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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



|þ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------

For the quarterly period ended September 30, 2005



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission File Number 1-14387

United Rentals, Inc.

Commission
File Number 1-13663

United Rentals (North America), Inc.

(Exact Names of Registrants as Specified in Their Charters)



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|                         |  |                                      
|------------------------ |  | -------------------------------------
|Delaware Delaware        |  | 06-1522496 06-1493538                
|(State of Incorporation) |  | (I.R.S. Employer Identification Nos.)



|                                                   |  |           
|-------------------------------------------------- |  | ----------
|Five Greenwich Office Park, Greenwich, Connecticut |  | 06831     
|(Address of Principal Executive Offices)           |  | (Zip code)

Registrants telephone number, including area code:  (203) 622-3131



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Indicate by check
mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days.    þ  Yes ̈No

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act).



|                             |  |                    |  |                       
|---------------------------- |  | ------------------ |  | ----------------------
|Large Accelerated Filer    þ |  | Accelerated Filer ̈ |  | Non-Accelerated Filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). ̈Yes    þ  No

As of March 1, 2006, there were 77,520,680 shares of United Rentals, Inc. Common Stock, $.01 par value, outstanding. There is no market for the
common stock of United Rentals (North America), Inc., all outstanding shares of which are owned by United Rentals, Inc.

This combined Form
10-Q is separately filed by (i) United Rentals, Inc. and (ii) United Rentals (North America), Inc. (which is a wholly owned subsidiary of United Rentals, Inc.). United Rentals (North America), Inc. meets the conditions set forth in General
Instruction (H)(1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format permitted by such instruction.



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UNITED RENTALS, INC.

UNITED RENTALS (NORTH AMERICA), INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005

INDEX



|        |  |                                                                                                                                                  |  |     
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|        |  |                                                                                                                                                  |  | Page
|PART I  |  | FINANCIAL INFORMATION                                                                                                                            |  |     
|        |  |                                                                                                                                                 
|Item 1  |  | Unaudited Condensed Consolidated Financial Statements                                                                                            |  | 4   
|        |  |                                                                                                                                                 
|        |  | United Rentals, Inc. Condensed Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004 (unaudited)                            |  | 4   
|        |  |                                                                                                                                                 
|        |  | United Rentals, Inc. Condensed Consolidated Statements of Operations for the Nine and Three Months Ended September 30, 2005 and 2004 (unaudited) |  | 5   
|        |  |                                                                                                                                                 
|        |  | United Rentals, Inc. Condensed Consolidated Statement of Stockholders Equity for the Three Months Ended September 30, 2005 (unaudited)          |  | 6   
|        |  |                                                                                                                                                 
|        |  | United Rentals, Inc. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004 (unaudited)           |  | 7   
|        |  |                                                                                                                                                 
|        |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                                                   |  | 8   
|        |  |                                                                                                                                                 
|Item 2  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                            |  | 32  
|        |  |                                                                                                                                                 
|Item 3  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                       |  | 44  
|        |  |                                                                                                                                                 
|Item 4  |  | Controls and Procedures                                                                                                                          |  | 45  
|        |  |                                                                                                                                                 
|PART II |  | OTHER INFORMATION                                                                                                                                |  |     
|        |  |                                                                                                                                                 
|Item 1  |  | Legal Proceedings                                                                                                                                |  | 50  
|        |  |                                                                                                                                                 
|Item 1A |  | Risk Factors                                                                                                                                     |  | 52  
|        |  |                                                                                                                                                 
|Item 2  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                      |  | 53  
|        |  |                                                                                                                                                 
|Item 6  |  | Exhibits                                                                                                                                         |  | 54  
|        |  |                                                                                                                                                 
|        |  | Signatures                                                                                                                                       |  | 57  



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EXPLANATORY NOTE

We were unable to timely file this quarterly report on Form 10-Q, our quarterly reports on Form 10-Q for the quarters ended June 30, 2005 and September 30, 2005 and our annual report on Form 10-K for 2004 as
a result of the previously announced SEC inquiry and related review by a Special Committee of our board of directors and the restatement of our consolidated financial statements for 2003 and 2002. We filed our annual report on Form 10-K for 2004,
including restated consolidated financial statements for 2003 and 2002, on March 31, 2006 (the 2004 Form 10-K). The restatement corrected accounting errors related to the recognition of equipment rental revenue, self-insurance
reserves, customer relationships and the provision for income taxes, and the accounting for certain short-term sale-leaseback transactions that constituted irregularities (the Restatement).

For information concerning the Restatement, see note 2 to our condensed consolidated financial statements included in this report. For additional
information regarding the background and effects of the Restatement, see our annual report on Form 10-K for 2005, which we filed contemporaneously with our 2004 Form 10-K on March 31, 2006.

Contemporaneous with the filing of this quarterly report on Form 10-Q for the quarter ended September 30, 2005, we are filing our quarterly reports on
Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this report are forward-looking in nature. Such statements can be identified by the use of
forward-looking terminology such as believe, expect, may, will, should, seek, on-track, plan, intend or anticipate, or the
negative thereof or comparable terminology, or by discussions of strategy. You are cautioned that our business and operations are subject to a variety of risks and uncertainties and, consequently, our actual results may materially differ from those
projected by any forward-looking statements. Certain of such risks and uncertainties are discussed below under Item 1A  Risk Factors. We make no commitment to revise or update any forward-looking statements in order to reflect events or
circumstances after the date any such statement is made.



3



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except per share data and unless otherwise indicated)



|                                                                                                                                                                                             |  |                    |       |   |                   |   |       |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----- | - | ----------------- | - | ----- | -
|                                                                                                                                                                                             |  | September 30, 2005 |       |   | December 31, 2004 |  
|ASSETS                                                                                                                                                                                       |  |                    |       |   |                   |   |       |  
|Cash and cash equivalents                                                                                                                                                                    |  | $                  | 151   |   |                   | $ | 303   |  
|Accounts receivable, net of allowance for doubtful accounts of $43 in 2005 and $53 in 2004                                                                                                   |  |                    | 584   |   |                   |   | 490   |  
|Inventory                                                                                                                                                                                    |  |                    | 180   |   |                   |   | 119   |  
|Prepaid expenses and other assets                                                                                                                                                            |  |                    | 158   |   |                   |   | 120   |  
|Rental equipment, net                                                                                                                                                                        |  |                    | 2,348 |   |                   |   | 2,123 |  
|Property and equipment, net                                                                                                                                                                  |  |                    | 433   |   |                   |   | 397   |  
|Goodwill                                                                                                                                                                                     |  |                    | 1,300 |   |                   |   | 1,293 |  
|Other intangible assets, net                                                                                                                                                                 |  |                    | 34    |   |                   |   | 37    |  
|                                                                                                                                                                                             |  |                    |       |   |                   |   |       |  
|                                                                                                                                                                                             |  | $                  | 5,188 |   |                   | $ | 4,882 |  
|                                                                                                                                                                                             |  |                    |       |   |                   |   |       |  
|                                                                                                                                                                                             |  |                   
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                         |  |                    |       |   |                   |   |       |  
|Liabilities:                                                                                                                                                                                 |  |                    |       |   |                   |   |       |  
|Accounts payable                                                                                                                                                                             |  | $                  | 243   |   |                   | $ | 217   |  
|Accrued expenses and other liabilities                                                                                                                                                       |  |                    | 367   |   |                   |   | 323   |  
|Debt                                                                                                                                                                                         |  |                    | 2,936 |   |                   |   | 2,945 |  
|Subordinated convertible debentures                                                                                                                                                          |  |                    | 222   |   |                   |   | 222   |  
|Deferred taxes                                                                                                                                                                               |  |                    | 239   |   |                   |   | 149   |  
|                                                                                                                                                                                             |  |                    |       |   |                   |   |       |  
|Total liabilities                                                                                                                                                                            |  |                    | 4,007 |   |                   |   | 3,856 |  
|Stockholders equity:                                                                                                                                                                        |  |                    |       |   |                   |   |       |  
|Preferred stock$0.01 par value, 5,000,000 shares authorized:                                                                                                                                |  |                    |       |   |                   |   |       |  
|Series C perpetual convertible preferred stock$.30 liquidation preference, 300,000 shares issued and outstanding                                                                            |  |                    |      |   |                   |   |      |  
|Series D perpetual convertible preferred stock$.15 liquidation preference, 150,000 shares issued and outstanding                                                                            |  |                    |      |   |                   |   |      |  
|Common stock$.01 par value, 500,000,000 shares authorized, 77,443,139 shares issued and outstanding on September 30, 2005 and
77,869,576 shares issued and outstanding on December 31, 2004 |  |                    | 1     |   |                   |   | 1     |  
|Additional paid-in capital                                                                                                                                                                   |  |                    | 1,349 |   |                   |   | 1,349 |  
|Deferred compensation                                                                                                                                                                        |  |                    | (15   | ) |                   |   | (19   | )
|Accumulated deficit                                                                                                                                                                          |  |                    | (204  | ) |                   |   | (342  | )
|Accumulated other comprehensive income                                                                                                                                                       |  |                    | 50    |   |                   |   | 37    |  
|                                                                                                                                                                                             |  |                    |       |   |                   |   |       |  
|Total stockholders equity                                                                                                                                                                   |  |                    | 1,181 |   |                   |   | 1,026 |  
|                                                                                                                                                                                             |  |                    |       |   |                   |   |       |  
|                                                                                                                                                                                             |  | $                  | 5,188 |   |                   | $ | 4,882 |  
|                                                                                                                                                                                             |  |                    |       |   |                   |   |       |  

See accompanying notes.



4



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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In millions, except per share data and unless otherwise indicated)



|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|--------------------------------------------------------- |  | ------------------------------- | ----- | - | -------------------------------- | - | ----- | ---- |  | - | -------------- | - |  | - | ----- | -
|                                                          |  | Nine Months Ended September 30, |       |   | Three Months Ended September 30, |  
|                                                          |  | 2005                            |       |   | 2004(Restated)                   |   |       | 2005 |  |   | 2004(Restated) |  
|Revenues:                                                 |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Equipment rentals                                         |  | $                               | 1,879 |   |                                  | $ | 1,694 |      |  | $ | 738            |   |  | $ | 663   |  
|Sales of rental equipment                                 |  |                                 | 228   |   |                                  |   | 193   |      |  |   | 61             |   |  |   | 58    |  
|New equipment sales                                       |  |                                 | 151   |   |                                  |   | 128   |      |  |   | 55             |   |  |   | 44    |  
|Contractor supplies sales                                 |  |                                 | 238   |   |                                  |   | 163   |      |  |   | 89             |   |  |   | 61    |  
|Service and other revenues                                |  |                                 | 104   |   |                                  |   | 94    |      |  |   | 37             |   |  |   | 32    |  
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Total revenues                                            |  |                                 | 2,600 |   |                                  |   | 2,272 |      |  |   | 980            |   |  |   | 858   |  
|Cost of revenues:                                         |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Cost of equipment rentals, excluding depreciation         |  |                                 | 955   |   |                                  |   | 871   |      |  |   | 354            |   |  |   | 322   |  
|Depreciation of rental equipment                          |  |                                 | 287   |   |                                  |   | 277   |      |  |   | 98             |   |  |   | 95    |  
|Cost of rental equipment sales                            |  |                                 | 165   |   |                                  |   | 137   |      |  |   | 43             |   |  |   | 41    |  
|Cost of new equipment sales                               |  |                                 | 124   |   |                                  |   | 109   |      |  |   | 45             |   |  |   | 37    |  
|Cost of contractor supplies sales                         |  |                                 | 181   |   |                                  |   | 120   |      |  |   | 69             |   |  |   | 45    |  
|Cost of service and other revenue                         |  |                                 | 51    |   |                                  |   | 49    |      |  |   | 19             |   |  |   | 17    |  
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Total cost of revenues                                    |  |                                 | 1,763 |   |                                  |   | 1,563 |      |  |   | 628            |   |  |   | 557   |  
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Gross profit                                              |  |                                 | 837   |   |                                  |   | 709   |      |  |   | 352            |   |  |   | 301   |  
|Selling, general and administrative expenses              |  |                                 | 422   |   |                                  |   | 353   |      |  |   | 164            |   |  |   | 123   |  
|Goodwill impairment                                       |  |                                 |      |   |                                  |   | 139   |      |  |   |               |   |  |   | 139   |  
|Non-rental depreciation and amortization                  |  |                                 | 49    |   |                                  |   | 49    |      |  |   | 17             |   |  |   | 16    |  
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Operating income                                          |  |                                 | 366   |   |                                  |   | 168   |      |  |   | 171            |   |  |   | 23    |  
|Interest expense                                          |  |                                 | 135   |   |                                  |   | 115   |      |  |   | 48             |   |  |   | 35    |  
|Interest expensesubordinated convertible debentures      |  |                                 | 12    |   |                                  |   | 12    |      |  |   | 4              |   |  |   | 4     |  
|Other (income) expense, net                               |  |                                 | (8    | ) |                                  |   | 174   |      |  |   | (7             | ) |  |   | 1     |  
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Income (loss) before provision (benefit) for income taxes |  |                                 | 227   |   |                                  |   | (133  | )    |  |   | 126            |   |  |   | (17   | )
|Provision (benefit) for income taxes                      |  |                                 | 89    |   |                                  |   | (19   | )    |  |   | 50             |   |  |   | 29    |  
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Net income (loss)                                         |  | $                               | 138   |   |                                  | $ | (114  | )    |  | $ | 76             |   |  | $ | (46   | )
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Earnings (loss) per sharebasic:                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Income (loss) available to common stockholders            |  | $                               | 1.45  |   |                                  | $ | (1.46 | )    |  | $ | 0.80           |   |  | $ | (0.58 | )
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Earnings (loss) per sharediluted:                        |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  
|Income (loss) available to common stockholders            |  | $                               | 1.32  |   |                                  | $ | (1.46 | )    |  | $ | 0.71           |   |  | $ | (0.58 | )
|                                                          |  |                                 |       |   |                                  |   |       |      |  |   |                |   |  |   |       |  

See accompanying notes.



5



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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited)

(In millions, except per share data and unless otherwise indicated)



|                                                  |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   
|------------------------------------------------- |  | ---------------------------------------------- | - | ---------------------------------------------- | - | ------------ |  | -------------------------- |  | - | --------------------- |  | - | ------------------- | - |  | -------------------- | --- | -------------------------------------- |  | - | ---- | - |  | - | --- |  | - | --
|                                                  |  | Series C Perpetual Convertible
Preferred Stock |   | Series D Perpetual Convertible
Preferred Stock |   | Common Stock |  | Additional Paid-in Capital |  |   | Deferred Compensation |  |   | Accumulated Deficit |   |  | Comprehensive Income |     | Accumulated Other Comprehensive Income
|                                                  |  |                                                |   | Number ofShares                                |   | Amount       |  |                            |  |   |                      
|Balance, December 31, 2004                        |  | $                                              |  |                                                | $ |             |  | 78                         |  | $ | 1                     |  | $ | 1,349               |   |  | $                    | (19 | )                                      |  | $ | (342 | ) |  |   |    |  | $ | 37
|Comprehensive income:                             |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   
|Net income                                        |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   | 138  |   |  |   | 138 |  |   |   
|Other comprehensive income:                       |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   
|Foreign currency translation adjustments          |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   | 8   |  |   | 8 
|Derivatives qualifying as hedges, net of taxof $2 |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   | 5   |  |   | 5 
|                                                  |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   
|Comprehensive income                              |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  | $ | 151 |  |   |   
|                                                  |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   
|Exercise of common stock options and warrants     |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   | 2                   |   |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   
|Amortization of deferred compensation             |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      | 4   |                                        |  |   |      |   |  |   |     |  |   |   
|Founders shares repurchased and retired           |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   | (2                  | ) |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   
|                                                  |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   
|Balance, September 30, 2005                       |  | $                                              |  |                                                | $ |             |  | 78                         |  | $ | 1                     |  | $ | 1,349               |   |  | $                    | (15 | )                                      |  | $ | (204 | ) |  |   |     |  | $ | 50
|                                                  |  |                                                |   |                                                |   |              |  |                            |  |   |                       |  |   |                     |   |  |                      |     |                                        |  |   |      |   |  |   |     |  |   |   



6



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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions, except per share data and unless otherwise indicated)



|                                                                                         |  |                                 |      |   |                 |   |        |  
|---------------------------------------------------------------------------------------- |  | ------------------------------- | ---- | - | --------------- | - | ------ | -
|                                                                                         |  | Nine Months Ended September 30, |     
|                                                                                         |  | 2005                            |      |   | 2004 (Restated) |  
|Cash Flows From Operating Activities:                                                    |  |                                 |      |   |                 |   |        |  
|Net income (loss)                                                                        |  | $                               | 138  |   |                 | $ | (114   | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                                 |      |   |                 |   |        |  
|Depreciation and amortization                                                            |  |                                 | 336  |   |                 |   | 326    |  
|Gain on sales of rental equipment                                                        |  |                                 | (63  | ) |                 |   | (56    | )
|Amortization of deferred compensation                                                    |  |                                 | 6    |   |                 |   | 18     |  
|Goodwill impairment                                                                      |  |                                 |     |   |                 |   | 139    |  
|Repurchase premiums for debt refinancing                                                |  |                                 |     |   |                 |   | 150    |  
|Deferred taxes                                                                           |  |                                 | 87   |   |                 |   | (18    | )
|Changes in operating assets and liabilities:                                             |  |                                 |      |   |                 |   |        |  
|Accounts receivable                                                                      |  |                                 | (95  | ) |                 |   | (48    | )
|Inventory                                                                                |  |                                 | (41  | ) |                 |   | (9     | )
|Prepaid expenses and other assets                                                        |  |                                 | 2    |   |                 |   | 43     |  
|Accounts payable                                                                         |  |                                 | 26   |   |                 |   | 111    |  
|Accrued expenses and other liabilities                                                   |  |                                 | 28   |   |                 |   | 3      |  
|                                                                                         |  |                                 |      |   |                 |   |        |  
|Net cash provided by operating activities                                                |  |                                 | 424  |   |                 |   | 545    |  
|                                                                                         |  |                                 |      |   |                 |   |        |  
|Cash Flows From Investing Activities:                                                    |  |                                 |      |   |                 |   |        |  
|Purchases of rental equipment                                                            |  |                                 | (680 | ) |                 |   | (479   | )
|Purchases of property and equipment                                                      |  |                                 | (56  | ) |                 |   | (42    | )
|Proceeds from sales of rental equipment                                                  |  |                                 | 228  |   |                 |   | 192    |  
|Purchases of other companies                                                             |  |                                 | (3   | ) |                 |   | (61    | )
|Proceeds from sale of branches                                                           |  |                                 | 2    |   |                 |   |       |  
|                                                                                         |  |                                 |      |   |                 |   |        |  
|Net cash used in investing activities                                                    |  |                                 | (509 | ) |                 |   | (390   | )
|                                                                                         |  |                                 |      |   |                 |   |        |  
|Cash Flows From Financing Activities:                                                    |  |                                 |      |   |                 |   |        |  
|Proceeds from debt                                                                       |  |                                 |     |   |                 |   | 2,179  |  
|Payments of debt                                                                         |  |                                 | (32  | ) |                 |   | (2,214 | )
|Purchase of interest rate caps                                                           |  |                                 |     |   |                 |   | (14    | )
|Payments of financing costs                                                              |  |                                 | (34  | ) |                 |   | (37    | )
|Proceeds from the exercise of common stock options                                       |  |                                 | 1    |   |                 |   | 4      |  
|Shares repurchased and retired                                                           |  |                                 | (2   | ) |                 |   | (4     | )
|                                                                                         |  |                                 |      |   |                 |   |        |  
|Net cash used in financing activities                                                    |  |                                 | (67  | ) |                 |   | (86    | )
|Effect of foreign exchange rates                                                         |  |                                 |     |   |                 |   | 1      |  
|                                                                                         |  |                                 |      |   |                 |   |        |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                                 | (152 | ) |                 |   | 70     |  
|Cash and cash equivalents at beginning of period                                         |  |                                 | 303  |   |                 |   | 79     |  
|                                                                                         |  |                                 |      |   |                 |   |        |  
|Cash and cash equivalents at end of period                                               |  | $                               | 151  |   |                 | $ | 149    |  
|                                                                                         |  |                                 |      |   |                 |   |        |  

See accompanying notes.



7



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share data unless otherwise indicated)

1.    Organization and Basis of Presentation

General

United Rentals, Inc., (Holdings, United Rentals or the Company) is principally a holding company and conducts its
operations primarily through its wholly owned subsidiary United Rentals (North America), Inc. (URI) and subsidiaries of URI. Holdings primary asset is its sole ownership of all issued and outstanding shares of common stock of URI.
URIs various credit agreements and debt instruments place restrictions on its ability to transfer funds to its shareholder.

We rent
equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and others in the United States, Canada and Mexico. In addition to renting equipment, we sell new and used
rental equipment, as well as related contractor supplies, parts and service. The nature of our business is such that short-term obligations are typically met by cash flow generated from long-term assets. Therefore, the accompanying balance sheets
are presented on an unclassified basis.

We have prepared the accompanying unaudited condensed consolidated interim financials statements
in accordance with the accounting policies described in our 2004 Form 10-K and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance
with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the 2004 Form 10-K.

In our opinion, all adjustments which are necessary for a fair statement of financial position, operating results and cash flows for the interim periods
presented have been made. Interim results of operations are not necessarily indicative of the results of the full year.

In August 2004 we
received notice from the SEC that it was conducting a non-public, fact-finding inquiry of the Company. The SEC inquiry appears to relate to a broad range of the Companys accounting practices and is not confined to a specific period. In March
2005, our board of directors formed a Special Committee of independent directors to review matters related to the SEC inquiry. Our board of directors received and acted upon findings of the Special Committee in January 2006. The actions that we took
with respect to the Special Committees findings and actions that we took with respect to certain other accounting matters, including the restatement of previously issued consolidated financial statements for 2003 and 2002, are discussed in
note 2 below (the Restatement Note). The unaudited condensed consolidated interim financial statements for the 2004 interim period have been restated to reflect the matters discussed in the Restatement Note.

Cash Equivalents

We consider all highly liquid
instruments with maturities of three months or less when purchased to be cash equivalents. Included in the cash balance at September 30, 2005 is $75 that we agreed to maintain in an investment account for a traffic control subsidiary to conduct
traffic control business with the state of Florida. In March 2006, we signed an agreement with the state of Florida whereby we are no longer required to maintain these funds in any type of account.

Stock-Based Compensation

The Company accounts for
its stock-based compensation arrangements using the intrinsic value method under the provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to



8



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



Employees. At September 30, 2005, the Company had six stock-based compensation plans. Since stock options have been granted by the Company with
exercise prices at or greater than the fair value of the shares at the date of grant, no compensation expense has been recognized. Restricted stock awards granted by the Company are recognized as deferred compensation. The Company recognizes
compensation expense related to these restricted stock awards over their vesting periods or earlier upon acceleration of vesting. During first quarter of 2004, the company accelerated the vesting of approximately 404,000 shares of restricted stock.
The following table provides additional information related to the Companys stock-based compensation arrangements:



|                                                                                          |  |                                 |      |   |                                  |   |       |      |  |   |                 |   |  |   |       |  
|----------------------------------------------------------------------------------------- |  | ------------------------------- | ---- | - | -------------------------------- | - | ----- | ---- |  | - | --------------- | - |  | - | ----- | -
|                                                                                          |  | Nine Months Ended September 30, |      |   | Three Months Ended September 30, |  
|                                                                                          |  | 2005                            |      |   | 2004 (Restated)                  |   |       | 2005 |  |   | 2004 (Restated) |  
|Net income (loss), as reported                                                            |  | $                               | 138  |   |                                  | $ | (114  | )    |  | $ | 76              |   |  | $ | (46   | )
|Plus: Stock-based compensation expense included in reported net income (loss), net of tax |  |                                 | 4    |   |                                  |   | 11    |      |  |   |                |   |  |   | 2     |  
|Less: Stock-based compensation expense determined using the fair value method, net of tax |  |                                 | (5   | ) |                                  |   | (21   | )    |  |   | (1              | ) |  |   | (6    | )
|                                                                                          |  |                                 |      |   |                                  |   |       |      |  |   |                 |   |  |   |       |  
|Pro forma net income (loss)                                                               |  | $                               | 137  |   |                                  | $ | (124  | )    |  | $ | 75              |   |  | $ | (50   | )
|                                                                                          |  |                                 |      |   |                                  |   |       |      |  |   |                 |   |  |   |       |  
|Basic earnings (loss) per share:                                                          |  |                                 |      |   |                                  |   |       |      |  |   |                 |   |  |   |       |  
|As reported                                                                               |  | $                               | 1.45 |   |                                  | $ | (1.46 | )    |  | $ | 0.80            |   |  | $ | (0.58 | )
|Pro forma                                                                                 |  | $                               | 1.45 |   |                                  | $ | (1.58 | )    |  | $ | 0.79            |   |  | $ | (0.63 | )
|Diluted earnings (loss) per share:                                                        |  |                                 |      |   |                                  |   |       |      |  |   |                 |   |  |   |       |  
|As reported                                                                               |  | $                               | 1.32 |   |                                  | $ | (1.46 | )    |  | $ | 0.71            |   |  | $ | (0.58 | )
|Pro forma                                                                                 |  | $                               | 1.32 |   |                                  | $ | (1.58 | )    |  | $ | 0.70            |   |  | $ | (0.63 | )

New Accounting Pronouncements

During the years ended December 31, 2005 and 2004, the Financial Accounting Standards Board (FASB) issued several pronouncements of significance to us which are discussed in detail below. In addition,
the FASB issued several other pronouncements, including standards on inventory (SFAS No. 151 Inventory Costs, an amendment of ARB 43, Chapter 4), exchanges of nonmonetary assets (SFAS No. 153 Exchanges of Nonmonetary
Assets), and accounting changes (SFAS No. 154 Accounting Changes and Error Corrections), which we either currently comply with or are not anticipating to have a significant impact on our future financial condition or results
of operations.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123(R), Share-Based
Payment (FAS 123(R)), an amendment of FAS No. 123, Accounting for Stock-Based Compensation, which supersedes APB 25 and requires companies to recognize compensation expense using a fair value based method for costs
related to share-based payments, including stock options. As permitted by the SEC, the requirements of FAS 123(R) are effective for our fiscal year beginning January 1, 2006. Upon adoption, we will elect to apply the modified prospective
transition method and therefore we will not restate the results of prior periods. The implementation of FAS 123(R) is not expected to have a material impact on the Company.

FAS 123(R) also requires that the benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow, rather than
as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after the effective date. While we can not estimate what those amounts will be in
the future (because they depend on, among other things, when employees exercise stock options and the fair value of our common stock on the date of exercise), the amount of operating cash flows recognized in 2005 for such excess tax deductions was
$1.



9



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset
Retirement Obligationsan interpretation of FASB Statement No. 143 (FIN 47). FIN 47 requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value can be
reasonably estimated. A conditional asset retirement obligation is a legal obligation to perform an asset retirement activity in which the timing or method of settlement are conditional upon a future event that may or may not be within control of
the entity. The adoption of FIN 47 in 2005 did not have a material impact on the Company.

2.    Restatement

Restatement and Reclassification of Previously Issued Consolidated Financial Statements and Related Matters

As previously reported and discussed in greater detail in our 2004 Form 10-K, subsequent to the filing of our Form 10-K for the year ended
December 31, 2003, which included our consolidated financial statements for the years ended December 31, 2003 and 2002, it was determined that the Companys originally issued financial statements for those periods required restatement
to correct the accounting for (i) the recognition of equipment rental revenue;

(ii) irregularities identified by the Special
Committee with respect to six short-term, or minor, equipment sale-leaseback transactions; (iii) self-insurance reserves; (iv) customer relationships; and (v) the provision for income taxes.

The effects of the restatement adjustments on our originally reported results of operations for the years ended December 31, 2003 and 2002 and on
our originally reported retained earnings at December 31, 2001, are summarized below.



|                                |  |                                  |      |   |                                       |   |      |   |  |   |     |  
|------------------------------- |  | -------------------------------- | ---- | - | ------------------------------------- | - | ---- | - |  | - | --- | -
|                                |  | Net Loss Year Ended December 31, |      |   | RetainedEarnings at December 31, 2001 |  
|                                |  | 2003                             |      |   | 2002                                  |   |     
|As originally reported          |  | $                                | (259 | ) |                                       | $ | (398 | ) |  | $ | 467 |  
|Adjustments for:                |  |                                  |      |   |                                       |   |      |   |  |   |     |  
|Equipment rental revenues (a)   |  |                                  | (2   | ) |                                       |   | (3   | ) |  |   | (17 | )
|Sale-leaseback transactions (b) |  |                                  | 20   |   |                                       |   | 2    |   |  |   | (33 | )
|Self-insurance reserves (c)     |  |                                  | 8    |   |                                       |   | (13  | ) |  |   | (41 | )
|Customer relationships (d)      |  |                                  | (2   | ) |                                       |   | (1   | ) |  |   |    |  
|                                |  |                                  |      |   |                                       |   |      |   |  |   |     |  
|Pre-tax impact                  |  |                                  | 24   |   |                                       |   | (15  | ) |  |   | (91 | )
|Related tax effects             |  |                                  | (9   | ) |                                       |   | 6    |   |  |   | 35  |  
|                                |  |                                  |      |   |                                       |   |      |   |  |   |     |  
|Adjustments, net of tax         |  |                                  | 15   |   |                                       |   | (9   | ) |  |   | (56 | )
|Income taxes (e)                |  |                                  | (10  | ) |                                       |   | 1    |   |  |   | (9  | )
|                                |  |                                  |      |   |                                       |   |      |   |  |   |     |  
|Total adjustments, net of tax   |  |                                  | 5    |   |                                       |   | (8   | ) |  |   | (65 | )
|                                |  |                                  |      |   |                                       |   |      |   |  |   |     |  
|As restated                     |  | $                                | (254 | ) |                                       | $ | (406 | ) |  | $ | 402 |  
|                                |  |                                  |      |   |                                       |   |      |   |  |   |     |  

Below is a summary of the nature and amount of the adjustments reflected in the restatement (all
amounts are presented on a pre-tax basis unless otherwise noted). We have provided below the impact on originally reported pre-tax and/or net income for 2001 and 2000 of certain of the items for which we are restating.

(a)Recognition of equipment rental revenues. Our originally reported results reflected the recognition of equipment rental
revenues based on the minimum amounts which became due and payable under the



10



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



terms of our applicable rental contracts. We have determined that equipment rental revenues should be recognized on a straight-line basis and have restated
our previously reported results to reflect this correction of an error. Our restatement had the impact of increasing/(decreasing) originally reported pre-tax income for 2001, 2000 and for periods prior to 2000 by $6, $4 and $(27), respectively.

(b) Sale-leaseback transactions. In 2002, 2001, and 2000 we previously recognized gross profits of $1, $20 and $12,
respectively, in conjunction with six minor sale-leaseback transactions. It has been determined that the accounting for these transactions constituted irregularities and we are restating our financial statements to properly reflect the accounting
for these six transactions. At the dates of the original minor sale-leaseback transactions, we recognized a premium (excess profit above fair value) on these transactions. In exchange for receiving this profit premium, we agreed to disburse cash in
later periods as well as pay premiums for subsequent equipment purchases (subsequent purchases).

Our
restatement for the sale-leaseback transactions had the impact of increasing/(decreasing) originally reported pre-tax income for 2003, 2002, 2001 and 2000 by $20, $2, $(21), and $(12), respectively. These restatement adjustments reflect the
elimination of the premium originally received in the minor sale-leaseback transactions as well as the deferral of any profit until all of our obligations associated with the originally received premiums were settled. Additionally, the adjustments
reflect a reduction in previously recorded depreciation expense because this expense reflected capitalized equipment costs for subsequent purchases that were overstated.

(c) Self-insurance reserves. We self-insure for certain types of claims associated with our business, including (i) workers
compensation claims and (ii) claims by third parties for injury or property damage caused by our equipment or personnel. These types of claims may take a substantial amount of time to resolve and, accordingly, the ultimate liability associated
with a particular claim may not be known for an extended period of time. Our prior methodology for developing self-insurance reserves was based on management estimates of ultimate liability which were developed without obtaining actuarial
valuations. In 2004, management adopted an estimation approach based on third party actuarial calculations that properly reflects and incorporates actuarial assumptions. Based on actuarial calculations performed by our third party actuaries in late
2004 and 2005, we concluded that the estimation process we previously used did not adequately take into account certain factors and that, as a result, a restatement was required. The factors that were not adequately addressed by our historical
estimation process included future changes in the cost of known claims over time, cost inflation and incurred but not reported claims. Our restatement for the self-insurance reserves had the impact of increasing/(decreasing) originally reported
pre-tax income for 2003, 2002, 2001, 2000 and for periods prior to 2000 by $8, $(13), $(11), $(18) and $(12), respectively.

(d) Customer relationships. In 2001, the FASB issued Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS No. 141), which required the use of the purchase method of
accounting for business combinations and prohibited the use of the pooling of interests method. SFAS No. 141 also changed the definition of intangible assets acquired in a purchase business combination, providing specific criteria for the
initial recognition and measurement of intangible assets apart from goodwill. SFAS 141 applied to all business combinations accounted for using the purchase method for which the acquisition date is July 1, 2001, or later.

We have reviewed acquisitions we made since July 1, 2001 and have determined that a portion of the purchase price for these
acquisitions previously allocated to goodwill should be recorded as a separate intangible assetcustomer relationships. This restatement reflects the amortization expense associated with the reallocation of a portion of the purchase price from
goodwill (which is not amortized) to customer relationships (which are amortized). This correction of an error had the impact of decreasing originally reported pre-tax income for 2003 and 2002 by $2 and $1, respectively.



11



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



(e) Income taxes. We have restated our income tax provision to
(i) correctly reflect all book-to-tax temporary differences (primarily depreciation and nondeductible reserves and accruals); (ii) reflect appropriate tax benefits for net operating loss and alternative minimum tax credits;
(iii) calculate deferred taxes at appropriate legal entity tax rates; and (iv) account for the settlement of an IRS audit examination. Our restatement for income taxes had the impact of increasing/(decreasing) originally reported net
income for 2003, 2002, 2001, 2000 and for periods prior to 2000 by $(10), $1, $(3), $(2) and $(4), respectively.

Buy-out of operating lease

In addition to the restatement matters discussed above, we have determined that $88 of costs for the year ended December 31, 2003
previously classified below operating income should be reclassified to cost of equipment rentals and included in operating income. This amount primarily represents the amount in excess of the fair value related to the buy-out of equipment under
operating leases. This reclassification, which has the effect of reducing gross profit and other expense (income), net by $88, has no impact on originally reported net income or earnings per share for the year ended December 31, 2003.

Trade packages

During the period from
the fourth quarter of 2000 through 2002, the Company sold used equipment to certain suppliers (referred to as trade packages). In certain of the trade packages, prices may have included a premium above fair value. In order to induce
these suppliers to buy used equipment at premium prices, the Company made commitments or concessions to the suppliers. It has been determined that the accounting for those transactions involved irregularities and that the Company improperly
recognized revenue from the transactions involving the undisclosed inducements. However, because records were not created that would have permitted the linkage of the sales and inducements (as a result of instructions given by certain former
employees of the Company), the Company is unable to determine the portion of the revenue and gross profit recognized in connection with trade packages with these suppliers between 2000 and 2002 that was improperly recognized. During this period, all
sales of used equipment to these suppliers (which includes all trade package transactions) generated total revenues and gross profits of $38 and $9, respectively. Notwithstanding the lack of records relating to these transactions, the Company
believes that its financial statements from and after 2002 are materially correct with respect to the effect of these transactions.

The
Special Committee concluded that, based on the evidence it reviewed, the practices regarding certain trade packages and minor sale-leaseback transactions described above appear to have been directed by the Companys two former chief financial
officers. Both of these individuals, who are no longer with the Company, declined to cooperate with the Special Committees investigation. Based upon recommendations of the Special Committee, the Companys board of directors directed the
Company, among other things, to evaluate potential claims relating to certain former company personnel, including these individuals and compensation and benefits previously received by them.

Purchase Accounting

The Company was formed and began
operations in 1997 with the acquisition of six equipment rental companies. During the subsequent three year period, we grew rapidly and completed approximately 230 additional acquisitions. By the end of 1999, we were the largest equipment rental
company in the world, with annual revenues of approximately $2.9 billion. With managements focus now turned toward organic growth, the pace of our acquisitions significantly slowed and from September 2001 through the date of this report we
completed only eight acquisitions. Substantially all of the business combinations that we have completed since the inception of the Company were accounted for as purchases, however, there were several significant business combinations accounted for
in the earlier period that were accounted for as poolings.



12



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



Accounting standards applicable to purchase business combinations require the acquiring company to
recognize the assets acquired and the liabilities assumed based on their fair values at the time of acquisition.Any excess between the cost of an acquired company and the sum of the fair values of tangible and identifiable intangible assets
less liabilities assumed should be recognized as goodwill.

In our historical accounting for these purchase business combinations,
long-lived fixed assets (comprised primarily of rental equipment) and goodwill generally represented the largest components of our acquisitions. As a result, when we performed our purchase price allocation process, the purchase price was primarily
allocated to these assets.

As discussed above, in March 2005, our Board of Directors formed a Special Committee of independent directors
to review matters related to the SEC inquiry. The Special Committee made certain findings related to the Companys historical practices concerning the valuation of rental equipment acquired in purchase business combinations. The committee
concluded that certain of these practices were not adequate between 1997 and August 2000. These practices included, among other things, the use of inconsistent valuation methodologies, some of which were reflected in memoranda that were not provided
to or reviewed by the Companys auditors, suggestions contained in those memoranda that improper methods of valuation be used (although the committee did not find evidence that such improper methods were generally applied), inadequate
supervision of personnel, inadequate coordination with providers of outside valuations and apparent confusion on the part of one of those providers. The Special Committee concluded that certain Company personnel (whom the committee was unable to
identify) may have sought to manipulate opening balance sheet values for equipment acquired in purchase business combinations by causing them to be understated and that these opening balance sheet values may have been understated by an amount the
committee was unable to determine.

Following our review of our historical practices and the findings of the Special Committee, the Company
considered whether the effect of the deficiencies identified by the committee required a restatement of previously reported results. These deficiencies in our historical practices between 1997 and August 2000 may have resulted in inaccurate values
being ascribed to rental equipment that we acquired in purchase business combinations, including in some cases values that may have been below fair value. However, we do not have the ability to revalue this equipment because we are unable to
currently determine its historical physical condition and the records that currently exist for this equipment are not sufficient to establish the physical condition of the equipment at the time of its acquisition.

The equipment valuations performed at the time of the acquisition, some of which included a physical inspection, reflected an assessment of the condition
of the equipment. While, as the Special Committee identified, there were various deficiencies in our historical valuation practices, it is not possible to accurately revalue this equipment to assess the reasonableness of specific valuations.
Therefore, we believe the only feasible approach is to give effect to the valuations that were performed contemporaneously with these acquisitions. Accordingly, notwithstanding deficiencies in the Companys historical valuation process as it
relates to purchase business combinations, the Company does not believe a restatement is required and believes that its financial statements from and after 2002 are materially correct with respect to the effect of equipment valuations.



13



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



The following table presents the effects of the foregoing restatements on a condensed basis on our
quarterly results for the three and nine months ended September 30, 2004:



|                          |  |                                      |       |   |                                     |   |       |                          |  |   |          |   |  |   |       |  
|------------------------- |  | ------------------------------------ | ----- | - | ----------------------------------- | - | ----- | ------------------------ |  | - | -------- | - |  | - | ----- | -
|                          |  | Three Months EndedSeptember 30, 2004 |       |   | Nine Months EndedSeptember 30, 2004 |  
|                          |  | AmountOriginallyReported             |       |   | Restated                            |   |       | AmountOriginallyReported |  |   | Restated |  
|Statements of Operations: |  |                                      |       |   |                                     |   |       |                          |  |   |          |   |  |   |       |  
|Revenues                  |  | $                                    | 850   |   |                                     | $ | 858   |                          |  | $ | 2,270    |   |  | $ | 2,272 |  
|Operating income          |  |                                      | (6    | ) |                                     |   | 24    |                          |  |   | 134      |   |  |   | 168   |  
|Net income                |  |                                      | (64   | ) |                                     |   | (46   | )                        |  |   | (136     | ) |  |   | (114  | )
|Basic loss per share      |  | $                                    | (0.83 | ) |                                     | $ | (0.58 | )                        |  | $ | (1.75    | ) |  | $ | (1.46 | )
|Diluted loss per share    |  | $                                    | (0.83 | ) |                                     | $ | (0.58 | )                        |  | $ | (1.75    | ) |  | $ | (1.46 | )

3.    Acquisitions

We completed two and three acquisitions during the years ended December 31, 2005 and 2004 respectively. The results of operations of the
businesses acquired in these acquisitions have been included in our results of operations from their respective acquisition dates.

In
December 2005, we acquired Sandvick Equipment & Supply Company, a trench safety company, with annual revenues of approximately $21. In June 2005, we acquired HSS RentX branch locations in Colorado. Total 2004 revenues of the acquired
branches were approximately $9. The aggregate purchase price for these 2005 acquisitions was approximately $42, less liabilities assumed of approximately $10.

In October 2004, we acquired Atlantic Rentals Ltd., which had revenues in 2003 of approximately $32. In February 2004, we acquired 843504 Alberta Ltd. (formerly known as Skyreach Equipment, Ltd.), which had annual
revenues in 2003 of approximately $35. The aggregate purchase price for these 2004 acquisitions was approximately $91, less liabilities assumed of $22.

The purchase prices for all acquisitions have been allocated to the assets acquired and liabilities assumed based on their respective fair values at their respective acquisition dates. Purchase price allocations are
subject to change when additional information concerning asset and liability valuations is completed. The preliminary purchase price allocations that are subject to change primarily consist of rental and non-rental equipment valuations. These
allocations are finalized within twelve months of the acquisition date and are not expected to result in significant differences between the preliminary and final allocations.

Pro forma combined results of operations giving effect to these acquisitions would not vary materially from historical results.

4.    Goodwill and Other Intangible Assets

Changes in the Companys carrying amount of goodwill for the nine months ended September 30, 2005 are as follows:



|                                                   |  |   |      
|-------------------------------------------------- |  | - | -----
|Balance at December 31, 2004                       |  | $ | 1,293
|Goodwill related to acquisitions                   |  |   | 2    
|Foreign currency translation and other adjustments |  |   | 5    
|                                                   |  |   |      
|Balance at September 30, 2005                      |  | $ | 1,300
|                                                   |  |   |      



14



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



We are required to review our goodwill for impairment annually as of a scheduled review date.
However, if events or circumstances suggest that goodwill could be impaired, we may be required to conduct an earlier review. The scheduled review date is October 1 of each year; however, we reviewed our traffic control segment goodwill as of
September 30, 2004 because continued weakness in this segment suggested the goodwill associated with this segment may have been impaired. Based on this review, we recorded an impairment charge of approximately $139 to write-off the remaining
goodwill associated with our traffic control segment.

Other intangible assets consist of customer relationships and non-compete agreements
and are amortized over periods ranging from three to twelve years. Amortization expense for other intangible assets was $3 for the nine months ended September 30, 2005 and September 30, 2004. The cost of other intangible assets and the
related accumulated amortization was as follows as of September 30, 2005:



|                         |  |                   |     |  
|------------------------ |  | ----------------- | --- | -
|                         |  | September 30,2005 |    
|Gross carrying amount    |  | $                 | 60  |  
|Accumulated amortization |  |                   | (26 | )
|                         |  |                   |     |  
|Net Amount               |  | $                 | 34  |  
|                         |  |                   |     |  

5.    Restructuring Charges

We recorded restructuring charges of $28 (including a non-cash component of approximately $3) and $29 (including a non-cash component of approximately
$11) in 2002 and 2001, respectively. Restructuring program activity during the nine months ended September 30, 2005 is outlined below:



|                                      |  |                          |    |  
|------------------------------------- |  | ------------------------ | -- | -
|                                      |  | Restructuringreserve (1) |   
|Balance at December 31, 2004          |  | $                        | 8  |  
|Cash payments charged against reserve |  |                          | (2 | )
|                                      |  |                          |    |  
|Balance at September 30, 2005         |  | $                        | 6  |  
|                                      |  |                          |    |  

---

|(1) | Balance relates to costs to vacate facilities
|--- | ---------------------------------------------



15



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



6.    Earnings Per Share

Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding and, if dilutive, the
Series C and Series D preferred shares as if converted to common shares since such shares are participating securities. Diluted earnings per share includes the impact of other diluted securities. The diluted share base for periods where the
numerator represents a loss excludes incremental weighted shares for the below-captioned Effect of dilutive securities due to their antidilutive effect. The following table sets forth the computation of basic and diluted earnings per
share:



|                                                                            |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|--------------------------------------------------------------------------- |  | ------------------------------ | ----------- | -------------- | ------------------------------- | ---------- | ---- |  | -------------- | ----------- |  | - | ---------- | -
|                                                                            |  | Nine Months EndedSeptember 30, |             |                | Three Months EndedSeptember 30, |           
|                                                                            |  | 2005                           |             | 2004(Restated) |                                 |            | 2005 |  | 2004(Restated) |            
|Numerator:                                                                  |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Net income (loss)                                                           |  | $                              | 138         |                | $                               | (114       | )    |  | $              | 76          |  | $ | (46        | )
|Plus:                                                                       |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Convertible debt interest                                                   |  |                                | 1           |                |                                 |           |      |  |                | 1           |  |   |           |  
|QUIPS interest                                                              |  |                                | 7           |                |                                 |           |      |  |                | 2           |  |   |           |  
|                                                                            |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Income (loss) available to common stockholders                              |  | $                              | 146         |                | $                               | (114       | )    |  | $              | 79          |  | $ | (46        | )
|Denominator:                                                                |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Weighted-average common shares                                              |  |                                | 77,960,242  |                |                                 | 77,505,171 |      |  |                | 78,010,517  |  |   | 77,843,606 |  
|Series C preferred                                                          |  |                                | 12,000,000  |                |                                 |           |      |  |                | 12,000,000  |  |   |           |  
|Series D preferred                                                          |  |                                | 5,000,000   |                |                                 |           |      |  |                | 5,000,000   |  |   |           |  
|                                                                            |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Denominator for basic earnings per shareweighted-average                   |  |                                | 94,960,242  |                |                                 | 77,505,171 |      |  |                | 95,010,517  |  |   | 77,843,606 |  
|Effect of dilutive securities:                                              |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Employee stock options                                                      |  |                                | 4,128,840   |                |                                 |           |      |  |                | 3,974,510   |  |   |           |  
|Convertible shares                                                          |  |                                | 5,634,055   |                |                                 |           |      |  |                | 5,702,334   |  |   |           |  
|QUIPS shares                                                                |  |                                | 5,077,926   |                |                                 |           |      |  |                | 5,077,926   |  |   |           |  
|Restricted stock units and phantom shares                                   |  |                                | 175,617     |                |                                 |           |      |  |                | 150,334     |  |   |           |  
|                                                                            |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Denominator for diluted earnings per shareadjusted weighted-average shares |  |                                | 109,976,680 |                |                                 | 77,505,191 |      |  |                | 109,915,621 |  |   | 77,843,606 |  
|                                                                            |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Earnings (loss) per sharebasic:                                            |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Income (loss) available to common stockholders                              |  | $                              | 1.45        |                | $                               | (1.46      | )    |  | $              | 0.80        |  |   | (0.58      | )
|                                                                            |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Earnings (loss) per sharediluted:                                          |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  
|Income (loss) available to common stockholders                              |  | $                              | 1.32        |                | $                               | (1.46      | )    |  | $              | 0.71        |  | $ | (0.58      | )
|                                                                            |  |                                |             |                |                                 |            |      |  |                |             |  |   |            |  

7.    Segment Information

Our reportable segments are general rentals, traffic control and trench safety, pump and power. The general rentals segment includes the rental of
construction, aerial, industrial and homeowner equipment and related services and activities. The general rentals segments customers include construction and industrial companies, manufacturers, utilities, municipalities and homeowners. The
general rentals segment operates throughout the United States and Canada and has one location in Mexico. The trench safety, pump and power segment includes



16



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



the rental of specialty construction products and related services. The trench safety, pump and power segments customers include construction companies
involved in infrastructure projects, municipalities and industrial companies. This segment operates in the United States and has one location in Canada. The traffic control segment includes the rental of equipment used in the management of
traffic-related services and activities. The traffic control segments customers include construction companies involved in infrastructure projects and municipalities. The traffic control segment operates in the United States. Our external
segment reporting is aligned with the manner in which management evaluates and allocates resources. We evaluate segment performance based on segment operating results which exclude goodwill impairment and restructuring and asset impairment charges.

Operating segment revenues and profitability for the three and nine month periods ended September 30, 2005 and 2004 were as follows:



|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|------------------------------------------- |  | ------------------------------- | ----- | - | -------------------------------- | - | ----- | ---- |  | - | --------------- | - |  | - | --- | -
|                                            |  | Nine Months Ended September 30, |       |   | Three Months Ended September 30, |  
|                                            |  | 2005                            |       |   | 2004 (Restated)                  |   |       | 2005 |  |   | 2004 (Restated) |  
|Total revenues                              |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|General rentals                             |  | $                               | 2,270 |   |                                  | $ | 1,989 |      |  | $ | 845             |   |  | $ | 742 |  
|Trench safety, pump and power               |  |                                 | 130   |   |                                  |   | 93    |      |  |   | 52              |   |  |   | 38  |  
|Traffic control                             |  |                                 | 200   |   |                                  |   | 190   |      |  |   | 83              |   |  |   | 78  |  
|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|Total revenues                              |  | $                               | 2,600 |   |                                  | $ | 2,272 |      |  | $ | 980             |   |  | $ | 858 |  
|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|Total Depreciation and Amortization Expense |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|General rentals                             |  | $                               | 305   |   |                                  | $ | 294   |      |  | $ | 106             |   |  | $ | 100 |  
|Trench safety, pump and power               |  |                                 | 14    |   |                                  |   | 11    |      |  |   | 4               |   |  |   | 4   |  
|Traffic control                             |  |                                 | 17    |   |                                  |   | 21    |      |  |   | 5               |   |  |   | 7   |  
|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|Total depreciation and amortization expense |  | $                               | 336   |   |                                  | $ | 326   |      |  | $ | 115             |   |  | $ | 111 |  
|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|Segment operating income (loss)             |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|General rentals                             |  | $                               | 345   |   |                                  | $ | 310   |      |  | $ | 154             |   |  | $ | 154 |  
|Trench safety, pump and power               |  |                                 | 35    |   |                                  |   | 26    |      |  |   | 18              |   |  |   | 12  |  
|Traffic control                             |  |                                 | (14   | ) |                                  |   | (29   | )    |  |   | (1              | ) |  |   | (4  | )
|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|Segment operating income                    |  | $                               | 366   |   |                                  | $ | 307   |      |  | $ | 171             |   |  | $ | 162 |  
|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|Total capital expenditures                  |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|General rentals                             |  | $                               | 687   |   |                                  | $ | 487   |      |  | $ | 201             |   |  | $ | 146 |  
|Trench safety, pump and power               |  |                                 | 33    |   |                                  |   | 23    |      |  |   | 14              |   |  |   | 10  |  
|Traffic control                             |  |                                 | 16    |   |                                  |   | 11    |      |  |   | 6               |   |  |   | 5   |  
|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  
|Total capital expenditures                  |  | $                               | 736   |   |                                  | $ | 521   |      |  | $ | 221             |   |  | $ | 161 |  
|                                            |  |                                 |       |   |                                  |   |       |      |  |   |                 |   |  |   |     |  



|                              |  |                   |       |                  |   |      
|----------------------------- |  | ----------------- | ----- | ---------------- | - | -----
|                              |  | September 30,2005 |       | December 31,2004
|Total assets                  |  |                   |       |                  |   |      
|General rentals               |  | $                 | 4,811 |                  | $ | 4,613
|Trench safety, pump and power |  |                   | 123   |                  |   | 92   
|Traffic control               |  |                   | 254   |                  |   | 177  
|                              |  |                   |       |                  |   |      
|Total assets                  |  | $                 | 5,188 |                  | $ | 4,882
|                              |  |                   |       |                  |   |      



17



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



The following is a reconciliation of segment operating income to total company operating income:



|                              |  |                                 |     |                                  |   |      |  |                 |     |  |   |    
|----------------------------- |  | ------------------------------- | --- | -------------------------------- | - | ---- |  | --------------- | --- |  | - | ---
|                              |  | Nine Months Ended September 30, |     | Three Months Ended September 30,
|                              |  | 2005                            |     | 2004 (Restated)                  |   | 2005 |  | 2004 (Restated)
|Total segment profits         |  |                                 |     |                                  |   |      |  |                 |     |  |   |    
|Unallocated items:            |  | $                               | 366 |                                  | $ | 307  |  | $               | 171 |  | $ | 162
|Goodwill impairment charges   |  |                                 |    |                                  |   | 139  |  |                 |    |  |   | 139
|                              |  |                                 |     |                                  |   |      |  |                 |     |  |   |    
|Consolidated operating income |  | $                               | 366 |                                  | $ | 168  |  | $               | 171 |  | $ | 23 
|                              |  |                                 |     |                                  |   |      |  |                 |     |  |   |    

8.    Financing Transactions / Debt

Transactions Completed in 2004

We refinanced
approximately $2.1 billion of debt in 2004 (the Refinancing). The Refinancing extended debt maturities, reduced interest expense going forward and provided the Company with greater financial flexibility. As part of the Refinancing, the
Company:



| |  |  | amended and restated URIs senior secured credit facility (New Credit Facility) to replace URIs previous $1.3 billion senior secured credit facility the
Company previously had in place;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | sold $1 billion of URIs 61/2percent
Senior Notes Due 2012;
| | - |  | -----------------------------------------------------------



| |  |  | sold $375 of URIs 7 percent Senior Subordinated Notes Due 2014;
| | - |  | ----------------------------------------------------------------



| |  |  | repaid $639 of term loans and $52 of borrowings that were outstanding under the old credit facility;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | repurchased $845 principal amount of URIs 103/4percent Senior Notes Due 2008 (the 103/4percent Notes), pursuant to a tender
offer;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | redeemed $300 principal amount of URIs outstanding 91/4percent Senior Subordinated Notes Due 2009 (the 91/4percent Notes); and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | redeemed $250 principal amount of URIs outstanding 9 percent Senior Subordinated Notes Due 2009 (the 9 percent Notes).
| | - |  | -------------------------------------------------------------------------------------------------------------------------

The Refinancing was completed during the first quarter of 2004, except that (i) the redemption of the 9 percent Notes was completed on April 1,
2004 and a portion of the term loan that is part of the New Credit Facility was drawn on such date and (ii) an additional $4 of the 103/4percent Notes were repurchased on April 7, 2004.

In connection with the
Refinancing, the Company incurred aggregate charges of approximately $171. These charges were attributable primarily to (i) the redemption and tender premiums for notes redeemed or repurchased as part of the Refinancing and (ii) the
write-off of previously capitalized costs relating to the debt refinanced. These charges are recorded in other income (expense), net.

7 percent Senior Subordinated Notes. In January 2004, as part of the Refinancing described above, URI issued $375 aggregate principal amount of 7 percent Senior Subordinated Notes (the 7 percent
Notes) which are due February 15, 2014. The net proceeds from the sale of the 7 percent Notes were approximately $369, after deducting offering expenses. The 7 percent Notes are unsecured and are guaranteed by Holdings and, subject to
limited exceptions, URIs domestic subsidiaries. The 7 percent Notes mature on February 15, 2014 and may be redeemed by URI on or after February 15, 2009, at specified redemption prices that range from 103.5 percent in 2009 to 100.0
percent in 2012 and thereafter. In addition, on or prior to February 15, 2007, URI may, at its option, use the proceeds of public equity offerings to redeem up to an aggregate of



18



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



35 percent of the outstanding 7 percent Notes at a redemption price of 107.0 percent. The indenture governing the 7 percent Notes contains certain
restrictive covenants, including limitations on (i) additional indebtedness, (ii) restricted payments, (iii) liens, (iv) dividends and other payments, (v) preferred stock of certain subsidiaries, (vi) transactions with
affiliates, (vii) the disposition of proceeds of asset sales and (viii) the Companys ability to consolidate, merge or sell all or substantially all of its assets.

61/2percent Senior Notes.In February 2004, as part of the Refinancing described above, URI issued $1 billion aggregate principal amount of 61/2percent Senior Notes (the 61/2percent Notes) which are due February 15, 2012. The net proceeds from the sale of the 61/2percent Notes were approximately $985, after deducting offering expenses. The 61/2percent Notes are unsecured and are guaranteed by Holdings and, subject to limited exceptions, URIs domestic subsidiaries. The 61/2percent Notes mature on February 15, 2012 and may be redeemed by URI on or after February 15, 2008, at specified redemption prices that range
from 103.25 percent in 2008 to 100.0 percent in 2010 and thereafter. In addition, on or prior to February 15, 2007, URI may, at its option, use the proceeds of public equity offerings to redeem up to an aggregate of 35 percent of the
outstanding 61/2percent Notes at a redemption price of 106.5 percent. The indenture governing the 61/2percent Notes contains certain restrictive covenants, including limitations on (i) additional indebtedness,
(ii) restricted payments, (iii) liens, (iv) dividends and other payments, (v) preferred stock of certain subsidiaries, (vi) transactions with affiliates, (vii) the disposition of proceeds of asset sales, (viii) the
Companys ability to consolidate, merge or sell all or substantially all of its assets and (ix) sale-leaseback transactions.

New Credit Facility. In the first quarter of 2004, as part of the Refinancing described above, the Company amended and
restated its senior secured credit facility. The amended and restated facility includes (i) a $650 revolving credit facility, (ii) a $150 institutional letter of credit facility and (iii) a $750 term loan. The revolving credit
facility, institutional letter of credit facility and term loan are governed by the same credit agreement. URIs obligations under the credit facility are guaranteed by Holdings and, subject to limited exceptions, URIs domestic
subsidiaries and are secured by liens on substantially all of the assets of URI, Holdings and URIs domestic subsidiaries. Set forth below is certain additional information concerning the amended and restated facility.

Revolving Credit Facility. The revolving credit facility enables URI to borrow up to $650 on a revolving basis and enables
certain of the Companys Canadian subsidiaries to borrow up to $150 (provided that the aggregate borrowings of URI and the Canadian subsidiaries may not exceed $650). A portion of the revolving credit facility, up to $250, is available for
issuance of letters of credit. As of September 30, 2005 and December 31, 2004, the outstanding borrowings under this facility were approximately $137 and $133 and utilized letters of credit were $65 and $50, respectively. All outstanding
borrowings under the revolving credit facility at September 30, 2005 were Canadian subsidiary borrowings.

U.S. dollar
borrowings under the revolving credit facility accrue interest, at the option of URIs Canadian subsidiaries, at either (a) the ABR rate (which is equal to the greater of (i) the Federal Funds Rate plus 0.5 percent and
(ii) JPMorgan Chase Banks prime rate) plus a margin of 1.25 percent, or (b) an adjusted LIBOR rate plus a maximum margin of 2.25 percent.

Canadian dollar borrowings under the revolving credit facility accrue interest, at the option of URIs Canadian subsidiaries, at either (a) the ABR rate (which is equal to the greater of (i) the Federal
Funds Rate plus 0.5 percent and (ii) JPMorgan Chase Banks prime rate) plus a margin of 1.25 percent, or (b) an adjusted LIBOR rate plus a maximum margin of 2.25 percent. The rate applicable to Canadian borrowings outstanding under
the revolving credit facility was 4.8 percent at September 30, 2005 and December 31, 2004.



19



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



URI is also required to pay the lenders a commitment fee equal to 0.5 percent per
annum, payable quarterly, in respect of undrawn commitments under the revolving credit facility.

Institutional Letter of
Credit Facility (ILCF). The ILCF provides for up to $150 in letters of credit. The ILCF is in addition to the letter of credit capacity under the revolving credit facility. The total combined letter of credit capacity under the
revolving credit facility and the ILCF is $400. Subject to certain conditions, all or part of the ILCF may be converted into term loans. The ILCF is scheduled to terminate in February 2011. As of both September 30, 2005 and December 31,
2004, the outstanding letters of credit under the ILCF were approximately $150.

URI is required to pay a fee which accrues
at the rate of 0.1 percent per annum on the amount of the ILCF. In addition, URI is required to pay participation and other fees in respect of letters of credit. For letters of credit obtained under both the ILCF and the revolving credit facility,
these fees accrue at a maximum rate of 2.25 percent per annum.

Term Loan. The term loan was obtained in two
draws. An initial draw of $550 was made upon the closing of the credit facility in February 2004 and an additional draw of $200 was made on April 1, 2004. Amounts repaid in respect of the term loan may not be reborrowed.

The term loan must be repaid in installments as follows: (i) during the period from and including June 30, 2004 to and including
March 31, 2010, URI must repay on each March 31, June 30, September 30 and December 31 of each year an amount equal to one-fourth of 1 percent of the original aggregate principal amount of the term loan and
(ii) URI must repay on each of June 30, 2010, September 30, 2010, December 31, 2010, and at maturity on February 14, 2011 an amount equal to 23.5 percent of the original aggregate principal amount of the term loan.
As of September 30, 2005 and December 31, 2004, amounts outstanding under the term loan were approximately $739 and $744, respectively.

Borrowings under the term loan accrue interest, at URIs option, at either (a) the ABR rate plus a maximum margin of 1.25 percent, or (b) an adjusted LIBOR rate plus a maximum margin of 2.25 percent.
The rate was 6.1 and 4.67 at September 30, 2005 and December 31, 2004, respectively.

Covenants. Under
the agreement governing the New Credit Facility, the Company is required to, among other things, satisfy certain financial tests relating to: (a) interest coverage ratio, (b) the ratio of funded debt to cash flow, (c) the ratio of
senior secured debt to tangible assets and (d) the ratio of senior secured debt to cash flow. If the Company is unable to satisfy any of these covenants, the lenders could elect to terminate the credit facility and require the Company to repay
the outstanding borrowings under the credit facility. The Company is also subject to various other covenants under the agreements governing its credit facility and other indebtedness. These covenants require the Company to timely file audited annual
and quarterly financial statements with the SEC and limit or prohibit, among other things, the Companys ability to incur indebtedness, make prepayments of certain indebtedness, pay dividends, make investments, create liens, make acquisitions,
sell assets and engage in mergers and acquisitions. If at any time an event of default under the New Credit Facility exists, the interest rate applicable to each revolving and term loan will be based on the highest margins above plus 2 percent.

Transactions Completed in 2005

Matters Relating to Consent Solicitation:In 2005, the Company successfully solicited consents for amendments to the indentures governing the following securities:



| |  |  | 61/2percent Senior Notes due 2012
| | - |  | ---------------------------------



20



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



| |  |  | 73/4percent Senior Subordinated Notes due
2013
| | - |  | ----------------------------------------------



| |  |  | 7 percent Senior Subordinated Notes due 2014
| | - |  | --------------------------------------------



| |  |  | 17/8percent Convertible Senior Subordinated
Notes due 2023 (Convertible Notes)
| | - |  | --------------------------------------------------------------------------------



| |  |  | 61/2percent Convertible Quarterly Income
Preferred Securities due 2028 (QUIPs)
| | - |  | --------------------------------------------------------------------------------

The indentures for these securities require the Company to file
annual and other periodic reports with the SEC. On September 19, 2005, the Company obtained consents from holders of these securities and entered into supplemental indentures amending the applicable covenants to allow the Company until
March 31, 2006 to comply with the requirement to make timely SEC filings (and waiving related defaults that occurred prior to the effectiveness of the amendments). In addition, the supplemental indenture relating to the Convertible Notes
changed the conversion rate from 38.9520 to 44.9438 shares of United Rentals common stock for each $1,000 (one thousand dollars) principal amount of Convertible Notes. Pursuant to the terms of the consent solicitation, the company paid
aggregate consent fees of approximately $34 to holders of its nonconvertible notes and QUIPs. The costs are being amortized through the maturity dates of the nonconvertible notes and QUIPs.

In March 2005, the Company successfully obtained its lenders consent to an amendment to the New Credit Facility that waived the covenant violation
from the delay in making certain SEC filings and extended the Companys deadline to comply with the requirements to make timely SEC filings until June 29, 2005 for our 2004 Annual Report on Form 10-K and until August 15, 2005 for our
first quarter 2005 Form 10-Q. In June 2005, the Company successfully obtained its lenders consent to an amendment to the New Credit Facility that waived the covenant violation from the delay in making certain SEC filings and extended the
Companys deadline to comply with the requirements to make timely SEC filings until December 31, 2005 for our 2004 Annual Report on Form 10-K and for our 2005 Form 10-Qs. Both of these consents were obtained without the payment of any
consent fees. In November 2005, the Company successfully obtained its lenders consent to an amendment to the New Credit Facility that waived the covenant violation from the delay in making certain SEC filings and extended the Companys
deadline to comply with the requirements to make timely SEC filings until March 31, 2006. Consent fees in the amount of $1 were paid to the lenders under the New Credit Facility. On March 31, 2006, the Company obtained its lenders
consent to an additional amendment to the New Credit Facility that (1) waived the covenant violation from the delay in making certain SEC filings, (2) extended the Companys deadline to make its SEC filings until April 28, 2006
and (3) limited the Companys ability to borrow under the New Credit Facility to amounts necessary to find obligations to be paid in the ordinary course during the one-week period following the applicable borrowing until these SEC filings
are made.

Accounts Receivable Securitization:On May 31, 2005, we obtained a new $200 accounts receivable securitization
facility and terminated our then existing $250 accounts receivable securitization facility. The new facility provides for generally lower borrowing costs than the old facility. In addition, the new facility provides for a substantially longer term,
with the scheduled termination date being May 29, 2009, compared with September 30, 2006 under the old facility. There were no outstanding borrowings under the old facility at the time it was terminated. In connection with terminating the
old facility, we incurred a charge of approximately $1, representing the write-off of previously capitalized costs relating to the old facility.

The new facility enables one of our subsidiaries to borrow up to $200 against a collateral pool of eligible accounts receivable. Consistent with the old facility, the borrowings under the new facility will be reflected as debt on our
consolidated balance sheets and the receivables in the collateral pool will be reflected as assets on our consolidated balance sheets. However, such assets are only available to satisfy the obligations of the borrower subsidiary, and once the
obligations of the borrower subsidiary are satisfied, the remaining assets will be available to be dividended to the parent.



21



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



Key terms of this facility include:



| |  |  | borrowings may be made only to the extent that the face amount of the receivables in the collateral pool exceeds the outstanding loans by a specified amount;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the facility is structured so that the receivables in the collateral pool are the lenders only source of repayment;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | prior to expiration or early termination of the facility, amounts collected on the receivables may, subject to certain conditions, be retained by the borrower, provided that the
remaining receivables in the collateral pool are sufficient to secure the then outstanding borrowings;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | after expiration or early termination of the facility, no new amounts will be advanced under the facility and collections on the receivables securing the facility will be used to
repay the outstanding borrowings; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the facility contains standard termination events including, without limitation, a termination event if (i) the long-term senior secured rating of URI falls below either B+
from Standard & Poors Rating Services (S&P) or B2 from Moodys Investors Service (Moodys) or (ii) our New Credit Facility is terminated. Our current ratings are discussed in the MD&A.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Outstanding borrowings under the facility generally accrue interest at the commercial paper rate plus a specified spread not
to exceed 1.0 percent. There were no outstanding borrowings under this facility at September 30, 2005 and December 31, 2004. We are also required to pay a commitment fee based on the long-term senior secured ratings of URI. This commitment
fee was .55 percent at September 30, 2005.

Redemption of remaining 103/4Senior Notes: In April 2005, the Company redeemed $12 principal amount of URIs
103/4Senior Notes due 2008 (the 103/4Notes). The principal repurchased represented the amounts of the 103/4Notes still outstanding after the 2004 tender offer. In connection with this redemption, the Company incurred charges of approximately $1. These charges were attributed primarily to (i) the
redemption for notes redeemed and (ii) the write-off of previously capitalized costs.

Loan Covenants and Compliance

As of September 30, 2005, we were in compliance with the covenants of the 7 percent Notes and the 61/2percent Notes, as amended as discussed above, as well as the covenants of our 73/4percent Senior Subordinated Notes due 2013, Convertible Notes due 2023, the QUIPs and the New Credit Facility. As
described above, as of March 31, 2006, the Company obtained its lenders consent to an additional amendment to the New Credit Facility that extended the Companys deadline to make its SEC filings until April 28, 2006.

As of March 31, 2006, although we filed our annual reports on Form 10-K for the years ended December 31, 2004 and
2005, we had not yet filed our quarterly reports on Form 10-Q for the periods ended in 2005. Therefore, we were in violation of the amendments to our indentures due to not filing our quarterly reports. We are filing each of these quarterly reports
on Form 10-Q on the date hereof. The Company is currently in compliance with its New Credit Facility, as amended, as of March 31, 2006.

9.    Legal and Regulatory Matters

SEC Non-Public Fact Finding Inquiry and Special Committee Review

As previously announced, on August 25, 2004, the Company received a letter from the SEC in which the SEC referred to an inquiry of the Company.
The letter transmitted a subpoena requesting certain of the



22



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



Companys documents. The letter and the subpoena referred to an SEC investigation entitled In the Matter of United Rentals, Inc. The notice from
the SEC states that the inquiry does not mean that the SEC has concluded that the Company or anyone else has broken the law or that the SEC has a negative opinion of any person, entity or security. As previously announced, the inquiry appears to
relate to a broad range of our accounting practices and is not confined to a specific period or the matters discussed in this report.

The
Company has since received additional document subpoenas from the SEC. As previously announced, in March 2005, the Companys board of directors formed the Special Committee to review matters related to the SEC inquiry. The Special Committee
retained independent counsel. The board of directors received and acted upon findings of the Special Committee on January 26, 2006. The conclusions and recommendations of the Special Committee are discussed above in the Restatement Note and
summarized in the Companys press release and the related current report on Form 8-K dated January 26, 2006.

The Company has
provided documents in response to the SEC subpoenas to the SEC or to the Special Committee, which has, in turn, provided documents to the SEC. The Company is cooperating fully with the SEC in complying with the subpoenas. The Company is also
responding to the SECs informal requests for information.

Shareholder Class Action Lawsuits and Derivative Litigation

As previously announced, following our public announcement of the SEC inquiry referred to above, three purported class action lawsuits were filed against
us in the United States District Court for the District of Connecticut. The plaintiff in each of the lawsuits seeks to sue on behalf of a purported class comprised of purchasers of our securities from October 23, 2003 to August 30, 2004.
The lawsuits name as the defendants our company, our chairman, our vice chairman and chief executive officer, our former president and chief financial officer, and our former corporate controller. The complaints allege, among other things, that
certain of our SEC filings and other public statements contained false and misleading statements which resulted in damages to the plaintiffs and the members of the purported class when they purchased our securities. On the basis of those
allegations, plaintiffs in each action assert claims (a) against all defendants under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and (b) against one or more of the individual defendants under
Section 20(a) of such Act. The complaints seek unspecified compensatory damages, costs and expenses. On February 1, 2005, the Court entered an order consolidating the three actions. On November 8, 2005, the Court appointed City of
Pontiac Policemans and Firemans Retirement System as lead plaintiff for the purported class. The consolidated action is now entitled In re United Rentals, Inc. Securities Litigation. The court has directed the parties to submit,
by April 17, 2006, a proposed schedule for the filing of a consolidated amended complaint and responses to any amended pleading. We intend to defend against these actions vigorously.

In January 2005, an alleged shareholder filed an action in Connecticut State Superior Court, Judicial District of Norwalk/Stamford at Stamford,
purportedly suing derivatively on our behalf. The action, entitled Gregory Riegel v. John N. Milne, et al., names as defendants certain of our current and/or former directors and/or officers, and us as a nominal defendant. The complaint
asserts, among other things, that the defendants breached their fiduciary duties to us by causing or allowing us to disseminate misleading and inaccurate information to shareholders and the market and by failing to establish and maintain adequate
accounting controls, thus exposing us to damages. The complaint seeks unspecified compensatory damages, costs and expenses against the defendants. The parties to the Riegelaction have agreed that the proceedings in this action will be stayed
pending the resolution of the anticipated motions to dismiss in the purported shareholder class actions.

In November 2004, we received a
letter from counsel for an alleged shareholder, raising allegations similar to the ones set forth in the derivative complaint described above and demanding that we take action in response to those allegations against certain of our current and/or
former directors and/or officers. Following receipt of the



23



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



letter, the board of directors formed a special committee of the board to consider the letter. In August 2005, this alleged shareholder commenced an action
in Connecticut State Superior Court, Judicial District of Norwalk/Stamford at Stamford, purporting to sue derivatively on our behalf. The action, entitled Nathan Brundridge v. Leon D. Black, et al., names as defendants certain of our current
and/or former directors and/or officers, and names us as a nominal defendant. The complaint in this action asserts, among other things, that all of the defendants breached fiduciary obligations to us by causing or allowing us to disseminate
misleading and inaccurate information to shareholders and the market, and by failing to establish and maintain adequate accounting controls, thus exposing us to damages. The complaint in this action also asserts a claim for unjust enrichment against
our chairman, our vice chairman and chief executive officer, and our former president and chief financial officer. The complaint seeks unspecified compensatory damages, equitable relief, costs and expenses against all of the defendants. The
complaint also seeks an order, in connection with plaintiffs unjust enrichment claim, directing the defendants against whom that claim is asserted to disgorge certain compensation they received from us with respect to fiscal years 2001, 2002
and 2003. The parties have agreed to submit to the court, by April 17, 2006, a proposed schedule for the filing of any amended complaint and responses to the operative complaint in the action. The parties agreement further provides that
the time by which all defendants must answer, move or otherwise respond to the complaint shall be adjourned pending the parties submission of the aforementioned schedule.

In August 2005, another alleged shareholder filed an action in the United States District Court for the District of Connecticut, purporting to sue
derivatively on our behalf. The action, entitled Natalie Gordon v. Wayland R. Hicks, et al., names as defendants certain of our current and/or former directors and/or officers, and names us as a nominal defendant. The complaint in this action
asserts claims against each of the defendants for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment. Each of these claims is premised on, among other things, the theory that the
individual defendants caused or permitted us to disseminate misleading and inaccurate information to shareholders and to the market, and failed to establish and maintain adequate accounting controls, thus exposing us to damages. The complaint also
asserts (a) a claim that a former director breached fiduciary obligations by selling shares of our common stock while in possession of material, non-public information, and (b) a claim against our chairman, our vice chairman and chief
executive officer, and our former president and chief financial officer for recovery of certain incentive-based compensation under section 304 of the Sarbanes-Oxley Act. The complaint seeks unspecified compensatory damages, equitable relief,
restitution, costs and expenses against all of the defendants. The complaint also seeks an order declaring that the defendants against whom the section 304 claim is directed are liable under the Sarbanes-Oxley Act and directing them to reimburse us
for all bonuses or other incentive-based or equity-based compensation they received for the fiscal years 1999 through 2004. The court has directed the parties to submit, on or before April 17, 2006, a proposed schedule for the filing of any
amended complaint and responses to the operative complaint in the action. Pending the submission and approval of the aforementioned schedule, the court has adjourned the time by which all defendants must answer, move, or otherwise respond to the
complaint in this action.

We are also a party to various other litigation matters, in most cases involving ordinary and routine claims
incidental to our business. We cannot estimate with certainty our ultimate legal and financial liability with respect to such pending litigation matters. However, we believe, based on our examination of such matters, that our ultimate liability will
not have a material adverse effect on our financial position, results of operations or cash flows.

Indemnification

The Company indemnifies its officers and directors pursuant to indemnification agreements and may in addition indemnify these individuals as permitted by
Delaware law. Accordingly, in connection with the purported class action lawsuit, three purported shareholder derivative lawsuits and the SEC inquiry and related



24



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



review of the Special Committee described above, the Company advanced counsel fees and other reasonable fees and expenses, actually and necessarily incurred
by the present and former directors and officers who are involved, in an aggregate amount of approximately $2.6 during fiscal 2005. Each of the individuals is required to execute an undertaking to repay such expenses if he or she is finally found
not to be entitled to indemnification.

10.    Condensed Consolidating Financial Information of Guarantor Subsidiaries

URI is 100 percent owned by Holdings (the Parent) and has outstanding (i) certain indebtedness that is guaranteed by
the Parent and (ii) certain indebtedness that is guaranteed by both Parent and substantially all of URIs United States subsidiaries (the guarantor subsidiaries). However, this indebtedness is not guaranteed by URIs
foreign subsidiaries (the non-guarantor subsidiaries) and certain of its United States subsidiaries. The guarantor subsidiaries are all 100 percent-owned and the guarantees are made on a joint and several basis and are full and
unconditional (subject to subordination provisions and subject to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void
under fraudulent conveyance laws). Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes that such information would not be material to investors; however, condensed
consolidating financial information is presented. The condensed consolidating financial information of the Company and its subsidiaries is as follows:

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2005



|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|------------------------------------------ |  | ------ | ----- | --- | - | ---------------------- |  | - | -------------------------- | - |  | -------------------- | ---- | - | ------------------ | - | ------ | - |  | - | -----
|                                           |  | Parent |       | URI |   | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   |  | Other & Eliminations |      |   | Consolidated Total
|ASSETS                                     |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|Cash and cash equivalents                  |  |        |       |     |   |                        |  | $ | 142                        |   |  | $                    | 9    |   |                    |   |        |   |  | $ | 151  
|Accounts receivable, net                   |  |        |       |     | $ | 38                     |  |   | 483                        |   |  |                      | 63   |   |                    |   |        |   |  |   | 584  
|Intercompany receivable (payable)          |  |        |       |     |   | 610                    |  |   | (458                       | ) |  |                      | (152 | ) |                    |   |        |   |  |   |     
|Inventory                                  |  |        |       |     |   | 76                     |  |   | 90                         |   |  |                      | 14   |   |                    |   |        |   |  |   | 180  
|Prepaid expenses and other assets          |  |        |       |     |   | 72                     |  |   | 74                         |   |  |                      | 1    |   |                    |   |        |   |  |   | 147  
|Rental equipment, net                      |  |        |       |     |   | 1,267                  |  |   | 849                        |   |  |                      | 232  |   |                    |   |        |   |  |   | 2,348
|Property and equipment, net                |  | $      | 33    |     |   | 126                    |  |   | 248                        |   |  |                      | 26   |   |                    |   |        |   |  |   | 433  
|Investment in subsidiaries                 |  |        | 1,370 |     |   | 2,151                  |  |   |                           |   |  |                      |     |   |                    | $ | (3,510 | ) |  |   | 11   
|Goodwill and other intangible assets, net  |  |        |      |     |   | 165                    |  |   | 1,021                      |   |  |                      | 148  |   |                    |   |       |   |  |   | 1,334
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|                                           |  | $      | 1,403 |     | $ | 4,505                  |  | $ | 2,449                      |   |  | $                    | 341  |   |                    | $ | (3,510 | ) |  | $ | 5,188
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|Liabilities:                               |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|Accounts payable                           |  |        |       |     | $ | 43                     |  | $ | 180                        |   |  | $                    | 20   |   |                    |   |        |   |  | $ | 243  
|Accrued expenses and other liabilities     |  |        |       |     |   | 136                    |  |   | 280                        |   |  |                      | 7    |   |                    | $ | (56    | ) |  |   | 367  
|Debt                                       |  |        |       |     |   | 2,799                  |  |   |                           |   |  |                      | 137  |   |                    |   |       |   |  |   | 2,936
|Subordinated convertible debentures        |  | $      | 222   |     |   |                       |  |   |                           |   |  |                      |     |   |                    |   |       |   |  |   | 222  
|Deferred taxes                             |  |        |      |     |   | 224                    |  |   | (15                        | ) |  |                      | 30   |   |                    |   |       |   |  |   | 239  
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|Total liabilities                          |  |        | 222   |     |   | 3,202                  |  |   | 445                        |   |  |                      | 194  |   |                    |   | (56    | ) |  |   | 4,007
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|Total stockholders equity                 |  |        | 1,181 |     |   | 1,303                  |  |   | 2,004                      |   |  |                      | 147  |   |                    |   | (3,454 | ) |  |   | 1,181
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      
|Total liabilities and stockholders equity |  | $      | 1,403 |     | $ | 4,505                  |  | $ | 2,449                      |   |  | $                    | 341  |   |                    | $ | (3,510 | ) |  | $ | 5,188
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                      |      |   |                    |   |        |   |  |   |      



25



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2004



|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|------------------------------------------ |  | ------ | ----- | --- | - | ---------------------- |  | - | -------------------------- | - |  | ---------------------- | ---- | - | ------------------ | - | ------ | - |  | - | -----
|                                           |  | Parent |       | URI |   | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   |  | Other and Eliminations |      |   | Consolidated Total
|ASSETS                                     |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|Cash and cash equivalents                  |  |        |       |     | $ | 247                    |  | $ | 34                         |   |  | $                      | 22   |   |                    |   |        |   |  | $ | 303  
|Accounts receivable, net                   |  |        |       |     |   | 20                     |  |   | 419                        |   |  |                        | 51   |   |                    |   |        |   |  |   | 490  
|Intercompany receivable (payable)          |  |        |       |     |   | 231                    |  |   | (85                        | ) |  |                        | (146 | ) |                    |   |        |   |  |   |     
|Inventory                                  |  |        |       |     |   | 46                     |  |   | 61                         |   |  |                        | 12   |   |                    |   |        |   |  |   | 119  
|Prepaid expenses and other assets          |  |        |       |     |   | 46                     |  |   | 66                         |   |  |                        |     |   |                    |   |        |   |  |   | 112  
|Rental equipment, net                      |  |        |       |     |   | 1,153                  |  |   | 764                        |   |  |                        | 206  |   |                    |   |        |   |  |   | 2,123
|Property and equipment, net                |  | $      | 22    |     |   | 120                    |  |   | 231                        |   |  |                        | 24   |   |                    |   |        |   |  |   | 397  
|Investment in subsidiaries                 |  |        | 1,226 |     |   | 2,039                  |  |   |                           |   |  |                        |     |   |                    | $ | (3,257 | ) |  |   | 8    
|Goodwill and other intangible assets, net  |  |        |       |     |   | 362                    |  |   | 827                        |   |  |                        | 141  |   |                    |   |        |   |  |   | 1,330
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|                                           |  | $      | 1,248 |     | $ | 4,264                  |  | $ | 2,317                      |   |  | $                      | 310  |   |                    | $ | (3,257 | ) |  | $ | 4,882
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|Liabilities:                               |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|Accounts payable                           |  |        |      |     | $ | 36                     |  | $ | 156                        |   |  | $                      | 25   |   |                    |   |       |   |  | $ | 217  
|Accrued expenses and other liabilities     |  |        |      |     |   | 140                    |  |   | 240                        |   |  |                        | 8    |   |                    | $ | (65    | ) |  |   | 323  
|Debt                                       |  |        |      |     |   | 2,812                  |  |   |                           |   |  |                        | 133  |   |                    |   |       |   |  |   | 2,945
|Subordinated convertible debentures        |  | $      | 222   |     |   |                       |  |   |                           |   |  |                        |     |   |                    |   |       |   |  |   | 222  
|Deferred taxes                             |  |        |      |     |   | 126                    |  |   | (5                         | ) |  |                        | 28   |   |                    |   |       |   |  |   | 149  
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|Total liabilities                          |  |        | 222   |     |   | 3,114                  |  |   | 391                        |   |  |                        | 194  |   |                    |   | (65    | ) |  |   | 3,856
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|Total stockholders equity                 |  |        | 1,026 |     |   | 1,150                  |  |   | 1,926                      |   |  |                        | 116  |   |                    |   | (3,192 | ) |  |   | 1,026
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      
|Total liabilities and stockholders equity |  | $      | 1,248 |     | $ | 4,264                  |  | $ | 2,317                      |   |  | $                      | 310  |   |                    | $ | (3,257 | ) |  | $ | 4,882
|                                           |  |        |       |     |   |                        |  |   |                            |   |  |                        |      |   |                    |   |        |   |  |   |      



26



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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|----------------------------------------------------------- |  | --------------------------------------------- | -- | - | --- | - | ---------------------- |  | - | -------------------------- | - |  | ---------------------- | -- | - | ------------------ | - | ---- | - |  | - | --- | -
|                                                            |  | For the Three Months Ended September 30, 2005 |   
|                                                            |  | Parent                                        |    |   | URI |   | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   |  | Other and Eliminations |    |   | Consolidated Total |  
|Revenues:                                                   |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Equipment rentals                                           |  |                                               |    |   |     | $ | 321                    |  | $ | 354                        |   |  | $                      | 63 |   |                    |   |      |   |  | $ | 738 |  
|Sales of rental equipment                                   |  |                                               |    |   |     |   | 25                     |  |   | 29                         |   |  |                        | 7  |   |                    |   |      |   |  |   | 61  |  
|New equipment sales                                         |  |                                               |    |   |     |   | 28                     |  |   | 21                         |   |  |                        | 6  |   |                    |   |      |   |  |   | 55  |  
|Contractor supplies sales                                   |  |                                               |    |   |     |   | 34                     |  |   | 46                         |   |  |                        | 9  |   |                    |   |      |   |  |   | 89  |  
|Service and other revenues                                  |  |                                               |    |   |     |   | 20                     |  |   | 13                         |   |  |                        | 4  |   |                    |   |      |   |  |   | 37  |  
|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Total revenues                                              |  |                                               |    |   |     |   | 428                    |  |   | 463                        |   |  |                        | 89 |   |                    |   |      |   |  |   | 980 |  
|Cost of revenues:                                           |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Cost of equipment rentals, excluding depreciation           |  |                                               |    |   |     |   | 140                    |  |   | 186                        |   |  |                        | 28 |   |                    |   |      |   |  |   | 354 |  
|Depreciation of rental equipment                            |  |                                               |    |   |     |   | 48                     |  |   | 40                         |   |  |                        | 10 |   |                    |   |      |   |  |   | 98  |  
|Cost of rental equipment sales                              |  |                                               |    |   |     |   | 18                     |  |   | 20                         |   |  |                        | 5  |   |                    |   |      |   |  |   | 43  |  
|Cost of new equipment sales                                 |  |                                               |    |   |     |   | 22                     |  |   | 18                         |   |  |                        | 5  |   |                    |   |      |   |  |   | 45  |  
|Cost of contractor supplies sales                           |  |                                               |    |   |     |   | 31                     |  |   | 31                         |   |  |                        | 7  |   |                    |   |      |   |  |   | 69  |  
|Cost of service and other revenue                           |  |                                               |    |   |     |   | 10                     |  |   | 7                          |   |  |                        | 2  |   |                    |   |      |   |  |   | 19  |  
|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Total cost of revenues                                      |  |                                               |    |   |     |   | 269                    |  |   | 302                        |   |  |                        | 57 |   |                    |   |      |   |  |   | 628 |  
|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Gross profit                                                |  |                                               |    |   |     |   | 159                    |  |   | 161                        |   |  |                        | 32 |   |                    |   |      |   |  |   | 352 |  
|Selling, general and administrative expenses                |  |                                               |    |   |     |   | 59                     |  |   | 93                         |   |  |                        | 12 |   |                    |   |      |   |  |   | 164 |  
|Non-rental depreciation and amortization                    |  | $                                             | 2  |   |     |   | 8                      |  |   | 6                          |   |  |                        | 1  |   |                    |   |      |   |  |   | 17  |  
|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Operating income (loss)                                     |  |                                               | (2 | ) |     |   | 92                     |  |   | 62                         |   |  |                        | 19 |   |                    |   |      |   |  |   | 171 |  
|Interest expense                                            |  |                                               | 4  |   |     |   | 43                     |  |   | 3                          |   |  |                        | 2  |   |                    | $ | (4   | ) |  |   | 48  |  
|Interest expensesubordinated convertible debenturesQuips  |  |                                               |   |   |     |   |                       |  |   |                           |   |  |                        |   |   |                    |   | 4    |   |  |   | 4   |  
|Other (income) expense, net                                 |  |                                               |   |   |     |   | 1                      |  |   | (7                         | ) |  |                        | (1 | ) |                    |   |     |   |  |   | (7  | )
|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Income (loss) before provision (benefit) for income taxes   |  |                                               | (6 | ) |     |   | 48                     |  |   | 66                         |   |  |                        | 18 |   |                    |   |     |   |  |   | 126 |  
|Provision (benefit) for income taxes                        |  |                                               | (2 | ) |     |   | 19                     |  |   | 26                         |   |  |                        | 7  |   |                    |   |     |   |  |   | 50  |  
|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Income (loss) before equity in net earnings of subsidiaries |  |                                               | (4 | ) |     |   | 29                     |  |   | 40                         |   |  |                        | 11 |   |                    |   |      |   |  |   | 76  |  
|Equity in net earnings of subsidiaries                      |  |                                               | 80 |   |     |   | 51                     |  |   |                           |   |  |                        |   |   |                    |   | (131 | ) |  |   |    |  
|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  
|Net income (loss)                                           |  | $                                             | 76 |   |     | $ | 80                     |  | $ | 40                         |   |  | $                      | 11 |   |                    | $ | (131 | ) |  | $ | 76  |  
|                                                            |  |                                               |    |   |     |   |                        |  |   |                            |   |  |                        |    |   |                    |   |      |   |  |   |     |  



27



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|----------------------------------------------------------- |  | -------------------------------------------------------- | --- | - | --- | - | --- | ---------------------- |  | - | -------------------------- | - | ---------------------- | - | -- | ------------------ | - | --- | - |  | - | --- | -
|                                                            |  | For the Three Months Ended September 30, 2004 (Restated) |    
|                                                            |  | Parent                                                   |     |   | URI |   |     | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   | Other and Eliminations |   |    | Consolidated Total |  
|Revenues:                                                   |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Equipment rentals                                           |  |                                                          |     |   |     | $ | 295 |                        |  | $ | 321                        |   |                        | $ | 47 |                    |   |     |   |  | $ | 663 |  
|Sales of rental equipment                                   |  |                                                          |     |   |     |   | 23  |                        |  |   | 29                         |   |                        |   | 6  |                    |   |     |   |  |   | 58  |  
|New equipment sales                                         |  |                                                          |     |   |     |   | 25  |                        |  |   | 15                         |   |                        |   | 4  |                    |   |     |   |  |   | 44  |  
|Contractor supplies sales                                   |  |                                                          |     |   |     |   | 23  |                        |  |   | 32                         |   |                        |   | 6  |                    |   |     |   |  |   | 61  |  
|Service and other revenues                                  |  |                                                          |     |   |     |   | 18  |                        |  |   | 11                         |   |                        |   | 3  |                    |   |     |   |  |   | 32  |  
|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Total revenues                                              |  |                                                          |     |   |     |   | 384 |                        |  |   | 408                        |   |                        |   | 66 |                    |   |     |   |  |   | 858 |  
|Cost of revenues:                                           |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Cost of equipment rentals, excluding depreciation           |  |                                                          |     |   |     |   | 117 |                        |  |   | 185                        |   |                        |   | 20 |                    |   |     |   |  |   | 322 |  
|Depreciation of rental equipment                            |  |                                                          |     |   |     |   | 46  |                        |  |   | 40                         |   |                        |   | 9  |                    |   |     |   |  |   | 95  |  
|Cost of rental equipment sales                              |  |                                                          |     |   |     |   | 16  |                        |  |   | 21                         |   |                        |   | 4  |                    |   |     |   |  |   | 41  |  
|Cost of new equipment sales                                 |  |                                                          |     |   |     |   | 21  |                        |  |   | 13                         |   |                        |   | 3  |                    |   |     |   |  |   | 37  |  
|Cost of contractor supplies sales                           |  |                                                          |     |   |     |   | 18  |                        |  |   | 23                         |   |                        |   | 4  |                    |   |     |   |  |   | 45  |  
|Cost of service and other revenue                           |  |                                                          |     |   |     |   | 9   |                        |  |   | 6                          |   |                        |   | 2  |                    |   |     |   |  |   | 17  |  
|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Total cost of revenues                                      |  |                                                          |     |   |     |   | 227 |                        |  |   | 288                        |   |                        |   | 42 |                    |   |     |   |  |   | 557 |  
|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Gross profit                                                |  |                                                          |     |   |     |   | 157 |                        |  |   | 120                        |   |                        |   | 24 |                    |   |     |   |  |   | 301 |  
|Selling, general and administrative expenses                |  |                                                          |     |   |     |   | 52  |                        |  |   | 62                         |   |                        |   | 9  |                    |   |     |   |  |   | 123 |  
|Goodwill impairment                                         |  |                                                          |     |   |     |   |    |                        |  |   | 139                        |   |                        |   |   |                    |   |     |   |  |   | 139 |  
|Non-rental depreciation and amortization                    |  | $                                                        | 2   |   |     |   | 7   |                        |  |   | 6                          |   |                        |   | 1  |                    |   |     |   |  |   | 16  |  
|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Operating income (loss)                                     |  |                                                          | (2  | ) |     |   | 98  |                        |  |   | (87                        | ) |                        |   | 14 |                    |   |     |   |  |   | 23  |  
|Interest expense                                            |  |                                                          | 4   |   |     |   | 34  |                        |  |   |                           |   |                        |   | 1  |                    | $ | (4  | ) |  |   | 35  |  
|Interest expensesubordinated convertible debentures        |  |                                                          |    |   |     |   |    |                        |  |   |                           |   |                        |   |   |                    |   | 4   |   |  |   | 4   |  
|Other (income) expense, net                                 |  |                                                          |    |   |     |   | 2   |                        |  |   | (1                         | ) |                        |   |   |                    |   |    |   |  |   | 1   |  
|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Income (loss) before provision (benefit) for income taxes   |  |                                                          | (6  | ) |     |   | 62  |                        |  |   | (86                        | ) |                        |   | 13 |                    |   |    |   |  |   | (17 | )
|Provision (benefit) for income taxes                        |  |                                                          | (2  | ) |     |   | 24  |                        |  |   | 2                          |   |                        |   | 5  |                    |   |    |   |  |   | 29  |  
|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Income (loss) before equity in net earnings of subsidiaries |  |                                                          | (4  | ) |     |   | 38  |                        |  |   | (88                        | ) |                        |   | 8  |                    |   |    |   |  |   | (46 | )
|Equity in net earnings of subsidiaries                      |  |                                                          | (42 | ) |     |   | (80 | )                      |  |   |                            |   |                        |   |   |                    |   | 122 |   |  |   |    |  
|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  
|Net income (loss)                                           |  | $                                                        | (46 | ) |     | $ | (42 | )                      |  | $ | (88                        | ) |                        | $ | 8  |                    | $ | 122 |   |  | $ | (46 | )
|                                                            |  |                                                          |     |   |     |   |     |                        |  |   |                            |   |                        |   |    |                    |   |     |   |  |   |     |  



28



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|---------------------------------------------------------------- |  | -------------------------------------------- | --- | - | --- | - | ---------------------- |  | - | -------------------------- | - | ---------------------- | - | --- | ------------------ | - | ---- | - |  | - | ----- | -
|                                                                 |  | For the Nine Months Ended September 30, 2005 |    
|                                                                 |  | Parent                                       |     |   | URI |   | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   | Other and Eliminations |   |     | Consolidated Total |  
|Revenues:                                                        |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Equipment rentals                                                |  |                                              |     |   |     | $ | 844                    |  | $ | 881                        |   |                        | $ | 154 |                    |   |      |   |  | $ | 1,879 |  
|Sales of rental equipment                                        |  |                                              |     |   |     |   | 106                    |  |   | 95                         |   |                        |   | 27  |                    |   |      |   |  |   | 228   |  
|New equipment sales                                              |  |                                              |     |   |     |   | 77                     |  |   | 57                         |   |                        |   | 17  |                    |   |      |   |  |   | 151   |  
|Contractor supplies sales                                        |  |                                              |     |   |     |   | 89                     |  |   | 124                        |   |                        |   | 25  |                    |   |      |   |  |   | 238   |  
|Service and other revenues                                       |  |                                              |     |   |     |   | 58                     |  |   | 35                         |   |                        |   | 11  |                    |   |      |   |  |   | 104   |  
|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Total revenues                                                   |  |                                              |     |   |     |   | 1,174                  |  |   | 1,192                      |   |                        |   | 234 |                    |   |      |   |  |   | 2,600 |  
|Cost of revenues:                                                |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Cost of equipment rentals, excluding depreciation                |  |                                              |     |   |     |   | 384                    |  |   | 495                        |   |                        |   | 76  |                    |   |      |   |  |   | 955   |  
|Depreciation of rental equipment                                 |  |                                              |     |   |     |   | 139                    |  |   | 117                        |   |                        |   | 31  |                    |   |      |   |  |   | 287   |  
|Cost of rental equipment sales                                   |  |                                              |     |   |     |   | 77                     |  |   | 69                         |   |                        |   | 19  |                    |   |      |   |  |   | 165   |  
|Cost of new equipment sales                                      |  |                                              |     |   |     |   | 62                     |  |   | 48                         |   |                        |   | 14  |                    |   |      |   |  |   | 124   |  
|Cost of contractor supplies sales                                |  |                                              |     |   |     |   | 75                     |  |   | 87                         |   |                        |   | 19  |                    |   |      |   |  |   | 181   |  
|Cost of service and other revenue                                |  |                                              |     |   |     |   | 28                     |  |   | 17                         |   |                        |   | 6   |                    |   |      |   |  |   | 51    |  
|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Total cost of revenues                                           |  |                                              |     |   |     |   | 765                    |  |   | 833                        |   |                        |   | 165 |                    |   |      |   |  |   | 1,763 |  
|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Gross profit                                                     |  |                                              |     |   |     |   | 409                    |  |   | 359                        |   |                        |   | 69  |                    |   |      |   |  |   | 837   |  
|Selling, general and administrative expenses                     |  |                                              |     |   |     |   | 170                    |  |   | 218                        |   |                        |   | 34  |                    |   |      |   |  |   | 422   |  
|Non-rental depreciation and amortization                         |  | $                                            | 5   |   |     |   | 23                     |  |   | 18                         |   |                        |   | 3   |                    |   |      |   |  |   | 49    |  
|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Operating income (loss)                                          |  |                                              | (5  | ) |     |   | 216                    |  |   | 123                        |   |                        |   | 32  |                    |   |      |   |  |   | 366   |  
|Interest expense                                                 |  |                                              | 11  |   |     |   | 126                    |  |   | 4                          |   |                        |   | 5   |                    | $ | (11  | ) |  |   | 135   |  
|Preferred dividends of a subsidiary trust                        |  |                                              |    |   |     |   |                       |  |   | 1                          |   |                        |   |    |                    |   | 11   |   |  |   | 12    |  
|Other (income) expense, net                                      |  |                                              |    |   |     |   | 3                      |  |   | (11                        | ) |                        |   |    |                    |   |     |   |  |   | (8    | )
|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Income (loss) before provision (benefit) for income taxes        |  |                                              | (16 | ) |     |   | 87                     |  |   | 129                        |   |                        |   | 27  |                    |   |     |   |  |   | 227   |  
|Provision (benefit) for income taxes                             |  |                                              | (6  | ) |     |   | 34                     |  |   | 51                         |   |                        |   | 10  |                    |   |     |   |  |   | 89    |  
|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Income (loss) before equity in net income (loss) of subsidiaries |  |                                              | (10 | ) |     |   | 53                     |  |   | 78                         |   |                        |   | 17  |                    |   |     |   |  |   | 138   |  
|Equity in net income (loss) of subsidiaries                      |  |                                              | 148 |   |     |   | 95                     |  |   |                           |   |                        |   |    |                    |   | (243 | ) |  |   |      |  
|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  
|Net income                                                       |  | $                                            | 138 |   |     | $ | 148                    |  | $ | 78                         |   |                        | $ | 17  |                    | $ | (243 | ) |  | $ | 138   |  
|                                                                 |  |                                              |     |   |     |   |                        |  |   |                            |   |                        |   |     |                    |   |      |   |  |   |       |  



29



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|----------------------------------------------------------- |  | ------------------------------------------------------- | ---- | - | --- | - | ----- | ---------------------- |  | - | -------------------------- | - | ---------------------- | - | --- | ------------------ | - | --- | - |  | - | ----- | -
|                                                            |  | For the Nine Months Ended September 30, 2004 (Restated) |     
|                                                            |  | Parent                                                  |      |   | URI |   |       | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   | Other and Eliminations |   |     | Consolidated Total |  
|Revenues:                                                   |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Equipment rentals                                           |  |                                                         |      |   |     | $ | 768   |                        |  | $ | 811                        |   |                        | $ | 115 |                    |   |     |   |  | $ | 1,694 |  
|Sales of rental equipment                                   |  |                                                         |      |   |     |   | 84    |                        |  |   | 92                         |   |                        |   | 17  |                    |   |     |   |  |   | 193   |  
|New equipment sales                                         |  |                                                         |      |   |     |   | 71    |                        |  |   | 44                         |   |                        |   | 13  |                    |   |     |   |  |   | 128   |  
|Contractor supplies sales                                   |  |                                                         |      |   |     |   | 61    |                        |  |   | 86                         |   |                        |   | 16  |                    |   |     |   |  |   | 163   |  
|Service and other revenues                                  |  |                                                         |      |   |     |   | 54    |                        |  |   | 32                         |   |                        |   | 8   |                    |   |     |   |  |   | 94    |  
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Total revenues                                              |  |                                                         |      |   |     |   | 1,038 |                        |  |   | 1,065                      |   |                        |   | 169 |                    |   |     |   |  |   | 2,272 |  
|Cost of revenues:                                           |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Cost of equipment rentals, excluding depreciation           |  |                                                         |      |   |     |   | 336   |                        |  |   | 479                        |   |                        |   | 56  |                    |   |     |   |  |   | 871   |  
|Depreciation of rental equipment                            |  |                                                         |      |   |     |   | 133   |                        |  |   | 118                        |   |                        |   | 26  |                    |   |     |   |  |   | 277   |  
|Cost of rental equipment sales                              |  |                                                         |      |   |     |   | 60    |                        |  |   | 65                         |   |                        |   | 12  |                    |   |     |   |  |   | 137   |  
|Cost of new equipment sales                                 |  |                                                         |      |   |     |   | 60    |                        |  |   | 39                         |   |                        |   | 10  |                    |   |     |   |  |   | 109   |  
|Cost of contractor supplies sales                           |  |                                                         |      |   |     |   | 46    |                        |  |   | 62                         |   |                        |   | 12  |                    |   |     |   |  |   | 120   |  
|Cost of service and other revenue                           |  |                                                         |      |   |     |   | 26    |                        |  |   | 19                         |   |                        |   | 4   |                    |   |     |   |  |   | 49    |  
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Total cost of revenues                                      |  |                                                         |      |   |     |   | 661   |                        |  |   | 782                        |   |                        |   | 120 |                    |   |     |   |  |   | 1,563 |  
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Gross profit                                                |  |                                                         |      |   |     |   | 377   |                        |  |   | 283                        |   |                        |   | 49  |                    |   |     |   |  |   | 709   |  
|Selling, general and administrative expenses                |  |                                                         |      |   |     |   | 149   |                        |  |   | 178                        |   |                        |   | 26  |                    |   |     |   |  |   | 353   |  
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   | 139                        |   |                        |   |    |                    |   |     |   |  |   | 139   |  
|Non-rental depreciation and amortization                    |  | $                                                       | 6    |   |     |   | 21    |                        |  |   | 19                         |   |                        |   | 3   |                    | $ |     |   |  |   | 49    |  
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Operating income (loss)                                     |  |                                                         | (6   | ) |     |   | 207   |                        |  |   | (53                        | ) |                        |   | 20  |                    |   |     |   |  |   | 168   |  
|Interest expense                                            |  |                                                         | 12   |   |     |   | 112   |                        |  |   |                           |   |                        |   | 3   |                    | $ | (12 | ) |  |   | 115   |  
|Preferred dividends of a subsidiary trust                   |  |                                                         |     |   |     |   | (1    | )                      |  |   | 1                          |   |                        |   |    |                    |   | 12  |   |  |   | 12    |  
|Other (income) expense, net                                 |  |                                                         |     |   |     |   | 173   |                        |  |   | (2                         | ) |                        |   | 3   |                    |   |    |   |  |   | 174   |  
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Income (loss) before provision (benefit) for income taxes   |  |                                                         | (18  | ) |     |   | (77   | )                      |  |   | (52                        | ) |                        |   | 14  |                    |   |    |   |  |   | (133  | )
|Provision (benefit) for income taxes                        |  |                                                         | (6   | ) |     |   | (34   | )                      |  |   | 14                         |   |                        |   | 7   |                    |   |    |   |  |   | (19   | )
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Income (loss) before equity in net earnings of subsidiaries |  |                                                         | (12  | ) |     |   | (43   | )                      |  |   | (66                        | ) |                        |   | 7   |                    |   |    |   |  |   | (114  | )
|Equity in net earnings of subsidiaries                      |  |                                                         | (102 | ) |     |   | (59   | )                      |  |   |                           |   |                        |   |    |                    |   | 161 |   |  |   |      |  
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  
|Net income                                                  |  | $                                                       | (114 | ) |     | $ | (102  | )                      |  | $ | (66                        | ) |                        | $ | 7   |                    | $ | 161 |   |  | $ | (114  | )
|                                                            |  |                                                         |      |   |     |   |       |                        |  |   |                            |   |                        |   |     |                    |   |     |   |  |   |       |  



30



---

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Dollars in millions, except per share data unless otherwise indicated)



CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the nine months ended September 30, 2005



|                                                                     |  |        |    |   |     |   |      |                        |  |   |                            |   |  |                        |     |   |                    |   |    |   |  |   |      |  
|-------------------------------------------------------------------- |  | ------ | -- | - | --- | - | ---- | ---------------------- |  | - | -------------------------- | - |  | ---------------------- | --- | - | ------------------ | - | -- | - |  | - | ---- | -
|                                                                     |  | Parent |    |   | URI |   |      | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   |  | Other and Eliminations |     |   | Consolidated Total |  
|Net cash provided by (used in) operating activities                  |  | $      |   |   |     | $ | 73   |                        |  | $ | 323                        |   |  | $                      | 28  |   |                    | $ |   |   |  | $ | 424  |  
|Net cash used in investing activities                                |  |        | (9 | ) |     |   | (247 | )                      |  |   | (214                       | ) |  |                        | (41 | ) |                    |   | 2  |   |  |   | (509 | )
|Net cash provided by (used in) financing activities                  |  |        | 9  |   |     |   | (73  | )                      |  |   | (1                         | ) |  |                        |    |   |                    |   | (2 | ) |  |   | (67  | )
|Effect of foreign exchange rate changes on cash and cash equivalents |  |        |   |   |     |   |     |                        |  |   |                           |   |  |                        |    |   |                    |   |   |   |  |   |     |  
|                                                                     |  |        |    |   |     |   |      |                        |  |   |                            |   |  |                        |     |   |                    |   |    |   |  |   |      |  
|Increase (decrease) in cash and cash equivalents                     |  |        |   |   |     |   | (247 | )                      |  |   | 108                        |   |  |                        | (13 | ) |                    |   |   |   |  |   | (152 | )
|Cash and cash equivalents at beginning of period                     |  |        |   |   |     |   | 247  |                        |  |   | 34                         |   |  |                        | 22  |   |                    |   |   |   |  |   | 303  |  
|                                                                     |  |        |    |   |     |   |      |                        |  |   |                            |   |  |                        |     |   |                    |   |    |   |  |   |      |  
|Cash and cash equivalents at end of period                           |  | $      |   |   |     | $ |     |                        |  | $ | 142                        |   |  | $                      | 9   |   |                    | $ |   |   |  | $ | 151  |  
|                                                                     |  |        |    |   |     |   |      |                        |  |   |                            |   |  |                        |     |   |                    |   |    |   |  |   |      |  

For the nine months ended September 30, 2004 (Restated)



|                                                                     |  |        |    |   |     |   |      |                        |  |   |                            |   |  |                        |     |   |                    |   |    |   |  |   |      |  
|-------------------------------------------------------------------- |  | ------ | -- | - | --- | - | ---- | ---------------------- |  | - | -------------------------- | - |  | ---------------------- | --- | - | ------------------ | - | -- | - |  | - | ---- | -
|                                                                     |  | Parent |    |   | URI |   |      | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   |  | Other and Eliminations |     |   | Consolidated Total |  
|Net cash provided by (used in) operating activities                  |  | $      | (6 | ) |     | $ | 274  |                        |  | $ | 235                        |   |  | $                      | 42  |   |                    | $ |   |   |  | $ | 545  |  
|Net cash used in investing activities                                |  |        | (9 | ) |     |   | (178 | )                      |  |   | (123                       | ) |  |                        | (84 | ) |                    |   | 4  |   |  |   | (390 | )
|Net cash provided by (used in) financing activities                  |  |        | 15 |   |     |   | (138 | )                      |  |   | (1                         | ) |  |                        | 42  |   |                    |   | (4 | ) |  |   | (86  | )
|Effect of foreign exchange rate changes on cash and cash equivalents |  |        |   |   |     |   |     |                        |  |   |                           |   |  |                        | 1   |   |                    |   |   |   |  |   | 1    |  
|                                                                     |  |        |    |   |     |   |      |                        |  |   |                            |   |  |                        |     |   |                    |   |    |   |  |   |      |  
|Increase (decrease) in cash and cash equivalents                     |  |        |   |   |     |   | (42  | )                      |  |   | 111                        |   |  |                        | 1   |   |                    |   |   |   |  |   | 70   |  
|Cash and cash equivalents at beginning of period                     |  |        |   |   |     |   | 42   |                        |  |   | 32                         |   |  |                        | 5   |   |                    |   |   |   |  |   | 79   |  
|                                                                     |  |        |    |   |     |   |      |                        |  |   |                            |   |  |                        |     |   |                    |   |    |   |  |   |      |  
|Cash and cash equivalents at end of period                           |  | $      |   |   |     | $ |     |                        |  | $ | 143                        |   |  | $                      | 6   |   |                    | $ |   |   |  | $ | 149  |  
|                                                                     |  |        |    |   |     |   |      |                        |  |   |                            |   |  |                        |     |   |                    |   |    |   |  |   |      |  



31



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following managements discussion and analysis gives effect to the restatement discussed in the Explanatory Note to this Report and in note 2 to
our condensed consolidated financial statements included in this Report.

Results of Operations

As discussed in note 7 to our condensed consolidated financial statements included in this Report, our reportable segments are general rentals, traffic
control and trench safety, pump and power. The general rentals segment includes the rental of construction, aerial, industrial and homeowner equipment and related services and activities. The general rentals segments customers include
construction and industrial companies, manufacturers, utilities, municipalities and homeowners. The general rentals segment operates throughout the United States and Canada and has one location in Mexico. The trench safety, pump and power segment
includes the rental of specialty construction products and related services. The trench safety, pump and power segments customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This
segment operates in the United States and has one location in Canada. The traffic control segment includes the rental of equipment used in the management of traffic-related services and activities. The traffic control segments customers
include construction companies involved in infrastructure projects and municipalities. The traffic control segment operates in the United States. The Companys external segment reporting is aligned with how management evaluates and allocates
resources. The Company evaluates segment performance based on segment operating results which exclude goodwill impairment and restructuring and asset impairment charges.



32



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Revenues by segment were as follows:



|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      
|------------------------------------- |  | --------------- | ----- | ----------------------------- | - | --------------- |  | ----- | --- |  | - | -----
|                                      |  | General rentals |       | Trench safety, pump and power |   | Traffic control |  | Total
|Three months ended September 30, 2005 |  |                 |       |                               |   |                 |  |       |     |  |   |      
|Equipment rentals                     |  | $               | 621   |                               | $ | 42              |  | $     | 75  |  | $ | 738  
|Sales of rental equipment             |  |                 | 57    |                               |   | 3               |  |       | 1   |  |   | 61   
|Sales of new equipment                |  |                 | 51    |                               |   | 3               |  |       | 1   |  |   | 55   
|Contractor supplies sales             |  |                 | 80    |                               |   | 3               |  |       | 6   |  |   | 89   
|Service and other                     |  |                 | 36    |                               |   | 1               |  |       |    |  |   | 37   
|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      
|Total revenue                         |  | $               | 845   |                               | $ | 52              |  | $     | 83  |  | $ | 980  
|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      
|                                      |  |                 |       |                              
|Three months ended September 30, 2004 |  |                 |       |                               |   |                 |  |       |     |  |   |      
|Equipment rentals                     |  | $               | 562   |                               | $ | 30              |  | $     | 71  |  | $ | 663  
|Sales of rental equipment             |  |                 | 54    |                               |   | 3               |  |       | 1   |  |   | 58   
|Sales of new equipment                |  |                 | 42    |                               |   | 2               |  |       |    |  |   | 44   
|Contractor supplies sales             |  |                 | 53    |                               |   | 2               |  |       | 6   |  |   | 61   
|Service and other                     |  |                 | 31    |                               |   | 1               |  |       |    |  |   | 32   
|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      
|Total revenue                         |  | $               | 742   |                               | $ | 38              |  | $     | 78  |  | $ | 858  
|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      
|                                      |  |                 |       |                              
|Nine months ended September 30, 2005  |  |                 |       |                               |   |                 |  |       |     |  |   |      
|Equipment rentals                     |  | $               | 1,601 |                               | $ | 100             |  | $     | 178 |  | $ | 1,879
|Sales of rental equipment             |  |                 | 215   |                               |   | 9               |  |       | 4   |  |   | 228  
|Sales of new equipment                |  |                 | 139   |                               |   | 10              |  |       | 2   |  |   | 151  
|Contractor supplies sales             |  |                 | 213   |                               |   | 9               |  |       | 16  |  |   | 238  
|Service and other                     |  |                 | 102   |                               |   | 2               |  |       |    |  |   | 104  
|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      
|Total revenue                         |  | $               | 2,270 |                               | $ | 130             |  | $     | 200 |  | $ | 2,600
|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      
|                                      |  |                 |       |                              
|Nine months ended September 30, 2004  |  |                 |       |                               |   |                 |  |       |     |  |   |      
|Equipment rentals                     |  | $               | 1,452 |                               | $ | 73              |  | $     | 169 |  | $ | 1,694
|Sales of rental equipment             |  |                 | 181   |                               |   | 8               |  |       | 4   |  |   | 193  
|Sales of new equipment                |  |                 | 123   |                               |   | 5               |  |       |    |  |   | 128  
|Contractor supplies sales             |  |                 | 142   |                               |   | 4               |  |       | 17  |  |   | 163  
|Service and other                     |  |                 | 91    |                               |   | 3               |  |       |    |  |   | 94   
|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      
|Total revenue                         |  | $               | 1,989 |                               | $ | 93              |  | $     | 190 |  | $ | 2,272
|                                      |  |                 |       |                               |   |                 |  |       |     |  |   |      

Equipment rentals. Equipment rentals represent our revenues from renting equipment.

Three months ended September 30, 2005 and 2004.2005 equipment rentals of $738 increased $75, or 11 percent, reflecting
a 5.0 percent increase in rental rates and a 13 percent increase in same-store rental revenues, partially offset by declines due to store closures in 2004. The increase also reflects an increase in our dollar equipment utilization rate from 68.4
percent for the three months ended September 30, 2004 to 72.4 percent for the three months ended September 30, 2005. Equipment rentals represented approximately 75 percent of total revenues for the three months ended September 30,
2005. On a segment basis, equipment rentals represented approximately 74 percent, 81 percent and 91 percent of total revenues for general rentals, trench safety, pump and power and traffic control, respectively. General rentals equipment rentals
increased $59, or 10 percent, reflecting increased rental rates and a 12 percent increase in same-store rental revenues. Trench safety, pump and power equipment rentals increased $12, or 39 percent, reflecting a 32 percent increase in same-store
rental revenues.

Nine months ended September 30, 2005 and 2004.2005 equipment rentals of $1,879 increased
$185, or 11 percent, reflecting a 6.3 percent increase in rental rates and a 12 percent increase in same-store rental revenues,



33



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partially offset by declines due to store closures in 2004. The increase also reflects an increase in our dollar equipment utilization rate which
increased from 59.3 percent for the nine months ended September 30, 2004 to 63.5 percent for the nine months ended September 30, 2005. Equipment rentals represented approximately 72 percent of total revenues for the nine months ended
September 30, 2005. On a segment basis, equipment rentals represented approximately 71 percent, 77 percent and 89 percent of total revenues for general rentals, trench safety, pump and power and traffic control, respectively. General rentals
equipment rentals increased $151, or 10 percent, reflecting increased rental rates and an 11 percent increase in same-store rental revenues. Trench safety, pump and power equipment rentals increased $27, or 35 percent, reflecting a 28 percent
increase in same-store rental revenues. Traffic control equipment rentals increased $9, or 5 percent, reflecting a 9 percent increase in same-store rental revenues.

Sales of rental equipment. Sales of rental equipment represent revenues associated with selling used equipment. For the three months ended
September 30, 2005 and 2004, sales of rental equipment represented approximately 10 percent of our total revenues and our general rentals segment accounted for approximately 95 percent of these sales. Sales of rental equipment for traffic
control and trench safety, pump and power were insignificant. For the three months ended September 30, 2005, sales of rental equipment increased 5 percent as compared to the same period in 2004, primarily reflecting an increase in the volume of
equipment sold. For the nine months ended September 30, 2005, sales of rental equipment increased 18 percent as compared to the comparable period in 2004. The increase primarily reflects an increase in the volume of equipment sold.

Sales of new equipment. For the three and nine months ended September 30, 2005 and 2004, sales of new equipment represented
approximately 6 percent of our total revenues. Our general rentals segment accounted for approximately 95 percent of these sales. Sales of new equipment for traffic control and trench safety, pump and power were insignificant. For the three and nine
months ended September 30, 2005, sales of new equipment increased by 25 and 18 percent as compared to the same periods in 2004, respectively. The increases reflect increases in the volume of equipment sold.

Sales of contractor supplies. Sales of contractor supplies represent our revenues associated with selling a variety of contractor supplies
including construction consumables, tools, small equipment and safety supplies. Consistent with sales of rental and used equipment, general rentals accounts for substantially all of our contractor supplies sales. General rentals accounted for
approximately 90 percent of total sales of contractor supplies. For the three and nine months ended September 30, 2005, sales of contractor supplies increased 46 percent as compared to the comparable periods in 2004. The increases reflect an
increase in the volume of supplies sold.

Service and other. Service and other represent our revenues earned from providing
services (including parts sales). Consistent with sales of rental and new equipment as well as sales of contractor supplies, general rentals accounts for substantially all of our service and other revenue. For the three months ended
September 30, 2005, service and other revenue increased 16 percent as compared to the same period in 2004. For the nine months ended September 30, 2005 service and other revenue increased 12 percent as compared to the same period in 2004.
The increases primarily reflect increased parts sales.



34



---

Segment Operating Profit

Segment operating profit and operating margin were as follows:



|                                      |  |                |     |   |                              |   |    |                 |  |   |       |   |  |   |     |  
|------------------------------------- |  | -------------- | --- | - | ---------------------------- | - | -- | --------------- |  | - | ----- | - |  | - | --- | -
|                                      |  | Generalrentals |     |   | Trench safety,pump and power |   |    | Traffic control |  |   | Total |  
|Three months ended September 30, 2005 |  |                |     |   |                              |   |    |                 |  |   |       |   |  |   |     |  
|Operating Profit (Loss)               |  | $              | 154 |   |                              | $ | 18 |                 |  | $ | (1    | ) |  | $ | 171 |  
|Operating Margin                      |  |                | 18  | % |                              |   | 35 | %               |  |   | -1    | % |  |   | 17  | %
|Three months ended September 30, 2004 |  |                |     |   |                              |   |    |                 |  |   |       |   |  |   |     |  
|Operating Profit (Loss)               |  | $              | 154 |   |                              | $ | 12 |                 |  | $ | (4    | ) |  | $ | 162 |  
|Operating Margin                      |  |                | 21  | % |                              |   | 32 | %               |  |   | -5    | % |  |   | 19  | %
|Nine months ended September 30, 2005  |  |                |     |   |                              |   |    |                 |  |   |       |   |  |   |     |  
|Operating Profit (Loss)               |  | $              | 345 |   |                              | $ | 35 |                 |  | $ | (14   | ) |  | $ | 366 |  
|Operating Margin                      |  |                | 15  | % |                              |   | 27 | %               |  |   | -7    | % |  |   | 14  | %
|Nine months ended September 30, 2004  |  |                |     |   |                              |   |    |                 |  |   |       |   |  |   |     |  
|Operating Profit (Loss)               |  | $              | 310 |   |                              | $ | 26 |                 |  | $ | (29   | ) |  | $ | 307 |  
|Operating Margin                      |  |                | 16  | % |                              |   | 28 | %               |  |   | -15   | % |  |   | 14  | %

The following is a reconciliation of segment profit to total company operating income:



|                           |  |                    |     |                   |   |    
|-------------------------- |  | ------------------ | --- | ----------------- | - | ---
|                           |  | Three Months Ended
|                           |  | September 30,2005  |     | September 30,2004
|Total segment profit       |  | $                  | 171 |                   | $ | 162
|Unallocated item:          |  |                    |     |                   |   |    
|Goodwill impairment charge |  |                    |    |                   |   | 139
|                           |  |                    |     |                   |   |    
|Operating income           |  | $                  | 171 |                   | $ | 23 
|                           | 
|                           |  | Nine Months Ended 
|                           |  | September 30,2005  |     | September 30,2004
|Total segment profit       |  | $                  | 366 |                   | $ | 307
|Unallocated item:          |  |                    |     |                   |   |    
|Goodwill impairment charge |  |                    |    |                   |   | 139
|                           |  |                    |     |                   |   |    
|Operating income           |  | $                  | 366 |                   | $ | 168

General rentals.For the three months ended September 30, 2005,
operating margin declined 3 percentage points as compared to the same period in 2004 primarily due to higher selling, general and administrative costs resulting from normal inflationary increases, partially offset by the benefit resulting from
increased rental rates.

For the nine months ended September 30, 2005, operating margin was essentially flat as compared to same
period in 2004. Gains from higher rental rates were offset by higher costs for labor, benefits and delivery resulting from normal inflationary increases as well as costs associated with the opening of new contractor supply distribution centers.
Additionally, there were increased professional costs related to regulatory issues and related matters.

Trench safety, pump and
power. Trench safety, pump and power operating profit increased 3 percentage points for the three months ended September 30, 2005 as compared to the same period in 2004, reflecting increased revenues of 37 percent.

For the nine months ended September 30, 2005, operating margin was essentially flat as compared to the same period in 2004. Operating
profit growth reflects 35 percent revenue growth for the period, driven by a 28 percent increase in same store rental revenues.



35



---

Traffic control.Traffic control operating loss decreased by $3 for the three months
ended September 30, 2005 as compared to the same period in 2004 primarily due to the closure and/or divestiture of unprofitable branches as well as reduced operating costs due to cost reductions and improved efficiencies.

Traffic control operating loss decreased by $15 for the nine months ended September 30, 2005 as compared to the same period in 2004 due to increased
revenues of approximately 5 percent and reduced costs as a result of closure / divestiture of unprofitable branches as well as reduced operating costs due to cost reductions and improved efficiencies.

Gross Margin. Gross margins by revenue classification were as follows:



|                          |  |                    |   |  |                    |  
|------------------------- |  | ------------------ | - |  | ------------------ | -
|                          |  | Three Months Ended |  
|                          |  | September 30, 2005 |   |  | September 30, 2004 |  
|Total gross margin        |  | 35.9               | % |  | 35.1               | %
|Equipment rentals         |  | 38.8               | % |  | 37.1               | %
|Sales of rental equipment |  | 29.4               | % |  | 28.7               | %
|Sales of new equipment    |  | 18.5               | % |  | 15.5               | %
|Contractor supplies sales |  | 22.4               | % |  | 26.6               | %
|Service and other         |  | 48.8               | % |  | 47.8               | %
|                          | 
|                          |  | Nine Months Ended  |  
|                          |  | September 30, 2005 |   |  | September 30, 2004 |  
|Total gross margin        |  | 32.2               | % |  | 31.2               | %
|Equipment rentals         |  | 34.0               | % |  | 32.2               | %
|Sales of rental equipment |  | 27.4               | % |  | 28.9               | %
|Sales of new equipment    |  | 18.2               | % |  | 15.0               | %
|Contractor supplies sales |  | 23.9               | % |  | 26.7               | %
|Service and other         |  | 49.5               | % |  | 48.7               | %

For the three months ended September 30, 2005, total gross profit margin improved by 0.8
percentage points as compared to the same period in 2004. Equipment rentals gross margin improved 1.7 percentage points primarily due to increased rental rates of 5.0 percent, revenue growth in the trench safety, pump and power segment of 37 percent
and cost reductions in traffic control. The 4.2 percentage point reduction in gross margins on contractor supplies sales resulted primarily from increased costs related to the opening of new distribution centers. The fluctuations in margins on sales
of rental equipment and new equipment primarily reflect changes in the mix of equipment sold, partially offset by improved pricing.

For
the nine months ended September 30, 2005, total gross profit margin improved by 1.0 percentage point as compared to the same period in 2004. Equipment rentals gross margin improved 1.8 percentage points primarily due to increased rental rates
of 6.3 percent, revenue growth in the trench safety, pump and power segment of 37 percent and cost reductions in traffic control. The 2.8 percentage point reduction in gross margin on contractor supplies sales resulted primarily from increased costs
related to the opening of new distribution centers. The fluctuations in margins on sales of rental equipment and new equipment primarily reflect changes in the mix of equipment sold, partially offset by improved pricing.

Selling, general and administrative expenses (SG&A). SG&A expense information for the three months and nine months ended
September 30, 2005 and 2004 was as follows:



|                                |  |                    |      |   |                    |   |      |  
|------------------------------- |  | ------------------ | ---- | - | ------------------ | - | ---- | -
|                                |  | Three Months Ended |     
|                                |  | September 30, 2005 |      |   | September 30, 2004 |  
|Total SG&A expenses             |  | $                  | 164  |   |                    | $ | 123  |  
|SG&A as a percentage of revenue |  |                    | 16.7 | % |                    |   | 14.3 | %



36



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|                                |  |                    |      |   |                    |   |      |  
|------------------------------- |  | ------------------ | ---- | - | ------------------ | - | ---- | -
|                                |  | Nine Months Ended  |     
|                                |  | September 30, 2005 |      |   | September 30, 2004 |  
|Total SG&A expenses             |  | $                  | 422  |   |                    | $ | 353  |  
|SG&A as a percentage of revenue |  |                    | 16.2 | % |                    |   | 15.5 | %

SG&A expense primarily includes sales force compensation, bad debt expense, advertising and
marketing expenses, third party professional fees, management salaries and clerical and administrative overhead.

For the three months
ended September 30, 2005, SG&A expense increased $41 as compared to the same period in 2004. In addition to normal inflationary increases and higher selling and administrative costs related to growth in the business, the year-over-year
growth in SG&A expense reflects increased professional costs related to regulatory issues and related matters of $12.

For the nine
months ended September 30, 2005, SG&A expense increased $69 as compared to the same period in 2004. In addition to normal inflationary increases as well as higher selling and administrative costs related to growth in the business, the
year-over-year growth in SG&A expense reflects increased professional costs related to regulatory issues and related matters of $20 for the nine months ended September 30, 2005.

Non-rental depreciation and amortizationfor the three months and nine months ended September 30, 2005 and 2004 was as follows:



|                                                                  |  |                    |    |   |                    |   |    |  
|----------------------------------------------------------------- |  | ------------------ | -- | - | ------------------ | - | -- | -
|                                                                  |  | Three Months Ended |   
|                                                                  |  | September 30, 2005 |    |   | September 30, 2004 |  
|Non-rental depreciation and amortization                          |  | $                  | 17 |   |                    | $ | 16 |  
|Non-rental depreciation and amortization as a percent of revenues |  |                    | 2  | % |                    |   | 2  | %
|                                                                  | 
|                                                                  |  | Nine Months Ended  |   
|                                                                  |  | September 30, 2005 |    |   | September 30, 2004 |  
|Non-rental depreciation and amortization                          |  | $                  | 49 |   |                    | $ | 49 |  
|Non-rental depreciation and amortization as a percent of revenues |  |                    | 2  | % |                    |   | 2  | %

Non-rental depreciation and amortization includes (i) depreciation expense associated with
equipment that is not offered for rent (such as vehicles, computers and office equipment) and amortization expense associated with leasehold improvements, (ii) the amortization of deferred financing costs and (iii) the amortization of
other intangible assets. Our other intangible assets primarily consist of customer relationships and non-compete agreements.

Interest expensefor the three months and nine months ended September 30, 2005 and 2004 was as follows:



|                 |  |                    |     |                    |   |    
|---------------- |  | ------------------ | --- | ------------------ | - | ---
|                 |  | Three Months Ended
|                 |  | September 30, 2005 |     | September 30, 2004
|Interest expense |  | $                  | 48  |                    | $ | 35 
|                 | 
|                 |  | Nine Months Ended 
|                 |  | September 30, 2005 |     | September 30, 2004
|Interest expense |  | $                  | 135 |                    | $ | 115



37



---

Interest expense for the three months ended September 30, 2005 increased $13 as compared to the same
period in 2004, reflecting the increase in interest rates applicable to our floating rate debt. Interest expense for the nine months ended September 30, 2005 increased $20 as compared to the same period in 2004, reflecting the increase in
interest rates applicable to our floating rate debt. As of September 30, 2005, approximately 42 percent of our debt was floating rate debt.

Other (income) expenses, net for the three and nine months ended September 30, 2005 and 2004 was as follows:



|                            |  |                    |    |   |                    |   |    
|--------------------------- |  | ------------------ | -- | - | ------------------ | - | ---
|                            |  | Three Months Ended
|                            |  | September 30, 2005 |    |   | September 30, 2004
|Other (income) expense, net |  | $                  | (7 | ) |                    | $ | 1  
|                            | 
|                            |  | Nine Months Ended 
|                            |  | September 30, 2005 |    |   | September 30, 2004
|Other (income) expense, net |  | $                  | (8 | ) |                    | $ | 174

Other expense of $174 for the nine months ended September 30, 2004 relates primarily to
approximately $171 of charges associated with the refinancing of approximately $2.1 billion of debt. This refinancing is discussed further below; see Liquidity and Capital Resources.

Income taxes. The following table summarizes our consolidated provision (benefit) for income taxes and the related effective tax rate for
the three and nine months ended September 30, 2005 and 2004:



|                                     |  |                    |     |   |                    |   |      |   
|------------------------------------ |  | ------------------ | --- | - | ------------------ | - | ---- | --
|                                     |  | Three Months Ended |    
|                                     |  | September 30, 2005 |     |   | September 30, 2004 |  
|Pre-tax income (loss)                |  | $                  | 126 |   |                    | $ | (17  | ) 
|Provision (benefit) for income taxes |  | $                  | 50  |   |                    | $ | 29   |   
|Effective tax rate                   |  |                    | 40  | % |                    |   | (2   | )%
|                                     | 
|                                     |  | Nine Months Ended  |    
|                                     |  | September 30,2005  |     |   | September 30,2004  |  
|Pre-tax income (loss)                |  | $                  | 227 |   |                    | $ | (133 | ) 
|Provision (benefit) for income taxes |  | $                  | 89  |   |                    | $ | (19  | ) 
|Effective tax rate                   |  |                    | 39  | % |                    |   | 14   | % 

The difference between the U.S. federal statutory income tax rate of 35 percent and the
consolidated effective tax rates for the three and nine months ended September 30, 2005 and 2004 primarily relate to goodwill impairment charges, states taxes, as well as certain nondeductible charges.

New Accounting Pronouncements. See note 1 to our consolidated financial statements for a full description of recent accounting pronouncements
including the respective dates of adoption and effects on results of operations and financial condition.

Liquidity and Capital
Resources

Liquidity. We manage our liquidity using internal cash management practices, which are subject to (1) the
statutes, regulations and practices of each of the local jurisdictions in which we operate, (2) the legal requirements of the agreements to which we are a party and (3) the policies and cooperation of the financial institutions we utilize
to maintain and provide cash management services.



38



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Our principal existing sources of cash are cash generated from operations and from the sale of rental
equipment and borrowings available under our revolving credit facility and receivables securitization facility. As of September 30, 2005, we had (i) $448 of borrowing capacity available under the revolving credit facility portion of our
$1.55 billion senior secured credit facility and (ii) $200 of borrowing capacity available under our receivables securitization facility (reflecting the size of the eligible collateral pool as of such date and no loans outstanding. We believe
that our existing sources of cash will be sufficient to support our existing operations over the next twelve months.

We expect that our
principal needs for cash relating to our existing operations over the next twelve months will be to fund (i) operating activities and working capital, (ii) the purchase of rental equipment and inventory items offered for sale,
(iii) payments due under operating leases, (iv) debt service and (v) acquisitions. We plan to fund such cash requirements from our existing sources of cash. In addition, we may seek additional financing through the securitization of
some of our equipment or real estate or through the use of additional operating leases. For information on the scheduled principal and interest payments coming due on our outstanding debt and on the payments coming due under our existing operating
leases, see Certain Information Concerning Contractual Obligations.

While emphasizing internal growth, we intend to
continue to expand through a disciplined acquisition program. We will consider potential transactions of varying sizes and may, on a selective basis, pursue acquisition or consolidation opportunities involving other public companies or large
privately-held companies. We expect to pay for future acquisitions using cash, capital stock, notes and/or assumption of indebtedness. To the extent that our existing sources of cash described above are not sufficient to fund such future
acquisitions, we will require additional debt or equity financing and, consequently, our indebtedness may increase or the ownership of existing stockholders may be diluted as we implement our growth strategy.

Transactions Completed in 2004

We refinanced approximately $2.1 billion of debt in 2004 (the Refinancing). The Refinancing extended debt maturities, reduced interest expense going forward and provided the Company with greater financial flexibility. As part of
the Refinancing, the Company:



| |  |  | amended and restated URIs senior secured credit facility (New Credit Facility) to replace URIs previous $1.3 billion senior secured credit facility;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | sold $1 billion of URIs 61/2percent
Senior Notes Due 2012;
| | - |  | -----------------------------------------------------------



| |  |  | sold $375 of URIs 7 percent Senior Subordinated Notes Due 2014;
| | - |  | ----------------------------------------------------------------



| |  |  | repaid $639 of term loans and $52 of borrowings that were outstanding under the old credit facility;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | repurchased $845 principal amount of URIs 103/4percent Senior Notes Due 2008 (the 103/4percent Notes), pursuant to a tender
offer;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | redeemed $300 principal amount of URIs outstanding 91/4percent Senior Subordinated Notes Due 2009 (the 91/4percent Notes); and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | redeemed $250 principal amount of URIs outstanding 9 percent Senior Subordinated Notes Due 2009 (the 9 percent Notes).
| | - |  | -------------------------------------------------------------------------------------------------------------------------

The Refinancing was completed during the first quarter of 2004, except that (i) the redemption of the 9 percent Notes was completed on April 1,
2004 and a portion of the term loan that is part of the New Credit Facility was drawn on such date and (ii) an additional $4 of the 103/4percent Notes were repurchased on April 7, 2004.



39



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In connection with the Refinancing, the Company incurred aggregate charges of approximately $171. These
charges were attributable primarily to (i) the redemption and tender premiums for notes redeemed or repurchased as part of the Refinancing and (ii) the write-off of previously capitalized costs relating to the debt refinanced.

7 percent Senior Subordinated Notes. In January 2004, as part of the Refinancing described above, URI issued $375 aggregate principal
amount of 7 percent Senior Subordinated Notes (the 7 percent Notes) which are due February 15, 2014. The net proceeds from the sale of the 7 percent Notes were approximately $369, after deducting offering expenses. The 7 percent
Notes are unsecured and are guaranteed by Holdings and, subject to limited exceptions, URIs domestic subsidiaries. The 7 percent Notes mature on February 15, 2014 and may be redeemed by URI on or after February 15, 2009, at specified
redemption prices that range from 103.5 percent in 2009 to 100.0 percent in 2012 and thereafter. In addition, on or prior to February 15, 2007, URI may, at its option, use the proceeds of public equity offerings to redeem up to an aggregate of
35 percent of the outstanding 7 percent Notes at a redemption price of 107.0 percent. The indenture governing the 7 percent Notes contains certain restrictive covenants, including limitations on (i) additional indebtedness, (ii) restricted
payments, (iii) liens, (iv) dividends and other payments, (v) preferred stock of certain subsidiaries, (vi) transactions with affiliates, (vii) the disposition of proceeds of asset sales and (viii) the Companys
ability to consolidate, merge or sell all or substantially all of its assets.

61/2percent Senior Notes.In February 2004, as part of the Refinancing described
above, URI issued $1 billion aggregate principal amount of 61/2percent Senior Notes (the 61/2percent Notes) which are due February 15, 2012. The net proceeds from the sale of the 61/2percent Notes were approximately $985, after deducting offering expenses. The 61/2percent Notes are unsecured and are guaranteed by Holdings and, subject to limited exceptions, URIs domestic
subsidiaries. The 61/2percent Notes mature on February 15, 2012 and may be redeemed by URI on or after
February 15, 2008, at specified redemption prices that range from 103.25 percent in 2008 to 100.0 percent in 2010 and thereafter. In addition, on or prior to February 15, 2007, URI may, at its option, use the proceeds of public equity
offerings to redeem up to an aggregate of 35 percent of the outstanding 61/2percent Notes at a redemption price
of 106.5 percent. The indenture governing the 61/2percent Notes contains certain restrictive covenants,
including limitations on (i) additional indebtedness, (ii) restricted payments, (iii) liens, (iv) dividends and other payments, (v) preferred stock of certain subsidiaries, (vi) transactions with affiliates,
(vii) the disposition of proceeds of asset sales, (viii) the Companys ability to consolidate, merge or sell all or substantially all of its assets and (ix) sale-leaseback transactions.

New Credit Facility. In the first quarter of 2004, as part of the
Refinancing described above, the Company amended and restated URIs senior secured credit facility. The amended and restated facility includes (i) a $650 revolving credit facility, (ii) a $150 institutional letter of credit facility
and (iii) a $750 term loan. The revolving credit facility, institutional letter of credit facility and term loan are governed by the same credit agreement. URIs obligations under the credit facility are guaranteed by Holdings and, subject
to limited exceptions, URIs domestic subsidiaries and are secured by liens on substantially all of the assets of URI, Holdings and URIs domestic subsidiaries. Set forth below is certain additional information concerning the amended and
restated facility.

Revolving Credit Facility. The revolving credit facility enables URI to borrow up to $650 on
a revolving basis and enables certain of the Companys Canadian subsidiaries to borrow up to $150 (provided that the aggregate borrowings of URI and the Canadian subsidiaries may not exceed $650). A portion of the revolving credit facility, up
to $250, is available for issuance of letters of credit. The revolving credit facility is scheduled to mature and terminate in February 2009. As of September 30, 2005 and December 31, 2004, the outstanding borrowings under this facility
were approximately $137 and $133, and utilized letters of credit were $65 and $50, respectively. All outstanding borrowings under the revolving credit facility at September 30, 2005 were Canadian subsidiary borrowings.

U.S. dollar borrowings under the revolving credit facility accrue interest, at the option of URIs Canadian subsidiaries, at either
(a) the ABR rate (which is equal to the greater of (i) the Federal Funds Rate plus 0.5 percent and (ii) JPMorgan Chase Banks prime rate) plus a margin of 1.25 percent, or (b) an adjusted LIBOR rate plus a maximum margin of
2.25 percent.



40



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Canadian dollar borrowings under the revolving credit facility accrue interest, at the
borrowers option, at either (a) the Canadian prime rate (which is equal to the greater of (i) the CDOR rate plus 1 percent and (ii) JPMorgan Chase Bank, Toronto Branchs prime rate) plus a margin of 1.25 percent, or
(b) the B/A rate (which is equal to JPMorgan Chase Bank, Toronto Branchs B/A rate) plus a maximum margin of 2.25 percent. The rate applicable to Canadian borrowings outstanding under the revolving credit facility was 4.8 at
September 30, 2005 and December 31, 2004, respectively.

URI is also required to pay the lenders a commitment fee
equal to 0.5 percent per annum, payable quarterly, in respect of undrawn commitments under the revolving credit facility.

Institutional Letter of Credit Facility (ILCF). The ILCF provides for up to $150 in letters of credit. The ILCF is in addition to the letter of credit capacity under the revolving credit facility. The total combined
letter of credit capacity under the revolving credit facility and the ILCF is $400. Subject to certain conditions, all or part of the ILCF may be converted into term loans. The ILCF is scheduled to terminate in February 2011. As of both
September 30, 2005 and December 31, 2004, the outstanding letters of credit under the ILCF were approximately $150.

URI is required to pay a fee which accrues at the rate of 0.1 percent per annum on the amount of the ILCF. In addition, URI is required to pay participation and other fees in respect of letters of credit. For letters of credit obtained
under both the ILCF and the revolving credit facility, these fees accrue at a maximum rate of 2.25 percent per annum.

Term Loan. The term loan was obtained in two draws. An initial draw of $550 was made upon the closing of the credit facility in February 2004 and an additional draw of $200 was made on April 1, 2004. Amounts repaid in
respect of the term loan may not be reborrowed.

The term loan must be repaid in installments as follows: (i) during
the period from and including June 30, 2004 to and including March 31, 2010, URI must repay on each March 31, June 30, September 30 and December 31 of each year an amount equal to one-fourth of 1 percent of
the original aggregate principal amount of the term loan and (ii) URI must repay on each of June 30, 2010, September 30, 2010, December 31, 2010, and at maturity on February 14, 2011 an amount equal to 23.5 percent
of the original aggregate principal amount of the term loan. As of September 30, 2005 and December 31, 2004, amounts outstanding under the term loan were approximately $739 and $744, respectively.

Borrowings under the term loan accrue interest, at URIs option, at either (a) the ABR rate plus a maximum margin of 1.25
percent, or (b) an adjusted LIBOR rate plus a maximum margin of 2.25 percent. The rate was 6.1 and 4.67 at September 30, 2005 and December 31, 2004, respectively.

Covenants. Under the agreement governing the New Credit Facility, the Company is required to, among other things, satisfy
certain financial tests relating to: (a) interest coverage ratio, (b) the ratio of funded debt to cash flow, (c) the ratio of senior secured debt to tangible assets and (d) the ratio of senior secured debt to cash flow. If the
Company is unable to satisfy any of these covenants, the lenders could elect to terminate the credit facility and require the Company to repay the outstanding borrowings under the credit facility. The Company is also subject to various other
covenants under the agreements governing its credit facility and other indebtedness. These covenants require the Company to timely file audited annual and quarterly financial statements with the SEC and limit or prohibit, among other things, the
Companys ability to incur indebtedness, make prepayments of certain indebtedness, pay dividends, make investments, create liens, make acquisitions, sell assets and engage in mergers and acquisitions. If at any time an event of default under
the New Credit Facility exists, the interest rate applicable to each revolving and term loan will be based on the highest margins above plus 2 percent.

Transactions Completed in 2005

Matters Relating to Consent Solicitation:In 2005, the
Company successfully solicited consents for amendments to the indentures governing the following securities:



| |  |  | 61/2percent Senior Notes due 2012
| | - |  | ---------------------------------



41



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| |  |  | 73/4percent Senior Subordinated Notes due
2013
| | - |  | ----------------------------------------------



| |  |  | 7 percent Senior Subordinated Notes due 2014
| | - |  | --------------------------------------------



| |  |  | 17/8percent Convertible Senior Subordinated
Notes due 2023 (Convertible Notes)
| | - |  | --------------------------------------------------------------------------------



| |  |  | 61/2percent Convertible Quarterly Income
Preferred Securities due 2028 (QUIPs)
| | - |  | --------------------------------------------------------------------------------

The indentures for these securities require annual and other
periodic reports to be filed with the SEC. On September 19, 2005, the Company obtained consents from holders of these securities and entered into supplemental indentures amending the applicable covenants to allow the Company until
March 31, 2006 to comply with the requirement to make timely SEC filings (and waiving related defaults that occurred prior to the effectiveness of the amendments). In addition, the supplemental indenture relating to the Convertible Notes
changed the conversion rate from 38.9520 to 44.9438 shares of United Rentals common stock for each $1,000 (one thousand dollars) principal amount of Convertible Notes. Pursuant to the terms of the consent solicitation, the Company paid
aggregate consent fees of approximately $34 to holders of its nonconvertible notes and QUIPs. These costs are being amortized through the maturity dates of the nonconvertible notes and QUIPs.

In March 2005, the Company successfully obtained its lenders consent to an amendment to the New Credit Facility that waived the covenant violation
from the delay in making certain SEC filings and extended the Companys deadline to make SEC filings until June 29, 2005 for our 2004 Annual Report on Form 10-K and until August 15, 2005 for our first quarter 2005 Form 10-Q. In June
2005, the Company successfully obtained its lenders consent to an amendment to the New Credit Facility that waived the covenant violation from the delay in making certain SEC filings and extended the Companys deadline to make SEC filings
until December 31, 2005 for our 2004 Annual Report on Form 10-K and for our 2005 Form 10-Qs. Both of these consents were obtained without the payment of any consent fees. In November 2005, the Company successfully obtained its lenders
consent to an amendment to the New Credit Facility that waived the covenant violation from the delay in making certain SEC filings and extended the Companys deadline to make SEC filings until March 31, 2006. Consent fees in the amount of
$1 were paid to the lenders under the New Credit Facility. On March 31, 2006, the Company obtained its lenders consent to an additional amendment to the New Credit Facility that (1) waived the covenant violation from the delay in
making certain SEC filings, (2) extended the Companys deadline to make its SEC filings until April 28, 2006 and (3) limited the Companys ability to borrow under the New Credit Facility to amounts necessary to find
obligations to be paid in the ordinary course during the one-week period following the applicable borrowing until these SEC filings are made.

Accounts Receivable Securitization:On May 31, 2005, we obtained a new $200 accounts receivable securitization facility and terminated our then existing $250 accounts receivable securitization facility. The new facility provides
for generally lower borrowing costs than the old facility. In addition, the new facility provides for a substantially longer term, with the scheduled termination date being May 29, 2009, compared with September 30, 2006 under the old
facility. There were no outstanding borrowings under the old facility at the time it was terminated. In connection with terminating the old facility, we incurred a charge of approximately $1, representing the write-off of previously capitalized
costs relating to the old facility.

The new facility enables one of our subsidiaries to borrow up to $200 against a collateral pool of
eligible accounts receivable. Consistent with the old facility, the borrowings under the new facility will be reflected as debt on our consolidated balance sheets and the receivables in the collateral pool will be reflected as assets on our
consolidated balance sheets. However, such assets are only available to satisfy the obligations of the borrower subsidiary, and once the obligations of the borrower subsidiary are satisfied, the remaining assets will be available to be dividended to
the parent.

Key terms of this facility include:



| |  |  | borrowings may be made only to the extent that the face amount of the receivables in the collateral pool exceeds the outstanding loans by a specified amount;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



42



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| |  |  | the facility is structured so that the receivables in the collateral pool are the lenders only source of repayment;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | prior to expiration or early termination of the facility, amounts collected on the receivables may, subject to certain conditions, be retained by the borrower, provided that the
remaining receivables in the collateral pool are sufficient to secure the then outstanding borrowings;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | after expiration or early termination of the facility, no new amounts will be advanced under the facility and collections on the receivables securing the facility will be used to
repay the outstanding borrowings; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the facility contains standard termination events including, without limitation, a termination event if (i) the long-term senior secured rating of URI falls below either B+
from Standard & Poors Rating Services or B2 from Moodys Investors Service or (ii) our New Credit Facility is terminated. Our current ratings are discussed below.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Outstanding borrowings under the facility generally accrue interest at the commercial paper rate plus a specified spread not to exceed 1.0 percent. There
were no outstanding borrowings under this facility at September 30, 2005 and December 31, 2004. We are also required to pay a commitment fee based on the long-term senior secured ratings of URI. This commitment fee was .55 percent at
September 30, 2005.

Redemption of remaining 103/4Senior Notes: In April 2005, the Company redeemed $12 principal amount of URIs 103/4Senior Notes due 2008 (the 103/4Notes). The principal repurchased represented the amounts of the 103/4Notes still outstanding after the 2004 tender offer. In connection with this redemption, the Company incurred charges of approximately $1. These charges were attributed primarily to (i) the
redemption for notes redeemed and (ii) the write-off of previously capitalized costs.

Loan
Covenants and Compliance

As of September 30, 2005, we were in compliance with the covenants of the 7 percent Notes and the
61/2percent Notes, as amended, as discussed above, as well as the covenants of our 73/4percent Senior Subordinated Notes due 2013, Convertible Notes, the QUIPs and the New Credit Facility. As described
above, on March 31, 2006 the Company obtained its lenders consent to an additional amendment to the New Credit Facility that extended the Companys deadline to make its SEC filings until April 28, 2006.

As of March 31, 2006, although we filed our annual reports on Form 10-K for the years ended December 31, 2005 and 2004, we had not yet filed
our quarterly reports on Form 10-Q for the periods ended in 2005. Therefore, we were in violation of the amendments to our indentures due to not filing our quarterly reports. We are filing each of these quarterly reports on Form 10-Q on the date
hereof. The Company is currently in compliance with the New Credit Facility, as amended, as of March 31, 2006.

Sources and Uses
of Cash. During the nine months ended September 30, 2005, we (i) generated cash from operations of $424 and (ii) generated cash from the sale of rental equipment of $228. We used cash during this period principally to (i)
purchase rental equipment of $680, (ii) purchase other property and equipment of $56 and (iii) utilize cash for debt repayments and financing costs of $66.

During the nine months ended September 30, 2004, we (i) generated cash from operations of $545, (ii) generated cash from the sale of rental equipment of $192 and (iii) utilized cash for borrowings,
net of debt repayments and financing costs, of $72. We used cash during this period principally to (i) purchase rental equipment of $479, (ii) purchase other property and equipment of $42 and (iii) purchase other companies, net of
cash acquired, of $61.



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Our credit ratings as of April 12, 2006 were as follows:



|        |  |                  |  |            
|------- |  | ---------------- |  | -----------
|        |  | Corporate Rating |  | Outlook (1)
|Moodys |  | B2               |  | Developing 
|S&P     |  | BB-              |  | Negative   
|Fitch   |  | BB               |  | Negative   

---

|(1) | On April 3, 2006, Moodys changed its outlook to Developing from Negative.
|--- | --------------------------------------------------------------------------

Both our ability to obtain financing and the related cost of borrowing are affected by our credit ratings, which are periodically reviewed by these rating agencies. Our current credit ratings are below investment
grade and we expect our access to the public debt markets to be limited to the non-investment grade segment until our ratings reflect an investment grade rating.

Certain Information Concerning Off-Balance Sheet Arrangements

We lease real estate, rental
equipment and non-rental equipment under operating leases as a `regular business activity. As part of some of our equipment operating leases, we guarantee that the value of the equipment at the end of the term will not be less than a specified
projected residual value. If the actual residual value for all equipment subject to such guarantees were to be zero, then our maximum potential liability under these guarantees would be approximately $26. Under current circumstances we do not
anticipate paying significant amounts under these guarantees; however, we cannot be certain that changes in market conditions or other factors will not cause the actual residual values to be lower than those currently anticipated. In accordance with
FIN 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, this potential liability was not reflected on our balance sheet as of September 30, 2005 and
December 31, 2004 or any prior date because the leases associated with such guarantees were entered into prior to January 1, 2003.

Certain Information Concerning Trust Preferred Securities

In August 1998, a subsidiary trust of Holdings sold $300
of QUIPs. The trust used the proceeds from the sale of these securities to purchase 61/2percent subordinated
convertible debentures due 2028 which resulted in Holdings receiving all of the net proceeds of the sale. The subsidiary trust that issued the trust preferred securities was consolidated with Holdings until December 31, 2003, when it was
deconsolidated.

Relationship Between Holdings and URI

Holdings is principally a holding company and primarily conducts its operations through its wholly owned subsidiary URI and subsidiaries of URI. Holdings
provides certain services to URI in connection with its operations. These services principally include: (i) senior management services, (ii) finance and tax related services and support, (iii) information technology systems and
support, (iv) acquisition related services, (v) legal services, and (vi) human resource support. In addition, Holdings leases certain equipment and real property that are made available for use by URI and its subsidiaries. URI has
made, and expects to continue to make, certain payments to Holdings in respect of the services provided by Holdings to URI. The expenses relating to URIs payments to Holdings are reflected on URIs financial statements as selling, general
and administrative expenses. In addition, although not legally obligated to do so, URI has in the past made, and expects that it will in the future make, distributions to Holdings to, among other things, enable Holdings to pay interest on the
convertible debentures that were issued to a subsidiary trust of Holdings as described above.



|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Our exposure to market risk primarily consists of (1) interest rate risk associated with our variable rate debt and (2) foreign currency exchange rate risk primarily associated with our Canadian operations.



44



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Interest Rate Risk. We periodically utilize interest rate swap agreements and interest rate
cap agreements to manage our interest costs and exposure to changes in interest rates. As of September 30, 2005, we had swap agreements with an aggregate notional amount of $1.2 billion and cap agreements with an agreement notional amount of
$725. The effect of the swap agreement was, at September 30, 2005, to convert $1.2 billion of our fixed rate notes to floating rate instruments. The fixed rate notes being converted consisted of (i) $445 of our 61/2percent notes through 2012, (ii) $375 of our 7 percent notes, and (iii) $375 of our 73/4percent senior subordinated notes through 2013.

As of September 30, 2005, after giving effect to our interest rate swap and cap agreements, we had an aggregate of $1.3 billion of indebtedness that
bears interest at variable rates. For this purpose, the portion of the term loan subject to the cap is considered fixed. The debt that is subject to fluctuations in interest rates includes $137 of borrowings under our revolver Canadian facility,
$1.2 billion in swaps, and $14 of term loans not subject to an interest rate cap. The weighted-average effective interest rates applicable to our variable rate debt on September 30, 2005 were (i) 4.8 percent for the revolving credit facility
(represents the Canadian rate since the amount outstanding was Canadian borrowings), (ii) 6.1 percent for the term loan and (iii) 6.7 percent for the debt subject to our swap agreements. As of September 30, 2005, based upon the amount
of our variable rate debt outstanding, after giving effect to our interest rate swap agreements, our annual earnings would decrease by approximately $13 for each one percentage point increase in the interest rates applicable to our variable rate
debt.

The amount of our variable rate indebtedness may fluctuate significantly as a result of changes in the amount of indebtedness
outstanding under our revolving credit facility and receivables securitization facility from time to time. For additional information concerning the terms of our variable rate debt, see note 8 to our consolidated financial statements.

Currency Exchange Risk.The functional currency for our Canadian operations is the Canadian dollar. As a result, our future earnings
could be affected by fluctuations in the exchange rate between the U.S. and Canadian dollars. Based upon the level of our Canadian operations during 2005 relative to the company as a whole, a 10 percent change in this exchange rate would not have a
material impact on our earnings. In addition, we periodically enter into foreign exchange contracts to hedge our transaction exposures. We had no outstanding foreign exchange contracts as of September 30, 2005. We do not engage in purchasing
forward exchange contracts for speculative purposes.



|Item 4. | Controls and Procedures
|------- | -----------------------

Evaluation of Disclosure Controls and
Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be
disclosed in the Companys reports under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and
that such information is accumulated and communicated to management, including the Companys Chief Executive Offer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of December 31, 2004 and September 30, 2005, the Companys management carried out an evaluation, under the supervision and with
participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the
evaluation and the identification of the material weaknesses in internal control over financial reporting described below, as well as our inability to timely file our 2004 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, our Chief
Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2005, the Companys disclosure controls and procedures were not effective. In addition, as a result of the subsequent identification of material
weaknesses in internal control as of December 31, 2004, as reported below and in the Companys Annual Report on Form 10-K for 2004 filed on March 31, 2006, our Chief Executive Officer and Chief Financial Officer have concluded that
the Companys disclosure controls and procedures as of September 30, 2004 were not effective.



45



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In light of the material weaknesses in internal control described below, and as a result of the SEC
inquiry and review of the Special Committee as discussed elsewhere in this Quarterly Report on Form 10-Q, we performed additional procedures to ensure that our unaudited condensed consolidated financial statements included in this report and our
audited consolidated financial statements in our Annual Reports on Form 10-K for the years ended December 31, 2005 and December 31, 2004 were prepared in accordance with generally accepted accounting principles in the United States of
America (GAAP). These steps included, among other actions, expansion of our year-end closing procedures, including performing detailed analyses of accounts and review of subsequent transactions to affirm year-end account balances, and
dedication of significant internal resources and external consultants to validating financial statement account balances and disclosures.

These and other procedures resulted in the identification of accounting and audit adjustments to our consolidated financial statements for the year ended December 31, 2004, which significantly delayed the filing of our Annual Report on
Form 10-K for the year ended December 31, 2004. These adjustments also required us to restate our previously filed unaudited condensed consolidated financial statements for the quarters ended March 31, June 30 and
September 30, 2004, respectively, and our audited consolidated financial statements for the years ended December 31, 2003 and 2002. The restatement adjustments are further described in Note 2 to our unaudited condensed consolidated
financial statements included within this Form 10-Q.

As a result of the additional procedures and related adjustments and restatements
described above, management has concluded that the condensed consolidated financial statements for the periods included in this quarterly report are fairly stated, in all material respects, in accordance with GAAP.

Managements Report on Internal Control over Financial Reporting

The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The
Companys internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The
Companys internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could
have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Under the supervision of our Chief Executive Officer and Chief Financial Officer, our management
assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2004. In making this assessment, management used the criteria set forthin Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).

A material weakness is a control deficiency, or
combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with managements assessment of the
effectiveness of our internal control over financial reporting, we identified the following material weaknesses in internal control over financial reporting as of December 31, 2004 (and as of September 30, 2004), which had not been
effectively remediated, and therefore continued to exist, as of September 30, 2005.



46



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Financial statement close process. Internal controls over the financial statement
close process were not effective and represented a material weakness in our internal control over financial reporting. The primary factors contributing to this material weakness were:



| |  |  | We did not maintain sufficient formal, written policies and procedures governing the financial statement close process;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | We did not maintain effective controls to provide reasonable assurance that accounts were complete and accurate and agreed to detailed support, and that account reconciliations were
properly performed, reviewed and approved. Accounts impacted by these deficiencies included stock compensation and deferred rent expense, among others;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We did not properly analyze and document key assumptions and processes used in determining reserve balances for certain judgmental accounts, including credit memo reserves, contract
accounting, accrued bonuses, medical insurance reserves and accounts payable cutoffs, and the analyses supporting recorded balances were not effectively reviewed and approved by appropriate management;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We did not maintain effective controls over the recording of journal entries, to ensure that entries were properly prepared with sufficient supporting documentation and were
reviewed and approved by appropriate management;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We did not maintain a documented formal management review process of the consolidated interim and annual financial statements; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | We did not maintain sufficient staffing with appropriate technical competence in the corporate finance and accounting departments.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------

Income taxes. Internal controls surrounding the accounting for income taxes were not effective and represented a material weakness
in our internal control over financial reporting. The primary factors contributing to the material weakness in accounting for income taxes were failure to maintain tax basis balance sheets permitting effective reconciliation of cumulative book to
tax differences, including book versus tax fixed asset records; failure to annually evaluate state tax rates; and failure to adequately verify data used in computations, particularly as it pertains to historical deferred tax liabilities and assets.

Self-insurance reserves. Internal controls pertaining to the self-insurance reserve estimation process were not
effective and represented a material weakness in our internal control over financial reporting. The primary factors contributing to these deficiencies was a lack of effective reconciliation of claims data and evaluation of recorded liabilities
associated with workers compensation claims and claims by third-parties for damage or injury caused by the Company.

Bulk
rental assets. Internal controls regarding the manner that certain types of bulk rental assets are recorded, tracked and relieved from the accounts upon disposal or sale were not effective and represented a material weakness in our
internal control over financial reporting. The primary factor contributing to the material weakness was a deficiency in the perpetual inventory system which did not provide for complete data regarding bulk rental asset quantities and unit costs,
which in turn impaired the ability to compute depreciation expense, record accurate cost of sales upon disposal and to complete fully effective physical inventories of these bulk rental assets.

As a result of the material weaknesses described above, our management has concluded that the Company did not maintain effective internal control over
financial reporting as of September 30, 2005 (or as of September 30, 2004).



47



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Remediation of Material Weaknesses in Internal Control over Financial Reporting

Material Weaknesses as of September 30, 2005

During fiscal 2005, we engaged in substantial efforts to address the material weaknesses in our internal control over financial reporting and related ineffectiveness of our disclosure controls and procedures. The following paragraphs
describe the on-going changes to our internal control over financial reporting subsequent to December 31, 2004 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting:

To correct the control deficiencies in our financial statement close process, we took the following actions in 2005:



| |  |  | We began the process of documenting formal, written policies and procedures governing the financial close process, including implementing formal monthly closing meetings with
corporate and region accounting staff;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We began implementing more formal account reconciliation and analysis processes, including review and approval requirements;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | We began performing additional review and documentation of the assumptions and processes used in determining the reserve balances for judgmental accounts, including accrued bonuses
and medical insurance reserves;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We began implementing more formal journal entry documentation, review and approval requirements and related procedures, to ensure journal entries are properly prepared with
supporting documentation and have been appropriately approved; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We upgraded the corporate finance and accounting staff with the addition of several experienced financial personnel at the Vice President, Director and senior analyst levels.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Several changes in our corporate tax function were adopted to remediate the material weakness in our accounting for income
taxes as of December 31, 2005. These included procedures to ensure that the income tax provision and related tax assets and liabilities are reconciled accurately and timely; maintaining tax basis balance sheets and effective reconciliation of
the cumulative book-to-tax differences, including book and tax fixed asset records; and annually evaluating the appropriate state tax rates. Additionally, the Company has enhanced communications between business unit, tax and accounting
department personnel, and completed, with the assistance of consultants, a thorough analysis of historical acquisitions and other activities supporting deferred tax liabilities and assets. To further strengthen the Companys tax function, a
search for an experienced Vice President of Taxes was initiated in late 2005, with successful recruitment of this new hire in January 2006.

The material weakness pertaining to our self-insurance estimation and evaluation process was remediated as of December 31, 2005 through our engaging qualified, third-party actuaries to perform actuarial calculations of the liabilities
for outstanding and incurred-but-not-reported claims, and by properly analyzing and reconciling claims data recorded in the general ledger with the data used by the actuaries. These actuarial calculations incorporate appropriate actuarial
assumptions and represent a substantial improvement from the former practice of estimating our liability with limited actuarial input. This more formal and complete analysis and evaluation of the estimated self-insurance liabilities is now completed
semi-annually by the corporate accounting and risk management functions.

To correct the control deficiencies surrounding accounting for
bulk rental assets, as of December 31, 2005 the Company completed a thorough analysis of the bulk assets accounting practices within each of our three reportable business segments, and implemented appropriate actions to ensure that the bulk
asset accounting properly reflects the transactions within each segment. These actions included standardizing bulk rental asset policies and practices across all locations within each segment, modifying the inventory system and updating procedures
to capture asset quantities and unit costs and to properly track bulk rental asset changes.



48



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We believe the foregoing actions have improved and will continue to improve our internal control over
financial reporting, as well as our disclosure controls and procedures. However, the material weakness in our financial close process was not remediated by December 31, 2005 and, accordingly, as reported in our Annual Report on Form 10-K for
the year ended December 31, 2005 our internal control over financial reporting and our disclosure controls and procedures remain ineffective as of December 31, 2005.

The remediation efforts noted above are subject to the Companys ongoing internal control assessment, testing and evaluation processes. While these
remediation efforts continue, we will utilize additional analyses and other detailed procedures and other appropriate measures to assist us with meeting the objectives otherwise fulfilled by an effective internal control environment.

Material Weakness Remediated as of September 30, 2005

In addition to the efforts described above to remediate material weaknesses that existed as of September 30, 2005, during fiscal 2005 we also engaged in substantial efforts to address the material weakness in our control environment as
reported in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2005 and June 30, 2005, which resulted in the effective remediation of this material weakness as of September 30, 2005, as described below:



| |  |  | We significantly strengthened management within key financial functions, including the appointment of a new Chief Financial Officer, who joined the Company as Interim Chief
Financial Officer in the third quarter of 2005 and was appointed our Executive Vice President and Chief Financial Officer in March 2006, a new Vice President of Internal Audit in the second quarter of 2005, a new Vice President, Assistant Corporate
Controller and a Director of Accounting and Consolidations in the third quarter of 2005 and a new Director of Financial Reporting and Analysis in the fourth quarter of 2005. In addition, subsequent to fiscal 2005, in the first quarter of 2006, we
hired a new Vice President of Taxes and a new Senior Vice President, Chief Information Officer, and certain former Corporate Finance and Accounting personnel were terminated or removed from their positions;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To strengthen the Companys corporate governance practices, in January 2005 the Company formed a Compliance Committee to monitor and enhance code of conduct and related
matters, including subsequent release of mandatory ethics and compliance training for all employees. Also, in February 2005 we expanded the role and resources of the internal audit function through establishing a co-sourcing internal audit
engagement with a global accounting and audit firm and through the subsequent hiring of an experienced Vice President of Internal Audit who reports directly to our audit committee; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Procedures for investigating and resolving allegations of wrong-doing, as reported through the Companys alert-line, were substantially improved through increased access to the
audit committee and senior management. Further, administration and monitoring of the conflict-of-interest process was transferred to the Corporate Security function to ensure effective and timely completion of this annual process.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in Internal Control over Financial Reporting

Except as discussed above, there were no changes in our internal control over financial reporting during the quarter ended September 30, 2005 that materially affected, or were reasonably likely to materially
affect, our internal control over financial reporting.



49



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

SEC Non-Public Fact Finding Inquiry and
Special Committee Review

As previously announced, on August 25, 2004, the Company received a letter from the SEC in which the SEC
referred to an inquiry of the Company. The letter transmitted a subpoena requesting certain of the Companys documents. The letter and the subpoena referred to an SEC investigation entitled In the Matter of United Rentals, Inc. The
notice from the SEC states that the inquiry does not mean that the SEC has concluded that the Company or anyone else has broken the law or that the SEC has a negative opinion of any person, entity or security. As previously announced, the inquiry
appears to relate to a broad range of our accounting practices and is not confined to a specific period or the matters discussed in this report.

The Company has since received additional document subpoenas from the SEC. As previously announced, in March 2005, the Companys board of directors formed the Special Committee to review matters related to the SEC inquiry. The Special
Committee retained independent counsel. The board of directors received and acted upon findings of the Special Committee on January 26, 2006. The conclusions and recommendations of the Special Committee are discussed above in
note 2Restatement, to our unaudited condensed consolidated financial statements included in this report and summarized in the Companys press release and the related current report on Form 8-K dated January 26, 2006.

The Company has provided documents in response to the SEC subpoenas to the SEC or to the Special Committee, which has, in turn, provided documents to
the SEC. The Company is cooperating fully with the SEC in complying with the subpoenas. The Company is also responding to the SECs informal requests for information.

Shareholder Class Action Lawsuits and Derivative Litigation

As previously announced, following our
public announcement of the SEC inquiry referred to above, three purported class action lawsuits were filed against us in the United States District Court for the District of Connecticut. The plaintiff in each of the lawsuits seeks to sue on behalf
of a purported class comprised of purchasers of our securities from October 23, 2003 to August 30, 2004. The lawsuits name as the defendants our company, our chairman, our vice chairman and chief executive officer, our former president and
chief financial officer, and our former corporate controller. The complaints allege, among other things, that certain of our SEC filings and other public statements contained false and misleading statements which resulted in damages to the
plaintiffs and the members of the purported class when they purchased our securities. On the basis of those allegations, plaintiffs in each action assert claims (a) against all defendants under Section 10(b) of the Exchange Act and Rule
10b-5 promulgated thereunder, and (b) against one or more of the individual defendants under Section 20(a) of such Act. The complaints seek unspecified compensatory damages, costs and expenses. On February 1, 2005, the Court entered
an order consolidating the three actions. On November 8, 2005, the Court appointed City of Pontiac Policemans and Firemans Retirement System as lead plaintiff for the purported class. The consolidated action is now entitled In re
United Rentals, Inc. Securities Litigation. The court has directed the parties to submit, by April 17, 2006, a proposed schedule for the filing of a consolidated amended complaint and responses to any amended pleading. We intend to defend
against these actions vigorously.

In January 2005, an alleged shareholder filed an action in Connecticut State Superior Court, Judicial
District of Norwalk/Stamford at Stamford, purportedly suing derivatively on our behalf. The action, entitled Gregory Riegel v. John N. Milne, et al., names as defendants certain of our current and/or former directors and/or officers, and us
as a nominal defendant. The complaint asserts, among other things, that the defendants breached their fiduciary duties to us by causing or allowing us to disseminate misleading and inaccurate information to shareholders and the market and by failing
to establish and maintain adequate accounting controls, thus exposing us to damages. The complaint seeks unspecified compensatory damages, costs and expenses against the defendants. The parties to the Riegelaction have agreed that the
proceedings in this action will be stayed pending the resolution of the anticipated motions to dismiss in the purported shareholder class actions.



50



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In November 2004, we received a letter from counsel for an alleged shareholder, raising allegations
similar to the ones set forth in the derivative complaint described above and demanding that we take action in response to those allegations against certain of our current and/or former directors and/or officers. Following receipt of the letter, the
board of directors formed a special committee of the board to consider the letter. In August 2005, this alleged shareholder commenced an action in Connecticut State Superior Court, Judicial District of Norwalk/Stamford at Stamford, purporting to sue
derivatively on our behalf. The action, entitled Nathan Brundridge v. Leon D. Black, et al., names as defendants certain of our current and/or former directors and/or officers, and names us as a nominal defendant. The complaint in this action
asserts, among other things, that all of the defendants breached fiduciary obligations to us by causing or allowing us to disseminate misleading and inaccurate information to shareholders and the market, and by failing to establish and maintain
adequate accounting controls, thus exposing us to damages. The complaint in this action also asserts a claim for unjust enrichment against our chairman, our vice chairman and chief executive officer, and our former president and chief financial
officer. The complaint seeks unspecified compensatory damages, equitable relief, costs and expenses against all of the defendants. The complaint also seeks an order, in connection with plaintiffs unjust enrichment claim, directing the
defendants against whom that claim is asserted to disgorge certain compensation they received from us with respect to fiscal years 2001, 2002 and 2003. The parties have agreed to submit to the court, by April 17, 2006, a proposed schedule for
the filing of any amended complaint and responses to the operative complaint in the action. The parties agreement further provides that the time by which all defendants must answer, move or otherwise respond to the complaint shall be adjourned
pending the parties submission of the aforementioned schedule.

In August 2005, another alleged shareholder filed an action in the
United States District Court for the District of Connecticut, purporting to sue derivatively on our behalf. The action, entitled Natalie Gordon v. Wayland R. Hicks, et al., names as defendants certain of our current and/or former directors
and/or officers, and names us as a nominal defendant. The complaint in this action asserts claims against each of the defendants for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment.
Each of these claims is premised on, among other things, the theory that the individual defendants caused or permitted us to disseminate misleading and inaccurate information to shareholders and to the market, and failed to establish and maintain
adequate accounting controls, thus exposing us to damages. The complaint also asserts (a) a claim that a former director breached fiduciary obligations by selling shares of our common stock while in possession of material, non-public
information, and (b) a claim against our chairman, our vice chairman and chief executive officer, and our former president and chief financial officer for recovery of certain incentive-based compensation under section 304 of the Sarbanes-Oxley
Act. The complaint seeks unspecified compensatory damages, equitable relief, restitution, costs and expenses against all of the defendants. The complaint also seeks an order declaring that the defendants against whom the section 304 claim is
directed are liable under the Sarbanes-Oxley Act and directing them to reimburse us for all bonuses or other incentive-based or equity-based compensation they received for the fiscal years 1999 through 2004. The court has directed the parties to
submit, on or before April 17, 2006, a proposed schedule for the filing of any amended complaint and responses to the operative complaint in the action. Pending the submission and approval of the aforementioned schedule, the court has adjourned
the time by which all defendants must answer, move, or otherwise respond to the complaint in this action.

We are also a party to various
other litigation matters, in most cases involving ordinary and routine claims incidental to our business. We cannot estimate with certainty our ultimate legal and financial liability with respect to such pending litigation matters. However, we
believe, based on our examination of such matters, that our ultimate liability will not have a material adverse effect on our financial position, results of operations or cash flows.

Indemnification

The Company indemnifies its officers and directors pursuant to indemnification
agreements and may in addition indemnify these individuals as permitted by Delaware law. Accordingly, in connection with the



51



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purported class action lawsuit, three purported shareholder derivative lawsuits and the SEC inquiry and related review of the Special Committee described
above, the Company advanced counsel fees and other reasonable fees and expenses, actually and necessarily incurred by the present and former directors and officers who are involved, in an aggregate amount of approximately $2.6 during fiscal 2005.
Each of the individuals is required to execute an undertaking to repay such expenses if he or she is finally found not to be entitled to indemnification.



|Item 1A. | Risk Factors
|-------- | ------------

Our results of operations and
financial condition are subject to numerous risks and uncertainties described in our annual report on Form 10-K for 2005, filed on March 31, 2006, and incorporated herein by reference. You should carefully consider these risk factors in
conjunction with the other information contained in this report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted.



52



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|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

Issuer Purchases of Equity Securities



|                       |  |                                 |     |  |                             |      
|---------------------- |  | ------------------------------- | --- |  | --------------------------- | -----
|Period                 |  | Total Number ofShares Purchased |     |  | Average PricePaid per Share
|7/1/05 through 7/31/05 |  | 1,749                           | (1) |  | $                           | 20.05
|8/1/05 through 8/31/05 |  | 507,251                         | (2) |  |                             | 11.65
|9/1/05 through 9/30/05 |  | 72,232                          | (3) |  |                             | 11.65
|                       |  |                                 |     |  |                             |      
|Total                  |  | 581,232                         |     |  |                             |      
|                       |  |                                 |     |  |                             |      

---

|(1) | The shares were surrendered to the Company by employees in order to satisfy tax withholding obligations upon the vesting of restricted stock. These shares were not acquired pursuant
to any repurchase plan or program.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As previously reported by the Company on a Form 8-K filed on August 16, 2005, the Company exercised its right to repurchase an aggregate of 507,251 shares of common stock (and
warrants to purchase an additional 714,286 shares of common stock) from the Companys former president and chief financial officer, John Milne.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | On September 21, 2005, the Company exercised its right to repurchase an aggregate of 72,232 shares of common stock from the individual who served as the Companys chief
financial officer prior to Mr. Milne.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



53



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|Item 6. | Exhibits
|------- | --------

(a) Exhibits:



|               |     |  |                                                                                                                                                                                                                                                          
|-------------- | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |     |  | Description of Exhibit                                                                                                                                                                                                                                   
|3              | (a) |  | Amended and Restated Certificate of Incorporation of United Rentals, Inc., (incorporated by reference to exhibit 3.1 of United Rentals, Inc. Report on Form 10-Q for the quarter ended
June 30, 1998)                                                    
|               |    
|3              | (b) |  | Certificate of Amendment to the United Rentals, Inc. Amended and Restated Certificate of Incorporation dated, September 29, 1998 (incorporated by reference to Exhibit 4.2 to the United
Rentals, Inc. Registration Statement on Form S-3, No. 333-70151)
|               |    
|3              | (c) |  | By-laws of United Rentals, Inc. (incorporated by reference to exhibit 3.2 of United Rentals, Inc. Report on Form 10-Q for the quarter ended June 30, 1998)                                                                                               
|               |    
|3              | (d) |  | Form of Certificate of Designation for Series C Perpetual Convertible Preferred Stock (incorporated by reference to exhibit 3(f) of United Rentals, Inc. Report on Form 10-Q for the quarter
ended September 30, 2001)                                   
|               |    
|3              | (e) |  | Form of Certificate of Designation for Series D Perpetual Convertible Preferred Stock (incorporated by reference to exhibit 3(g) of United Rentals, Inc. Report on Form 10-Q for the quarter
ended September 30, 2001)                                   
|               |    
|3              | (f) |  | Form of Certificate of Designation for Series E Junior Participating Preferred Stock (incorporated by reference to Exhibit A of Exhibit 4 of the United Rentals, Inc. Current Report on Form
8-K filed on October 5, 2001)                               
|               |    
|3              | (g) |  | Rights Agreement dated September 28, 2001 between United Rentals, Inc. and American Stock Transfer & Trust Co., as Rights Agent (incorporated by reference to Exhibit 4 of the United
Rentals, Inc. Current Report on Form 8-K filed on October 5, 2001) 
|               |    
|3              | (h) |  | Amended and Restated Certificate of Incorporation of United Rentals (North America), Inc., (incorporated by reference to Exhibit 3.3 of the United Rentals (North America), Inc. Report on Form
10-Q for the quarter ended June 30, 1998)                
|               |    
|3              | (i) |  | By-laws of United Rentals (North America), Inc., (incorporated by reference to Exhibit 3.4 of the United Rentals (North America), Inc. Report on Form 10-Q for the quarter ended June 30,
1998)                                                          
|               |    
|4              | (d) |  | Indenture dated August 5, 1998 by and between United Rentals, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 10(hh) of United Rentals, Inc. Registration
Statement on Form S-4, Registration No. 333-63171)             
|               |    
|4              | (e) |  | Supplement relating to the QUIPs securities (incorporated by reference to Exhibit 4.5 to United Rentals, Inc. Report on Form 8-K filed on September 23, 2005)                                                                                            
|               |    
|4              | (i) |  | Consent Solicitation Statement (QUIPs) (incorporated by reference to Exhibit 99.4 to United Rentals, Inc. Report on Form 8-K filed on August 22, 2005)                                                                                                   
|               |    
|4              | (j) |  | Consent Form (QUIPs) (incorporated by reference to Exhibit 99.5 to United Rentals, Inc. Report on Form 8-K filed on August 22, 2005)                                                                                                                     
|               |    
|4              | (k) |  | Consent Solicitation Statement (QUIPs) (incorporated by reference to Exhibit 99.4 to United Rentals, Inc. Report on Form 8-K filed on September 12, 2005)                                                                                                
|               |    
|4              | (l) |  | Consent Form (QUIPs) (incorporated by reference to Exhibit 99.5 to United Rentals, Inc. Report on Form 8-K filed on September 12, 2005)                                                                                                                  
|               |    
|4              | (n) |  | Supplemental Indenture relating to 17/8percent
Convertible Senior Subordinated Notes due 2023 (incorporated by reference to Exhibit 4.4 to United Rentals, Inc. Report on Form 8-K filed on September 23, 2005)                                          



54



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|               |      |  |                                                                                                                                                                                                                                                                                                                                        
|-------------- | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |      |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                 
|4              | (p)  |  | Supplemental Indenture relating to 73/4percent Senior
Subordinated Notes due 2013 (incorporated by reference to Exhibit 4.2 to United Rentals, Inc. Report on Form 8-K filed on September 23, 2005)                                                                                                                                    
|               |     
|4              | (r)  |  | Supplemental Indenture relating to 7 percent Senior Subordinated Notes due 2014 (incorporated by reference to Exhibit 4.3 to United Rentals, Inc. Report on Form 8-K filed on
September 23, 2005)                                                                                                                                      
|               |     
|4              | (t)  |  | Supplemental Indenture relating to 61/2percent Senior
Notes due 2012 (incorporated by reference to Exhibit 4.1 to United Rentals, Inc. Report on Form 8-K filed on September 23, 2005)                                                                                                                                                 
|               |     
|4              | (u)  |  | Consent Solicitation Statement (Senior Notes, Senior Subordinated Notes, and Convertible Senior Subordinated Notes) (incorporated by reference to Exhibit 99.2 to United Rentals, Inc. Report
on Form 8-K filed on August 22, 2005)                                                                                                    
|               |     
|4              | (v)  |  | Consent Form (Senior Notes, Senior Subordinated Notes, and Convertible Senior Subordinated Notes) (incorporated by reference to Exhibit 99.3 to United Rentals, Inc. Report on Form 8-K filed
on August 22, 2005)                                                                                                                      
|               |     
|4              | (w)  |  | Consent Solicitation Statement (Senior Notes, Senior Subordinated Notes, and Convertible Senior Subordinated Notes) (incorporated by reference to Exhibit 99.2 to United Rentals, Inc. Report
on Form 8-K filed on September 12, 2005)                                                                                                 
|               |     
|4              | (x)  |  | Consent Form (Senior Notes, Senior Subordinated Notes, and Convertible Senior Subordinated Notes) (incorporated by reference to Exhibit 99.3 to United Rentals, Inc. Report on Form 8-K filed
on September 12, 2005)                                                                                                                   
|               |     
|10             | (u)  |  | Amendment Agreement dated as of August 22, 2005, between United Rentals, Inc., and Joseph Ehrenreich (incorporated by reference to exhibit 99.1 of the United Rentals, Inc. Report on Form
8-K filed August 24, 2005)                                                                                                                 
|               |     
|10             | (w)  |  | Employment Agreement, dated as of September 12, 2005, between the Company and Martin Welch III (incorporated by reference to exhibit 99.2 of the United Rentals, Inc. Report on Form 8-K
filed September 14, 2005)                                                                                                                    
|               |     
|10             | (hh) |  | Agreement dated as of September 22, 2005, between United Rentals, Inc. and Michael Kneeland (incorporated by reference to exhibit 99.1 of the United Rentals, Inc. Report on Form 8-K
filed September 23, 2005)                                                                                                                       
|               |     
|10             | (ii) |  | Agreement dated as of September 22, 2005, between United Rentals, Inc. and Joseph Sherk (incorporated by reference to exhibit 99.2 of the United Rentals, Inc. Report on Form 8-K filed
September 23, 2005)                                                                                                                           
|               |     
|10             | (oo) |  | Indemnification Agreement, dated as of September 12, 2005, between the Company and Martin Welch III (incorporated by reference to exhibit 99.3 of the United Rentals, Inc. Report on Form
8-K filed September 14, 2005)                                                                                                               
|               |     
|10             | (pp) |  | Form of Indemnification Agreement entered into as of August 22, 2005 with Alfred Colangelo, vice president finance; Elliot Mayer, vice president treasurer; and Joseph Sherk, vice
president and corporate controller (incorporated by reference to exhibit 99.2 of the United Rentals, Inc. Report on Form 8-K filed August 24, 2005)
|               |     
|10             | (g)* |  | Call of units, dated August 15, 2005, from United Rentals, Inc., to John N. Milne                                                                                                                                                                                                                                                      
|               |     
|31             | (a)* |  | Rule 13a-14(a) Certification by Chief Executive Officer                                                                                                                                                                                                                                                                                
|               |     
|31             | (b)* |  | Rule 13a-14(a) Certification by Chief Financial Officer                                                                                                                                                                                                                                                                                



55



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|               |      |  |                                                      
|-------------- | ---- |  | -----------------------------------------------------
|Exhibit Number |      |  | Description of Exhibit                               
|32             | (a)* |  | Section 1350 Certification by Chief Executive Officer
|               |     
|32             | (b)* |  | Section 1350 Certification by Chief Financial Officer

---

|* | Filed herewith.
|- | ---------------

| | This document is a management contract or compensatory plan or arrangement.
|- | ---------------------------------------------------------------------------



56



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



|       |  |                |  |                      |  |                                      |  |                                                                                         
|------ |  | -------------- |  | -------------------- |  | ------------------------------------ |  | ----------------------------------------------------------------------------------------
|       |  |                |  | UNITED RENTALS, INC.
|       |  |                |  |                     
|Dated: |  | April 12, 2006 |  |                      |  | By:                                  |  | /s/ MARTIN E. WELCH III                                                                 
|       |  |                |  |                      |  |                                      |  |                                                                                         
|       |  |                |  |                      |  |                                      |  | Martin E. Welch III Chief Financial
Officer (Principal Financial and Accounting Officer)
|       |  |                | 
|       |  |                |  |                      |  | UNITED RENTALS (NORTH AMERICA), INC.
|       |  |                |  |                     
|Dated: |  | April 12, 2006 |  |                      |  | By:                                  |  | /s/ MARTIN E. WELCH III                                                                 
|       |  |                |  |                      |  |                                      |  |                                                                                         
|       |  |                |  |                      |  |                                      |  | Martin E. Welch III Chief Financial
Officer (Principal Financial and Accounting Officer)



57