelerated
filer þ (Do not check if a smaller reporting company)

    Smaller reporting company o
 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 September 30, 2008 and December 31, 2007
    
    
    2Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2008 and September 30, 2007
    
    
    3Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and September 30, 2007
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11ITEM 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    22ITEM 4T.Controls and Procedures
    
    
    23PART II.Other Information
    
    
    23ITEM 1.Legal Proceedings
    
    
    23ITEM 1A.Risk Factors
    
    
    24ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24ITEM 3.Defaults Upon Senior Securities
    
    
    24ITEM 4.Submission of Matters to a Vote of Security Holders
    
    
    24ITEM 5.Other Information
    
    
    24ITEM 6.Exhibits
    
    
    25SIGNATURES
    
    
    26EX-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
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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PART I. Financial Information
 
 Item 1. Financial Statements
 RSC HOLDINGS INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 (Unaudited)
 September 30,
    
    
    December 31,2008
    
    
    2007AssetsCash and cash equivalents
    
    $
    273
    
    
    $
    10,039Accounts receivable, net
    
    
    292,159
    
    
    
    284,570Inventory
    
    
    22,279
    
    
    
    21,563Rental equipment, net
    
    
    1,864,794
    
    
    
    1,929,514Property and equipment, net
    
    
    181,615
    
    
    
    191,901Goodwill and other intangibles, net
    
    
    938,864
    
    
    
    925,621Deferred financing costs
    
    
    48,959
    
    
    
    55,660Other assets
    
    
    33,711
    
    
    
    41,469Total assets
    
    $
    3,382,654
    
    
    $
    3,460,337Liabilities and Stockholders Equity (Deficit)Accounts payable
    
    $
    160,394
    
    
    $
    264,384Accrued expenses and other liabilities
    
    
    182,815
    
    
    
    179,876Debt
    
    
    2,629,526
    
    
    
    2,736,225Deferred income taxes, net
    
    
    347,195
    
    
    
    323,950Total liabilities
    
    
    3,319,930
    
    
    
    3,504,435Commitments and contingenciesPreferred stock, no par value, (500,000 shares
authorized, no shares issued and outstanding at
September 30, 2008 and December 31, 2007)
    
    
    
    
    
    
    Common stock, no par value, (300,000,000 shares
authorized, 103,352,891 shares issued and outstanding
at September 30, 2008 and 103,147,575 shares issued
and outstanding as of December 31, 2007)
    
    
    824,619
    
    
    
    820,344Accumulated deficit
    
    
    (764,727
    )
    
    
    (876,645
    )Accumulated other comprehensive income
    
    
    2,832
    
    
    
    12,203Total stockholders equity (deficit)
    
    
    62,724
    
    
    
    (44,098
    )Total liabilities and stockholders equity (deficit)
    
    $
    3,382,654
    
    
    $
    3,460,337
  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 September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Equipment rental revenue
    
    $
    418,604
    
    
    $
    411,585
    
    
    $
    1,195,782
    
    
    $
    1,144,206Sale of merchandise
    
    
    18,906
    
    
    
    19,909
    
    
    
    56,152
    
    
    
    60,896Sale of used rental equipment
    
    
    29,357
    
    
    
    30,460
    
    
    
    86,043
    
    
    
    106,027Total revenues
    
    
    466,867
    
    
    
    461,954
    
    
    
    1,337,977
    
    
    
    1,311,129Cost of revenues:Cost of equipment rentals, excluding
depreciation
    
    
    182,873
    
    
    
    163,693
    
    
    
    522,684
    
    
    
    479,676Depreciation  rental equipment
    
    
    81,869
    
    
    
    76,485
    
    
    
    239,331
    
    
    
    216,553Cost of merchandise sales
    
    
    12,514
    
    
    
    12,080
    
    
    
    34,910
    
    
    
    36,880Cost of used rental equipment sales
    
    
    20,479
    
    
    
    21,288
    
    
    
    60,153
    
    
    
    75,180Total cost of revenues
    
    
    297,735
    
    
    
    273,546
    
    
    
    857,078
    
    
    
    808,289Gross profit
    
    
    169,132
    
    
    
    188,408
    
    
    
    480,899
    
    
    
    502,840Operating expenses:Selling, general, and administrative
    
    
    46,232
    
    
    
    40,431
    
    
    
    127,596
    
    
    
    111,120Management fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,000Depreciation and amortization 
non-rental equipment and intangibles
    
    
    12,603
    
    
    
    11,843
    
    
    
    37,214
    
    
    
    34,152Total operating expenses
    
    
    58,835
    
    
    
    52,274
    
    
    
    164,810
    
    
    
    168,272Operating income
    
    
    110,297
    
    
    
    136,134
    
    
    
    316,089
    
    
    
    334,568Interest expense, net
    
    
    48,296
    
    
    
    58,204
    
    
    
    152,399
    
    
    
    195,093Other expense (income), net
    
    
    327
    
    
    
    (22
    )
    
    
    (316
    )
    
    
    (224
    )Income before provision for income taxes
    
    
    61,674
    
    
    
    77,952
    
    
    
    164,006
    
    
    
    139,699Provision for income taxes
    
    
    19,325
    
    
    
    30,403
    
    
    
    59,235
    
    
    
    54,482Net income
    
    $
    42,349
    
    
    $
    47,549
    
    
    $
    104,771
    
    
    $
    85,217Weighted average shares outstanding used in
computing net income per common share:Basic
    
    
    103,303
    
    
    
    103,148
    
    
    
    103,229
    
    
    
    96,600Diluted
    
    
    103,602
    
    
    
    104,642
    
    
    
    103,806
    
    
    
    98,100Net income per common share:Basic
    
    $
    0.41
    
    
    $
    0.46
    
    
    $
    1.01
    
    
    $
    0.88Diluted
    
    $
    0.41
    
    
    $
    0.45
    
    
    $
    1.01
    
    
    $
    0.87
  3




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RSC HOLDINGS INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Nine Months EndedSeptember 30,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    104,771
    
    
    $
    85,217Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    276,545
    
    
    
    250,705Amortization of deferred financing costs
    
    
    7,281
    
    
    
    10,709Share-based compensation expense
    
    
    2,797
    
    
    
    2,843Gain on sales of rental and non-rental property and equipment, net of
non-cash writeoffs
    
    
    (23,828
    )
    
    
    (32,407
    )Deferred income taxes
    
    
    22,274
    
    
    
    21,482Excess tax benefits from share-based payment arrangements
    
    
    (141
    )
    
    
    Changes in operating assets and liabilities, net of acquisition:Accounts receivable, net
    
    
    (3,720
    )
    
    
    (29,911
    )Inventory
    
    
    (690
    )
    
    
    (2,174
    )Other assets
    
    
    (1,559
    )
    
    
    2,690Accounts payable
    
    
    (106,889
    )
    
    
    123,325Accrued expenses and other liabilities
    
    
    18,524
    
    
    
    63,242Net cash provided by operating activities
    
    
    295,365
    
    
    
    495,721Cash flows from investing activities:Cash paid for acquisition, net of cash acquired
    
    
    (33,236
    )
    
    
    Purchases of rental equipment
    
    
    (230,464
    )
    
    
    (516,105
    )Purchases of property and equipment
    
    
    (12,205
    )
    
    
    (14,751
    )Proceeds from sales of rental equipment
    
    
    86,043
    
    
    
    106,027Proceeds from sales of property and equipment
    
    
    4,350
    
    
    
    9,803Net cash used in investing activities
    
    
    (185,512
    )
    
    
    (415,026
    )Cash flows from financing activities:Cash consideration paid to Atlas
    
    
    
    
    
    
    (17,995
    )Proceeds from senior ABL revolver
    
    
    178,743
    
    
    
    31,458Payments on senior ABL revolver
    
    
    (272,822
    )
    
    
    (120,736
    )Payments on senior ABL term loan
    
    
    (1,875
    )
    
    
    (1,875
    )Payments on senior Term Facility
    
    
    
    
    
    
    (230,700
    )Payments on capital leases and other
    
    
    (28,639
    )
    
    
    (29,057
    )Deferred financing costs
    
    
    (580
    )
    
    
    (437
    )Proceeds from stock option exercises
    
    
    1,339
    
    
    
    Excess tax benefits from share-based payment arrangements
    
    
    141
    
    
    
    Proceeds from the issuance of common stock
    
    
    
    
    
    
    255,064Capital contributions from Atlas
    
    
    
    
    
    
    4,500Increase (decrease) in outstanding checks in excess of cash balances
    
    
    4,201
    
    
    
    (14,774
    )Net cash used in financing activities
    
    
    (119,492
    )
    
    
    (124,552
    )Effect of foreign exchange rates on cash
    
    
    (127
    )
    
    
    (161
    )Net decrease in cash and cash equivalents
    
    
    (9,766
    )
    
    
    (44,018
    )Cash and cash equivalents at beginning of period
    
    
    10,039
    
    
    
    46,188Cash and cash equivalents at end of period
    
    $
    273
    
    
    $
    2,170Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    137,630
    
    
    $
    148,339Supplemental schedule of non-cash investing and financing activities:Purchase of assets under capital lease obligations
    
    $
    18,153
    
    
    $
    46,768
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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 Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in 000s except per share data)Numerator:Net income
    
    $
    42,349
    
    
    $
    47,549
    
    
    $
    104,771
    
    
    $
    85,217Denominator:Weighted average shares  basic
    
    
    103,303
    
    
    
    103,148
    
    
    
    103,229
    
    
    
    96,600Employee stock options
    
    
    299
    
    
    
    1,494
    
    
    
    577
    
    
    
    1,500Weighted average shares  diluted
    
    
    103,602
    
    
    
    104,642
    
    
    
    103,806
    
    
    
    98,100Net income per common share  basic
    
    $
    0.41
    
    
    $
    0.46
    
    
    $
    1.01
    
    
    $
    0.88Net income per common share  diluted
    
    $
    0.41
    
    
    $
    0.45
    
    
    $
    1.01
    
    
    $
    0.87Anti dilutive stock options excluded
    
    
    900
    
    
    
    
    
    
    
    864
    
    
    
    
 (3) Comprehensive Income
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in 000s)Net income
    
    $
    42,349
    
    
    $
    47,549
    
    
    $
    104,771
    
    
    $
    85,217Currency translation adjustments
    
    
    (4,133
    )
    
    
    5,571
    
    
    
    (7,075
    )
    
    
    12,330Change in fair value of cash flow hedges, net of tax
    
    
    (2,218
    )
    
    
    1,505
    
    
    
    (2,296
    )
    
    
    1,505Comprehensive income
    
    $
    35,998
    
    
    $
    54,625
    
    
    $
    95,400
    
    
    $
    99,052
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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
    
    
    (7,075
    )
    
    
    
    
    
    
    (7,075
    )Change in fair value of cash flow hedges, net of tax
    
    
    
    
    
    
    (2,296
    )
    
    
    (2,296
    )Balance at September 30, 2008
    
    $
    14,623
    
    
    $
    (11,791
    )
    
    $
    2,832
 (4) Debt
  September 30,
    
    
    December 31,2008
    
    
    2007DeferredInterest
    
    
    
    
    
    FinancingRate (a)
    
    Maturity Date
    
    
    Costs
    
    
    Debt
    
    
    Debt(in 000s)Senior ABL
revolving credit
facility
    
    4.30%
    
    Nov. 2011
    
    $
    13,737
    
    
    $
    733,662
    
    
    $
    828,000Senior ABL term loan
    
    4.57%
    
    Nov. 2012
    (b)
    
    2,734
    
    
    
    245,000
    
    
    
    246,875Senior Term Facility
    
    6.30%
    
    Nov. 2013
    
    
    15,409
    
    
    
    899,300
    
    
    
    899,300Senior Notes
    
    9.50%
    
    Dec. 2014
    
    
    17,079
    
    
    
    620,000
    
    
    
    620,000Capitalized lease
obligations and
other
    
    2.75%
    
    Various
    
    
    
    
    
    
    131,564
    
    
    
    142,050Total
    
    
    
    
    
    
    
    $
    48,959
    
    
    $
    2,629,526
    
    
    $
    2,736,225
 
 (a)
    
    Estimated interest rate presented is the effective interest rate as of September 30, 2008.(b)
    
    Installments of $0.6 million quarterly ($2.5 million annually) are due through maturity.     7




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
 (5) Derivative Instruments
     (6) Acquisition
  8




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
 (7) 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.
  SignificantQuoted Prices in
    
    OtherFair Value
    
    Active Markets
    
    Observable
    
    SignificantSeptember
    
    for Identical
    
    Inputs
    
    Unobservable30, 2008
    
    Assets (Level 1)
    
    (Level 2)
    
    Inputs (Level 3)Interest rate derivatives (a)
    
    $
    2,540
    
    
    $
    
    
    
    $
    2,540
    
    
    $
    
  SignificantQuoted Prices in
    
    OtherFair Value
    
    Active Markets
    
    Observable
    
    SignificantSeptember
    
    for Identical
    
    Inputs
    
    Unobservable30, 2008
    
    Assets (Level 1)
    
    (Level 2)
    
    Inputs (Level 3)Interest rate derivatives (a)
    
    $
    22,077
    
    
    $
    
    
    
    $
    22,077
    
    
    $
    
 
 (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).  (8) Income Tax
   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 nine months ended September 30, 2008 included in this
Quarterly Report.
 Overview
   Three Months Ended
    
    Nine Months EndedSeptember 30
    
    September 30,2008
    
    2007
    
    2008
    
    2007Total revenues
    
    $
    466.9
    
    
    $
    462.0
    
    
    $
    1,338.0
    
    
    $
    1,311.1Income before provision for income taxes
    
    
    61.7
    
    
    
    78.0
    
    
    
    164.0
    
    
    
    139.7Net income
    
    
    42.3
    
    
    
    47.5
    
    
    
    104.8
    
    
    
    85.2
  Three Months Ended
    
    Nine Months EndedSeptember 30
    
    September 30,2008
    
    2007
    
    2008
    
    2007Adjusted EBITDA (a)
    
    $
    205.7
    
    
    $
    225.4
    
    
    $
    595.4
    
    
    $
    611.1Utilization (b)
    
    
    72.3
    %
    
    
    74.6
    %
    
    
    70.9
    %
    
    
    73.0
    %Average fleet age (months)
    
    
    31
    
    
    
    25
    
    
    
    31
    
    
    
    25Original equipment cost (c)
    
    $
    2,771
    
    
    $
    2,671
    
    
    $
    2,771
    
    
    $
    2,671
 
 (a)
    
    Defined as consolidated net income before net interest expense, income taxes and
depreciation and amortization and before certain other items, including share-based
compensation, management fees and recapitalization expenses (in thousands). Adjusted
EBITDA is not a recognized measure under Generally 11




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Accepted Accounting Principles (GAAP). See reconciliation between net income and adjusted
EBITDA under Liquidity and Capital Resources - Adjusted EBITDA.(b)
    
    Defined as average dollar value of equipment rented by customers (based on original
equipment cost) for the relevant period divided by the aggregate dollar value of all
equipment (based on original cost) for all equipment.(c)
    
    Defined as original dollar value of equipment purchased from the original equipment
manufacturer (OEM). Fleet purchased from non-OEM sources is assigned a comparable
original equipments cost (OEC) dollar value at the time of purchase (in millions).      Business Environment and Outlook
  Capital Expenditures
  12




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Store Closures
  Recent Developments
 Divisional Reorganization
  Acquisition Activity
  Factors Affecting Our Results of Operations
  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.
 13




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
    
    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.
  14




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##### Table of Contents



Three Months Ended September 30, 2008, Compared to Three Months Ended September 30, 2007
  Percent of RevenueThree Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    September 30,
    
    
    Increase (decrease)2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008 versus 2007(unaudited)Revenues:Equipment rental revenue
    
    $
    418,604
    
    
    $
    411,585
    
    
    
    89.7
    %
    
    
    89.1
    %
    
    $
    7,019
    
    
    
    1.7
    %Sale of merchandise
    
    
    18,906
    
    
    
    19,909
    
    
    
    4.0
    
    
    
    4.3
    
    
    
    (1,003
    )
    
    
    (5.0
    )Sale of used rental equipment
    
    
    29,357
    
    
    
    30,460
    
    
    
    6.3
    
    
    
    6.6
    
    
    
    (1,103
    )
    
    
    (3.6
    )Total revenues
    
    
    466,867
    
    
    
    461,954
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    4,913
    
    
    
    1.1Cost of revenues:Cost of equipment rentals,
excluding depreciation
    
    
    182,873
    
    
    
    163,693
    
    
    
    39.2
    
    
    
    35.4
    
    
    
    19,180
    
    
    
    11.7Depreciation 
rental equipment
    
    
    81,869
    
    
    
    76,485
    
    
    
    17.5
    
    
    
    16.6
    
    
    
    5,384
    
    
    
    7.0Cost of merchandise sales
    
    
    12,514
    
    
    
    12,080
    
    
    
    2.7
    
    
    
    2.6
    
    
    
    434
    
    
    
    3.6Cost of used rental equipment
sales
    
    
    20,479
    
    
    
    21,288
    
    
    
    4.4
    
    
    
    4.6
    
    
    
    (809
    )
    
    
    (3.8
    )Total cost of revenues
    
    
    297,735
    
    
    
    273,546
    
    
    
    63.8
    
    
    
    59.2
    
    
    
    24,189
    
    
    
    8.8Gross profit
    
    
    169,132
    
    
    
    188,408
    
    
    
    36.2
    
    
    
    40.8
    
    
    
    (19,276
    )
    
    
    (10.2
    )Operating expenses:Selling, general, and
administrative
    
    
    46,232
    
    
    
    40,431
    
    
    
    9.9
    
    
    
    8.8
    
    
    
    5,801
    
    
    
    14.3Depreciation and amortization
 nonrental equipment and
intangibles
    
    
    12,603
    
    
    
    11,843
    
    
    
    2.7
    
    
    
    2.6
    
    
    
    760
    
    
    
    6.4Total operating expenses
    
    
    58,835
    
    
    
    52,274
    
    
    
    12.6
    
    
    
    11.3
    
    
    
    6,561
    
    
    
    12.6Operating income
    
    
    110,297
    
    
    
    136,134
    
    
    
    23.6
    
    
    
    29.5
    
    
    
    (25,837
    )
    
    
    (19.0
    )Interest expense, net
    
    
    48,296
    
    
    
    58,204
    
    
    
    10.3
    
    
    
    12.6
    
    
    
    (9,908
    )
    
    
    (17.0
    )Other expense (income), net
    
    
    327
    
    
    
    (22
    )
    
    
    0.1
    
    
    
    
    
    
    
    349
    
    
    
    1,586.4Income before provision for
income taxes
    
    
    61,674
    
    
    
    77,952
    
    
    
    13.2
    
    
    
    16.9
    
    
    
    (16,278
    )
    
    
    (20.9
    )Provision for income taxes
    
    
    19,325
    
    
    
    30,403
    
    
    
    4.1
    
    
    
    6.6
    
    
    
    (11,078
    )
    
    
    (36.4
    )Net income
    
    $
    42,349
    
    
    $
    47,549
    
    
    
    9.1
    %
    
    
    10.3
    %
    
    $
    (5,200
    )
    
    
    (10.9
    )
    15




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Nine Months Ended September 30, 2008, Compared to Nine Months Ended September 30, 2007
  Nine Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    Increase (decrease)2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008 versus 2007(unaudited)Revenues:Equipment rental revenue
    
    $
    1,195,782
    
    
    $
    1,144,206
    
    
    
    89.4
    %
    
    
    87.3
    %
    
    $
    51,576
    
    
    
    4.5
    %Sale of merchandise
    
    
    56,152
    
    
    
    60,896
    
    
    
    4.2
    
    
    
    4.6
    
    
    
    (4,744
    )
    
    
    (7.8
    )Sale of used rental equipment
    
    
    86,043
    
    
    
    106,027
    
    
    
    6.4
    
    
    
    8.1
    
    
    
    (19,984
    )
    
    
    (18.8
    )Total revenues
    
    
    1,337,977
    
    
    
    1,311,129
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    26,848
    
    
    
    2.0Cost of revenues:Cost of equipment rentals, excluding
depreciation
    
    
    522,684
    
    
    
    479,676
    
    
    
    39.1
    
    
    
    36.6
    
    
    
    43,008
    
    
    
    9.0Depreciation  rental equipment
    
    
    239,331
    
    
    
    216,553
    
    
    
    17.9
    
    
    
    16.5
    
    
    
    22,778
    
    
    
    10.5Cost of merchandise sales
    
    
    34,910
    
    
    
    36,880
    
    
    
    2.6
    
    
    
    2.8
    
    
    
    (1,970
    )
    
    
    (5.3
    )Cost of used rental equipment
sales
    
    
    60,153
    
    
    
    75,180
    
    
    
    4.5
    
    
    
    5.7
    
    
    
    (15,027
    )
    
    
    (20.0
    )Total cost of revenues
    
    
    857,078
    
    
    
    808,289
    
    
    
    64.1
    
    
    
    61.6
    
    
    
    48,789
    
    
    
    6.0Gross profit
    
    
    480,899
    
    
    
    502,840
    
    
    
    35.9
    
    
    
    38.4
    
    
    
    (21,941
    )
    
    
    (4.4
    )Operating expenses:Selling, general, and
administrative
    
    
    127,596
    
    
    
    111,120
    
    
    
    9.5
    
    
    
    8.5
    
    
    
    16,476
    
    
    
    14.8Management fees
    
    
    
    
    
    
    23,000
    
    
    
    
    
    
    
    1.8
    
    
    
    (23,000
    )
    
    
    (100.0
    )Depreciation and amortization 
nonrental equipment and intangibles
    
    
    37,214
    
    
    
    34,152
    
    
    
    2.8
    
    
    
    2.6
    
    
    
    3,062
    
    
    
    9.0Total operating expenses
    
    
    164,810
    
    
    
    168,272
    
    
    
    12.3
    
    
    
    12.8
    
    
    
    (3,462
    )
    
    
    (2.1
    )Operating income
    
    
    316,089
    
    
    
    334,568
    
    
    
    23.6
    
    
    
    25.5
    
    
    
    (18,479
    )
    
    
    (5.5
    )Interest expense, net
    
    
    152,399
    
    
    
    195,093
    
    
    
    11.4
    
    
    
    14.9
    
    
    
    (42,694
    )
    
    
    (21.9
    )Other income, net
    
    
    (316
    )
    
    
    (224
    )
    
    
    
    
    
    
    
    
    
    
    (92
    )
    
    
    41.1Income before provision for income
taxes
    
    
    164,006
    
    
    
    139,699
    
    
    
    12.3
    
    
    
    10.7
    
    
    
    24,307
    
    
    
    17.4Provision for income taxes
    
    
    59,235
    
    
    
    54,482
    
    
    
    4.4
    
    
    
    4.2
    
    
    
    4,753
    
    
    
    8.7Net income
    
    $
    104,771
    
    
    $
    85,217
    
    
    
    7.8
    %
    
    
    6.5
    %
    
    $
    19,554
    
    
    
    22.9
    17




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18




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flows and Liquidity
  Nine Months EndedSeptember 30,2008
    
    
    2007(in 000s)Net cash provided by operating activities
    
    $
    295,365
    
    
    $
    495,721Net cash used in investing activities
    
    
    (185,512
    )
    
    
    (415,026
    )Net cash used in by financing activities
    
    
    (119,492
    )
    
    
    (124,552
    )Effect of foreign exchange rates on cash
    
    
    (127
    )
    
    
    (161
    )Net decrease in cash and cash equivalents
    
    $
    (9,766
    )
    
    $
    (44,018
    )
  Operating activities 
 Investing activities 
 
    
    Replacement capital expenditures, which are capital expenditures required to replace the
original equipment cost of rental assets that were sold during the period; and
    
    Growth capital expenditures, which are the portion of capital expenditures associated
with the expansion of our rental fleet.
  19




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Financing
activities -
 Indebtedness
     Outlook
   20




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##### Table of Contents



Adjusted EBITDA
  Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in 000s)Net income
    
    $
    42,349
    
    
    $
    47,549
    
    
    $
    104,771
    
    
    $
    85,217Depreciation of rental
equipment and depreciation
and amortization of
non-rental equipment
    
    
    94,472
    
    
    
    88,328
    
    
    
    276,545
    
    
    
    250,705Interest expense, net
    
    
    48,296
    
    
    
    58,204
    
    
    
    152,399
    
    
    
    195,093Provision for income taxes
    
    
    19,325
    
    
    
    30,403
    
    
    
    59,235
    
    
    
    54,482EBITDA
    
    $
    204,442
    
    
    $
    224,484
    
    
    $
    592,950
    
    
    $
    585,497Adjustments:Share based compensation
    
    
    957
    
    
    
    971
    
    
    
    2,797
    
    
    
    2,843Other (income) expense, net
    
    
    327
    
    
    
    (22
    )
    
    
    (316
    )
    
    
    (224
    )Management fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,000Adjusted EBITDA
    
    $
    205,726
    
    
    $
    225,433
    
    
    $
    595,431
    
    
    $
    611,116
 Contingent Earn-out
  Critical Accounting Policies and Estimates
  Impairment of Goodwill
    21




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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
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
    22




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##### Table of Contents



Currency Exchange Risk
  
 Item 4T. Controls and Procedures
  Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II. Other Information
 
 Item 1. Legal Proceedings
   23




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##### Table of Contents



Item 1A. Risk Factors
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  24




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##### Table of Contents



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
 25




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##### Table of Contents



SIGNATURES
  RSC Holdings Inc.
 Signature
    
    Title
    
    Date/s/ Erik Olsson
    
    Chief Executive Officer (Principal
    
    October 28, 2008Erik Olsson
    
    Executive Officer)/s/ David Mathieson
    
    Chief Financial Officer (Principal FinancialDavid Mathieson
    
    and Principal Accounting Officer)
    
    October 28, 2008
 26




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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
 27