As filed with the Securities and Exchange Commission on July 5, 2001

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-----------------

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)

06-1522496 (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: from time to
timeAs 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. [X][_]
If this Formform 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: [_]

CALCULATION OF REGISTRATION FEE

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Proposed Maximum Proposed Maximum
Title of Each Class of Proposed Maximum Aggregate
Securities to be Amount to be Aggregate Price Per Aggregate Offering Price Amount of
to be Registered Registered Per Unit (1) Price (1) Registration Fee
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Common Stock, par value $0.01 per
share ("Common Stock) 788,559 shares(2) $16.63(2) $13,113,736
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Common Stock 200,000 shares(3) $29.74 $5,948,000
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Total 988,559 $19,061,736 $4,765
- --------------------------------------------------------------------------------------------------------Stock").......... 10,350,000 shares $25.63(1) $265,270,500 $66,318

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(1)Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457.

(2) These are outstanding shares. This registration statement covers the
possible sale of these shares, from time to time, by the holders thereof.
Pursuant to Rule 457(c), with respect to these shares, the proposed maximum
aggregate price per unit is assumed to be based upon the average of the high and low sales
prices of the Company's Common Stock on March 28,July 2, 2001, as reported on the New
York Stock Exchange Composite Tape.

(3) These are shares that may be acquired upon the exercise of outstanding
warrants. This registration statement covers the possible sale of these shares,
from time to time, by the holders of such warrants. These warrants provide for
an exercise price of $29.7366 per share. Pursuant to Rule 457(g), with respect
to these shares, the proposed maximum aggregate price per unit is assumed to be
such exercise price.

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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PROSPECTUS

UNITED RENTALS, INC.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 June 20, 2001.

9,000,000 Shares

[LOGO] United/TM/
Rentals

Common Stock

--------------------
Certain-----------------

All of our security holders may sell, from time to time, up to 988,559the shares of our common stock. However, a lockup agreement prohibitsstock 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 380,953 of these shares prior to September 26, 2001.

The selling security holders may sell shares:

. through the New York Stock Exchange, in the over-the-counter market, in
privately negotiated transactions or otherwise;

. directly to purchasers or through agents, brokers, dealers or
underwriters; and

. at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, or at negotiated prices.

Ourshares.

United Rentals' common stock is traded on the New York Stock Exchange under
the symbol "URI."

Investing in our securities involves certain risks."URI". The last reported sale price of the common stock on June 18,
2001, was $24.41 per share.

See "Risk Factors" beginning on page 6.9 to read about factors you should
consider before buying shares of our common stock.

-----------------

Neither the Securities and Exchange Commission nor any state securities
commissionother regulatory
body has approved or disapproved of these securities or determined ifpassed upon the
accuracy or adequacy of this prospectus is truthful or complete.prospectus. Any representation to the contrary is
a criminal offense.

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Per Share Total
--------- -----

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.

-----------------

The date of this prospectus is March 29, 2001underwriters 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 "believes," "expects," "may,"
"will," "should," "on-track," "plan" or "anticipates""anticipates," 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. 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;

. Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;

. The following Current Reports on Form 8-K: (1) Report dated January 2,
2001, and (2) Report dated February 28, 2001, (3) Report dated April 13, 2001
and (4) Report dated April 30, 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.

UNITED RENTALS, INC.1

PROSPECTUS SUMMARY

This summary contains a general summary of the information contained in
this prospectus. It 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 755approximately 750 locations in 47 states, seven Canadian provinces and
Mexico. We offer for rent over 600 different types of equipment to more than 1.2 million
customers
includingthat include construction and

2
industrial companies, manufacturers, utilities,
municipalities, homeowners and others. DuringIn 2000, we completedserved more than 1.2 million
customers, completed over 8.4 million rental transactions.transactions and generated
revenues, EBITDA and net income of $2.9 billion, $962.4 million 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 $3.4$3.5 billion.
Our fleet includes:

. light to heavyGeneral construction and industrial equipment, such as aerial
lifts, backhoes,
skid-steer loaders, forklifts, earth moving equipment, material handling
equipment, compressors, pumps and generators;

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

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

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

. specialSpecial event equipment, such as large tents, light towers and power
units used for sporting, corporate and other large
events, such as light towers, portable power units, electrical cable,
and tents;events; and

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

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

OurWe 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 executive officesdriver 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 located at Five Greenwich Office
Park, Greenwich, Connecticut 06830,increasingly
using rental equipment for plant maintenance, plant turnarounds and our telephone numberother
functions requiring the periodic use of equipment. The market for rental
equipment is (203) 622-3131.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. We haveOur rental fleet is the largest and most
comprehensive equipment rental fleet in the industry, which helpsallows 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 assurance that substantial quantities or wide varieties of
different typesequipment.

Significant Purchasing Power. We purchase large amounts of equipment,
will be available on a continuing basis.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, through
multiple branches, (2) cross-market equipment
specialties of different branches within each cluster and (3) reduce costs by
centralizingconsolidating functions that are common functionsto our approximately 750 branches, such
as payroll, accounts payable and credit and collection, into 2625 credit offices
and three service centers. In 2000, 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 approximately 750 branches in 47
states, seven Canadian provinces and Mexico.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 reducesprovide 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. Our geographic diversity and large network of branch
locations also give us the ability to better serve National Account customers,
better serve customers that operate at multiple locations, and access used
equipment re-sale markets across the country.

Customer Diversity. Our customer base is highly diversified and ranges
from Fortune 500 companies to small companies and homeowners. We estimate that
our top ten customers accounted for approximately 2% of our revenues during
2000.

Strong and Motivated Branch Management. Each of our branches has a full-
time branch manager who is supervised by one of our 66 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 region performance with extensive systems and controls, including
performance benchmarks and detailed monthly operating reviews. We promote
equipment sharing among branches through our incentive compensation program,
which links the compensation of branch personnel to their branch's financial
performance and return on assets.

Significant Purchasing Power. We purchase large amounts of equipment and
other items, which enables us to negotiate favorable terms with our vendors. Our
purchasing power is further increased by our ongoing efforts to narrow our
vendor base. For example, we reduced the number of our primary equipment
suppliers from 111 to 28 in 2000. This 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
similarly consolidating our merchandise suppliers and negotiating more favorable
warranty terms with key vendors.

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 currently includes 39 professionals. We currently haveprofessionals serving over 1,3001,400 National Account
customers, including more than 700200 new accounts added in 2000. Ourthe first quarter of
2001. We estimate our revenues from National Account customers increasedwill increase to
approximately $244.8$400.0 million in 20002001 from $89.1$245.0 million in the prior year.

Information Technology Systems. Our information technology systems
facilitate rapid and informed decision making and permit us to respond quickly
to changing market conditions. Our systems provide management with a wide range
of operating and financial data, enable our branches to manage a wealth of
information, such as customer requirements, equipment availability, and
maintenance histories, and give our customers online access to their accounts.
Our systems also enable branch personnel to search for needed equipment
throughout a geographic region, determine its closest location and arrange for
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. We also have a subsidiary that is the

leading provider of proprietary software to the equipment rental industry for
use in managing and operating multiple branch locations. Our software includes
the Rentalman(TM) system developed by this subsidiary.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 43 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.

Industry Background

Industry SizeExperienced 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 Growth. The U.S. equipment rental industryMichael 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 grown from
about $6 billion in annual rental revenues in 1990 to over $25 billion in 2000,
representing a
compound annual growth ratefull-time branch manager who is supervised by one of approximately 14.5%. This
information is based on data reported by Manfredi & Associates, Inc. In addition
to reflecting general economic growth, weour 63 district managers
and nine regional vice presidents. We believe that our managers are among the
growthmost knowledgeable and experienced in the industry, and we empower them--within
budgetary guidelines--to make day-to-day decisions concerning staffing,
pricing, equipment rental industrypurchasing 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 being driven byavailable 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 trends:

Recognitionkey business strategies:

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

. actively managing the many advantagescomposition 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 equipment rental may offer compared with
ownership. They recognize that by renting they can:

. avoid the large capital investment required for equipment purchases;

. accesscan benefit from our ability to provide a broad selection
of equipment and select thea consistently high level of service throughout North
America;

. marketing our extensive fleet of specialized lines of equipment,
best
suitedincluding (1) aerial work platforms for each particular job;

. reduce storageuse in large projects requiring
significant amounts of equipment for extended periods of time, (2)
traffic control equipment for use in infrastructure projects and maintenance costs;(3)
trench safety equipment required for use in below ground work in order to
comply with government worker safety standards; and

. accesstraining our sales force and branch personnel in value-added sales
techniques to achieve customer satisfaction and maximize the latest technology without investingvalue 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.

Outsourcing. Although growthequipment 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 rental industry hasand sell used equipment. We
anticipate significantly increasing our free cash flow from operations in 2001
by reducing our equipment expenditures to date
been largely drivenapproximately $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 72,672,722 shares(1)

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

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

- --------
(1) We calculated the outstanding shares based on the number of shares
outstanding as of June 8, 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) 7,094,296 shares issuable
upon the exercise of outstanding warrants, which provide for a weighted
average exercise price of $11.76 per share, (v) 16,566,328 shares issuable
upon the exercise of outstanding options, which provide for a weighted
average exercise price of $20.44 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.

We refinanced an increase in rentals by the construction industry, we
believe that the costaggregate of $1,695.7 million of indebtedness and other
advantagesobligations in April 2001. As part of renting, togetherthis refinancing, we (1) issued $450
million of 10 3/4% Senior Notes Due 2008, (2) obtained a new senior secured
credit facility comprised of a $750 million term loan and a $750 million
revolving credit facility and (3) used proceeds from the notes and the new
secured credit facility to repay indebtedness and other obligations that were
outstanding under our old revolving credit facility, certain term loans and a
synthetic lease. The balance sheet data under the heading "Pro Forma" adjusts
the historical balance sheet data to give effect to the borrowings under our
old credit facility subsequent to March 31, 2001 and the refinancing
transactions, as if such transactions had occurred on March 31, 2001.

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

Three Months
Ended
Year Ended December 31, March 31,
-------------------- -----------
1998 1999 2000 2000 2001
------ ------ ------ ----- -----
(dollars in millions, except per share da

Income statement data:
Total revenues...................................... $1,220 $2,234 $2,919 $ 579 $ 619
Gross profit........................................ 423 825 1,089 206 203
Operating income.................................... 145 409 548 84 68
Interest expense.................................... 64 140 229 50 57
Preferred dividends of a subsidiary trust........... 8 20 20 5 5
Income before provision for income taxes and
extraordinary item................................ 78 242 301 30 6
Net income(1)(2).................................... 13 143 176 17 3
Basic earnings per share before extraordinary item.. $ 0.53 $ 2.00 $ 2.48 $0.24 $0.05
Diluted earnings per share before extraordinary item $ 0.48 $ 1.53 $ 1.89 $0.19 $0.04
Basic earnings per share(2)......................... $ 0.20 $ 2.00 $ 2.48 $0.24 $0.05
Diluted earnings per share(2)....................... $ 0.18 $ 1.53 $ 1.89 $0.19 $0.04

Other financial data:
Diluted earnings per share, as adjusted(2).......... $ 1.00 $ 1.65 $ 1.89 $0.19 $0.04
EBITDA(3)........................................... $ 404 $ 761 $ 962 $ 178 $ 170

As of March 31, 2001
--------------------
Historical Pro Forma
---------- ---------
(dollars in millions)

Balance sheet data:
Cash and cash equivalents..................................... $ 26 $ 26
Rental equipment, net......................................... 1,720 1,751
Total assets.................................................. 5,112 5,143
Total debt.................................................... 2,751 2,807
Company-obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust............................ 300 300
Stockholders' equity.......................................... 1,514 1,514

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(1) We recorded an extraordinary item (net of income taxes) of $21.3 million in
1998. Such charge resulted from the early extinguishment of certain debt
and primarily reflected prepayment penalties on certain debt of U.S.
Rentals.
(2) Our earnings during 1998 were impacted by merger-related expenses of $47.2
million ($33.2 million net of taxes), a $4.8 million 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. Our earnings during 1999 were impacted by $18.2 million ($10.8
million net of taxes) of expenses incurred related to a terminated tender
offer. Our earnings per share, as adjusted, exclude such amounts. Basic
earnings per share, as adjusted, were $1.10 and $2.15 for 1998 and 1999,
respectively. Diluted earnings per share, as adjusted, were $1.00 and $1.65
for 1998 and 1999, respectively.
(3) EBITDA is defined as net income (excluding (i) non-operating income and
expense, (ii) $47.2 million in merger-related expenses in 1998 related to
the three acquisitions accounted for as poolings-of-interests, including
the merger with U.S. Rentals and (iii) $8.3 million of expenses that are
included in selling, general trend toward the corporate outsourcingand administrative expenses for 1999 and which
related to a terminated tender offer), plus interest expense, income taxes
and depreciation and amortization. We have presented EBITDA data to provide
you with additional information concerning our ability to meet our future
debt service obligations and capital expenditure and working capital
requirements. However, EBITDA is not a measure of non-core competencies, are
increasingly leading industrial companies, municipalities, government agencies,
utilities and othersfinancial performance
under generally accepted accounting principles. Accordingly, you should not
consider EBITDA an alternative to rent equipment.

5net income or cash flows as indicators of
our operating performance or liquidity.

RISK FACTORS

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

Sensitivity to ChangesOur business could be hurt by a decline in Constructionconstruction and Industrial Activitiesindustrial
activities.

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 which could
adversely affect our business.or depress
rental rates and the sales prices for the equipment we sell. 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 worsens or continues over
the long-term;

. an increase in interest rates; or

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

In addition, demand for our traffic control 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.

FluctuationsThe loss of Operating Resultsany member of senior management could hurt our business.

We are highly dependent upon our senior management team. Consequently, our
business could be adversely affected in the event that we lose the services of
any member of senior management. 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 business is highly competitive and competition may increase.

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.

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--withcustomers, with rental activity tending
to be lower in the winter;

. our recent acquisitionsacquisition 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.

Dependence on Additional CapitalFluctuations in our operating results could adversely affect the trading value
of our common stock.

Our business could be hurt if we are unable to obtain additional capital as
required.

We may require additional capital for, among other purposes, purchasing
rental equipment, completing acquisitions, and establishing new rental locations.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, our business could be adversely affected.

Certain Risks Relating to AcquisitionsWe have made acquisitions, which entails certain risks.

We have grown in part through acquisitions. The making of acquisitions
entails certain risks, including:

. unrecorded liabilities of acquired companies could have unrecorded liabilities that we fail to discover
during our due diligence investigations;

. we may have difficulty in assimilating the operations and personnel of the acquired
company with our existing operations;

. we may loseloss of key employees of the acquired company; and

. we may have difficulty maintaining uniform standards, controls, procedures and
policies.

DependenceWe depend on Managementour information technology systems, and any disruption in these
systems could hurt our business.

Our ability to monitor and control our operations depends to a large extent
on the proper functioning of our information technology systems. Any disruption
in these systems or the failure of these systems to operate as expected could,
depending on the magnitude and duration of the problem, adversely affect our
business.

We are highly dependent upon our senior management team. Consequently,exposed to various possible claims relating to our business, could be adversely affected in the event that we lose the services of
any member of senior management. Furthermore, if we lose the services of certain
members of senior management, it is an event of default under the agreements
governingand our
credit facility and certain of our other indebtedness, unless we
appoint replacement officers satisfactory to the lenders within 30 days. We doinsurance may not maintain "key man" life insurance with respect to members of senior
management.

Competition

The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We may in the
future encounter increased competition from our existing competitors or from new
companies. In addition, certain equipment manufacturers may commence (or
increase their existing efforts relating to) renting and selling equipment
directly to our customers.

Liability and Insurancefully protect us.

We are exposed to various possible claims relating to our business. These
possible claims include claimsthose 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$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.

We cannot be certain that insurance will continue to be available to us on
economically reasonable terms, if at all.

EnvironmentalWe are subject to numerous environmental and Safety Regulations

Theresafety regulations. Our business
could be hurt if we are required to incur compliance or remediation costs that
are not currently anticipated.

Our operations are subject to numerous federal, state and local laws and regulations governing environmental
protection and occupational health and safety matters. These include laws and regulations that governregulate such
issues as wastewater, discharges, the use,
treatment, storage and disposal ofstormwater, solid and hazardous wastes and materials, and
air quality and the remediation of contamination associated with the release of
hazardous substances.quality. Under these laws, an owner or lessee of real estatewe may be liable for, among other things, (1)
the costs of removal or remediation of
hazardous or toxic substances located on, in, or emanating from, the real
estate,investigating and remediating contamination at our sites as well
as related costssites to which we sent hazardous wastes for disposal or treatment regardless
of investigation and property damage and
substantial penalties,fault and (2) fines and penalties for non-compliance. Our operations
generally do not raise significant environmental contamination at facilities where
its waste is or has been disposed. These laws often impose liability whether or
not the owner or lessee knew of the presence of the hazardous or toxic
substances and whether or not the owner or lessee was responsible for these
substances. Our activities that are or may be affected by these laws include ourrisks, but we use of hazardous
materials to clean and maintain equipment, and our disposaldispose of solid and hazardous
waste and wastewater from equipment washing. We alsowashing, and store and dispense petroleum
products from underground and above-ground storage tanks located at certain rental locations, and at times we must remove or upgrade
tanks to comply with applicable laws. Furthermore, we have acquired or lease
certain locations which have or may have been contaminated by leakage from
underground tanks or other sources and are in the process of
assessing the
nature of the required remediation.our locations.

Based on the conditions currently known to us, we do not believe that any
unreserved environmentalpending or likely remediation and compliance costs required with respect to those conditions will not have a material adverse
effect on our business. However, weWe cannot be certain, that we will not identifyhowever, as to the potential
financial impact on our business if new adverse environmental conditions that are
not currently known to us, that all
potential releases from underground storage tanks removed in the past have been
identified,discovered or that environmental and safety requirements will not become more stringent or be interpreted and applied more stringently in the future.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.

Risks Related to International Operations

Our operations outside the United States are subject to risks normally
associated with international operations. These include the need to convert
currencies, whichA prolonged labor dispute could result in a gain or loss depending on fluctuations in
exchange rates, and the need to comply with foreign laws.

Dependence on Information Technology Systems

Our ability to monitor and controlhurt our operations depends to a large
extent on the proper functioning of our information technology systems. Any
disruption in these systems or the failure of these systems to operate as
expected could, depending on the magnitude and duration of the problem,
adversely affect our business.

Labor Matters

Certain of our employees 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 business could be
adversely affected.

Restrictive Covenants

The agreements governingcovenants could adversely affect our existing long-term indebtedness contain,
and future agreements governingbusiness by limiting our
long-term indebtedness may also contain,
certainflexibility.

We are subject to various restrictive financial and operating covenants
which affect, and in many
respects significantlyunder 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 consolidations.acquisitions. These
covenants maycould adversely affect our business by significantly limitlimiting our
operating and financial flexibility.

Our operations outside the United States are subject to the risks normally
associated with international operations.

Our operations outside the United States are subject to the risks normally
associated with international operations. These include the need to convert
currencies, which could result in a gain or loss depending on fluctuations in
exchange rates, and the need to comply with foreign laws.

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. 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."

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.

USE OF PROCEEDS

The shares covered by this prospectus are being offered by certain
selling security holders and not by our company. Consequently, our companyUnited Rentals will not receive any proceeds from the sale of these shares.

9common 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 (through June 18, 2001). 26.40 15.06

SELLING SECURITY HOLDERSOn June 18, 2001, the last reported sale price of the common stock as
reported on the New York Stock Exchange was $24.41. As of June 18, 2001, there
were approximately 312 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 March 31, 2001 on
an historical basis and on a pro forma basis. 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.

We refinanced an aggregate of $1,695.7 million of indebtedness and other
obligations in April 2001. As part of this refinancing, we (1) issued $450
million of 10 3/4% Senior Notes Due 2008, (2) obtained a new senior secured
credit facility comprised of a $750 million term loan and a $750 million
revolving credit facility and (3) used proceeds from the notes and the new
secured credit facility to repay indebtedness and other obligations that were
outstanding under our old revolving credit facility, certain term loans and a
synthetic lease. The data under the heading "Pro Forma" adjusts the historical
data to give effect to the borrowings under our old credit facility subsequent
to March 31, 2001 and the refinancing transactions, as if such transactions had
occurred on March 31, 2001.

As of March 31, 2001
--------------------
Historical Pro Forma
------ ------
(dollars in millions,
except share data)

Cash and cash equivalents..................................................... $ 26 $ 26
====== ======
Debt (including current portion):
Revolving credit facility.................................................. $ 429 $ 474
Term loans................................................................. 1,189 750
Receivables securitization................................................. 100 100
10 3/4% senior notes due 2008.............................................. 450
9 1/2% senior subordinated notes due 2008.................................. 200 200
8.8% senior subordinated notes due 2008.................................... 201 201
9 1/4% senior subordinated notes due 2009.................................. 300 300
9% senior subordinated notes due 2009...................................... 250 250
Other debt................................................................. 82 82
------ ------
Total debt............................................................. 2,751 2,807
Company-obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust............................................................ 300 300
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,
69,813,652 shares issued and outstanding(1)(2)........................... 1 1
Additional paid in capital................................................. 1,173 1,173
Retained earnings.......................................................... 359 359
Accumulated other comprehensive loss....................................... (19) (19)
------ ------
Total stockholders' equity............................................. 1,514 1,514
------ ------
Total capitalization.......................................................... $4,565 $4,621
====== ======

- --------
(1) We issued an aggregate of 2,859,070 shares of common stock subsequent to
March 31, 2001 (through June 8, 2001). These shares are not reflected in
the table.
(2) 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) 7,094,296 shares issuable upon
the exercise of outstanding warrants, which provide for a weighted average
exercise price of $11.76 per share, (v) 16,566,328 shares issuable upon the
exercise of outstanding options, which provide for a weighted average
exercise price of $20.44 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 March 31, 2001 and the
income statement data for the three-month periods ended March 31, 2001 and 2000
are derived from our unaudited consolidated financial statements which are
included herein.

We refinanced an aggregate of $1,695.7 million of indebtedness and other
obligations in April 2001. As part of this refinancing, we (1) issued $450
million of 10 3/4% Senior Notes Due 2008, (2) obtained a new senior secured
credit facility comprised of a $750 million term loan and a $750 million
revolving credit facility and (3) used proceeds from the notes and the new
secured credit facility to repay indebtedness and other obligations that were
outstanding under our old revolving credit facility, certain term loans and a
synthetic lease. The balance sheet data under the heading "Pro Forma" adjusts
the historical balance sheet data to give effect to the borrowings under our
old credit facility subsequent to March 31, 2001 and the refinancing
transactions, as if such transactions had occurred on March 31, 2001.

Certain of our securityacquisitions 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

Three Months
Ended
Year Ended December 31, March 31,
----------------------------------- ------------
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 $ 579 $ 619
Total cost of operations.................................. 241 341 797 1,409 1,830 373 416
----- ----- ------ ------ ------ ----- -----
Gross profit.............................................. 113 149 423 825 1,089 206 203
Selling, general and administrative expenses.............. 55 71 196 353 454 102 109
Merger-related expenses................................... 47
Non-rental depreciation and amortization.................. 9 13 35 63 87 20 26
Termination cost of deferred compensation agreements...... 20
----- ----- ------ ------ ------ ----- -----
Operating income.......................................... 49 45 145 409 548 84 68
Interest expense.......................................... 11 12 64 140 229 50 57
Preferred dividends of a subsidiary trust................. 8 20 20 5 5
Other (income) expense, net............................... (2) (5) 7 (2) (1)
----- ----- ------ ------ ------ ----- -----
Income before provision for income taxes and extraordinary
items.................................................... 38 35 78 242 301 30 6
Provision for income taxes................................ 30 44 99 125 13 3
----- ----- ------ ------ ------ ----- -----
Income before extraordinary items......................... 38 5 34 143 176 17 3
Extraordinary items, net (1).............................. 1 21
----- ----- ------ ------ ------ ----- -----
Net income (3)............................................ $ 38 $ 4 $ 13 $ 143 $ 176 $ 17 $ 3
===== ===== ====== ====== ====== ===== =====
Pro forma provision for income taxes before extraordinary
items (2)................................................ $ 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 $0.24 $0.05
Diluted earnings per share before extraordinary items..... $1.67 $0.11 $ 0.48 $ 1.53 $ 1.89 $0.19 $0.04
Basic earnings per share (3).............................. $1.67 $0.08 $ 0.20 $ 2.00 $ 2.48 $0.24 $0.05
Diluted earnings per share (3)............................ $1.67 $0.08 $ 0.18 $ 1.53 $ 1.89 $0.19 $0.04

Other financial data:
EBITDA (4)................................................ $ 124 $ 161 $ 404 $ 761 $ 962 $ 178 $ 170

As of December 31, As of March 31, 2001
------------------------------ --------------------
1996 1997 1998 1999 2000 Historical Pro Forma
---- ---- ------ ------ ------ ------ ------
(dollars in millions)

Balance sheet data:
Cash and cash equivalents........................... $ 3 $ 72 $ 20 $ 24 $ 34 $ 26 $ 26
Rental equipment, net............................... 235 461 1,143 1,660 1,733 1,720 1,751
Total assets........................................ 381 826 2,635 4,498 5,124 5,112 5,143
Total debt.......................................... 214 265 1,315 2,266 2,675 2,751 2,807
Company-obligated mandatorily redeemable convertible
preferred securities of a subsidiary trust......... 300 300 300 300 300
Stockholders' equity................................ 105 446 726 1,397 1,546 1,514 1,514

- --------
(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.
(2) 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 is 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 reflects 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.
(3) Our earnings during 1997 were impacted by $20.3 million of expenses related
to the termination of certain deferred compensation expenses in connection
with U.S. Rentals' initial public offering, a $7.5 million charge to
recognize deferred tax liabilities of U.S. Rentals and an extraordinary
item (net of income taxes) of $1.5 million. Our earnings during 1998 were
impacted by merger-related expenses of $47.2 million ($33.2 million net of
taxes), a $4.8 million 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. Our earnings during 1999 were
impacted by $18.2 million ($10.8 million net of taxes) of expenses incurred
related to a terminated tender offer. Excluding such amounts, (1) basic
earnings per share for the years ended

1997, 1998 and 1999 would have been $0.70, $1.10 and $2.15, respectively,
and (ii) diluted earnings per share for the years ended 1997, 1998 and 1999
would have been $0.66, $1.00 and $1.65, respectively.
(4) EBITDA is defined as net income (excluding (i) non-operating income and
expense, (ii) a $20.3 million non-recurring charge incurred by U.S. Rentals
in 1997 arising from the termination of deferred compensation agreements
with certain executives, (iii) $47.2 million in merger-related expenses in
1998 related to the three acquisitions accounted for as
poolings-of-interests, including the merger with U.S. Rentals and (iv) $8.3
million of expenses that are included in selling, general and
administrative expenses for 1999 and which related to a terminated tender
offer), plus interest expense, income taxes and depreciation and
amortization. We have presented EBITDA data to provide you with additional
information concerning our ability to meet out future debt service
obligations and capital expenditure and working capital requirements.
However, EBITDA is not a measure of financial performance under generally
accepted accounting principles. Accordingly, you should not consider EBITDA
an alternative to net income or cash flows as indicators of our operating
performance or liquidity.

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.

Results of Operations

Three Months Ended March 31, 2001 and 2000

Revenues. Total revenues for the three months ended March 31, 2001 were
$619.1 million, representing an increase of 6.9% over total revenues of $579.0
million for the three months ended March 31, 2000. Our revenues during these
periods were attributable to the following sources.

. Revenues from Equipment Rentals. These revenues were $461.4 million in
the first quarter of 2001, representing an increase of 15.3% from $400.1
million in the first quarter of 2000. These revenues accounted for 74.5%
of our total revenues in the first quarter of 2001 compared with 69.1% of
our total revenues in the first quarter of 2000. The 15.3% increase in
these revenues in the first quarter of 2001 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 8.2 percentage points) 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 7.1 percentage points).

. Revenues from the Sales of Rental Equipment. These revenues were $39.1
million in the first quarter of 2001, representing a decrease of 44.4%
from $70.3 million in the first quarter of 2000. These revenues accounted
for 6.3% of our total revenues in the first quarter of 2001 compared with
12.1% of our total revenues in the first quarter of 2000.

We have, in response to softening economic conditions, been focusing on
measures to reduce our cash outlays. These measures include reducing our
2001 budget for new equipment purchases and slowing the rate at which we
sell our used rental equipment. The 44.4% reduction in revenues from the
sales of rental equipment during the first quarter of 2001 reflects these
actions. For additional information, 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 $118.6 million in the first quarter of 2001,
representing an increase of 9.3% from $108.5 million in the first quarter
of 2000. These revenues accounted for 19.2% of our total revenues in the
first quarter of 2001 compared with 18.7% of our total revenues in the
first quarter of 2000. The 9.3% increase in sales of equipment and
merchandise and other revenues was attributable to the increase in the
volume of transactions.

Gross Profit. Gross profit decreased to $202.6 million in the three months
ended March 31, 2001, from $206.0 million in the three months ended March 31,
2000. This decrease primarily reflected the following: (i) the sales of used
rental equipment, which generally produces higher gross profit margins than our
other sources of revenues, accounted for a smaller percentage of our total
revenues as discussed above, and (ii) our business of renting traffic control
equipment, which generally operates at a loss during the first quarter due to
seasonal factors, increased in size, making our overall results during the
first quarter more subject to this seasonality.

Our gross profit margin by source of revenues in the three months ended
March 31, 2001 and 2000 was: (i) equipment rental (33.1% in the three months
ended March 31, 2001 and 38.1% in the three months ended March 31, 2000), (ii)
sales of rental equipment (41.0% in the three months ended March 31, 2001 and
41.6% in the three months ended March 31, 2000) and (iii) sales of equipment
and merchandise and other revenues (28.6% in the three months ended March 31,
2001 and 22.5% in the three months ended March 31, 2000). The decrease in the
gross profit margin from rental revenues in the three months ended March 31,
2001 was primarily attributable to the impact of our traffic control business
as described above. The increase in the gross profit margin from sales of
equipment and merchandise and other revenue in the three months ended March 31,
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 $108.9 million, or 17.6% of total
revenues, during the three months ended March 31, 2001 and $101.9 million, or
17.6% of total revenues, during the three months ended March 31, 2000.

Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $26.1 million, or 4.2% of total revenues, in the three months
ended March 31, 2001 and $20.0 million, or 3.5% of total revenues, in the three
months ended March 31, 2000. The increase in the dollar amount of non-rental
depreciation and amortization in the first three months of 2001 primarily
reflected the amortization of goodwill attributable to acquisitions completed
subsequent to the first quarter of 2000.

Interest Expense. Interest expense increased to $57.5 million in the three
months ended March 31, 2001 from $49.7 million in the three months ended March
31, 2000. This increase primarily reflected an increase in our indebtedness,
principally to fund acquisitions.

Preferred Dividends of a Subsidiary Trust. During the three months ended
March 31, 2001 and 2000, preferred dividends of a subsidiary trust were $4.9
million.

Other (Income) Expense. Other income was $0.7 million in the three months
ended March 31, 2001 compared with $0.2 million in the three months ended March
31, 2000.

Income Taxes. Income taxes were $2.4 million, or an effective rate of
41.5%, in the three months ended March 31, 2001 compared to $12.4 million, or
an effective rate of 41.5%, in the three months ended March 31, 2000.

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) 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, United Rentals (North America), Inc. ("URI"), a wholly owned
subsidiary of United Rentals, Inc. ("Holdings"), refinanced $1,664.5 million of
its outstanding secured indebtedness. In order to effect this refinancing, URI:

. 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 URI's 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).

Certain Information Concerning Our Revolving Credit Facility

Our revolving credit facility enables URI to borrow up to $750 million on a
revolving basis and enables one of our Canadian subsidiaries to borrow up to
$40 million (provided that the aggregate borrowings of URI and the Canadian
subsidiary may not exceed $750 million). Up to $100 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 by URI 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 IBOR
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 IBOR rate, respectively, and down to minimum
margins of 0.75% and 1.75%, for revolving loans based on the ABR rate and the
adjusted IBOR rate, respectively. If at any time an event of default exists,
the interest rate applicable to each loan will increase to the maximum margins
set forth above and, if we fail to pay any principal or interest under the
credit facility when due, the interest rates will increase by an additional 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 three months of 2001, we (i) generated cash from
operations of approximately $56.1 million, (ii) generated cash from the sale of
rental equipment of approximately $39.1 million and (iii) obtained net proceeds
from financing activities of approximately $52.1 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 $27.7 million), (ii) purchase rental equipment
(approximately $98.3 million), (iii) purchase other property and equipment
(approximately $16.7 million) and (iv) purchase and retire shares of our
outstanding common stock (approximately $23.2 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) generated cash 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 Three Months of 2001. The decrease in accounts
receivable at March 31, 2001 compared to December 31, 2000 was primarily due to
collection of accounts receivable generated in the seasonally stronger prior
fiscal quarters. The increase in prepaid expenses and other

assets at March 31, 2001 compared to December 31, 2000 was primarily
attributable to payment of certain prepaid expenses during the first quarter.
The decrease in rental equipment at March 31, 2001 compared to December 31,
2000 was primarily attributable to the depreciation of the assets and to the
disposal of rental equipment, partially offset by purchases of rental
equipment, during the first quarter.

The decrease in accounts payable at March 31, 2001 compared to December 31,
2000 was attributable to the payment of accounts payable. The increase in debt
at March 31, 2001 compared to December 31, 2000 was primarily attributable to
borrowings for acquisition related payments and equipment purchases. The
decrease in accrued expenses and other liabilities at March 31, 2001 compared
to December 31, 2000 was primarily attributable to the payment of certain
accrued bonus compensation. The decrease in additional paid-in capital at March
31, 2001 compared to December 31, 2000, primarily reflected the purchase and
retirement of shares of our outstanding common stock.

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 ($260.5 million available as of June 19, 2001) and
cash generated from operations.

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 matters
described below under "--Certain Projected Charges--Branch Consolidation." 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.

We estimate that equipment expenditures for the year 2001 will be
approximately $400 million for our existing operations (compared to $962
million in 1999). 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 $1,664.5 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 $19.3 million over the next 12 months. We may also, at our
option, make additional principal payments.

We plan to reduce the rate at which we sell our used equipment in 2001. The
magnitude of the reduction will depend on a number of 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 28 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.

Certain Projected Charges

Branch Consolidation

We estimate that we will incur a pre-tax charge in 2001 in the range of $20
million to $40 million in connection with our plan to close or consolidate 25
to 30 under-performing branches. This charge will primarily relate to severance
for employees and vacating facilities.

Debt Refinancing

We refinanced $1,664.5 million of indebtedness during the second quarter of
2001 (as described under "--Recent Financing Transactions"). We have recorded a
pre-tax extraordinary charge of approximately $18 million during the second
quarter of 2001, primarily relating to the write-off of financing fees.

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." In addition, information concerning certain projected charges that may
impact quarterly results over the near term is set forth under "--Certain
Projected Charges."

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 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities." This standard amends
SFAS No. 133 and addresses a limited number of issues causing implementation
difficulties. We adopted SFAS No. 133 on January 1, 2001 and it did not have a
material effect on our consolidated financial position or results of
operations.

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 is not expected to have a material effect on our
consolidated financial position or results of operations.

BUSINESS

The Company

United Rentals is the largest equipment rental company in North America
with approximately 750 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, EBITDA and net income of $2.9 billion, $962.4 million 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 $3.5 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;

. 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;

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

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

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 approximately 750 branches, such
as payroll, accounts payable and credit and collection, into 25 credit offices
and three service centers. In 2000, approximately 10.7% of our rental revenue
was attributable to equipment sharing among branches.

Geographic and Customer Diversity. We have approximately 750 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 1,400 National Account
customers, including more than 200 new accounts added in the first 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.

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 will 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.

Products and Services

We offer for rent a wide variety of equipment to customers that include
construction and industrial companies, manufacturers, utilities,
municipalities, homeowners and others. We also sell used equipment, act as a
dealer for many types of new equipment, and sell related merchandise, parts and
service. In addition, we have a subsidiary that develops and markets software
for use by equipment rental companies in managing and operating multiple branch
locations.

For financial information concerning our foreign and domestic operations,
see note 14 of the notes to our audited consolidated financial statements
included herein.

Equipment Rental

We offer for rent over 600 different types of equipment on a daily, weekly
or monthly basis. The types of equipment that we offer include general
construction and industrial equipment; aerial work

platforms; traffic control equipment; trench safety equipment; equipment for
sporting, corporate and other special events; and general tools and light
equipment. In 2000, our average rental period was approximately six days, and
the average value per rental transaction was $209.

Our equipment rental fleet is the largest in the world and is also one of
the newest and best maintained. Our fleet includes over 500,000 units and has
an original purchase price of approximately $3.5 billion and a weighted average
age of approximately 28 months. We estimate that (i) aerial work platforms
accounted for approximately 24% of our equipment rental revenues in 2000, (ii)
earth moving equipment accounted for approximately 13% of such revenues and
(iii) forklifts accounted for approximately 10% of such revenues.

We vary our equipment mix from branch to branch in response to local market
conditions and customer requirements. Most of our branches offer a general mix
of equipment, while some specialize in specific equipment categories such as
aerial work platforms and traffic control equipment.

Used Equipment Sales

In order to maintain a modern fleet and optimize our equipment mix, we
routinely sell used rental equipment and invest in new equipment. We have
generally been able to obtain favorable sales prices due to our comprehensive
maintenance program and our national sales force that can access many resale
markets across North America.

We principally sell used equipment through our sales force and our web site
(www.unitedrentals.com) which includes an online database of used equipment
available for sale. We also sell our used equipment to used equipment dealers
and through public auctions. In addition, we sometimes trade in used equipment
to our vendors when we buy new equipment.

New Equipment Sales

We are a dealer for many leading equipment manufacturers. These
manufacturers include Genie Industries, Inc., JLG Industries, Inc., and
SkyJack, Inc. (aerial lifts); Multiquip, Inc. (compaction equipment,
generators, pumps and concrete equipment); Bomag and Wacker (compaction
equipment); Sullair Corporation (compressors); Skytrack and Lull (rough terrain
reach forklifts); Scattrack (skid-steer loaders and mini-excavators); Terex
Corporation (off-road dump trucks and telehandlers); and Honda USA (pumps and
generators). Typically, dealership agreements do not have a specific term and
may be terminated at any time. The type of new equipment that we sell varies by
location.

Related Merchandise, Parts and Other Services

At most of our locations, we sell equipment parts and a variety of supplies
and merchandise that may be used with our rental equipment, such as saw blades,
fasteners, drill bits, hard hats, gloves and other safety equipment. At some of
our branches, we also offer repair and maintenance services for equipment that
is owned by our customers.

Our Rentalman(TM) Software

We have a subsidiary that develops and markets software for use by
equipment rental companies in managing and operating multiple branch locations.
Seven of the ten largest equipment rental companies, including United Rentals,
use the Rentalman(TM) software package developed by our subsidiary.

Customers

Our customer base is highly diversified and ranges from Fortune 500
companies to small businesses and homeowners. We estimate that no single
customer accounted for more than 0.5% of

our revenues during 2000 and that our top 10 customers accounted for
approximately 2% of our revenues in 2000.

Our customer base varies by branch and is determined by several factors,
including the equipment mix and marketing focus of the particular branch and
the business composition of the local economy. Our customers include:

. construction companies that use equipment for building and renovating
commercial buildings, warehouses, industrial and manufacturing plants,
office parks, airports, residential developments and other facilities;

. industrial companies--such as manufacturers, chemical companies, paper
mills, railroads, ship builders and utilities--that use equipment for
plant maintenance, upgrades, expansion and construction;

. municipalities that require equipment for a variety of purposes, such as
traffic control and highway construction and maintenance;

. sponsors of sporting, corporate, entertainment and other large special
events--including events such as the Super Bowl, the U.S. Open Golf
Championship, the NASCAR Brickyard 400, the PGA Championship, the Ryder
Cup, concerts and charity events; and

. homeowners and other individuals that use equipment for projects that
range from simple repairs to major renovations.

Sales and Marketing

We market our products and services through multiple channels as described
below.

Sales Force. As of June 12, 2001, we had a total of 2,515 salespeople,
including 1,195 store-based customer service representatives and 1,320
field-based salespeople. Our sales force calls on existing and potential
customers and assists our customers in planning for their equipment needs.

National Account Program. Our National Account sales force is dedicated to
establishing and expanding relationships with large customers, particularly
those with a national or multi-regional presence. The National Account team
closely coordinates its efforts with the local sales force in each area. Our
National Account team currently includes 39 sales professionals.

E-Rental Store(TM). Our customers can rent or buy equipment online 24 hours
a day seven days a week at our E-Rental Store(TM), which is part of our web
site. Our customers can also use our URdata(TM) application to access
up-to-the-minute reports on their business activity with us.

Advertising. We promote our business through local and national advertising
in various media, including trade publications, yellow pages, the Internet and
direct mail. We also regularly participate in industry trade shows and
conferences and sponsor a variety of local promotional events.

Suppliers

We have been making ongoing efforts to consolidate our vendor base in order
to further increase our purchasing power. We estimate that our largest supplier
accounted for approximately 24% of our equipment purchases in 2000, and that
our top 10 largest suppliers accounted for approximately 73% of our equipment
purchases during that period. We believe that we have alternative sources of
supply for each of our material equipment categories.

Information Technology Systems

We have advanced information technology systems which facilitate rapid and
informed decision making and enable us to respond quickly to changing market
conditions. Each branch is equipped with one or more workstations that are
electronically linked to our other locations and to our AS/400 system located
at our data center. All rental transactions are entered at these workstations
and processed on a real-time basis. Personnel at each location are able to
access the system 24 hours a day in order to determine equipment availability
and monitor business activity on a real-time basis. They can also obtain
customized reports on a wide range of operating and financial data, including
equipment utilization, rental rate trends, maintenance histories and customer
transaction histories.

Our information technology systems and our web site are supported by our
in-house group of approximately 100 information technology specialists. This
group trains our personnel at the branch location; upgrades and customizes our
systems; provides hardware and technology support; operates a support desk to
assist branch personnel in the day-to-day use of the systems; extends the
systems to newly acquired locations; and manages our web site.

Competition

The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We believe
that, in general, large companies enjoy significant competitive advantages
compared to smaller operators, including greater purchasing power, a lower cost
of capital, the ability to provide customers with a broader range of equipment
and services and with newer and better maintained equipment, and greater
flexibility to transfer equipment among locations in response to customer
demand. For additional information, see "--Competitive Advantages."

Properties

As of March 31, 2001, we operated 755 branch locations. Of these locations,
676 were in the United States, 78 were in Canada and one was in Mexico. The
number of locations in each state or province is shown below.

United States

.Alabama (12) .Louisiana (8) .North Dakota (10)
.Alaska (4) .Maine (2) .Ohio (13)
.Arizona (22) .Maryland (19) .Oklahoma (7)
.Arkansas (3) .Massachusetts (11) .Oregon (26)
.California (102) .Michigan (6) .Pennsylvania (18)
.Colorado (17) .Minnesota (15) .Rhode Island (2)
.Connecticut (11) .Mississippi (1) .South Carolina (11)
.Delaware (5) .Missouri (11) .South Dakota (9)
.Florida (38) .Montana (1) .Tennessee (9)
.Georgia (20) .Nebraska (8) .Texas (58)
.Idaho (2) .Nevada (16) .Utah (11)
.Illinois (17) .New Hampshire (2) .Virginia (12)
.Indiana (12) .New Jersey (9) .Washington (33)
.Iowa (12) .New Mexico (5) .Wisconsin (9)
.Kansas (5) .New York (19) .Wyoming (2)
.Kentucky (7) .North Carolina (24)

Canada Mexico
.Alberta (2) .Nuevo Leon, Monterrey (1)
.British Columbia (16)
.Manitoba (2)
.Newfoundland (9)
.Ontario (35)
.Quebec (12)
.Saskatchewan (2)

Our branch locations generally include facilities for displaying equipment
and, depending on the location, may include separate equipment service areas
and storage areas.

We own 98 of our rental locations and lease the other locations. Our leases
provide for varying terms and include 24 leases that are renewable on a
month-to-month basis and 42 leases without renewal options that provide for a
remaining term of less than one year.

We maintain a fleet of approximately 13,440 vehicles that are used for
delivery, maintenance and sales functions. We own a portion of this fleet and
lease the remainder.

Our corporate headquarters are located in Greenwich, Connecticut, where we
occupy approximately 28,000 square feet under a lease for approximately 12,000
square feet that extends until 2003 and a lease for approximately 16,000 square
feet that extends until 2004 (subject to a two-year renewal option).

Environmental and Safety Regulations

Our operations are subject to numerous laws governing environmental
protection and occupational health and safety matters. These laws regulate such
issues as wastewater, stormwater, solid and hazardous wastes and materials, and
air quality. Under these laws, we may be liable for,

among other things, (1) the costs of investigating and remediating
contamination at our sites as well as sites to which we sent hazardous wastes
for disposal or treatment regardless of fault and (2) fines and penalties for
non-compliance. Our operations generally do not raise significant environmental
risks, but we use hazardous materials to clean and maintain equipment, and
dispose of solid and hazardous waste and wastewater from equipment washing, and
store and dispense petroleum products from underground and above-ground storage
tanks located at certain of our locations.

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

Employees

As of June 12, 2001, we had 15,452 employees. Of these employees, 4,177 are
salaried personnel and 11,275 are hourly personnel. Collective bargaining
agreements relating to 64 separate locations cover approximately 1,207 of our
employees. We believe our relations with our employees are satisfactory.

Legal Proceedings

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

MANAGEMENT

Information Concerning Directors and Executive Officers

The table below identifies, and provides certain information concerning,
our directors and executive officers:

Name Age Positions(1)
---- --- ------------

Bradley S. Jacobs.. 44 Chairman, Chief Executive Officer and
Director

Wayland R. Hicks... 58 Vice Chairman, Chief Operating Officer and
Director

John N. Milne...... 42 Vice Chairman, President, Chief Acquisition
Officer, Secretary and Director

Michael J. Nolan... 40 Chief Financial Officer

Leon D. Black...... 49 Director(2)

Richard D. Colburn. 90 Director

Ronald M. DeFeo.... 49 Director

Michael S. Gross... 39 Director(2)

Richard J. Heckmann 57 Director

John S. McKinney... 46 Director

Gerald Tsai, Jr.... 72 Director

Timothy J. Tully... 37 Director

Christian M. Weyer. 76 Director

- --------
(1) For information concerning the term served by directors, see "--Right of
Holders of Series A Preferred to Elect Directors" and "--Classification of
Directors."
(2) Messrs. Black and Gross were elected directors by the holders may sell,of the Series
A Preferred. See "--Right of Holders of Series A Preferred to Elect
Directors."

Bradley S. Jacobs has been Chairman, Chief Executive Officer and a director
of our company since its formation in September 1997. Mr. Jacobs founded United
Waste Systems, Inc. and served as its Chairman and Chief Executive Officer from
its inception in 1989 until the sale of the company in August 1997. From 1984
to July 1989, Mr. Jacobs was Chairman and Chief Operating Officer of Hamilton
Resources Ltd., an international trading company, and from 1979 to 1983, he was
Chief Executive Officer of Amerex Oil Associates, Inc., an oil brokerage firm
that he co-founded.

Wayland R. Hicks has been Chief Operating Officer of our company since
November 1997 and a director since June 1998. He also served as President of
our company during the period from November 1997 until September 1998, when he
became Vice Chairman. Mr. Hicks previously held various senior executive
positions at Xerox Corporation where he worked for 28 years (1966-1994). His
positions at Xerox Corporation included Executive Vice President, Corporate
Operations (1993-1994), Executive Vice President, Corporate Marketing and
Customer Support Operations (1989-1993) and Executive Vice President,
Engineering and Manufacturing--Xerox Business Products and Systems Group
(1987-1989). Mr. Hicks also served as Vice Chairman and Chief Executive Officer
of Nextel Communications Corp. (1994-1995) and as Chief Executive Officer and
President of Indigo N.V. (1996-1997). He is also a director of Maytag
Corporation.

John N. Milne has been Vice Chairman, Chief Acquisition Officer and a
director of our company since its formation in September 1997 and President
since June 2001. Mr. Milne was Vice Chairman

and Chief Acquisition Officer of United Waste Systems, Inc. from 1993 until
August 1997 and held other senior executive positions at United Waste from 1990
until 1993. From September 1987 to March 1990, Mr. Milne was employed in the
Corporate Finance Department of Drexel Burnham Lambert Incorporated.

Michael J. Nolan has been Chief Financial Officer of our company since its
formation in September 1997. Mr. Nolan served as the Chief Financial Officer of
United Waste Systems, Inc. from February 1994 until August 1997. He served in
other finance positions at United Waste from November 1991 until February 1994,
including Vice President, Finance, from October 1992 to February 1994. From
1985 until November 1991, Mr. Nolan held various positions at the accounting
firm of Ernst & Young, including senior audit manager.

Leon D. Black became a director of our company in January 1999. Mr. Black
is one of the founding principals of Apollo Advisors, L.P. (which was
established in August 1990 and which, together with its affiliates, acts as the
managing general partner of several private securities investment funds) and
Apollo Real Estate Advisors, L.P. (which, together with its affiliates, acts as
the managing general partner of several real estate investment funds). Mr.
Black is also a director of Samsonite Corporation, Sequa Corporation, Allied
Waste Industries, Inc., Wyndham International, Inc., and Vail Resorts, Inc. He
also serves as a trustee of The Museum of Modern Art, Mount Sinai--NYU Medical
Center, Lincoln Center for the Performing Arts, Vail Valley Foundation, The
Metropolitan Museum of Art, The Jewish Museum, Cardozo Law School, Spence
School, Prep for Prep and The Asia Society.

Richard D. Colburn became a director of our company in September 1998
following the merger of our company with U.S. Rentals. Mr. Colburn was Chairman
and sole shareholder of U.S. Rentals for 22 years. Mr. Colburn is a private
investor.

Ronald M. DeFeo has been a director of our company since October 1997. Mr.
DeFeo is the Chairman, Chief Executive Officer, President and a director of
Terex Corporation, a leading global provider of equipment for the
manufacturing, mining and construction industries. Mr. DeFeo joined Terex in
1992 as President of the Terex heavy equipment group and was appointed
President and Chief Operating Officer in 1993 and Chief Executive Officer in
1995. From 1984 to 1992, Mr. DeFeo held various management positions at
Tenneco, Inc., including Senior Vice President and Managing Director of Case
Europe.

Michael S. Gross became a director of our company in January 1999. Mr.
Gross is one of the founding principals of Apollo Advisors, L.P. (which was
established in August 1990 and which, together with its affiliates, acts as the
managing general partner of several private securities investment funds). Mr.
Gross is also a director of Allied Waste Industries, Inc., Breuner's Home
Furnishings Corp., Clark Enterprises, Inc., Converse, Inc., Encompass Services
Corporation, Florsheim Group, Inc., Pacer International Inc., Rare Medium
Group, Inc., and Saks Incorporated. Mr. Gross is a founding member, and serves
on the executive committee, of Youth Renewal Fund and is the Chairman of the
Board of the Mt. Sinai Children's Center Foundation.

Richard J. Heckmann has been a director of our company since October 1997.
Mr. Heckmann has served since September 1999 as Chairman of Vivendi Water, the
water products group of Vivendi S.A., a worldwide utility and communications
company. Mr. Heckmann joined Vivendi following Vivendi's acquisition in April
1999 of United States Filter Corporation, a leading global provider of
industrial and commercial water and wastewater treatment systems and services.
Mr. Heckmann was Chairman, President and Chief Executive Officer of United
States Filter Corporation from 1990 until its acquisition by Vivendi. Mr.
Heckmann is also a director of Vivendi Environmental Corp., K2 Inc. and
Philadelphia Suburban Corporation.

John S. McKinney became a director of our company in September 1998
following the merger of our company with U.S. Rentals. He also served as Vice
President of our company until the end of 2000. Mr. McKinney served as Chief
Financial Officer of U.S. Rentals from 1990 until the merger and

as Controller of U.S. Rentals from 1988 until 1990. Prior to joining U.S.
Rentals, Mr. McKinney held various positions at Iomega Corporation, including
Assistant Controller, and at the accounting firm of Arthur Andersen & Co.

Gerald Tsai, Jr. has been a director of our company since December 1997.
Mr. Tsai served as Chairman, Chief Executive Officer and President of Delta
Life Corporation, an insurance company, from 1993 until the sale of the company
in October 1997. Mr. Tsai was Chairman of the Executive Committee of the Board
of Directors of Primerica Corporation, a diversified financial services
company, from December 1988 until April 1991, and served as Chief Executive
Officer of Primerica Corporation from April 1986 until December 1988. Mr. Tsai
is currently a private investor and serves as a director of IPnetwork, Inc.,
Rite Aid Corporation, Saks Incorporated, Satmark Media Group, Sequa
Corporation, Triarc Companies, Inc. and Zenith National Insurance Corp. He also
serves as a trustee of Boston University, Mount Sinai-NYU Medical Center and
NYU School of Medicine Foundation Board.

Timothy J. Tully became a director of our company in June 2001. Mr. Tully
is the co-founder of Tully Capital Partners, LLC (an equity investor in public
and private companies) and Heron Investments, LLC ( a money management and
investment advisory company). Since 1997, he has served as the managing member
of these companies and of several other private investment vehicles. Mr. Tully
was previously a real estate investor involved in the acquisition, operation
and sale of commercial properties (1991-1997) and an equity options specialist
and market maker for the options trading division formerly operated by the New
York Stock Exchange (1986-1991).

Christian M. Weyer became a director of our company in December 1998. Mr.
Weyer has been in the international banking business for 33 years and has
served as President of Enerfin S.A., an international trade and financial
advisory firm, since 1985. From May 1988 to December 1992, Mr. Weyer was a
member of senior management at Banque Indosuez in Geneva, Switzerland, with
responsibility for matters relating to commercial banking, and from 1971 to
1985, held various senior management positions at Banque Paribas and its
affiliates (including President of Banque Paribas (Suisse) in Geneva during
1984). Prior to 1971, Mr. Weyer held senior management positions with Chase
Manhattan Bank in Paris and in Geneva.

Right of Holders of Series A Preferred to Elect Directors

In January 1999, we sold 300,000 shares of our Series A Perpetual
Convertible Preferred Stock ("Series A Preferred") to Apollo.

The holders of the Series A Preferred, voting separately as a single class,
have the right to elect:

. two directors, if (as of the record date for such vote) the aggregate
number of shares of common stock that are issuable upon conversion of
Series A Preferred then held by Apollo, Apollo Management IV, L.P., or
their affiliates (plus any shares of common stock then held by such
entities that were issued upon conversion of the Series A Preferred) is
at least eight million; or

. one director, if (as of the record date for such vote) the aggregate
number of shares of common stock that are issuable upon conversion of
Series A Preferred then held by Apollo, Apollo Management IV, L.P., or
their affiliates (plus any shares of common stock then held by such
entities that were issued upon conversion of the Series A Preferred) is
at least four million but less than eight million.

Based on the number of shares of Series A Preferred that are currently held
by Apollo, the holders of the Series A Preferred have the right to elect two
directors.

Any director that is elected by the holders of the Series A Preferred,
voting separately as a single class, holds office until the next annual meeting
of stockholders and the election and qualification of a successor (or the
earlier resignation or removal of such director).

If the holders of the Series A Preferred do not have the right, voting
separately as a single class, to elect any directors pursuant to provisions
described above, then the holders of the Series A Preferred have the right to
vote for the election of directors of our company together with the holders of
the common stock, as a single class, with each share of Series A Preferred
entitled to one vote for each share of common stock issuable upon conversion of
such share of Series A Preferred.

Agreement Relating to Election of Directors

Mr. Hicks' employment agreement provides that at each annual meeting of
stockholders of our company that occurs during the term of the agreement and at
which Mr. Hicks' term as director is scheduled to expire, we will nominate Mr.
Hicks for re-election as a director.

Classification of Directors

The directors of our company (excluding any elected by the holders of the
Series A Preferred) are divided into three classes as follows:

Class 1. The members of this class are Messrs. Hicks, McKinney and Tsai.
The term of office of this class will expire at our annual meeting of
stockholders in 2002.

Class 2. The members of this class are Messrs. DeFeo, Heckmann and
Tully. The term of office of this class will expire at our annual meeting
of stockholders in 2003.

Class 3. The members of this class are Messrs. Colburn, Jacobs, Milne
and Weyer. The term of office of this class will expire at our annual
meeting of stockholders in 2004.

At each annual meeting of stockholders, successors to directors of the
class whose term expires at such meeting will be elected to serve for
three-year terms and until their successors are elected and qualified.

Committees of the Board

The board of directors has three standing committees: the Audit Committee,
the Compensation/ Stock Option Committee, and the Special Stock Option
Committee. The board of directors does not have a Nominating Committee.

The responsibilities of the Audit Committee include selecting the firm of
independent accountants to be appointed to audit our financial statements and
reviewing the scope and results of the audit with the independent accountants.
The members of the Audit Committee are Messrs. DeFeo, Heckmann and Tsai. Each
member of the Audit Committee is independent within the meaning of the New York
Stock Exchange's listing standards.

The responsibilities of the Compensation/Stock Option Committee include
making recommendations with respect to the compensation to be paid to officers
and directors, administering any stock plan in which officers or directors are
eligible to participate and approving the grant of awards pursuant to any such
plan. The members of this committee are Messrs. DeFeo, Heckmann and Tsai.

The responsibilities of the Special Stock Option Committee include
administering any stock plan in which officers and directors are not eligible
to participate and approving the grant of awards to persons who are not
officers or directors. The members of this committee are Messrs. Jacobs and
Milne.

Employment, Severance and Change-of-Control Arrangements

Employment Agreements

We have entered into employment agreements with each of our executive
officers. Certain information with regard to these agreements is set forth
below.

Base Salary. Our executive officers are currently being paid base salaries
at the following annual rates: Mr. Jacobs ($485,000), Mr. Hicks ($450,000), Mr.
Milne ($335,000) and Mr. Nolan ($285,000). These salary levels reflect
increases approved by our board, from time to time, upand are above the minimum
salary levels originally provided for by these agreements (except in the case
of Mr. Hicks).

Bonus. The agreements do not provide for mandatory bonuses. However, the
agreements provide that, in addition to 988,559the compensation specifically provided
for, we may pay such salary increases, bonuses or incentive compensation as may
be authorized by our board of directors.

Certain of the agreements provide that the employee is entitled to
participate in certain specified insurance, retirement, compensation and
benefit plans if such plans are made available to other specified executives of
the company.

Term. The employment agreements with the following executives provide that
the term shall automatically renew so that at all times the balance of the
terms will not be less than the period hereinafter specified with respect to
such executive: Mr. Jacobs (five years), Mr. Milne (five years) and Mr. Nolan
(three years). The employment agreement with Mr. Hicks provides for a term
extending until November 2003.

Termination and Severance. Under each of the agreements, we or the employee
may at any time terminate the agreement, with or without cause. However, we are
required to make severance payments to the extent described below.

The employment agreement with Mr. Jacobs provides that he is entitled to
severance benefits in the event that (i) his employment agreement is terminated
by us without Cause (as defined in the employment agreement), (ii) he
terminates his employment agreement for Good Reason (as defined in the
employment agreement) or because of a breach by us of our obligations
thereunder, (iii) his employment is terminated as a result of death or (iv) our
company or he terminates the employment agreement due to his disability. The
severance benefits include (a) a lump sum payment equal to 13.51 times the sum
of his annual base salary at the time of termination plus the highest annual
cash bonus paid to him in the preceding three years (except the multiple is
five rather than 13.51 if the termination is due to death or disability) and
(b) the continuation of his benefits for the remaining term. The term "Good
Reason" is defined in the employment agreement and includes, among other
things, the assignment to him of any duties inconsistent with, or a diminution
of, his position, duties, titles, offices, responsibilities, and status with
our company or his removal from his current positions or any failure to reelect
him to his current positions.

The employment agreement with Mr. Milne contains a severance provision that
is the same as described above for Mr. Jacobs, except that the severance
benefit is equal to (a) a lump sum payment equal to five times the sum of his
annual base salary at the time of termination plus the highest annual bonus
paid to him in the preceding three years and (b) the continuation of his
benefits for the remaining term. The agreement with Mr. Milne also provides for
a greater severance payment under certain circumstances as described in the
second following paragraph.

The employment agreement with Mr. Hicks provides that he is entitled to a
severance payment in the amount of $1 million in the event that his employment
agreement is terminated by our company without Cause (as defined in the
employment agreement) or he terminates his employment for Good Reason (as
defined in the employment agreement). The agreement with Mr. Hicks also
provides for a greater severance payment under certain circumstances as
described in the following paragraph.

The employment agreements with Messrs. Hicks, Milne and Nolan provide that
the executive is entitled to a specified severance payment if the executive
resigns (or his employment is otherwise terminated) within 90 days after Mr.
Jacobs terminates his employment agreement for Good Reason (which for this
purpose means the assignment to Mr. Jacobs of any duties inconsistent with, or
a diminution of, his position, duties, titles, offices, responsibilities, and
status with our company or any removal of Mr. Jacobs from his current positions
or any failure to reelect Mr. Jacobs to his current positions). The specified
severance payment is equal to a specified multiple of the sum of (x) the
executive's annual base salary in effect at the time of termination plus (y)
the highest annual cash bonus (if any) paid by our company to the executive
during the three-year period preceding the date of termination. The specified
multiple used for calculating the severance payment is 9.655, in the case of
Mr. Hicks, 10.91, in the case of Mr. Milne, and 8.67, in the case of Mr. Nolan.

The employment agreements with each executive also provide that if any
portion of the required severance payment to the executive constitutes an
"excess parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code")), the executive is entitled to receive a
payment sufficient on an after-tax basis to offset any excise tax payable by
the executive pursuant to Section 4999 of the Code. Any payment constituting an
"excess parachute payment" would not be deductible by our company.

Options. Each of the agreements provides that all stock options at any time
to be granted to the executive will automatically vest upon a "change of
control" (as defined in the agreement) of our company.

Other Provisions. The agreement with Mr. Hicks provides that at each annual
meeting of the stockholders of our company which occurs during the term of the
agreement and at which Mr. Hicks' term as director would be scheduled to
expire, we will nominate Mr. Hicks for re-election as a director.

Restricted Stock Agreements

We have entered into restricted stock agreements with each of our executive
officers. The shares of restricted stock held by each executive is as follows:
Mr. Jacobs (800,000 shares), Mr. Hicks (500,000 shares), Mr. Milne (470,000
shares) and Mr. Nolan (235,000 shares). The restricted stock held by an
executive will vest on June 5, 2011 provided he is then still employed by us,
or, if earlier, the first to occur of the following (except that clauses (3),
(4) and (5) only apply to Messrs. Jacobs, Hicks and Milne): (1) a "change of
control" (as defined in the agreement) occurs; (2) he dies, retires after age
60, or is permanently disabled while employed by us; (3) we terminate his
employment without cause (as defined in the agreement); (4) he resigns after we
fail to nominate him to continue as a director; (5) he resigns after we reduce
his duties, authority, title or compensation; (6) he resigns after we direct
him to relocate or substantially increase his travel; or (7) he resigns after
Mr. Jacobs resigns and Mr. Jacobs' resignation is for one of the reasons
enumerated in the preceding three clauses.

CERTAIN TRANSACTIONS

We have from time to time purchased equipment from Terex Corporation and
may do so in the future. Mr. DeFeo, a director of our company, is the chief
executive officer and a director of Terex. We purchased approximately $70
million of equipment from Terex in 2000.

SELLING STOCKHOLDER

The Colburn Music Fund (the "Music Fund"), a non profit corporation,
currently owns 12,000,000 shares of our common stock. The Music Fund will sell
9,000,000 of these shares in the offering (10,350,000 shares, if the
underwriters fully exercise the over-allotment option). Following the offering,
the Music Fund will continue to own 3,000,000 shares of our common stock
(1,650,000 shares, if the underwriters fully exercise the over-allotment
option). These shares will be subject to a 270 day lock-up as described under
"Underwriting."

The Music Fund is affiliated with Richard D. Colburn, a non-officer
director of our company, as described below. Mr. Colburn was formerly Chairman
of U.S. Rentals and became a director of our company in September 1998
following the merger of our company with U.S. Rentals.

The shares of our common stock that are owned by the Music Fund were
originally issued by us in connection with the merger of our company with U.S.
Rentals. The shares were originally issued to a corporation wholly owned by Mr.
Colburn and were subsequently transferred by this corporation to the Music
Fund.

Mr. Colburn is a director of the Music Fund and, in that capacity, may
share the power to direct the voting and disposition of the shares of our
common stock held by the Music Fund. Because of this power, Mr. Colburn is
considered to have "beneficial ownership" of these shares, within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934. However, Mr. Colburn
disclaims such beneficial ownership.

As described above, Mr. Colburn is considered to be the "beneficial owner,"
within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, of
all of the shares being sold by the Music Fund. The table below shows the
aggregate number of shares of common stock that are currently beneficially
owned by Mr. Colburn and the number of shares that he will beneficially own
following the offering. The shares that he will beneficially own following the
offering will be subject to a 270 day lock-up as described under
"Underwriting."

Shares of Common
Shares of Common Stock Stock Beneficially
Beneficially Owned Prior to Owned After This
This Offering Offering
--------------------- --------------------
Number Percent Number Percent
---------- ------- --------- -------

Richard D. Colburn 13,451,000(1) 18.5% 4,451,000(2) 6.1%

- --------
(1) Consists of (i) 30,000 shares issuable upon exercise of currently
exercisable options held by Mr. Colburn, (ii) 1,421,000 outstanding shares
owned by a corporation wholly owned by Mr. Colburn and (iii) 12,000,000
outstanding shares held by the Music Fund.
(2) Consists of (i) 30,000 shares issuable upon exercise of currently
exercisable options held by Mr. Colburn, (ii) 1,421,000 outstanding shares
owned by a corporation wholly owned by Mr. Colburn and (iii) 3,000,000
outstanding shares held by the Music Fund.

PRINCIPAL STOCKHOLDERS

General

The table below and the notes thereto set forth as of June 8, 2001 (unless
otherwise indicated in the footnotes), certain information concerning the
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of our common stock by (i) each director and executive officer of
our company, (ii) all executive officers and directors of our company as a
group and (iii) each person known to us to be the owner of more than 5% of our
common stock.

Following the offering, the number of shares beneficially owned by Mr.
Colburn will be reduced as described under "Selling Stockholder." This will
reduce the aggregate number of shares beneficially owned by all executive
officers and directors as a group to 28,672,619 shares, representing 33.4% of
the outstanding common stock.

Number of
Shares of Percent of
Common Stock Common
Beneficially Stock
Name and Address(1) Owned(2)(3) Owned(3)
- ------------------- ---------- --------

Bradley S. Jacobs........................................... 18,166,535(4) 22.2%
Wayland R. Hicks............................................ 1,801,944(5) 2.4%
John N. Milne............................................... 3,062,537(6) 4.1%
Michael J. Nolan............................................ 1,398,197(7) 1.9%
Leon D. Black............................................... 30,000(8) *
Richard D. Colburn.......................................... 13,451,000(9) 18.5%
Ronald M. DeFeo............................................. 93,000(10) *
Michael S. Gross............................................ 30,000(11) *
Richard J. Heckmann......................................... 182,800(12) *
John S. McKinney............................................ 955,119(13) 1.3%
Gerald Tsai, Jr............................................. 710,001(14) 1.0%
Timothy J. Tully............................................ 105,120(15) *
Christian M. Weyer.......................................... 102,000(16) *
All executive officers and directors as a group (13 persons) 37,672,619(17) 43.9%
Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV, L.P.......................... 15,333,333(18) 17.4%
Wellington Management Company, LLP.......................... 4,264,970(19) 5.5%

- --------
* Less than 1%.
(1) Unless otherwise indicated, the address is c/o our company at Five
Greenwich Office Park, Greenwich, CT 06830.
(2) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of any
shares as of a given date which such person has the right to acquire
within 60 days after such date. For purposes of computing the percentage
of outstanding shares held by each person or group of persons named above
on a given date, any security which such person or persons has the right
to acquire within 60 days after such date is deemed to be outstanding for
the purpose of computing the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.
(3) In certain cases, includes securities owned by one or more entities
controlled by the named holder.
(4) Consists of 9,066,534 outstanding shares (including 800,000 shares of
restricted stock that are subject to vesting), 6,150,001 shares issuable
upon the exercise of currently exercisable warrants and 2,950,000 shares
issuable upon the exercise of currently exercisable options.

Mr. Jacobs has certain rights relating to the disposition of the shares
and warrants owned by certain of the other officers and employees of
United Rentals as described under "--Certain Agreements Relating to
Securities Held by Officers." By virtue of such rights, Mr. Jacobs is
deemed to share beneficial ownership (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934) of the shares owned by such
other officers and employees of United Rentals. The shares that the table
indicates are owned by Mr. Jacobs include the shares with respect to which
Mr. Jacobs is deemed to share beneficial ownership as aforesaid. Excluding
such shares, Mr. Jacobs is deemed the beneficial owner of an aggregate of
15,143,043 shares of common stock (composed of 7,193,043 outstanding
shares (including 800,000 shares of restricted stock that are subject to
vesting), 5,000,000 shares issuable upon the exercise of currently
exercisable warrants and 2,950,000 shares issuable upon the exercise of
currently exercisable options).
(5) Consists of 576,944 outstanding shares (including 500,000 shares of
restricted stock that are subject to vesting) and 1,225,000 shares
issuable upon the exercise of currently exercisable options.
(6) Consists of 1,598,251 outstanding shares (including 470,000 shares of
restricted stock that are subject to vesting), 714,286 shares issuable
upon the exercise of currently exercisable warrants and 750,000 shares
issuable upon the exercise of currently exercisable options.
(7) Consists of 597,482 outstanding shares (including 235,000 shares of
restricted stock that are subject to vesting), 285,715 shares issuable
upon the exercise of currently exercisable warrants and 515,000 shares
issuable upon the exercise of currently exercisable options.
(8) Consists of 30,000 shares issuable upon exercise of currently exercisable
options. Mr. Black disclaims beneficial ownership of certain shares as
described in footnote 18.
(9) Consists of (i) 1,421,000 outstanding shares owned by a corporation wholly
owned by Mr. Colburn, (ii) 30,000 shares issuable upon exercise of
currently exercisable options held by Mr. Colburn and (iii) 12,000,000
outstanding shares held by the Music Fund, of which Mr. Colburn is a
director. As a director of the Music Fund, Mr. Colburn may share the power
to direct the voting and disposition of the shares held by the Music Fund.
However, Mr. Colburn disclaims beneficial ownership of such shares.
(10) Consists of 3,000 outstanding shares and 90,000 shares issuable upon the
exercise of currently exercisable options.
(11) Consists of 30,000 shares issuable upon exercise of currently exercisable
options. Mr. Gross disclaims beneficial ownership of certain shares as
described in footnote 18.
(12) Consists of 92,800 outstanding shares and 90,000 shares issuable upon
exercise of currently exercisable options.
(13) Consists of 962 outstanding shares and 954,157 shares issuable upon the
exercise of currently exercisable options.
(14) Consists of 270,001 outstanding shares and 440,000 shares issuable upon
exercise of currently exercisable options.
(15) Consists of 105,120 outstanding shares held by a limited liability company
of which Mr. Tully serves as managing member. Mr. Tully disclaims
beneficial ownership of 76,590 of these shares.
(16) Consists of 72,000 outstanding shares and 30,000 shares issuable upon
exercise of currently exercisable options.
(17) Consists of 24,388,461 outstanding shares, 6,150,001 shares issuable upon
the exercise of currently exercisable warrants and 7,134,157 shares
issuable upon the exercise of currently exercisable options.
(18) Consists of 12,000,000 shares issuable upon conversion of outstanding
shares of our Series A Preferred Stock and 3,333,333 shares issuable upon
conversion of outstanding shares of our Series B-1 Preferred Stock. Of the
shares indicated, (i) 13,055,707 shares are owned by Apollo Investment
Fund IV, L.P. ("AIFIV") and (ii) 2,277,626 shares are owned by Apollo
Overseas Partners IV, L.P. ("Overseas IV"). Apollo Advisors IV, L.P.
("Advisors IV") is the general partner of AIFIV and the managing general
partner of Overseas IV. Apollo Capital Management IV, L.P. ("Capital
Management IV") is the general partner of Advisors IV. The directors and
principal executive officers of Capital Management IV are Leon D. Black
and John J. Hannan.

Messrs. Black and Hannan are also limited partners of Advisors IV. Messrs.
Black, Gross and Hannan disclaim beneficial ownership of the shares owned
by AIFIV and Overseas IV. The address of both AIFIV and Overseas IV is c/o
Apollo Advisors IV, L.P., Two Manhattanville Road, Purchase, New York
10577.
(19) The share ownership information for Wellington Management Company, LLP
("Wellington") is as of December 31, 2000, and is based on information in
a Schedule 13G/A filed by Wellington. Wellington has shared voting power
with respect to 3,969,501 of the indicated shares and has shared
dispositive power with respect to all of the indicated shares. Such shares
are owned by various clients of Wellington for whom Wellington serves as
investment advisor.

Certain Agreements Relating to Securities Held By Officers

Prior to our initial public offering, certain executive officers and other
employees of our company purchased our common stock (and in certain cases
warrants) from us in private placements. All shares of our common stock and
warrants purchased by the executive officers and other employees of our company
prior to our initial public offering (and any shares of our common stock
acquired upon exercise of such warrants) are referred to as the "Private
Placement Securities."

Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has entered into an agreement with our company and Mr. Jacobs that
provides that (1) if Mr. Jacobs sells any Private Placement Securities that he
beneficially owns in a commercial, non-charitable transaction, then Mr. Jacobs
is required to use his best efforts to sell (and has the right to sell subject
to certain exceptions) on behalf of such holder a pro rata portion of such
holder's Private Placement Securities at the then prevailing prices, and (2)
except for sales that may be required to be made as aforesaid, the holder shall
not (without our prior written consent) sell or otherwise dispose of the
Private Placement Securities owned by such holder (subject to certain
exceptions for charitable gifts). The foregoing provisions of the agreements
terminate, depending on the individual, in either September or October 2002.

Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has also agreed pursuant to this prospectus,such agreements that we, in our sole
discretion, may, prior to September 1, 2005, repurchase the Private Placement
Securities owned by such holder in the event that such holder breaches any
agreement with us or acts adversely to the interest of our company. The amount
to be paid by us in the event of a repurchase will be equal to (1) in the case
of Messrs. Milne and Nolan, $9.125 per share of common stock and $0.625 per
warrant plus an amount representing a 4% annual return on such amounts from the
date on which such securities were purchased and (2) in the case of any other
holder of Private Placement Securities, the amount originally paid by such
holder for such securities plus an amount representing a 10% annual return on
such amount.

There are currently approximately 3,023,492 Private Placement Securities
that are subject to the lockup
agreement described below. These shares are comprisedaforementioned agreements (comprised of (1) 788,5591,873,491
outstanding shares and (2) 200,0001,150,001 shares that may be acquired throughpursuant to
currently exercisable warrants). These securities include the exercisefollowing
securities held by the current executive officers and directors of our company:
John N. Milne (1,068,251 outstanding warrants. Theseshares and warrants provideto purchase 714,286
shares); and Michael J. Nolan (347,382 outstanding shares and warrants to
purchase 285,715 shares).

DESCRIPTION OF CAPITAL STOCK

General

Our authorized capital stock consists of 500,000,000 shares of common
stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par
value $0.01 per share.

The following description of our capital stock is a summary of the material
terms of such stock. This summary may not contain all the information that is
important to you. The summary is subject in all respects to applicable Delaware
law and to the provisions of our Certificate of Incorporation and By-laws.

Common Stock

As of June 8, 2001, there were 72,672,722 shares of common stock
outstanding. The holders of shares of common stock are entitled to:

. one vote per share held on all matters submitted to a vote at a meeting
of stockholders;

. do not have cumulative voting rights;

. do not have preemptive rights;

. are entitled to receive dividends, if any, that may be declared by the
board of directors (subject to the rights of preferred stockholders); and

. upon liquidation, dissolution or winding-up of our business are entitled
to any assets remaining after we pay our creditors (subject to the rights
of preferred stockholders).

Preferred Stock

General

We are authorized by our certificate of incorporation to issue up to
5,000,000 shares of preferred stock in one or more series. The board of
directors has the authority, without any vote or action by our stockholders, to
(1) authorize the issuance of preferred stock up to the limit set by our
certificate of incorporation, (2) create new series of preferred stock and (3)
fix the terms of each series, including any rights relating to dividends,
voting, conversion, redemption, and liquidation preference. The issuance of
preferred stock could adversely affect the voting and other rights of holders
of the common stock and may have the effect of delaying or preventing a change
in control of our company.

As of the date of this prospectus, we have designated two series of
preferred stock as described below.

Series A Perpetual Convertible Preferred Stock

We have designated 300,000 shares of preferred stock as Series A Perpetual
Convertible Preferred Stock ("Series A Preferred"). Set forth below is a
summary of certain terms of the Series A Preferred. A complete description of
the terms of the Series A Preferred is set forth in the Certificate of
Designation therefor as amended (the "Series A Designation"), which is an
exhibit to the Registration Statement of which this prospectus forms a part.
Set forth below is a summary of certain terms of the Series A Preferred, which
summary is qualified in its entirety by reference to the Series A Designation.

Ranking. The Series A Preferred ranks (1) senior to the common stock with
respect to distributions upon the liquidation, winding-up or dissolution of
Holdings and (2) the same as the Series B Preferred with respect to such
distributions.

share of Series A Preferred (the "Series A Liquidation Preference"), plus
accrued and unpaid dividends, if any, to the date fixed for liquidation,
dissolution, winding-up or reduction or decrease in capital stock, before any
distribution is made on the common stock. After payment in full of the Series A
Liquidation Preference and such dividends, if any, to which holders of Series A
Preferred are entitled, such holders will not be entitled to any further
participation in any distribution of assets of Holdings.

Dividends. The Series A Preferred bears no stated dividend. However, in the
event that Holdings declares or pays any dividends or other distributions upon
the common stock, Holdings must (subject to certain exceptions) also declare
and pay to the holders of the Series A Preferred, at the same time that it
declares and pays such dividends or other distributions to the holders of the
common stock, the dividends or distributions which would have been declared and
paid with respect to the common stock issuable upon conversion of the Series A
Preferred had all of the outstanding shares of Series A Preferred been
converted immediately prior to the record date for such dividend or
distribution, or if no record date is fixed, the date as of which the record
holders of common stock entitled to such dividends or distributions are
determined.

Conversion Rights. Each share of Series A Preferred is convertible at any
time, at the option of the holder, into 40 shares of common stock (representing
a conversion price of $25 per share of common stock based on the liquidation
preference of $1,000 per share of Series A Preferred). The conversion price is
subject to adjustment in certain events as set forth in the Series A
Designation.

Voting. Under certain circumstances the holders of the Series A Preferred,
voting separately as a single class, have the right to elect one or two
directors as described under "Management--Right of Holders of Series A
Preferred to Elect Directors."

Except as described above with respect to the election of directors and
except as otherwise required by applicable law, the holders of Series A
Preferred are entitled to vote together with the holders of the common stock as
a single class on all matters submitted to stockholders of Holdings for a vote.
Each share of Series A Preferred is entitled to one vote for each share of
common stock issuable upon conversion of such share of Series A Preferred.

In addition, Holdings may not, without the affirmative vote or consent of
the holders of at least a majority of the shares of Series A Preferred then
outstanding voting or consenting as the case may be, as a separate class, take
certain actions specified in the Series A Designation.
Redemption; Automatic Conversion. If a Change in Control (as defined in the
Series A Designation) with respect to Holdings occurs (or Holdings enters into
a binding agreement relating thereto), the following provisions will apply:

. If the Change in Control is in connection with an acquisition which is
not accounted for under the "pooling-of-interests" method of generally
accepted accounting principles, Holdings must offer to purchase within 10
business days after the Change in Control all of the then outstanding
shares of Series A Preferred at a purchase price per share, in cash,
equal to the Series A Liquidation Preference thereof plus an amount equal
to 6.25% of $29.7366the Series A Liquidation Preference, compounded annually from
January 7, 1999 to the purchase date (the "Series A Call Price").

. If the Change in Control is an acquisition which is accounted for under
the "pooling-of-interests" method of accounting, all of the then
outstanding Series A Preferred will be automatically converted into
common stock having a market value equal to 109.5% of the Series A Call
Price, valued at the closing price of the common stock at the close of
business on the business day prior to the date of the Change in Control.

Redemption Relating to Certain Issuances of Securities. If, after 2 1/2
years following the date of issuance of the Series A Preferred, Holdings issues
for cash common stock or a series of preferred stock convertible into common
stock, in either a public offering or a bona fide private financing, for a
price for the common stock (including any amount payable upon conversion of
such preferred stock) below the then current conversion price of Series A
Preferred into common stock (currently $25 per share.

Wiese Planningshare) (a "Series A Reduced
Price Offering"), then Holdings must make an offer to purchase the outstanding
shares of Series A Preferred as follows:

. If the Series A Reduced Price Offering does not trigger an obligation to
offer to purchase Series B Preferred Stock, Holdings must make an offer
to apply towards the purchase of outstanding shares of Series A
Preferred, at the Series A Call Price, 40% of the Specified Amount (as
hereinafter defined) with respect to such offering. The "Specified
Amount" with respect to any Series A Reduced Price Offering shall equal
the amount by which the net cash proceeds from any such Series A Reduced
Price Offering and Engineering, Inc. holds 761,905for all other Series A Reduced Price Offerings
consummated during the preceding 12 months (but excluding any Series A
Reduced Price Offerings prior to June 30, 2001) exceeds an aggregate of
$50 million, less a credit for all amounts theretofore paid for such
purchases during such 12-month period.

. If the Series A Reduced Price Offering does trigger an obligation to
offer to purchase Series B Preferred Stock, then Holdings will be
required to offer to apply the Call Percentage (as defined below) of the
Specified Amount towards the purchase of both Series B Preferred and
Series A Preferred. In such event, the Specified Amount shall be
allocated to the purchase of Series B Preferred and Series A Preferred in
proportion to the aggregate liquidation amount of each such series of
preferred stock (provided that, if the aggregate liquidation amount of
the Series B Preferred is in excess of $500 million, such excess shall be
ignored in calculating such proportion).

For purposes of the preceding paragraph, the "Call Percentage" will be a
function of the aggregate liquidation amount of the Series A Preferred and
Series B Preferred as set forth in the following table:

Call
Aggregate Liquidation Amount Percentage
---------------------------- ----------

up to and including $500 million.................... 40%
more than $500 million to and including $550 million 43%
more than $550 million to and including $600 million 46%
more than $600 million to and including $650 million 50%
more than $650 million to and including $700 million 53%
more than $700 million to and including $750 million 56%
more than $750 million.............................. 60%

Series B Perpetual Convertible Preferred Stock

We have designated 500,000 shares of preferred stock as Series B Perpetual
Convertible Preferred Stock consisting of 450,000 shares designated as Class
B-1 Perpetual Convertible Preferred Stock (the "B-1 Preferred Stock") and
50,000 shares designated as Class B-2 Perpetual Convertible Preferred Stock
(the "B-2 Preferred Stock"). A complete description of the terms of the Series
B Preferred is set forth in the Certificate of Designation therefor (the
"Series B Designation"), which is an exhibit to the Registration Statement of
which this prospectus forms a part. Set forth below is a summary of certain
terms of the Series B Preferred, which summary is qualified in its entirety by
reference to the Series B Designation.

Except where otherwise indicated, (1) the terms set forth below apply to
both the B-1 Preferred and B-2 Preferred and (2) each reference to the Series B
Preferred includes both the B-1 Preferred and B-2 Preferred.

Ranking. The Series B Preferred ranks (1) senior to the common stock with
respect to distributions upon the liquidation, winding-up or dissolution of
Holdings and (2) the same as the Series A Preferred with respect to such
distributions.

Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of Holdings or reduction or decrease in its capital
stock resulting in a distribution of assets to the holders of any class or
series of Holding's capital stock, the holders of Series B Preferred will be
entitled to payment out of the assets of Holdings available for distribution of
an amount equal to $1,000 per share of Series B Preferred (the "Series B
Liquidation Preference"), plus accrued and unpaid dividends, if any, to the
date fixed for liquidation, dissolution, winding-up or reduction or decrease in
capital stock, before any distribution is made on the common stock. After
payment in full of the Series B Liquidation Preference and such dividends, if
any, to which holders of Series B Preferred are entitled, such holders will not
be entitled to any further participation in any distribution of assets of
Holdings.

Dividends. The Series B Preferred bears no stated dividend. However, in the
event that Holdings declares or pays any dividends or other distributions upon
the common stock, Holdings must (subject to certain exceptions) also declare
and pay to the holders of the Series B Preferred, at the same time that it
declares and pays such dividends or other distributions to the holders of the
common stock, the dividends or distributions which would have been declared and
paid with respect to the common Stock issuable upon conversion of the Series B
Preferred had all of the outstanding shares of Series B Preferred been
converted immediately prior to the record date for such dividend or
distribution, or if no record date is fixed, the date as of which the record
holders of common stock entitled to such dividends or distributions are
determined.

Conversion Rights. Each share of Series B Preferred is convertible at any
time, at the option of the holder, into 33 1/3 shares of common stock
(representing a conversion price of $30 per share of common stock based on the
liquidation preference of $1,000 per share of Series B Preferred). The
conversion price is subject to adjustment in certain events as set forth in the
Series B Designation.

Voting. Except as otherwise required by applicable law, the holders of B-1
Preferred are entitled to vote together with the holders of the common stock as
a single class on all matters submitted to stockholders of Holdings for a vote.
Each share of B-1 Preferred is entitled to one vote for each share of common
stock issuable upon conversion of such share of B-1 Preferred.

Except as provided in the following paragraph, the holders of the B-2
Preferred are not entitled to vote on any matter to be voted on by stockholders
of Holdings.

Holdings may not, without the affirmative vote or consent of the holders of
at least a majority of the shares of Series B Preferred then outstanding voting
or consenting as the case may be, as a separate class, take certain actions
specified in the Series B Designation.

Redemption; Automatic Conversion. If a Change in Control (as defined in the
Series B Designation) with respect to Holdings occurs (or Holdings enters into
a binding agreement relating thereto), the following provisions will apply:

. If the Change of Control is not in connection with an acquisition that is
accounted for under the "pooling-of-interests" method of generally
accepted accounting principles, Holdings must offer to purchase, within
10 business days after the Change of Control, all of the then outstanding
shares of Series B Preferred at a purchase price per share, in cash,
equal to the Series B Liquidation Preference thereof plus an amount equal
to 6.25% of the Series B Liquidation Preference, compounded annually from
the date of issuance of such share to the purchase date (the ''Series B
Call Price").

. If the Change of Control is an acquisition that is accounted for under
the "pooling-of-interests" method of generally accepted accounting
principles, then, upon the occurrence of the Change in Control, all of
the then outstanding Series B Preferred Stock will be automatically
converted into common stock having a market value equal to 109.5% of the
Series B Call Price, valued at the closing price of the common stock at
the close of business on the business day prior to the date of the Change
in Control.

Redemption Relating to Certain Issuances of Securities. If, after 2 1/2
years following the date of the issuance of the Series B Preferred, Holdings
issues for cash, common stock or a series of preferred stock convertible into
common stock, in either a public offering or a bona fide private financing, for
a price for the common stock (including any amount payable upon conversion of
preferred stock) below the conversion price then in effect for the Series B
Preferred (each such offering being referred to as a "Series B Reduced Price
Offering"), then Holdings will be required to make an offer to purchase the
outstanding shares of Series B Preferred as follows:

. If the Series B Reduced Price Offering does not also trigger an
obligation to offer to repurchase Series A Preferred, then Holdings will
be required to offer to apply towards the purchase of Series B Preferred
at the Series B Call Price an amount equal to 40% of the Specified Amount
(as hereinafter defined) with respect to such offering. The "Specified
Amount" with respect to any Series B Reduced Price Offering shall equal
the amount by which the net cash proceeds from such Series B Reduced
Price Offering and for all other Series B Reduced Price Offerings
consummated during the preceding 12 months (but excluding any Reduced
Price Offering prior to December 31, 2001) exceeds an aggregate of $50
million, less a credit for all amounts theretofore paid to the holders of
the Series A Preferred and the Series B Preferred for such purchases
during such 12-month period.

. If the Series B Reduced Price Offering also triggers an obligation to
offer to purchase Series A Preferred, then Holdings will be required to
offer to apply the Call Percentage (as defined above with respect to the
Series A Preferred) of the Specified Amount towards the purchase of both
Series B Preferred and Series A Preferred. In such event, the Specified
Amount shall be allocated to the purchase of Series B Preferred and
Series A Preferred in proportion to the aggregate liquidation amount of
each such series of preferred stock (provided that, if the aggregate
liquidation amount of the Series B Preferred is in excess of $500
million, such excess shall be ignored in calculating such proportion).

Right to Exchange Between Classes of Series B Preferred. Subject to certain
limitations set forth in the Series B Designation, certain holders of shares of
B-2 Preferred shall be entitled, without the payment of any additional
consideration, to convert at any time and from time to time any or all shares
of B-2 Preferred held by such holder into the same number of shares of B-1
Preferred and vice versa.

Warrants, Options and Convertible Securities

There are currently outstanding warrants to purchase an aggregate of
7,094,296 shares of common stock. Such warrants provides for a weighted average
exercise price of $11.76 per share.

There are currently outstanding options to purchase an aggregate of
16,566,328 shares of common stock. These options provide for a weighted average
exercise price of $20.44 per share. Of these options, options to purchase an
aggregate of 13,243,826 shares of common stock are currently exercisable and
options to purchase 3,322,502 shares of common stock will become exercisable in
installments over specified periods.

There are currently outstanding convertible notes that, at the option of
the holders thereof, may be converted into an aggregate of 232,586 shares of
common stock. Such notes provides for a weighted average conversion price of
$33.25 per share.

A subsidiary trust of Holdings has issued $300 million of Trust Preferred
Securities. These securities are convertible at the option of the holders
thereof into common stock at a conversion price equivalent to $43.63 per share
(subject to adjustment).

Transfer Agent and Registrar

American Stock Transfer & Trust Company serves as transfer agent and
registrar for the common stock.

CERTAIN CHARTER AND BY-LAW PROVISIONS

The following brief description of certain provisions our Certificate of
Incorporation (the "Certificate") and By-laws does not purport to be complete
and is subject in all respects to the provisions of the Certificate and
By-laws, copies of which have been filed as exhibits to the Registration
Statement of which this prospectus forms a part.

Classified Board of Directors

The Certificate provides that the directors (other than directors elected
by holders of preferred stock) shall be divided into three classes and that the
number of directors in each class shall be as nearly equal as is possible based
upon the number of directors constituting the entire board of directors. Each
class is elected to serve a three-year term. The terms of the classes are
staggered so that the term of only one class expires each year.

The classification of directors has the effect of making it more difficult
for stockholders to change the composition of the board. At least two annual
meetings of stockholders, instead of one, will generally be required to effect
a change in a majority of the board. Such a delay may help ensure that our
directors, if confronted by a third party attempting to force a proxy contest,
a tender or exchange offer or other extraordinary corporate transaction, would
have sufficient time to review the proposal as well as any available
alternatives to the proposal and to act in what they believe to be the best
interests of the stockholders. However, the classification of directors could
also have the effect of discouraging a third party from initiating a proxy
contest, making a tender offer or otherwise attempting to obtain control of the
company, even though such an attempt might be beneficial to the company and its
stockholders. The classification of directors could thus increase the
likelihood that incumbent directors will retain their positions.

Number of Directors; Removal; Filling Vacancies

The Certificate provides that (subject to any rights of holders of
preferred stock to elect directors) the number of directors comprising the
entire board of directors may not be less than three or more than nine, unless
approved by action of not less than two-thirds of the directors then in office.

The Certificate also provides that (subject to any rights of holders of
preferred stock) newly created directorships resulting from an increase in the
authorized number of directors or vacancies on the board resulting from death,
resignation, retirement, disqualification or removal of directors or any other
cause may be filled only by the board (and not by the stockholders unless there
are no directors in office), provided that a quorum is then in office and
present, or by a majority of the directors then in

office, if less than a quorum is then in office, or by the sole remaining
director. Accordingly, the board could prevent any stockholder from enlarging
the board and filling the new directorships with such stockholder's own
nominees.

Under the Delaware law, unless otherwise provided in the certificate of
incorporation, directors serving on a classified board may only be removed by
the stockholders for cause. The Certificate provides that directors may be
removed only for cause and only upon the affirmative vote of holders of at
least 66 2/3% of the voting power of all the then outstanding shares of stock
entitled to vote generally in the election of directors, voting together as a
single class.

The provisions of the Certificate governing the number of directors, their
removal and the filling of vacancies may have the effect of discouraging a
third party from initiating a proxy contest, making a tender offer or otherwise
attempting to gain control of our company, or of attempting to change the
composition or policies of our board, even though such attempts might be
beneficial to our company or our stockholders. These provisions of the
Certificate could thus increase the likelihood that incumbent directors retain
their positions.

Limitation on Special Meetings; No Stockholder Action by Written Consent

The Certificate and the By-laws provide that (subject to the rights, if
any, of holders of any class or series of Preferred Stock then outstanding) (1)
only a majority of our board of directors or the chief executive officer will
be able to call a special meeting of stockholders; (2) the business permitted
to be conducted at a special meeting of stockholders shall be limited to
matters properly brought before the meeting by or at the direction of our board
of directors; and (3) stockholder action may be taken only at a duly called and
convened annual or special meeting of stockholders and may not be taken by
written consent. These provisions, taken together, prevent stockholders from
forcing consideration by the stockholders of stockholder proposals over the
opposition of our board of directors, except at an annual meeting.

Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals

The By-laws establish an advance notice procedure for stockholders to make
nominations of candidates for election as director, or to bring other business
before an annual meeting of stockholders of Holdings (the "Stockholder Notice
Procedure").

The Stockholder Notice Procedure provides that, subject to the rights of
any holders of preferred stock, only persons who are nominated by or at the
direction of our board of directors, any committee appointed by our board, or
by a stockholder who has given timely written notice to the Secretary of our
company prior to the meeting at which directors are to be elected, will be
eligible for election as directors. The Stockholder Notice Procedure provides
that at an annual meeting only such business may be conducted as has been
brought before the meeting by, or at the direction of, our board of directors,
any committee appointed by our board, or by a stockholder who has given timely
written notice to the Secretary of our company of such stockholder's intention
to bring such business before such meeting. Under the Stockholder Notice
Procedure, to be timely, notice of stockholder nominations or proposals to be
made at an annual or special meeting must be received by us not less than 60
days nor more than 90 days prior to the scheduled date of the meeting (or, if
less than 70 days' notice or prior public disclosure of the date of the meeting
is given, then the 15th day following the earlier of (i) the day such notice
was mailed or (ii) the day such public disclosure was made).

Under the Stockholder Notice Procedure, a stockholder's notice to us
proposing to nominate a person for election as director must contain certain
information about the nominating stockholder and the proposed nominee. Under
the Stockholder Notice Procedure, a stockholder's notice relating to the

conduct of business other than the nomination of directors must contain certain
information about such business and about the proposing stockholder. If the
Chairman or other officer presiding at a meeting determines that a person was
not nominated, or other business was not brought before the meeting, in
accordance with the Stockholder Notice Procedure, such person will not be
eligible for election as a director, or such business will not be conducted at
such meeting, as the case may be.

By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure affords our board of directors an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the board, to inform stockholders about such qualifications. By
requiring advance notice of other proposed business, the Stockholder Notice
Procedure also provides a more orderly procedure for conducting annual meetings
of stockholders and, to the extent deemed necessary or desirable by our board
of directors, provides the board with an opportunity to inform stockholders,
prior to such meetings, of any business proposed to be conducted at such
meetings, together with any recommendations as to the board's position
regarding action to be taken with respect to such business, so that
stockholders can better decide whether to attend such a meeting or to grant a
proxy regarding the disposition of any such business.

CERTAIN U.S. TAX CONSIDERATIONS APPLICABLE TO NON-U.S. HOLDERS OF THE COMMON
STOCK

The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of common stock
applicable to Non-U.S. Holders of such common stock who are beneficial owners
of the common stock and who acquire and own such common stock as a capital
asset within the meaning of section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code"). A "Non-U.S. Holder" is any person other than (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in the United States under the laws of the United States
or of any state, (iii) an estate whose income is includable in gross income for
United States federal income tax purposes regardless of its source, or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons
have the authority to control all substantial decisions of the trust.

The discussion does not consider specific facts and circumstances that may
be soldrelevant to a particular Non-U.S. Holder's tax position (including the fact
that in the case of a Non-U.S. Holder that is a partnership, the U.S. tax
consequences of holding and disposing of shares of common stock may be affected
by certain determinations made at the partner level) and does not consider U.S.
state and local or non-U.S. tax consequences. Further, it does not consider
Non-U.S. Holders subject to special tax treatment under the federal income tax
laws (including banks and insurance companies, dealers in securities, and
holders of securities held as part of a "straddle," "hedge," or conversion
transaction). The following discussion is based on provisions of the Code and
administrative and judicial interpretations as of the date hereof, all of which
are subject to change, possibly on a retroactive basis, and any change could
affect the continuing validity of this discussion.

The following summary is included herein for general information.
Accordingly, each prospective Non-U.S. Holder is urged to consult a tax advisor
with respect to the United States federal tax consequences of holding and
disposing of common stock, as well as any tax consequences that may arise under
the laws of any U.S. state, local or other non-U.S. taxing jurisdiction.

Non-U.S. Holders

For purposes of the following discussion, dividends and gain on the sale,
exchange or other disposition of common stock will be considered to be "U.S.
trade or business income" if such income or gain is (i) effectively connected
with the conduct of a U.S. trade or business and (ii) in the case of a treaty
resident, attributable to a permanent establishment (or, in the case of an
individual, a fixed base) in the United States.

Dividends

In general, dividends paid to a Non-U.S. Holder of common stock will be
subject to withholding of U.S. federal income tax at a 30% rate unless such
rate is reduced by an applicable tax treaty. Dividends that are U.S. trade or
business income, are generally subject to U.S. federal income tax on a net
basis at regular income tax rates, and are not generally subject to the 30%
withholding tax if the Non-U.S. Holder provides a properly executed form W-8ECI
(or successor form) to the payor. Any U.S. trade or business income received by
a Non-U.S. Holder that is a corporation may also, under certain circumstances,
be subject to an additional "branch profits tax" at a 30% rate or such lower
rate as may be applicable under a tax treaty. Under U.S. Treasury Regulations,
a Non-U.S. Holder of common stock who wishes to claim the benefit of an
applicable treaty rate would be required to provide a properly executed Form
W-8 BEN (or successor form) and may be required in certain instances to

obtain a U.S. taxpayer identification number which may require the Non-U.S.
Holder to provide certain documentary evidence issued by foreign governmental
authorities as proof of residence in the foreign country.

A Non-U.S. Holder of common stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to this prospectus. Wiese Planninga tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for a refund with the
Internal Revenue Service (the "Service").

Sale, Exchange, Redemption or Other Disposition

Except as described below and Engineering, Inc.subject to the discussion concerning backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange,
redemption or other disposition of common stock generally will not be subject
to U.S. federal income tax, unless (i) such gain is U.S. trade or business
income, (ii) subject to certain exceptions, the Non-U.S. Holder is an
individual who holds the common stock as a capital asset, is present in the
United States for 183 days or more during the taxable year of the disposition,
and certain other conditions are present, (iii) the Non-U.S. Holder is subject
to tax under U.S. tax law provisions applicable to certain U.S. expatriates
(including certain former citizens or residents of the United States) or (iv)
United Rentals is or has agreedbeen a "United States real property holding
corporation" (a "USRPHC") for federal income tax purposes and such Non-U.S.
Holder has held, directly or constructively, more than 5% of the outstanding
common stock within the five-year period ending on the date of the sale or
exchange. United Rentals believes that it has not been, is not currently, and
is not likely to become, a United States real property holding corporation.
However, no assurance can be given that United Rentals will not sell 50%be a United
States real property holding corporation when a Non-U.S. Holder sells its
shares of theses shares priorcommon stock.

Federal Estate Tax

Common stock owned or treated as owned by an individual who is not a
citizen or resident of the United States for U.S. federal estate tax purposes
will be included in such individual's gross estate for U.S. federal estate tax
purposes unless an applicable estate tax treaty otherwise provides.

Information Reporting and Backup Withholding

United Rentals must report annually to March 30, 2001,the Service and to each Non-U.S.
Holder any dividend income that itis subject to withholding, or that is exempt
from U.S. withholding tax pursuant to a tax treaty. Copies of these information
returns may also be made available, under the provisions of a specific treaty
or agreement, to the tax authorities of the country in which the Non-U.S.
Holder resides.

The payment of proceeds from the disposition of common stock to or through
the United States office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner
certifies as to its non-U.S. status under penalty of perjury or otherwise
establishes its entitlement to an exemption from information reporting and
backup withholding, provided that the broker does not have actual knowledge
that the holder is a U.S. person or that the conditions of an exemption are
not, in fact, satisfied. The payment of proceeds from the disposition of common
stock to or through a non-U.S. office of a non-U.S. broker that is not a "U.S.
related person" will not sellbe subject to information reporting or backup
withholding. For this purpose, a "U.S. related person" is a foreign person with
one or more of certain enumerated relationships with the balanceUnited States.

In the case of thesethe payment of proceeds from the disposition of common stock
to or through a non-U.S. office of a broker that is either a U.S. person or a
U.S. related person, the regulations
require information reporting on the payment unless the broker has documentary
evidence in its files that the owner is a Non-U.S. Holder and the broker has no
knowledge to the contrary. Backup

withholding will not apply to payments made through the foreign office of a
broker that is not a U.S. person or a U.S. related person (absent actual
knowledge that the payee is a U.S. person).

Any amounts withheld under the backup withholding rules from a payment of a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability provided the requisite procedures
are followed.

UNDERWRITING

The selling stockholder and the underwriters for the offering (the
"Underwriters") named below have entered into an underwriting agreement with
respect to the shares priorbeing offered. Subject to September 26, 2001.

The table below identifies the selling security holders and indicatescertain conditions, each
Underwriter has severally agreed to purchase the number of shares indicated in
the following table. Goldman, Sachs & Co. and Credit Suisse First Boston
Corporation are the representatives of the Underwriters.

Underwriters Number of Shares
------------ ----------------

Goldman, Sachs & Co...................
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc............
Deutsche Banc Alex. Brown Inc. ......
Legg Mason Wood Walker, Incorporated..
---------
Total.............................. 9,000,000
=========

If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional
1,350,000 shares from the selling stockholder to cover such sales. They may
exercise that each selling security holder may selloption for 30 days. If any shares are purchased pursuant to this
prospectus. If a selling security holder transfers any ofoption, the Underwriters will severally purchase shares shownin approximately the
same proportion as set forth in the table above.

The following table shows the transfereeper share and total underwriting discounts
and commissions to be paid to the Underwriters by the selling stockholder. Such
amounts are shown assuming both no exercise and full exercise of the
Underwriters' option to purchase 1,350,000 additional shares.

Paid by the Selling Stockholder No Exercise Full Exercise
------------------------------- ----------- -------------

Per Share........... $ $
Total............... $ $

Shares sold by the Underwriters to the public will initially be consideredoffered at
the initial price to public set forth on the cover of this prospectus. Any
shares sold by the Underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial price to public. Any such securities
dealers may resell any shares purchased from the Underwriters to certain other
brokers or dealers at a discount of up to $ per share from the initial price
to public. If all the shares are not sold at the initial price to public, the
representatives may change the offering price and the other selling security holder for
purposesterms.

The selling stockholder, Richard D. Colburn and Ayr, Inc. (an affiliate of
Mr. Colburn) have agreed that until 270 days after the date of this prospectus
provided that (1)neither they nor any of their affiliates will, without the prior written
consent of Goldman, Sachs & Co., dispose of or hedge any of their shares of
common stock or securities convertible into or exchangeable for shares of
common stock. Subject to certain conditions, the foregoing agreement does not
limit transfers (a) upon the consummation of any merger or reorganization of
United Rentals in which the surviving entity is not controlled by the persons
who controlled United Rentals before such consummation, (b) to one or more
affiliates or one or more members of Mr. Colburn's family, or a trust,
corporation, partnership or limited liability company, the sole beneficiaries
of which are members of Mr. Colburn's family, or (c) to one or more charitable
organizations. In the case of any transfer was a privtae
placement and (2)pursuant to clause (b) or (c) of the
preceding sentence, the transferee is identifiedrequired to agree in writing to be bound
by the terms of the foregoing lock-up, except that charitable organizations
which receive shares under clause (c) may after completion of the offering sell

such shares pursuant to Rule 144 so long as no individual charitable
organization sells more than 25,000 of such shares under Rule 144 and so long
as all such charitable organizations together sell no more than 100,000 of such
shares under Rule 144.

United Rentals and all of our executive officers and directors (other than
Mr. Colburn, who entered into the lock-up described in the preceding paragraph)
have agreed that until 90 days after the date of this prospectus they will not
dispose of or hedge any of their shares of our common stock or securities
convertible into or exchangeable for shares of our common stock, without the
prior written consent of Goldman, Sachs & Co. The foregoing agreement will not
limit a stockholder's ability to transfer shares in a supplementprivate placement or to
this
prospectus.

Name of Selling Security Holder Number of Shares
- ------------------------------- ----------------

Wiese Planning and Engineering, Inc. (1) ...... 761,905(2)
John J. Lanigan, Jr. (1) ....................... 46,940(3)
Michael T. Lanigan (1) ........................ 46,940(3)
William P. Lanigan (1) ........................ 46,940(3)
Daniel P. Lanigan (1) ......................... 46,940(3)
Walter J. Payton (1) .......................... 12,240(3)
Wayland R. Hicks (4) .......................... 26,654(2)

(1) Eachpledge shares, provided that the transferee or pledgee agrees to be bound by
such agreement. The foregoing agreement also will not limit our ability to (a)
make equity or equity-based awards pursuant to existing compensation plans, (b)
issue shares upon exercise or conversion of these selling security holders isoutstanding options, warrants and
convertible securities, (c) issue shares, warrants or convertible securities as
consideration for acquisitions, provided that the number of shares, warrants or
convertible securities (calculated on a former ownercommon stock equivalent basis in the
case of a businesswarrants and convertible securities) that we acquired (or an affiliate or relativemay be issued as
consideration for acquisitions may not exceed 5,000,000 unless the recipients
of such a former owner).

(2) Theseexcess shares, are currently outstanding.

(3) Thesewarrants or convertible securities agree with us (which
agreement may not be amended without the prior written consent of Goldman,
Sachs & Co.) to be subject to the foregoing lock-up agreement with respect to
such excess shares, may be acquiredwarrants or convertible securities or (d) issue shares upon
the exercise of outstanding warrants.any warrants or convertible securities issued pursuant to the
preceding clause, provided that such shares will be subject to the foregoing
lock-up to the same extent, if any, as the warrants or convertible securities
pursuant to which such shares were issued.

Our common stock is listed on the NYSE under the symbol "URI."

In connection with the offering, the Underwriters may purchase and sell
shares of common stock in the open market. These warrants provide fortransactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the Underwriters of a greater
number of shares than they are required to purchase in the offering. "Covered"
short sales are sales made in an exerciseamount not greater than the Underwriters'
option to purchase additional shares from the selling stockholder in the
offering. The Underwriters may close out any covered short position by either
exercising their option to purchase additional shares or purchasing shares in
the open market. In determining the source of shares to close out the covered
short position, the Underwriters will consider, among other things, the price
of $29.7366 per share.

(4) Mr. Hicks is Vice Chairman, a director and Chief Operating officer of our
company. In additionshares available for purchase in the open market as compared to the price at
which they may purchase shares coveredthrough the overallotment option. "Naked" short
sales are any sales in excess of such option. The Underwriters must close out
any naked short position by this registration statement,
Mr. Hicks owns 112,600purchasing shares in the open market. A naked short
position is more likely to be created if the Underwriters are concerned that
there may be downward pressure on the price of ourthe common stock in the open
market after pricing that could adversely affect investors who purchase in the
offering. Stabilizing transactions consist of various bids for or purchases of
common stock made by the Underwriters in the open market prior to the
completion of the offering.

The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares
sold by or for the account of such Underwriter in stabilizing or short covering
transactions.

Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of the
common stock, and together with the imposition of the penalty bid, may
stabilize, maintain or otherwise affect the market price of the common stock.
PLAN OF DISTRIBUTION

The selling security holdersAs a result, the price of the common stock may sell shares:

. throughbe higher than the New York Stock Exchange,price that
otherwise might exist in the

open market. If these activities are commenced, they may be discontinued at any
time. These transactions may be effected on the NYSE, in the over-the-counter
market or otherwise.

United Rentals estimates that the total expenses of this offering,
excluding underwriting discounts and commissions, will be approximately
$800,000. United Rentals and the selling stockholder will pay all such
expenses, other than certain travel-related expenses.

Each of the Underwriters has from time to time provided, and may in privately negotiated transactionsthe
future provide, financial advisory, investment banking and general financing
and banking services to United Rentals and its affiliates, for which such
Underwriter has received or otherwise;

. directly to purchasers or through agents, brokers, dealers or
underwriters; and

. at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, or at negotiated prices.

If a selling security holder sells shares through agents, brokers, dealers
or underwriters, such agents, brokers, dealers or underwriters may receive compensation incustomary fees and commissions.
Affiliates of Goldman, Sachs & Co., Credit Suisse First Boston Corporation,
J.P. Morgan Securities Inc. and Deutsche Banc Alex. Brown are lenders under our
credit facility.

United Rentals, the formselling stockholder and Richard D. Colburn have agreed
to indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of discounts, commissions or concessions. Such
compensation may be greater than customary compensation.

To the extent required, we will use our best efforts to file one or more
supplements to this prospectus to describe any material information with respect
to the plan of distribution not previously disclosed in this prospectus or any
material change to such information.1933.

LEGAL MATTERS

Certain legal matters relating toin connection with the shares of common stock that may be
offered pursuant to this prospectusoffering will be passed upon
for us by Weil, Gotshal & Manges LLP New York, New York, and Ehrenreich Eilenberg & Krause LLP, New
York, New York.LLP.
Certain legal matters in connection with the offering will be passed upon for
the Underwriters by Cravath, Swaine & Moore.

EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 2000 and schedules included1999, and for each of the three
years in our Annual Report on Form 10-K
for the yearperiod ended December 31, 2000, as set forth in their report, which is
incorporated by referencereport. We
have included our financial statements in thisthe prospectus and elsewhere in the
registration statement. Our financial statements and schedules are incorporated by referencestatement in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.

1161

INDEX TO FINANCIAL STATEMENTS

Page
-----

I: Unaudited Consolidated Financial Statements of United Rentals, Inc.
Consolidated Balance Sheets--March 31, 2001 (unaudited) and December 31, 2000........ F-2
Consolidated Statements of Operations for the three months ended March 31, 2001
and 2000 (unaudited)............................................................... F-3
Consolidated Statements of Stockholders' Equity for the three months ended
March 31, 2001 (unaudited)......................................................... F-4
Consolidated Statements of Cash Flows for the three months ended March 31, 2001
and 2000 (unaudited)............................................................... F-5
Notes to Unaudited Consolidated Financial Statements................................. F-6

II: Consolidated Financial Statements of United Rentals, Inc.
Report of Independent Auditors....................................................... F-9
Consolidated Balance Sheets--December 31, 2000 and 1999.............................. F-10
Consolidated Statements of Operations for the years ended December 31, 2000,
1999 and 1998...................................................................... F-11
Consolidated Statements of Stockholders' Equity for the years ended December 31,
2000, 1999 and 1998................................................................ F-12
Consolidated Statements of Cash Flows for the years ended to December 31, 2000,
1999 and 1998...................................................................... F-13
Notes to Consolidated Financial Statements........................................... F-15

F-1

UNITED RENTALS, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

March 31, December 31,
2001 2000
- - ---------- ----------
(In thousands,
except share data)

ASSETS
Cash and cash equivalents................................................... $ 26,202 $ 34,384
Accounts receivable, net of allowance for doubtful accounts of $53,444 in
2001 and $55,624 in 2000.................................................. 420,579 469,594
Inventory................................................................... 127,829 133,380
Prepaid expenses and other assets........................................... 167,807 104,493
Rental equipment, net....................................................... 1,719,676 1,732,835
Property and equipment, net................................................. 428,125 422,239
Intangible assets, net of accumulated amortization of $123,385 in 2001 and
$108,066 in 2000.......................................................... 2,221,894 2,227,008

---------- ----------
$5,112,112 $5,123,933

========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable......................................................... $ 205,864 $ 260,155
Debt..................................................................... 2,751,190 2,675,367
Deferred taxes........................................................... 214,784 206,243
Accrued expenses and other liabilities................................... 125,850 136,225

---------- ----------
Total liabilities.................................................... 3,297,688 3,277,990
Commitments and contingencies
Company-obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust.......................................... 300,000 300,000
Stockholders' equity:
Preferred stock--$.01 par value, 5,000,000 shares authorized:............
Series A perpetual convertible preferred stock--$300,000 liquidation
preference, 300,000 shares issued and outstanding.................... 3 3
Series B perpetual convertible preferred stock--$150,000 liquidation
preference, 150,000 shares issued and outstanding.................... 2 2
Common stock--$.01 par value, 500,000,000 shares authorized,
69,813,652 shares issued and outstanding in 2001 and 71,065,707
in 2000................................................................ 698 711
Additional paid-in capital............................................... 1,173,419 1,196,324
Retained earnings........................................................ 359,262 355,850
Accumulated other comprehensive loss..................................... (18,960) (6,947)

---------- ----------
Total stockholders' equity........................................... 1,514,424 1,545,943

---------- ----------
$5,112,112 $5,123,933

========== ==========

The accompanying notes are an integral part of these consolidated financial
statements.

F-2

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
March 31
-------------------
2001 2000
-------- --------
(In thousands, except
per share data)

Revenues:
Equipment rentals................................................. $461,382 $400,098
Sales of rental equipment......................................... 39,122 70,332
Sales of equipment and merchandise and other revenues............. 118,600 108,532

-------- --------
Total revenues....................................................... 619,104 578,962
Cost of revenues:
Cost of equipment rentals, excluding depreciation................. 230,033 174,300
Depreciation of rental equipment.................................. 76,801 73,503
Cost of rental equipment sales.................................... 23,076 41,086
Cost of equipment and merchandise sales and other operating costs. 86,627 84,089

-------- --------
Total cost of revenues............................................... 416,537 372,978

-------- --------
Gross profit......................................................... 202,567 205,984
Selling, general and administrative expenses......................... 108,893 101,850
Non-rental depreciation and amortization............................. 26,107 20,018

-------- --------
Operating income..................................................... 67,567 84,116
Interest expense..................................................... 57,530 49,683
Preferred dividends of a subsidiary trust............................ 4,875 4,875
Other (income) expense, net.......................................... (670) (204)

-------- --------
Income before provision for income taxes............................. 5,832 29,762
Provision for income taxes........................................... 2,420 12,351

-------- --------
Net income........................................................... $ 3,412 $ 17,411

======== ========
Basic earnings per share............................................. $ 0.05 $ 0.24

======== ========
Diluted earnings per share........................................... $ 0.04 $ 0.19

======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-3

UNITED RENTALS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)

Series A Series B
Perpetual Perpetual
Convertible Convertible Common
Preferred Stock Preferred Stock Stock
---------------- ---------------- ------------------ Additional
Number of Number of Number Paid-in Retained Compre-hensive
Shares Amount Shares Amount of Shares Amount Capital Earnings Loss
------- -- ------- -- ---------- ---- ---------- -------- --------
(In thousands, except share data)

Balance, December 31, 2000.... 300,000 $3 150,000 $2 71,065,707 $711 $1,196,324 $355,850
Comprehensive income:.........
Net income................. 3,412 $ 3,412
Other comprehensive loss:..
Foreign currency
translation
adjustments............. (12,013)

--------
Comprehensive loss............ $ (8,601)

========
Issuance of common stock...... 2,770 50
Exercise of common
stock options................ 15,775 208
Shares repurchased and
retired...................... (1,270,600) (13) (23,163)

------- -- ------- -- ---------- ---- ---------- --------
Balance, March 31, 2001....... 300,000 $3 150,000 $2 69,813,652 $698 $1,173,419 $359,262

======= == ======= == ========== ==== ========== ========

Accumulated
Other
Comprehensive
Loss
--------

Balance, December 31, 2000.... $ (6,947)
Comprehensive income:.........
Net income.................
Other comprehensive loss:..
Foreign currency
translation
adjustments............. (12,013)

Comprehensive loss............

Issuance of common stock......
Exercise of common
stock options................
Shares repurchased and
retired......................

--------
Balance, March 31, 2001....... $(18,960)

========

The accompanying notes are an integral part of these consolidated financial
statements.

F-4

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended
March 31
---------------------
2001 2000
--------- ---------
(In thousands)

Cash Flows From Operating Activities:
Net income........................................................................................ $ 3,412 $ 17,411
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization................................................................... 102,908 93,521
Gain on sales of rental equipment............................................................... (16,046) (29,246)
Deferred taxes.................................................................................. 2,105 3,088
Changes in operating assets and liabilities:
Accounts receivable............................................................................ 49,467 50,331
Inventory...................................................................................... 6,096 (10,787)
Prepaid expenses and other assets.............................................................. (38,752) (16,942)
Accounts payable............................................................................... (54,583) 59,315
Accrued expenses and other liabilities......................................................... 1,460 (73,125)
--------- ---------
Net cash provided by operating activities................................................ 56,067 93,566
Cash Flows From Investing Activities:
Purchases of rental equipment..................................................................... (98,347) (193,020)
Purchases of property and equipment............................................................... (16,722) (30,848)
Proceeds from sales of rental equipment........................................................... 39,122 70,332
In-process acquisition costs...................................................................... (719) (1,926)
Payments of contingent purchase price............................................................. (6,403)
Purchases of other companies...................................................................... (27,695) (128,651)
--------- ---------
Net cash used in investing activities.................................................... (104,361) (290,516)
Cash Flows From Financing Activities:
Proceeds from debt................................................................................ 95,155 231,278
Payments of debt.................................................................................. (19,645) (34,476)
Proceeds from sale-leaseback...................................................................... 12,000
Payments of financing costs....................................................................... (381) (86)
Proceeds from the exercise of common stock options................................................ 172 95
Shares repurchased and retired.................................................................... (23,176)
--------- ---------
Net cash provided by financing activities................................................ 52,125 208,811
Effect of foreign exchange rates.................................................................. (12,013) (770)
--------- ---------
Net increase (decrease) in cash and cash equivalents.............................................. (8,182) 11,091
Cash and cash equivalents at beginning of period.................................................. 34,384 23,811
--------- ---------
Cash and cash equivalents at end of period........................................................ $ 26,202 $ 34,902
========= =========

Supplemental disclosure of cash flow information:
Cash paid for interest............................................................................ $ 62,604 $ 55,154
Cash paid for income taxes, net of refunds........................................................ $ 765 $ 35,900

Supplemental disclosure of non-cash investing and financing activities:
The Company acquired the net assets and assumed certain liabilities of other companies as follows:
Assets, net of cash acquired................................................................... $ 5,457 $ 192,580
Liabilities assumed............................................................................ (1,036) (63,929)
Less:..........................................................................................
Amounts paid through issuance of debt....................................................... (600)
--------- ---------
3,821 128,651
Due to seller payments......................................................................... 23,874
--------- ---------
Net cash paid............................................................................ $ 27,695 $ 128,651
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

F-5

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

General

United Rentals, Inc., is principally a holding company ("Holdings" or the
"Company") and conducts its operations primarily through its wholly owned
subsidiary United Rentals (North America), Inc. ("URI") and subsidiaries of
URI. Separate footnote information is not presented for the financial
statements of URI and subsidiaries as that information is substantially
equivalent to that presented below. Earnings per share data is not provided for
the operating results of URI and its subsidiaries as they are wholly owned
subsidiaries of Holdings.

The Consolidated Financial Statements of the Company included herein are
unaudited and, in the opinion of management, such financial statements reflect
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the results of the interim periods presented. Interim financial
statements do not require all disclosures normally presented in year-end
financial statements, and, accordingly, certain disclosures have been omitted.
Results of operations for the three month period ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001. The Consolidated Financial Statements included herein should
be read in conjunction with the Company's Consolidated Financial Statements and
related Notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000.

Impact of Recently Issued Accounting Standards

In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133". This standard delays the effective date of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities", for one
year, to fiscal years beginning after June 15, 2000. SFAS No. 133 establishes a
new model for accounting for derivatives and hedging activities. In June 2000,
the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities". This standard amends SFAS No. 133 and
addresses a limited number of issues causing implementation difficulties. The
Company adopted SFAS No. 133 on January 1, 2001 and it did not have a material
effect on the Company's consolidated financial position or results of
operations.

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 is not expected to have a material effect on the
Company's consolidated financial position or results of operations.

Reclassifications

Certain prior year balances have been reclassified to conform to the 2001
presentation.

2. Acquisitions

During the three months ended March 31, 2001 and the year ended December
31, 2000, the Company completed two acquisitions and 53 acquisitions,
respectively, that were accounted for as purchases. The results of operations
of the businesses acquired in these acquisitions have been included in the
Company's results of operations from their respective acquisition dates.

F-6

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

The following table summarizes, on an unaudited pro forma basis, the
results of operations of the Company for the three months ended March 31, 2000
as though each acquisition which was consummated during the period January 1,
2000 to March 31, 2001 as mentioned above and in Note 3 to the Notes to
Consolidated Financial Statements included in the Company's 2000 Annual Report
on Form 10-K was made on January 1, 2000 (in thousands, except per share data):

Revenues.................. $640,403
Net income................ 18,228
Basic earnings per share.. $ 0.25
Diluted earnings per share $ 0.19

Since the acquisitions made during the three months ended March 31, 2001
did not have a material impact on the Company's pro forma results of
operations, the pro forma results of operations for the first quarter of 2001
are not shown.

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

3. Earnings Per Share

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

Three Months
Ended
March 31
---------------
2001 2000
------- -------

Numerator:
Net income.................................................. $ 3,412 $17,411

Denominator:
Denominator for basic earnings per share--
weighted-average shares.................................... 70,731 72,059
Effect of dilutive securities:
Employee stock options................................... 1,315 1,234
Warrants................................................. 2,563 2,558
Series A perpetual convertible preferred stock........... 12,000 12,000
Series B perpetual convertible preferred stock........... 5,000 5,000

------- -------
Denominator for diluted earnings per share--
adjusted weighted-average shares........................... 91,609 92,851

======= =======

Basic earnings per share........................................ $ 0.05 $ 0.24

======= =======
Diluted earnings per share...................................... $ 0.04 $ 0.19

======= =======

F-7

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

4. Subsequent Event

In April 2001, URI issued $450.0 million aggregate principal amount of 10
3/4% senior notes. Concurrent with the issuance of the senior notes, URI
entered into a new senior secured credit facility. The new credit facility is
comprised of a $750.0 million term loan and a $750.0 million revolving credit
facility. The proceeds from the new senior notes and new senior secured credit
facility were used to refinance outstanding secured indebtedness of
approximately $1,664.5 million and obligations under a synthetic lease of $31.2
million. For additional information concerning these transactions, see "--Item
2 Management's Discussion and Analysis of Financial Condition and Results of
Operations--Information Concerning Recent Financing Transactions" in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, which is
incorporated by reference herein.

As a result of the refinancing, the Company will record in the second
quarter of 2001 a pretax extraordinary charge of approximately $17.0 million,
primarily related to the write-off of financing fees.

F-8

REPORT OF INDEPENDENT AUDITORS

Board of Directors
United Rentals, Inc.

We have audited the accompanying consolidated balance sheets of United
Rentals, Inc. as of December 31, 2000 and 1999 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2000. These consolidated financial
statements are the responsibility of the management of United Rentals, Inc. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of United Rentals, Inc. at December 31, 2000 and 1999, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.

/S/ ERNST & YOUNG LLP
MetroPark, New Jersey
February 23, 2001

F-9

UNITED RENTALS, INC.

CONSOLIDATED BALANCE SHEETS

December 31
----------------------
2000 1999
---------- ----------
(In thousands, except
share data)

Assets
Cash and cash equivalents.............................................. $ 34,384 $ 23,811
Accounts receivable, net of allowance for doubtful accounts of $55,624
and $58,376 at 2000 and 1999, respectively........................... 469,594 434,985
Inventory.............................................................. 133,380 129,473
Prepaid expenses and other assets...................................... 104,493 81,457
Rental equipment, net.................................................. 1,732,835 1,659,733
Property and equipment, net............................................ 422,239 304,907
Intangible assets, net of accumulated amortization of $108,066 and
$51,231 at 2000 and 1999, respectively............................... 2,227,008 1,863,372
---------- ----------
$5,123,933 $4,497,738
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable.................................................... $ 260,155 $ 242,946
Debt................................................................ 2,675,367 2,266,148
Deferred taxes...................................................... 206,243 81,229
Accrued expenses and other liabilities.............................. 136,225 209,929

---------- ----------
Total liabilities............................................... 3,277,990 2,800,252
Commitments and contingencies
Company-obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust..................................... 300,000 300,000
Stockholders' equity:
Preferred stock--$.01 par value, 5,000,000 shares authorized:
Series A perpetual convertible preferred stock--$300,000
liquidation preference, 300,000 shares issued and outstanding
in 2000 and 1999................................................ 3 3
Series B perpetual convertible preferred stock--$150,000
liquidation preference, 150,000 shares issued and outstanding
in 2000 and 1999................................................ 2 2
Common stock--$.01 par value, 500,000,000 shares authorized,
71,065,707 shares issued and outstanding in 2000 and
72,051,095 shares issued and outstanding in 1999.................. 711 721
Additional paid-in capital.......................................... 1,196,324 1,216,968
Retained earnings................................................... 355,850 179,475
Accumulated other comprehensive (loss) income....................... (6,947) 317

---------- ----------
Total stockholders' equity...................................... 1,545,943 1,397,486

---------- ----------
$5,123,933 $4,497,738

========== ==========

See accompanying notes.

F-10

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31
----------------------------------
2000 1999 1998
---------- ---------- ----------
(in thousands, except per share amounts)

Revenues:
Equipment rentals.................................... $2,056,683 $1,581,026 $ 895,466
Sales of rental equipment............................ 347,678 235,678 119,620
Sales of equipment and merchandise and other revenues 514,500 416,924 205,196
---------- ---------- ----------
Total revenues........................................ 2,918,861 2,233,628 1,220,282
Cost of revenues:
Cost of equipment rentals, excluding depreciation.... 907,477 676,972 394,750
Depreciation of rental equipment..................... 328,131 280,641 175,910
Cost of rental equipment sales....................... 208,182 136,678 66,136
Cost of equipment and merchandise sales and other
operating costs.................................... 386,501 314,419 160,038
---------- ---------- ----------
Total cost of revenues................................ 1,830,291 1,408,710 796,834
---------- ---------- ----------
Gross profit.......................................... 1,088,570 824,918 423,448
Selling, general and administrative expenses.......... 454,330 352,595 195,620
Merger-related expenses............................... 47,178
Non-rental depreciation and amortization.............. 86,301 62,867 35,248
---------- ---------- ----------
Operating income...................................... 547,939 409,456 145,402
Interest expense...................................... 228,779 139,828 64,157
Preferred dividends of a subsidiary trust............. 19,500 19,500 7,854
Other (income) expense, net........................... (1,836) 8,321 (4,906)
---------- ---------- ----------
Income before provision for income taxes and
extraordinary item.................................. 301,496 241,807 78,297
Provision for income taxes............................ 125,121 99,141 43,499
---------- ---------- ----------
Income before extraordinary item...................... 176,375 142,666 34,798
Extraordinary item, net of tax benefit of $14,255..... 21,337
---------- ---------- ----------
Net income............................................ $ 176,375 $ 142,666 $ 13,461
========== ========== ==========
Earnings per share--basic:
Income before extraordinary item..................... $ 2.48 $ 2.00 $ 0.53
Extraordinary item, net.............................. 0.33
---------- ---------- ----------
Net income........................................... $ 2.48 $ 2.00 $ 0.20
========== ========== ==========
Earnings per share--diluted:
Income before extraordinary item..................... $ 1.89 $ 1.53 $ 0.48
Extraordinary item, net.............................. 0.30
---------- ---------- ----------
Net income........................................... $ 1.89 $ 1.53 $ 0.18
========== ========== ==========

See accompanying notes.

F-11

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Series A Series B
Perpetual Perpetual
Convertible Convertible
Preferred Stock Preferred Stock Common Stock
-------------- -------------- ------------------
Number Number Number Additional Compre-
of of of Paid-in Retained hensive
Shares Amount Shares Amount Shares Amount Capital Earnings Income
------- -- ------- -- ---------- ---- ---------- -------- --------
(In thousands, except share amounts)

Balance, December 31, 1997......... 56,239,375 $562 $ 401,758 $ 44,068
Comprehensive income:
Net income...................... 13,461 $ 13,461
Other comprehensive income:
Foreign currency translation
adjustments................... (281)
--------
Comprehensive income............. $ 13,180
========
Issuance of common stock and
warrants........................ 10,813,255 108 267,214
Conversion of convertible notes.. 30,947 461
Cancellation of common stock..... (137,600) (1) 1
Reclassification of Subchapter S
accumulated earnings to paid-
in-capital...................... 18,979 (18,979)
Pooling-of-interests............. 1,456,997 15 (14) 1,795
Exercise of common stock
options......................... 25,025 619
Subchapter S distributions of a
pooled entity................... (3,536)
---------- ---- ---------- --------
Balance, December 31, 1998......... 68,427,999 684 689,018 36,809
Comprehensive income:
Net income...................... 142,666 $142,666
Other comprehensive income:
Foreign currency translation
adjustments................... 598
--------
Comprehensive income............. $143,264
========
Issuance of Series A perpetual
convertible preferred stock..... 300,000 $3 286,997
Issuance of Series B perpetual
convertible preferred stock..... 150,000 $2 143,798
Issuance of common stock......... 2,291,568 23 64,678
Exercise of common stock
options......................... 1,331,528 14 32,477
------- -- ------- -- ---------- ---- ---------- --------
Balance, December 31, 1999......... 300,000 3 150,000 2 72,051,095 721 1,216,968 179,475
Comprehensive income:
Net income...................... 176,375 $176,375
Other comprehensive income:
Foreign currency translation
adjustments................... (7,264)
--------
Comprehensive income............. $169,111
========
Issuance of common stock......... 773,320 8 9,867
Exercise of common stock
options......................... 26,307 421
Shares repurchased and retired... (1,785,015) (18) (30,932)
------- -- ------- -- ---------- ---- ---------- --------
Balance, December 31, 2000......... 300,000 $3 150,000 $2 71,065,707 $711 $1,196,324 $355,850
======= == ======= == ========== ==== ========== ========

Accumulated
Other
Comprehensive
(Loss) Income
-------

Balance, December 31, 1997.........
Comprehensive income:
Net income......................
Other comprehensive income:
Foreign currency translation
adjustments................... $ (281)

Comprehensive income.............

Issuance of common stock and
warrants........................
Conversion of convertible notes..
Cancellation of common stock.....
Reclassification of Subchapter S
accumulated earnings to paid-
in-capital......................
Pooling-of-interests.............
Exercise of common stock
options.........................
Subchapter S distributions of a
pooled entity...................
-------
Balance, December 31, 1998......... (281)
Comprehensive income:
Net income......................
Other comprehensive income:
Foreign currency translation
adjustments................... 598

Comprehensive income.............

Issuance of Series A perpetual
convertible preferred stock.....
Issuance of Series B perpetual
convertible preferred stock.....
Issuance of common stock.........
Exercise of common stock
options.........................
-------
Balance, December 31, 1999......... 317
Comprehensive income:
Net income......................
Other comprehensive income:
Foreign currency translation
adjustments................... (7,264)

Comprehensive income.............

Issuance of common stock.........
Exercise of common stock
options.........................
Shares repurchased and retired...
-------
Balance, December 31, 2000......... $(6,947)
=======

See accompanying notes.

F-12

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31
------------------------------------
2000 1999 1998
--------- ----------- -----------
(In thousands)

Cash Flows From Operating Activities:
Net income....................................................................... $ 176,375 $ 142,666 $ 13,461
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization.................................................. 414,432 343,508 212,311
Gain on sales of rental equipment.............................................. (139,496) (99,000) (53,484)
Gain on sales of businesses.................................................... (4,084) (1,842) (4,189)
Write down of assets held for sale............................................. 4,040
Extraordinary item............................................................. 35,592
Deferred taxes................................................................. 109,280 41,820 27,345
Changes in operating assets and liabilities:
Accounts receivable............................................................ 8,613 (93,716) (53,368)
Inventory...................................................................... 69,706 (6,544) (6,392)
Prepaid expenses and other assets.............................................. (29,848) 7,257 (3,526)
Accounts payable............................................................... (16,091) 64,453 39,251
Accrued expenses and other liabilities......................................... (76,166) 22,758 5,088
--------- ----------- -----------
Net cash provided by operating activities..................................... 512,721 421,360 216,129
--------- ----------- -----------

Cash Flows From Investing Activities:
Purchases of rental equipment.................................................... (808,204) (718,112) (479,534)
Purchases of property and equipment.............................................. (153,770) (123,649) (84,617)
Proceeds from sales of rental equipment.......................................... 347,678 235,678 119,620
Proceeds from sales of businesses................................................ 19,246 6,521 10,640
Purchases of other companies..................................................... (347,337) (986,790) (911,837)
Payments of contingent purchase price............................................ (16,266) (8,216) (3,956)
In-process acquisition costs..................................................... (4,285) (1,002) (241)
--------- ----------- -----------
Net cash used in investing activities......................................... (962,938) (1,595,570) (1,349,925)
--------- ----------- -----------

Cash Flows From Financing Activities:
Proceeds from issuance of common stock, net of issuance costs.................... 64,701 207,005
Proceeds from the issuance of Series A Preferred, net of issuance costs.......... 287,000
Proceeds from the issuance of Series B Preferred, net of issuance costs.......... 143,800
Proceeds from debt............................................................... 456,202 1,083,616 1,263,637
Payments on debt................................................................. (134,599) (497,650) (685,667)
Proceeds from sale-leaseback..................................................... 193,478 88,000 35,000
Proceeds from the issuance of redeemable convertible preferred securities........ 300,000
Payments of financing costs...................................................... (16,408) (19,443) (34,982)
Proceeds from the exercise of common stock options............................... 331 26,989 619
Subchapter S distributions of a pooled entity.................................... (3,536)
Shares repurchased and retired................................................... (30,950)
--------- ----------- -----------
Net cash provided by financing activities..................................... 468,054 1,177,013 1,082,076
Effect of foreign exchange rates................................................. (7,264) 598 (281)
--------- ----------- -----------
Net increase (decrease) in cash and cash equivalents............................. 10,573 3,401 (52,001)
Cash and cash equivalents at beginning of year................................... 23,811 20,410 72,411
--------- ----------- -----------
Cash and cash equivalents at end of year......................................... $ 34,384 $ 23,811 $ 20,410
========= =========== ===========

See accompanying notes.

F-13

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)

Year Ended December 31
----------------------------------
2000 1999 1998
--------- ---------- ----------
(In thousands)

Supplemental disclosure of cash flow information:
Cash paid for interest...................................................... $ 248,763 $ 124,285 $ 43,157
Cash paid for taxes, net of refunds......................................... $ 23,746 $ 17,509 $ 10,224

Supplemental schedule of non-cash investing and financing activities
The Company acquired the net assets and assumed certain liabilities of other
companies as follows:
Assets, net of cash acquired.............................................. $ 565,114 $1,468,567 $1,501,467
Liabilities assumed....................................................... (142,277) (472,382) (518,861)
Less:
Amounts paid in common stock and warrants................................ (10,000) (60,304)
Amounts paid through issuance of debt.................................... (65,500) (9,395) (10,465)
--------- ---------- ----------
Net cash paid............................................................... $ 347,337 $ 986,790 $ 911,837
========= ========== ==========

See accompanying notes.

F-14

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

United Rentals, Inc. is principally a holding company ("Holdings") and
conducts its operations primarily through its wholly owned subsidiary United
Rentals (North America), Inc. ("URI") and subsidiaries of URI. Holdings was
incorporated in July 1998 and became the parent of URI on August 5, 1998,
pursuant to the reorganization of the legal structure of URI described in Note
9. Prior to such reorganization, the name of URI was United Rentals, Inc.
References herein to the "Company" refer to Holdings and its subsidiaries, with
respect to periods following the reorganization, and to URI and its
subsidiaries, with respect to periods prior to the reorganization. As a result
of the reorganization, Holdings' primary asset is its sole ownership of all
issued and outstanding shares of common stock of URI. URI's various credit
agreements and debt instruments place restrictions on its ability to transfer
funds to its shareholder.

The Company rents a broad array of equipment to a diverse customer base
that includes construction industry participants, industrial companies,
homeowners and others in the United States, Canada and Mexico. The Company also
engages in related activities such as selling rental equipment, acting as a
distributor for certain new equipment and selling related merchandise and
parts. The nature of the Company's business is such that short-term obligations
are typically met by cash flow generated from long-term assets. Therefore, the
accompanying balance sheets are presented on an unclassified basis.

The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, giving retroactive effect for
the reorganization for all periods presented. All significant intercompany
accounts and transactions have been eliminated. The accompanying consolidated
financial statements for the year ended December 31, 1998 include the accounts
of certain acquisitions completed in 1998 that were accounted for as
poolings-of-interests, as described in Note 3.

2. Summary of Significant Accounting Policies

Cash Equivalents

The Company considers all highly liquid instruments with a maturity of
three months or less when purchased to be cash equivalents.

Inventory

Inventory consists of equipment, tools, parts, fuel and related supply
items. Inventory is stated at the lower of cost or market and is net of a
reserve for obsolescence and shrinkage of $15.5 million and $16.8 million at
December 31, 2000 and 1999, respectively. Cost is determined on either a
weighted average or first-in, first-out method.

Rental Equipment

Rental equipment is recorded at cost and depreciated over the estimated
useful lives of the equipment using the straight-line method. The range of
estimated useful lives for rental equipment is two to ten years. Rental
equipment is depreciated to a salvage value of zero to ten percent of cost.
Ordinary repair and maintenance costs are charged to operations as incurred.

Property and Equipment

Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method. The range of estimated
useful lives for property and equipment is two to

F-15

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

thirty-nine years. Ordinary repair and maintenance costs are charged to
operations as incurred. Leasehold improvements are amortized using the
straight-line method over their estimated useful lives or the remaining life of
the lease, whichever is shorter.

Intangible Assets

Intangible assets consist of the excess of cost over the fair value of
identifiable net assets of businesses acquired and non-compete agreements. The
non-compete agreements are being amortized on a straight-line basis for a
period ranging from three to eight years. The remaining intangible assets are
being amortized on a straight-line basis over forty years.

Long-Lived Assets

Long-lived assets are recorded at the lower of amortized cost or fair
value. As part of an ongoing review of the valuation of long-lived assets, the
Company assesses the carrying value of such assets if facts and circumstances
suggest they may be impaired. If this review indicates that the carrying value
of these assets may not be recoverable, as determined by a nondiscounted cash
flow analysis over the remaining useful life, the carrying value would be
reduced to its estimated fair value. There have been no material impairments
recognized in these financial statements.

Derivative Financial Instruments

Derivative financial instruments, which are periodically used by the
Company in the management of its interest rate and foreign currency exposures,
are accounted for on an accrual basis. Income and expense are recorded in the
same category as that arising from the related asset or liability. The fair
value of these agreements are not recognized in the financial statements.
Derivative financial instruments are not used for trading purposes.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for accounts
receivable, accounts payable, accrued expenses and other liabilities
approximate fair value due to the immediate to short-term maturity of these
financial instruments. The fair values of the Credit Facility, Term Loan B,
Term Loan C, Term Loan D, receivables securitization and certain other debt are
determined using current interest rates for similar instruments as of December
31, 2000 and 1999 and approximate the carrying value of these financial
instruments due to the fact that the underlying instruments include provisions
to adjust interest rates to approximate fair market value. The estimated fair
value of the Company's other financial instruments at December 31, 2000 and
1999 are based upon available market information and are as follows:

2000 1999
-------------------------- --------------------------
Carrying Amount Fair Value Carrying Amount Fair Value
-------- -------- -------- --------
(In thousands)

Redeemable convertible preferred
securities.................... $300,000 $133,125 $300,000 $192,375
Senior subordinated notes....... 951,153 702,500 950,653 906,400
Other debt...................... 94,086 94,086 73,745 73,745

Revenue Recognition

Revenue related to the sale of equipment and merchandise is recognized at
the time of delivery to, or pick-up by, the customer. Revenue related to rental
equipment is recognized over the contract term.

F-16

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Advertising Expense

The Company advertises primarily through trade publications and yellow
pages. Advertising costs are expensed as incurred and totaled $23.8 million,
$19.0 million and $13.5 million for the years ended December 31, 2000, 1999 and
1998, respectively.

Income Taxes

The Company uses the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on the
differences between financial statement and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse. Recognition of deferred
tax assets is limited to amounts considered by management to be more likely
than not realized in future periods.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
accounts receivable. The Company maintains cash and cash equivalents with high
quality financial institutions.

Concentration of credit risk with respect to accounts receivable are
limited because a large number of geographically diverse customers make up the
Company's customer base. No single customer represents greater than 10% of
total accounts receivable. The Company controls credit risk through credit
approvals, credit limits, and monitoring procedures.

Stock-Based Compensation

The Company accounts for its stock based compensation arrangements under
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees". Since stock options are granted by
the Company with exercise prices at or greater than the fair value of the
shares at the date of grant, no compensation expense is recognized.

Insurance

The Company is insured for general liability, workers' compensation, and
group medical claims up to a specified claim and aggregate amounts (subject to
a deductible of one million dollars). Insured losses subject to this deductible
are accrued based upon the aggregate liability for reported claims incurred and
an estimated liability for claims incurred but not reported. These liabilities
are not discounted.

F-17

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Impact of Recently Issued Accounting Standards

In June 1999, the Financial Accounting Standards Board ("FASB'') issued
Statement of Financial Accounting Standards ("SFAS'') No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133." This standard delays the effective date of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," for one
year, to fiscal years beginning after June 15, 2000. SFAS No. 133 establishes a
new model for accounting for derivatives and hedging activities. The adoption
of SFAS No. 133 on January 1, 2001 is not expected to have a material effect on
the Company's consolidated financial position or results of operations.

In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities." This standard amends
SFAS No. 133 and addresses a limited number of issues causing implementation
difficulties. The Company will adopt SFAS No. 138 on January 1, 2001 and it is
not expected to have a material effect on the Company's consolidated financial
position or results of operations.

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 is not expected to have a material effect on the
Company's consolidated financial position or results of operations.

Reclassifications

Certain prior year balances have been reclassified to conform to the 2000
presentation.

3. Acquisitions

Acquisitions Accounted for as Poolings-of-Interests

On August 24, 1998, the Company issued 2,744,368 shares of its common stock
for all of the outstanding shares of common stock of Rental Tools.

On September 24, 1998, the Company issued 1,456,997 shares of its common
stock for all of the outstanding shares of common stock of Wynne Systems, Inc.
This transaction was accounted for as a pooling-of-interests; however, this
transaction was not material to the Company's consolidated operations and
financial position and, therefore, the Company's financial statements have not
been restated for this transaction but have been combined beginning July 1,
1998.

On September 29, 1998, a merger (the "Merger") of United Rentals, Inc. and
U.S. Rentals was completed. The Merger was effected by having a wholly owned
subsidiary of United Rentals, Inc. merge with and into U.S. Rentals. Following
the Merger, United Rentals, Inc. contributed the capital stock of U.S. Rentals
to URI, a wholly owned subsidiary of United Rentals, Inc. Pursuant to the
Merger, each outstanding share of common stock of U.S. Rentals was converted
into the right to receive 0.9625 of a share of common stock of United Rentals,
Inc. An aggregate of approximately 29.6 million shares of United Rentals, Inc.
common stock were issued in the Merger in exchange for the outstanding shares
of U.S. Rentals common stock.

F-18

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The table below shows the separate revenue and net income (loss) of the
Company prior to the above mergers ("United"), U.S. Rentals and Rental Tools
for periods prior to combination:

U.S. Rental
United Rentals Tools Combined
-------- -------- ------- --------
(In thousands)

For the nine months ended September 30, 1998:
Revenues.................................. $311,919 $451,101 $41,242 $804,262
Net income (loss)......................... (53,178) 43,670 4,695 (4,813)

Acquisitions Accounted for as Purchases

The acquisitions completed during the years ended December 31, 2000, 1999
and 1998 include 53, 102 and 81 acquisitions, respectively, that were accounted
for as purchases. The results of operations of the businesses acquired in these
acquisitions have been included in the Company's results of operations from
their respective acquisition dates.

During 2000, the Company purchased the outstanding stock and certain assets
of (i) Liddell Brothers Inc., in February, (ii) Safety Lites Sales and Leasing,
Inc., in March, (iii) Durante Equipment Corp., Inc., in June, (iv) Horizon High
Reach, Inc., in September, and (v) Wiese Planning & Engineering Inc., in
December. The aggregate initial consideration paid for these five acquisitions
that were accounted for as purchases was approximately $153.1 million and
consisted of $83.8 million in cash and 761,905 shares of common stock and $59.3
million in seller notes. In addition, the Company repaid or assumed outstanding
indebtedness of these companies acquired in the aggregate amount of
approximately $5.5 million.

The aggregate initial consideration paid by the Company for other 2000
acquisitions that were accounted for as purchases was $210.2 million and
consisted of approximately $184.6 million in cash and $6.2 million in seller
notes. In addition, the Company repaid or assumed outstanding indebtedness of
the companies acquired in the other 2000 acquisitions in the aggregate amount
of $77.5 million.

During 1999, the Company purchased the outstanding stock and certain assets
of (i) National Equipment Finance Company, in June, (ii) Mi-Jack Products, Inc.
and related entities, in May, (iii) Elmen Rent All, Inc., in June (iv) Forte,
Inc., in March, and (v) Arayco, Inc. in June. The aggregate initial
consideration paid for these five acquisitions that were accounted for as
purchases was approximately $275.4 million and consisted of $270.4 million in
cash and $5.0 million in seller notes. In addition, the Company repaid or
assumed outstanding indebtedness of these companies acquired in the aggregate
amount of approximately $99.8 million.

The aggregate initial consideration paid by the Company for other 1999
acquisitions accounted for as purchases was $663.6 million and consisted of
approximately $659.2 million in cash and $4.4 million in seller notes. In
addition, the Company repaid or assumed outstanding indebtedness of the
companies acquired in the other 1999 acquisitions in the aggregate amount of
approximately $239.3 million.

In January 1998 the Company purchased the outstanding stock and certain
assets of (i) Access Rentals, Inc. and Affiliate, (ii) the BNR Group of
Companies and (iii) Mission Valley Rentals, Inc. The aggregate initial
consideration paid by the Company for these three acquisitions that were
accounted for as purchases was $88.7 million and consisted of approximately
$81.4 million in cash and 370,231 shares of common stock and warrants to
purchase an aggregate of 30,000 shares of the Company's common stock. In
addition, the Company repaid or assumed outstanding indebtedness of these three
companies acquired in the aggregate amount of $64.0 million.

F-19

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Also during 1998, the Company purchased the outstanding stock and certain
assets of (i) Power Rental Co., Inc., in June (ii) Equipment Supply Co., Inc.
and Affiliates in June and (iii) McClinch Inc. and Subsidiaries and McClinch
Equipment Services, Inc. in September. The aggregate initial consideration paid
by the Company for these three acquisitions that were accounted for as
purchases was $298.4 million and consisted of approximately $278.0 million in
cash and 496,063 shares of common stock. In addition, the Company repaid or
assumed outstanding indebtedness of these three companies acquired in the
aggregate amount of $155.4 million.

The aggregate initial consideration paid by the Company for other 1998
acquisitions that were accounted for as purchases was $550.4 million and
consisted of approximately $507.3 million in cash and 1,083,997 shares of
common stock, and seller notes of $10.5 million. In addition, the Company
repaid or assumed outstanding indebtedness of the other companies acquired in
1998 in the aggregate amount of $211.8 million.

The purchase prices for all acquisitions accounted for as purchases have
been allocated to the assets acquired and liabilities assumed based on their
respective fair values at their respective acquisition dates. However, the
Company has not completed its valuation of all of its purchases and,
accordingly, the purchase price allocations are subject to change when
additional information concerning asset and liability valuations are completed.

The following table summarizes, on an unaudited pro forma basis, the
combined results of operations of the Company for the years ended December 31,
2000 and 1999 as though each acquisition described above was made on January 1,
for each of the periods.

2000 1999
---------- ----------
(In thousands, except
per share data)

Revenues.................. $3,095,872 $2,956,543
Net income................ 182,342 154,084
Basic earnings per share.. $ 2.54 $ 2.14
========== ==========
Diluted earnings per share $ 1.94 $ 1.64
========== ==========

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

Merger-Related Expenses, Extraordinary Item and Other Costs

The results of operations for the year ended December 31, 1999 include
pre-tax expenses related to a terminated tender offer totaling approximately
$18.2 million ($10.8 million after tax), primarily consisting of $8.3 million
in professional fees recorded in selling, general and administrative expense
and $9.9 million in financing commitment fees recorded in other (income)
expense, net.

The results of operations for the year ended December 31, 1998, include
pre-tax expenses related to three acquisitions accounted for as
poolings-of-interests totaling approximately $47.2 million ($33.2 million
after-tax), consisting of (i) $18.5 million for investment banking, legal,
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
computer systems acquired through the U.S. Rentals merger and one of the other
acquisitions accounted for as a pooling-of-interests and (v) $3.9 million in
other expenses.

F-20

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company recorded a pre-tax extraordinary item of $35.6 million ($21.3
million after-tax) in 1998. The charge related to the early extinguishment of
debt primarily related to the Merger with U.S. Rentals.

4. Rental Equipment

Rental equipment consists of the following:

December 31
-----------------------
2000 1999
---------- ----------
(In thousands)

Rental equipment............. $2,281,994 $2,098,624
Less accumulated depreciation (549,159) (438,891)
---------- ----------
Rental equipment, net........ $1,732,835 $1,659,733
---------- ----------

5. Property and Equipment

Property and equipment consist of the following:

December 31
--------------------
2000 1999
--------- --------
(In thousands)

Land.......................................... $ 53,612 $ 50,143
Buildings..................................... 104,925 91,934
Transportation equipment...................... 228,265 139,944
Machinery and equipment....................... 36,587 31,484
Furniture and fixtures........................ 56,109 46,507
Leasehold improvements........................ 48,952 26,387
--------- --------
528,450 386,399
Less accumulated depreciation and amortization (106,211) (81,492)
--------- --------
Property and equipment, net................... $ 422,239 $304,907
========= ========

6. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:

December 31
-----------------
2000 1999
-------- --------
(In thousands)

Accrued profit sharing $ 39,485 $ 39,052
Accrued insurance..... 15,428 22,738
Accrued interest...... 36,993 37,477
Other................. 44,319 110,662
-------- --------
$136,225 $209,929
======== ========

F-21

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. Debt

Debt consists of the following:

December 31
---------------------
2000 1999
---------- ----------
(In thousands)

Credit Facility, interest payable at a weighted average rate
of 7.8% and 6.9% at December 31, 2000 and 1999,
respectively.............................................. $ 337,000 $ 243,000
Term Loan B, interest payable at 8.89% and 8.71% at
December 31, 2000 and 1999, respectively.................. 246,875 248,750
Term Loan C, interest payable at 9.26% and 8.96% at
December 31, 2000 and 1999, respectively.................. 748,125 750,000
Term Loan D, interest payable at a weighted average rate of
9.18% at December 31, 2000................................ 198,128
Senior Subordinated Notes, interest payable semi-annually,
(9 1/2% at December 31, 2000 and 1999).................... 200,000 200,000
Senior Subordinated Notes, interest payable semi-annually,
(8.80% at December 31, 2000 and 1999)..................... 201,153 200,653
Senior Subordinated Notes, interest payable semi-annually,
(9 1/4% at December 31, 2000 and 1999).................... 300,000 300,000
Senior Subordinated Notes, interest payable semi-annually,
(9% at December 31, 2000 and 1999)........................ 250,000 250,000
Receivables securitization, interest payable at 7.44% at
December 31, 2000......................................... 100,000
Other debt, interest payable at various rates ranging from
4% to 11% and 6% to 12.3% at December 31, 2000 and
1999, respectively, due through 2007...................... 94,086 73,745

---------- ----------
$2,675,367 $2,266,148

========== ==========

Credit Facility. The Company has a credit facility (the "Credit Facility")
which enables URI to borrow up to $827.5 million on a revolving basis and
permits a Canadian subsidiary of URI (the "Canadian Subsidiary") to directly
borrow up to $40.0 million under the Credit Facility (provided that the
aggregate borrowings of URI and the Canadian Subsidiary do not exceed $827.5
million). Up to $50.0 million ($1.4 million outstanding at December 31, 2000)
of the Credit Facility is available in the form of letters of credit. The
agreement governing the Credit Facility requires that the aggregate commitment
shall be reduced on the last day of each calendar quarter, beginning September
30, 2001 and continuing through June 30, 2003, by an amount equal to $20.7
million. The Credit Facility terminates on September 26, 2003, at which time
all outstanding indebtedness is due.

Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i) the
Federal Funds Rate plus 0.5% or (ii) Bank of America's reference rate) or (b)
the Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted eurodollar rate) plus a margin ranging from 1.200% to 1.875%
per annum. Borrowings by the Canadian Subsidiary under the Credit Facility
accrue interest, at such subsidiary's option, at either (x) the Prime Rate
(which is equal to Bank of America Canada's prime rate), (y) the BA Rate (which
is equal to Bank of America Canada's BA Rate) plus a margin ranging from 1.200%
to 1.875% per annum or (z) the Eurodollar Rate (which for borrowing by the
Canadian Subsidiary is equal to Bank of America Canada's reserve adjusted
Eurodollar Rate) plus a margin ranging from 1.200% to 1.875% per annum. If at
any time an event of default (as defined in the agreement governing the Credit
Facility) exists, the interest rate applicable to each loan will increase by 2%
per annum. The Company

F-22

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

is also required to pay the banks an annual facility fee equal to 0.375% of the
banks' $827.5 million aggregate lending commitment under the Credit Facility
(which fee may be reduced to 0.300% for periods during which the Company
maintains a specified funded debt to cash flow ratio).

The obligations of URI under the Credit Facility are (i) secured by
substantially all of its assets, the stock of its United States subsidiaries
and a portion of the stock of URI's Canadian subsidiaries and (ii) guaranteed
by Holdings and secured by the stock of URI. The obligations of the Canadian
Subsidiary under the Credit Facility are guaranteed by URI and secured by
substantially all of the assets of the Canadian Subsidiary and the stock of the
subsidiaries of the Canadian Subsidiary.

The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a) maximum
leverage, (b) the ratio of senior debt to cash flow, (c) minimum interest
coverage ratio, (d) the ratio of funded debt to cash flow, and (e) the ratio of
senior debt to tangible assets. The agreements governing the Credit Facility
also contain various other covenants that restrict the Company's ability to,
among other things, (i) incur additional indebtedness, (ii) permit liens to
attach to its assets, (iii) pay dividends or make other restricted payments on
its common stock and certain other securities and (iv) make acquisitions unless
certain financial conditions are satisfied. In addition, the agreement
governing the Credit Facility (a) requires the Company to maintain certain
financial ratios and (b) provides that failure by any two of certain of the
Company's executive officers to continue to hold executive positions with the
Company for a period of 30 consecutive days constitutes an event of default
unless replacement officers satisfactory to the lenders are appointed.

Term Loan B. URI obtained a $250.0 million term loan (the "Term Loan B")
from a group of financial institutions. The Term Loan B matures on June 30,
2005. Prior to maturity, quarterly installments of principal in the amount of
$0.6 million are due on the last day of each calendar quarter, commencing
September 30, 1999. The amount due at maturity is $235.6 million. The Term Loan
B accrues interest, at URI's option, at either (a) the Base Rate (as defined
above with respect to the Credit Facility) plus a margin of 0.375% per annum,
or (b) the Eurodollar Rate (as defined above with respect to the Credit
Facility for borrowings by the Company) plus a margin of 2.25% per annum. The
Term Loan B is secured pari passu with the Credit Facility and the agreement
governing the Term Loan B contains restrictive covenants substantially similar
to those provided under the Credit Facility.

Term Loan C. URI obtained a $750.0 million term loan from a group of
financial institutions (the "Term Loan C"). The Term Loan C matures in June
2006. Prior to maturity, quarterly installments of principal in the amount of
$1.9 million are due on the last day of each calendar quarter, commencing
September 30, 2000. The amount due at maturity is $706.3 million. The Term Loan
C accrues interest, at URI's option, at either (a) the Base Rate (as defined
above with respect to the Credit Facility) plus a margin of 0.625% per annum,
or (b) the Eurodollar Rate (as defined above with respect to the Credit
Facility) plus a margin of 2.50% per annum. The Term Loan C is secured pari
passu with the Credit Facility and the agreement governing the Term Loan C
contains restrictive covenants substantially similar to those provided under
the Credit Facility.

Term Loan D. URI obtained a $200.0 million term loan from a financial
institution (the "Term Loan D"). The Term Loan D matures in June 2006. Prior to
maturity, quarterly installments of principal are due on the last day of each
calendar quarter, in the amount of $0.25 million on September 30, 2000 and in
the amount of $0.5 million commencing December 31, 2000 to maturity. The amount
due at maturity is $188.5 million. The Term Loan D accrues interest, at URI's
option, at either (a) the Base

F-23

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Rate (as defined above with respect to the Credit Facility) plus a margin of
0.625% per annum, or (b) the Eurodollar Rate (as defined above with respect to
the Credit Facility) plus a margin of 2.5% per annum. The Term Loan D is
secured pari passu with the Credit Facility, and the agreement governing the
Term Loan D contains restrictive covenants substantially similar to those
provided under the Credit Facility.

At December 31, 2000, the Company had interest rate protection in the form
of swap agreements with an aggregate notional amount of $200.0 million. The
effect of these agreements is to limit the interest rate exposure to 8.75% on
$200.0 million of Term Loan B. The overall weighted average interest rate on
the Term Loan B was 8.80% at December 31, 2000. While it is not the Company's
intention to terminate the interest rate swap agreements, the fair values were
estimated by obtaining quotes from brokers which represented the amounts that
the Company would receive or pay if the agreements were terminated. These fair
values indicated that termination of the agreements at December 31, 2000, would
have resulted in a pretax loss of $4.3 million.

9 1/2% Senior Subordinated Notes. URI issued $200.0 million aggregate
principal amount of 9 1/2% senior subordinated notes, (the "9 1/2 Notes") which
are due June 1, 2008. The 9 1/2% Notes are unsecured. URI may, at its option,
redeem the 9 1/2% Notes on or after June 1, 2003 at specified redemption prices
which range from 104.75% in 2003 to 100.0% in 2006 and thereafter. In addition,
on or prior to June 1, 2001, URI may, at its option, use the proceeds of a
public equity offering to redeem up to 35% of the outstanding 9 1/2% Notes, at
a redemption price of 109.5%. The indenture governing the 9 1/2% Notes contains
certain restrictive covenants, including (i) limitations on additional
indebtedness, (ii) limitations on restricted payments, (iii) limitations on
liens, (iv) limitations on dividends and other payment restrictions, (v)
limitations on preferred stock of certain subsidiaries, (vi) limitations on
transactions with affiliates, (vii) limitations on the disposition of proceeds
of asset sales and (viii) limitations on the ability of the Company to
consolidate, merge or sell all or substantially all of its assets.

8.80% Senior Subordinated Notes. URI issued $205.0 million aggregate
principal amount of 8.80% senior subordinated notes, (the "8.80% Notes") which
are due August 15, 2008. The 8.80% Notes are unsecured. URI may, at its option,
redeem the 8.80% Notes on or after August 15, 2003 at specified redemption
prices which range from 104.4% in 2003 to 100.0% in 2006 and thereafter. In
addition, on or prior to August 15, 2001, URI may, at its option, use the
proceeds of a public equity offering to redeem up to 35% of the outstanding
8.80% Notes, at a redemption price of 108.8%. The indenture governing the 8.80%
Notes contains restrictions substantially similar to those applicable to the 9
1/2% Notes.

9 1/4% Senior Subordinated Notes. URI issued $300.0 million aggregate
principal amount of 9 1/4% senior subordinated notes, (the "9 1/4% Notes")
which are due January 15, 2009. The 9 1/4% Notes are unsecured. URI may, at its
option, redeem the 9 1/4% Notes on or after January 15, 2004 at specified
redemption prices which range from 104.625% in 2004 to 100.0% in 2007 and
thereafter. In addition, on or prior to January 15, 2002, URI may, at its
option, use the proceeds of a public equity offering to redeem up to 35% of the
outstanding 9 1/4% Notes, at a redemption price of 109.25%. The indenture
governing the 9 1/4% Notes contains restrictions substantially similar to those
applicable to the 9 1/2% Notes.

9% Senior Subordinated Notes. URI issued $250.0 million aggregate principal
amount of 9% senior subordinated notes, (the "9% Notes") which are due April 1,
2009. The 9% Notes are unsecured. URI may, at its option, redeem the 9% Notes
on or after April 1, 2004 at specified redemption prices which range from
104.5% in 2004 to 100.0% in 2007 and thereafter. In addition, on or prior to
April 1, 2002, URI may, at its option, use the proceeds of a public equity
offering to redeem

F-24

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

up to 35% of the outstanding 9% Notes, at a redemption price of 109.0%. The
indenture governing the 9% Notes contains restrictions substantially similar to
those applicable to the 9 1/2% Notes.

Receivables Securitization. In December 2000, the Company obtained $100.0
million through the securitization of certain of its accounts receivable. In
the securitization, the Company transferred $203.0 million of its accounts
receivable to a special purpose subsidiary (the "SPV") which in turn pledged
those receivables to secure $100.0 million of borrowings that the SPV incurred
to finance its acquisition of those receivables from the Company. These
borrowings accrue interest at Credit Lyonnais' blended commercial paper rate
plus a margin of 0.75% per annum. These borrowings are an obligation of the SPV
and not of Holdings or URI, and the lenders' recourse in respect of the
borrowings is generally limited to collections that the SPV receives on the
receivables. Collections on the receivables are used to service the borrowings.
Subject to certain conditions, collections from the receivables may also be
used by the SPV from time to time until December 2003 to acquire additional
accounts receivables from the Company that the SPV will pledge to the lenders
to secure the borrowings.

Maturities of the Company's debt for each of the next five years at
December 31, 2000 are as follows (In thousands):

2001...... $ 33,787
2002...... 29,512
2003...... 464,498
2004...... 33,984
2005...... 250,043
Thereafter 1,863,543

8. Income Taxes

The provision for historical federal and state income taxes is as follows:

Year ended December 31
-------------------------
2000 1999 1998
-------- ------- -------
(In thousands)

Historical:
Domestic federal:
Current............ $ 10,419 $39,643 $14,291
Deferred........... 97,756 37,598 21,047
-------- ------- -------
108,175 77,241 35,338
Domestic state:
Current............ 3,587 10,405 1,067
Deferred........... 6,815 3,437 7,020
-------- ------- -------
10,402 13,842 8,087
-------- ------- -------
Total domestic..... 118,577 91,083 43,425

Foreign federal:
Current............ 1,061 4,917 519
Deferred........... 3,590 465 (492)
-------- ------- -------
4,651 5,382 27
Foreign provincial:
Current............ 774 2,356 277
Deferred........... 1,119 320 (230)
-------- ------- -------
1,893 2,676 47
-------- ------- -------
Total foreign...... 6,544 8,058 74
-------- ------- -------
$125,121 $99,141 $43,499
======== ======= =======

F-25

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A reconciliation of the provision for income taxes and the amount computed
by applying the statutory federal income tax rate of 35% to income before
provision for income taxes is as follows:

Year ended December 31
--------------------------
2000 1999 1998
-------- ------- -------
(In thousands)

Computed tax rate at statutory tax rate.................... $105,524 $84,632 $27,404
State income taxes, net of federal tax benefit............. 6,762 8,997 4,177
Non-deductible expenses.................................... 9,992 6,265 7,400
Provision for deferred taxes of Subchapter S Corporation at
time of pooling.......................................... 4,750
Other...................................................... 2,843 (753) (232)
-------- ------- -------
$125,121 $99,141 $43,499
======== ======= =======

The components of deferred income tax assets (liabilities) are as follows:

December 31
---------------------
2000 1999
--------- ---------
(In thousands)

Property and equipment..................... $(298,058) $(175,180)
Intangibles................................ (32,518) (13,188)
Reserves and allowances.................... 37,460 48,577
Net operating loss and credit carryforwards 84,257 56,266
Other...................................... 2,616 2,296

--------- ---------
$(206,243) $ (81,229)

========= =========

The current and deferred tax assets and liabilities at December 31, 2000
include the effects of certain reclassifications related to differences between
the income tax provisions and tax returns for prior years. These
reclassifications had no effect on net income.

For financial reporting purposes, income before income taxes and
extraordinary items for the Company's foreign subsidiaries was $15.6 million
and $19.9 million for the years ended December 31, 2000 and 1999, respectively.
At December 31, 2000 and 1999, unremitted earnings of foreign subsidiaries were
approximately $22.9 million and $13.8 million, respectively. Since it is the
Company's intention to indefinitely reinvest these earnings, no United States
taxes have been provided. Determination of the amount of unrecognized deferred
tax liability on these unremitted taxes is not practicable.

The Company has net operating loss carryforwards ("NOL's") of $138.2
million for federal income tax purposes that expire through 2018.

9. Holding Company Reorganization

URI was formerly named United Rentals, Inc. On August 5, 1998, a
reorganization was effected pursuant to which (i) URI became a wholly owned
subsidiary of Holdings, a newly formed holding company, (ii) the name of URI
was changed from United Rentals, Inc. to United Rentals (North America), Inc.,
(iii) the name of the new holding company became United Rentals, Inc., (iv) the

F-26

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

outstanding common stock of URI was automatically converted, on a
share-for-share basis, into common stock of Holdings and (v) the common stock
of Holdings commenced trading on the New York Stock Exchange under the symbol
"URI" instead of the common stock of URI. The purpose of the reorganization was
to facilitate certain financings. The business operations of the Company did
not change as a result of the new legal structure. The stockholders of Holdings
have the same rights, privileges and interests with respect to Holdings as they
had with respect to URI immediately prior to the reorganization.

10. Company-Obligated Mandatorily Redeemable Convertible Preferred Securities
of a Subsidiary Trust

In August 1998, a subsidiary trust (the "Trust") of Holdings issued and
sold in a private offering (the "Preferred Securities Offering") $300.0 million
of 30 year, 6 1/2% Convertible Quarterly Income Preferred Securities (the
"Preferred Securities"). The net proceeds from the Preferred Securities
Offering were approximately $290.0 million. The Trust used the proceeds from
the Preferred Securities Offering to purchase 6 1/2% convertible subordinated
debentures due 2028 (the "Debentures") from Holdings which resulted in Holdings
receiving all of the net proceeds of the Preferred Securities Offering.
Holdings in turn contributed the net proceeds of the Preferred Securities
Offering to URI. The Preferred Securities are non-voting securities, carry a
liquidation value of $50 per security and are convertible into the Company's
common stock at an initial rate of 1.146 shares per security (equivalent to an
initial conversion price of $43.63 per share). They are convertible at any time
at the holders' option and are redeemable, at the Company's option, after three
years, subject to certain conditions.

Holders of the Preferred Securities are entitled to preferential cumulative
cash distributions from the Trust at an annual rate of 6 1/2% of the
liquidation value, accruing from the original issue date and payable quarterly
in arrears beginning February 1, 1999. The distribution rate and dates
correspond to the interest rate and payments dates on the Debentures. Holdings
may defer interest payments on the Debentures for up to twenty consecutive
quarters, but not beyond the maturity date of the Debentures. If interest
payments on the Debentures are deferred, so are the payments on the Preferred
Securities. Under this circumstance, Holdings will be prohibited from paying
dividends on any of its capital stock or making payments with respect to its
debt that rank pari passu with or junior to the Debentures.

Holdings has executed a guarantee with regard to payment of the Preferred
Securities to the extent that the Trust has sufficient funds to make the
required payments.

11. Capital Stock

Series A Perpetual Convertible Preferred Stock. On January 7, 1999,
Holdings sold 300,000 shares of its Series A Perpetual Convertible Preferred
Stock ("Series A Preferred"). Subject to certain thresholds related to the
aggregate number of shares issuable upon conversion of Series A Preferred, the
holders of the Series A Preferred, voting separately as a single class, have
the right, on an as-converted basis, to elect up to two directors. Currently,
holders of the Series A Preferred may elect two directors. Except for the
election of directors, the holders of the Series A Preferred have the same
voting rights as those belonging to holders of Holdings common stock. The net
proceeds from the sale of the Series A Preferred were approximately $287.0
million. Holdings contributed such net proceeds to URI. The Series A Preferred
is convertible into 12,000,000 shares of Holdings common stock at $25 per share
based upon a liquidation preference of $1,000 per share of Series A Preferred,
subject to adjustment. The Series A Preferred has no stated dividend. However,
in the event Holdings declares or

F-27

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

pays any dividends on, or distributions of, its common stock, it must (subject
to certain exceptions) also declare and pay to the holders of Series A
Preferred the dividends and distributions which would have been declared and
paid upon conversion of the Series A Preferred.

Series B Perpetual Convertible Preferred Stock. On September 30, 1999,
Holdings sold 150,000 shares of its Series B Perpetual Convertible Preferred
Stock ("Series B Preferred"). The Series B Preferred is divided into two
classes designated as Class B-1 and Class B-2. Other than voting rights, the
classes are substantially the same. The holders of the 105,252 shares of Class
B-1 are entitled to the same voting rights, on an as-converted basis, as those
belonging to holders of Holdings common stock. The holders of the 44,748 shares
of Class B-2 have no such voting rights. The net proceeds from the sale of the
Series B Preferred were approximately $143.8 million. Holdings contributed such
net proceeds to URI. The Series B Preferred is convertible into 5,000,000
shares of Holding's common stock at $30 per share based upon a liquidation
preference of $1,000 per share of Series B Preferred, subject to adjustment.
The Series B Preferred has no stated dividend. However, in the event Holdings
declares or pays any dividends on, or distributions of, its common stock, it
must (subject to certain exceptions) also declare and pay to the holders of
Series B Preferred the dividends and distributions which would have been
declared and paid upon conversion of the Series B Preferred.

Warrants. As of December 31, 2000 there are outstanding warrants to
purchase an aggregate of 7,094,296 shares of common stock. The weighted average
exercise price of the warrants is $11.76 per share. All warrants are currently
exercisable and may be exercised at any time through 2009.

Common Stock. On March 9, 1999, Holdings completed a public offering of
2,290,000 shares of common stock. The net proceeds to the Company from this
offering were approximately $64.7 million (after deducting underwriting
discounts and offering expenses). Holdings contributed such net proceeds to
URI. During 2000, the Company approved a share repurchase program to acquire up
to $200 million of its issued and outstanding common stock. Share repurchases
under the program may be made from time to time, continuing through May 2002.
During 2000, the Company repurchased and retired 1,785,015 shares of common
stock.

1997 Stock Option Plan. The Company's 1997 Stock Option Plan provides for
the granting of options to purchase not more than an aggregate of 5,000,000
shares of common stock. Some or all of such options may be "incentive stock
options" within the meaning of the Internal Revenue Code. All officers,
directors and employees of the Company and other persons who perform services
on behalf of the Company are eligible to participate in this plan. Each option
granted pursuant to this plan must provide for an exercise price per share that
is at least equal to the fair market value per share of common stock on the
date of grant. No options may be granted under this plan after August 31, 2007.
As of December 31, 2000 and 1999, options to purchase an aggregate of 4,950,536
shares and 4,731,183 shares of common stock, respectively, were outstanding
under this plan. The exercise price of each option, the period during which
each option may be exercised and other terms and conditions of each option are
determined by the Board of Directors (or by a committee appointed by the Board
of Directors).

1998 Stock Option Plan. The Company's 1998 Stock Option Plan provides for
the granting of options to purchase not more than an aggregate of 4,200,000
shares of common stock. Some or all of the options issued under the 1998 Stock
Option Plan may be "incentive stock options" within the meaning of the Internal
Revenue Code. All officers and directors of the Company and its subsidiaries
are eligible to participate in the 1998 Stock Option Plan. Each option granted
pursuant to the 1998

F-28

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Option Plan must provide for an exercise price per share that is at least
equal to the fair market value per share of common stock on the date of grant.
No options may be granted under the 1998 Stock Option Plan after August 20,
2008. As of December 31, 2000 and 1999, options to purchase an aggregate of
4,200,000 shares of common stock were outstanding pursuant to this plan to
executive officers and directors. The exercise price of each option, the period
during which each option may be exercised and other terms and conditions of
each option are determined by the Board of Directors (or by a committee
appointed by the Board of Directors).

1998 Supplemental Stock Option Plan. The Company has adopted a stock option
plan pursuant to which options, for up to an aggregate of 5,600,000 shares of
common stock, may be granted to employees who are not officers or directors and
to consultants and independent contractors who perform services for the Company
or its subsidiaries. As of December 31, 2000 and 1999, options to purchase an
aggregate of 5,373,509 shares and 4,140,384 shares of common stock,
respectively, were outstanding pursuant to this plan. The exercise price of
each option, the period during which each option may be exercised and other
terms and conditions of each option are determined by the Board of Directors
(or by a committee appointed by the Board of Directors).

1997 Performance Award Plan. Effective February 20, 1997, U.S. Rentals
adopted the 1997 Performance Award Plan under which stock options and other
awards could be granted to key employees and directors at prices and terms
established by U.S. Rentals at the date of grant. The options expire in 2007.
As a result of the Merger, all outstanding options to purchase shares of U.S.
Rentals common stock became fully vested and were converted into options to
purchase the Company's common stock. As of December 31, 2000 and 1999, options
to purchase an aggregate of 2,572,050 shares and 2,581,675 shares of common
stock, respectively, were outstanding pursuant to this plan.

A summary of the transactions within the Company's stock option plans
follows:

Weighted
Average
Exercise
Shares Price
---------- ------

Outstanding at January 1, 1998.. 4,825,699 $19.52
Granted...................... 9,453,718 19.78
Exercised.................... (25,025) 20.78
Canceled..................... (209,578) 22.94
---------- ------

Outstanding at December 31, 1998 14,044,814 19.60
Granted...................... 3,092,462 26.77
Exercised.................... (1,331,528) 20.74
Canceled..................... (152,506) 26.70
---------- ------

Outstanding at December 31, 1999 15,653,242 20.86
Granted...................... 1,921,125 16.56
Exercised.................... (26,307) 16.91
Canceled..................... (451,965) 27.03
---------- ------
Outstanding at December 31, 2000 17,096,095 $20.23
========== ======
Exercisable at December 31, 2000 11,906,938 $19.58
========== ======

F-29

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Options Outstanding Options Exercisable
-------------------------------- --------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Amount Contractual Exercise Amount Exercise
Range of Exercise Prices Outstanding Life Price Exercisable Price
- ------------------------ ---------- --------- ------ ---------- ------

$10.00 - $15.00......... 4,722,077 7.7 years $12.38 4,317,980 $12.30
15.01 - 20.00......... 1,995,359 9.0 years 16.79 293,787 18.72
20.01 - 25.00......... 7,146,663 7.1 years 21.77 5,543,191 21.64
25.01 - 30.00......... 1,821,230 8.2 years 27.33 888,666 27.27
30.01 - 50.00......... 1,410,766 7.4 years 34.67 863,314 35.08
---------- ----------
17,096,095. 7.6 years 20.23 11,906,938 19.58
========== ==========

The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees" in accounting for stock-based employee compensation arrangements
whereby no compensation cost related to stock options is deducted in
determining net income. Had compensation cost for the Company's stock option
plans been determined pursuant to SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have
differed. The weighted average fair value of options granted was $7.70, $10.99
and $11.94 during 2000, 1999 and 1998, respectively. The fair value is
estimated on the date of grant using the Black-Scholes option pricing model
which uses subjective assumptions which can materially affect fair value
estimates and, therefore, does not necessarily provide a single measure of fair
value of options. Using the Black-Scholes option pricing model and a risk-free
interest rate average of 5.15%, 6.29% and 4.6% in 2000, 1999 and 1998,
respectively, a volatility factor for the market price of the Company's common
stock of 69%, 52% and 85% in 2000, 1999 and 1998, respectively, and a
weighted-average expected life of options of approximately three years in 2000,
1999 and 1998, the Company's net income (loss), basic earnings (loss) per share
and diluted earnings (loss) per share would have been $156.4 million, $2.20 and
$1.69, respectively, for the year ended December 31, 2000, $104.3 million,
$1.46 and $1.12, respectively, for the year ended December 31, 1999, and $(13.3
million), $(0.20) and $(0.20), respectively, for the year ended December 31,
1998. For purposes of these pro forma disclosures, the estimated fair value of
options is amortized over the options' vesting period. Since the number of
options granted and their fair value may vary significantly from year to year,
the pro forma compensation expense in future years may be materially different.

At December 31, 2000 there are (i) 7,094,296 shares of common stock
reserved for the exercise of warrants, (ii) 17,338,256 shares of common stock
reserved for issuance pursuant to options granted and that may be granted in
the future under the Company's stock option plans, (iii) 6,875,580 shares of
common stock reserved for the issuance of outstanding preferred securities of a
subsidiary trust, (iv) 17,000,000 shares of common stock reserved for the
issuance of Series A and Series B preferred stock and (v) 232,586 shares of
common stock reserved for the conversion of convertible debt.

F-30

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

12. Earnings Per Share

The following table sets forth the computation of historical basic and
diluted earnings per share:

Year Ended December 31
-----------------------------------
2000 1999 1998
----------- ----------- -----------
(In thousands, except share and
per share data)

Numerator:
Income before extraordinary item............ $ 176,375 $ 142,666 $ 34,798
Plus: preferred dividends of a subsidiary
trust, net of taxes....................... 11,406
----------- ----------- -----------
Income available to common stockkholders.... $ 187,781 $ 142,666 $ 34,798
=========== =========== ===========
Denominator:
Denominator for basic earnings per share-
weighted-average shares................... 71,069,174 71,353,127 66,225,492
Effect of dilutive securities:
Employee stock options.................... 1,517,015 4,651,237 2,641,194
Warrants.................................. 2,791,387 3,978,536 4,208,434
Series A Preferred........................ 12,000,000 11,802,740
Series B Preferred........................ 5,000,000 1,250,000
Company-obligated mandatorily
redeemable convertible preferred
securities of a subsidiary trust........ 6,876,003
----------- ----------- -----------
Denominator for dilutive earnings per share-
adjusted weighted-average shares.......... 99,253,579 93,035,640 73,075,120
=========== =========== ===========
Earnings per share-basic:
Income before extraordinary item............ $ 2.48 $ 2.00 $ 0.53
Extraordinary item, net..................... 0.33
----------- ----------- -----------
Net income.................................. $ 2.48 $ 2.00 $ 0.20
=========== =========== ===========
Earnings per share-diluted:
Income before extraordinary item............ $ 1.89 $ 1.53 $ 0.48
Extraordinary item, net..................... 0.30
----------- ----------- -----------
Net income.................................. $ 1.89 $ 1.53 $ 0.18
=========== =========== ===========

F-31

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. Commitments and Contingencies

Operating Leases

The Company leases rental equipment, real estate and certain office
equipment under operating leases. Certain real estate leases require the
Company to pay maintenance, insurance, taxes and certain other expenses in
addition to the stated rentals. Future minimum lease payments, by year and in
the aggregate, for noncancellable operating leases with initial or remaining
terms of one year or more are as follows at December 31, 2000:

Real Rental Other
Estate Equipment Equipment
Leases Leases Leases
-------- -------- -------
(In thousands)

2001...... $ 51,815 $ 98,158 $17,318
2002...... 46,464 93,864 15,372
2003...... 42,739 77,597 12,076
2004...... 39,706 55,889 10,827
2005...... 34,153 43,352 2,487
Thereafter 108,175 34,830
-------- -------- -------
$323,052 $403,690 $58,080
======== ======== =======

The Company was the seller-lessee in sale-leaseback transactions in 2000
where it sold rental equipment for aggregate proceeds of $218.8 million, in
1999 where it sold rental equipment for aggregate proceeds of $88.0 million and
in 1998 where it sold rental equipment for aggregate proceeds of $35.0 million.
For the 2000 transactions, the Company agreed to lease back the rental
equipment over periods ranging from eight months to five years. In connection
with the 2000 transactions, the Company recognized a gain of $12.5 million and
recorded deferred gains on the sales of approximately $4.0 million. For the
1999 transaction, the Company agreed to lease back the rental equipment over a
five year period beginning December 1999 and will recognize a deferred gain on
the sale of approximately $6.3 million over the five year period. For the 1998
transaction, the Company agreed to lease back the rental equipment over a five
year period beginning December 1998 and will recognize a deferred gain on the
sale of approximately $0.6 million over the five year period. The future
payments under these leases are included in the table above.

Rent expense under non-cancelable operating leases totaled $137.3 million,
$65.5 million and $20.5 million for the years ended December 31, 2000, 1999 and
1998, respectively. The Company's real estate leases provide for varying terms
and include 24 leases that are on a month-to-month basis and 42 leases that
provide for a remaining term of less than one year and do not provide a renewal
option.

Employee Benefit Plans

The Company currently sponsors one defined contribution 401(k) retirement
plan which is subject to the provisions of ERISA. The Company also sponsors a
deferred profit sharing plan for the benefit of the full time employees of its
Canadian subsidiaries. Under these plans, the Company matches a percentage of
the participants contributions up to a specified amount. Company contributions
to the plans were $6.2 million, $4.6 million and $1.0 million for the years
ended December 31, 2000, 1999 and 1998, respectively.

Legal Matters

The Company is party to legal proceedings and potential claims arising in
the ordinary course of its business. In the opinion of management, the Company
has adequate legal defenses, reserves, or

F-32

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

insurance coverage with respect to these matters so that the ultimate
resolution will not have a material adverse effect on the Company's financial
position, results of operations, or cash flows. The Company had accrued $7.6
million and $13.7 million at December 31, 2000 and 1999, respectively, to cover
the uninsured portion of possible costs arising from these pending claims and
other potential unasserted claims.

Environmental Matters

The Company and its operations are subject to various laws and related
regulations governing environmental matters. Under such laws, an owner or
lessee of real estate may be liable for the costs of removal or remediation of
certain hazardous or toxic substances located on or in, or emanating from, such
property, as well as investigation of property damage. The Company incurs
ongoing expenses associated with the removal of underground storage tanks and
the performance of appropriate remediation at certain of its locations. The
Company believes that such removal and remediation will not have a material
adverse effect on the Company's financial position, results of operations, or
cash flows.

14. Segment Information

The Company operates in one industry segment consisting of the rental and
sales of equipment and related merchandise and parts. The Company's operations
are managed as one segment, or strategic unit, because it offers similar
products and services in similar markets and the factors determining strategic
decisions are comparable for all products and services.

The Company operates in the United States, Canada and Mexico. Revenues are
attributable to countries based upon the location of the customers. Geographic
area information for the years ended December 31, 2000, 1999 and 1998 is as
follows:

Year ended December 31
--------------------------------
2000 1999 1998
---------- ---------- ----------
(In thousands)

Revenues from external customers
Domestic..................................... $2,753,266 $2,086,808 $1,168,071
Foreign...................................... 165,595 146,820 52,211
---------- ---------- ----------
Total revenues from external customers........ $2,918,861 $2,233,628 $1,220,282
========== ========== ==========

Rental equipment, net
Domestic..................................... $1,604,191 $1,537,199 $1,099,539
Foreign...................................... 128,644 122,534 43,467
---------- ---------- ----------
Total consolidated rental equipment, net...... $1,732,835 $1,659,733 $1,143,006
========== ========== ==========

Property and equipment, net
Domestic..................................... $ 405,873 $ 285,456 $ 180,777
Foreign...................................... 16,366 19,451 4,734
---------- ---------- ----------
Total consolidated property and equipment, net $ 422,239 $ 304,907 $ 185,511
========== ========== ==========

Intangible assets, net
Domestic..................................... $2,092,882 $1,740,326 $ 867,090
Foreign...................................... 134,126 123,046 54,975
---------- ---------- ----------
Total consolidated intangible assets, net..... $2,227,008 $1,863,372 $ 922,065
========== ========== ==========

F-33

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

15. Quarterly Financial Information (Unaudited)

Selected Financial Data

The following table of quarterly financial information has been prepared
from unaudited financial statements of the Company, and reflects adjustments
which are, in the opinion of management, necessary for a fair presentation of
the interim periods presented.

First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
(In thousands, except per share data)

For the year ended December 31, 2000:
Total revenues...................... $578,962 $729,946 $859,033 $750,920
Gross profit........................ 205,984 271,798 340,704 270,084
Net income.......................... 17,411 47,199 75,391 36,374
Basic earnings per share............ $ 0.24 $ 0.66 $ 1.07 $ 0.51
Diluted earnings per share.......... 0.19 0.51 0.79 0.40

For the year ended December 31, 1999:
Total revenues...................... $392,309 $503,662 $668,618 $669,039
Gross profit........................ 133,991 184,064 256,979 249,884
Net income.......................... 16,225 25,886 56,208 44,347
Basic earnings per share............ $ 0.24 $ 0.36 $ 0.78 $ 0.62
Diluted earning per share........... 0.18 0.28 0.60 0.48

16. Condensed Consolidating Financial Information of Guarantor Subsidiaries

Certain indebtedness of URI, a wholly owned subsidiary of Holdings (the
"Parent"), is guaranteed by URI's United States subsidiaries (the "guarantor
subsidiaries") but is not guaranteed by URI's foreign subsidiaries (the
"non-guarantor subsidiaries"). The guarantor subsidiaries are all wholly-owned
and the guarantees are made on a joint and several basis and are full and
unconditional (subject to subordination provisions and subject to a standard
limitation which provides that the maximum amount guaranteed by each guarantor
will not exceed the maximum amount that can be guaranteed without making the
guarantee void under fraudulent conveyance laws). Separate consolidated
financial statements of the guarantor subsidiaries have not been presented
because management believes that such information would not be material to
investors. However, condensed consolidating financial information as of
December 31, 2000 and 1999, and for each of the three years in the period ended
December 31, 2000, are presented. The condensed consolidating financial
information of the Company and its subsidiaries are as follows:

F-34

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2000

Guarantor Non-Guarantor Other and Consolidated
Parent URI Subsidiaries Subsidiaries Eliminations Total
---------- ---------- ---------- ---------- ----------- ----------
(In thousands)

Assets
Cash and cash equivalents...... $ 29,733 $ 4,651 $ 34,384
Accounts receivable, net....... $ 216,444 143,295 109,855 469,594
Intercompany receivable
(payable)..................... 319,423 (55,187) (264,236)
Inventory...................... 54,022 73,979 5,379 133,380
Prepaid expenses and other
assets........................ 28,263 75,633 597 104,493
Rental equipment, net.......... 837,972 766,219 128,644 1,732,835
Property and equipment, net.... $ 34,807 139,871 231,195 16,366 422,239
Investment in subsidiaries..... 1,839,952 2,257,692 $(4,097,644)
Intangible assets, net......... 960,444 1,132,438 134,126 2,227,008
---------- ---------- ---------- ---------- ----------- ----------
$1,874,759 $4,814,131 $2,397,305 $ 135,382 $(4,097,644) $5,123,933
========== ========== ========== ========== =========== ==========

Liabilities and Stockholder's
Equity
Liabilities:
Accounts payable............ $ 78,623 $ 165,677 $ 15,855 $ 260,155
Debt........................ $ 300,000 2,647,144 3,484 24,739 $ (300,000) 2,675,367
Deferred taxes.............. 186,091 20,702 (550) 206,243
Accrued expenses and
other liabilities.......... 28,816 86,560 18,862 13,750 (11,763) 136,225
---------- ---------- ---------- ---------- ----------- ----------
Total liabilities........ 328,816 2,998,418 208,725 53,794 (311,763) 3,277,990

Commitments and
contingencies
Company-obligated mandatorily
redeemable convertible
preferred securities of a
subsidiary trust.............. 300,000 300,000
Stockholder's equity:
Preferred stock............. 5 5
Common stock................ 711 711
Additional paid-in capital.. 1,196,324 1,488,238 1,830,500 65,657 (3,384,395) 1,196,324
Retained earnings........... 355,850 327,475 358,080 22,878 (708,433) 355,850
Accumulated other
comprehensive
loss....................... (6,947) (6,947) 6,947 (6,947)
---------- ---------- ---------- ---------- ----------- ----------
Total stockholder's
equity.................. 1,545,943 1,815,713 2,188,580 81,588 $(4,085,881) 1,545,943
---------- ---------- ---------- ---------- ----------- ----------
$1,874,759 $4,814,131 $2,397,305 $ 135,382 $(4,097,644) $5,123,933
========== ========== ========== ========== =========== ==========

F-35

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 1999
--------------------------------------------------------------------------
Guarantor Non-Guarantor Other and Consolidated
Parent URI Subsidiaries Subsidiaries Eliminations Total
---------- ---------- ---------- --------- ----------- ----------
(In thousands)

Assets
Cash and cash equivalents...... $ 3,689 $ 16,414 $ 3,708 $ 23,811
Accounts receivable, net....... 200,419 199,981 34,585 434,985
Intercompany receivable
(payable)..................... 142,156 42,906 (185,062)
Inventory...................... 56,086 64,253 9,134 129,473
Prepaid expenses and other
assets........................ $ 31,554 1,020 18,296 17,809 $ 12,778 81,457
Rental equipment, net.......... 747,232 789,967 122,534 1,659,733
Property and equipment, net.... 28,383 150,841 106,232 19,451 304,907
Investment in subsidiaries..... 1,702,802 2,072,115 (3,774,917)
Intangible assets, net......... 792,198 948,128 123,046 1,863,372
---------- ---------- ---------- --------- ----------- ----------
$1,762,739 $4,165,756 $2,186,177 $ 145,205 $(3,762,139) $4,497,738
========== ========== ========== ========= =========== ==========

Liabilities and Stockholder's
Equity
Liabilities:
Accounts payable............ $ 30,381 $ 71,995 $ 120,511 $ 20,059 $ 242,946
Debt........................ 300,000 2,231,923 380 33,845 $ (300,000) 2,266,148
Deferred income taxes....... 80,476 753 81,229
Accrued expenses and
other liabilities.......... 34,872 107,828 53,177 10,802 3,250 209,929
---------- ---------- ---------- --------- ----------- ----------
Total liabilities........ 365,253 2,492,222 174,068 65,459 (296,750) 2,800,252
Commitments and
contingencies
Company-obligated mandatorily
redeemable convertible
preferred securities of a
subsidiary trust.............. 300,000 300,000
Stockholder's equity:
Preferred stock............. 5 5
Common stock................ 721 721
Additional paid-in capital.. 1,216,968 1,487,907 1,830,182 65,644 $(3,383,733) 1,216,968
Retained earnings........... 179,475 185,627 181,927 13,785 (381,339) 179,475
Accumulated other
comprehensive income....... 317 317 (317) 317
---------- ---------- ---------- --------- ----------- ----------
Total stockholder's
equity.................. 1,397,486 1,673,534 2,012,109 79,746 (3,765,389) 1,397,486
---------- ---------- ---------- --------- ----------- ----------
$1,762,739 $4,165,756 $2,186,177 $ 145,205 $(3,762,139) $4,497,738
========== ========== ========== ========= =========== ==========

F-36

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 2000

Guarantor Non-Guarantor Other and Consolidated
Parent URI Subsidiaries Subsidiaries Eliminations Total
-------- ---------- ---------- ---------- ---------- ----------
(In thousands)

Revenues:
Equipment rentals............... $ 851,541 $1,094,613 $ 110,529 $2,056,683
Sales of rental equipment....... 145,519 178,576 23,583 347,678
Sales of equipment and
merchandise and other
revenues....................... 253,798 229,219 31,483 514,500
-------- ---------- ---------- ---------- ---------- ----------
Total revenues.................... 1,250,858 1,502,408 165,595 2,918,861
Cost of revenues:
Cost of equipment rentals,
excluding depreciation......... 364,047 494,350 49,080 907,477
Depreciation of rental
equipment...................... 152,640 155,239 20,252 328,131
Cost of rental equipment sales.. 87,161 106,617 14,404 208,182
Cost of equipment and
merchandise sales and other
operating costs................ 197,190 164,186 25,125 386,501
-------- ---------- ---------- ---------- ---------- ----------
Total cost of revenues............ 801,038 920,392 108,861 1,830,291
-------- ---------- ---------- ---------- ---------- ----------
Gross profit...................... 449,820 582,016 56,734 1,088,570
Selling, general and
administrative expenses.......... 184,135 245,431 24,764 454,330
Non-rental depreciation and
amortization..................... $ 7,718 33,692 39,618 5,273 86,301
-------- ---------- ---------- ---------- ---------- ----------
Operating income (loss)........... (7,718) 231,993 296,967 26,697 547,939
Interest expense.................. 19,500 217,904 135 10,740 $ (19,500) 228,779
Preferred dividends of a
subsidiary trust................. 19,500 19,500
Other (income) expense, net....... 2,129 (4,285) 320 (1,836)
-------- ---------- ---------- ---------- ---------- ----------
Income (loss) before provision
(benefit) for income taxes....... (27,218) 11,960 301,117 15,637 301,496
Provision (benefit) for income
taxes............................ (11,295) 4,908 124,964 6,544 125,121
-------- ---------- ---------- ---------- ---------- ----------
Income (loss) before equity in net
earnings of subsidiaries......... (15,923) 7,052 176,153 9,093 176,375
Equity in net earnings of
subsidiaries..................... 192,298 185,246 $ (377,544)
-------- ---------- ---------- ---------- ---------- ----------
Net income........................ $176,375 $ 192,298 $ 176,153 $ 9,093 $ (377,544) $ 176,375
======== ========== ========== ========== ========== ==========

F-37

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999

Guarantor Non-Guarantor Other and Consolidated
Parent URI Subsidiaries Subsidiaries Eliminations Total
-------- -------- ---------- -------- --------- ----------
(In thousand)

Revenues:
Equipment rentals..................... $600,431 $ 880,182 $100,413 $1,581,026
Sales of rental equipment............. 113,982 106,737 14,959 235,678
Sales of equipment and merchandise
and other revenues................... 195,647 189,829 31,448 416,924
-------- -------- ---------- -------- --------- ----------
Total revenues.......................... 910,060 1,176,748 146,820 2,233,628
Cost of revenues:
Cost of equipment rentals, excluding
depreciation......................... 250,959 381,718 44,295 676,972
Depreciation of rental equipment...... 116,385 146,622 17,634 280,641
Cost of rental equipment sales........ 62,972 64,945 8,761 136,678
Cost of equipment and merchandise
sales and other operating costs...... 161,902 128,328 24,189 314,419
-------- -------- ---------- -------- --------- ----------
Total cost of revenues.................. 592,218 721,613 94,879 1,408,710
-------- -------- ---------- -------- --------- ----------
Gross profit............................ 317,842 455,135 51,941 824,918
Selling, general and administrative
expenses............................... $ 8,267 144,341 177,456 22,531 352,595
Non-rental depreciation and
amortization........................... 4,926 29,667 24,617 3,657 62,867
-------- -------- ---------- -------- --------- ----------
Operating income (loss)................. (13,193) 143,834 253,062 25,753 409,456
Interest expense........................ 19,500 132,929 1,428 5,471 $ (19,500) 139,828
Preferred dividends of a subsidiary
trust.................................. 19,500 19,500
Other (income) expense, net............. 9,689 (1,549) (524) 427 278 8,321
-------- -------- ---------- -------- --------- ----------
Income (loss) before provision (benefit)
for income taxes....................... (42,382) 12,454 252,158 19,855 (278) 241,807
Provision (benefit) for income taxes.... (17,487) 3,039 105,531 8,058 99,141
-------- -------- ---------- -------- --------- ----------
Income (loss) before equity in net
earnings of subsidiaries............... (24,895) 9,415 146,627 11,797 (278) 142,666
Equity in net earnings of subsidiaries.. 167,561 158,424 (325,985)
-------- -------- ---------- -------- --------- ----------
Net income.............................. $142,666 $167,839 $ 146,627 $ 11,797 $(326,263) $ 142,666
======== ======== ========== ======== ========= ==========

F-38

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998

Guarantor Non-Guarantor Other and Consolidated
Parent URI Subsidiaries Subsidiaries Eliminations Total
------- -------- -------- ------- -------- ----------
(In thousands)

Revenues:
Equipment rentals..................... $213,823 $649,508 $32,135 $ 895,466
Sales of rental equipment............. 17,992 96,739 4,889 119,620
Sales of equipment and merchandise
and other revenues................... 58,582 131,427 15,187 205,196
------- -------- -------- ------- -------- ----------
Total revenues........................... 290,397 877,674 52,211 1,220,282
Cost of revenues:
Cost of equipment rentals,
excluding depreciation............... 91,100 289,892 13,758 394,750
Depreciation of rental equipment...... 45,602 125,810 4,498 175,910
Cost of rental equipment sales........ 8,586 54,805 2,745 66,136
Cost of equipment and
merchandise sales and other
operating costs...................... 49,754 98,332 11,952 160,038
------- -------- -------- ------- -------- ----------
Total cost of revenues................... 195,042 568,839 32,953 796,834
------- -------- -------- ------- -------- ----------
Gross profit............................. 95,355 308,835 19,258 423,448
Selling, general and administrative
expenses................................ 31,092 155,512 9,016 195,620
Merger-related expenses.................. 47,178 47,178
Non-rental depreciation and
amortization............................ $ 561 8,682 24,769 1,233 $ 3 35,248
------- -------- -------- ------- -------- ----------
Operating income (loss).................. (561) 55,581 81,376 9,009 (3) 145,402
Interest expense......................... 7,854 33,006 24,193 6,958 (7,854) 64,157
Preferred dividends of a subsidiary trust 7,854 7,854
Other (income) expense, net.............. (2,481) (2,605) (11) 191 (4,906)
------- -------- -------- ------- -------- ----------
Income (loss) before provision (benefit)
for income taxes and extraordinary
item.................................... (8,415) 25,056 59,788 2,062 (194) 78,297
Provision (benefit) for income taxes..... (3,472) 13,850 33,047 74 43,499
------- -------- -------- ------- -------- ----------
Income (loss) before extraordinary item
and equity in net earnings of
subsidiaries............................ (4,943) 11,206 26,741 1,988 (194) 34,798
Extraordinary item, net.................. 21,337 21,337
------- -------- -------- ------- -------- ----------
Income (loss) before equity in net
earnings of subsidiaries................ (4,943) 11,206 5,404 1,988 (194) 13,461
Equity in net earnings of subsidiaries... 18,404 7,392 (25,796)
------- -------- -------- ------- -------- ----------
Net income............................... $13,461 $ 18,598 $ 5,404 $ 1,988 $(25,990) $ 13,461
======= ======== ======== ======= ======== ==========

F-39

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Year Ended December 31, 2000

Guarantor Non-Guarantor Other and Consolidated
Parent URI Subsidiaries Subsidiaries Eliminations Total
-------- --------- --------- -------- -------- ---------
(In thousands)

Net cash provided by (used in) operating
activities.............................. $(37,379) $ 243,759 $ 227,855 $ 43,066 $ 35,420 $ 512,721
Cash Flows From Investing Activities:
Purchases of rental equipment......... (489,259) (283,488) (35,457) (808,204)
Purchases of property and
equipment............................ (13,071) (34,477) (102,510) (3,712) (153,770)
Proceeds from sales of rental
equipment............................ 145,519 178,576 23,583 347,678
Proceeds from sale of businesses...... 16,246 3,000 19,246
Payments of contingent purchase
price................................ (3,030) (13,236) (16,266)
Purchases of other companies.......... (337,257) (10,080) (347,337)
Capital contributed to subsidiary..... (331) 331
In-process acquisition costs.......... (4,285) (4,285)
-------- --------- --------- -------- -------- ---------
Net cash used in investing
activities........................ (13,402) (702,258) (217,658) (25,666) (3,954) (962,938)
Cash Flows from Financing
Activities:
Shares repurchased and retired........ (30,950) (30,950)
Dividend distributions to Parent...... (50,450) 50,450
Proceeds from debt.................... 452,912 3,290 456,202
Repayments of debt.................... (125,238) (168) (9,193) (134,599)
Proceeds from sale-leaseback.......... 193,478 193,478
Payments of financing costs........... (16,223) (185) (16,408)
Capital contributions by parent....... 331 (331)
Proceeds from the exercise of stock
options.............................. 331 331
Proceeds from dividends from
subsidiary........................... 50,450 (50,450)
-------- --------- --------- -------- -------- ---------

Net cash provided by financing
activities........................ 50,781 454,810 3,122 (9,193) (31,466) 468,054
Effect of foreign exchange rates...... (7,264) (7,264)
-------- --------- --------- -------- -------- ---------

Net increase (decrease) in cash and
cash equivalents........................ (3,689) 13,319 943 10,573
Cash and cash equivalents at beginning
of period............................... 3,689 16,414 3,708 23,811
-------- --------- --------- -------- -------- ---------
Cash and cash equivalents at end of
period.................................. $ $ 29,733 $ 4,651 $ 34,384
======== ========= ========= ======== ======== =========
Supplemental disclosure of cash flow
information:
Cash paid for interest................... $ 19,500 $ 218,346 $ 135 $ 10,782 $ 248,763
Cash paid for income taxes............... $ 19,833 $ 3,913 $ 23,746
Supplemental disclosure of non-cash
investing and financing activities:
The Company acquired the net assets
and assumed certain liabilities of other
companies as follows:...................
Assets, net of cash acquired.......... $ 554,077 $ 11,037 $ 565,114
Liabilities assumed................... (141,320) (957) (142,277)
Less:.................................
Amounts paid in common stock and
warrants of Parent................... (10,000) (10,000)
Amounts paid through issuance of
debt................................. (65,500) (65,500)
-------- --------- --------- -------- -------- ---------
Net cash paid......................... $ 337,257 $ 10,080 $ 347,337
======== ========= ========= ======== ======== =========

F-40

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Year Ended December 31, 1999

Guarantor Non-Guarantor Other and Consolidated
Parent URI Subsidiaries Subsidiaries Eliminations Total
--------- ----------- -------- --------- --------- -----------
(In thousands)

Net cash provided by (used in)
operating activities................... $ (4,824) $ 292,412 $ 13,185 $ 119,585 $ 1,002 $ 421,360
Cash Flows From Investing
Activities:
Purchases of rental equipment........ (539,775) (99,365) (78,972) (718,112)
Purchases of property and
equipment........................... (14,181) (74,634) (20,366) (14,468) (123,649)
Proceeds from sales of rental
equipment........................... 113,982 106,737 14,959 235,678
Proceeds from sale of
businesses.......................... 1,040 2,354 3,127 6,521
Payments of contingent purchase
price............................... (2,387) (4,265) (1,564) (8,216)
Purchases of other companies......... (915,937) (70,853) (986,790)
Capital contributed to subsidiary.... (522,985) 522,985
In-process acquisition costs......... (1,002) (1,002)
--------- ----------- -------- --------- --------- -----------
Net cash used in investing
activities....................... (537,166) (1,417,711) (14,905) (147,771) 521,983 (1,595,570)
Cash Flows from Financing
Activities:
Dividend distributions to Parent..... (19,500) 19,500
Proceeds from debt................... 1,025,843 26,524 31,249 1,083,616
Repayments of debt................... (474,808) (20,958) (1,884) (497,650)
Proceeds from sale-leaseback......... 88,000 88,000
Payments of financing costs.......... (18,995) (448) (19,443)
Capital contributions by parent...... 522,985 (522,985)
Proceeds from issuance of
common stock and warrants,
net of issuance costs............... 64,701 64,701
Proceeds from issuance of
preferred stock, net of issuance
costs............................... 430,800 430,800
Proceeds from the exercise of stock
options............................. 26,989 26,989
Proceeds from dividends from
subsidiary.......................... 19,500 (19,500)
--------- ----------- -------- --------- --------- -----------

Net cash provided by
financing activities............. 541,990 1,123,525 5,566 28,917 (522,985) 1,177,013
Effect of foreign exchange rates..... 598 598
--------- ----------- -------- --------- --------- -----------

Net increase (decrease) in cash and
cash equivalents....................... (1,774) 3,846 1,329 3,401
Cash and cash equivalents at beginning
of period.............................. 1,774 16,257 2,379 20,410
--------- ----------- -------- --------- --------- -----------
Cash and cash equivalents at end of
period................................. $ $ $ 20,103 $ 3,708 $ 23,811
========= =========== ======== ========= ========= ===========

Supplemental disclosure of cash
flow information:
Cash paid for interest.................. $ 19,500 $ 98,728 $ 1,194 $ 4,863 $ 124,285
Cash paid for income taxes.............. $ 16,372 $ 1,137 $ 17,509

Supplemental disclosure of non-
cash investing and financing
activities:
The Company acquired the net assets
and assumed certain liabilities of
other companies as follows:
Assets, net of cash acquired......... $ 1,371,807 $ 96,760 $ 1,468,567
Liabilities assumed.................. (448,685) (23,697) (472,382)
Less:
Amounts paid through issuance of
debt................................ (7,185) (2,210) (9,395)
--------- ----------- -------- --------- --------- -----------
Net cash paid........................ $ 915,937 $ 70,853 $ 986,790
========= =========== ======== ========= ========= ===========

F-41

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Year Ended December 31, 1998

Guarantor Non-Guarantor Other and Consolidated
Parent URI Subsidiaries Subsidiaries Eliminations Total
--------- ----------- --------- -------- ---------- -----------
(In thousands)

Net cash provided by (used in) operating
activities.............................. $ (4,157) $ (63,760) $ 206,996 $ 67,370 $ 9,680 $ 216,129
Cash Flows From Investing Activities:
Purchases of rental equipment......... (415,140) (50,494) (13,900) (479,534)
Purchases of property and equipment... (15,535) (65,742) (2,851) (1,050) 561 (84,617)
Proceeds from sales of rental
equipment............................ 17,992 96,739 4,889 119,620
Proceeds from sale of businesses...... 10,640 10,640
Payments of contingent purchase
price................................ (2,800) (1,156) (3,956)
Purchases of other companies.......... (840,730) (12,510) (58,597) (911,837)
Capital contributed to subsidiary..... (492,590) 492,590
In-process acquisition costs.......... (241) (241)
--------- ----------- --------- -------- ---------- -----------
Net cash provided by (used in)
investing activities.............. (508,125) (1,292,980) 28,084 (69,814) 492,910 (1,349,925)
Cash Flows from Financing Activities:
Dividend distributions to Parent...... (4,658) 4,658
Proceeds from debt.................... 300,000 1,225,586 10,187 27,864 (300,000) 1,263,637
Repayments of debt.................... (432,222) (230,685) (22,760) (685,667)
Proceeds from sale-leaseback.......... 35,000 35,000
Payments of financing costs........... (24,982) (10,000) (34,982)
Capital contributions by parent....... 492,590 (492,590)
Distributions to stockholders......... (3,536) (3,536)
Proceeds from issuance of common
stock and warrants, net of issuance
costs................................ 207,005 207,005
Proceeds from the exercise of stock
options.............................. 619 619
Proceeds from issuance of redeemable
convertible preferred securities..... 300,000 300,000
Proceeds from dividends from
subsidiary........................... 4,658 (4,658)
--------- ----------- --------- -------- ---------- -----------
Net cash provided by (used in)
financing activities.............. 512,282 1,291,314 (224,034) 5,104 (502,590) 1,082,076
Effect of foreign exchange rates...... (281) (281)
--------- ----------- --------- -------- ---------- -----------
Net increase (decrease) in cash and cash
equivalents............................. (65,426) 11,046 2,379 (52,001)
Cash and cash equivalents at beginning of
period.................................. 67,200 5,211 72,411
--------- ----------- --------- -------- ---------- -----------
Cash and cash equivalents at end of
period.................................. $ $ 1,774 $ 16,257 $ 2,379 $ 20,410
========= =========== ========= ======== ========== ===========
Supplemental disclosure of cash flow
information:
Cash paid for interest................... $ 4,658 $ 27,085 $ 11,098 $ 316 $ 43,157
Cash paid for income taxes............... $ 8,034 $ 2,190 $ 10,224

Supplemental disclosure of non-cash
investing and financing activities:
The Company acquired the net assets and
assumed certain liabilities of other
companies as follows:
Assets, net of cash acquired.......... $ 1,409,516 $ 12,510 $ 79,441 $ 1,501,467
Liabilities assumed................... (500,228) (18,633) (518,861)
Less:
Amounts paid in common stock and
warrants of Parent................... (58,093) (2,211) (60,304)
Amounts paid through issuance of
debt................................. (10,465) (10,465)
--------- ----------- --------- -------- ---------- -----------
Net cash paid......................... $ 840,730 $ 12,510 $ 58,597 $ 911,837
========= =========== ========= ======== ========== ===========

F-42

- --------------------------------------
- --------------------------------------

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

-----------------

TABLE OF CONTENTS

Page
----

Cautionary Notice Regarding Forward-
Looking Statements................... 1
Where You Can Find More Information.... 1
Incorporation by Reference............. 1
Prospectus Summary..................... 2
Risk Factors........................... 10
Use of Proceeds........................ 13
Price Range of Common Stock............ 13
Dividend Policy........................ 14
Capitalization......................... 15
Selected Consolidated Financial
Information.......................... 16
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... 19
Business............................... 29
Management............................. 37
Selling Stockholder.................... 43
Principal Stockholders................. 44
Description of Capital Stock........... 47
Certain Charter and By-law Provisions.. 52
Certain U.S. Tax Considerations
Applicable to Non-U.S. Holders of the
Common Stock......................... 55
Underwriting........................... 58
Legal Matters.......................... 61
Experts................................ 61
Index to Financial Statements.......... F-1

- --------------------------------------
- --------------------------------------
- --------------------------------------
- --------------------------------------

9,000,000 Shares

United Rentals, Inc.

Common Stock

----------------

[LOGO] United/TM/
Rentals

----------------

Goldman, Sachs & Co.

Credit Suisse First Boston

JPMorgan

Deutsche Banc Alex. Brown

Legg Mason Wood Walker
Incorporated

- --------------------------------------
- --------------------------------------

PART II

Item 14. Other Expenses of Issuance and Distribution

The expenses of the Registrant in connection with the distribution of the
securities being registered hereunder are set forth below and will be borne by
the Registrant.below. All expenses are
estimated other than the SEC registration fee.

-------------------------------------------------------------------------
Securities and Exchange Commission registration fee ....... $4,765.00
-------------------------------------------------------------------------$ 66,318
NASD fee........................................... 27,027
Printing expenses ......................................... 1,000.00
-------------------------------------------------------------------------expenses.................................. 300,000
Accounting fees and expenses .............................. 10,000.00
-------------------------------------------------------------------------expenses....................... 75,000
Legal fees and expenses ................................... 10,000.00
-------------------------------------------------------------------------
Miscellaneous ............................................. 5,000.00(other than blue sky)...... 250,000
Blue sky fees and expenses......................... 15,000
Miscellaneous...................................... 66,655
--------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total ............................................. $30,765.00
==========
-------------------------------------------------------------------------Total........................................... $800,000
========

Item 15. Indemnification of Directors and Officers

The Certificate of Incorporation (the "Certificate") of the United Rentals,
Inc. (the "Company") provides that a director will not be personally liable to
the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law (the "Delaware Law"), which concerns unlawful payments of
dividends, stock purchases or redemptions, or (iv) for any transaction from
which the director derived an improper personal benefit. If the Delaware Law is
subsequently amended to permit further limitation of the personal liability of
directors, the liability of a director of the Company will be eliminated or
limited to the fullest extent permitted by the Delaware Law as amended.

The Registrant, as a Delaware corporation, is empowered by Section 145 of
the Delaware Law, subject to the procedures and limitation stated therein, to
indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any threatened, pending or completed action, suit or proceeding
in which such person is made a party by reason of his being or having been a
director, officer, employee or agent of the Registrant. The statute provides
that indemnification pursuant to its provisions is not exclusive of other
rights of indemnification to which a person may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors, or otherwise. The
Company has entered into indemnification agreements with its directors and
officers. In general, these agreements require the Company to indemnify each of
such persons against expenses, judgments, fines, settlements and other
liabilities incurred in connection with any proceeding (including a derivative
action) to which such person may be made a party by reason of the fact that
such person is or was a director, officer or employee of the Company or
II-1

guaranteed any obligations of the Company, provided that the right of an
indemnitee to receive indemnification is subject to the following limitations:
(i) an indemnitee is not entitled to indemnification unless he acted in good
faith and in a manner that he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful and
(ii) in the case of a derivative action, an indemnitee is not entitled to
indemnification in the event that he is judged in a final non-appealable
decision of a court of competent jurisdiction to be liable to the Company due
to willful misconduct in the performance of his duties to the Company (unless
and only to the extent that the court determines that the indemnitee is fairly
and reasonably entitled to indemnification).

Pursuant to Section 145 of the Delaware Law, the Registrant has purchased
insurance on behalf of its present and former directors and officers against
any liability asserted against or incurred by them in such capacity or arising
out of their status as such.

II-1

Item 16. Exhibits.
1.1 Form of Underwriting Agreement*

4.1 Amended and Restated Certificate of Incorporation of the Registrant dated August 5, 1998
(incorporated by reference to Exhibit 3.1 to the Registrant's Report on Form 10-Q for the
quarterly period ended June 30, 1998)

4.2 Certificate of Amendment to the Registrant's Certificate of Incorporation dated September 29,
1998 (incorporated by reference to Exhibit 4.2 to the Registrant's Registration Statement on
Form S-3 , No. 333-70151)

4.3 Form of Certificate of Designation for Series A Perpetual Convertible Preferred Stock
(incorporated by reference to Exhibit 4(k) to the United Rentals, Inc. Registration Statement
on Form S-3, , No. 333-70151)

4.3 Form of Certificate of Designation for Series A Perpetual Convertible
Preferred Stock (incorporated by reference to Exhibit 4(k) to the United
Rentals, Inc. Amendment No. 1 on Form S-3 to Registration Statement on Form
S-1, No. 333-64463) together with a certificate of amendment thereto (incorporated
by reference to exhibit A of the United Rentals, Inc. Proxy Statement on Schedule 14A dated
July 22, 1999)

4.4 Form of Certificate of Designation for Series B Perpetual Convertible Preferred Stock
(incorporated by reference to exhibit B of the United Rentals, Inc. Proxy Statement on
Schedule 14A dated July 22, 1999)

4.5 By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Report
on Form 10-Q for the quarterly period ended June 30, 1998)

5.1 Opinion of Ehrenreich Eilenberg & Krause LLP*

10.1 Senior Restricted Stock Agreement, dated as of June 5, 2001, between the Registrant and
Bradley S. Jacobs**

10.2 Senior Restricted Stock Agreement, dated as of June 5, 2001, between the Registrant and
Wayland R. Hicks**

10.3 Senior Restricted Stock Agreement, dated as of June 5, 2001, between the Registrant and
John N. Milne**

10.4 Senior Restricted Stock Agreement, dated as of June 5, 2001, between the Registrant and
Michael J. Nolan**

23.1 Consent of Ehrenreich Eilenberg & Krause LLP (included in Exhibit 5.1)

II-2

23.2 Consent of Ernst & Young LLP**

24.1 Power of Attorney (included in Part II of the Registration Statement under the caption
"Signatures" )

- --------

* To be filed by amendment
** Filed herewith

Item 17. Undertakings.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;

II-2

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities and Exchange
Act of 1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against II-3

such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(d) The undersigned registrant hereby undertakes that:

(i) For the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

II-3

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Greenwich, Connecticut, on the 28th19th day of March,June, 2001.

United Rentals, Inc.UNITED RENTALS, INC.

/S/ MICHAEL J. NOLAN
By: /s/ Michael J. Nolan
----------------------_________________________________
Michael J. Nolan
Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in their
respective capacities and on the respective dates indicated. Each person whose
signature appears below hereby authorizes Bradley S. Jacobs, John N. Milne and
Michael J. Nolan and each with full power of substitution, to execute in the
name and on behalf of such person any amendment or any post-effective amendment
to this Registration Statement (and any additional registration statements
relating to the same offering of securities as covered by this Registration
Statement that are filed pursuant to Rule 462(b) under the Securities Act) and
to file the same, with exhibits thereto, and other documents in connection
therewith, making such changes in this Registration Statement as the Registrant
deems appropriate, and appoints each of Bradley S. Jacobs, John N. Milne and
Michael J. Nolan, each with full power of substitution, attorney-in-fact to
sign any amendment and any post-effective amendment to this Registration
Statement and to file the same, with exhibits thereto, and other documents in
connection therewith.

II-4
Name Title Date
---- ----- ----

/S/ BRADLEY S. JACOBS Chairman, Chief Executive June 19, 2001
----------------------- Officer and Director (principal
Bradley S. Jacobs /s/ Bradley S. Jacobs
- ----------------------
Bradley S. Jacobs
Chairman, Chief Executive Officer and Director (Principal Executive Officer)
March 28, 2001

Waylandexecutive officer)

/S/ WAYLAND R. Hicks

/s/ Wayland R. Hicks
- ---------------------
Wayland R. Hicks,HICK Vice Chairman and Director March 28,June 19, 2001
II-5
-----------------------
Wayland R. Hicks

/S/ JOHN N. MILNE Vice Chairman and Director June 19, 2001
-----------------------
John N. Milne

/s/ John N. Milne
- -------------------
John N. Milne, Vice Chairman andLEON D. BLACK Director March 28,June 19, 2001
-----------------------
Leon D. Black

/s/ LeonRICHARD D. Black
- -------------------
Leon D. Black,COLBURN Director March 28,June 19, 2001
-----------------------
Richard D. Colburn

/s/ Richard D. Colburn
- ------------------------
Richard D. Colburn,/S/ RONALD M. DEFEO Director March 28,June 19, 2001
-----------------------
Ronald M. DeFeo

/s/ Ronald M. DeFeo
- ---------------------
Ronald M. DeFeo,MICHAEL S. GROSS Director March 28,June 19, 2001
-----------------------
Michael S. Gross

/s/ Michael S. Gross
- ----------------------
Michael S. Gross,/S/ RICHARD J. HECKMANN Director March 28,June 19, 2001
-----------------------
Richard J. Heckmann

/s/ Richard J. Heckmann
- -------------------------
Richard J. Heckmann,JOHN S. MCKINNEY Director March 28,June 19, 2001
II-6
-----------------------
John S. McKinney

S-1

Name Title Date
- --------------------------
John S. McKinney,---- ----- ----

/s/ GERALD TSAI, JR. Director Gerald Tsai, Jr.

/s/ Gerald Tsai, Jr.June 19, 2001
- ----------------------
Gerald Tsai, Jr.,

/S/ TIMOTHY J. TULLY Director March 28,June 19, 2001
- ----------------------
Timothy J. Tully

/S/ CHRISTIAN M. WEYER Director June 19, 2001
- ----------------------
Christian M. Weyer

/s/ Christian M. Weyer/S/ MICHAEL J. NOLAN Chief Financial Officer June 19, 2001
- ------------------------
Christian M. Weyer, Director
March 28, 2001---------------------- (principal financial and
Michael J. Nolan /s/ Michael J. Nolan
- ----------------------
Michael J. Nolan, Chief Financial Officer
(Principal Financial Officer)
March 28, 2001

Peter R. Borzilleri

/s/ Peter R. Borzilleri
- -------------------------
Peter R. Borzilleri, Vice President, Corporate Controller
(Principal Accounting Officer)
March 28, 2001

II-7accounting officer)

S-2