##### 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, 2010
 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.
 (Exact name of registrant as specified in its charter)
 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
 (Registrants
telephone number,
 N/A
 (Former
name, former address and former fiscal year, if changed since
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non accelerated filer o
(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
    
    
    3ITEM 1.Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets at March 31, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31,
2010 and March 31, 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
2010 and March 31, 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    7ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15ITEM 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    25ITEM 4.Controls and Procedures
    
    
    26PART II.Other Information
    
    
    26ITEM 1.Legal Proceedings
    
    
    26ITEM 1A.Risk Factors
    
    
    27ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27ITEM 3.Defaults Upon Senior Securities
    
    
    27ITEM 4.Reserved
    
    
    27ITEM 5.Other Information
    
    
    27ITEM 6.Exhibits
    
    
    28SIGNATURES
    
    
    29EX-10.1EX-31.1EX-31.2EX-32.1
  i




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Introductory Note
  
 Cautionary Note for Forward-Looking Information
    
    
    the effect of an economic downturn or other factors resulting in a decline in
non-residential construction, non-construction maintenance, capital improvements and
capital investment;
    
    intense rental rate price pressure from competitors, some of whom are heavily
indebted and may significantly reduce their prices to generate cash to meet debt
covenants; from contractor customers some of whom are bidding work at cost or below to
secure work for their remaining best employees; from industrial customers who generally
are experiencing profitability shortfalls in the current economic climate and in return
are asking all of their most significant suppliers for price reductions and cost
reduction ideas;
    
    the rental industrys ability to continue to sell used equipment through both the
retail and auction markets at prices sufficient to enable us to maintain orderly
liquidation values that support our borrowing base to meet our minimum availability and
to avoid testing springing covenants of leverage and fixed charge coverage contained in
our Senior ABL Revolving Facility credit agreement;
    
    our ability to comply with our debt covenants;
    
    risks related to the credit markets willingness to continue to lend to borrowers
rated B- and C;
    
    our ability to generate cash and/or incur additional indebtedness to finance
equipment purchases;
 1




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##### Table of Contents




    
    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 employment
legislation, the environment and customer privacy, among others;
    
    fluctuations in fuel or supply costs;
    
    heavy reliance on centralized information technology systems;
    
    claims that the software products and information systems on which we rely infringe
on the intellectual property rights of others; and
    
    the other factors described in Part II, Item 1A of this Quarterly Report on Form 10-Q
under the caption Risk Factors.
  2




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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)
 March 31,
    
    
    December 31,2010
    
    
    2009AssetsCash and cash equivalents
    
    $
    7,862
    
    
    $
    4,535Accounts receivable, net of allowance for doubtful
accounts of $10,878 and $10,741 at March 31, 2010 and
December 31, 2009, respectively
    
    
    175,418
    
    
    
    181,975Inventory
    
    
    13,961
    
    
    
    14,421Rental equipment, net of accumulated depreciation of
$1,040,400 and $1,016,606 at March 31, 2010 and
December 31, 2009, respectively
    
    
    1,340,941
    
    
    
    1,384,999Property and equipment, net of accumulated
depreciation of $186,673 and $180,495 at March 31,
2010 and December 31, 2009, respectively
    
    
    114,377
    
    
    
    123,197Goodwill and other intangibles, net
    
    
    939,872
    
    
    
    940,063Deferred financing costs
    
    
    52,617
    
    
    
    55,539Other assets
    
    
    24,513
    
    
    
    24,590Total assets
    
    $
    2,669,561
    
    
    $
    2,729,319Liabilities and Stockholders (Deficit) EquityAccounts payable
    
    $
    81,438
    
    
    $
    46,275Accrued expenses and other liabilities
    
    
    181,881
    
    
    
    174,829Debt
    
    
    2,126,842
    
    
    
    2,172,109Deferred income taxes
    
    
    289,208
    
    
    
    312,465Total liabilities
    
    
    2,679,369
    
    
    
    2,705,678Commitments and contingenciesPreferred stock, no par value, (500,000 shares
authorized, no shares issued and outstanding at March
31, 2010 and December 31, 2009)
    
    
    
    
    
    
    Common stock, no par value, (300,000,000 shares
authorized, 103,414,486 shares issued and outstanding
at March 31, 2010 and 103,412,561 shares issued and
outstanding at December 31, 2009)
    
    
    829,966
    
    
    
    829,288Accumulated deficit
    
    
    (837,670
    )
    
    
    (799,842
    )Accumulated other comprehensive loss
    
    
    (2,104
    )
    
    
    (5,805
    )Total stockholders (deficit) equity
    
    
    (9,808
    )
    
    
    23,641Total liabilities and stockholders (deficit) equity
    
    $
    2,669,561
    
    
    $
    2,729,319
  3




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##### Table of Contents



RSC
HOLDINGS INC. AND SUBSIDIARIES
 
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Revenues:Equipment rental revenue
    
    $
    222,213
    
    
    $
    287,470Sale of merchandise
    
    
    11,421
    
    
    
    13,900Sale of used rental equipment
    
    
    27,106
    
    
    
    49,903Total revenues
    
    
    260,740
    
    
    
    351,273Cost of revenues:Cost of equipment rentals, excluding depreciation
    
    
    131,226
    
    
    
    149,479Depreciation of rental equipment
    
    
    66,645
    
    
    
    75,263Cost of merchandise sales
    
    
    8,074
    
    
    
    10,000Cost of used rental equipment sales
    
    
    24,637
    
    
    
    45,792Total cost of revenues
    
    
    230,582
    
    
    
    280,534Gross profit
    
    
    30,158
    
    
    
    70,739Operating expenses:Selling, general and administrative
    
    
    33,778
    
    
    
    39,513Depreciation and amortization of
non-rental equipment and intangibles
    
    
    10,057
    
    
    
    11,782Other operating (gains) losses, net
    
    
    (2,312
    )
    
    
    108Total operating expenses, net
    
    
    41,523
    
    
    
    51,403Operating (loss) income
    
    
    (11,365
    )
    
    
    19,336Interest expense, net
    
    
    49,793
    
    
    
    40,210Other (income) expense, net
    
    
    (199
    )
    
    
    303Loss before benefit for income taxes
    
    
    (60,959
    )
    
    
    (21,177
    )Benefit for income taxes
    
    
    (23,131
    )
    
    
    (7,673
    )Net loss
    
    $
    (37,828
    )
    
    $
    (13,504
    )Weighted average shares outstanding used in computing net loss
per common share:Basic and diluted
    
    
    103,477
    
    
    
    103,428Net loss per common share:Basic and diluted
    
    $
    (0.37
    )
    
    $
    (0.13
    )
  4




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RSC
HOLDINGS INC. AND SUBSIDIARIES
 
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009(In thousands)Cash flows from operating activities:Net loss
    
    $
    (37,828
    )
    
    $
    (13,504
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    76,702
    
    
    
    87,045Amortization of deferred financing costs
    
    
    3,173
    
    
    
    2,603Amortization of original issue discount
    
    
    268
    
    
    
    Share-based compensation expense
    
    
    663
    
    
    
    1,132Gain on sales of rental and non-rental property and equipment, net of
non-cash writeoffs
    
    
    (2,608
    )
    
    
    (3,208
    )Deferred income taxes
    
    
    (23,666
    )
    
    
    (12,287
    )Gain on insurance settlement
    
    
    (1,736
    )
    
    
    Interest expense on hedge ineffectiveness
    
    
    85
    
    
    
    Changes in operating assets and liabilities:Accounts receivable, net
    
    
    7,372
    
    
    
    66,837Inventory
    
    
    485
    
    
    
    1,679Other assets
    
    
    160
    
    
    
    5,321Accounts payable
    
    
    35,382
    
    
    
    (60,287
    )Accrued expenses and other liabilities
    
    
    7,029
    
    
    
    (9,201
    )Net cash provided by operating activities
    
    
    65,481
    
    
    
    66,130Cash flows from investing activities:Purchases of rental equipment
    
    
    (44,906
    )
    
    
    (8,591
    )Purchases of property and equipment
    
    
    (331
    )
    
    
    (1,107
    )Proceeds from sales of rental equipment
    
    
    27,106
    
    
    
    49,903Proceeds from sales of property and equipment
    
    
    1,296
    
    
    
    3,459Insurance proceeds from rental equipment and property claims
    
    
    1,736
    
    
    
    2,000Net cash (used in) provided by investing activities
    
    
    (15,099
    )
    
    
    45,664Cash flows from financing activities:Proceeds from Senior ABL Revolving Facility
    
    
    35,000
    
    
    
    30,816Payments on Senior ABL Revolving Facility
    
    
    (73,000
    )
    
    
    (133,038
    )Payments on Senior ABL Term Loan
    
    
    
    
    
    
    (625
    )Payments on capital leases and other debt
    
    
    (9,020
    )
    
    
    (9,969
    )Payments for deferred financing costs
    
    
    (624
    )
    
    
    (275
    )Proceeds from stock option exercises
    
    
    15
    
    
    
    256Decrease in outstanding checks in excess of cash balances
    
    
    
    
    
    
    (1,069
    )Net cash used in financing activities
    
    
    (47,629
    )
    
    
    (113,904
    )Effect of foreign exchange rates on cash
    
    
    574
    
    
    
    (25
    )Net increase (decrease) in cash and cash equivalents
    
    
    3,327
    
    
    
    (2,135
    )Cash and cash equivalents at beginning of period
    
    
    4,535
    
    
    
    13,670Cash and cash equivalents at end of period
    
    $
    7,862
    
    
    $
    11,535
  5




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RSC
HOLDINGS INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009(In thousands)Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    36,831
    
    
    $
    32,715Cash received for taxes, net
    
    
    406
    
    
    
    5,577Supplemental schedule of non-cash investing and financing activities:Purchase of assets under capital lease obligations
    
    $
    1,484
    
    
    $
    692Accrued deferred financing costs
    
    
    260
    
    
    
    
  6




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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
  Recent Accounting Pronouncements
   7




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RSC
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
  (2) Fair Value of Financial Instruments
    (3) Net Loss per Share
   Three Months EndedMarch 31,2010
    
    
    2009(in 000s except per share data)Numerator:Net loss
    
    $
    (37,828
    )
    
    $
    (13,504
    )Denominator:Weighted average shares  basic
    
    
    103,477
    
    
    
    103,428Employee stock options
    
    
    
    
    
    
    Total weighted average shares  diluted
    
    
    103,477
    
    
    
    103,428Net loss per common share  basic and diluted
    
    $
    (0.37
    )
    
    $
    (0.13
    )Anti-dilutive stock-based awards excluded
    
    
    6,050
    
    
    
    5,293
 8




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RSC
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
  (4) Accumulated Other Comprehensive Income (Loss)
  FairMarket
    
    
    AccumulatedForeign
    
    
    Value of
    
    
    OtherCurrency
    
    
    Cash Flow
    
    
    ComprehensiveTranslation
    
    
    Hedges
    
    
    Income (Loss)(in 000s)Balance at December 31, 2009
    
    $
    15,967
    
    
    $
    (21,772
    )
    
    $
    (5,805
    )Foreign currency translation
    
    
    3,567
    
    
    
    
    
    
    
    3,567Change in fair value of cash flow hedges, net of tax
    
    
    
    
    
    
    134
    
    
    
    134Balance at March 31, 2010
    
    $
    19,534
    
    
    $
    (21,638
    )
    
    $
    (2,104
    )
  Three Months EndedMarch 31,2010
    
    
    2009(in 000s)Net loss
    
    $
    (37,828
    )
    
    $
    (13,504
    )Currency translation adjustments
    
    
    3,567
    
    
    
    (2,043
    )Change in fair value of cash flow hedges, net of tax
    
    
    134
    
    
    
    (1,232
    )Comprehensive loss
    
    $
    (34,127
    )
    
    $
    (16,779
    )
 (5) Closed Location Charges
   9




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RSC
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
   Lease Exitand Other
    
    
    EmployeeRelated Costs
    
    
    Termination
    
    
    Other Exit Costs(a)
    
    
    Costs (b)
    
    
    (c)
    
    
    TotalClosed location reserves at December 31, 2009
    
    $
    (6,492
    )
    
    $
    (122
    )
    
    $
    
    
    
    $
    (6,614
    )Charges incurred to close locations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash payments
    
    
    709
    
    
    
    90
    
    
    
    
    
    
    
    799Adjustments to reserve
    
    
    191
    
    
    
    (20
    )
    
    
    
    
    
    
    171Closed location reserves at March 31, 2010
    
    $
    (5,592
    )
    
    $
    (52
    )
    
    $
    
    
    
    $
    (5,644
    )
 
 (a)
    
    Lease exit and other related costs are included within cost of equipment rentals in the
condensed consolidated statements of operations. The lease exit portion of the closed
location reserves at March 31, 2010 are expected to be paid over the remaining contractual
term of the leases, which range from two to 96 months.(b)
    
    Employee termination costs primarily consist of severance payments and related benefits. For
the three months ended March 31, 2010, these costs are included within cost of equipment
rentals in the condensed consolidated statements of operations.(c)
    
    Other exit costs include costs incurred primarily to transport fleet from closed locations to
other locations. No costs for these activities were incurred in the three months ended March
31, 2010.  10




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RSC
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
 (6) Debt
  March 31,
    
    
    December 31,2010
    
    
    2009DeferredInterest
    
    
    Maturity
    
    
    FinancingRate (a)
    
    
    Date
    
    
    Costs
    
    
    Debt
    
    
    Debt(in 000s)Senior ABL Revolving Facility
    
    
    5.21
    %
    
    
    (b
    )
    
    $
    18,462
    
    
    $
    363,195
    
    
    $
    401,195Second Lien Term Facility
    
    
    9.83
    %
    
    Nov. 2013
    
    
    
    6,504
    
    
    
    479,395
    
    
    
    479,3952014 Notes
    
    
    9.50
    %
    
    Dec. 2014
    
    
    
    13,729
    
    
    
    620,000
    
    
    
    620,0002017 Notes
    
    
    10.50
    %
    
    Jul. 2017
    
    
    
    8,986
    
    
    
    400,000
    
    
    
    400,0002019 Notes
    
    
    10.50
    %
    
    Nov. 2019
    
    
    
    4,936
    
    
    
    200,000
    
    
    
    200,000Capitalized lease obligations
    
    
    0.57
    %
    
    Various
    
    
    
    
    
    
    
    77,298
    
    
    
    84,833Total
    
    
    
    
    
    
    
    
    
    $
    52,617
    
    
    
    2,139,888
    
    
    
    2,185,423Original issue discounts (c)
    
    
    n/a
    
    
    
    n/a
    
    
    
    
    
    
    
    (13,046
    )
    
    
    (13,314
    )Total, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,126,842
    
    
    $
    2,172,109
 
 (a)
    
    Estimated interest presented is the effective interest rate as of March 31, 2010 including
the effect of original issue discounts, where applicable, and excluding the effect of deferred
financing costs.(b)
    
    Of the outstanding balance on the Senior ABL Revolving Facility at March 31, 2010, $93.7
million is due November 2011 (the Non-Extending portion) with the remaining $269.5 million
due August 2013 (the Extending portion).(c)
    
    The original issue discount represents the unamortized difference between the $400.0 million
aggregate principal amount of the 2017 Notes and the proceeds received upon issuance and the
unamortized difference between the $200.0 million aggregate principal amount of the 2019 Notes
and the proceeds received upon issuance.   Fair ValueSenior ABL Revolving Facility
    
    $
    363,195Second Lien Term Facility
    
    
    459,0212014 Notes
    
    
    616,9002017 Notes
    
    
    425,0002019 Notes
    
    
    201,000Capitalized lease obligations
    
    
    77,298Total
    
    $
    2,142,414
  11




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
 (7) Derivative Instruments
      12




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
    March 31, 2010
    
    
    December 31, 2009
    
    
    March 31, 2010
    
    
    December 31, 2009Loss in
    
    
    Loss inFair Value of
    
    
    Fair Value of
    
    
    accumulated OCL
    
    
    accumulated OCLDerivative Type
    
    Swap Liabilities
    
    
    Swap Liabilities
    
    
    (net of tax) (b)
    
    
    (net of tax)Interest rate
swaps designated as
hedges (a)
    
    $
    35,621
    
    
    $
    35,755
    
    
    $
    21,638
    
    
    $
    21,772Interest rate swaps
not designated as
hedges (a)
    
    $
    5,212
    
    
    $
    7,068
    
    
    
    N/A
    
    
    
    N/A
 
 (a)
    
    See Note 8 for further discussion on measuring fair value of the interest rate swaps.(b)
    
    The Company estimates that approximately $11.7 millions of losses in accumulated
other comprehensive loss at March 31, 2010 will be reclassified into earnings during the
next twelve months.  LossLoss recognized in
    
    
    Loss reclassified from
    
    
    recognized onaccumulated OCL
    
    
    accumulated OCL into
    
    
    ineffective portionDerivative Type
    
    (net of tax)
    
    
    expense (net of tax)
    
    
    of  derivativeInterest rate swaps
    
    $
    4,008
    
    
    $
    4,142
    
    
    $
    85
  13




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RSC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
 (8) Fair Value
 Measurements
  
    
    Level 1  Observable inputs such as quoted prices in active markets;
    
    Level 2  Inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly; and
    
    Level 3  Unobservable inputs in which there is little or no market data, which
require the reporting entity to develop its own assumptions.
  SignificantQuoted Prices in
    
    
    OtherActive Markets for
    
    
    Observable
    
    
    SignificantFair Value
    
    
    Identical Assets
    
    
    Inputs
    
    
    UnobservableMarch 31, 2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Interest rate derivatives (a)
    
    $
    40,833
    
    
    $
    
    
    
    $
    40,833
    
    
    $
    
 
 (a)
    
    The Companys interest rate derivative instruments are not traded on a market exchange
and therefore the fair values are determined using valuation models which include
assumptions about the Companys credit risk and interest rates based on those observed in
the underlying markets (LIBOR swap rate).  (9) Income Tax
  14




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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 on Form 10-Q . 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 2009 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, 2010 included in this Quarterly Report on Form 10-Q .
 Overview
    Three Months EndedMarch 31,2010
    
    
    2009Total revenues
    
    $
    260,740
    
    
    $
    351,273Loss before benefit for income taxes
    
    
    (60,959
    )
    
    
    (21,177
    )Net loss
    
    
    (37,828
    )
    
    
    (13,504
    )
  Three Months EndedMarch 31,2010
    
    
    2009Adjusted EBITDA (in millions) (a)
    
    $
    66.0
    
    
    $
    107.5Fleet utilization (b)
    
    
    54.8
    %
    
    
    57.8
    %Average fleet age at period end (months)
    
    
    42
    
    
    
    34Original equipment fleet cost (in millions) (c)
    
    $
    2,301
    
    
    $
    2,560
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##### Table of Contents



(a)
    
    Defined as consolidated net loss before net interest expense, income taxes and
depreciation and amortization and before certain other items, including, share-based
compensation and other (income) expense, net. Adjusted EBITDA is not a recognized measure
under GAAP. See reconciliation between net loss and Adjusted EBITDA under Liquidity and
Capital Resources  Adjusted EBITDA.(b)
    
    Defined as the average aggregate dollar value of equipment rented by customers (based
on original equipment fleet cost OEC) during the relevant period, divided by the average
aggregate dollar value of all equipment owned (based on OEC) during the relevant period.(c)
    
    Defined as the original dollar value of rental equipment purchased from the original
equipment manufacturer (OEM). Fleet purchased from non-OEM sources is assigned a
comparable OEC dollar value at the time of purchase.     Business Environment and Outlook
    16




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##### Table of Contents




    
    closing under-performing locations and redeploying rental fleet to more
profitable locations with higher demand;
    
    expanding and diversifying our presence in industrial or non-construction
markets, which historically tend to place a heightened emphasis on maintenance
during times of economic slowdowns;
    
    adjusting capital expenditures to meet changes in demand for our rental
equipment;
    
    reducing headcount;
    
    divesting excess rental fleet, which generates cash and improves fleet
utilization;
    
    slowing sales of used equipment, allowing our average fleet age to increase,
which enables us to retain fleet we will need when the economic situation
improves;
    
    utilizing excess cash flow to repay outstanding amounts on our Senior ABL
Revolving Facility;
    
    evaluating additional opportunities to restructure our debt to extend existing
maturities and replace shorter term obligations with longer term obligations; and
    
    implementing cost reduction measures throughout our business.
 Factors Affecting Our Results of Operations
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##### Table of Contents



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



Three Months Ended March 31, 2010, Compared to Three Months Ended March 31, 2009
  Percent of RevenueThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,
    
    
    Increase (decrease)2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010 versus 2009(unaudited)Revenues:Equipment rental revenue
    
    $
    222,213
    
    
    $
    287,470
    
    
    
    85.2
    %
    
    
    81.8
    %
    
    $
    (65,257
    )
    
    
    (22.7
    )%Sale of merchandise
    
    
    11,421
    
    
    
    13,900
    
    
    
    4.4
    
    
    
    4.0
    
    
    
    (2,479
    )
    
    
    (17.8
    )Sale of used rental equipment
    
    
    27,106
    
    
    
    49,903
    
    
    
    10.4
    
    
    
    14.2
    
    
    
    (22,797
    )
    
    
    (45.7
    )Total revenues
    
    
    260,740
    
    
    
    351,273
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    (90,533
    )
    
    
    (25.8
    )Cost of revenues:Cost of equipment rentals,
excluding depreciation
    
    
    131,226
    
    
    
    149,479
    
    
    
    50.3
    
    
    
    42.6
    
    
    
    (18,253
    )
    
    
    (12.2
    )Depreciation of rental equipment
    
    
    66,645
    
    
    
    75,263
    
    
    
    25.6
    
    
    
    21.4
    
    
    
    (8,618
    )
    
    
    (11.5
    )Cost of merchandise sales
    
    
    8,074
    
    
    
    10,000
    
    
    
    3.1
    
    
    
    2.8
    
    
    
    (1,926
    )
    
    
    (19.3
    )Cost of used rental equipment
sales
    
    
    24,637
    
    
    
    45,792
    
    
    
    9.4
    
    
    
    13.0
    
    
    
    (21,155
    )
    
    
    (46.2
    )Total cost of revenues
    
    
    230,582
    
    
    
    280,534
    
    
    
    88.4
    
    
    
    79.9
    
    
    
    (49,952
    )
    
    
    (17.8
    )Gross profit
    
    
    30,158
    
    
    
    70,739
    
    
    
    11.6
    
    
    
    20.1
    
    
    
    (40,581
    )
    
    
    (57.4
    )Operating expenses:Selling, general and
administrative
    
    
    33,778
    
    
    
    39,513
    
    
    
    13.0
    
    
    
    11.2
    
    
    
    (5,735
    )
    
    
    (14.5
    )Depreciation and amortization
of non-rental equipment and
intangibles
    
    
    10,057
    
    
    
    11,782
    
    
    
    3.9
    
    
    
    3.4
    
    
    
    (1,725
    )
    
    
    (14.6
    )Other operating (gains)
losses, net
    
    
    (2,312
    )
    
    
    108
    
    
    
    (0.9
    )
    
    
    
    
    
    
    (2,420
    )
    
    
    n/aTotal operating expenses, net
    
    
    41,523
    
    
    
    51,403
    
    
    
    15.9
    
    
    
    14.6
    
    
    
    (9,880
    )
    
    
    (19.2
    )Operating (loss) income
    
    
    (11,365
    )
    
    
    19,336
    
    
    
    (4.4
    )
    
    
    5.5
    
    
    
    (30,701
    )
    
    
    n/aInterest expense, net
    
    
    49,793
    
    
    
    40,210
    
    
    
    19.1
    
    
    
    11.4
    
    
    
    9,583
    
    
    
    23.8Other (income) expense, net
    
    
    (199
    )
    
    
    303
    
    
    
    (0.1
    )
    
    
    0.1
    
    
    
    (502
    )
    
    
    n/aLoss before benefit for
income taxes
    
    
    (60,959
    )
    
    
    (21,177
    )
    
    
    (23.4
    )
    
    
    (6.0
    )
    
    
    (39,782
    )
    
    
    n/aBenefit for income taxes
    
    
    (23,131
    )
    
    
    (7,673
    )
    
    
    (8.9
    )
    
    
    (2.2
    )
    
    
    (15,458
    )
    
    
    n/aNet loss
    
    $
    (37,828
    )
    
    $
    (13,504
    )
    
    
    (14.5
    )%
    
    
    (3.8
    )%
    
    $
    (24,324
    )
    
    
    n/a
    19




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flows and Liquidity
   Three months endedMarch 31,2010
    
    
    2009(in 000s)Net cash provided by operating activities
    
    $
    65,481
    
    
    $
    66,130Net cash (used in) provided investing activities
    
    
    (15,099
    )
    
    
    45,664Net cash used in financing activities
    
    
    (47,629
    )
    
    
    (113,904
    )Effect of foreign exchange rates on cash
    
    
    574
    
    
    
    (25
    )Net increase (decrease) in cash and cash equivalents
    
    $
    3,327
    
    
    $
    (2,135
    )
  Operating activities  ,
  Investing activities 
 21




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Financing activities 
 Indebtedness
     22




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##### Table of Contents



Outlook
   Adjusted EBITDA
   Three Months EndedMarch 31,2010
    
    
    2009(in 000s)Net loss
    
    $
    (37,828
    )
    
    $
    (13,504
    )Depreciation of rental
equipment and depreciation
and amortization of
non-rental equipment and
intangibles
    
    
    76,702
    
    
    
    87,045Interest expense, net
    
    
    49,793
    
    
    
    40,210Benefit for income taxes
    
    
    (23,131
    )
    
    
    (7,673
    )EBITDA
    
    $
    65,536
    
    
    $
    106,078Adjustments:Share-based compensation
    
    
    663
    
    
    
    1,132Other (income) expense, net
    
    
    (199
    )
    
    
    303Adjusted EBITDA
    
    $
    66,000
    
    
    $
    107,513
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##### Table of Contents



Free Cash Flow
   Three Months EndedMarch 31,2010
    
    
    2009(in 000s)Net cash provided by operating activities
    
    $
    65,481
    
    
    $
    66,130Purchases of rental equipment
    
    
    (44,906
    )
    
    
    (8,591
    )Purchases of property and equipment
    
    
    (331
    )
    
    
    (1,107
    )Proceeds from sales of rental equipment
    
    
    27,106
    
    
    
    49,903Proceeds from sales of property and equipment
    
    
    1,296
    
    
    
    3,459Insurance proceeds from rental equipment and property claims
    
    
    1,736
    
    
    
    2,000Net capital (expenditures) inflows
    
    
    (15,099
    )
    
    
    45,664Free cash flow
    
    $
    50,382
    
    
    $
    111,794
 Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
    25




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##### Table of Contents



Currency Exchange Risk
  
 Item 4. Controls and Procedures
  Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II. Other Information
 
 Item 1. Legal Proceedings
   26




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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. Reserved
 
 Item 5. Other Information
  27




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##### Table of Contents



Item 6. Exhibits
 Exhibits and Financial Statement Schedules
 ExhibitNumber
    
    Description10.1
    
    Amended and Restated Executive Employment and Noncompetition Agreement
by and between Patricia D. Chiodo and RSC Equipment Rental, Inc.
effective November 28, 200631.1
    
    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
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##### Table of Contents



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

Erik Olsson
    
    President, Chief Executive Officer and Director (Principal Executive Officer)
    
    April 22, 2010/s/ Patricia D. Chiodo

Patricia D. Chiodo
    
    Vice President, Controller and
Interim 
Chief Financial Officer (Principal Financial and
Principal Accounting Officer)
    
    April 22, 2010
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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    Amended and Restated Executive Employment and Noncompetition Agreement
by and between Patricia D. Chiodo and RSC Equipment Rental, Inc.
effective November 28, 200631.1
    
    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
 30