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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



(Mark One)



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



| |  | For the quarterly period ended March 31, 2003
| |  | ---------------------------------------------



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



| |  | For the transition period from

to
| |  | ----------------------------------



Commission File No. 1-14387



United Rentals, Inc.



Commission File No. 1-13663



United Rentals (North America), Inc.

(Exact names of registrants as specified in their charters)



|Delaware Delaware                                              |  | 06-1522496 06-1493538                
|-------------------------------------------------------------- |  | -------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Nos.)
|                                                              
|Five Greenwich Office Park, Greenwich, Connecticut             |  | 06830                                
|(Address of principal executive offices)                       |  | (Zip Code)                           



(203)
622-3131

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.



x  Yes ̈No



Indicate by check
mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



x  Yes ̈No



As of May 8, 2003, there were 77,166,358 shares of the 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 MARCH 31, 2003



INDEX



|        |  |                                                                                                                                           |  | Page
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|PART I  |  | FINANCIAL INFORMATION                                                                                                                     |  |     
|Item 1  |  | Unaudited Consolidated Financial Statements                                                                                               |  |     
|        |  | United Rentals, Inc. Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 (unaudited)                                   |  | 4   
|        |  | United Rentals, Inc. Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and 2002 (unaudited)                 |  | 5   
|        |  | United Rentals, Inc. Consolidated Statement of Stockholders Equity for the Three Months Ended March 31, 2003 (unaudited)                 |  | 6   
|        |  | United Rentals, Inc. Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 (unaudited)                 |  | 7   
|        |  | United Rentals (North America), Inc. Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 (unaudited)                   |  | 8   
|        |  | United Rentals (North America), Inc. Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and 2002 (unaudited) |  | 9   
|        |  | United Rentals (North America), Inc. Consolidated Statement of Stockholders Equity for the Three Months Ended March 31, 2003 (unaudited) |  | 10  
|        |  | United Rentals (North America), Inc. Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 (unaudited) |  | 11  
|        |  | Notes to Unaudited Consolidated Financial Statements                                                                                      |  | 12  
|Item 2  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                     |  | 25  
|Item 3  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                |  | 37  
|Item 4  |  | Controls and Procedures                                                                                                                   |  | 37  
|       
|PART II |  | OTHER INFORMATION                                                                                                                         |  |     
|Item 1  |  | Legal Proceedings                                                                                                                         |  | 38  
|Item 6  |  | Exhibits and Reports on Form 8-K                                                                                                          |  | 38  
|        |  | Signatures                                                                                                                                |  | 39  



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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 these factors are discussed in Item 2 of Part I of this Report under the caption Factors that May Influence Future Results and Results Anticipated
by Forward-Looking Statements. 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.



We make available on our internet website free of charge our
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports as soon as practicable after we electronically file such reports with the SEC. Our website address is
www.unitedrentals.com. The information contained in our website is not incorporated by reference in this Report.



UNITED RENTALS



United Rentals is the largest equipment rental company in the world. We offer for rent over 600 types of equipmenteverything from
heavy machines to hand toolsthrough our network of more than 750 rental locations in the United States, Canada and Mexico. We currently serve more than 1.7 million customers, including construction and industrial companies, manufacturers,
utilities, municipalities, homeowners and others.



Our fleet of rental equipment, the largest in the world, includes over 500,000 units having an original purchase price of approximately $3.7 billion. The fleet includes:



| |  |  | General construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earth moving equipment, material handling equipment,
compressors, pumps and generators;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Aerial work platforms, such as scissor lifts and boom lifts;
| | - |  | ------------------------------------------------------------



| |  |  | General tools and light equipment, such as power washers, water pumps, heaters and hand tools;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | Traffic control equipment, such as barricades, cones, warning lights, message boards and pavement marking systems; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | Trench safety equipment for below ground work, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers
and line testing equipment.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
addition to renting equipment, we sell used rental equipment, act as a dealer for new equipment and sell related merchandise, parts and service.



Industry Background



Based on industry sources, we estimate that the U.S. equipment rental industry has grown from approximately $6.5 billion in annual rental
revenues in 1990 to about $24 billion in 2002. This represents a compound annual growth rate of approximately 11.5%, although in the past two years industry rental revenues decreased by about $2 billion. The recent downturn in industry revenues is a
reflection of the significant slowdown in private non-residential construction activity. This activity was down 16.4% in 2002 from 2001 and 11.4% in the first quarter of 2003 from the same period last year according to Department of Commerce data.
Our industry is particularly sensitive to changes in non-residential construction activity because this sector has been the principal user of rental equipment. When non-residential construction activity eventually rebounds, we would expect to see
our industry resume its long-term growth trend.



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We believe
that long-term industry growth, in addition to reflecting general economic expansion, is being driven by the increasing recognition by equipment users of the many advantages that equipment rental may offer compared with ownership. They recognize
that by renting they can:



| |  |  | avoid the large capital investment required for equipment purchases;
| | - |  | --------------------------------------------------------------------



| |  |  | access a broad selection of equipment and select the equipment best suited for each particular job;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | reduce storage and maintenance costs; and
| | - |  | -----------------------------------------



| |  |  | access the latest technology without investing in new equipment.
| | - |  | ----------------------------------------------------------------



While the construction industry has to date been the principal user of rental equipment, industrial
companies, utilities and others are increasingly using rental equipment for plant maintenance, plant turnarounds and other functions requiring the periodic use of equipment. We believe that over the long term increasing rentals by the industrial
sector could become a more significant factor in driving our industrys growth.



Competitive Advantages



We believe that we benefit from the following competitive advantages:



Large and Diverse Rental Fleet.    Our rental fleet is the largest and most comprehensive in the industry, which allows us to:



| |  |  | attract customers by providing one-stop shopping;
| | - |  | ---------------------------------------------------



| |  |  | serve a diverse customer base and reduce our dependence on any particular customer or group of customers; and
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | serve customers that require substantial quantities and/or wide varieties of equipment.
| | - |  | ---------------------------------------------------------------------------------------



Significant Purchasing Power.    We purchase large amounts of equipment,
merchandise and other items, which enables us to negotiate favorable pricing, warranty and other terms with our vendors.



Operating Efficiencies.    We benefit from the following operating efficiencies:



Equipment Sharing Among
Branches.    We generally group our branches into clusters of 10 to 30 locations that are in the same geographic area. Each branch within a cluster can access all available equipment in the cluster area. This increases
equipment utilization because equipment that is idle at one branch can be marketed and rented through other branches. In the first quarter of 2003, the sharing of equipment among branches accounted for approximately 10.7%, or $48 million, of our
total rental revenue.



Ability to Transfer
Equipment Among Branches.    The size of our branch network gives us the ability to take advantage of strength at a particular branch or in a particular region by permanently transferring underutilized equipment from weaker
to stronger areas.



Consolidation of Common
Functions.    We reduce costs through the consolidation of functions that are common to our more than 750 branches, such as payroll, accounts payable, benefits and risk management, information technology and credit and
collection, into 17 credit offices and three service centers.



State-of-the-Art Information Technology Systems.    We have state-of-the-art information technology systems that facilitate our ability to make rapid and informed decisions, respond quickly to
changing market conditions, and share equipment among branches. We have an in-house team of information technology specialists that supports our systems.



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Strong
Brand Recognition.    We have strong brand recognition, which helps us to attract new customers and build customer loyalty.



Geographic and Customer Diversity.    We have more than 750 branches in 47 states, seven Canadian
provinces and Mexico and serve customers that range from Fortune 500 companies to small companies and homeowners. We currently serve more than 1.7 million customers and our top ten customers account for less than 3% of our revenues. We believe that
our geographic and customer diversity provide us with many advantages including: (1) enabling us to better serve National Account customers with multiple locations, (2) helping us achieve favorable resale prices by allowing us to access used
equipment resale markets across the country, (3) reducing our dependence on any particular customer and (4) reducing the impact that fluctuations in regional economic conditions have on our overall financial performance.



National Account
Program.    Our National Account sales force is dedicated to establishing and expanding relationships with large companies, particularly those with a national or multi-regional presence. We offer our National Account
customers the benefits of a consistent level of service across North America, a wide selection of equipment and a single point of contact for all their equipment needs. We currently serve 1,746 National Account customers.



Strong and Motivated Branch
Management.    Each of our branches has a full-time branch manager who is supervised by one of our 55 district managers and nine regional vice presidents. We believe that our managers are among the most knowledgeable and
experienced in the industry, and we empower themwithin budgetary guidelinesto make day-to-day decisions concerning branch matters. Senior management closely tracks branch, district and regional performance with extensive systems and
controls, including performance benchmarks and detailed monthly operating reviews. The compensation of branch managers and other branch personnel is linked to their branchs financial performance and return on assets. This incentivizes branch
personnel to control costs, optimize pricing, share equipment with other branches and manage their fleet efficiently.



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UNITED RENTALS, INC.



CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                                    |  | March 31, 2003                    |           |   | December 31, 2002 |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | --------- | - | ----------------- | -
|                                                                                                                                    |  | (In thousands, except share data) |          
|ASSETS                                                                                                                              |  |                                   |           |   |                   |  
|Cash and cash equivalents                                                                                                           |  | $                                 | 32,928    |   |                   | $
|Accounts receivable, net of allowance for doubtful accounts of $44,203 in 2003 and
$48,542 in 2002                                  |  |                                   | 422,266   |   |                   |  
|Inventory                                                                                                                           |  |                                   | 107,781   |   |                   |  
|Prepaid expenses and other assets                                                                                                   |  |                                   | 150,935   |   |                   |  
|Rental equipment, net                                                                                                               |  |                                   | 1,838,098 |   |                   |  
|Property and equipment, net                                                                                                         |  |                                   | 418,371   |   |                   |  
|Goodwill, net                                                                                                                       |  |                                   | 1,716,676 |   |                   |  
|Other intangible assets, net                                                                                                        |  |                                   | 5,021     |   |                   |  
|                                                                                                                                    |  |                                   |           |   |                   |  
|                                                                                                                                    |  | $                                 | 4,692,076 |   |                   | $
|                                                                                                                                    |  |                                   |           |   |                   |  
|                                                                                                                                   
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                |  |                                   |           |   |                   |  
|Liabilities:                                                                                                                        |  |                                   |           |   |                   |  
|Accounts payable                                                                                                                    |  | $                                 | 191,657   |   |                   | $
|Debt                                                                                                                                |  |                                   | 2,533,631 |   |                   |  
|Deferred taxes                                                                                                                      |  |                                   | 220,754   |   |                   |  
|Accrued expenses and other liabilities                                                                                              |  |                                   | 179,181   |   |                   |  
|                                                                                                                                    |  |                                   |           |   |                   |  
|Total liabilities                                                                                                                   |  |                                   | 3,125,223 |   |                   |  
|Commitments and contingencies                                                                                                       |  |                                   |           |   |                   |  
|Company-obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust                                     |  |                                   | 226,550   |   |                   |  
|Stockholders equity:                                                                                                               |  |                                   |           |   |                   |  
|Preferred stock$.01 par value, 5,000,000 shares authorized:                                                                        |  |                                   |           |   |                   |  
|Series C perpetual convertible preferred stock$300,000 liquidation preference,
300,000 shares issued and outstanding               |  |                                   | 3         |   |                   |  
|Series D perpetual convertible preferred stock$150,000 liquidation preference,
150,000 shares issued and outstanding               |  |                                   | 2         |   |                   |  
|Common stock$.01 par value, 500,000,000 shares authorized, 77,085,729 shares
issued and outstanding in 2003 and 76,657,521 in 2002 |  |                                   | 771       |   |                   |  
|Additional paid-in capital                                                                                                          |  |                                   | 1,345,128 |   |                   |  
|Deferred compensation                                                                                                               |  |                                   | (55,218   | ) |                   |  
|Retained earnings                                                                                                                   |  |                                   | 60,558    |   |                   |  
|Accumulated other comprehensive loss                                                                                                |  |                                   | (10,941   | ) |                   |  
|                                                                                                                                    |  |                                   |           |   |                   |  
|Total stockholders equity                                                                                                          |  |                                   | 1,340,303 |   |                   |  
|                                                                                                                                    |  |                                   |           |   |                   |  
|                                                                                                                                    |  | $                                 | 4,692,076 |   |                   | $
|                                                                                                                                    |  |                                   |           |   |                   |  



See
accompanying notes.



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UNITED RENTALS, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)





|                                                                                                                  |  | Three Months Ended March 31 |        
|----------------------------------------------------------------------------------------------------------------- |  | --------------------------- | -------
|                                                                                                                  |  | 2003                        |        
|                                                                                                                  |  | (In thousands)              |        
|Revenues:                                                                                                         |  |                             |        
|Equipment rentals                                                                                                 |  | $                           | 443,648
|Sales of rental equipment                                                                                         |  |                             | 35,080 
|Sales of equipment and merchandise and other revenues                                                             |  |                             | 113,123
|                                                                                                                  |  |                             |        
|Total revenues                                                                                                    |  |                             | 591,851
|Cost of revenues:                                                                                                 |  |                             |        
|Cost of equipment rentals, excluding depreciation                                                                 |  |                             | 252,404
|Depreciation of rental equipment                                                                                  |  |                             | 80,743 
|Cost of rental equipment sales                                                                                    |  |                             | 23,255 
|Cost of equipment and merchandise sales and other operating costs                                                 |  |                             | 81,460 
|                                                                                                                  |  |                             |        
|Total cost of revenues                                                                                            |  |                             | 437,862
|                                                                                                                  |  |                             |        
|Gross profit                                                                                                      |  |                             | 153,989
|Selling, general and administrative expenses                                                                      |  |                             | 96,761 
|Non-rental depreciation and amortization                                                                          |  |                             | 16,978 
|                                                                                                                  |  |                             |        
|Operating income                                                                                                  |  |                             | 40,250 
|Interest expense                                                                                                  |  |                             | 50,975 
|Preferred dividends of a subsidiary trust                                                                         |  |                             | 3,681  
|Other (income) expense, net                                                                                       |  |                             | (106   
|                                                                                                                  |  |                             |        
|Income (loss) before provision (benefit) for income taxes and cumulative effect of
change in accounting principle |  |                             | (14,300
|Provision (benefit) for income taxes                                                                              |  |                             | (5,577 
|                                                                                                                  |  |                             |        
|Income (loss) before cumulative effect of change in accounting principle                                          |  |                             | (8,723 
|Cumulative effect of change in accounting principle, net of tax benefit of
$60,529                                |  |                             |        
|                                                                                                                  |  |                             |        
|Net loss                                                                                                          |  | $                           | (8,723 
|                                                                                                                  |  |                             |        
|Earnings (loss) per sharebasic:                                                                                  |  |                             |        
|Income (loss) before cumulative effect of change in accounting principle                                          |  | $                           | (0.11  
|Cumulative effect of change in accounting principle, net                                                          |  |                             |        
|                                                                                                                  |  |                             |        
|Net loss                                                                                                          |  | $                           | (0.11  
|                                                                                                                  |  |                             |        
|Earnings (loss) per sharediluted:                                                                                |  |                             |        
|Income (loss) before cumulative effect of change in accounting principle                                          |  | $                           | (0.11  
|Cumulative effect of change in accounting principle, net                                                          |  |                             |        
|                                                                                                                  |  |                             |        
|Net loss                                                                                                          |  | $                           | (0.11  
|                                                                                                                  |  |                             |        



See
accompanying notes.



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UNITED RENTALS, INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(Unaudited)



|                                                           |  | Series
CPerpetualConvertiblePreferredStock |   | Series
DPerpetualConvertiblePreferredStock |   | Common Stock |  | AdditionalPaid-inCapital |  | DeferredCompensation |     |  | RetainedEarnings |           |  | ComprehensiveIncome |         |   | AccumulatedOtherComprehensiveLoss |  
|---------------------------------------------------------- |  | ------------------------------------------ | - | ------------------------------------------ | - | ------------ |  | ------------------------ |  | -------------------- | --- |  | ---------------- | --------- |  | ------------------- | ------- | - | --------------------------------- | -
|                                                           |  |                                            |   | Numberof Shares                            |   | Amount       |  |                          |  |                      |    
|                                                           |  | (In thousands)                             |  
|Balance, December 31, 2002                                 |  | $                                          | 3 |                                            | $ | 2            |  | 76,657                   |  | $                    | 765 |  | $                | 1,341,290 |  | $                   | (52,988 | ) |                                   | $
|Comprehensive income (loss):                               |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|Net loss                                                   |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|Other comprehensive income:                                |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|Foreign currency translation adjustments                   |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|Derivatives qualifying as hedges, net of tax               |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|                                                           |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|Comprehensive income                                       |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|                                                           |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|Issuance of common stock under deferred compensation plans |  |                                            |   |                                            |   |              |  | 429                      |  |                      | 6   |  |                  | 3,838     |  |                     | (3,844  | ) |                                   |  
|Amortization of deferred compensation                      |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     | 1,614   |   |                                   |  
|                                                           |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  
|Balance March 31, 2003                                     |  | $                                          | 3 |                                            | $ | 2            |  | 77,086                   |  | $                    | 771 |  | $                | 1,345,128 |  | $                   | (55,218 | ) |                                   | $
|                                                           |  |                                            |   |                                            |   |              |  |                          |  |                      |     |  |                  |           |  |                     |         |   |                                   |  







See accompanying notes.



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UNITED
RENTALS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                                        |  | Three Months Ended March 31 |         
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | --------
|                                                                                                                        |  | 2003                        |         
|                                                                                                                        |  | (In thousands)              |         
|Cash Flows From Operating Activities:                                                                                   |  |                             |         
|Net loss                                                                                                                |  | $                           | (8,723  
|Adjustments to reconcile net loss to net cash provided by operating
activities:                                         |  |                             |         
|Depreciation and amortization                                                                                           |  |                             | 97,721  
|Gain on sales of rental equipment                                                                                       |  |                             | (11,825 
|Deferred taxes                                                                                                          |  |                             | (4,833  
|Amortization of deferred compensation                                                                                   |  |                             | 1,614   
|Cumulative effect of change in accounting principle                                                                     |  |                             |         
|Changes in operating assets and liabilities:                                                                            |  |                             |         
|Accounts receivable                                                                                                     |  |                             | 43,930  
|Inventory                                                                                                               |  |                             | (9,021  
|Prepaid expenses and other assets                                                                                       |  |                             | (6,632  
|Accounts payable                                                                                                        |  |                             | (15,381 
|Accrued expenses and other liabilities                                                                                  |  |                             | (4,196  
|                                                                                                                        |  |                             |         
|Net cash provided by operating activities                                                                               |  |                             | 82,654  
|Cash Flows From Investing Activities:                                                                                   |  |                             |         
|Purchases of rental equipment                                                                                           |  |                             | (102,499
|Purchases of property and equipment                                                                                     |  |                             | (8,885  
|Proceeds from sales of rental equipment                                                                                 |  |                             | 35,080  
|In-process acquisition costs                                                                                            |  |                             |         
|Deposits on rental equipment purchases                                                                                  |  |                             | (13,422 
|Purchases of other companies                                                                                            |  |                             | (4,162  
|                                                                                                                        |  |                             |         
|Net cash used in investing activities                                                                                   |  |                             | (93,888 
|Cash Flows From Financing Activities:                                                                                   |  |                             |         
|Proceeds from debt                                                                                                      |  |                             | 19,500  
|Payments of debt                                                                                                        |  |                             | (3,041  
|Payments of financing costs                                                                                             |  |                             | (590    
|Proceeds from the exercise of common stock options                                                                      |  |                             |         
|Shares repurchased and retired                                                                                          |  |                             |         
|Company-obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust repurchased and retired |  |                             |         
|                                                                                                                        |  |                             |         
|Net cash provided by financing activities                                                                               |  |                             | 15,869  
|Effect of foreign exchange rates                                                                                        |  |                             | 9,062   
|                                                                                                                        |  |                             |         
|Net increase in cash and cash equivalents                                                                               |  |                             | 13,697  
|Cash and cash equivalents at beginning of period                                                                        |  |                             | 19,231  
|                                                                                                                        |  |                             |         
|Cash and cash equivalents at end of period                                                                              |  | $                           | 32,928  
|                                                                                                                        |  |                             |         
|Supplemental disclosure of cash flow information:                                                                       |  |                             |         
|Cash paid for interest                                                                                                  |  | $                           | 39,972  
|Cash paid for income taxes, net of refunds                                                                              |  | $                           | 360     
|                                                                                                                       
|Supplemental disclosure of non-cash investing and financing
activities:                                                 |  |                             |         
|The Company acquired the net assets and assumed certain liabilities of other companies
as follows:                      |  |                             |         
|Assets, net of cash acquired                                                                                            |  | $                           | 3,314   
|Liabilities assumed                                                                                                     |  |                             | (50     
|                                                                                                                        |  |                             |         
|                                                                                                                        |  |                             | 3,264   
|Due to seller and other payments                                                                                        |  |                             | 898     
|                                                                                                                        |  |                             |         
|Net cash paid                                                                                                           |  | $                           | 4,162   
|                                                                                                                        |  |                             |         



See
accompanying notes.



7



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UNITED RENTALS (NORTH AMERICA), INC.



CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                   |  | March 31, 2003                    |           |   | December 31, 2002 |  
|-------------------------------------------------------------------------------------------------- |  | --------------------------------- | --------- | - | ----------------- | -
|                                                                                                   |  | (In thousands, except share data) |          
|ASSETS                                                                                             |  |                                   |           |   |                   |  
|Cash and cash equivalents                                                                          |  | $                                 | 32,928    |   |                   | $
|Accounts receivable, net of allowance for doubtful accounts of $44,203 in 2003 and
$48,542 in 2002 |  |                                   | 422,266   |   |                   |  
|Inventory                                                                                          |  |                                   | 107,781   |   |                   |  
|Prepaid expenses and other assets                                                                  |  |                                   | 142,532   |   |                   |  
|Rental equipment, net                                                                              |  |                                   | 1,838,098 |   |                   |  
|Property and equipment, net                                                                        |  |                                   | 393,027   |   |                   |  
|Goodwill, net                                                                                      |  |                                   | 1,716,676 |   |                   |  
|Other intangible assets, net                                                                       |  |                                   | 5,021     |   |                   |  
|                                                                                                   |  |                                   |           |   |                   |  
|                                                                                                   |  | $                                 | 4,658,329 |   |                   | $
|                                                                                                   |  |                                   |           |   |                   |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                               |  |                                   |           |   |                   |  
|Liabilities:                                                                                       |  |                                   |           |   |                   |  
|Accounts payable                                                                                   |  | $                                 | 191,657   |   |                   | $
|Debt                                                                                               |  |                                   | 2,533,631 |   |                   |  
|Deferred taxes                                                                                     |  |                                   | 220,754   |   |                   |  
|Accrued expenses and other liabilities                                                             |  |                                   | 203,838   |   |                   |  
|                                                                                                   |  |                                   |           |   |                   |  
|Total liabilities                                                                                  |  |                                   | 3,149,880 |   |                   |  
|Commitments and contingencies                                                                      |  |                                   |           |   |                   |  
|Stockholders equity:                                                                              |  |                                   |           |   |                   |  
|Common stock$.01 par value, 3,000 shares authorized, 1,000 shares issued and
outstanding          |  |                                   |           |   |                   |  
|Additional paid-in capital                                                                         |  |                                   | 1,581,833 |   |                   |  
|Accumulated deficit                                                                                |  |                                   | (62,443   | ) |                   |  
|Accumulated other comprehensive loss                                                               |  |                                   | (10,941   | ) |                   |  
|                                                                                                   |  |                                   |           |   |                   |  
|Total stockholders equity                                                                         |  |                                   | 1,508,449 |   |                   |  
|                                                                                                   |  |                                   |           |   |                   |  
|                                                                                                   |  | $                                 | 4,658,329 |   |                   | $
|                                                                                                   |  |                                   |           |   |                   |  









See accompanying notes.



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##### Table of Contents

UNITED RENTALS (NORTH AMERICA), INC.



CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                                                                  |  | Three Months Ended March 31 |        
|----------------------------------------------------------------------------------------------------------------- |  | --------------------------- | -------
|                                                                                                                  |  | 2003                        |        
|                                                                                                                  |  | (In thousands)              |        
|Revenues:                                                                                                         |  |                             |        
|Equipment rentals                                                                                                 |  | $                           | 443,648
|Sales of rental equipment                                                                                         |  |                             | 35,080 
|Sales of equipment and merchandise and other revenues                                                             |  |                             | 113,123
|                                                                                                                  |  |                             |        
|Total revenues                                                                                                    |  |                             | 591,851
|Cost of revenues:                                                                                                 |  |                             |        
|Cost of equipment rentals, excluding depreciation                                                                 |  |                             | 252,404
|Depreciation of rental equipment                                                                                  |  |                             | 80,743 
|Cost of rental equipment sales                                                                                    |  |                             | 23,255 
|Cost of equipment and merchandise sales and other operating costs                                                 |  |                             | 81,460 
|                                                                                                                  |  |                             |        
|Total cost of revenues                                                                                            |  |                             | 437,862
|                                                                                                                  |  |                             |        
|Gross profit                                                                                                      |  |                             | 153,989
|Selling, general and administrative expenses                                                                      |  |                             | 96,761 
|Non-rental depreciation and amortization                                                                          |  |                             | 14,445 
|                                                                                                                  |  |                             |        
|Operating income                                                                                                  |  |                             | 42,783 
|Interest expense                                                                                                  |  |                             | 50,975 
|Other (income) expense, net                                                                                       |  |                             | (106   
|                                                                                                                  |  |                             |        
|Income (loss) before provision (benefit) for income taxes and cumulative effect of
change in accounting principle |  |                             | (8,086 
|Provision (benefit) for income taxes                                                                              |  |                             | (3,154 
|                                                                                                                  |  |                             |        
|Income (loss) before cumulative effect of change in accounting principle                                          |  |                             | (4,932 
|Cumulative effect of change in accounting principle, net of tax benefit of
$60,529                                |  |                             |        
|                                                                                                                  |  |                             |        
|Net loss                                                                                                          |  | $                           | (4,932 
|                                                                                                                  |  |                             |        





See accompanying notes.



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##### Table of Contents

UNITED RENTALS (NORTH AMERICA), INC.



CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

(Unaudited)



|                                             |  | Common Stock                      |  | Additional Paid-In Capital |  | Accumulated Deficit |           |  | Comprehensive Income |         |   | Accumulated Other Comprehensive Loss |  
|-------------------------------------------- |  | --------------------------------- |  | -------------------------- |  | ------------------- | --------- |  | -------------------- | ------- | - | ------------------------------------ | -
|                                             |  | Number of Shares                  |  | Amount                     |  |                     |           | 
|                                             |  | (In thousands, except share data) |  |                            |  |                    
|                                            
|Balance, December 31, 2002                   |  | 1,000                             |  |                            |  | $                   | 1,581,833 |  | $                    | (53,830 | ) |                                      |  
|Comprehensive income:                        |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      |  
|Net loss                                     |  |                                   |  |                            |  |                     |           |  |                      | (4,932  | ) |                                      | $
|Other comprehensive income:                  |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      |  
|Foreign currency translation adjustments     |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      |  
|Derivatives qualifying as hedges, net of tax |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      |  
|                                             |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      |  
|Comprehensive income                         |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      | $
|                                             |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      |  
|Dividend distributions to parent             |  |                                   |  |                            |  |                     |           |  |                      | (3,681  | ) |                                      |  
|                                             |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      |  
|Balance, March 31, 2003                      |  | 1,000                             |  |                            |  | $                   | 1,581,833 |  | $                    | (62,443 | ) |                                      |  
|                                             |  |                                   |  |                            |  |                     |           |  |                      |         |   |                                      |  



See
accompanying notes.



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##### Table of Contents

UNITED RENTALS (NORTH AMERICA), INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                   |  | Three Months Ended March 31 |         
|-------------------------------------------------------------------------------------------------- |  | --------------------------- | --------
|                                                                                                   |  | 2003                        |         
|                                                                                                   |  | (In thousands)              |         
|Cash Flows From Operating Activities:                                                              |  |                             |         
|Net loss                                                                                           |  | $                           | (4,932  
|Adjustments to reconcile net loss to net cash provided by operating
activities:                    |  |                             |         
|Depreciation and amortization                                                                      |  |                             | 95,188  
|Gain on sales of rental equipment                                                                  |  |                             | (11,825 
|Deferred taxes                                                                                     |  |                             | (4,833  
|Cumulative effect of change in accounting principle                                                |  |                             |         
|Changes in operating assets and liabilities:                                                       |  |                             |         
|Accounts receivable                                                                                |  |                             | 43,930  
|Inventory                                                                                          |  |                             | (9,021  
|Prepaid expenses and other assets                                                                  |  |                             | (6,442  
|Accounts payable                                                                                   |  |                             | (15,381 
|Accrued expenses and other liabilities                                                             |  |                             | (2,188  
|                                                                                                   |  |                             |         
|Net cash provided by operating activities                                                          |  |                             | 84,496  
|                                                                                                   |  |                             |         
|Cash Flows From Investing Activities:                                                              |  |                             |         
|Purchases of rental equipment                                                                      |  |                             | (102,499
|Purchases of property and equipment                                                                |  |                             | (7,046  
|Proceeds from sales of rental equipment                                                            |  |                             | 35,080  
|Deposits on rental equipment purchases                                                             |  |                             | (13,422 
|Purchases of other companies                                                                       |  |                             | (4,162  
|                                                                                                   |  |                             |         
|Net cash used in investing activities                                                              |  |                             | (92,049 
|                                                                                                   |  |                             |         
|Cash Flows From Financing Activities:                                                              |  |                             |         
|Proceeds from debt                                                                                 |  |                             | 19,500  
|Payments of debt                                                                                   |  |                             | (3,041  
|Payments of financing costs                                                                        |  |                             | (590    
|Capital contributions by parent                                                                    |  |                             |         
|Dividend distributions to parent                                                                   |  |                             | (3,681  
|                                                                                                   |  |                             |         
|Net cash provided by financing activities                                                          |  |                             | 12,188  
|Effect of foreign exchange rates                                                                   |  |                             | 9,062   
|                                                                                                   |  |                             |         
|Net increase in cash and cash equivalents                                                          |  |                             | 13,697  
|Cash and cash equivalents at beginning of period                                                   |  |                             | 19,231  
|                                                                                                   |  |                             |         
|Cash and cash equivalents at end of period                                                         |  | $                           | 32,928  
|                                                                                                   |  |                             |         
|Supplemental disclosure of cash flow information:                                                  |  |                             |         
|Cash paid for interest                                                                             |  | $                           | 35,370  
|Cash paid for income taxes, net of refunds                                                         |  | $                           | 360     
|                                                                                                  
|Supplemental disclosure of non-cash investing and financing
activities:                            |  |                             |         
|The Company acquired the net assets and assumed certain liabilities of other companies
as follows: |  |                             |         
|Assets, net of cash acquired                                                                       |  | $                           | 3,314   
|Liabilities assumed                                                                                |  |                             | (50     
|                                                                                                   |  |                             |         
|                                                                                                   |  |                             | 3,264   
|Due to seller and other payments                                                                   |  |                             | 898     
|                                                                                                   |  |                             |         
|Net cash paid                                                                                      |  | $                           | 4,162   
|                                                                                                   |  |                             |         



See
accompanying notes.



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##### Table of Contents

UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



1.    Basis of Presentation



General



United Rentals,
Inc., (Holdings 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.
Separate footnote information is not presented for the financial statements of URI and subsidiaries as that information is substantially equivalent to that presented below. Earnings per share data is not provided for the operating results of URI and
its subsidiaries as they are wholly owned subsidiaries of Holdings.



The Consolidated Financial Statements of the Company included herein are unaudited and, in the opinion of management, such financial statements reflect all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the results of the interim periods presented. Interim financial statements do not require all disclosures normally presented in year-end financial statements, and, accordingly, certain disclosures have been omitted.
Results of operations for the three month period ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. The Consolidated Financial Statements included herein should be read in
conjunction with the Companys Consolidated Financial Statements and related Notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2002.



Impact of Recently Issued Accounting Standards



In April 2002, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standard (SFAS) No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This standard rescinds SFAS
No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This standard also rescinds SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers. This standard amends SFAS No. 13, Accounting for Leases, to eliminate an inconsistency related to the required accounting for sale-leaseback transactions and certain lease
modifications. This standard also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The Company adopted this standard on January 1,
2003, and will reclassify a pre-tax extraordinary loss of approximately $18.1 million recognized during the second quarter of 2001 to operating income. The adoption of the remaining provisions of SFAS No. 145 did not have a material effect on the
Companys consolidated financial position or results of operations.



In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosure. This standard provides alternative methods of transition to the fair value method of
accounting for stock-based employee compensation under SFAS No. 123, Accounting for Stock-Based Compensation, but does not require the Company to use the fair value method. This standard also amends certain disclosure requirements
related to stock-based employee compensation. The Company adopted the disclosure portion of this standard as of December 31, 2002 and such adoption is reflected under Stock-Based Compensation below.



In January 2003, the FASB issued Interpretation No. 46
(FIN 46), Consolidation of Variable Interest Entities, which addresses consolidation of variable interest entities (VIEs). FIN 46 requires a VIE to be consolidated by a parent company if that company is subject to
a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. A VIE is a corporation, partnership, trust or any other legal structure used for
business purposes that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for



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##### Table of Contents

UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



the entity to support its activities. The consolidation requirements of FIN 46 apply immediately to VIEs created after January 31, 2003. For
entities created prior to February 1, 2003, these requirements will begin to apply in the first fiscal year or interim period beginning after June 15, 2003.



The Company leases a portion of its rental equipment under operating leases. Based on the Companys preliminary assessment, a
substantial portion of these leases may be with VIEs. In accordance with currently applicable accounting standards, neither the equipment subject to these leases nor the lease obligations are reflected on the Companys balance sheet (rather the
lease payments are reflected as an expense). FIN 46 will change this treatment for those operating leases that are with VIEs. If FIN 46 applies, the lease payment obligations would be reflected as debt on the Companys balance sheet and the
equipment, less applicable depreciation, would be reflected as an asset. To the extent that the amount of additional debt recorded on the balance sheet in connection with adoption of FIN 46 exceeds the amount of the additional assets so recorded,
the Company would recognize a non-cash expense designated as cumulative effect of change in accounting principle which could be material. The adoption of FIN 46 will not change the amount of the Companys contractual payment
obligations and should not impact its compliance with its existing debt covenants. Accordingly, the adoption of FIN 46 should not have a material impact on the Companys liquidity or overall financial condition.



In April 2003, the FASB issued SFAS No. 149, Amendment
of Statement 133 on Derivative Instruments and Hedging Activities. This standard amends and clarifies financial accounting and reporting for derivative instruments and for hedging activities under SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This standard is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. The provisions of this standard
that relate to SFAS No. 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. The adoption of this standard
regarding the provisions effective after June 30, 2003 is not expected to have a material effect on the Companys statements of financial position or results of operations.



13



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##### Table of Contents

UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





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
Employees. At March 31, 2003, the Company had six stock-based compensation plans. Since stock options are 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
is 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. The following table provides
additional information related to the Companys stock-based compensation arrangements for the three months ended March 31, 2003 and 2002 had the Company used the fair value method of accounting for stock-based employee compensation under SFAS
No. 123 (in thousands, except per share data):



|                                                                                         |  | 2003 |        |   | 2002 |  
|---------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | -
|Net loss, as reported                                                                    |  | $    | (8,723 | ) |      | $
|Plus: Stock-based compensation expense includedin reported net loss, net of
tax          |  |      | 958    |   |      |  
|Less: Stock-based compensation expense determined usingthe fair value
method, net of tax |  |      | (1,591 | ) |      |  
|                                                                                         |  |      |        |   |      |  
|Pro forma net loss                                                                       |  | $    | (9,356 | ) |      | $
|                                                                                         |  |      |        |   |      |  
|Basic loss per share:                                                                    |  |      |        |   |      |  
|As reported                                                                              |  | $    | (0.11  | ) |      | $
|Pro forma                                                                                |  | $    | (0.12  | ) |      | $
|Diluted loss per share:                                                                  |  |      |        |   |      |  
|As reported                                                                              |  | $    | (0.11  | ) |      | $
|Pro forma                                                                                |  | $    | (0.12  | ) |      | $



The
weighted average fair value of options granted was $4.36 and $10.64 during the three months ended March 31, 2003 and 2002, respectively. The fair value is estimated on the date of grant using the Black-Scholes option pricing model which uses
subjective assumptions which can materially affect fair value estimates and, therefore, does not necessarily provide a single measure of fair value of options. The Company used a risk-free interest rate average of 1.93% and 2.01% in 2003 and 2002,
respectively, a volatility factor for the market price of the Companys common stock of 65% and 66% in 2003 and 2002, respectively, and a weighted-average expected life of options of approximately three years in 2003 and 2002. For purposes of
these pro forma disclosures, the estimated fair value of options is amortized over the options vesting period. Since the number of options granted and their fair value may vary significantly from year to year, the pro forma compensation
expense in future years may be materially different.



2.    Acquisitions



During the three months ended March 31, 2003 and the year ended December 31, 2002, the Company completed one acquisition and two acquisitions, one of which is further described below, respectively, that were accounted for as
purchases. The results of operations of the businesses acquired in these acquisitions have been included in the Companys results of operations from their respective acquisition dates.



On June 30, 2002, the Company acquired 35 rental locations
from National Equipment Services, Inc. for approximately $111.6 million in cash, which was determined based primarily on the number of locations acquired and their financial performance. The acquisition of these rental locations was made to
complement the Companys existing network of rental locations. The results of operations of the acquisition are included in the Companys statement of operations as of the date of acquisition.



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##### Table of Contents

UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





The purchase prices for the acquisitions have been allocated to the assets acquired and liabilities assumed based on their respective fair values at their respective acquisition dates. However, the Company has not completed its
valuation of all of its purchases and, accordingly, the purchase price allocations are subject to change when additional information concerning asset and liability valuations are 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 12 months of the acquisition date and are not expected to result in significant differences between the preliminary and final
allocations.



The following table summarizes, on
an unaudited pro forma basis, the results of operations of the Company for the three months ended March 31, 2002 as though each acquisition which was consummated during the period January 1, 2003 to March 31, 2003 as mentioned above and in Note 3 to
the Notes to Consolidated Financial Statements included in the Companys 2002 Annual Report on Form 10-K was made on January 1, 2002 (in thousands, except per share data):



|                                                                                      |  | Three Months Ended March 31, 2002 |         
|------------------------------------------------------------------------------------- |  | --------------------------------- | --------
|Revenues                                                                              |  | $                                 | 617,791 
|Income before cumulative effect of change in accounting principle                     |  | $                                 | 7,538   
|Net loss                                                                              |  | $                                 | (280,801
|Basic earnings per share before cumulative effect of change in accounting
principle   |  | $                                 | 0.10    
|                                                                                      |  |                                   |         
|Basic earnings (loss) per share                                                       |  | $                                 | (3.82   
|                                                                                      |  |                                   |         
|Diluted earnings per share before cumulative effect of change in accounting
principle |  | $                                 | 0.08    
|                                                                                      |  |                                   |         
|Diluted earnings (loss) per share                                                     |  | $                                 | (2.88   
|                                                                                      |  |                                   |         



The
unaudited pro forma results are based upon certain assumptions and estimates which are subject to change. These results are not necessarily indicative of the actual results of operations that might have occurred, nor are they necessarily indicative
of expected results in the future.



Since the
acquisition made in 2003 had an insignificant impact on the Companys pro forma results of operations for the three months ended March 31, 2003, such pro forma results of operations are not shown.



3.    Goodwill and Other Intangible Assets



Goodwill consists of the excess of cost
over the fair value of indentifiable net assets acquired. The goodwill related to an acquisition is allocated to the acquired branches and other branches that are expected to benefit from synergies resulting from the acquisition. The allocation
among such branches is based upon the relative financial performance of each branch.



Changes in the Companys carrying amount of goodwill for the first three months of 2003 are as follows (in thousands):



|Balance at December 31, 2002                       |  | $ | 1,705,191
|-------------------------------------------------- |  | - | ---------
|Foreign currency translation and other adjustments |  |   | 9,530    
|Goodwill related to acquisitions                   |  |   | 1,955    
|                                                   |  |   |          
|Balance at March 31, 2003                          |  | $ | 1,716,676
|                                                   |  |   |          



As
required upon the adoption of SFAS No. 142 on January 1, 2002, the Company recorded a non-cash charge of approximately $348.9 million ($288.3 million, net of tax). This impairment charge, net of tax benefit, was recorded on the statement of
operations as a Cumulative Effect of Change in Accounting Principle.



15



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##### Table of Contents

UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In the fourth quarter of 2002 during the Companys first annual impairment analysis, it recorded an additional non-cash impairment
charge of approximately $247.9 million. This impairment charge was recorded on the statement of operations as goodwill impairment.



The Company will perform its next annual impairment test as required under SFAS No. 142, Goodwill and Other Intangible Assets,
as of October 1, 2003. Impairment testing may be required earlier if events or circumstances suggest the Companys goodwill could be impaired. Any future goodwill impairment charge would be recorded on the statement of operations as
goodwill impairment and would reduce operating income.



The Company tests for goodwill impairment on a branch-by-branch basis rather than on an aggregate basis. This means that a goodwill write-off is required even if only one or a limited number of the Companys branches
has impairment and even if there is no impairment for all its branches on an aggregate basis. Factors that may cause future impairment at a particular branch, in addition to macroeconomic factors that affect all the Companys branches, include
changes in local demand and local competitive conditions. The continued weakness in non-residential construction spending and the decreased business relating to traffic control rentals, in combination with the fact that the Company tests for
impairment on a branch-by-branch basis, increases the likelihood that the Company will be required to take additional non-cash goodwill write-offs in the future, although the Company cannot quantify at this time the magnitude of any future
write-offs. Future goodwill write-offs, if required, may have a material adverse effect on the Companys results.



Other intangible assets consist of non-compete agreements and are amortized over periods ranging from three to eight years. The cost of
other intangible assets and the related accumulated amortization as of March 31, 2003 were $17.0 million and $12.0 million, respectively. Amortization expense of other intangible assets was $0.9 million for the first three months of 2003.



As of March 31, 2003, estimated amortization
expense of other intangible assets for the remainder of 2003 and for each of the next five years is as follows (in thousands):



|Remainder of 2003 |  | $ | 2,219
|----------------- |  | - | -----
|2004              |  |   | 1,642
|2005              |  |   | 579  
|2006              |  |   | 298  
|2007              |  |   | 175  
|2008              |  |   | 71   
|Thereafter        |  |   | 37   
|                  |  |   |      
|                  |  | $ | 5,021
|                  |  |   |      



4.    Restructuring Charges



The Company adopted a restructuring plan in 2001 and a restructuring plan in the fourth quarter of 2002 as described below. In connection with these plans, the Company recorded pre-tax restructuring charges of
$28.9 million in 2001 and $28.3 million in the fourth quarter of 2002.



The 2001 plan involved the following principal elements: (i) 31 underperforming branches and five administrative offices were closed or consolidated with other locations ($18.3 million), (ii) the
reduction of the Companys workforce by 489 through the termination of branch and administrative personnel ($5.7 million) and (iii) certain information technology hardware and software was no longer used ($4.9 million).



The 2002 plan involved the following principal elements: (i)
42 underperforming branches and five administrative offices will be closed or consolidated with other locations (including 32 closed or consolidated as of March 31, 2003) ($24.6 million); (ii) the Companys workforce will be reduced by 412
(including 298 terminated as of March 31, 2003) ($2.8 million), and (iii) a certain information technology project was abandoned ($0.9 million).



16



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##### Table of Contents

UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





The aggregate balance of the 2001 and 2002 charges was $23.7 million as of March 31, 2003, consisting of $1.7 million for the 2001 charge and $22.0 million for the 2002 charge, and $27.1 million as of December 31, 2002, consisting of
$2.3 million for the 2001 charge and $24.8 million for the 2002 charge. The Company estimates that approximately $10.0 million of the aggregate amount will be incurred by December 31, 2003 (comprised of approximately $9.4 million of cash and
approximately $0.6 million of non-cash) and approximately $13.7 million will be paid in future periods.



Components of the restructuring charges are as follows (in thousands):



|                             |  | Balance December 31, 2002 |        | Activity in 2003 |   | Balance March 31, 2003
|---------------------------- |  | ------------------------- | ------ | ---------------- | - | ----------------------
|Costs to vacate facilities   |  | $                         | 22,258 |                  | $ | 2,773                 
|Workforce reduction costs    |  |                           | 3,462  |                  |   | 412                   
|Information technology costs |  |                           | 1,395  |                  |   | 196                   
|                             |  |                           |        |                  |   |                       
|                             |  | $                         | 27,115 |                  | $ | 3,381                 
|                             |  |                           |        |                  |   |                       



5.    Earnings Per Share



The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data):



|                                                                                                |  | Three Months Ended March 31 |       
|----------------------------------------------------------------------------------------------- |  | --------------------------- | ------
|                                                                                                |  | 2003                        |       
|Numerator                                                                                       |  |                             |       
|Income (loss) before cumulative effect of change in accounting principle                        |  | $                           | (8,723
|Denominator:                                                                                    |  |                             |       
|Denominator for basic earnings per shareweighted-average
shares                                |  |                             | 76,778
|Effect of dilutive securities:                                                                  |  |                             |       
|Employee stock options                                                                          |  |                             |       
|Warrants                                                                                        |  |                             |       
|Series C Preferred                                                                              |  |                             |       
|Series D Preferred                                                                              |  |                             |       
|                                                                                                |  |                             |       
|Denominator for dilutive earnings per shareadjusted weighted-average
shares                    |  |                             | 76,778
|                                                                                                |  |                             |       
|Earnings (loss) per sharebasic:                                                                |  |                             |       
|Income (loss) before cumulative effect of change in accounting
principle                        |  | $                           | (0.11 
|Cumulative effect of change in accounting principle, net                                        |  |                             |       
|                                                                                                |  |                             |       
|Net loss                                                                                        |  | $                           | (0.11 
|                                                                                                |  |                             |       
|Earnings (loss) per sharediluted:                                                              |  |                             |       
|Income (loss) before extraordinary item and cumulative effect of change in accounting
principle |  | $                           | (0.11 
|Cumulative effect of change in accounting principle, net                                        |  |                             |       
|                                                                                                |  |                             |       
|Net loss                                                                                        |  | $                           | (0.11 
|                                                                                                |  |                             |       



The
diluted share base for the first three months of 2003, where the numerator represents a loss, excludes the effect of dilutive securities because of their antidilutive effect.



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





6.    Comprehensive Income



The following table sets forth the Companys comprehensive income (loss) (in thousands):



|                                             |  | Three Months Ended March 31 |       
|-------------------------------------------- |  | --------------------------- | ------
|                                             |  | 2003                        |       
|Net loss                                     |  | $                           | (8,723
|Other comprehensive income (loss):           |  |                             |       
|Foreign currency translation adjustment      |  |                             | 14,544
|Derivatives qualifying as hedges, net of tax |  |                             | 1,363 
|                                             |  |                             |       
|Comprehensive income (loss)                  |  | $                           | 7,184 
|                                             |  |                             |       



7.    Guarantees



Restricted Stock.    The Company has granted to employees other than executive officers and directors approximately 1,200,000 shares of restricted stock that contain the following provisions. The shares
vest in 2004, 2005 or 2006 or earlier upon a change in control of the Company, death, disability, retirement or certain terminations of employment, and are subject to forfeiture prior to vesting on certain other terminations of employment, the
violation of non-compete provisions and certain other events. The grants provide that the Company will pay to employees who vest in their restricted stock, and who sell their restricted stock within five trading days after vesting, a maximum
aggregate amount for all these employees of: (i) approximately $300,000 for each dollar by which the per share proceeds of these sales are less than $27.26 but more than $15.17; (ii) approximately $800,000 for each dollar by which the per share
proceeds of these sales are less than $15.17 but more than $9.18; and (iii) approximately $1,200,000 for each dollar by which the per share proceeds of these sales are less than $9.18.



Operating Leases.    As part of certain of its equipment operating leases, the
Company guarantees that the value of the equipment at the end of the lease term will not be less than a specified projected residual value. The use of these guarantees helps to lower the Companys monthly operating lease payments. The Company
believes that the projected residual values are reasonable and, accordingly, that it is not likely to incur material obligations pursuant to such guarantees. However, the Company cannot be certain that the actual residual values will not turn out to
be significantly below the projected values that the Company guaranteed. If the residual value for all equipment subject to such guarantees were to be zero, then the Companys maximum potential liability under these guarantees would be
approximately $229.9 million. In conformity with applicable accounting standards, this potential liability is not recorded on the Companys balance sheet. However, this may change under a recently issued accounting interpretation relating to
the consolidation of variable interest entities, or FIN 46, described in Note 1 above.



8.    Subsequent Event



Financing Transaction in April 2003.    On April 9, 2003, URI issued an additional $200 million aggregate principal amount of its 103/4% Senior
Notes (the 2003 103/4% Notes) which are due April 15, 2008. The gross proceeds to the Company from the sale of the 2003 103/4% Notes were $207 million and the net proceeds were approximately $202 million (after deducting the initial purchasers discount and estimated offering expenses). The 2003 103/4% Notes contain the same guarantees, restrictive covenants and maturity date as our existing 103/4% senior notes. The Company used substantially all of the net proceeds from the 2003 103/4% Notes to pay down its outstanding borrowings under its receivables securitization facility.



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





9.    Condensed Consolidating Financial Information of Guarantor Subsidiaries



Certain indebtedness of URI, a 100%-owned subsidiary of Holdings (the Parent), is guaranteed by URIs United States
subsidiaries (the guarantor subsidiaries) and, in certain cases, also by Parent. However, this indebtedness is not guaranteed by URIs foreign subsidiaries (the non-guarantor subsidiaries). The guarantor subsidiaries are
all 100%-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 as of March 31, 2003 and December 31, 2002, and for each of the three month periods ended March 31, 2003 and 2002, are presented. The
condensed consolidating financial information of the Company and its subsidiaries are as follows:



CONDENSED CONSOLIDATING BALANCE SHEET



March 31, 2003



|                                                                                                |  | Parent         |           |   | URI |   |           | Guarantor Subsidiaries |  |   | Non- Guarantor Subsidiaries |   |  | Other and Eliminations |          |   | Consolidated Total |  
|----------------------------------------------------------------------------------------------- |  | -------------- | --------- | - | --- | - | --------- | ---------------------- |  | - | --------------------------- | - |  | ---------------------- | -------- | - | ------------------ | -
|                                                                                                |  | (In thousands) |          
|ASSETS                                                                                          |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Cash and cash equivalents                                                                       |  |                |           |   |     |   |           |                        |  | $ | 28,459                      |   |  | $                      | 4,469    |   |                    |  
|Accounts receivable, net                                                                        |  |                |           |   |     | $ | 16,342    |                        |  |   | 376,775                     |   |  |                        | 29,149   |   |                    |  
|Intercompany receivable (payable)                                                               |  |                |           |   |     |   | 614,424   |                        |  |   | (433,932                    | ) |  |                        | (180,492 | ) |                    |  
|Inventory                                                                                       |  |                |           |   |     |   | 42,315    |                        |  |   | 60,056                      |   |  |                        | 5,410    |   |                    |  
|Prepaid expenses and other assets                                                               |  |                |           |   |     |   | 43,502    |                        |  |   | 97,843                      |   |  |                        | 1,187    |   |                    | $
|Rental equipment, net                                                                           |  |                |           |   |     |   | 1,007,923 |                        |  |   | 684,350                     |   |  |                        | 145,825  |   |                    |  
|Property and equipment, net                                                                     |  | $              | 25,344    |   |     |   | 116,710   |                        |  |   | 259,989                     |   |  |                        | 16,328   |   |                    |  
|Investment in subsidiaries                                                                      |  |                | 1,541,509 |   |     |   | 2,275,120 |                        |  |   |                             |   |  |                        |          |   |                    |  
|Intangible assets, net                                                                          |  |                |           |   |     |   | 245,435   |                        |  |   | 1,344,634                   |   |  |                        | 131,628  |   |                    |  
|                                                                                                |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|                                                                                                |  | $              | 1,566,853 |   |     | $ | 4,361,771 |                        |  | $ | 2,418,174                   |   |  | $                      | 153,504  |   |                    | $
|                                                                                                |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                            |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Liabilities:                                                                                    |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Accounts payable                                                                                |  |                |           |   |     | $ | 52,086    |                        |  | $ | 126,649                     |   |  | $                      | 12,922   |   |                    |  
|Debt                                                                                            |  | $              | 226,550   |   |     |   | 2,472,494 |                        |  |   | 392                         |   |  |                        | 60,745   |   |                    | $
|Deferred taxes                                                                                  |  |                |           |   |     |   | 208,842   |                        |  |   | (805                        | ) |  |                        | 12,717   |   |                    |  
|Accrued expenses and other liabilities                                                          |  |                |           |   |     |   | 113,848   |                        |  |   | 83,541                      |   |  |                        | 6,449    |   |                    |  
|                                                                                                |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Total liabilities                                                                               |  |                | 226,550   |   |     |   | 2,847,270 |                        |  |   | 209,777                     |   |  |                        | 92,833   |   |                    |  
|Commitments and contingencies                                                                   |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Company-obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Stockholders equity:                                                                           |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Preferred stock                                                                                 |  |                | 5         |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Common stock                                                                                    |  |                | 771       |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Additional paid-in capital                                                                      |  |                | 1,345,128 |   |     |   | 1,581,833 |                        |  |   | 1,901,936                   |   |  |                        | 68,395   |   |                    |  
|Deferred compensation                                                                           |  |                | (55,218   | ) |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Retained earnings                                                                               |  |                | 60,558    |   |     |   | (62,443   | )                      |  |   | 306,461                     |   |  |                        | (1,672   | ) |                    |  
|Accumulated other comprehensive loss                                                            |  |                | (10,941   | ) |     |   | (4,889    | )                      |  |   |                             |   |  |                        | (6,052   | ) |                    |  
|                                                                                                |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|Total stockholders equity                                                                      |  |                | 1,340,303 |   |     |   | 1,514,501 |                        |  |   | 2,208,397                   |   |  |                        | 60,671   |   |                    | $
|                                                                                                |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  
|                                                                                                |  | $              | 1,566,853 |   |     | $ | 4,361,771 |                        |  | $ | 2,418,174                   |   |  | $                      | 153,504  |   |                    | $
|                                                                                                |  |                |           |   |     |   |           |                        |  |   |                             |   |  |                        |          |   |                    |  





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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





CONDENSED CONSOLIDATING BALANCE SHEET



December 31, 2002



|                                                                                                |  | Parent         |           |   | URI |   |           | GuarantorSubsidiaries |  |   | Non-GuarantorSubsidiaries |   |  | Other andEliminations |          |   | ConsolidatedTotal |  
|----------------------------------------------------------------------------------------------- |  | -------------- | --------- | - | --- | - | --------- | --------------------- |  | - | ------------------------- | - |  | --------------------- | -------- | - | ----------------- | -
|                                                                                                |  | (In thousands) |          
|ASSETS                                                                                          |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Cash and cash equivalents                                                                       |  |                |           |   |     |   |           |                       |  | $ | 16,908                    |   |  | $                     | 2,323    |   |                   |  
|Accounts receivable, net                                                                        |  |                |           |   |     | $ | 7,354     |                       |  |   | 426,733                   |   |  |                       | 32,109   |   |                   |  
|Intercompany receivable (payable)                                                               |  |                |           |   |     |   | 604,962   |                       |  |   | (422,624                  | ) |  |                       | (182,338 | ) |                   |  
|Inventory                                                                                       |  |                |           |   |     |   | 36,602    |                       |  |   | 50,450                    |   |  |                       | 4,746    |   |                   |  
|Prepaid expenses and other assets                                                               |  |                |           |   |     |   | 42,158    |                       |  |   | 79,323                    |   |  |                       | 1,326    |   |                   | $
|Rental equipment, net                                                                           |  |                |           |   |     |   | 1,003,791 |                       |  |   | 709,615                   |   |  |                       | 132,269  |   |                   |  
|Property and equipment, net                                                                     |  | $              | 25,765    |   |     |   | 137,713   |                       |  |   | 246,307                   |   |  |                       | 15,567   |   |                   |  
|Investment in subsidiaries                                                                      |  |                | 1,532,290 |   |     |   | 2,216,629 |                       |  |   |                           |   |  |                       |          |   |                   |  
|Intangible assets, net                                                                          |  |                |           |   |     |   | 243,529   |                       |  |   | 1,344,537                 |   |  |                       | 122,946  |   |                   |  
|                                                                                                |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|                                                                                                |  | $              | 1,558,055 |   |     | $ | 4,292,738 |                       |  | $ | 2,451,249                 |   |  | $                     | 128,948  |   |                   | $
|                                                                                                |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                            |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Liabilities:                                                                                    |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Accounts payable                                                                                |  |                |           |   |     | $ | 50,931    |                       |  | $ | 139,922                   |   |  | $                     | 16,185   |   |                   |  
|Debt                                                                                            |  | $              | 226,550   |   |     |   | 2,454,119 |                       |  |   | 711                       |   |  |                       | 57,968   |   |                   | $
|Deferred taxes                                                                                  |  |                |           |   |     |   | 226,392   |                       |  |   | (805                      | ) |  |                       |          |   |                   |  
|Accrued expenses and other liabilities                                                          |  |                |           |   |     |   | 58,968    |                       |  |   | 115,430                   |   |  |                       | 8,699    |   |                   |  
|                                                                                                |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Total liabilities                                                                               |  |                | 226,550   |   |     |   | 2,790,410 |                       |  |   | 255,258                   |   |  |                       | 82,852   |   |                   |  
|Commitments and contingencies                                                                   |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Company-obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Stockholders equity:                                                                           |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Preferred stock                                                                                 |  |                | 5         |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Common stock                                                                                    |  |                | 765       |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Additional paid-in capital                                                                      |  |                | 1,341,290 |   |     |   | 1,562,410 |                       |  |   | 1,901,936                 |   |  |                       | 68,395   |   |                   |  
|Deferred compensation                                                                           |  |                | (52,988   | ) |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Retained earnings                                                                               |  |                | 69,281    |   |     |   | (53,830   | )                     |  |   | 294,055                   |   |  |                       | (1,703   | ) |                   |  
|Accumulated other comprehensive loss                                                            |  |                | (26,848   | ) |     |   | (6,252    | )                     |  |   |                           |   |  |                       | (20,596  | ) |                   |  
|                                                                                                |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|Total stockholders equity                                                                      |  |                | 1,331,505 |   |     |   | 1,502,328 |                       |  |   | 2,195,991                 |   |  |                       | 46,096   |   |                   | $
|                                                                                                |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  
|                                                                                                |  | $              | 1,558,055 |   |     | $ | 4,292,738 |                       |  | $ | 2,451,249                 |   |  | $                     | 128,948  |   |                   | $
|                                                                                                |  |                |           |   |     |   |           |                       |  |   |                           |   |  |                       |          |   |                   |  



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS



|                                                                  |  | For the Three Months Ended March 31, 2003 |       
|----------------------------------------------------------------- |  | ----------------------------------------- | ------
|                                                                  |  | Parent                                    |       
|Revenues:                                                         |  |                                           |       
|Equipment rentals                                                 |  |                                           |       
|Sales of rental equipment                                         |  |                                           |       
|Sales of equipment and merchandise and other revenues             |  |                                           |       
|                                                                  |  |                                           |       
|Total revenues                                                    |  |                                           |       
|Cost of revenues:                                                 |  |                                           |       
|Cost of equipment rentals, excluding depreciation                 |  |                                           |       
|Depreciation of rental equipment                                  |  |                                           |       
|Cost of rental equipment sales                                    |  |                                           |       
|Cost of equipment and merchandise sales and other operating costs |  |                                           |       
|                                                                  |  |                                           |       
|Total cost of revenues                                            |  |                                           |       
|                                                                  |  |                                           |       
|Gross profit                                                      |  |                                           |       
|Selling, general and administrative expenses                      |  |                                           |       
|Non-rental depreciation and amortization                          |  | $                                         | 2,450 
|                                                                  |  |                                           |       
|Operating income (loss)                                           |  |                                           | (2,450
|Interest expense                                                  |  |                                           | 3,681 
|Preferred dividends of a subsidiary trust                         |  |                                           |       
|Other (income) expense, net                                       |  |                                           |       
|                                                                  |  |                                           |       
|Income (loss) before provision (benefit) for income taxes         |  |                                           | (6,131
|Provision (benefit) for income taxes                              |  |                                           | (2,391
|                                                                  |  |                                           |       
|Income (loss) before equity in net earnings of subsidiaries       |  |                                           | (3,740
|                                                                  |  |                                           |       
|Equity in net loss of subsidiaries                                |  |                                           | (4,932
|                                                                  |  |                                           |       
|Net income (loss)                                                 |  | $                                         | (8,672
|                                                                  |  |                                           |       



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS



|                                                                                                                    |  | For the Three Months Ended March 31, 2002 |         
|------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | --------
|                                                                                                                    |  | Parent                                    |         
|Revenues:                                                                                                           |  |                                           |         
|Equipment rentals                                                                                                   |  |                                           |         
|Sales of rental equipment                                                                                           |  |                                           |         
|Sales of equipment and merchandise and other revenues                                                               |  |                                           |         
|                                                                                                                    |  |                                           |         
|Total revenues                                                                                                      |  |                                           |         
|Cost of revenues:                                                                                                   |  |                                           |         
|Cost of equipment rentals, excluding depreciation                                                                   |  |                                           |         
|Depreciation of rental equipment                                                                                    |  |                                           |         
|Cost of rental equipment sales                                                                                      |  |                                           |         
|Cost of equipment and merchandise sales and other operating costs                                                   |  |                                           |         
|                                                                                                                    |  |                                           |         
|Total cost of revenues                                                                                              |  |                                           |         
|                                                                                                                    |  |                                           |         
|Gross profit                                                                                                        |  |                                           |         
|Selling, general and administrative expenses                                                                        |  |                                           |         
|Non-rental depreciation and amortization                                                                            |  | $                                         | 2,129   
|                                                                                                                    |  |                                           |         
|Operating income (loss)                                                                                             |  |                                           | (2,129  
|Interest expense                                                                                                    |  |                                           | 4,694   
|Preferred dividends of a subsidiary trust                                                                           |  |                                           |         
|Other (income) expense, net                                                                                         |  |                                           |         
|                                                                                                                    |  |                                           |         
|Income (loss) before provision (benefit) for income taxes and cumulative effect of
change in accounting principle   |  |                                           | (6,823  
|Provision (benefit) for income taxes                                                                                |  |                                           | (2,661  
|                                                                                                                    |  |                                           |         
|Income (loss) before cumulative effect of change in accounting principle and equity in
net earnings of subsidiaries |  |                                           | (4,162  
|Cumulative effect of change in accounting principle                                                                 |  |                                           |         
|                                                                                                                    |  |                                           |         
|Income (loss) before equity in net earnings of subsidiaries                                                         |  |                                           | (4,162  
|Equity in net loss of subsidiaries                                                                                  |  |                                           | (276,593
|                                                                                                                    |  |                                           |         
|Net income (loss)                                                                                                   |  | $                                         | (280,755
|                                                                                                                    |  |                                           |         



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



CONDENSED CONSOLIDATING CASH FLOW INFORMATION



|                                                                                                   |  | For the Three Months Ended March 31, 2003 |       
|-------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | ------
|                                                                                                   |  | Parent                                    |       
|                                                                                                   |  | (In thousands)                            |       
|Net cash provided by (used in) operatingactivities                                                 |  | $                                         | (1,842
|Cash flows from investing activities:                                                              |  |                                           |       
|Purchases of rental equipment                                                                      |  |                                           |       
|Purchases of property and equipment                                                                |  |                                           | (1,839
|Proceeds from sales of rental equipment                                                            |  |                                           |       
|Purchases of other companies                                                                       |  |                                           |       
|Deposits on rental equipment purchases                                                             |  |                                           |       
|                                                                                                   |  |                                           |       
|Net cash used in investing activities                                                              |  |                                           | (1,839
|Cash flows from financing activities:                                                              |  |                                           |       
|Proceeds from debt                                                                                 |  |                                           |       
|Payments of debt                                                                                   |  |                                           |       
|Payments of financing costs                                                                        |  |                                           |       
|Dividend distributions to parent                                                                   |  |                                           |       
|Proceeds from dividends from subsidiary                                                            |  |                                           | 3,681 
|                                                                                                   |  |                                           |       
|Net cash provided by (used in) financing activities                                                |  |                                           | 3,681 
|Effect of foreign exchange rates                                                                   |  |                                           |       
|                                                                                                   |  |                                           |       
|Net increase in cash and cash equivalents                                                          |  |                                           |       
|Cash and cash equivalents at beginning of period                                                   |  |                                           |       
|                                                                                                   |  |                                           |       
|Cash and cash equivalents at end of period                                                         |  |                                           |       
|                                                                                                   |  |                                           |       
|Supplemental disclosure of cash flow information:                                                  |  |                                           |       
|Cash paid for interest                                                                             |  | $                                         | 4,602 
|Cash paid for income taxes, net of refunds                                                         |  |                                           |       
|Supplemental disclosure of non-cash investing and financing activities:                            |  |                                           |       
|The Company acquired the net assets and assumed certain liabilities of other companies
as follows: |  |                                           |       
|Assets, net of cash acquired                                                                       |  |                                           |       
|Liabilities assumed                                                                                |  |                                           |       
|                                                                                                   |  |                                           |       
|                                                                                                   |  |                                           |       
|Due to seller and other payments                                                                   |  |                                           |       
|                                                                                                   |  |                                           |       
|Net cash paid                                                                                      |  |                                           |       
|                                                                                                   |  |                                           |       



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





CONDENSED CONSOLIDATING CASH FLOW INFORMATION



|                                                                                                                        |  | For the Three Months Ended March 31, 2002 |        
|----------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | -------
|                                                                                                                        |  | Parent                                    |        
|                                                                                                                        |  | (In thousands)                            |        
|Net cash provided by (used in) operatingactivities                                                                      |  | $                                         | (15,639
|Cash flows from investing activities:                                                                                   |  |                                           |        
|Purchases of rental equipment                                                                                           |  |                                           |        
|Purchases of property and equipment                                                                                     |  |                                           | (535   
|Proceeds from sales of rental equipment                                                                                 |  |                                           |        
|Capital contributed to subsidiary                                                                                       |  |                                           | (58,548
|Purchases of other companies                                                                                            |  |                                           |        
|Deposits on rental equipment purchases                                                                                  |  |                                           |        
|In-process acquisition costs                                                                                            |  |                                           |        
|                                                                                                                        |  |                                           |        
|Net cash used in investing activities                                                                                   |  |                                           | (59,083
|Cash flows from financing activities:                                                                                   |  |                                           |        
|Proceeds from debt                                                                                                      |  |                                           |        
|Payments of debt                                                                                                        |  |                                           |        
|Payments of financing costs                                                                                             |  |                                           |        
|Capital contributions by parent                                                                                         |  |                                           |        
|Dividend distributions to parent                                                                                        |  |                                           |        
|Shares repurchased and retired                                                                                          |  |                                           | (22,374
|Proceeds from the exercise of commonstock options                                                                       |  |                                           | 58,548 
|Company-obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust repurchased and retired |  |                                           |        
|Proceeds from dividends from subsidiary                                                                                 |  |                                           | 38,548 
|                                                                                                                        |  |                                           |        
|Net cash provided by (used in) financing activities                                                                     |  |                                           | 74,722 
|Effect of foreign exchange rates                                                                                        |  |                                           |        
|                                                                                                                        |  |                                           |        
|Net increase (decrease) in cash and cashequivalents                                                                     |  |                                           |        
|Cash and cash equivalents at beginning of period                                                                        |  |                                           |        
|                                                                                                                        |  |                                           |        
|Cash and cash equivalents at end of period                                                                              |  |                                           |        
|                                                                                                                        |  |                                           |        
|Supplemental disclosure of cash flowinformation:                                                                        |  |                                           |        
|Cash paid for interest                                                                                                  |  | $                                         | 4,875  
|Cash paid for income taxes, net of refunds                                                                              |  |                                           |        
|Supplemental disclosure of non-cash investingand financing
activities:                                                  |  |                                           |        
|The Company acquired the net assets andassumed certain liabilities of other
companies as follows:                       |  |                                           |        
|Assets, net of cash acquired                                                                                            |  |                                           |        
|Liabilities assumed                                                                                                     |  |                                           |        
|                                                                                                                        |  |                                           |        
|                                                                                                                        |  |                                           |        
|Due to seller and other payments                                                                                        |  |                                           |        
|                                                                                                                        |  |                                           |        
|Net cash paid                                                                                                           |  |                                           |        
|                                                                                                                        |  |                                           |        





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



The following discussion reviews our operations for the three months ended March 31, 2003 and 2002 and should be read in conjunction with
the Unaudited Consolidated Financial Statements and related Notes included herein and the Consolidated Financial Statements and related Notes included in our 2002 Annual Report on Form 10-K.



General



We are the largest equipment rental company in the world. Our revenues are divided into three categories:



| |  |  | Equipment rentalsThis category includes our revenues from renting equipment. This category also includes related revenues such as the fees we charge for
equipment delivery, fuel, repair of rental equipment and damage waivers.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sales of rental equipmentThis category includes our revenues from the sale of used rental equipment.
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Sales of equipment and merchandise and other revenuesThis category principally includes our revenues from the following sources: (i) the sale of new
equipment, (ii) the sale of supplies and merchandise, (iii) repair services and the sale of parts for equipment owned by customers, and (iv) the operations of our subsidiary that develops and markets software for use by equipment rental companies in
managing and operating multiple branch locations.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our cost of operations consists primarily of: (i) depreciation costs relating to the rental equipment that we own and lease payments for the rental equipment that we hold under operating leases, (ii) the cost of repairing and
maintaining rental equipment, (iii) the cost of the items that we sell including new and used equipment and related parts, merchandise and supplies and (iv) personnel costs, occupancy costs and supply costs.



We record rental equipment expenditures at cost and depreciate
equipment using the straight-line method over the estimated useful life (which ranges from two to ten years), after giving effect to an estimated salvage value of 0% to 10% of cost.



Selling, general and administrative expenses primarily include sales commissions, bad debt expense,
advertising and marketing expenses, management salaries, and clerical and administrative overhead.



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 consist
of non-compete agreements.



We completed
acquisitions in each of 2003 and 2002. See Note 2 to the Notes to Unaudited Consolidated Financial Statements included elsewhere in this Report. In view of the fact that our operating results for these years were affected by acquisitions, we believe
that our results for these periods may not be directly comparable.



Change in Accounting Treatment for Goodwill and Other Intangible Assets



Goodwill consists of the excess of cost over the fair value of identifiable net assets acquired. The goodwill related to an acquisition is allocated to the acquired branches and other branches that are
expected to benefit from synergies resulting from the acquisition. The allocation among such branches is based upon the relative financial performance of each branch.



Effective January 1, 2002, we adopted Statement of Financial Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets issued by the Financial Accountants Standards Board (FASB). Under this standard, our goodwill, which we previously amortized over 40 years, is no longer amortized. Our other



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intangible assets will continue to be amortized over their estimated useful lives. Under the new accounting standard, we are required to
periodically review our goodwill for impairment. In general, this means that we must determine whether the fair value of the goodwill, calculated in accordance with applicable accounting standards, is at least equal to the recorded value shown on
our balance sheet. If the fair value of the goodwill is less than the recorded value, we are required to write off the excess goodwill as an expense.



We completed our initial impairment analysis in the first quarter of 2002 and recorded a non-cash charge of approximately $348.9 million
($288.3 million, net of tax). This impairment charge, net of tax benefit, was recorded on our statement of operations as a Cumulative Effect of Change in Accounting Principle. This charge appears below the operating income line and,
accordingly, does not impact operating income. In the fourth quarter of 2002 during our first annual impairment analysis, we recorded an additional non-cash impairment charge of approximately $247.9 million. This impairment charge was recorded on
the statement of operations as goodwill impairment. This charge appears above the operating income line and, accordingly, does impact operating income. The number of branches at which there was some impairment represented approximately
43% of our total branches. However, a substantial part of the total impairment charges (approximately 85%) reflected impairment at approximately 20% of our total branches. Our stockholders equity was reduced by the amount of both charges.



Under SFAS No. 142, we are required to review
our goodwill for further impairment at least annually. Our next annual impairment test will be as of October 1, 2003. Impairment testing may be required earlier if events or circumstances suggest that the Companys goodwill could be impaired.
Any future goodwill impairment charge would be recorded on our statement of operations as goodwill impairment and would reduce operating income.



We test for goodwill impairment on a branch-by-branch basis rather than on an aggregate basis. This means that a goodwill write-off is
required even if only one or a limited number of our branches has impairment and even if there is no impairment for all our branches on an aggregate basis. Factors that may cause future impairment at a particular branch, in addition to macroeconomic
factors that affect all our branches, include changes in local demand and local competitive conditions. The continued weakness in non-residential construction spending and reduced state spending on infrastructure projects, in combination with the
fact that we test for impairment on a branch-by-branch basis, increases the likelihood that we will be required to take additional non-cash goodwill write-offs in the future, although we cannot quantify at this time the magnitude of any future
write-offs. Future goodwill write-offs, if required, may have a material adverse effect on our results.



Restructuring Plans in 2001 and 2002



We adopted a restructuring plan in 2001 and a restructuring plan in the fourth quarter of 2002 as described below. In connection with these plans, we recorded pre-tax restructuring charges of $28.9
million in 2001 and $28.3 million in the fourth quarter of 2002.



The 2001 plan involved the following principal elements: (i) 31 underperforming branches and five administrative offices were closed or consolidated with other locations ($18.3 million), (ii) the reduction of our workforce by 489
through the termination of branch and administrative personnel ($5.7 million), and (iii) certain information technology hardware and software was no longer used ($4.9 million). We estimate that we realized annual cost savings from this plan in the
range of $27 million to $33 million. These cost savings represent the costs eliminated by the restructuring plan partially offset by estimated increased costs at remaining branches due to the shift to remaining branches of a portion of the equipment
and business of the closed branches.



The 2002
plan involved the following principal elements: (i) 42 underperforming branches and five administrative offices will be closed or consolidated with other locations (including 32 closed or consolidated as of March 31, 2003) ($24.6 million); (ii) our
workforce will be reduced by 412 (including 298 terminated as of March 31, 2003) ($2.8 million), and (iii) a certain information technology project was abandoned ($0.9 million).



The aggregate balance of the 2001 and 2002 charges was $23.7 million as of March 31, 2003, consisting of $1.7
million for the 2001 charge and $22.0 million for the 2002 charge, and $27.1 million as of December 31,



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2002, consisting of $2.3 million for the 2001 charge and $24.8 million for the 2002 charge. We estimate that approximately $10.0 million of
the aggregate amount will be incurred by December 31, 2003 (comprised of $9.4 million of cash and $0.6 million of non-cash) and approximately $13.7 million will be paid in future periods.



Components of the restructuring charges are as follows (in thousands):



|                             |  | Balance December 31,2002 |        | Activity in 2003 |   | Balance March 31,2003
|---------------------------- |  | ------------------------ | ------ | ---------------- | - | ---------------------
|Costs to vacate facilities   |  | $                        | 22,258 |                  | $ | 2,773                
|Workforce reduction costs    |  |                          | 3,462  |                  |   | 412                  
|Information technology costs |  |                          | 1,395  |                  |   | 196                  
|                             |  |                          |        |                  |   |                      
|                             |  | $                        | 27,115 |                  | $ | 3,381                
|                             |  |                          |        |                  |   |                      



Results of Operations



Three Months Ended March 31, 2003 and
2002



Revenues.    We had total revenues of $591.9 million in the first three months of 2003, representing a decrease of 1.2% from total revenues of $599.0 million in the first three months of 2002. The different
components of our revenues are discussed below:



1.Equipment Rentals.    Our revenues from equipment rentals were $443.6 million in the first quarter of 2003, representing a decrease of 0.6% from $446.3 million in the first three months of
2002. These revenues accounted for 75.0% of our total revenues in 2003 compared with 74.5% of our total revenues in 2002.



Rental rates were down 2.3% in the first quarter of 2003 compared to the same period last year. This decrease principally reflected
continued weakness in non-residential construction. Our dollar equipment utilization rate in the first quarter of 2003 was 46.6% compared to 49.6% in last years first quarter. The decrease in the utilization rate was primarily attributable to
the declines in rental rates and weakness in traffic equipment rentals.



The 0.6% decline in equipment rental revenues principally reflected the net effect of the following:



| |  |  | Our revenues at locations open more than one year, or same store rental revenues, increased by approximately 1.6%. This increase reflected an increase in the volume
of transactions at these locations, which was more than sufficient to offset the decline in rental rates. This volume increase was primarily driven by the transfer to these locations of equipment that had previously been deployed at branches that
were closed or consolidated under our restructuring plan. Although overall we saw an increase in our rental volume, the volume of traffic equipment rentals decreased principally due to reduced state spending for infrastructure projects.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We lost revenues due to the closing or sale of branches and added revenues due to the addition of new locations through acquisitions and start-ups. The net effect of
these two factors was a loss of revenues that more than offset the increase in same store rental revenues.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



2.Sales of Rental Equipment.    Our revenues from sales of rental equipment were $35.1 million in
the first three months of 2003, representing a decrease of 10.4% from $39.1 million in the first three months of 2002. These revenues accounted for 5.9% of our total revenues in the first three months of 2003 compared with 6.5% of our total revenues
in the first three months of 2002. The decrease in these revenues in the first three months of 2003 reflected weaker pricing and the slowing of equipment sales as part of our plan to increase the average age of our fleet (as described below under
Liquidity and Capital ResourcesCash Requirements Related to Operations).



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3.Sales of Equipment and Merchandise and Other Revenues.    Our revenues from sale of equipment and merchandise and other revenues were $113.1 million in the first three months of
2003 and $113.5 million in the first three months of 2002. These revenues accounted for 19.1% of our total revenues in the first three months of 2003 compared with 19.0% of our total revenues in the first three months of 2002. Revenues in the first
three months of 2003 as compared to the first three months of 2002 reflected a decrease in new equipment sales which was offset by increases in revenues from sales of merchandise and service.



Gross Profit.    Gross profit
decreased to $154.0 million in the first three months of 2003 from $179.2 million in the first three months of 2002. This decrease reflected the decrease in total revenues discussed above, as well as the decrease in gross profit margin
described below primarily from equipment rental. Information concerning our gross profit margin by source of revenue is set forth below:



1.Equipment Rentals.    Our gross profit margin from equipment rental revenues was 24.9% in the
first three months of 2003 and 29.7% in the first three months of 2002. The decrease in 2003 principally reflected the decrease in rental rates described above, the decrease in traffic equipment rentals, higher costs related to fuel, employee
benefits and insurance and increased rental depreciation due to a larger fleet size.



2.Sales of Rental Equipment.    Our gross profit margin from sales of rental equipment was 33.7% in the first three months of 2003 and 35.8% in the first three
months of 2002. The decrease in 2003 primarily reflected continued price weakness in the used equipment market.



3.Sales of Equipment and Merchandise and Other Revenues.    Our gross profit margin from
sales of equipment and merchandise and other revenues was 28.0% in the first three months of 2003 and 28.7% in the first three months of 2002.



Selling, General and Administrative Expenses.    Selling, general and administrative expenses
(SG&A) were $96.8 million, or 16.3% of total revenues, during the first three months of 2003 and $98.5 million, or 16.4% of total revenues, during the first three months of 2002. This decrease in SG&A reflected our continued
focus on SG&A cost reductions.



Non-rental
Depreciation and Amortization.    Non-rental depreciation and amortization was $17.0 million, or 2.9% of total revenues, in the first three months of 2003 and $13.9 million, or 2.3% of total revenues, in the first three
months of 2002. The increase in 2003 was primarily attributable to an increase in transportation equipment and an increase in leasehold improvements in connection with branch upgrades.



Operating Income.    We recorded operating income of $40.3 million in the first
three months of 2003 compared with operating income of $66.8 million in the first three months of 2002. The principal reason for the decrease in 2003 was the decline in revenues and gross margins described above.



Interest Expense.    Interest
expense was $51.0 million in the first three months of 2003 and $50.0 million in the first three months of 2002. The increase in 2003 principally reflected an increase in interest expense related to a higher average debt balance partially offset by
lower interest rates on our variable rate debt.



Preferred Dividends of a Subsidiary Trust.    Preferred dividends of a subsidiary trust were $3.7 million during the first three months of 2003 and $4.7 million during the first three months of 2002. The
decrease in 2003 reflected our repurchase of a portion of our outstanding trust preferred securities during 2002.



Other (Income) Expense.    Other income was $0.1 million in the first three months of 2003 and $0.3 million in
the first three months of 2002.



Income
Taxes.    Income taxes were a benefit of $5.6 million, or an effective rate of 39%, in the first three months of 2003 and a provision for taxes of $4.8 million, or an effective rate of 39%, in the first three months of 2002.



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Income
(Loss) Before Cumulative Effect of Change in Accounting Principle.    We had a loss before cumulative effect of change in accounting principle of $8.7 million in the first three months of 2003 and income before cumulative
effect of change in accounting principle of $7.6 million in the first three months of 2002. The loss in 2003 principally reflected the decrease in operating income described above.



Cumulative Effect of Change in Accounting Principle.    During the first three
months of 2002, as described under Change in Accounting Treatment for Goodwill and Other Intangible Assets, we recorded an amount of $288.3 million, net of tax, for impairment of goodwill as part of our transitional impairment test
upon the adoption of SFAS No. 142.



Liquidity and Capital
Resources



Financing Transaction in April 2003



On April 9, 2003, URI issued an
additional $200 million aggregate principal amount of its 103/4% Senior Notes which are due April 15, 2008. The gross proceeds from the sale of these notes were $207 million and the net proceeds were approximately $202
million (after deducting the initial purchasers discount and estimated offering expenses). These notes are unsecured and were issued by United Rentals (North America), Inc. (URI), a wholly owned subsidiary of United Rentals, Inc.
(Holdings) and are guaranteed by Holdings and, subject to limited exceptions, our domestic subsidiaries. We used substantially all of the net proceeds from these notes to pay down our outstanding borrowings under our receivables
securitization facility. This facility is currently scheduled to mature and terminate in June 2003, absent the consent of the lenders to renew the facility. We intend to seek the lenders consent to renew this facility or, alternatively, seek
to obtain a new facility. The repayment of the outstanding borrowings under the accounts receivables securitization facility from the proceeds of the notes offering gives us additional flexibility to borrow in the future to fund general corporate
purposes or growth opportunities. These may include fleet expansion when non-residential construction eventually rebounds, acquisitions or the repurchase of outstanding securities of our company. The principal purpose of the April notes offering was
to obtain additional borrowing flexibility and to lengthen the maturity of our debt. For additional information concerning this transaction, see Note 7 to the Notes to Unaudited Consolidated Financial Statements included elsewhere in this Report.



Sources and Uses of Cash



During the first three months of 2003, we (i) generated cash
from operations of $82.7 million, (ii) generated cash from the sale of rental equipment of $35.1 million and (iii) obtained cash from borrowings, net of repayments, of approximately $16.5 million. We used cash during this period principally to (i)
pay consideration for acquisitions of $4.2 million, (ii) purchase rental equipment of $102.5 million, (iii) purchase other property and equipment of $8.9 million and (iv) pay deposits on rental equipment purchases of $13.4 million.



Cash Requirements Related to Operations



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 May 8, 2003, we had $451.8 million of borrowing capacity available under our $650
million revolving credit facility (reflecting outstanding loans of approximately $49.7 million and outstanding letters of credit in the amount of approximately $148.5 million). We believe that our existing sources of cash will be sufficient to
support our existing operations over the next 12 months.



We expect that our principal needs for cash relating to our existing operations over the next 12 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) costs relating to our restructuring plans. We plan to fund such cash requirements relating to our existing operations from our existing sources of cash described above.
In addition, we plan to seek additional financing through the securitization of



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some of our equipment. For information on the scheduled principal payments coming due on our outstanding debt and on the payments coming due
under our existing operating leases, see Certain Information Concerning Contractual Obligations.



The amount of our future capital expenditures will depend on a number of factors, including general economic conditions and growth
prospects. Based on current conditions, we estimate that capital expenditures for the year 2003 will be approximately $350 million for our existing operations. These expenditures are comprised of approximately $300 million of expenditures to replace
rental equipment sold, of which $102 million was expended during the first quarter of 2003, and approximately $50 million of expenditures for the purchase of non-rental equipment, of which $9 million was expended during the first quarter of 2003. We
expect that we will fund such expenditures from proceeds from the sale of used equipment, cash generated from operations and, if required, borrowings available under our revolving credit facility.



We plan to increase the weighted average age of our fleet,
which is approximately 37 months, to 42 months by the end of 2003. Over the longer term we may further increase the average age of our fleet to about 45 months. This plan reflects our belief that the optimum age of our fleet is somewhat higher
than where it is today. In estimating the optimum age of our fleet, we have taken into account a number of factors, including our current estimates regarding the relationship between age and reliability and maintenance costs and the capital
expenditures required to maintain the fleet at a particular age. We will continue to evaluate these factors and, if our estimates prove inaccurate, may modify our plan.



While emphasizing internal growth, we may also 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.



Certain Information Concerning Contractual Obligations



The table below provides certain information concerning the payments coming due under certain categories of our existing contractual
obligations:



|                                                                                                |  | Remainder of 2003 |         |     | 2004 |   | 2005    |  | 2006 |         | 2007 |   | 2008    |  | Thereafter |         | Total
|----------------------------------------------------------------------------------------------- |  | ----------------- | ------- | --- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | ---------- | ------- | -----
|                                                                                                |  | (in thousands)   
|Debt excluding capital leases(1)                                                                |  | $                 | 182,598 | (2) |      | $ | 6,904   |  | $    | 220     |      | $ | 107,470 |  | $          | 580,102 |      
|Capital leases(1)                                                                               |  |                   | 9,412   |     |      |   | 20,097  |  |      | 7,485   |      |   | 5,043   |  |            | 323     |      
|Operating leases(1):                                                                            |  |                   |         |     |      |   |         |  |      |         |      |   |         |  |            |         |      
|Real estate                                                                                     |  |                   | 50,939  |     |      |   | 63,084  |  |      | 55,177  |      |   | 50,200  |  |            | 45,809  |      
|Rental equipment                                                                                |  |                   | 85,869  |     |      |   | 89,960  |  |      | 84,097  |      |   | 247,959 |  |            | 40,635  |      
|Other equipment                                                                                 |  |                   | 16,159  |     |      |   | 15,847  |  |      | 5,239   |      |   | 2,063   |  |            | 1,072   |      
|Company-obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust |  |                   |         |     |      |   |         |  |      |         |      |   |         |  |            |         |      
|Purchase obligations                                                                            |  |                   |         |     |      |   |         |  |      |         |      |   |         |  |            |         |      
|Other long-term obligations                                                                     |  |                   |         |     |      |   |         |  |      |         |      |   |         |  |            |         |      
|                                                                                                |  |                   |         |     |      |   |         |  |      |         |      |   |         |  |            |         |      
|Total                                                                                           |  | $                 | 344,977 |     |      | $ | 195,892 |  | $    | 152,218 |      | $ | 412,735 |  | $          | 667,941 |      
|                                                                                                |  |                   |         |     |      |   |         |  |      |         |      |   |         |  |            |         |      

---

|(1) |  | The payments due with respect to a period represent (i) in the case of debt and capital leases, the scheduled principal payments due in such period, and (ii) in the
case of operating leases, the minimum lease payments due in such period under non-cancelable operating leases plus the maximum potential guarantee amounts discussed below under Certain Information Concerning Off-Balance Sheet
ArrangementsOperating Leases.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) |  | Includes $180 million that is payable should our accounts receivable securitization facility terminate in June 2003. The term of this facility may be extended
subject to the lenders consent being obtained. Extension of the facility in 2003 would reduce the debt payable in 2003 from $182.6 million to $2.6 million and increase by a corresponding amount the debt payable in the year during which the
extended facility terminates.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Certain
Information Concerning Off-Balance Sheet Arrangements



Restricted Stock.    We have granted to employees other than executive officers and directors approximately 1,200,000 shares of restricted stock that contain the following provisions. The shares vest in
2004, 2005 or 2006 or earlier upon a change in control of the Company, death, disability, retirement or certain terminations of employment, and are subject to forfeiture prior to vesting on certain other terminations of employment, the violation of
non-compete provisions and certain other events. The grants provide that we will pay to employees who vest in their restricted stock, and who sell their restricted stock within five trading days after vesting, a maximum aggregate amount for all
these employees of: (i) approximately $300,000 for each dollar by which the per share proceeds of these sales are less than $27.26 but more than $15.17; (ii) approximately $800,000 for each dollar by which the per share proceeds of these sales are
less than $15.17 but more than $9.18; and (iii) approximately $1,200,000 for each dollar by which the per share proceeds of these sales are less than $9.18.



Operating Leases.    We lease real estate, rental equipment and non-rental equipment under operating leases as
a regular business activity. As part of many 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. The use of these guarantees helps to
lower our monthly operating lease payments. We believe that the projected residual values are reasonable and, accordingly, that we are not likely to incur material obligations pursuant to such guarantees. However, we cannot be certain that the
actual residual values will not turn out to be significantly below the projected values that we guaranteed. If the residual value for all equipment subject to such guarantees were to be zero, then our maximum potential liability under these
guarantees would be approximately $229.9 million. In conformity with applicable accounting standards this potential liability is currently not recorded on our balance sheet. However, this may change under a recently issued accounting interpretation
relating to the consolidation of variable interest entities described below under Impact of Recently Issued Accounting Standards. For additional information concerning lease payment obligations under our operating leases, see
Certain Information Concerning Contractual Obligations.



Relationship Between Holdings and URI



United Rentals, Inc. (Holdings) is principally a holding company and primarily conducts its operations through its wholly owned subsidiary United Rentals (North America), Inc. (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 related services and support, (iii) information technology systems and support, and (iv)
acquisition related services. 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, and expects that it will in the future, make distributions to Holdings to, among other things, enable Holdings to pay dividends on the Trust Preferred Securities that were issued by a subsidiary trust of Holdings as described
above.



The Trust Preferred Securities are the
obligation of a subsidiary trust of Holdings and are not the obligation of URI. As a result, the dividends payable on these securities are reflected as an expense on the consolidated financial statements of Holdings, but are not reflected as an
expense on the consolidated financial statements of URI. This is the principal reason why the net loss reported on the consolidated financial statements of URI is less than the net loss reported on the consolidated financial statements of Holdings.



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Seasonality



Our business is seasonal with demand for
our rental equipment tending to be lower in the winter months. The seasonality of our business is heightened because we offer for rent traffic control equipment. Branches that rent a significant amount of this type of equipment tend to generate most
of their revenues and profits in the second and third quarters of the year, slow down during the fourth quarter and operate at a loss during the first quarter.



Inflation



Although we cannot accurately anticipate the effect of inflation on our operations, we believe that inflation has not had, and is not
likely in the foreseeable future to have, a material impact on our results of operations.



Impact of Recently Issued Accounting Standards



In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This standard rescinds SFAS No.
4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This standard also rescinds SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers. This standard amends SFAS No. 13, Accounting for Leases, to eliminate an inconsistency related to the required accounting for sale-leaseback transactions and certain lease
modifications. This standard also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. We adopted this standard on January 1, 2003, and
will reclassify a pre-tax extraordinary loss of approximately $18.1 million recognized during the second quarter of 2001 to operating income. The adoption of the remaining provisions of SFAS No. 145 did not have a material effect on our consolidated
financial position or results of operations.



In
December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosure. This standard provides alternative methods of transition to the fair value method of accounting for stock-based employee
compensation under SFAS No. 123, Accounting for Stock-Based Compensation, but does not require us to use the fair value method. This standard also amends certain disclosure requirements related to stock-based employee compensation. We
adopted the disclosure portion of this standard as of December 31, 2002 and such adoption is reflected in Note 1 to the Notes to Unaudited Consolidated Financial Statements included elsewhere in this Report.



In January 2003, the FASB issued Interpretation No. 46
(FIN 46), Consolidation of Variable Interest Entities, which addresses consolidation of variable interest entities (VIEs). FIN 46 requires a VIE to be consolidated by a parent company if that company is subject to
a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. A VIE is a corporation, partnership, trust or any other legal structure used for
business purposes that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities. The consolidation requirements of FIN 46 apply
immediately to VIEs created after January 31, 2003. For entities created prior to February 1, 2003, these requirements will begin to apply in the first fiscal year or interim period beginning after June 15, 2003.



We lease a portion of our rental equipment under operating
leases (as described in Note 15 to our consolidated financial statements included in our 2002 Annual Report on Form 10-K incorporated by reference herein), and based on our preliminary assessment a substantial portion of these leases may be with
VIEs. In accordance with currently applicable accounting standards, neither the equipment subject to these leases nor the lease obligations are reflected on our balance sheet (rather the lease payments are reflected as an expense). FIN 46 may change
this treatment for those operating leases that are with VIEs. If FIN 46 applies, the lease payment obligations would be reflected as debt on our balance sheet and the equipment, less applicable depreciation,



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would be reflected as an asset. To the extent that the amount of additional debt recorded on the balance sheet in connection with adoption of
FIN 46 exceeds the amount of the additional assets so recorded, we would recognize a non-cash expense designated as cumulative effect of change in accounting principle which could be material. The adoption of FIN 46 will not change the
amount of our contractual payment obligations and should not impact compliance with our existing debt covenants. Accordingly, the adoption of FIN 46 should not have a material impact on our liquidity or overall financial condition.



In April 2003, the FASB issued SFAS No. 149, Amendment
of Statement 133 on Derivative Instruments and Hedging Activities. This standard amends and clarifies financial accounting and reporting for derivative instruments and for hedging activities under SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This standard is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. The provisions of this standard
that relate to SFAS No. 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. The adoption of this standard
regarding the provisions effective after June 30, 2003 is not expected to have a material effect on our statements of financial position or operations.



Factors that May Influence Future Results and Accuracy of Forward-Looking Statements



Sensitivity to Changes in Construction and Industrial Activities



Our equipment is principally used in connection with
construction and industrial activities. Consequently, decreases in construction or industrial activity due to a recession or other reasons may lead to a decrease in the demand for our equipment or the prices that we can charge. Any such decrease
could adversely affect our operating results by decreasing revenues and gross profit margins. For example, there was a significant decline in non-residential construction activity in 2002 which depressed demand for our equipment and put downward
pressure on rental rates. This was the principal reason that in 2002; (i) our rental rates declined approximately 4.8% from 2001, (ii) our rental revenues from locations open more than one year declined approximately 2.7% from 2001 and (iii) our
gross profit margin from equipment rental revenues declined to 32.1% from 37.9% in 2001.



We have identified below certain factors that may cause a further downturn in construction and industrial activity, either temporarily or long-term:



| |  |  | a continuation or a worsening of the current recessionary environment;
| | - |  | ----------------------------------------------------------------------



| |  |  | an increase in interest rates;
| | - |  | ------------------------------



| |  |  | adverse weather conditions which may temporarily affect a particular region; or
| | - |  | -------------------------------------------------------------------------------



| |  |  | terrorism or hostilities involving the United States.
| | - |  | -----------------------------------------------------



In addition, demand for our equipment may not reach projected levels in the event that funding for highway and other construction projects
under government programs is reduced.



Fluctuations of
Operating Results



We expect that our
revenues and operating results may fluctuate from quarter to quarter or over the longer term due to a number of factors. These factors include:



| |  |  | seasonal rental patterns of our customers, with rental activity tending to be lower in the winter;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | completion of acquisitions;
| | - |  | ---------------------------



| |  |  | changes in the amount of revenue relating to renting traffic control equipment, since revenues from this equipment category tend to be more seasonal than the rest of
our business;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | changes in the size of our rental fleet or in the rate at which we sell our used equipment;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | changes in demand for our equipment or the prices therefor due to changes in economic conditions, competition or other factors;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the interest rates applicable to our floating rate debt;
| | - |  | -------------------------------------------------------------------



| |  |  | increases in the cost of fuel;
| | - |  | ------------------------------



| |  |  | if we determine that a potential acquisition will not be consummated, the need to charge against earnings any expenditures relating to such transaction (such as
financing commitment fees, merger and acquisition advisory fees and professional fees) previously capitalized;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the possible need, from time to time, to take goodwill write-offs as described below or other write-offs or special charges due to a variety of occurrences such as
the adoption of new accounting standards, store consolidations or closings or the refinancing of existing indebtedness.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Substantial Goodwill



At March 31, 2003, we had on our balance sheet net goodwill in the amount of $1,716.7 million, which represented approximately 36.6% of
our total assets at such date. This goodwill is an intangible asset and represents the excess of the purchase price that we paid for acquired businesses over the estimated fair value of the net assets of those businesses. We are required to test our
goodwill for impairment at least annually. In general, this means that we must determine whether the fair value of the goodwill, calculated in accordance with applicable accounting standards, is at least equal to the recorded value shown on our
balance sheet. If the fair value of the goodwill is less than the recorded value, we are required to write off the excess goodwill as an expense. Any write-off would reduce our total assets and shareholders equity and be a charge against
income.



We test for goodwill impairment on a
branch-by-branch basis rather than on an aggregate basis. This means that a goodwill write-off is required even if only one or a limited number of our branches has impairment and even if there is no impairment for all our branches on an aggregate
basis. Factors that may cause future impairment at a particular branch, in addition to macro economic factors that affect all our branches, include changes in local demand and local competitive conditions. The fact that we test for impairment on a
branch-by-branch basis increases the likelihood that we will be required to take additional non-cash goodwill write-offs in the future, although we cannot quantify at this time the magnitude of any future write-off.



Substantial Indebtedness



At March 31, 2003, our total indebtedness was approximately
$2,533.6 million. Our substantial indebtedness has the potential to affect us adversely in a number of ways. For example, it will or could:



| |  |  | require us to devote a substantial portion of our cash flow to debt service, reducing the funds available for other purposes;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | constrain our ability to obtain additional financing, particularly since substantially all of our assets are subject to security interests relating to existing
indebtedness; or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | make it difficult for us to cope with a downturn in our business or a decrease in our cash flow.
| | - |  | ------------------------------------------------------------------------------------------------



Furthermore, if we are unable to service our indebtedness and
fund our business, we will be forced to adopt an alternative strategy that may include:



| |  |  | reducing or delaying capital expenditures;
| | - |  | ------------------------------------------



| |  |  | limiting our growth;
| | - |  | --------------------



| |  |  | seeking additional capital;
| | - |  | ---------------------------



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| |  |  | selling assets; or
| | - |  | ------------------



| |  |  | restructuring or refinancing our indebtedness.
| | - |  | ----------------------------------------------



Even if we adopt an alternative strategy, the strategy may not be successful and we may continue to be unable to service our indebtedness
and fund our business.



A portion of our
indebtedness bears interest at variable rates that are linked to changing market interest rates. As a result, an increase in market interest rates would increase our interest expense and our debt service obligations. At March 31, 2003, we had $867.6
million of variable rate indebtedness.



Need to Satisfy
Financial and Other Covenants in Debt Agreements



Under the agreements governing our credit facility and our term loan, we are required to, among other things, satisfy certain financial tests relating to: (a) minimum interest coverage ratio, (b) the ratio of funded debt to cash
flow, (c) the ratio of senior debt to tangible assets and (d) the ratio of senior debt to cash flow. If we are unable to satisfy any of these covenants, the lenders could elect to terminate the credit facility and require us to repay the outstanding
borrowings under the credit facility and our term loan. In such event, unless we are able to refinance the indebtedness coming due and replace the revolving credit facility, we would likely not have sufficient liquidity for our business needs and be
forced to adopt an alternative strategy as described above. Even if we adopt an alternative strategy, the strategy may not be successful and we may not have sufficient liquidity for our business.



We are also subject to various other covenants under the
agreements governing our credit facility, term loan and other indebtedness. These covenants limit or prohibit, among other things, our 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. These covenants could adversely affect our operating results by significantly limiting our operating and financial flexibility.



Dependence on Additional Capital



If the cash that we generate from our business, together with
cash that we may borrow under our credit facility, is not sufficient to fund our capital requirements, we will require additional debt and/or equity financing. However, we may not succeed in obtaining the requisite additional financing on terms that
are satisfactory to us or at all. If we are unable to obtain sufficient additional capital in the future, we may be unable to fund the capital outlays required for the success of our business, including those relating to purchasing equipment, making
acquisitions, opening new rental locations and refinancing existing indebtedness.



Certain Risks Relating to Acquisitions



We have grown in part through acquisitions and may continue to do so. The making of acquisitions entails certain risks, including:



| |  |  | unrecorded liabilities of acquired companies that we fail to discover during our due diligence investigations;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | difficulty in assimilating the operations and personnel of the acquired company with our existing operations or in maintaining uniform standards; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | loss of key employees of the acquired company.
| | - |  | ----------------------------------------------



It is possible that we will not realize the expected benefits from our acquisitions or that our existing operations will be harmed as a
result of acquisitions.



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Dependence on Management



Our success is highly dependent on the
experience and skills of our senior management team. If we lose the services of any member of this team and are unable to find a suitable replacement, we may not have the depth of senior management resources required to efficiently manage our
business and execute our strategy. We do not maintain key man life insurance on the lives of members of senior management.



Competition



The equipment rental industry is highly fragmented and competitive. Our competitors primarily include small, independent businesses with
one or two rental locations, regional competitors which operate in one or more states, public companies or divisions of public companies, and equipment vendors and dealers who both sell and rent equipment directly to customers. We may in the future
encounter increased competition from our existing competitors or from new companies. Competitive pressures could adversely affect our revenues and operating results by decreasing our market share or depressing the prices that we can charge.



Dependence on Information Technology Systems



Our information technology systems
facilitate our ability to monitor and control our operations and adjust to changing market conditions. Any disruptions in these systems or the failure of these systems to operate as expected could, depending on the magnitude of the problem,
adversely affect our operating results by limiting our capacity to effectively monitor and control our operations and adjust to changing market conditions.



Liability and Insurance



We are exposed to various possible claims relating to our business. These possible claims include those relating to (1) personal injury or
death caused by equipment rented or sold by us, (2) motor vehicle accidents involving our delivery and service personnel and (3) employment related claims. We carry a broad range of insurance for the protection of our assets and operations. However,
such insurance may not fully protect us for a number of reasons, including:



| |  |  | our coverage is subject to deductibles of $2 million for general liability and $3 million for automobile liability and limited to a maximum of $100 million per
occurrence;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we do not maintain coverage for environmental liability (other than legally required fuel storage tank coverage), since we believe that the cost for such coverage is
high relative to the benefit that it provides; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | certain types of claims, such as claims for punitive damages or for damages arising from intentional misconduct, which are often alleged in third party lawsuits,
might not be covered by our insurance.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



If we are
found liable for any significant claims that are not covered by insurance, our operating results could be adversely affected because our expenses related to claims would increase. It is possible that some or all of the insurance that is currently
available to us will not be available in the future on economically reasonable terms or at all.



Environmental and Safety Regulations



Our operations are subject to numerous laws governing environmental protection and occupational health and safety matters. These laws
regulate such issues as wastewater, stormwater, solid and hazardous wastes and materials, and air quality. Under these laws, we may be liable for, among other things, (1) the costs of investigating and remediating contamination at our sites as well
as sites to which we sent hazardous wastes for disposal or treatment regardless of fault and (2) fines and penalties for non-compliance. Our operations generally do not raise significant environmental risks, but we use hazardous materials to clean
and maintain equipment, and dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from underground and above-ground storage tanks located at certain of our locations.



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Based on the
conditions currently known to us, we do not believe that any pending or likely remediation and compliance costs will have a material adverse effect on our business. We cannot be certain, however, as to the potential financial impact on our business
if new adverse environmental conditions are discovered or environmental and safety requirements become more stringent. If we are required to incur environmental compliance or remediation costs that are not currently anticipated by us, our operating
results could be adversely affected depending on the magnitude of the cost.



Labor Matters



We
have approximately 1,000 employees that are represented by unions and covered by collective bargaining agreements. If we should experience a prolonged labor dispute involving a significant number of our employees, our ability to serve our customers
could be adversely affected. Furthermore, our labor costs could increase as a result of the settlement of actual or threatened labor disputes.



Increase in the Average Age of our Fleet



In formulating our plan to increase the average age of our fleet during 2003 and possibly beyond, we have made estimates concerning the
relationship between the age of our fleet and required maintenance costs. If our estimates are wrong, our operating results could be adversely affected because our maintenance expenses would be higher than anticipated.



Operations Outside the United States



Our operations in Canada and Mexico are subject to the risks
normally associated with international operations. These include (1) the need to convert currencies, which could result in a gain or loss depending on fluctuations in exchange rates, (2) the need to comply with foreign laws and (3) the possibility
of political or economic instability in foreign countries.



Item 3.    Quantitative and Qualitative Disclosures about Market Risk



Market risks relating to changes in interest rates and foreign currency exchanges rates were reported in Item 7A of our Annual Report
on Form 10-K for the year ended December 31, 2002. There has been no material change in these market risks since the end of the fiscal year 2002.



Item 4.    Controls and Procedures



(a)  Evaluation of Disclosure Controls and Procedures.



An evaluation has been carried out under the supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and the operation of our disclosure controls and procedures (as such term is defined in Rules 13a-14(c) under the Securities Exchange Act of 1934). This evaluation
took place as of a date within 90 days prior to the filing date of this quarterly report (Evaluation Date). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date,
the disclosure controls and procedures are reasonably designed and effective to ensure that (i) information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in the SECs rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.



(b)  Changes in Internal Controls.



Since the Evaluation Date, there have not been any significant changes in our internal controls or in other factors that could significantly affect such controls.



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PART
II    OTHER INFORMATION



Item 1.    Legal Proceedings

We and our subsidiaries are parties to various
litigation matters involving ordinary and routine claims incidental to our business. Our ultimate legal and financial liability with respect to such pending litigation cannot be estimated with certainty but we believe, based on our examination of
such matters, that such ultimate liability will not have a material adverse effect on our consolidated financial position or results of operations.



Item 6.    Exhibits and Reports on Form 8-K

(a)  Exhibits:

|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                                                                                    
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3(a)           |  | Amended and Restated Certificate of Incorporation of United Rentals, Inc., in effect as of the date hereof
(incorporated by reference to exhibit 3.1 of United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).                          
|              
|3(b)           |  | Certificate of Amendment to the United Rentals, Inc. 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., in effect as of the date hereof (incorporated by reference to exhibit 3.2 of
United Rentals, Inc. Quarterly 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 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 to the United Rentals, Inc. Report on Form 8-K filed on October 5, 2001).                         
|              
|3(h)           |  | Amended and Restated Certificate of Incorporation of United Rentals (North America), Inc., in effect as of the date
hereof (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., in effect as of the date hereof (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(a)*          |  | Registration Rights Agreement dated as of April 9, 2003, among United Rentals (North America), Inc., the Guarantors
named therein, and the initial purchasers named therein.                                                                                              
|              
|10(a)*         |  | Purchase Agreement dated April 4, 2003 relating to the initial sale by United Rentals (North America), Inc. of $200
million aggregate principal amount of 103/4% Senior Notes due 2008.                                                                                   
|              
|10(b)*         |  | Severance Agreement with Michael J. Nolan, dated as of April 29, 2003**                                                                                                                                                                                                   
|              
|10(c)*         |  | Letter Agreement with Bradley S. Jacobs, dated as of April 21, 2003**                                                                                                                                                                                                     
|              
|10(d)*         |  | Letter Agreement with John N. Milne, dated as of April 21, 2003**                                                                                                                                                                                                         
|              
|10(e)*         |  | Letter Agreement with Wayland R. Hicks, dated as of April 21, 2003**                                                                                                                                                                                                      
|              
|99(a)*         |  | Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.                                                                                                                        
|              
|99(b)*         |  | Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.                                                                                                                        

(b)  Reports on Form 8-K:

| | 1. |  | Form 8-K filed on February 25, 2003 (earliest event reported February 24, 2003); Item 9 was reported.
| | -- |  | -----------------------------------------------------------------------------------------------------

---

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

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



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SIGNATURES



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



|Dated: May 14, 2003 |  | UNITED RENTALS, INC.                
|------------------- |  | ------------------------------------
|                   
|                    |  | By:                                 
|                    |  |                                     
|                   
|Dated: May 14, 2003 |  | UNITED RENTALS, INC.                
|                   
|                    |  | By:                                 
|                    |  |                                     
|                   
|Dated: May 14, 2003 |  | UNITED RENTALS (NORTH AMERICA),
INC.
|                   
|                    |  | By:                                 
|                    |  |                                     
|                   
|Dated: May 14, 2003 |  | UNITED RENTALS (NORTH AMERICA),
INC.
|                   
|                    |  | By:                                 
|                    |  |                                     



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CERTIFICATIONS



I, Bradley S. Jacobs, certify that:



1.  I have reviewed this quarterly report on Form 10-Q of United Rentals, Inc. and United Rentals
(North America), Inc.;



2.  Based on my
knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;



3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrants as of, and for, the periods presented in this quarterly report;



4.  The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrants and we have:



a)  designed such disclosure controls and procedures to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;



b)  evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly report (the Evaluation Date); and



c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;



5.  The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants boards of directors (or persons
performing the equivalent function):



a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and



b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and



6.  The registrants other certifying officers
and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material weaknesses.



May 14, 2003



|                                        
|----------------------------------------
|/S/    BRADLEY S.
JACOBS                
|Bradley S. JacobsChief Executive Officer



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CERTIFICATIONS



I, John M. Milne, certify that:



1.  I have reviewed this quarterly report on Form 10-Q of United Rentals, Inc. and United Rentals
(North America), Inc.;



2.  Based on my
knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;



3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrants as of, and for, the periods presented in this quarterly report;



4.  The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrants and we have:



a)  designed such disclosure controls and procedures to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;



b)  evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly report (the Evaluation Date); and



c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;



5.  The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants boards of directors (or persons
performing the equivalent function):



a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and



b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and



6.  The registrants other certifying officers
and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material weaknesses.



May 14, 2003



|                                                   
|---------------------------------------------------
|/S/    JOHN N.
MILNE                               
|John N. Milne President and Chief Financial Officer



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