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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 June 30, 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 August 12, 2003, there were 76,948,985 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 JUNE 30, 2003



INDEX



|        |  |                                                                                                                                                  |  | Page
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|PART I  |  | FINANCIAL INFORMATION                                                                                                                            |  |     
|Item 1  |  | Unaudited Consolidated Financial Statements                                                                                                      |  |     
|        |  | United Rentals, Inc. Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002 (unaudited)                                           |  | 4   
|        |  | United Rentals, Inc. Consolidated Statements of Operations for the Six and Three Months Ended June 30, 2003 and 2002 (unaudited)                 |  | 5   
|        |  | United Rentals, Inc. Consolidated Statement of Stockholders Equity for the Six Months Ended June 30, 2003 (unaudited)                           |  | 6   
|        |  | United Rentals, Inc. Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002 (unaudited)                           |  | 7   
|        |  | United Rentals (North America), Inc. Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002 (unaudited)                           |  | 8   
|        |  | United Rentals (North America), Inc. Consolidated Statements of Operations for the Six and Three Months Ended June 30, 2003 and 2002 (unaudited) |  | 9   
|        |  | United Rentals (North America), Inc. Consolidated Statement of Stockholders Equity for the Six Months Ended June 30, 2003 (unaudited)           |  | 10  
|        |  | United Rentals (North America), Inc. Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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                                                            |  | 29  
|Item 3  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                       |  | 44  
|Item 4  |  | Controls and Procedures                                                                                                                          |  | 44  
|        |  |                                                                                                                                                 
|PART II |  | OTHER INFORMATION                                                                                                                                |  |     
|Item 1  |  | Legal Proceedings                                                                                                                                |  | 45  
|Item 4  |  | Submission of Matters to a Vote of Security Holders                                                                                              |  | 45  
|Item 6  |  | Exhibits and Reports on Form 8-K                                                                                                                 |  | 46  
|        |  | Signatures                                                                                                                                       |  | 48  



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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 Accuracy of
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, earthmoving 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 pressure 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 underground 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 8.7% in the first half 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
to date the principal end market for rental equipment has been non-residential construction. 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
driven by an end-user market that increasingly recognizes the many advantages of renting equipment rather than owning. Customers recognize that by renting they can:



| |  |  | avoid the large capital investment required for many 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 technologies without investing in new equipment.
| | - |  | ------------------------------------------------------------------



While the construction industry has been the principal user of rental equipment to date, industrial companies, utilities and others are increasingly using
rental equipment for plant maintenance, plant turnarounds and other operations 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. This 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 who 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 second quarter of 2003, the sharing of equipment among branches accounted for approximately 12.4%, or $68 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 two 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 who 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 1,753 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 56 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 fleet efficiently.



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UNITED RENTALS, INC.



CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                                    |  | June 30,2003                      |           |   | December 31,2002 |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | --------- | - | ---------------- | -
|                                                                                                                                    |  | (In thousands, except share data) |          
|ASSETS                                                                                                                              |  |                                   |           |   |                  |  
|Cash and cash equivalents                                                                                                           |  | $                                 | 30,403    |   |                  | $
|Accounts receivable, net of allowance for doubtful accounts of $46,450 in 2003 and $48,542 in 2002                                  |  |                                   | 488,607   |   |                  |  
|Inventory                                                                                                                           |  |                                   | 110,488   |   |                  |  
|Prepaid expenses and other assets                                                                                                   |  |                                   | 154,111   |   |                  |  
|Rental equipment, net                                                                                                               |  |                                   | 1,898,734 |   |                  |  
|Property and equipment, net                                                                                                         |  |                                   | 419,260   |   |                  |  
|Goodwill, net                                                                                                                       |  |                                   | 1,727,921 |   |                  |  
|Other intangible assets, net                                                                                                        |  |                                   | 4,232     |   |                  |  
|                                                                                                                                    |  |                                   |           |   |                  |  
|                                                                                                                                    |  | $                                 | 4,833,756 |   |                  | $
|                                                                                                                                    |  |                                   |           |   |                  |  
|                                                                                                                                    |  |                                  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                |  |                                   |           |   |                  |  
|Liabilities:                                                                                                                        |  |                                   |           |   |                  |  
|Accounts payable                                                                                                                    |  | $                                 | 217,533   |   |                  | $
|Debt                                                                                                                                |  |                                   | 2,586,011 |   |                  |  
|Deferred taxes                                                                                                                      |  |                                   | 230,367   |   |                  |  
|Accrued expenses and other liabilities                                                                                              |  |                                   | 181,109   |   |                  |  
|                                                                                                                                    |  |                                   |           |   |                  |  
|Total liabilities                                                                                                                   |  |                                   | 3,215,020 |   |                  |  
|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, 76,942,735 shares issued and outstanding in 2003 and 76,657,521
in 2002 |  |                                   | 769       |   |                  |  
|Additional paid-in capital                                                                                                          |  |                                   | 1,340,859 |   |                  |  
|Deferred compensation                                                                                                               |  |                                   | (42,652   | ) |                  |  
|Retained earnings                                                                                                                   |  |                                   | 83,949    |   |                  |  
|Accumulated other comprehensive income (loss)                                                                                       |  |                                   | 9,256     |   |                  |  
|                                                                                                                                    |  |                                   |           |   |                  |  
|Total stockholders equity                                                                                                          |  |                                   | 1,392,186 |   |                  |  
|                                                                                                                                    |  |                                   |           |   |                  |  
|                                                                                                                                    |  | $                                 | 4,833,756 |   |                  | $
|                                                                                                                                    |  |                                   |           |   |                  |  



See accompanying notes.



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UNITED RENTALS, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                                                   |  | Six Months Ended June 30              |           |   | Three Months Ended June 30 |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------------------- | --------- | - | -------------------------- | -
|                                                                                                   |  | 2003                                  |           |   | 2002                       |  
|                                                                                                   |  | (In thousands, except per share data) |          
|Revenues:                                                                                          |  |                                       |           |   |                            |  
|Equipment rentals                                                                                  |  | $                                     | 994,035   |   |                            | $
|Sales of rental equipment                                                                          |  |                                       | 76,586    |   |                            |  
|Sales of equipment and merchandise and other revenues                                              |  |                                       | 249,286   |   |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Total revenues                                                                                     |  |                                       | 1,319,907 |   |                            |  
|Cost of revenues:                                                                                  |  |                                       |           |   |                            |  
|Cost of equipment rentals, excluding depreciation                                                  |  |                                       | 549,457   |   |                            |  
|Depreciation of rental equipment                                                                   |  |                                       | 163,166   |   |                            |  
|Cost of rental equipment sales                                                                     |  |                                       | 50,948    |   |                            |  
|Cost of equipment and merchandise sales and other operating costs                                  |  |                                       | 179,281   |   |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Total cost of revenues                                                                             |  |                                       | 942,852   |   |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Gross profit                                                                                       |  |                                       | 377,055   |   |                            |  
|Selling, general and administrative expenses                                                       |  |                                       | 208,324   |   |                            |  
|Non-rental depreciation and amortization                                                           |  |                                       | 33,847    |   |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Operating income                                                                                   |  |                                       | 134,884   |   |                            |  
|Interest expense                                                                                   |  |                                       | 105,376   |   |                            |  
|Preferred dividends of a subsidiary trust                                                          |  |                                       | 7,362     |   |                            |  
|Other (income) expense, net                                                                        |  |                                       | (1,608    | ) |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Income before provision for income taxes and cumulative effect of change in accounting principle   |  |                                       | 23,754    |   |                            |  
|Provision for income taxes                                                                         |  |                                       | 9,086     |   |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Income before cumulative effect of change in accounting principle                                  |  |                                       | 14,668    |   |                            |  
|Cumulative effect of change in accounting principle, net of tax benefit of $60,529                 |  |                                       |           |   |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Net income (loss)                                                                                  |  | $                                     | 14,668    |   |                            | $
|                                                                                                   |  |                                       |           |   |                            |  
|Earnings (loss) per sharebasic:                                                                   |  |                                       |           |   |                            |  
|Income available to common stockholders before cumulative effect of change in accounting principle |  | $                                     | 0.19      |   |                            | $
|Cumulative effect of change in accounting principle, net                                           |  |                                       |           |   |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Income (loss) available to common stockholders                                                     |  | $                                     | 0.19      |   |                            | $
|                                                                                                   |  |                                       |           |   |                            |  
|Earnings (loss) per sharediluted:                                                                 |  |                                       |           |   |                            |  
|Income available to common stockholders before cumulative effect of change in accounting principle |  | $                                     | 0.16      |   |                            | $
|Cumulative effect of change in accounting principle, net                                           |  |                                       |           |   |                            |  
|                                                                                                   |  |                                       |           |   |                            |  
|Income (loss) available to common stockholders                                                     |  | $                                     | 0.16      |   |                            | $
|                                                                                                   |  |                                       |           |   |                            |  



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 |   | AccumulatedOtherComprehensiveIncome (Loss) |  
|--------------------------------------------------------------------- |  | ------------------------------------------ | --------------- | ------------------------------------------ | ------ | ------------ |  | ------------------------ |  | - | -------------------- |  | - | ---------------- | - | ------------------- | - | ------------------------------------------ | -
|                                                                      |  |                                            | Numberof Shares |                                            | Amount |              |  |                          |  |  
|                                                                      |  | (In thousands)                             |                
|Balance, December 31, 2002                                            |  | $                                          | 3               |                                            | $      | 2            |  | 76,657                   |  | $ | 765                  |  | $ | 1,341,290        |   |                     | $ | (52,988                                    | )
|Comprehensive income:                                                 |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|Net income                                                            |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|Other comprehensive income:                                           |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|Foreign currency translation adjustments                              |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|Derivatives qualifying as hedges, net of tax                          |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|                                                                      |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|Comprehensive income                                                  |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|                                                                      |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|Issuance of common stock under compensation plans, net of forfeitures |  |                                            |                 |                                            |        |              |  | 286                      |  |   | 4                    |  |   | (431             | ) |                     |   | 927                                        |  
|Amortization of deferred compensation                                 |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   | 9,409                                      |  
|                                                                      |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  
|Balance, June 30, 2003                                                |  | $                                          | 3               |                                            | $      | 2            |  | 76,943                   |  | $ | 769                  |  | $ | 1,340,859        |   |                     | $ | (42,652                                    | )
|                                                                      |  |                                            |                 |                                            |        |              |  |                          |  |   |                      |  |   |                  |   |                     |   |                                            |  







See accompanying notes.



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UNITED RENTALS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                                       |  | Six Months EndedJune 30 |         
|---------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | --------
|                                                                                                                       |  | 2003                    |         
|                                                                                                                       |  | (In thousands)          |         
|Cash Flows From Operating Activities:                                                                                  |  |                         |         
|Net income (loss)                                                                                                      |  | $                       | 14,668  
|Adjustments to reconcile net loss to net cash provided by operating activities:                                        |  |                         |         
|Depreciation and amortization                                                                                          |  |                         | 197,013 
|Gain on sales of rental equipment                                                                                      |  |                         | (25,638 
|Deferred taxes                                                                                                         |  |                         | 4,780   
|Amortization of deferred compensation                                                                                  |  |                         | 9,409   
|Cumulative effect of change in accounting principle                                                                    |  |                         |         
|Changes in operating assets and liabilities:                                                                           |  |                         |         
|Accounts receivable                                                                                                    |  |                         | (22,411 
|Inventory                                                                                                              |  |                         | (8,369  
|Prepaid expenses and other assets                                                                                      |  |                         | (5,721  
|Accounts payable                                                                                                       |  |                         | 10,495  
|Accrued expenses and other liabilities                                                                                 |  |                         | 5,916   
|                                                                                                                       |  |                         |         
|Net cash provided by operating activities                                                                              |  |                         | 180,142 
|Cash Flows From Investing Activities:                                                                                  |  |                         |         
|Purchases of rental equipment                                                                                          |  |                         | (265,673
|Purchases of property and equipment                                                                                    |  |                         | (23,962 
|Proceeds from sales of rental equipment                                                                                |  |                         | 76,586  
|In-process acquisition costs                                                                                           |  |                         |         
|Deposits on rental equipment purchases                                                                                 |  |                         | (12,361 
|Purchases of other companies                                                                                           |  |                         | (4,527  
|                                                                                                                       |  |                         |         
|Net cash used in investing activities                                                                                  |  |                         | (229,937
|Cash Flows From Financing Activities:                                                                                  |  |                         |         
|Proceeds from debt                                                                                                     |  |                         | 244,446 
|Payments of debt                                                                                                       |  |                         | (187,117
|Payments of financing costs                                                                                            |  |                         | (7,517  
|Proceeds from the exercise of common stock options                                                                     |  |                         |         
|Shares repurchased and retired                                                                                         |  |                         |         
|Company-obligated mandatorily redeemable convertible preferred securities of a subsidiary trust repurchasedand
retired |  |                         |         
|                                                                                                                       |  |                         |         
|Net cash provided by financing activities                                                                              |  |                         | 49,812  
|Effect of foreign exchange rates                                                                                       |  |                         | 11,155  
|                                                                                                                       |  |                         |         
|Net increase (decrease) in cash and cash equivalents                                                                   |  |                         | 11,172  
|Cash and cash equivalents at beginning of period                                                                       |  |                         | 19,231  
|                                                                                                                       |  |                         |         
|Cash and cash equivalents at end of period                                                                             |  | $                       | 30,403  
|                                                                                                                       |  |                         |         
|Supplemental disclosure of cash flow information:                                                                      |  |                         |         
|Cash paid for interest                                                                                                 |  | $                       | 111,106 
|Cash paid for income taxes, net of refunds                                                                             |  | $                       | 790     
|                                                                                                                       |  |                        
|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                                                                                       |  |                         | 1,263   
|                                                                                                                       |  |                         |         
|Net cash paid                                                                                                          |  | $                       | 4,527   
|                                                                                                                       |  |                         |         



See accompanying notes.



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UNITED RENTALS (NORTH AMERICA), INC.



CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                   |  | June 30,2003                     |           |   | December 31,2002 |  
|-------------------------------------------------------------------------------------------------- |  | -------------------------------- | --------- | - | ---------------- | -
|                                                                                                   |  | (In thousands,except share data) |          
|ASSETS                                                                                             |  |                                  |           |   |                  |  
|Cash and cash equivalents                                                                          |  | $                                | 30,403    |   |                  | $
|Accounts receivable, net of allowance for doubtful accounts of $46,450 in 2003 and $48,542 in 2002 |  |                                  | 488,607   |   |                  |  
|Inventory                                                                                          |  |                                  | 110,488   |   |                  |  
|Prepaid expenses and other assets                                                                  |  |                                  | 145,792   |   |                  |  
|Rental equipment, net                                                                              |  |                                  | 1,898,734 |   |                  |  
|Property and equipment, net                                                                        |  |                                  | 391,886   |   |                  |  
|Goodwill, net                                                                                      |  |                                  | 1,727,921 |   |                  |  
|Other intangible assets, net                                                                       |  |                                  | 4,232     |   |                  |  
|                                                                                                   |  |                                  |           |   |                  |  
|                                                                                                   |  | $                                | 4,798,063 |   |                  | $
|                                                                                                   |  |                                  |           |   |                  |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                               |  |                                  |           |   |                  |  
|Liabilities:                                                                                       |  |                                  |           |   |                  |  
|Accounts payable                                                                                   |  | $                                | 217,533   |   |                  | $
|Debt                                                                                               |  |                                  | 2,586,011 |   |                  |  
|Deferred taxes                                                                                     |  |                                  | 230,367   |   |                  |  
|Accrued expenses and other liabilities                                                             |  |                                  | 212,297   |   |                  |  
|                                                                                                   |  |                                  |           |   |                  |  
|Total liabilities                                                                                  |  |                                  | 3,246,208 |   |                  |  
|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                                                                                |  |                                  | (39,234   | ) |                  |  
|Accumulated other comprehensive income (loss)                                                      |  |                                  | 9,256     |   |                  |  
|                                                                                                   |  |                                  |           |   |                  |  
|Total stockholders equity                                                                         |  |                                  | 1,551,855 |   |                  |  
|                                                                                                   |  |                                  |           |   |                  |  
|                                                                                                   |  | $                                | 4,798,063 |   |                  | $
|                                                                                                   |  |                                  |           |   |                  |  





See accompanying notes.



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UNITED RENTALS (NORTH AMERICA), INC.



CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                                                 |  | Six Months Ended June 30 |           |   | Three Months Ended June 30 |  
|------------------------------------------------------------------------------------------------ |  | ------------------------ | --------- | - | -------------------------- | -
|                                                                                                 |  | 2003                     |           |   | 2002                       |  
|                                                                                                 |  | (In thousands)           |          
|Revenues:                                                                                        |  |                          |           |   |                            |  
|Equipment rentals                                                                                |  | $                        | 994,035   |   |                            | $
|Sales of rental equipment                                                                        |  |                          | 76,586    |   |                            |  
|Sales of equipment and merchandise and other revenues                                            |  |                          | 249,286   |   |                            |  
|                                                                                                 |  |                          |           |   |                            |  
|Total revenues                                                                                   |  |                          | 1,319,907 |   |                            |  
|Cost of revenues:                                                                                |  |                          |           |   |                            |  
|Cost of equipment rentals, excluding depreciation                                                |  |                          | 549,457   |   |                            |  
|Depreciation of rental equipment                                                                 |  |                          | 163,166   |   |                            |  
|Cost of rental equipment sales                                                                   |  |                          | 50,948    |   |                            |  
|Cost of equipment and merchandise sales and other operating costs                                |  |                          | 179,281   |   |                            |  
|                                                                                                 |  |                          |           |   |                            |  
|Total cost of revenues                                                                           |  |                          | 942,852   |   |                            |  
|                                                                                                 |  |                          |           |   |                            |  
|Gross profit                                                                                     |  |                          | 377,055   |   |                            |  
|Selling, general and administrative expenses                                                     |  |                          | 208,324   |   |                            |  
|Non-rental depreciation and amortization                                                         |  |                          | 29,329    |   |                            |  
|                                                                                                 |  |                          |           |   |                            |  
|Operating income                                                                                 |  |                          | 139,402   |   |                            |  
|Interest expense                                                                                 |  |                          | 105,376   |   |                            |  
|Other (income) expense, net                                                                      |  |                          | (1,608    | ) |                            |  
|                                                                                                 |  |                          |           |   |                            |  
|Income before provision for income taxes and cumulative effect of change in accounting principle |  |                          | 35,634    |   |                            |  
|Provision for income taxes                                                                       |  |                          | 13,676    |   |                            |  
|                                                                                                 |  |                          |           |   |                            |  
|Income before cumulative effect of change in accounting principle                                |  |                          | 21,958    |   |                            |  
|Cumulative effect of change in accounting principle, net of tax benefit of $60,529               |  |                          |           |   |                            |  
|                                                                                                 |  |                          |           |   |                            |  
|Net income (loss)                                                                                |  | $                        | 21,958    |   |                            | $
|                                                                                                 |  |                          |           |   |                            |  





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-InCapital |  | Accumulated Deficit |           |  | Comprehensive Income |         | AccumulatedOtherComprehensiveIncome (Loss) | 
|-------------------------------------------- |  | --------------------------------- |  | ------------------------- |  | ------------------- | --------- |  | -------------------- | ------- | ------------------------------------------ | 
|                                             |  | Number of Shares                  |  | Amount                    |  |                     |           | 
|                                             |  | (In thousands, except share data) | 
|                                             |  |                                   |  |                           |  |                    
|Balance, December 31, 2002                   |  | 1,000                             |  |                           |  | $                   | 1,581,833 |  | $                    | (53,830 | )                                          | 
|Comprehensive income:                        |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 
|Net income                                   |  |                                   |  |                           |  |                     |           |  |                      | 21,958  |                                            | 
|Other comprehensive income:                  |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 
|Foreign currency translation adjustments     |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 
|Derivatives qualifying as hedges, net of tax |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 
|                                             |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 
|Comprehensive income                         |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 
|                                             |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 
|Dividend distributions to parent             |  |                                   |  |                           |  |                     |           |  |                      | (7,362  | )                                          | 
|                                             |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 
|Balance, June 30, 2003                       |  | 1,000                             |  |                           |  | $                   | 1,581,833 |  | $                    | (39,234 | )                                          | 
|                                             |  |                                   |  |                           |  |                     |           |  |                      |         |                                            | 









See accompanying notes.



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##### Table of Contents

UNITED RENTALS (NORTH AMERICA), INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                   |  | Six Months Ended June 30 |         
|-------------------------------------------------------------------------------------------------- |  | ------------------------ | --------
|                                                                                                   |  | 2003                     |         
|                                                                                                   |  | (In thousands)           |         
|Cash Flows From Operating Activities:                                                              |  |                          |         
|Net income (loss)                                                                                  |  | $                        | 21,958  
|Adjustments to reconcile net loss to net cash provided by operating activities:                    |  |                          |         
|Depreciation and amortization                                                                      |  |                          | 192,495 
|Gain on sales of rental equipment                                                                  |  |                          | (25,638 
|Deferred taxes                                                                                     |  |                          | 4,780   
|Cumulative effect of change in accounting principle                                                |  |                          |         
|Changes in operating assets and liabilities:                                                       |  |                          |         
|Accounts receivable                                                                                |  |                          | (22,411 
|Inventory                                                                                          |  |                          | (8,369  
|Prepaid expenses and other assets                                                                  |  |                          | (2,516  
|Accounts payable                                                                                   |  |                          | 10,495  
|Accrued expenses and other liabilities                                                             |  |                          | 13,955  
|                                                                                                   |  |                          |         
|Net cash provided by operating activities                                                          |  |                          | 184,749 
|                                                                                                   |  |                          |         
|Cash Flows From Investing Activities:                                                              |  |                          |         
|Purchases of rental equipment                                                                      |  |                          | (265,673
|Purchases of property and equipment                                                                |  |                          | (21,207 
|Proceeds from sales of rental equipment                                                            |  |                          | 76,586  
|Deposits on rental equipment purchases                                                             |  |                          | (12,361 
|Purchases of other companies                                                                       |  |                          | (4,527  
|                                                                                                   |  |                          |         
|Net cash used in investing activities                                                              |  |                          | (227,182
|                                                                                                   |  |                          |         
|Cash Flows From Financing Activities:                                                              |  |                          |         
|Proceeds from debt                                                                                 |  |                          | 244,446 
|Payments of debt                                                                                   |  |                          | (187,117
|Payments of financing costs                                                                        |  |                          | (7,517  
|Capital contributions by parent                                                                    |  |                          |         
|Dividend distributions to parent                                                                   |  |                          | (7,362  
|                                                                                                   |  |                          |         
|Net cash provided by financing activities                                                          |  |                          | 42,450  
|Effect of foreign exchange rates                                                                   |  |                          | 11,155  
|                                                                                                   |  |                          |         
|Net increase (decrease) in cash and cash equivalents                                               |  |                          | 11,172  
|Cash and cash equivalents at beginning of period                                                   |  |                          | 19,231  
|                                                                                                   |  |                          |         
|Cash and cash equivalents at end of period                                                         |  | $                        | 30,403  
|                                                                                                   |  |                          |         
|                                                                                                   |  |                         
|Supplemental disclosure of cash flow information:                                                  |  |                          |         
|Cash paid for interest                                                                             |  | $                        | 101,902 
|Cash paid for income taxes, net of refunds                                                         |  | $                        | 790     
|                                                                                                   |  |                         
|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                                                                   |  |                          | 1,263   
|                                                                                                   |  |                          |         
|Net cash paid                                                                                      |  | $                        | 4,527   
|                                                                                                   |  |                          |         



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 six and three month periods
ended June 30, 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 reclassified 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



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##### Table of Contents

UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 apply in the first interim period beginning after June 15, 2003.



The Company leases a portion of its rental equipment under operating leases. Under the accounting standards that were applicable prior to July 1, 2003, neither the equipment subject to these leases nor the lease
obligations were reflected on the Companys balance sheet as of June 30, 2003 or any prior date.



As of July 1, 2003, a substantial portion of the Companys operating leases were with VIEs and were impacted by FIN 46. In accordance with FIN 46,
effective as of July 1, 2003, the Company is required to: (i) record the lease payment obligations under these leases (including any potential liability associated with guarantees of residual value) as a liability on its balance sheet
(approximately $320 million), (ii) record the equipment subject to these leases as an asset on its balance sheet based on the carrying amount as of July 1, 2003 (estimated to be in the range of $250 million to $270 million); and (iii) recognize
a non-cash expense designated as cumulative effect of change in accounting principle equal to the amount by which the additional liabilities recorded in connection with the adoption of FIN 46 exceeds the additional assets so recorded
(estimated to be in the range of $50 million to $70 million).



The Company may modify some or all of the above-mentioned operating leases in a manner that would cause the Company to no longer consolidate those leases under FIN 46. Upon the effectiveness of any such lease modification, the lease
obligations under such lease (other than any residual guarantee amounts) and the related equipment would cease to be reflected on the Companys balance sheet.



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.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,
which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard requires financial instruments falling within the scope of this standard be
classified as liabilities. This standard is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective with the first interim period beginning after June 15, 2003. Upon adoption of this standard, the
Company will reclassify its company-obligated mandatorily redeemable convertible preferred securities of a subsidiary trust to the liabilities section of the balance sheet.



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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 June 30, 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 or earlier upon acceleration of vesting. During 2003, the Company accelerated the vesting of approximately 235,000 shares of restricted stock. The following table provides
additional information related to the Companys stock-based compensation arrangements for the six and three months ended June 30, 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):



|                                                                                          |  | Six Months Ended June 30 |        |   | Three Months Ended June 30 |  
|----------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | -------------------------- | -
|                                                                                          |  | 2003                     |        |   | 2002                       |  
|Net income (loss), as reported                                                            |  | $                        | 14,668 |   |                            | $
|Plus: Stock-based compensation expense included in reported net income (loss), net of tax |  |                          | 5,776  |   |                            |  
|Less: Stock-based compensation expense determined using the fair value method, net of tax |  |                          | (7,081 | ) |                            |  
|                                                                                          |  |                          |        |   |                            |  
|Pro forma net income (loss)                                                               |  | $                        | 13,363 |   |                            | $
|                                                                                          |  |                          |        |   |                            |  
|Basic loss per share:                                                                     |  |                          |        |   |                            |  
|As reported                                                                               |  | $                        | 0.19   |   |                            | $
|Pro forma                                                                                 |  | $                        | 0.17   |   |                            | $
|Diluted loss per share:                                                                   |  |                          |        |   |                            |  
|As reported                                                                               |  | $                        | 0.16   |   |                            | $
|Pro forma                                                                                 |  | $                        | 0.14   |   |                            | $



2.    Acquisitions



During
the six months ended June 30, 2003, the Company completed one acquisition and during the year ended December 31, 2002, the Company completed two acquisitions, one of which is further described below. 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.



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 its 2003 purchase 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.



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##### Table of Contents

UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes, on an unaudited pro forma basis, the results of operations of the
Company for the six and three months ended June 30, 2002 as though each acquisition which was consummated during the period January 1, 2003 to June 30, 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):



|                                                                                      |  | Six Months EndedJune 30, 2002 |           |   | Three Months EndedJune 30, 2002
|------------------------------------------------------------------------------------- |  | ----------------------------- | --------- | - | -------------------------------
|Revenues                                                                              |  | $                             | 1,370,566 |   |                                
|Income before cumulative effect of change in accounting principle                     |  | $                             | 59,224    |   |                                
|Net income (loss)                                                                     |  | $                             | (229,115  | ) |                                
|                                                                                      |  |                              
|Basic earnings per share before cumulative effect of change in accounting principle   |  | $                             | 0.86      |   |                                
|                                                                                      |  |                               |           |   |                                
|Basic earnings (loss) per share                                                       |  | $                             | (2.99     | ) |                                
|                                                                                      |  |                               |           |   |                                
|Diluted earnings per share before cumulative effect of change in accounting principle |  | $                             | 0.65      |   |                                
|                                                                                      |  |                               |           |   |                                
|Diluted earnings (loss) per share                                                     |  | $                             | (2.27     | ) |                                
|                                                                                      |  |                               |           |   |                                



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 six and three months ended June 30, 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 six months of 2003 are as follows (in thousands):



|Balance at December 31, 2002                       |  | $ | 1,705,191
|-------------------------------------------------- |  | - | ---------
|Foreign currency translation and other adjustments |  |   | 20,775   
|Goodwill related to acquisitions                   |  |   | 1,955    
|                                                   |  |   |          
|Balance at June 30, 2003                           |  | $ | 1,727,921
|                                                   |  |   |          



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 as
of the annual testing date or at any other date when an indicator of impairment may exist 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 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 June 30, 2003 were $17.1 million and $12.9 million, respectively, and as of
December 31, 2002 were $17.0 million and $11.2 million, respectively. Amortization expense of other intangible assets was $1.8 million for the first six months of 2003.



As of June 30, 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 |  | $ | 1,398
|----------------- |  | - | -----
|2004              |  |   | 1,655
|2005              |  |   | 591  
|2006              |  |   | 305  
|2007              |  |   | 175  
|2008              |  |   | 71   
|Thereafter        |  |   | 37   
|                  |  |   |      
|                  |  | $ | 4,232
|                  |  |   |      



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).



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The 2002 plan involved the following principal elements: (i) the closure or consolidation with other
locations of 42 underperforming branches and five administrative offices (including 36 closed or consolidated as of June 30, 2003) ($24.6 million); (ii) a reduction of the Companys workforce by 412 (including 342 terminated as of June 30,
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 $20.9 million as of June 30, 2003, consisting of $1.4 million for the 2001 charge and $19.5 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 $7.2 million (primarily in cash) of the aggregate
amount will be paid by December 31, 2003 and approximately $13.7 million will be paid in future periods.



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



|                             |  | BalanceDecember 31,2002 |        | Activity in2003 |   | BalanceJune 30,2003
|---------------------------- |  | ----------------------- | ------ | --------------- | - | -------------------
|Costs to vacate facilities   |  | $                       | 22,258 |                 | $ | 5,031              
|Workforce reduction costs    |  |                         | 3,462  |                 |   | 747                
|Information technology costs |  |                         | 1,395  |                 |   | 391                
|                             |  |                         |        |                 |   |                    
|                             |  | $                       | 27,115 |                 | $ | 6,169              
|                             |  |                         |        |                 |   |                    



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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):



|                                                                                                   |  | Six Months EndedJune 30 |        |      | Three Months EndedJune 30
|-------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ---- | -------------------------
|                                                                                                   |  | 2003                    |        | 2002 |                          
|Numerator:                                                                                         |  |                         |        |      |                          
|Income before cumulative effect of change in accounting principle                                  |  | $                       | 14,668 |      | $                        
|Plus: Liquidation preference in excess of amounts paid for convertible preferred securities        |  |                         |        |      |                          
|                                                                                                   |  |                         |        |      |                          
|Income available to common stockholders                                                            |  | $                       | 14,668 |      | $                        
|                                                                                                   |  |                         |        |     
|Denominator:                                                                                       |  |                         |        |      |                          
|Denominator for basic earnings per shareweighted-average shares                                   |  |                         | 76,904 |      |                          
|Effect of dilutive securities:                                                                     |  |                         |        |      |                          
|Employee stock options                                                                             |  |                         | 65     |      |                          
|Warrants                                                                                           |  |                         | 490    |      |                          
|Series C perpetual convertible preferred stock                                                     |  |                         | 12,000 |      |                          
|Series D perpetual convertible preferred stock                                                     |  |                         | 5,000  |      |                          
|                                                                                                   |  |                         |        |      |                          
|Denominator for diluted earnings per shareadjusted weighted-average shares                        |  |                         | 94,459 |      |                          
|                                                                                                   |  |                         |        |      |                          
|                                                                                                   |  |                         |        |     
|Earnings per sharebasic:                                                                          |  |                         |        |      |                          
|Income available to common stockholders before cumulative effect of change in accounting principle |  | $                       | 0.19   |      | $                        
|Cumulative effect of change in accounting principle, net                                           |  |                         |        |      |                          
|                                                                                                   |  |                         |        |      |                          
|Income (loss) available to common stockholders                                                     |  | $                       | 0.19   |      | $                        
|                                                                                                   |  |                         |        |      |                          
|                                                                                                   |  |                         |        |     
|Earnings per sharediluted:                                                                        |  |                         |        |      |                          
|Income available to common stockholders before cumulative effect of change in accounting principle |  | $                       | 0.16   |      | $                        
|Cumulative effect of change in accounting principle, net                                           |  |                         |        |      |                          
|                                                                                                   |  |                         |        |      |                          
|Income (loss) available to common stockholders                                                     |  | $                       | 0.16   |      | $                        
|                                                                                                   |  |                         |        |      |                          



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



6.    Financing Transactions



New 103/4% Senior Notes.    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 mature on April 15, 2008 and
may be redeemed by URI on or after April 15, 2005, at specified redemption prices that range from 105.375% in 2005 to 100.0% in 2007 and thereafter. In addition, on or prior to April 15, 2004, URI may, at its option, use the proceeds of a public
equity offering to redeem up to 35% of the outstanding 2003 103/4% Notes at a redemption price of 110.75%. The
indenture governing the 2003 103/4% Notes contains certain restrictive covenants, including limitations on (i)
additional indebtedness, (ii) restricted payments, (iii) liens, (iv) dividends and other payments, (v) preferred stock of certain subsidiaries, (vi) transactions with affiliates, (vii) the disposition of proceeds of asset sales and (viii) the
Companys ability to consolidate, merge or sell all or substantially all of its assets. 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.



New Receivables Securitization Facility.    On
June 17, 2003, the Company obtained a new accounts receivable securitization facility under which one of its subsidiaries can borrow up to $250 million against a collateral pool of accounts receivable. Upon obtaining this facility, the Company
terminated its existing accounts receivable securitization facility.



The borrowings under the new facility and the receivables in the collateral pool are included in the liabilities and assets, respectively, reflected on the Companys consolidated balance sheet. However, such assets are only available
to satisfy the obligations of the borrower subsidiary.



Key
terms of this facility include:



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



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



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



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



Outstanding
borrowing under the facility generally accrue interest at the commercial paper rate plus 1%. However, after expiration or early termination of the facility, outstanding borrowings will accrue interest at 0.5% plus the greater of (i) the prime rate
and (ii) the Federal Funds Rate plus 0.5%. The Company is also required to pay a commitment fee of 0.45% per annum in respect of undrawn commitments under the facility. As of June 30, 2003, (i) the outstanding borrowings under the facility were
approximately $13.0 million and (ii) the aggregate face amount of the receivables in the collateral pool was approximately $360.2 million.



The agreement governing this facility is scheduled to expire on September 30, 2006. However, the lenders under this facility, at their option, may
terminate the facility earlier upon the occurrence of certain events, including: (i) the long-term senior secured debt rating of United Rentals (North America), Inc. or, subject to certain conditions, United Rentals, Inc., is downgraded to be at or
below B by Standard & Poors Rating Services; (ii) the long-term senior unsecured debt rating of United Rentals (North America), Inc. or, subject to



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



certain conditions, United Rentals, Inc., is downgraded to be at or below CCC+ by Standard & Poors Rating Services; (iii) the long-term
issuer rating of United Rentals (North America), Inc. or, subject to certain conditions, United Rentals, Inc., is downgraded to be at or below Caa by Moodys Investors Service; (iv) the long-term senior implied rating of United
Rentals (North America), Inc. or, subject to certain conditions, United Rentals, Inc., is downgraded to be at or below B3 by Moodys Investors Service; or (v) either Standard & Poors Rating Services or Moodys
Investors Service ceases to provide any such rating.



Interest Rate Swap Agreements.    During the second quarter of 2003, the Company entered into an interest rate swap agreement that converted $100 million of the 2003 103/4% Notes to a floating rate instrument through 2008. Changes in the fair value of this hedge, designated a fair value hedge, and along with an offsetting
change in the fair value of the hedged item, are recorded in the statement of operations. There is no ineffectiveness related to this hedge.



7.    Comprehensive Income



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



|                                             |  | Six Months Ended June 30 |        |      | Three Months EndedJune 30 |         
|-------------------------------------------- |  | ------------------------ | ------ | ---- | ------------------------- | --------
|                                             |  | 2003                     |        | 2002 |                           |         
|Net income (loss)                            |  | $                        | 14,668 |      | $                         | (229,641
|Other comprehensive income (loss):           |  |                          |        |      |                           |         
|Foreign currency translation adjustment      |  |                          | 33,493 |      |                           | 9,788   
|Derivatives qualifying as hedges, net of tax |  |                          | 2,611  |      |                           | 124     
|                                             |  |                          |        |      |                           |         
|Comprehensive income (loss)                  |  | $                        | 50,772 |      | $                         | (219,729
|                                             |  |                          |        |      |                           |         



8.    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 does not know at this time the extent to
which the actual residual values may be less than the guaranteed residual values and, accordingly, cannot quantify the amount that it will be required to pay, if any, under these guarantees. If the actual 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 $268.8 million. Under the accounting standards that were applicable prior to July 1, 2003, this potential liability
was not reflected on the Companys balance sheet as of June 30, 2003 or any prior date. As described earlier in Note 1, effective July 1, 2003, the liabilities associated with certain of the Companys operating leases (including any
potential liabilities associated with the guarantee of residual value) are required to be recorded as a liability on its balance sheet.



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



10.    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 June 30, 2003 and December 31, 2002, and for each of
the six and three month periods ended June 30, 2003 and 2002, are presented. The condensed consolidating financial information of the Company and its subsidiaries are as follows:



CONDENSED CONSOLIDATING BALANCE SHEET



June 30, 2003



|                                                                                              |  | Parent         |           |   | URI |   |           | Guarantor Subsidiaries |  |   | Non-Guarantor Subsidiaries |   |  | Other and Eliminations |          |   | Consolidated Total |  
|--------------------------------------------------------------------------------------------- |  | -------------- | --------- | - | --- | - | --------- | ---------------------- |  | - | -------------------------- | - |  | ---------------------- | -------- | - | ------------------ | -
|                                                                                              |  | (In thousands) |          
|ASSETS                                                                                        |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Cash and cash equivalents                                                                     |  |                |           |   |     |   |           |                        |  | $ | 24,293                     |   |  | $                      | 6,110    |   |                    |  
|Accounts receivable, net                                                                      |  |                |           |   |     | $ | 24,164    |                        |  |   | 428,045                    |   |  |                        | 36,398   |   |                    |  
|Intercompany receivable (payable)                                                             |  |                |           |   |     |   | 625,877   |                        |  |   | (434,704                   | ) |  |                        | (191,173 | ) |                    |  
|Inventory                                                                                     |  |                |           |   |     |   | 43,166    |                        |  |   | 61,723                     |   |  |                        | 5,599    |   |                    |  
|Prepaid expenses and other assets                                                             |  |                |           |   |     |   | 43,373    |                        |  |   | 101,063                    |   |  |                        | 1,356    |   |                    | $
|Rental equipment, net                                                                         |  |                |           |   |     |   | 1,023,569 |                        |  |   | 709,767                    |   |  |                        | 165,398  |   |                    |  
|Property and equipment, net                                                                   |  | $              | 27,374    |   |     |   | 112,914   |                        |  |   | 261,555                    |   |  |                        | 17,417   |   |                    |  
|Investment in subsidiaries                                                                    |  |                | 1,591,362 |   |     |   | 2,306,657 |                        |  |   |                            |   |  |                        |          |   |                    |  
|Intangible assets, net                                                                        |  |                |           |   |     |   | 245,518   |                        |  |   | 1,344,019                  |   |  |                        | 142,616  |   |                    |  
|                                                                                              |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|                                                                                              |  | $              | 1,618,736 |   |     | $ | 4,425,238 |                        |  | $ | 2,495,761                  |   |  | $                      | 183,721  |   |                    | $
|                                                                                              |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                          |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Liabilities:                                                                                  |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Accounts payable                                                                              |  |                |           |   |     | $ | 60,608    |                        |  | $ | 141,629                    |   |  | $                      | 15,296   |   |                    |  
|Debt                                                                                          |  | $              | 226,550   |   |     |   | 2,494,414 |                        |  |   | 27,212                     |   |  |                        | 64,385   |   |                    | $
|Deferred taxes                                                                                |  |                |           |   |     |   | 217,393   |                        |  |   | (805                       | ) |  |                        | 13,779   |   |                    |  
|Accrued expenses and other liabilities                                                        |  |                |           |   |     |   | 113,865   |                        |  |   | 90,979                     |   |  |                        | 7,453    |   |                    |  
|                                                                                              |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Total liabilities                                                                             |  |                | 226,550   |   |     |   | 2,886,280 |                        |  |   | 259,015                    |   |  |                        | 100,913  |   |                    |  
|                                                                                              |  |                |           |   |     |  
|Commitments and contingencies                                                                 |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Company-obligated mandatorilyredeemable convertible preferredsecurities of a subsidiary trust |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Stockholders equity:                                                                         |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Preferred stock                                                                               |  |                | 5         |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Common stock                                                                                  |  |                | 769       |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Additional paid-in capital                                                                    |  |                | 1,340,859 |   |     |   | 1,581,833 |                        |  |   | 1,901,936                  |   |  |                        | 68,395   |   |                    |  
|Deferred compensation                                                                         |  |                | (42,652   | ) |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Retained earnings                                                                             |  |                | 83,949    |   |     |   | (39,234   | )                      |  |   | 334,810                    |   |  |                        | 1,516    |   |                    |  
|Accumulated other comprehensiveincome (loss)                                                  |  |                | 9,256     |   |     |   | (3,641    | )                      |  |   |                            |   |  |                        | 12,897   |   |                    |  
|                                                                                              |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|Total stockholders equity                                                                    |  |                | 1,392,186 |   |     |   | 1,538,958 |                        |  |   | 2,236,746                  |   |  |                        | 82,808   |   |                    | $
|                                                                                              |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  
|                                                                                              |  | $              | 1,618,736 |   |     | $ | 4,425,238 |                        |  | $ | 2,495,761                  |   |  | $                      | 183,721  |   |                    | $
|                                                                                              |  |                |           |   |     |   |           |                        |  |   |                            |   |  |                        |          |   |                    |  



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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 mandatorilyredeemable convertible preferredsecurities 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 Six Months Ended June 30, 2003 |        
|----------------------------------------------------------------- |  | -------------------------------------- | -------
|                                                                  |  | Parent                                 |        
|                                                                  |  | (In thousands)                         |        
|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                          |  | $                                      | 4,352  
|                                                                  |  |                                        |        
|Operating income (loss)                                           |  |                                        | (4,352 
|Interest expense                                                  |  |                                        | 7,362  
|Preferred dividends of a subsidiary trust                         |  |                                        |        
|Other (income) expense, net                                       |  |                                        |        
|                                                                  |  |                                        |        
|Income (loss) before provision (benefit) for income taxes         |  |                                        | (11,714
|Provision (benefit) for income taxes                              |  |                                        | (4,526 
|                                                                  |  |                                        |        
|Income (loss) before equity in net earnings of subsidiaries       |  |                                        | (7,188 
|Equity in net earnings of subsidiaries                            |  |                                        | 21,856 
|                                                                  |  |                                        |        
|Net income                                                        |  | $                                      | 14,668 
|                                                                  |  |                                        |        



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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS



|                                                                                                                    |  | For the Six Months Ended June 30, 2002 |         
|------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------- | --------
|                                                                                                                    |  | Parent                                 |         
|                                                                                                                    |  | (In thousands)                         |         
|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                                                                            |  | $                                      | 4,329   
|                                                                                                                    |  |                                        |         
|Operating income (loss)                                                                                             |  |                                        | (4,329  
|Interest expense                                                                                                    |  |                                        | 9,299   
|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   |  |                                        | (13,628 
|Provision (benefit) for income taxes                                                                                |  |                                        | (5,315  
|                                                                                                                    |  |                                        |         
|Income (loss) before cumulative effect of change in accounting principle and equity in net earnings of
subsidiaries |  |                                        | (8,313  
|Cumulative effect of change in accounting principle                                                                 |  |                                        |         
|                                                                                                                    |  |                                        |         
|Loss before equity in net loss of subsidiaries                                                                      |  |                                        | (8,313  
|Equity in net loss of subsidiaries                                                                                  |  |                                        | (221,328
|                                                                                                                    |  |                                        |         
|Net loss                                                                                                            |  | $                                      | (229,641
|                                                                                                                    |  |                                        |         





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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS



|                                                                  |  | For the Three Months Ended June 30, 2003 |       
|----------------------------------------------------------------- |  | ---------------------------------------- | ------
|                                                                  |  | Parent                                   |       
|                                                                  |  | (In thousands)                           |       
|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                          |  | $                                        | 1,902 
|                                                                  |  |                                          |       
|Operating income (loss)                                           |  |                                          | (1,902
|Interest expense                                                  |  |                                          | 3,681 
|Preferred dividends of a subsidiary trust                         |  |                                          |       
|Other (income) expense, net                                       |  |                                          |       
|                                                                  |  |                                          |       
|Income (loss) before provision (benefit) for income taxes         |  |                                          | (5,583
|Provision (benefit) for income taxes                              |  |                                          | (2,135
|                                                                  |  |                                          |       
|Income (loss) before equity in net earnings of subsidiaries       |  |                                          | (3,448
|Equity in net earnings of subsidiaries                            |  |                                          | 26,839
|                                                                  |  |                                          |       
|Net income                                                        |  | $                                        | 23,391
|                                                                  |  |                                          |       





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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS



|                                                                  |  | For the Three Months Ended June 30, 2002 |       
|----------------------------------------------------------------- |  | ---------------------------------------- | ------
|                                                                  |  | Parent                                   |       
|                                                                  |  | (In thousands)                           |       
|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                          |  | $                                        | 2,200 
|                                                                  |  |                                          |       
|Operating income (loss)                                           |  |                                          | (2,200
|Interest expense                                                  |  |                                          | 4,605 
|Preferred dividends of a subsidiary trust                         |  |                                          |       
|Other (income) expense, net                                       |  |                                          |       
|                                                                  |  |                                          |       
|Income (loss) before provision (benefit) for income taxes         |  |                                          | (6,805
|Provision (benefit) for income taxes                              |  |                                          | (2,654
|                                                                  |  |                                          |       
|Income (loss) before equity in net earnings of subsidiaries       |  |                                          | (4,151
|Equity in net earnings of subsidiaries                            |  |                                          | 55,265
|                                                                  |  |                                          |       
|Net income                                                        |  | $                                        | 51,114
|                                                                  |  |                                          |       





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UNITED RENTALS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



CONDENSED CONSOLIDATING CASH FLOW INFORMATION



|                                                                                                 |  | For the Six Months Ended June 30, 2003 |       
|------------------------------------------------------------------------------------------------ |  | -------------------------------------- | ------
|                                                                                                 |  | Parent                                 |       
|                                                                                                 |  | (In thousands)                         |       
|Net cash provided by (used in) operating activities                                              |  | $                                      | (4,607
|Cash flows from investing activities:                                                            |  |                                        |       
|Purchases of rental equipment                                                                    |  |                                        |       
|Purchases of property and equipment                                                              |  |                                        | (2,755
|Proceeds from sales of rental equipment                                                          |  |                                        |       
|Purchases of other companies                                                                     |  |                                        |       
|Deposits on rental equipment purchases                                                           |  |                                        |       
|                                                                                                 |  |                                        |       
|Net cash used in investing activities                                                            |  |                                        | (2,755
|Cash flows from financing activities:                                                            |  |                                        |       
|Proceeds from debt                                                                               |  |                                        |       
|Payments of debt                                                                                 |  |                                        |       
|Payments of financing costs                                                                      |  |                                        |       
|Dividend distributions to parent                                                                 |  |                                        |       
|Proceeds from dividends from subsidiary                                                          |  |                                        | 7,362 
|                                                                                                 |  |                                        |       
|Net cash provided by (used in) financing activities                                              |  |                                        | 7,362 
|Effect of foreign exchange rates                                                                 |  |                                        |       
|                                                                                                 |  |                                        |       
|Net increase in cash andcash equivalents                                                         |  |                                        |       
|Cash and cash equivalents at beginning of period                                                 |  |                                        |       
|                                                                                                 |  |                                        |       
|Cash and cash equivalents at endof period                                                        |  |                                        |       
|                                                                                                 |  |                                        |       
|Supplemental disclosure of cashflow information:                                                 |  |                                        |       
|Cash paid for interest                                                                           |  | $                                      | 9,204 
|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 othercompanies 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 Six Months Ended June 30, 2002 |        
|----------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------- | -------
|                                                                                                                        |  | Parent                                 |        
|                                                                                                                        |  | (In thousands)                         |        
|Net cash provided by (used in) operating activities                                                                     |  | $                                      | (19,126
|Cash flows from investing activities:                                                                                   |  |                                        |        
|Purchases of rental equipment                                                                                           |  |                                        |        
|Purchases of property and equipment                                                                                     |  |                                        | (1,653 
|Proceeds from sales of rental equipment                                                                                 |  |                                        |        
|Capital contributed to subsidiary                                                                                       |  |                                        | (63,759
|Purchases of other companies                                                                                            |  |                                        |        
|Deposits on rental equipment purchases                                                                                  |  |                                        |        
|In-process acquisition costs                                                                                            |  |                                        |        
|                                                                                                                        |  |                                        |        
|Net cash used in investing activities                                                                                   |  |                                        | (65,412
|Cash flows from financing activities:                                                                                   |  |                                        |        
|Proceeds from debt                                                                                                      |  |                                        |        
|Payments of debt                                                                                                        |  |                                        |        
|Payments of financing costs                                                                                             |  |                                        |        
|Capital contributions by parent                                                                                         |  |                                        |        
|Dividend distributions to parent                                                                                        |  |                                        |        
|Common shares repurchased and retired                                                                                   |  |                                        | (26,726
|Company-obligated mandatorily redeemable convertible preferred securities of a subsidiary trust repurchased and
retired |  |                                        |        
|Proceeds from the exercise of common stock options                                                                      |  |                                        | 63,759 
|Proceeds from dividends from subsidiary                                                                                 |  |                                        | 47,505 
|                                                                                                                        |  |                                        |        
|Net cash provided by (used in) financing activities                                                                     |  |                                        | 84,538 
|Effect of foreign exchange rates                                                                                        |  |                                        |        
|                                                                                                                        |  |                                        |        
|Net increase (decrease) 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                                                                                                  |  | $                                      | 9,478  
|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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Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations



The following discussion reviews our operations for the six and three months ended June 30, 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 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 continue to be amortized over their estimated useful lives. Under SFAS No. 142, 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 our 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 as of the annual testing date or at any other date when an indicator of impairment may exist 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 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.



Change in Accounting Treatment for
Certain Operating Leases.



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). Under the accounting standards that were applicable prior to July 1, 2003, neither the
equipment subject to these leases nor the lease obligations were reflected on our balance sheet as of June 30, 2003 or any prior date.



Effective July 1, 2003, the accounting treatment for certain of our operating leases has been changed by FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities. Under FIN 46, the lease obligations related to operating leases with certain types of variable interest entities (VIEs) must be reflected as a liability on our balance sheet and
the related equipment as an asset. A VIE is defined as 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. For additional information concerning FIN 46, see Impact of Recently Issued Accounting Standards.



As of July 1, 2003, a substantial portion of our operating leases were with
VIEs and were impacted by FIN 46. In accordance with FIN 46, effective as of July 1, 2003, we are required to: (i) record the lease payment obligations under these leases (including any potential liability associated with guarantees of residual
value) as a



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liability on our balance sheet (approximately $320 million), (ii) record the equipment subject to these leases as an asset on our balance sheet based on
the carrying amount as of July 1, 2003 (estimated to be in the range of $250 million to $270 million); and (iii) recognize a non-cash expense designated as cumulative effect of change in accounting principle equal to the amount by which
the additional liabilities recorded in connection with the adoption of FIN 46 exceeds the additional assets so recorded (estimated to be in the range of $50 million to $70 million).



The adoption of FIN 46 does 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.



We may modify some or all of the above-mentioned operating leases in a manner that would cause us to no longer consolidate those leases under FIN 46. Upon
the effectiveness of any such lease modification, the lease obligations under such lease (other than any residual guarantee amounts) and the related equipment would cease to be reflected on our balance sheet.



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) the closure or
consolidation with other locations of 42 underperforming branches and five administrative offices (including 36 closed or consolidated as of June 30, 2003) ($24.6 million); (ii) a reduction of our workforce by 412 (including 342 terminated as of
June 30, 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 $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, and $20.9 million as of June 30, 2003, consisting of $1.4 million for the 2001 charge and $19.5 million for the 2002 charge. We estimate that approximately $7.2 million (primarily in cash) of the aggregate balance as of
June 30, 2003 will be paid by December 31, 2003 and approximately $13.7 million will be paid in future periods.



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

|                             |  | BalanceDecember 31,2002 |        | Activityin 2003 |   | BalanceJune 30,2003
|---------------------------- |  | ----------------------- | ------ | --------------- | - | -------------------
|Costs to vacate facilities   |  | $                       | 22,258 |                 | $ | 5,031              
|Workforce reduction costs    |  |                         | 3,462  |                 |   | 747                
|Information technology costs |  |                         | 1,395  |                 |   | 391                
|                             |  |                         |        |                 |   |                    
|                             |  | $                       | 27,115 |                 | $ | 6,169              
|                             |  |                         |        |                 |   |                    



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Results of Operations



Six Months Ended June 30, 2003 and 2002



Revenues.    We had total revenues of $1,319.9 million in the first six months of 2003, representing a decrease of 1.8% from
total revenues of $1,343.7 million in the first six months of 2002. The different components of our revenues are discussed below:



1.Equipment Rentals.    Our revenues from equipment rentals were $994.0 million in the first six months
of 2003, representing a decrease of 0.4% from $997.9 million in the first six months of 2002. These revenues accounted for 75.3% of our total revenues in 2003 compared with 74.3% of our total revenues in 2002. The principal factors constraining our
rental revenues during the first half of 2003 were reduced state spending for infrastructure projects due to budget shortfalls and continued weakness in non-residential construction activity.



Our rental rates were down 0.4% in the first six months of 2003 compared to
the same period last year. This decrease primarily reflected the weakness in certain of our end markets. Our dollar equipment utilization rate in the first six months of 2003 was 52.4% compared to 54.7% in the first six months of 2002. The decrease
in the dollar utilization rate in 2003 primarily reflected: (i) weakness in traffic equipment rentals and (ii) a change in fleet mix towards equipment with generally lower dollar utilization rates.



The 0.4% 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 1.7%. This increase reflected an increase in the volume of transactions
at these locations, which was more than sufficient to offset the slight 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. Although our rental volume increased on an overall basis, the volume of traffic equipment rentals decreased primarily due to reduced state spending for infrastructure projects.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We lost revenues due to the closing or sale of branches and added revenues 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 $76.6 million in the first six months of 2003, representing a decrease of 18.3% from $93.8 million in the
first six months of 2002. These revenues accounted for 5.8% of our total revenues in the first six months of 2003 compared with 7.0% of our total revenues in the first six months of 2002. The decrease in these revenues in the first six months of
2003 reflected a planned reduction in used 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) and, to
a lesser extent, weaker pricing.



3.Sales of Equipment and Merchandise and Other Revenues.    Our revenues from sale of equipment and merchandise and other revenues were $249.3 million in the first six months of
2003 and $252.1 million in the first six months of 2002. These revenues accounted for 18.9% of our total revenues in the first six months of 2003 compared with 18.8% of our total revenues in the first six months of 2002. The decrease in these
revenues in 2003 reflected a decrease in new equipment sales which was partially offset by increases in revenues from sales of merchandise and service.



Gross Profit.    Gross profit decreased to $377.1 million in the first six months of 2003 from $432.5 million in the first six
months of 2002. This decrease reflected the decrease in total revenues discussed above and 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 28.3% in the first six months of 2003 and 33.0% in the first six months of 2002. The decrease in 2003 principally reflected cost increases



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and the decrease in rental rates and decrease in traffic equipment rentals described above. The cost increases were attributable to several factors
including: (i) higher costs for fuel, occupancy, employee benefits, insurance and claims, and repairs and maintenance and (ii) an increase in depreciation expense due to a larger fleet size.



2.Sales of Rental
Equipment.    Our gross profit margin from sales of rental equipment was 33.5% in the first six months of 2003 and 35.0% in the first six 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 28.1% in the first six months of both 2003 and 2002.



Selling, General and Administrative
Expenses.    Selling, general and administrative expenses (SG&A) were $208.3 million, or 15.8% of total revenues, during the first six months of 2003 and $205.0 million, or 15.3% of total revenues, during the
first six months of 2002. Our bad debt expense, which is included in SG&A, was approximately $2.5 million higher in the first six months of 2003 than in the same period last year.



Non-rental Depreciation and Amortization.    Non-rental depreciation and amortization was $33.8
million, or 2.6% of total revenues, in the first six months of 2003 and $27.7 million, or 2.1% of total revenues, in the first six months of 2002. The increase in 2003 was primarily attributable to an upgrade in transportation equipment and an
increase in leasehold improvements in connection with branch upgrades.



Operating Income.    We recorded operating income of $134.9 million in the first six months of 2003 compared with operating income of $199.7 million in the first six 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 $105.4 million in the first six months of 2003 and $97.5 million in the first six months of 2002. The increase in 2003 principally reflected the
additional interest expense attributable to the senior notes we issued in December 2002 and April 2003 partially offset by lower interest rates on our variable rate debt.



Preferred Dividends of a Subsidiary Trust.    Preferred dividends of a subsidiary trust were $7.4
million during the first six months of 2003 and $9.3 million during the first six 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 $1.6
million in the first six months of 2003 and $3.3 million in the first six months of 2002. The higher other income in 2002 was primarily attributable to a favorable settlement of a lawsuit in 2002.



Income Taxes.    Income taxes were $9.1 million,
or an effective rate of 38.25%, in the first six months of 2003 and $37.5 million, or an effective rate of 39%, in the first six months of 2002. The decrease in the effective rate in 2003 was attributable to lower foreign and state taxes.



Income Before Cumulative Effect of Change in Accounting
Principle.    We had income before cumulative effect of change in accounting principle of $14.7 million in the first six months of 2003 and $58.7 million in the first six months of 2002. The decrease in 2003 principally
reflected the decrease in operating income and the increase in interest expense described above.



Cumulative Effect of Change in Accounting Principle.    During the first quarter 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.



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Three Months Ended June 30, 2003 and 2002



Revenues.    We had total revenues of $728.1
million in the second quarter of 2003, representing a decrease of 2.2% from total revenues of $744.8 million in the second quarter of 2002. The different components of our revenues are discussed below:



1.Equipment
Rentals.    Our revenues from equipment rentals were $550.4 million in the second quarter of 2003, representing a decrease of 0.2% from $551.6 million in the second quarter of 2002. These revenues accounted for 75.6% of our
total revenues in 2003 compared with 74.1% of our total revenues in 2002.



Our rental rates were up 1.5% in the second quarter of 2003 compared to the same period last year. Our dollar equipment utilization rate in the second quarter of 2003 was 58.1% compared to 59.8% in last years
second quarter. The decrease in the dollar utilization rate in 2003 primarily reflected: (i) a change in fleet mix towards equipment with generally lower dollar utilization rates and (ii) weakness in traffic equipment rentals. These factors were
partially offset by the increase in rental rates.



The 0.2%
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 1.8%. This increase reflected the increase in rental rates and an
increase in the volume of transactions at these locations. 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 our rental volume increased on an overall basis, 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 factors
was a loss of revenues that offset the increase in same store rental revenues.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



2.Sales of Rental Equipment.    Our revenues from sales of rental equipment were $41.5 million in the second quarter of 2003, representing a decrease of 24.0% from
$54.6 million in the second quarter of 2002. These revenues accounted for 5.7% of our total revenues in the second quarter of 2003 compared with 7.3% of our total revenues in the second quarter of 2002. The decrease in these revenues in the second
quarter of 2003 reflected a planned reduction in used 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) and, to a lesser extent, weaker pricing.



3.Sales of Equipment and Merchandise and Other Revenues.    Our revenues from sale of equipment and merchandise and other revenues were $136.2 million in the second quarter of
2003 and $138.5 million in the second quarter of 2002. These revenues accounted for 18.7% of our total revenues in the second quarter of 2003 compared with 18.6% of our total revenues in the second quarter of 2002. The decrease in these revenues in
2003 reflected a decrease in new equipment sales which was partially offset by increases in revenues from sales of merchandise and service.



Gross Profit.    Gross profit decreased to $223.1 million in the second quarter of 2003 from $253.3 million in the second
quarter of 2002. This decrease reflected the decrease in total revenues discussed above and 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 31.1% in the second quarter of 2003 and 35.6% in the second quarter of 2002. The decrease in 2003 principally reflected cost increases and the decrease in
traffic equipment rentals described above. The cost increases were attributable to several factors including: (i) higher costs for fuel, occupancy, employee benefits, insurance and claims, and repairs and maintenance and (ii) an increase in
depreciation expense due to a larger fleet size.



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2.Sales of Rental Equipment.    Our gross profit
margin from sales of rental equipment was 33.3% in the second quarter of 2003 and 34.4% in the second quarter 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 28.2% in the second quarter of 2003 and 27.6% in the second quarter of 2002. The increase in 2003 reflected
higher margins on new equipment sales.



Selling, General and
Administrative Expenses.    SG&A was $111.6 million, or 15.3% of total revenues, during the second quarter of 2003 and $106.5 million, or 14.3% of total revenues, during the second quarter of 2002. Our bad debt expense,
which is included in SG&A, was approximately $3.5 million higher in the second quarter of 2003 than in the same period last year.



Non-rental Depreciation and Amortization.    Non-rental depreciation and amortization was $16.9 million, or 2.3% of total
revenues, in the second quarter of 2003 and $13.9 million, or 1.9% of total revenues, in the second quarter of 2002. The increase in 2003 was primarily attributable to an upgrade in transportation equipment and an increase in leasehold improvements
in connection with branch upgrades.



Operating
Income.    We recorded operating income of $94.6 million in the second quarter of 2003 compared with operating income of $132.9 million in the second quarter 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 $54.4 million in the second quarter of 2003 and $47.5 million in the second quarter of 2002. The increase in 2003 principally reflected the additional interest expense
attributable to the senior notes that we issued in December 2002 and April 2003 partially offset by a lower average debt balance and 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 second quarter of 2003 and $4.6 million during the second quarter 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 $1.5
million in the second quarter of 2003 and $3.0 million in the second quarter of 2002. The higher other income in 2002 was primarily attributable to a favorable settlement of a lawsuit in 2002.



Income Taxes.    Income taxes were $14.7 million,
or an effective rate of 38.5%, in the second quarter of 2003 and $32.7 million, or an effective rate of 39.0%, in the second quarter of 2002. The decrease in the effective rate in 2003 was attributable to lower foreign and state taxes.



Net Income.    We had net income of $23.4
million in the second quarter of 2003 and $51.1 million in the second quarter of 2002. The decrease in 2003 principally reflected the decrease in operating income and the increase in interest expense described above.



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Liquidity and Capital Resources



Recent Financing Transactions



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. The repayment of the outstanding borrowings under the accounts receivables securitization facility from the proceeds of the notes offering gave 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 6 to the Notes to Unaudited Consolidated Financial
Statements included elsewhere in this Report.



On June
17, 2003, we obtained a new accounts receivable securitization facility under which one of our subsidiaries can borrow up to $250 million against a collateral pool of accounts receivable. Upon obtaining this facility, we terminated our existing
accounts receivable securitization facility. The borrowings under the new facility and the receivables in the collateral pool are included in the liabilities and assets, respectively, reflected on our consolidated balance sheet. However, such assets
are only available to satisfy the obligations of the borrower subsidiary. As of June 30, 2003, (i) the outstanding borrowings under the facility were approximately $13.0 million and (ii) the aggregate face amount of the receivables in the collateral
pool was approximately $360.2 million. The agreement governing this facility is scheduled to expire on September 30, 2006. For additional information concerning this facility, see Note 6 to the Notes to Unaudited Consolidated Financial Statements
included elsewhere in this Report.



Sources and Uses of
Cash



During the first six months of 2003, we (i)
generated cash from operations of $180.1 million, (ii) generated cash from the sale of rental equipment of $76.6 million and (iii) obtained cash from borrowings, net of repayments, of approximately $57.3 million. We used cash during this period
principally to (i) pay consideration for acquisitions of $4.5 million, (ii) purchase rental equipment of $265.7 million, (iii) purchase other property and equipment of $24.0 million, (iv) pay deposits on rental equipment purchases of $12.4 million
and (v) pay financing costs of $7.5 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 August 7, 2003, we had $439.7 million of
borrowing capacity available under our $650 million revolving credit facility (reflecting outstanding loans of approximately $50.3 million and outstanding letters of credit in the amount of approximately $160.0 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 may 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 below.



The amount of our future capital expenditures will depend on a number of factors, including general economic conditions and growth prospects. We estimate
that our capital expenditures for the year 2003 will be approximately $350 million for our existing operations. Of this amount, $289.7 million had been expended through June 30, 2003 (comprised of $265.7 million to replace rental equipment sold and
$24.0 million to purchase non-rental equipment). 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 37 months, to approximately 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:



|                                                                                                |  | Remainderof 2003 |         | 2004 |   | 2005    |  | 2006 |         | 2007 |   | 2008    |  | Thereafter |         | Total
|----------------------------------------------------------------------------------------------- |  | ---------------- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | ---------- | ------- | -----
|                                                                                                |  | (in thousands)  
|Debt excluding capital leases(1)                                                                |  | $                | 1,735   |      | $ | 6,904   |  | $    | 221     |      | $ | 173,063 |  | $          | 531,564 |      
|Capital leases(1)                                                                               |  |                  | 9,410   |      |   | 20,097  |  |      | 7,485   |      |   | 6,299   |  |            | 1,746   |      
|Operating leases(1):                                                                            |  |                  |         |      |   |         |  |      |         |      |   |         |  |            |         |      
|Real estate                                                                                     |  |                  | 34,637  |      |   | 64,953  |  |      | 57,137  |      |   | 52,028  |  |            | 47,363  |      
|Rental equipment                                                                                |  |                  | 53,540  |      |   | 88,771  |  |      | 82,843  |      |   | 277,561 |  |            | 48,001  |      
|Other equipment                                                                                 |  |                  | 10,480  |      |   | 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                                                                                           |  | $                | 109,802 |      | $ | 196,572 |  | $    | 152,925 |      | $ | 511,014 |  | $          | 629,746 |      
|                                                                                                |  |                  |         |      |   |         |  |      |         |      |   |         |  |            |         |      

---

|(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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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 do not know at this time the extent
to which the actual residual values may be less than the guaranteed residual values and, accordingly, cannot quantify the amount that we will be required to pay, if any, under these guarantees. If the actual residual value for all equipment subject
to such guarantees were to be zero, then our maximum potential liability under these guarantees would be approximately $268.8 million. Under the accounting standards that were applicable prior to July 1, 2003, this potential liability was not
reflected on our balance sheet as of June 30, 2003 or any prior date. As described under Change in Accounting Treatment for Certain Operating Leases, effective July 1, 2003, the liabilities associated with certain of our operating
leases (including any potential liabilities associated with the guarantee of residual value) are required to be recorded as a liability on our balance sheet. For additional information concerning lease payment obligations under our operating leases,
see Certain Information Concerning Contractual Obligations above.



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 and tax related services and support, (iii) information technology systems and support, (iv) acquisition related
services, (v) legal services, and (vi) human resource support. In addition, Holdings leases certain equipment and real property that are made available for use by URI and its subsidiaries. URI has made, and expects to continue to make, certain
payments to Holdings in respect of the services provided by Holdings to URI. The expenses relating to URIs payments to Holdings are reflected on URIs financial statements as selling, general and administrative expenses. In addition,
although not legally obligated to do so, URI has in the past made, and expects that it will in the future make, distributions to Holdings to, among other things, enable Holdings to pay dividends on the 61/2% Convertible Quarterly Income Preferred Securities (Trust Preferred Securities) that were issued by a subsidiary trust of Holdings.



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 income reported on the consolidated financial statements of URI is more than the net income reported on the consolidated financial statements of Holdings.



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



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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 reclassified 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 apply in the first interim period beginning after
June 15, 2003. For information on the impact of FIN 46 on the way we account for certain operating leases, see Change in Accounting Treatment for Certain Operating Leases.



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.



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In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard requires financial
instruments falling within the scope of this standard be classified as liabilities. This standard is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective with the first interim period beginning
after June 15, 2003. Upon adoption of this standard, we will classify our company-obligated mandatorily redeemable convertible preferred securities of a subsidiary trust as a liability.



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



Sensitivity to Changes in Construction and Industrial Activities



Our general rental equipment is principally used in
connection with construction and industrial activities and our traffic control equipment is principally used in connection with the construction or repair of roads and bridges and similar infrastructure projects. Weakness in our end markets,
such as a decline in construction or industrial activity or a reduction in infrastructure projects, 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 have been significant declines in non-residential construction activity in 2002 and 2003 and reductions in government spending on infrastructure projects in
several key states. This weakness in our end markets adversely affected our results in 2002 and the first six months of 2003 as described above and in our Annual Report on Form 10-K for 2002.



We have identified below certain factors that may cause further weakness in
our end markets, either temporarily or long-term:



| |  |  | continuation of weakness in the economy or the onset of a new recession;
| | - |  | ------------------------------------------------------------------------



| |  |  | further reductions in government spending for roads, bridges and other infrastructure projects;
| | - |  | -----------------------------------------------------------------------------------------------



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



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



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



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;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | changes in government spending for infrastructure projects;
| | - |  | -----------------------------------------------------------



| |  |  | 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 costs;
| | - |  | -------------------



| |  |  | 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;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | 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 June 30, 2003, we had on our balance sheet net goodwill in the amount of $1,727.9 million, which represented approximately 36% 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 as of the annual date of testing or at any other date when an indicator of impairment may exist 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 June 30, 2003, our total indebtedness was
approximately $2,586.0 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;
| | - |  | ---------------------------



| |  |  | 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 June 30, 2003, taking into account our interest rate swap
agreements, we had $943.1 million of variable rate indebtedness.



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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.



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.



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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, $1 million for workers compensation 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. 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 1,400 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.



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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



We periodically utilize interest rate swap agreements to manage and mitigate our exposure to changes in interest rates. At June 30, 2003, we had interest
rate protection in the form of swap agreements with an aggregate notional amount of $981.5 million. The effect of some of these agreements is to limit our interest rate exposure to 9.5% on $200.0 million of our term loan through 2003 and 4.6% on
$171.5 million of our term loan through 2003. The effect of the remainder of these agreements is to convert $610.0 million of our fixed rate notes to floating rate instruments. The fixed rate notes being converted consist of; (i) $300.0 million of
our 91/4% subordinated notes through 2009, (ii) $210.0 million of our December 2002 issued 103/4% senior notes through 2008 and (iii) $100.0 million of our April 2003 issued 103/4% senior notes through 2008.



We have the following indebtedness that bears interest at variable rates: (i) all borrowings under our $650 million
revolving credit facility ($52.6 million outstanding as of June 30, 2003), (ii) our term loan ($639.0 million remaining outstanding as of June 30, 2003), and (iii) all borrowings under our $250 million accounts receivable securitization
facility ($13.0 million outstanding as of June 30, 2003). The weighted average interest rates applicable to our variable rate debt on June 30, 2003 were (i) 5.8% for the revolving credit facility (this is the Canadian rate since the amount
outstanding was Canadian borrowings), (ii) 4.7% for the term loan, and (iii) 2.0% for the receivables securitization facility. Based upon the amount of variable rate debt outstanding, taking into account our interest rate swap agreements, as of
June 30, 2003 (approximately $943.1 million in the aggregate), our annual earnings would decrease by approximately $5.8 million for each one percentage point increase in the interest rates applicable to our variable rate debt. The amount of our
variable rate indebtedness may fluctuate significantly as a result of changes in the amount of indebtedness outstanding under our revolving credit facility and receivables securitization facility from time to time. For additional information
concerning the terms of our variable rate debt, see Note 9 to our notes to consolidated financial statements included in our 2002 Annual Report on Form 10-K.



Market risk relating to changes in foreign currency exchanges rates was 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 this market risk since the end of the fiscal year 2002.



Item 4.    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) as of June 30, 2003. This evaluation took place as of a date within 90 days prior to the
filing date of this quarterly report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2003, 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.



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##### Table of Contents

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 4.    Submission of Matters to a Vote of Security Holders



Our Companys Annual Meeting of Stockholders was held on May 28, 2003. The holders of 67,594,353 common shares, 300,000 Series C Perpetual
Convertible Preferred Shares (Series C Preferred) and 105,252 Class D-1 Perpetual Convertible Preferred Shares (Class D-1 Preferred) were present either in person or by proxy. The following three matters were voted
on and approved at such meeting.



| | 1. |  | The election of two members to the Board of Directors by the holders of our common stock and Class D-1 Preferred (where each share of Class D-1 Preferred is entitled to 331/3votes).
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                 |  | FOR        |  | WITHHELD 
|---------------- |  | ---------- |  | ---------
|Ronald M. DeFeo  |  | 68,420,121 |  | 2,682,632
|Gerald Tsai, Jr. |  | 68,420,025 |  | 2,682,728



| | 2. |  | The election of two members to the Board of Directors by the holders of the Series C Preferred.
| | -- |  | -----------------------------------------------------------------------------------------------



|                 |  | FOR     |  | WITHHELD
|---------------- |  | ------- |  | --------
|Leon D. Black    |  | 300,000 |  |         
|Michael S. Gross |  | 300,000 |  |         



| | 3. |  | The ratification of the appointment of Ernst & Young LLP as our Companys independent auditors for the fiscal year ending December 31, 2003 by the holders of our common
stock, Class D-1 Preferred (where each share of Class D-1 Preferred is entitled to 331/3votes) and
Series C Preferred (were each share of Series C Preferred is entitled to 40 votes).
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|FOR        |  | AGAINST   |  | ABSTAIN
|---------- |  | --------- |  | -------
|81,155,314 |  | 1,931,091 |  | 16,348 



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##### Table of Contents

Item 6.    Exhibits and Reports on Form 8-K



(a)  Exhibits:



|ExhibitNumber |  | 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 the 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 the 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 the 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 the 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. Current Report on Form 8-K filed on October 5, 2001).                                                                          
|              | 
|3(h)          |  | Amended and Restated Certificate of Incorporation of United Rentals (North America), Inc., in effect as of the date hereof (incorporated by reference to Exhibit 3.3 of the United
Rentals (North America), Inc. Quarterly 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. Quarterly
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
(incorporated by reference to Exhibit 4(a) of the United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).            
|              | 
|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 (incorporated by reference to Exhibit 10(a) of the United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).
|              | 
|10(b)         |  | Letter Agreement with Bradley S. Jacobs, dated as of April 21, 2003 (incorporated by reference to Exhibit 10(c) of the United Rentals, Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003).**                                                                                                                 
|              | 
|10(c)         |  | Letter Agreement with John N. Milne, dated as of April 21, 2003 (incorporated by reference to Exhibit 10(d) of the United Rentals, Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003).**                                                                                                                     
|              | 
|10(d)         |  | Letter Agreement with Wayland R. Hicks, dated as of April 21, 2003 (incorporated by reference to Exhibit 10(e) of the United Rentals, Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003).**                                                                                                                  



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|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              | 
|10(e)         |  | Severance Agreement with Michael J. Nolan, dated as of April 29, 2003 (incorporated by reference to Exhibit 10(b) of the United Rentals, Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003).**                                  
|              | 
|10(f)*        |  | Purchase and Contribution Agreement dated June 17, 2003 by and between United Rentals Receivables LLC I and United Rentals Receivables LLC II.                                                                                                        
|              | 
|10(g)*        |  | Parent Undertaking Agreement dated June 17, 2003 between United Rentals, Inc. and Deutsche Bank Securities, Inc. as agent.                                                                                                                            
|              | 
|10(h)*        |  | Receivables Purchase Agreement dated June 17, 2003 by and among United Rentals Receivables LLC II, United Rentals, Inc., as collection agent, various financial institutions and
Deutsche Bank Securities, Inc., as agent.                            
|              | 
|10(i)*        |  | Purchase and Contribution Agreement dated June 17, 2003 by and between United Rentals (North America), Inc., United Rentals Northwest, Inc., United Rentals Southeast, L.P., United
Equipment Rentals Gulf, L.P. and United Rentals Receivables LLC I.
|              | 
|31(a)*        |  | Certification by Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.                                                                                                                                           
|              | 
|31(b)*        |  | Certification by Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.                                                                                                                                           
|              | 
|32(a)*        |  | Certification by Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350).                                                     
|              | 
|32(b)*        |  | Certification by Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350).                                                     

---

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

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



(b)  Reports on Form 8-K:



|   | 
|-- | 
|1. | 
|   | 
|2. | 
|   | 
|3. | 



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SIGNATURES



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



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



48