Edgar Filing: UNITED RENTALS INC /DE

As filed with the Securities and Exchange Commission on September 6, 2001

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

United Rentals, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware 06-1522496
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

Five Greenwich Office Park
Greenwich, Connecticut 06830
(203) 622-3131
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)

Michael J. Nolan, Chief Financial Officer
United Rentals, Inc.
Five Greenwich Office Park
Greenwich, Connecticut 06830
(203) 622-3131
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)

A copy of all communications, including communications sent
to the agent for service, should be sent to:

Joseph Ehrenreich, Esq. Malcolm E. Landau, Esq. Kris F. Heinzelman, Esq.
Ehrenreich Eilenberg & Krause LLP Weil, Gotshal & Manges LLP Cravath, Swaine & Moore
11 East 44th Street 767 Fifth Avenue Worldwide Plaza
New York, NY 10017 New York, NY 10153 825 Eighth Avenue
(212) 986-9700 (212) 310-8000 New York, NY 10019
(212) 474-1000

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

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The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell nor does it seek an offer to buy
these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated September 6, 2001.

9,000,000 Shares

[LOGO] United/TM/
Rentals

Common Stock

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All of the shares of common stock in the offering are being sold by The
Colburn Music Fund. United Rentals, Inc. will not receive any of the proceeds
from the sale of the shares.

United Rentals' common stock is traded on the New York Stock Exchange under
the symbol "URI". The last reported sale price of the common stock on August
14, 2001, was $23.45 per share.

See "Risk Factors" beginning on page 9 to read about factors you should
consider before buying shares of our common stock.

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Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.

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Per Share Total
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Initial price to public.............................. $ $
Underwriting discount................................ $ $
Proceeds, before expenses, to the selling stockholder $ $

To the extent that the underwriters sell more than 9,000,000 shares of
common stock, the underwriters have the option to purchase up to an additional
1,350,000 shares from the selling stockholder at the initial public offering
price less the underwriting discount.

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The underwriters expect to deliver the shares against payment in New York,
New York on , 2001.

Goldman, Sachs & Co. Credit Suisse First Boston

JPMorgan
Deutsche Banc Alex. Brown
Legg Mason Wood Walker
Incorporated

Prospectus dated , 2001.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

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

WHERE YOU CAN FIND MORE INFORMATION

We file reports, proxy statements, and other information with the SEC. Such
reports, proxy statements, and other information can be read and copied at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. The SEC maintains an internet site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC, including our company.

INCORPORATION BY REFERENCE

The SEC allows us to "incorporate by reference" the documents that we file
with the SEC. This means that we can disclose important information to you by
referring you to those documents. Any information we incorporate in this manner
is considered part of this prospectus; however, to the extent that there are
any inconsistencies between information presented in this prospectus and
information contained in incorporated documents filed with the SEC before the
date of this prospectus, the information in this prospectus shall be deemed to
supersede the earlier information. Any information we file with the SEC after
the date of this prospectus and until this offering is completed will
automatically update and supersede the information contained in this
prospectus.

We incorporate by reference the following documents that we have filed with
the SEC and any filings that we will make with the SEC in the future under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
this offering is completed:

. Annual Report on Form 10-K for the year ended December 31, 2000;

. The following Quarterly Reports on Form 10-Q: (1) Report for the quarter
ended March 31, 2001, and (2) Report for the quarter ended June 30, 2001;

. The following Current Reports on Form 8-K: (1) Report filed on January 2,
2001, (2) Report filed on March 2, 2001, (3) Report filed on April 16,
2001, (4) Report filed on May 1, 2001 and (5) Report filed on July 27,
2001;

. Definitive Proxy Statement on Schedule 14A filed on April 30, 2001; and

. Registration Statement on Form 8-A dated November 27, 1997 (filed on
December 3, 1997), and Registration Statement on Form 8-A dated August 6,
1998.

We will provide without charge, upon written or oral request, a copy of any
or all of the documents which are incorporated by reference into this
prospectus. Requests should be directed to: United Rentals, Inc., Attention:
Corporate Secretary, Five Greenwich Office Park, Greenwich, Connecticut 06830,
telephone number: (203) 622-3131.

PROSPECTUS SUMMARY

This summary may not include all the information that is important to you.
You should read the entire prospectus and the documents incorporated by
reference before making an investment decision. Unless otherwise indicated, all
data in this prospectus assumes that the underwriters will not exercise the
over-allotment option.

United Rentals

United Rentals is the largest equipment rental company in North America
with more than 740 locations in 47 states, seven Canadian provinces and Mexico.
We offer for rent over 600 different types of equipment to customers that
include construction and industrial companies, manufacturers, utilities,
municipalities, homeowners and others. In 2000, we served more than 1.2 million
customers, completed over 8.4 million rental transactions and generated
revenues and net income of $2.9 billion and $176.4 million, respectively.

We have the largest fleet of rental equipment in the world, with over
500,000 units having an original purchase price of approximately $3.6 billion.
Our fleet includes:

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

. Aerial work platforms, such as scissor lifts and boom lifts;

. General tools and light equipment, such as power washers, water pumps,
heaters and hand tools;

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

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

. Special event equipment, such as large tents, light towers and power
units used for sporting, corporate and other events.

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

We estimate that the U.S. equipment rental industry has grown from
approximately $6.5 billion in annual rental revenues in 1990 to over $25
billion in 2000, representing a compound annual growth rate of approximately
14.5%. We believe that the principal driver of growth in the equipment rental
industry, in addition to general economic expansion, has been the increasing
recognition by equipment users of the many advantages that equipment rental may
offer compared with ownership. They recognize that by renting they can:

. avoid the large capital investment required for equipment purchases;

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

. reduce storage and maintenance costs; and

. access the latest technology without investing in new equipment.

While the construction industry has to date been the principal user of
rental equipment, industrial companies, utilities and others are increasingly
using rental equipment for plant maintenance, plant turnarounds and other
functions requiring the periodic use of equipment. The market for rental
equipment is also benefiting from increased government funding for
infrastructure projects, such as funding under the U.S. Transportation Equity
Act for the 21st Century ("TEA-21") and the Aviation Investment and Reform Act
for the 21st Century ("AIR-21"). TEA-21 earmarks $175 billion for highway
construction and $42 billion for transit spending over the 1998-2003 fiscal
period, a 40% increase over the prior six-year period. AIR-21 provides for $40
billion in construction spending over three years to support the FAA's airport
improvement programs.

Competitive Advantages

We believe that we benefit from the following competitive advantages:

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

. attract customers by providing "one-stop" shopping;

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

. serve customers that require substantial quantities 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. Our purchasing power is further
increased by our ongoing efforts to consolidate our vendor base. For example,
we reduced the number of our primary equipment suppliers from 111 to 28 in
2000. This reduction allowed us to lower our equipment purchase costs by
approximately $150 million in 2000 and should enable us to save additional
amounts in 2001. We expect to realize additional savings by consolidating our
merchandise suppliers and negotiating more favorable warranty terms with key
vendors.

Operating Efficiencies. We generally group our branches into clusters of 10
to 30 locations that are in the same geographic area. Our information
technology systems allow each branch to access all available equipment within a
cluster. We believe that our cluster strategy produces significant operating
efficiencies and increases equipment utilization by enabling us to: (1) market
equipment through all branches within a cluster, (2) cross-market equipment
specialties of different branches within each cluster and (3) reduce costs by
consolidating functions that are common to our more than 740 branches, such as
payroll, accounts payable and credit and collection, into 24 credit offices and
three service centers. In the second quarter of 2001, approximately 10.7% of
our total rental revenue was attributable to equipment sharing among branches.

Information Technology Systems. Our information technology systems
facilitate our ability to make rapid and informed decisions, respond quickly to
changing market conditions, and share equipment among branches. These systems
allow: (1) management to obtain a wide range of operating and financial data,
(2) branch personnel to access and manage branch level data, such as customer
requirements, equipment availability and maintenance histories, and (3)
customers to access their accounts online. These systems promote equipment
sharing among branches by enabling branch personnel to locate needed equipment
within a geographic region, determine its closest location and

arrange for its delivery to a customer's work site. We have an in-house team of
approximately 100 information technology specialists that supports our systems
and extends them to new locations.

Geographic and Customer Diversity. We have more than 740 branches in 47
states, seven Canadian provinces and Mexico and served more than 1.2 million
customers in 2000. Our customers are diverse, ranging from Fortune 500
companies to small companies and homeowners, and in 2000 our top ten customers
accounted for approximately 2% 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 larger 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
and a single point of contact for all their equipment needs. Our National
Account team includes 39 professionals serving over 1,500 National Account
customers, including more than 130 new accounts added in the second quarter of
2001. We estimate our revenues from National Account customers will increase to
approximately $400.0 million in 2001 from $245.0 million in 2000.

Risk Management and Safety Programs. We place great emphasis on risk
reduction and safety and believe that we have one of the most comprehensive
risk management and safety programs in the industry. Our risk management
department is staffed by 41 experienced professionals and is responsible for
implementing our safety programs and procedures, developing our employee and
customer training programs and managing any claims against us.

Experienced Senior Management. Our senior management team is comprised of
executives with proven track records. Our management team includes Bradley S.
Jacobs, John N. Milne and Michael J. Nolan, who together with others founded
our company in September 1997, and Wayland R. Hicks who joined them shortly
thereafter. Prior to the founding of our company, Mr. Jacobs served as the
Chairman and Chief Executive Officer of United Waste Systems, Inc., which he
founded in 1989, and Messrs. Milne and Nolan served as members of the United
Waste senior management team for periods of seven and six years, respectively.
United Waste was sold in August 1997 and, at the time, was the sixth largest
provider of integrated, non-hazardous solid waste management services in the
United States. Mr. Hicks, prior to joining our company, held senior executive
positions at Xerox Corporation, where he worked for 28 years, including
Executive Vice President, Corporate Operations and Executive Vice President,
Corporate Marketing and Customer Support Operations. Mr. Hicks also served as
Vice Chairman and Chief Executive Officer of Nextel Communications Corp.
(1994-1995).

Strong and Motivated Branch Management. Each of our branches has a
full-time branch manager who is supervised by one of our 63 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 staffing,
pricing, equipment purchasing and other branch matters. Management closely
tracks branch, district and regional performance with extensive systems and
controls, including performance benchmarks and detailed monthly operating
reviews. We promote equipment sharing among branches by linking the
compensation of branch managers and other personnel to their branch's financial
performance and return on assets.

Flexible Business Strategy. We generate significant cash from operations
that is available for growth investment or debt reduction. In response to the
slowing economy at the beginning of this year, we decreased the rate at which
we purchase new equipment, open new locations and make acquisitions, thereby
increasing cash available for debt reduction. We expect to accelerate our
growth activities as economic conditions warrant.

Strategy

We have established the following key business strategies:

Enhance Industry Leadership Position. We intend to use our extensive fleet,
broad geographic coverage, advanced information technology systems and depth of
experience of our senior and branch management to generate further growth and
increase our market share by:

. actively managing the composition and size of our fleet to meet customer
needs and respond to local demand;

. promoting equipment sharing and cross-marketing of equipment specialties
among branches in geographic regions;

. focusing on providing outstanding customer service and support;

. marketing our services to existing and potential National Account
customers that can benefit from our ability to provide a broad selection
of equipment and a consistently high level of service throughout North
America;

. marketing our extensive fleet of specialized lines of equipment,
including (1) aerial work platforms for use in large projects requiring
significant amounts of equipment for extended periods of time, (2)
traffic control equipment for use in infrastructure projects and (3)
trench safety equipment required for use in below ground work in order to
comply with government worker safety standards; and

. training our sales force and branch personnel in value-added sales
techniques to achieve customer satisfaction and maximize the value of
each transaction.

Maintain Disciplined Approach to Growth Through New Branches and
Acquisitions. We intend to continue to selectively open new branches and make
acquisitions that will expand our geographic reach, enhance our operating
efficiency and increase our market share. In seeking acquisition candidates, we
generally focus on those that have the potential to be immediately accretive to
earnings.

Rapidly Adapt to Changing Economic Conditions. We have made significant
investments in new equipment over the past several years and, as a result, have
one of the most modern rental fleets in the industry. The young age of our
fleet gives us the flexibility to respond to an economic downturn by reducing
the rate at which we purchase new equipment and sell used equipment. We
anticipate significantly increasing our free cash flow from operations in 2001
by reducing our equipment expenditures to approximately $400 million, compared
to $962 million in 2000.

The Offering

Common stock offered by the selling stockholder.. 9,000,000 shares

Common stock to be outstanding after the offering 73,251,558 shares(1)

New York Stock Exchange Symbol................... URI

Use of Proceeds.................................. United Rentals will not
receive any proceeds from
this offering.

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(1) We calculated the outstanding shares based on the number of shares
outstanding as of August 14, 2001. The outstanding shares do not include:
(i) 12,000,000 shares issuable upon conversion of outstanding preferred
shares of United Rentals, which provide for a conversion price of $25 per
share, (ii) 5,000,000 shares issuable upon conversion of outstanding
preferred shares of United Rentals, which provide for a conversion price of
$30 per share, (iii) 6,875,580 shares issuable upon conversion of
outstanding preferred securities of a subsidiary trust of United Rentals,
which provide for a conversion price of $43.625 per share, (iv) 6,808,581
shares issuable upon the exercise of outstanding warrants, which provide
for a weighted average exercise price of $11.83 per share, (v) 16,546,567
shares issuable upon the exercise of outstanding options, which provide for
a weighted average exercise price of $20.29 per share, and (vi) 232,586
shares issuable upon conversion of outstanding debt of United Rentals,
which provide for a weighted average conversion price of $33.25 per share.

Summary Consolidated Financial Information

The tables below present selected financial information for our company.
You should read this information together with (1) the information set forth
under "Capitalization," "Selected Consolidated Financial Information" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and (2) the consolidated financial statements of our company and
the related notes which are included herein.

Certain of our acquisitions were accounted for as purchases and certain
acquisitions were accounted for as poolings-of-interests, including our
September 1998 merger with U.S. Rentals, Inc. For further information
concerning the accounting for these acquisitions, see (1) note 3 to the audited
consolidated financial statements of our company included herein, and (2) note
2 to the unaudited consolidated financial statements of our company included
herein.

Summary Consolidated Financial Information

Six Months Ended
Year Ended December 31, June 30,
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1998 1999 2000 2000 2001
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(dollars in millions, except per share data)

Income statement data:
Total revenues...................................... $1,220 $2,234 $2,919 $1,309 $1,387
Gross profit........................................ 423 825 1,089 478 489
Restructuring charge................................ 29
Operating income.................................... 145 409 548 226 185
Interest expense.................................... 64 140 229 106 115
Preferred dividends of a subsidiary trust........... 8 20 20 10 10
Income before provision for income taxes and
extraordinary item................................ 78 242 301 110 53
Extraordinary items, net(1)......................... 21 11
Net income(2)....................................... 13 143 176 65 17
Basic earnings per share before extraordinary item.. $ 0.53 $ 2.00 $ 2.48 $ 0.90 $ 0.40
Diluted earnings per share before extraordinary item $ 0.48 $ 1.53 $ 1.89 $ 0.70 $ 0.31
Basic earnings per share(2)......................... $ 0.20 $ 2.00 $ 2.48 $ 0.90 $ 0.24
Diluted earnings per share(2)....................... $ 0.18 $ 1.53 $ 1.89 $ 0.70 $ 0.18

As of June 30, 2001
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(dollars in millions)

Balance sheet data:
Cash and cash equivalents..................................... $ 36
Rental equipment, net......................................... 1,851
Goodwill, net(3).............................................. 2,200
Total assets.................................................. 5,315
Total debt.................................................... 2,760
Company-obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust............................ 300
Stockholders' equity.......................................... 1,541

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(1) We recorded an extraordinary item (net of income taxes) of $21.3 million in
1998 and an extraordinary item (net of income taxes) of $11.3 million in
2001. Such charge in 1998 resulted from the early extinguishment of certain
debt and primarily reflected prepayment penalties on certain debt of U.S.
Rentals. Such charge in 2001 resulted from the refinancing of certain debt
and primarily reflected the write-off of deferred financing fees.

(2) Our earnings during 1998 were impacted by merger-related expenses of $47.2
million ($33.2 million net of taxes or $0.45 per diluted share), a $4.8
million ($0.07 per diluted share) charge to recognize deferred tax
liabilities of a company acquired in a pooling-of-interests transaction and
an extraordinary item (net of income taxes) of $21.3 million ($0.30 per
diluted share). Our earnings during 1999 were impacted by $18.2 million
($10.8 million net of taxes or $0.12 per diluted share) of expenses related
to a terminated tender offer. Our earnings during 2001 were impacted by a
restructuring charge of $28.9 million ($19.2 million net of taxes or $0.20
per diluted share), a $7.8 million ($5.2 million net of taxes or $0.06 per
diluted share) charge relating to refinancing costs of a synthetic lease
and an extraordinary item (net of income taxes) of $11.3 million ($0.13 per
diluted share).

(3) Goodwill is defined as the excess of cost over the fair value of
identifiable net assets of businesses acquired and is amortized on a
straight-line basis over forty years.

RISK FACTORS

In addition to the other information in this document, you should carefully
consider the following factors before making an investment decision.

A decline in construction and industrial activities could adversely affect our
revenues and operating results by decreasing the demand for our equipment or
the prices that we can charge.

Our equipment is principally used in connection with construction and
industrial activities. Consequently, a downturn in construction or industrial
activity 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 revenues and
operating results. We have identified below certain of the factors which may
cause such a downturn, either temporarily or long-term:

. a continuation or a worsening of the recent slow-down of the economy;

. an increase in interest rates; or

. adverse weather conditions which may temporarily affect a particular
region.

In addition, demand for our equipment may not reach projected levels in the
event that funding for highway and other construction projects under government
programs, such as the Transportation Equity Act for the 21st Century ("TEA-21")
or the Aviation Investment and Reform Act for the 21st Century ("AIR-21"), does
not reach expected levels.

If we lose any member of our senior management 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 growth strategy.

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 growth strategy. For information on our employment and severance
arrangements with senior management, see "Management--Employment Agreements and
Change-in-Control Agreements." We do not maintain "key man" life insurance with
respect to members of senior management.

Our industry is highly competitive, and competitive pressures could lead to a
decrease in our market share or in the prices that we can charge.

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. In addition, equipment manufacturers may commence or increase
their existing efforts relating to renting and selling equipment directly to
our customers or potential customers. Competitive pressures could adversely
affect our revenues and operating results by decreasing our market share or
depressing the prices that we can charge.

Our operating results may fluctuate which could affect the trading value of our
common stock.

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,
including:

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

. our recent acquisition of businesses that specialize in renting traffic
control equipment, which tend to operate at a loss during the first
quarter;

. the timing of expenditures for new equipment and the disposition of used
equipment;

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

. changes in the interest rates applicable to our floating rate debt;

. 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; and

. the possible need, from time to time, to take other write-offs or special
charges due to a variety of occurrences, such as store consolidations or
closings or the refinancing of existing indebtedness.

Fluctuations in our operating results could adversely affect the trading value
of our common stock.

Our substantial indebtedness will require us to devote a substantial portion of
our cash flow to debt service and could, among other things, constrain our
ability to obtain additional financing and make it more difficult for us to
cope with a downturn in our business.

We have a substantial amount of indebtedness. Specifically, on June 30,
2001, our total indebtedness was approximately $2,759.7 million, of which
approximately $1,327.7 million was secured indebtedness. 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.

We cannot assure you that any of these strategies could be effected on
favorable terms or at all.

An increase in market interest rates would increase our interest expense and
our debt service obligations because some of our debt bears interest at
variable rates.

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. On June 30, 2001, we had $1,295.0 million of variable rate
indebtedness.

If we are unable to obtain additional capital as required, 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.

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. We
cannot, however, be certain that any additional financing will be available or,
if available, will be available on terms that are satisfactory to us. 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.

Restrictive covenants could adversely affect our business by limiting our
flexibility.

We are subject to various restrictive financial and operating covenants
under the agreements governing our indebtedness. These covenants limit or
prohibit, among other things, our ability to incur indebtedness, make
prepayments of certain indebtedness, make investments, create liens, make
acquisitions, sell assets and engage in mergers and acquisitions. These
covenants could adversely affect our business by significantly limiting our
operating and financial flexibility.

We have made acquisitions, which entails certain risks. We cannot guarantee
that we will realize the expected benefits from our acquisitions or that our
existing operations will not be harmed as a result of 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;

. loss of key employees of the acquired company; and

. difficulty maintaining uniform standards, controls, procedures and
policies.

We cannot guarantee that we will realize the expected benefits from our
acquisitions or that our existing operations will not be harmed as a result of
acquisitions.

Goodwill related to acquisitions represents a substantial portion of our total
assets. If the fair value of the goodwill should drop below the recorded value,
we would be required to write off the excess goodwill, which could adversely
affect our operating results.

At June 30, 2001, we had on our balance sheet net goodwill in the amount of
$2.2 billion, which represents approximately 41.4% 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
market value of the net assets of those businesses. If the fair value of the
goodwill, determined in accordance with applicable accounting standards, were
to fall below the recorded value shown on the balance sheet, we would be
required to write off the excess goodwill. Any write-off would be treated as an
expense and would adversely affect our operating results.

Disruptions in our information technology systems could adversely affect our
operating results by limiting our capacity to effectively monitor and control
our operations.

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.

We are exposed to various possible claims relating to our business, and our
insurance may not fully protect us.

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 a deductible of $1.0 million and limited to a
maximum of $98.0 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. We cannot be
certain that insurance will continue to be available to us on economically
reasonable terms, if at all.

We are subject to numerous environmental and safety regulations. If we are
required to incur compliance or remediation costs that are not currently
anticipated our operating results could be hurt.

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 business could be adversely affected
depending on the magnitude of the cost.

Labor disputes could disrupt our ability to serve our customers or lead to
higher labor costs.

We have approximately 1,207 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.

Our operations outside the United States are subject to the risks normally
associated with international operations which could adversely affect our
operating results.

Our operations outside the United States 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.

Absence of dividends could reduce our attractiveness to investors.

We have never paid any dividends on our common stock and have no plans to
pay any such dividends in the foreseeable future. Furthermore, certain of the
agreements governing our outstanding indebtedness prohibit us from paying
dividends on our common stock or restrict our ability to pay such dividends.
See "Dividend Policy." As a result, our stock may be less attractive to certain
investors than the stock of dividend-paying companies.

Shares eligible for future sale could adversely affect the market price of our
common stock.

If our stockholders sell substantial amounts of our common stock (including
shares issued upon exercise of warrants, options or convertible securities),
the market price of our common stock could fall. Subject to certain lock-up
agreements to be entered into by the selling stockholder and by our officers
and directors in connection with the offering (as described under
"Underwriting"), substantially all of the outstanding shares of our common
stock may be sold in the public market.

Anti-takeover provisions in our charter and by-laws could limit our share price
and deter a third party from acquiring our company.

Certain provisions of our Certificate of Incorporation and By-laws, as well
as applicable Delaware law, could make it difficult for a third party to
acquire our company without the consent of the incumbent board. These
provisions provide, among other things, that:

. the directors of our company (other than directors elected by the holders
of our outstanding preferred stock) are divided into three classes, with
directors of each class serving for a staggered three-year period;

. directors may be removed only for cause and only upon the affirmative
vote of at least 66 2/3% of the voting power of all the then outstanding
shares of stock entitled to vote;

. stockholders may not act by written consent;

. stockholder nominations and proposals may only be made if specified
advance notice requirements are complied with;

. stockholders are precluded from calling a special meeting of
stockholders; and

. the board of directors has the authority to issue shares of preferred
stock in one or more series and to fix the powers, preferences and rights
of any such series without stockholder approval.

These provisions could:

. have the effect of delaying, deferring or preventing a change of control
that may be in the best interests of the stockholders and that the
stockholders may favor;

. discourage bids for our common stock at a premium over the market price;
and

. impede the ability of the holders of our common stock to change our
management.

USE OF PROCEEDS

United Rentals will not receive any proceeds from the sale of common stock
in this offering by the selling stockholder.

PRICE RANGE OF COMMON STOCK

Our common stock trades on the New York Stock Exchange under the symbol
"URI." The following table sets forth, for the periods indicated, the high and
low sales prices for the common stock, as reported by the New York Stock
Exchange.

High Low
------ ------

1999:
First quarter........................... $35.69 $26.13
Second quarter.......................... 33.25 25.13
Third quarter........................... 31.00 21.50
Fourth quarter.......................... 21.94 14.31

2000:
First quarter........................... $22.31 $13.44
Second quarter.......................... 19.94 13.00
Third quarter........................... 24.19 17.00
Fourth quarter.......................... 24.31 11.69

2001:
First quarter........................... $19.73 $12.75
Second quarter.......................... 26.40 15.06
Third quarter (through August 14, 2001). 26.00 22.10

On August 14, 2001, the last reported sale price of the common stock as
reported on the New York Stock Exchange was $23.45. As of August 14, 2001,
there were approximately 331 holders of record of the common stock. We believe
that the number of beneficial owners is substantially greater than the number
of record holders, because a large portion of the common stock is held of
record in broker "street name."

DIVIDEND POLICY

We intend to retain all earnings for the foreseeable future for use in the
operation and expansion of our business and, accordingly, we currently have no
plans to pay dividends on our common stock. The payment of any future dividends
will be determined by our board of directors in light of conditions then
existing, including our earnings, financial condition and capital requirements,
restrictions in financing agreements, business conditions and other factors.
Under the terms of certain agreements governing our outstanding indebtedness,
we are prohibited or restricted from paying dividends on our common stock. In
addition, under Delaware law, we are prohibited from paying any dividends
unless we have capital surplus or net profits available for this purpose.

CAPITALIZATION

The following table summarizes our capitalization as of June 30, 2001. You
should read this table together with (1) the information set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and (2) the consolidated financial statements of our company and
the related notes which are included herein.

As of June 30, 2001
---------------------
(dollars in millions,
except share data)

Cash and cash equivalents..................................................... $ 36
======
Debt (including current portion):
Revolving credit facility.................................................. $ 333
Term loan.................................................................. 750
Receivables securitization................................................. 212
10 3/4% senior notes due 2008.............................................. 450
9 1/2% senior subordinated notes due 2008.................................. 200
8.8% senior subordinated notes due 2008.................................... 201
9 1/4% senior subordinated notes due 2009.................................. 300
9% senior subordinated notes due 2009...................................... 250
Other debt................................................................. 64
------
Total debt............................................................. 2,760
Company-obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust............................................................ 300
Stockholders' equity:
Preferred stock--$.01 par value, 5,000,000 shares authorized:
Series A perpetual convertible preferred stock--$300 liquidation
preference, 300,000 shares issued and outstanding....................
Series B perpetual convertible preferred stock--$150 liquidation
preference, 150,000 shares issued and outstanding....................
Common stock--$.01 par value, 500,000,000 shares authorized,
73,150,359 shares issued and outstanding(1).............................. 1
Additional paid in capital................................................. 1,241
Deferred compensation...................................................... (59)
Retained earnings.......................................................... 373
Accumulated other comprehensive loss....................................... (15)
------
Total stockholders' equity............................................. 1,541
------
Total capitalization.......................................................... $4,601
======

--------

(1) Does not include (i) 12,000,000 shares issuable upon conversion of the
outstanding shares of Series A Perpetual Convertible Preferred Stock, which
provide for a conversion price of $25 per share, (ii) 5,000,000 shares
issuable upon conversion of the outstanding shares of Series B Perpetual
Convertible Preferred Stock, which provide for a conversion price of $30
per share, (iii) 6,875,580 shares issuable upon conversion of the
outstanding preferred securities of a subsidiary trust, which provide for a
conversion price of $43.625 per share, (iv) 6,808,581 shares issuable upon
the exercise of outstanding warrants, which provide for a weighted average
exercise price of $11.83 per share, (v) 16,546,567 shares issuable upon the
exercise of outstanding options, which provide for a weighted average
exercise price of $20.29 per share, and (vi) 232,586 shares issuable upon
conversion of outstanding debt of United Rentals, which provide for a
weighted average conversion price of $33.25 per share.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The tables below present selected financial information for our company.
You should read this information together with (1) the information set forth
under "Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and (2) the consolidated financial
statements of our company and the related notes which are included herein.

The balance sheet data presented below as of December 31, 2000 and 1999 and
the income statement data for the years ended December 31, 2000, 1999 and 1998
are derived from our audited consolidated financial statements which are
included herein. The balance sheet data presented below as of December 31,
1998, 1997 and 1996 and the income statement data for the years ended December
31, 1997 and 1996 are derived from audited consolidated financial statements of
our company which are not included or incorporated by reference in this
prospectus. The balance sheet data presented below as of June 30, 2001 and the
income statement data for the six-month periods ended June 30, 2001 and 2000
are derived from our unaudited consolidated financial statements which are
included herein.

Certain of our acquisitions were accounted for as purchases and certain
acquisitions were accounted for as poolings-of-interests, including our
September 1998 merger with U.S. Rentals, Inc. For further information
concerning the accounting for these acquisitions, see (1) note 3 to the audited
consolidated financial statements of our company included herein and (2) note 2
to the unaudited consolidated financial statements of our company included
herein.

Selected Consolidated Financial Information

Six Months
Ended
Year Ended December 31, June 30,
---------------------------------- -------------
1996 1997 1998 1999 2000 2000 2001
----- ----- ------ ------ ------ ------ ------
(dollars in millions, except per share data)

Income statement data:
Total revenues............................................ $ 354 $ 490 $1,220 $2,234 $2,919 $1,309 $1,387
Total cost of operations.................................. 241 341 797 1,409 1,830 831 898
----- ----- ------ ------ ------ ------ ------
Gross profit.............................................. 113 149 423 825 1,089 478 489
Selling, general and administrative expenses.............. 55 71 196 353 454 211 222
Merger-related expenses................................... 47
Restructuring charge...................................... 29
Non-rental depreciation and amortization.................. 9 13 35 63 87 41 53
Termination cost of deferred compensation agreements...... 20
----- ----- ------ ------ ------ ------ ------
Operating income.......................................... 49 45 145 409 548 226 185
Interest expense.......................................... 11 12 64 140 229 106 115
Preferred dividends of a subsidiary trust................. 8 20 20 10 10
Other (income) expense, net............................... (2) (5) 7 (2) 7
----- ----- ------ ------ ------ ------ ------
Income before provision for income taxes and extraordinary
items.................................................... 38 35 78 242 301 110 53
Provision for income taxes................................ 30 44 99 125 45 25
----- ----- ------ ------ ------ ------ ------
Income before extraordinary items......................... 38 5 34 143 176 65 28
Extraordinary items, net(1)............................... 1 21 11
----- ----- ------ ------ ------ ------ ------
Net income(2)............................................. $ 38 $ 4 $ 13 $ 143 $ 176 $ 65 $ 17
===== ===== ====== ====== ====== ====== ======
Pro forma provision for income taxes before extraordinary
items(3)................................................. $ 15 $ 14 $ 44
Pro forma income before extraordinary items(2)............ 23 21 34
Basic earnings per share before extraordinary items....... $1.67 $0.12 $ 0.53 $ 2.00 $ 2.48 $ 0.90 $ 0.40
Diluted earnings per share before extraordinary items..... $1.67 $0.11 $ 0.48 $ 1.53 $ 1.89 $ 0.70 $ 0.31
Basic earnings per share(2)............................... $1.67 $0.08 $ 0.20 $ 2.00 $ 2.48 $ 0.90 $ 0.24
Diluted earnings per share(2)............................. $1.67 $0.08 $ 0.18 $ 1.53 $ 1.89 $ 0.70 $ 0.18

As of December 31,
------------------------------ As of
1996 1997 1998 1999 2000 June 30, 2001
---- ---- ------ ------ ------ -------------
(dollars in millions)

Balance sheet data:
Cash and cash equivalents........................... $ 3 $ 72 $ 20 $ 24 $ 34 $ 36
Rental equipment, net............................... 235 461 1,143 1,660 1,733 1,851
Goodwill, net(4).................................... 1 74 922 1,853 2,216 2,200
Total assets........................................ 381 826 2,635 4,498 5,124 5,315
Total debt.......................................... 214 265 1,315 2,266 2,675 2,760
Company-obligated mandatorily redeemable convertible
preferred securities of a subsidiary trust......... 300 300 300 300
Stockholders' equity................................ 105 446 726 1,397 1,546 1,541

--------

(1)The charge in 1997 resulted from the prepayment of debt by U.S. Rentals. The
charge in 1998 resulted from the early extinguishment of certain debt and
primarily reflected prepayment penalties on certain debt of U.S. Rentals.
The charge in 2001 resulted from the refinancing of certain debt and
primarily reflected the write-off of deferred financing fees.

(2)Our earnings during 1997 were impacted by $20.3 million ($0.40 per diluted
share) of expenses related to the termination of certain deferred
compensation expenses in connection with U.S. Rentals' initial public
offering, a $7.5 million ($0.15 per diluted share) charge to recognize
deferred tax liabilities of U.S. Rentals and an extraordinary item (net of
income taxes) of $1.5 million ($0.03 per diluted share). Our earnings during
1998 were impacted by merger-related expenses of $47.2 million ($33.2
million net of taxes or $0.45 per diluted share), a $4.8 million ($0.07 per
diluted share) charge to recognize deferred tax liabilities of a company
acquired in a pooling-of-interests transaction and an extraordinary item
(net of income taxes) of $21.3 million ($0.30 per diluted share). Our
earnings during 1999 were impacted by $18.2 million ($10.8 million net of
taxes or $0.12 per diluted share) of expenses related to a terminated tender
offer. Our earnings during 2001 were impacted by a restructuring charge of
$28.9 million ($19.2 million net of taxes or $0.20 per diluted share), a
$7.8 million ($5.2 million net of taxes or $0.06 per diluted share) charge,
recorded in other expense, relating to refinancing costs of a synthetic
lease, and an extraordinary item (net of income taxes) of $11.3 million
($0.13 per diluted share).

(3)U.S. Rentals was taxed as a Subchapter S Corporation until its initial
public offering in February 1997, and another company that we acquired in a
pooling-of-interests transaction was taxed as a Subchapter S Corporation
until being acquired by us in 1998. In general, the income or loss of a
Subchapter S Corporation is passed through to its owners rather than being
subjected to taxes at the entity level. Pro forma provisions for income
taxes before extraordinary items and pro forma income before extraordinary
items reflect a provision for income taxes as if all such companies were
liable for federal and state income taxes as taxable corporate entities for
all periods presented.

(4)Goodwill is defined as the excess of cost over the fair value of
identifiable net assets of businesses acquired and is amortized on a
straight-line basis over forty years.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion should be read in conjunction with the
consolidated financial statements of our company and the related notes which
are included herein.

General

We primarily derive revenues from the following sources: (i) equipment
rental (including additional fees that may be charged for equipment delivery,
fuel, repair of rental equipment, and damage waivers), (ii) the sale of used
rental equipment, (iii) the sale of new equipment and (iv) the sale of related
merchandise and parts and other revenue.

Cost of operations consists primarily of depreciation costs associated with
rental equipment, the cost of repairing and maintaining rental equipment, the
cost of rental equipment and equipment and other merchandise sold, personnel
costs, occupancy costs and supplies.

We record rental equipment expenditures at cost and depreciate equipment
using the straight-line method over the estimated useful life (which ranges
from 2 to 10 years), after giving effect to an estimated salvage value of 0% to
10% of cost.

Selling, general and administrative expenses primarily include sales
commissions, 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 intangible assets. Our intangible assets include
non-compete agreements and goodwill, which represents the excess of the
purchase price of acquired companies over the estimated fair market value of
the net assets acquired.

Accounting For Acquisitions

We commenced operations in October 1997 and have completed 247
acquisitions, including a merger with U.S. Rentals, Inc., which was completed
in September 1998. We accounted for three of these acquisitions (including the
U.S. Rentals merger) as "poolings-of-interests," which means that for
accounting and financial reporting purposes the acquired company is treated as
having been combined with us at all time since the inception of the acquired
company. Accordingly, we have restated our financial statements to include the
accounts of two of the companies acquired in these pooling-of-interest
transactions (but have not restated our financial statements for the third
transaction, which was not material and which has been combined with us
effective July 1, 1998). For additional information concerning this
restatement, see note 3 to our audited consolidated financial statements
included herein. We accounted for our other acquisitions as "purchases," which
means that the results of operations of the acquired company are included in
our financial statements only from the date of acquisition. In view of the fact
that our operating results for 2001, 2000, 1999 and 1998 were affected by
acquisitions that were accounted for as purchases, we believe that our results
for these periods are not directly comparable.

Restructuring Plan

We have adopted a restructuring plan involving the following principal
elements: (i) 31 underperforming branches are being closed or consolidated with
other locations (comprised of 18

closed or consolidated as of June 30, 2001 and 13 that will be closed or
consolidated by December 31, 2001); (ii) five administrative offices are being
closed or consolidated with other locations; (iii) our employee headcount is
being reduced by 489; and (iv) certain information technology hardware and
software will no longer be used.

The aggregate annual revenues from the 31 branches that are being
eliminated amounted to approximately $82.0 million. We expect that we will
retain approximately $56 million of this revenue by shifting the business of
some of the closed branches to other locations. We estimate that we will
realize annual cost savings from the branch closures of approximately $33
million.

We recorded, in the second quarter of 2001, a restructuring charge of
approximately $28.9 million relating to the restructuring plan described above.
This charge is comprised of a non-cash charge in the amount of $10.9 million
and cash expenses in the amount of $18.0 million. We paid approximately $3.2
million of these cash expenses in the second quarter of 2001. We expect to pay
the balance of these cash expenses as follows: approximately $8.6 million
during the balance of 2001 and approximately $6.2 million in subsequent
periods.

The restructuring charge includes: (1) the cost of vacating facilities,
primarily the payment of obligations under leases, offset by estimated sublease
opportunities, the write-off of capital improvements made to such facilities
and the write-off of related goodwill, (2) workforce reduction costs, primarily
severance, and (3) information technology costs. The table below provides
certain information concerning the restructuring charge:

Activity
Amount through Balance
of June 30, June 30,
Components of Restructuring Charge Charge 2001(1) 2001(2)
---------------------------------- ------- -------- --------

Cost to vacate facilities........... $18,291 $ 9,779 $ 8,512
Workforce reduction costs........... 5,666 1,296 4,370
Information technology costs......... 4,965 3,042 1,923

------- ------- -------
Total........................... $28,922 $14,117 $14,805
======= ======= =======

--------

(1)Represents the non-cash component of the charge plus the cash component
that was paid through June 30, 2001.

(2)Represents the portion of the cash component of the charge that had not
been paid as of June 30, 2001.

Debt Refinancing and Extraordinary Item

We refinanced an aggregate of $1,695.7 million of indebtedness and other
obligations in April 2001, as described under "--Liquidity and Capital
Resources--Information Concerning Recent Financing Transactions." We recorded
the following charges relating to this refinancing in the second quarter of
2001: (i) a pre-tax extraordinary charge of $18.1 million ($11.3 million, net
of tax) that relates to the refinancing of indebtedness and primarily reflects
the write-off of deferred financing fees and (ii) a pre-tax charge of $7.8
million ($5.2 million, net of tax) that is recorded in other (income) expense,
net, and relates to the refinancing of a synthetic lease.

Results of Operations

Six Months Ended June 30, 2001 and 2000

Revenues. Total revenues for the six months ended June 30, 2001 were
$1,387.1 million, representing an increase of 6.0% over total revenues of
$1,308.9 million for the six months ended June 30, 2000. Our revenues during
these periods were attributable to the following sources:

. Revenues from Equipment Rentals. These revenues were $1,043.8 million in
the first six months of 2001, representing an increase of 14.5% from
$911.6 million in the first six months of 2000. These revenues accounted
for 75.3% of our total revenues in the first six months of 2001 compared
with 69.6% of our total revenues in first six months of 2000. The 14.5%
increase in these revenues in the first six months of 2001 reflected (i)
increased revenues at locations open more than one year (which accounted
for approximately 8.0 percentage points, 7.9 percentage points of which
related to increases in the volume of transactions and utilization
rates, offset by 0.1 percentage points from price decreases) and (ii)
new rental locations acquired through acquisitions and the opening of
start-up locations, partially offset by locations sold or closed (which
accounted for approximately 6.5 percentage points).

. Revenues from the Sales of Rental Equipment. These revenues were $72.2
million in the first six months of 2001, representing a decrease of
53.4% from $155.2 million in the first six months of 2000. These
revenues accounted for 5.2% of our total revenues in the first six
months of 2001 compared with 11.9% of our total revenues in the first
six months of 2000. The reduction in these revenues in 2001 reflects the
fact that, as the economy softened, we reduced our budget for new
equipment purchases in 2001 and slowed the rate at which we sell our
used rental equipment. See "--Liquidity and Capital Resources--Certain
Measures to Reduce Cash Requirements."

. Revenues from the Sales of Equipment and Merchandise and Other Revenues.
These revenues were $271.1 million in the first six months of 2001,
representing an increase of 12.0% from $242.1 million in the first six
months of 2000. These revenues accounted for 19.6% of our total revenues
in the first six months of 2001 compared with 18.5% of our total
revenues in the first six months of 2000. The 12.0% increase in sales of
equipment and merchandise and other revenues was attributable to the
increase in the volume of transactions.

Gross Profit. Gross profit increased to $488.6 million in the six months
ended June 30, 2001, from $477.8 million in the six months ended June 30, 2000.
This increase primarily reflected the increase in revenues described above. Our
gross profit margin by source of revenues in the six months ended June 30, 2001
and 2000 was: (i) equipment rental (36.9% in the six months ended June 30, 2001
and 39.0% in the six months ended June 30, 2000), (ii) sales of rental
equipment (41.3% in the six months ended June 30, 2001 and 41.2% in the six
months ended June 30, 2000) and (iii) sales of equipment and merchandise and
other revenues (27.1% in the six months ended June 30, 2001 and 23.9% in the
six months ended June 30, 2000).

The decrease in the gross profit margin from rental revenues in the six
months ended June 30, 2001, principally reflected the following factors. First,
we had more traffic control equipment in 2001 than in 2000. This lowered our
overall gross profit margin because (i) this equipment category generally
produces losses during the first quarter due to seasonal factors and (ii) this
equipment category generally produces lower gross profit margins than our other
categories. Second, our cost of equipment rental increased in 2001 because more
of our rental equipment was held by us under operating leases rather than being
owned. The increase in the gross profit margin from sales of equipment and
merchandise and other revenue in the six months ended June 30, 2001, primarily
reflected the following: (i) lower costs resulting from our ongoing efforts to
consolidate our suppliers and further capitalize on our purchasing power and
(ii) a shift in mix which resulted in more of our sales being attributable to
higher margin areas such as providing services and selling parts.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $221.7 million, or 16.0% of total
revenues, during the six months ended June 30, 2001 and $211.0 million, or
16.1% of total revenues, during the six months ended June 30, 2000. Although we
have been implementing a number of measures to reduce SG&A, including reducing
the number of administrative personnel, reducing discretionary expenditures and
consolidating certain credit and collection facilities, SG&A as a percentage of
total revenues only decreased very slightly in 2001. This principally reflects
the fact that our revenues from the sales of rental equipment were down
significantly in 2001 for the reasons described above. SG&A as a percentage of
revenues, excluding revenues from the sale of rental equipment, decreased to
16.9% in the six months ended June 30, 2001 from 18.3% in the six months ended
June 30, 2000.

Restructuring Charge. We recorded a restructuring charge of $28.9 million
in the six months ended June 30, 2001. See "--Restructuring Plan" for
additional information.

Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $53.2 million, or 3.8% of total revenues, in the six months
ended June 30, 2001 and $40.7 million, or 3.1% of total revenues, in the six
months ended June 30, 2000. The increase in the dollar amount of non-rental
depreciation and amortization in the first six months of 2001 primarily
reflected (i) the amortization of goodwill attributable to acquisitions
completed subsequent to the second quarter of 2000 and (ii) additional
non-rental vehicles which have shorter useful lives.

Interest Expense. Interest expense increased to $114.6 million in the six
months ended June 30, 2001 from $106.2 million in the six months ended June 30,
2000. This increase primarily reflected an increase in the Company's
indebtedness, principally to fund acquisitions.

Preferred Dividends of a Subsidiary Trust. During the six months ended June
30, 2001 and 2000, preferred dividends of a subsidiary trust were $9.8 million.

Other (Income) Expense. Other expense was $6.9 million in the six months
ended June 30, 2001 compared with other income of $0.3 million in the six
months ended June 30, 2000. The increase in other expense in the first six
months of 2001 was primarily attributable to the $7.8 million charge we
incurred relating to the refinancing costs of a synthetic lease as described
under "--Debt Refinancing and Extraordinary Item."

Income Taxes. Income taxes were $25.1 million, or an effective rate of
47.0%, in the six months ended June 30, 2001 compared to $45.8 million, or an
effective rate of 41.5%, in the six months ended June 30, 2000. The increase in
the effective rate in the first six months of 2001 was primarily attributable
to the non-deductibility for income tax purposes of certain costs in the
restructuring charge.

Extraordinary Item. We recorded an extraordinary charge of $18.1 million
($11.3 million, net of tax) in the six months ended June 30, 2001. See "--Debt
Refinancing and Extraordinary Item" for additional information.

Years Ended December 31, 2000 and 1999

Revenues. Total revenues for 2000 were $2,918.9 million, representing an
increase of 30.7% over total revenues of $2,233.6 million in 1999. Our revenues
in 2000 and 1999 were attributable to: (i) equipment rental ($2,056.7 million,
or 70.5% of revenues, in 2000 compared to $1,581.0 million, or 70.8% of
revenues, in 1999), (ii) sales of rental equipment ($347.7 million, or 11.9% of
revenues, in 2000 compared to $235.7 million, or 10.6% of revenues, in 1999)
and (iii) sales of equipment and merchandise and other revenues ($514.5
million, or 17.6% of revenues, in 2000 compared to $416.9 million, or 18.7% of
revenues, in 1999).

The 30.7% increase in total revenues in 2000 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 12.9 percentage points, 10.9 percentage points of which related
to increases in the volume of transactions and utilization rates and 2.0
percentage points of which related to price increases) and (ii) the net effect
of new rental locations acquired through acquisitions and the opening of
start-up locations partially offset by locations sold or closed (which
accounted for approximately 17.8 percentage points). The increase in revenues
at locations open more than one year primarily reflected (a) an increase in the
volume of rental transactions, (b) an increase in the sale of related
merchandise and parts which was driven by the increase in equipment rental and
sales transactions and (c) an increase in the sale of used equipment.

Gross Profit. Gross profit increased to $1,088.6 million in 2000 from
$824.9 million in 1999. This increase in gross profit was primarily
attributable to the increase in revenues described above. Our gross profit
margin by source of revenue in 2000 and 1999 was: (i) equipment rental (39.9%
in 2000 and 39.4% in 1999), (ii) sales of rental equipment (40.1% in 2000 and
42.0% in 1999) and (iii) sales of equipment and merchandise and other revenues
(24.9% in 2000 and 24.6% in 1999). The increase in the gross profit margin from
rental revenues in 2000 was primarily attributable to greater equipment
utilization rates and to economies of scale. The decrease in the gross profit
margin from the sales of rental equipment in 2000 reflected the sale of more
late-model used equipment which generally generates lower gross profit margins
than older equipment.

Selling, General and Administrative Expenses. SG&A was $454.3 million, or
15.6% of total revenues, during 2000 and $352.6 million, or 15.8% of total
revenues, during 1999. SG&A in 1999 included an $8.3 million charge primarily
due to professional fees incurred in connection with a terminated tender offer.
Excluding this charge, SG&A as a percentage of revenues was 15.4% in 1999.

Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $86.3 million, or 3.0% of total revenues, in 2000 and $62.9
million, or 2.8% of total revenues, in 1999.

Interest Expense. Interest expense increased to $228.8 million in 2000 from
$139.8 million in 1999. This increase primarily reflected (i) an increase in
our indebtedness, principally to fund acquisitions, and (ii) an increase in the
interest rates applicable to our variable rate debt.

Preferred Dividends of a Subsidiary Trust. During 2000 and 1999, preferred
dividends of a subsidiary trust were $19.5 million.

Other (Income) Expense. Other income was $1.8 million in 2000 compared to
$8.3 million of other expense in 1999. The other expense in 1999 was
attributable to a $9.9 million charge that principally related to fees that we
paid for a $2.0 billion financing commitment that was subsequently cancelled
upon termination of a tender offer made by us in 1999.

Income Taxes. Income taxes increased to $125.1 million, or an effective
rate of 41.5%, in 2000 from $99.1 million, or an effective rate of 41.0%, in
1999.

Years Ended December 31, 1999 and 1998

Revenues. Total revenues for 1999 were $2,233.6 million, representing an
increase of 83.0% over total revenues in 1998 of $1,220.3 million. Our revenues
in 1999 and 1998 were attributable to: (i) equipment rental ($1,581.0 million,
or 70.8% of revenues, in 1999 compared to $895.5 million, or 73.4% of revenues,
in 1998), (ii) sales of rental equipment ($235.7 million, or 10.6% of revenues,
in 1999 compared to $119.6 million, or 9.8% of revenues, in 1998) and (iii)
sales of equipment and merchandise and other revenues ($416.9 million, or 18.6%
of revenues, in 1999 compared to $205.2 million, or 16.8% of revenues, in
1998).

The 83.0% increase in total revenues in 1999 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 21.2 percentage points) and (ii) new rental locations acquired
through acquisitions and the opening of start-up locations (which accounted for
approximately 61.8 percentage points). The increase in revenues at locations
open more than one year primarily reflected (a) an increase in the volume of
rental transactions, (b) expansion of the product lines that we offer for sale,
(c) an increase in the sale of related merchandise and parts which was driven
by the increase in equipment rental and sales transactions and (d) an increase
in the sale of used equipment.

Gross Profit. Gross profit increased to $824.9 million in 1999 from $423.4
million in 1998. This increase in gross profit was primarily attributable to
the increase in revenues described above. Our gross profit margin by source of
revenue in 1999 and 1998 was: (i) equipment rental (39.4% in 1999 and 36.3% in
1998), (ii) sales of rental equipment (42.0% in 1999 and 44.7% in 1998) and
(iii) sales of equipment and merchandise and other revenues (24.6% in 1999 and
22.0% in 1998). The increase in the gross profit margin from rental revenues in
1999 was primarily attributable to greater equipment utilization rates and to
economies of scale. The decrease in the gross profit margin from the sales of
rental equipment in 1999 primarily reflected a shift in mix towards the sale of
more late-model used equipment which generally generates lower gross profit
margins than older equipment. The increase in the gross profit margin from
sales of equipment and merchandise and other revenue in 1999 primarily
reflected the benefits of greater purchasing power.

Selling, General and Administrative Expenses. SG&A was $352.6 million, or
15.8% of total revenues, during 1999 and $195.6 million, or 16.0% of total
revenues, during 1998. SG&A in 1999 includes an $8.3 million charge primarily
due to professional fees incurred in connection with a terminated tender offer.
Excluding this charge, SG&A as a percentage of revenues decreased to 15.4% in
1999, primarily due to certain economies of scale relating to the increase in
revenues described above.

Merger-related Expenses. We incurred merger-related expenses in 1998 of
$47.2 million ($33.2 million after-tax) in connection with three acquisitions
completed by us in 1998 that were accounted for as poolings-of-interests. These
expenses consisted of: (i) $18.5 million for investment banking, legal and
accounting services and other merger costs, (ii) $14.5 million of expenses
relating to the closing of duplicate facilities, (iii) $8.2 million for
employee severance and related matters, (iv) $2.1 million for the write down of
the computer systems acquired through our merger with U.S. Rentals and one of
the other acquisitions accounted for as a pooling-of-interests and (v) $3.9
million in other expenses.

Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $62.9 million, or 2.8% of total revenues, in 1999 and $35.2
million, or 2.9% of total revenues, in 1998.

Interest Expense. Interest expense increased to $139.8 million in 1999 from
$64.2 million in 1998. This increase primarily reflected the fact that our
indebtedness significantly increased in 1999, primarily to fund acquisitions.

Preferred Dividends of a Subsidiary Trust. Preferred dividends of a
subsidiary trust were $19.5 million in 1999 compared with $7.9 million in 1998.

Other (Income) Expense. Other expense was $8.3 million in 1999 compared
with other income of $4.9 million in 1998. The increase in other expense in
1999 primarily reflected a $9.9 million charge that principally related to fees
paid by us for a $2.0 billion financing commitment that was subsequently
cancelled upon termination of a tender offer.

Income Taxes. Income taxes increased to $99.1 million, or an effective rate
of 41.0%, in 1999 from $43.5 million, or an effective rate of 55.6%, in 1998.
During 1998, our high effective tax rate reflected (i) the non-deductibility of
$7.4 million for income tax purposes of certain merger-related expenses and
(ii) a $4.8 million charge to recognize deferred tax liabilities of an acquired
business, which was a Subchapter S Corporation prior to being acquired by us.

Extraordinary Item. We recorded an extraordinary charge of $35.6 million
($21.3 million net of taxes) in 1998. This charge was incurred in connection
with the early extinguishment of certain debt and primarily reflected
prepayment penalties on certain debt of U.S. Rentals.

Liquidity and Capital Resources

Recent Financing Transactions

In April 2001, we refinanced $1,695.7 million of our indebtedness and other
obligations. In order to effect this refinancing, we:

. issued $450.0 million of 10 3/4% Senior Notes Due 2008;

. obtained a new senior secured credit facility comprised of a $750.0
million term loan and a $750.0 million revolving credit facility;

. made an initial draw under the new revolving credit facility in the
amount of $525.0 million; and

. used the proceeds from the notes, the new term loan and the initial
draw under the new revolving credit facility to (i) permanently repay
the outstanding balance under our old revolving credit facility ($476.0
million); (ii) repay outstanding term loans ($1,188.5 million) and
(iii) repay an outstanding synthetic lease ($31.2 million).

In June 2001, we obtained an additional $112.0 million through the
securitization of additional accounts receivable.

Certain Information Concerning Our Credit Facility

Our revolving credit facility enables URI to borrow up to $750.0 million on
a revolving basis and enables one of our Canadian subsidiaries to borrow up to
$40.0 million (provided that the aggregate borrowings of URI and the Canadian
subsidiary may not exceed $750.0 million). Up to $100.0 million of the
revolving credit facility is available in the form of letters of credit. The
revolving credit facility will mature and terminate on October 20, 2006.

Borrowings under the revolving credit facility will, until October 20,
2001, accrue interest, at our option, at either (A) the ABR Rate (which is
equal to the greater of (i) the Federal Funds Rate plus 0.5% or (ii) the Chase
Manhattan Bank's prime rate) plus a margin of 1.00% or (B) an adjusted LIBOR
rate plus a margin of 2.0%. From and after October 20, 2001, the above interest
rate margins will be adjusted quarterly based on our funded debt to cash flow
ratio, up to maximum margins of 1.75% and 2.75%, for revolving loans based on
the ABR rate and the adjusted LIBOR rate, respectively, and down to minimum
margins of 0.75% and 1.75%, for revolving loans based on the ABR rate and the
adjusted LIBOR rate, respectively. If at any time an event of default exists,
the interest rate applicable to each loan will increase by 2% per annum.

We are also required to pay the lenders a commitment fee equal to 0.5% per
annum in respect of undrawn commitments under the revolving credit facility.

Sources and Uses of Cash

During the first six months of 2001, we (i) generated cash from operations
of approximately $298.5 million, (ii) generated cash from the sale of rental
equipment of approximately $72.2 million and (iii) obtained net proceeds from
financing activities of approximately $9.2 million. We used cash during this
period principally to (i) pay consideration for acquisitions and settle certain
outstanding liabilities due to former owners of businesses that we acquired
(approximately $37.8 million), (ii) purchase rental equipment (approximately
$303.3 million), (iii) purchase other property and equipment (approximately
$31.4 million) and (iv) purchase and retire shares of our outstanding common
stock (approximately $24.8 million).

During 2000, we (i) generated cash from operations of approximately $512.7
million, (ii) generated cash from the sale of rental equipment of approximately
$347.7 million and (iii) obtained net proceeds from financing activities of
approximately $468.1 million. We used cash during this period principally to
(i) pay consideration for acquisitions (approximately $347.3 million), (ii)
purchase rental equipment (approximately $808.2 million), (iii) purchase other
property and equipment (approximately $153.8 million) and (iv) purchase and
retire shares of our outstanding common stock (approximately $31.0 million).

Certain Balance Sheet Changes

Changes in the First Six Months of 2001. The increase in accounts
receivable at June 30, 2001 compared to December 31, 2000 was attributable to
the increase in revenues due to the seasonally stronger second quarter. The
decrease in inventory at June 30, 2001 compared to December 31, 2000 primarily
reflected increased sales during the second quarter of 2001. The increase in
prepaid expenses and other assets at June 30, 2001 compared to December 31,
2000 was primarily attributable to payment of certain prepaid expenses during
the first six months of 2001. The increase in accounts payable, deferred taxes
and accrued expenses and other liabilities at June 30, 2001 compared to
December 31, 2000 was primarily attributable to the increase in revenues in the
second quarter of 2001.

The increase in rental equipment at June 30, 2001 compared to December 31,
2000 primarily reflected our equipment purchases during the first six months of
2001. The increase in debt at June 30, 2001 compared to December 31, 2000
primarily reflected borrowings for acquisition related payments and equipment
purchases during the first six months of 2001. The increase in additional
paid-in capital at June 30, 2001 compared to December 31, 2000 was primarily
attributable to the accounting for restricted shares that were issued during
the second quarter of 2001.

Changes in 2000. Our asset and liability accounts were all higher at
December 31, 2000 than at December 31, 1999, other than accrued expenses and
other liabilities which was lower. The general increase in our asset and
liability accounts primarily reflected the acquisitions and the equipment
purchases made that we made in 2000. The decrease in accrued expenses and other
liabilities primarily reflected the refund of certain income tax payments.

The decrease in additional paid-in capital at December 31, 2000 compared
with December 31, 1999, primarily reflected the purchase and retirement of
shares of our outstanding common stock offset in part by the issuance of common
stock in connection with an acquisition.

Cash Requirements Related to Operations

Our principal existing sources of cash are borrowings available under our
revolving credit facility ($289.7 million available as of August 7, 2001) and
cash generated from operations. Our cash generated from operations was
approximately $298.5 million and $262.8 million in the first six months of 2001
and the first six months of 2000, respectively. The increase in 2001 primarily
reflected the changes in our operating assets and liabilities discussed above
under "--Certain Balance Sheet Changes." 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) debt service and (iv) costs relating to the
restructuring charge. We plan to fund such cash requirements relating to our
existing operations from our existing sources of cash described above. In
addition, we plan to seek additional financing through the securitization of
certain of our accounts receivable and equipment.

We estimate that equipment expenditures for the year 2001 will be
approximately $400 million for our existing operations. These expenditures are
comprised of approximately (i) $150 million of expenditures in order to replace
rental equipment sold, (ii) $200 million of discretionary expenditures to
increase the size of our rental fleet and (iii) $50 million of expenditures for
the purchase of 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.

While emphasizing internal growth, we may also continue to expand through a
disciplined acquisition program. 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 financing and,
consequently, our indebtedness may increase as we implement our growth
strategy. There can be no assurance, however, that any additional financing
will be available or, if available, will be on terms that are satisfactory to
us.

The recent refinancing of $1,695.7 million of our indebtedness (described
under "--Recent Financing Transactions") extended the maturities of a
significant amount of our indebtedness. Based on the scheduled maturities of
our current indebtedness, we are required to make principal payments of
approximately $15.7 million over the next 12 months. We may also, at our
option, make additional principal payments.

Certain Measures to Reduce Cash Requirements

As the economy softened, we adopted a number of measures to further control
costs and increase free cash flow. These include the restructuring plan
discussed above under "--Restructuring Plan" and the measures described below.

Reduce Equipment Purchases. We will purchase less new equipment in 2001
than in 2000 ($400 million budgeted for 2001 compared to approximately $962
million expended in 2000) and will reduce the rate at which we sell used
equipment. The amount of the reduction will depend on future developments,
including the economic outlook, conditions in the used equipment market and our
equipment utilization rate. Based on current conditions, we estimate that our
revenues from the sale of used equipment will be 50-75% lower in 2001 than in
2000.

We estimate that the weighted average age of our rental fleet, which
currently is approximately 29 months, will increase to approximately 32 months
as a result of the planned reduction in the rate at which we purchase new
equipment and sell used equipment. We believe that, because of the young age of
our fleet, our business will not be adversely affected by this increase in
average age.

Continue to Consolidate Suppliers. We reduced the number of our primary
equipment suppliers from 111 to 28 in 2000. This allowed us to lower our
purchase costs by approximately $150 million in 2000 and should enable us to
save additional amounts in 2001. We are currently in the process of similarly
consolidating our merchandise suppliers.

Other Cost-Cutting Measures. We are seeking to reduce costs in a number of
other ways, including reducing administrative expenses, consolidating credit
and collection centers, and streamlining advertising.

Relationship Between Holdings and URI

United Rentals, Inc. ("Holdings") is principally a holding company and
primarily conducts its operations through its wholly owned subsidiary United
Rentals (North America), Inc. ("URI") and subsidiaries of URI. Holdings
provides certain services to URI in connection with its operations. These
services principally include: (i) senior management services, (ii) finance
related services and support, (iii) information technology systems and support
and (iv) acquisition related services. In addition, Holdings leases certain
equipment and real property that are made available for use by URI and its
subsidiaries. URI has made, and expects to continue to make, certain payments
to Holdings in respect of the services provided by Holdings to URI. The
expenses relating to URI's payments to Holdings are reflected on URI's
financial statements as selling, general and administrative expenses. In
addition, although not legally obligated to do so, URI has in the past, and
expects that it will in the future, make distributions to Holdings to, among
other things, enable Holdings to pay dividends on certain preferred securities
(the "Trust Preferred Securities") that were issued by a subsidiary trust of
Holdings in August 1998.

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 higher than the net
income reported on the consolidated financial statements of Holdings.

Fluctuations in Operating Results

We expect that our revenues and operating results may fluctuate from
quarter to quarter or over the longer term. Certain of the general factors that
may cause such fluctuations are discussed under "Risk Factors--Our operating
results may fluctuate which could affect the trading value of our common
stock."

We are continually involved in the investigation and evaluation of
potential acquisitions. In accordance with accounting principles generally
accepted in the United States, we capitalize certain direct out-of-pocket
expenditures (such as legal and accounting fees) relating to potential or
pending acquisitions. Indirect acquisition costs, such as executive salaries,
general corporate overhead, public affairs and other corporate services, are
expensed as incurred. Our policy is to charge against earnings any capitalized
expenditures relating to any potential or pending acquisition that we determine
will not be consummated. There can be no assurance that in future periods we
will not be required to incur a charge against earnings in accordance with such
policy, which charge, depending upon the magnitude thereof, could adversely
affect our results of operations.

We will be required to incur significant start-up expenses in connection
with establishing each start-up location. Such expenses may include, among
others, pre-opening expenses related to setting up the facility, and expenses
in connection with training employees, installing information systems and
marketing. We expect that, in general, start-up locations will initially
operate at a loss or at less than normalized profit levels. Consequently, the
opening of a start-up location may negatively impact our margins until the
location achieves normalized profitability.

There may be a lag between the time that we purchase new equipment and
begin to incur the related depreciation and interest expenses and the time that
the equipment begins to generate revenues at normalized rates. As a result, the
purchase of new equipment, particularly equipment purchased in connection with
expanding and diversifying our rental equipment, may periodically reduce
margins.

Seasonality

Our business is seasonal with demand for our rental equipment tending to be
lower in the winter months. The seasonality of our business has been heightened
by our acquisition of businesses that specialize in renting traffic control
equipment. These businesses 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.

Recently Issued Accounting Standards

In June 1998, the FASB issued, and subsequently amended, SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which became
effective for us on January 1, 2001. Under SFAS No. 133, all derivatives are
required to be recorded as assets or liabilities and measured at fair value.
Gains or losses resulting from changes in the values of derivatives are
recognized immediately or deferred, depending on the use of the derivative and
whether or not it qualifies as a hedge.

We occasionally use derivative financial instruments to manage our risk
associated with fluctuations in interest rates on our debt. We currently have
interest rate swap agreements that convert $200.0 million of our variable rate
term loan to a fixed rate instrument through 2003. These swap agreements are
designated as cash flow hedges and changes in the fair value of the hedges are
recorded in other comprehensive income and reclassified into earnings in the
same periods during which the hedged transaction affects earnings. There is no
ineffectiveness related to these hedges.

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities--a
replacement of FASB Statement No. 125." This standard revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures. This standard is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001 and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000.
The adoption of SFAS No. 140 did not have a material effect on our consolidated
financial position or results of operations.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations." This
standard addresses financial accounting and reporting for business combinations
and supersedes APB Opinion No. 16, "Business Combinations" and SFAS No. 38,
"Accounting for Preacquisition Contingencies of Purchased Enterprises." All
business combinations in the scope of this Statement are to be accounted for
using one method, the purchase method. This standard is effective for all
business combinations initiated after June 30, 2001.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." This standard addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, "Intangible Assets." This standard is effective for fiscal years beginning
after December 15, 2001. However, this standard is immediately effective in
cases where goodwill and intangible assets are acquired after June 30, 2001.
Under this standard, goodwill and intangible assets deemed to have indefinite
lives will no longer be amortized but will be subject to annual impairment
tests. We are currently evaluating the impact that SFAS No. 142 will have on
our financial statements and will perform a fair value analysis of goodwill in
connection with the adoption of this standard on January 1, 2002.

BUSINESS

The Company