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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the quarterly period ended March 31, 1999

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-14387

United Rentals, Inc.

Commission File No. 1-13663

United Rentals (North America), Inc.
(Exact names of registrants as specified in their charters)

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

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

Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.

X Yes No

As of May 10, 1999, there were 71,569,756 shares of the United Rentals, Inc.
common stock, $.01 par value outstanding. There is no market for the common
stock of United Rentals (North America), Inc., all outstanding shares of which
are owned by United Rentals, Inc.

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

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UNITED RENTALS, INC.
UNITED RENTALS (NORTH AMERICA), INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999

INDEX

Page
----

PART I FINANCIAL INFORMATION
Item 1 Unaudited Consolidated Financial Statements
United Rentals, Inc. Consolidated Balance Sheets as of March 31,
1999 and
December 31, 1998 (unaudited)................................... 6
United Rentals, Inc. Consolidated Statements of Operations for
the Three Months Ended March 31, 1999 and 1998 (unaudited)...... 7
United Rentals, Inc. Consolidated Statement of Stockholders'
Equity for the Three Months Ended March 31, 1999 (unaudited).... 8
United Rentals, Inc. Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 1999 and 1998 (unaudited)...... 9
United Rentals (North America), Inc. Consolidated Balance Sheets
as of March 31, 1999
and December 31, 1998 (unaudited)............................... 10
United Rentals (North America), Inc. Consolidated Statements of
Operations for the
Three Months Ended March 31, 1999 and 1998 (unaudited).......... 11
United Rentals (North America), Inc. Consolidated Statement of
Stockholder's Equity for the Three Months Ended March 31, 1999
(unaudited)..................................................... 12
United Rentals (North America), Inc. Consolidated Statements of
Cash Flows for the
Three Months Ended March 31, 1999 and 1998 (unaudited).......... 13
Notes to Unaudited Consolidated Financial Statements............. 14
Management's Discussion and Analysis of Financial Condition and
Item 2 Results of Operations........................................... 26
Item 3 Quantitative and Qualitative Disclosures about Market Risk....... 35
PART II OTHER INFORMATION
Item 1 Legal Proceedings................................................ 35
Item 2 Changes in Securities and Use of Proceeds........................ 37
Item 6 Exhibits and Reports on Form 8-K................................. 39
Signatures....................................................... 41

Certain of the statements contained in this Report are forward looking in
nature. Such statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," or
"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 these factors are discussed in Item 2 of Part I
of this Report under the caption "--Factors that May Influence Future Results
and Accuracy of Forward-Looking Statements." We make no commitment to revise
or update any forward-looking statements in order to reflect events or
circumstances after the date any such statement is made.

UNITED RENTALS

United Rentals is the largest equipment rental company in North America with
482 branch locations in 41 states, Canada and Mexico. We offer for rent over
600 different types of equipment on a daily, weekly or monthly basis and serve
customers that include construction industry participants, industrial
companies and homeowners. We also sell used rental equipment, act as a dealer
for many types of new equipment, and sell related merchandise and parts. In
the past year, we have served over 900,000 customers.

We have one of the most comprehensive and newest equipment rental fleets in
the industry. The types of rental equipment that we offer include a broad
range of light to heavy construction and industrial equipment, such as
backhoes, aerial lifts, skid-steer loaders, forklifts, compressors, pumps and
generators, as well as a variety of smaller tools and equipment. Our equipment
fleet has an original purchase price of approximately $2.3 billion and a
weighted average age of approximately 25 months (based on original purchase
price).

We began operations in October 1997 and have grown through a combination of
internal growth and the acquisition of 117 companies (through May 4, 1999).
Our acquisitions include our merger with U.S. Rentals in September 1998. At
the time of the merger, U.S. Rentals was the second largest equipment rental
company in the United States based on 1997 rental revenues.

COMPETITIVE ADVANTAGES

We believe that we benefit from the following competitive advantages:

Full Range Of Rental Equipment. We have one of the largest and most
comprehensive equipment rental fleets in the industry, which enables us to:

. attract customers by providing the benefit of "one-stop" shopping;

. serve a diverse customer base, which reduces our dependence on any
particular customer or group of customers;

. serve large customers that require assurance that substantial quantities
of different types of equipment will be available as required on a
continuing basis; and

. minimize lost sales due to equipment being unavailable.

Operating Efficiencies. We generally group our branches into clusters of 10
to 30 locations that are in the same area. Our management information system
enables each branch to track equipment at any other branch and to access all
available equipment within a cluster. We believe that our cluster strategy
produces significant operating efficiencies by enabling us to:

. market the equipment within a cluster through multiple branches, rather
than a single branch, which increases our equipment utilization rate;

. cross-market the equipment specialties of different branches within each
cluster, which increases revenues without increasing marketing expenses;
and

. reduce costs by centralizing common functions such as payroll, credit
and collection, and certain equipment delivery.

Significant Purchasing Power. We have significant purchasing power because
of our volume purchases. As a result, we can generally buy new equipment and
related merchandise and parts at prices that are significantly lower than
prices paid by smaller companies. We can also buy many other products and
services--such as insurance, telephone and fuel--at attractive rates.

Management Information System. We have a modern management information
system which facilitates rapid and informed decision-making and enables us to
respond quickly to changing market conditions. The system provides management
with a wide range of real-time operating and financial data, including reports
on inventory, receivables, customers, vendors, fleet utilization and price and
sales trends. The system also enables 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. The system includes software
developed by our Wynne Systems subsidiary, which is the leading provider of
proprietary software for use by equipment rental companies in managing and
operating multiple branch locations. We have an in-house staff of 35
management information specialists that supports our management information
system and extends it to new locations.

Customer Diversity. Our customer base is highly diversified and ranges from
Fortune 100 companies to small contractors and homeowners. We estimate that
our top ten customers accounted for approximately 4% of our revenues during
1998 (on a pro forma basis as if the acquisitions that we completed in 1998
and 1999 had been completed at the beginning of 1998).

Geographic Diversity. We have branches in 41 states, Canada and Mexico. We
believe that our geographic diversity should reduce 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 serve national accounts and access used equipment
re-sale markets across the country.

Experienced Senior Management. Our senior management combines executives who
have extensive operating experience in the equipment rental industry with
executives who have proven track records in other industries. Our senior
management includes former officers of United Waste Systems, Inc., which was a
publicly-traded solid waste management company that successfully executed a
growth strategy combining a disciplined acquisition program, the integration
and optimization of acquired facilities, and internal growth. Our senior
management also includes former executives of U.S. Rentals who have extensive
experience in the equipment rental industry.

Strong And Motivated Branch Management. Each of our branches has a full-time
branch manager who is supervised by one of our 44 district managers and eight
regional vice presidents. We believe that our branch and district managers,
who average over 20 years of experience in the equipment rental industry, are
among the most knowledgeable and experienced in the industry. We encourage
entrepreneurship at the branch level by giving branch managers a high degree
of autonomy relating to day-to-day operations. For example, each branch
manager is empowered to make decisions--within budgetary guidelines--
concerning staffing, pricing and equipment purchasing. We also promote
entrepreneurship at the branch level, as well as equipment sharing among
branches, through our profit sharing program which directly ties the
compensation of branch personnel to their branch's financial performance and
equipment utilization rates. We balance the autonomy that we grant branch
managers with systems through which senior management closely tracks branch
performance. We also share information across branches so that each branch can
measure its operating performance relative to other branches and benefit from
the best practices developed throughout our organization.

Professional Acquisition Team. Our 25-person acquisition team works full-
time on identifying and evaluating acquisition candidates and executing our
acquisition program. The core of this group consists of seasoned acquisition
professionals--most of whom were members of the acquisition team at United
Waste Systems, where they completed over 200 acquisitions. The team also
includes former owners of businesses that we acquired, who have extensive
industry experience and contacts with potential acquisition candidates.

GROWTH STRATEGY

Our plan for future growth includes the following key elements:

Continue Strong Internal Growth. We are seeking to sustain our strong
internal growth by:

. expanding and modernizing our equipment fleet;

. increasing the cross-marketing of our equipment specialties at different
locations;

. increasing our advertising--which becomes increasingly cost-effective as
we grow because the benefits are spread over a larger number of
branches;

. expanding our national accounts program--which dedicates a portion of
our sales force to establishing and expanding relationships with large
customers that have a national or multi-regional presence; and

. increasing our rentals to industrial companies by developing a
comprehensive marketing program specifically aimed at this sector.

Execute Disciplined Acquisition Program. We intend to continue our
disciplined acquisition program. We generally seek to acquire multiple
locations within the regions that we enter, with the goal of creating clusters
of locations that can share various resources, including equipment, marketing
resources, back office functions and certain equipment delivery. We are
seeking to acquire companies of varying sizes, including relatively large
companies to serve as platforms for new regional clusters and smaller
companies to complement existing or anticipated locations. In considering
whether to buy a company, we evaluate a number of factors, including purchase
price, anticipated impact on earnings, the quality of the target's rental
equipment and management, the opportunities to improve operating margins and
increase internal growth at the target, the economic prospects of the region
in which the target is located, the potential for additional acquisitions in
the region, and the competitive landscape in the target's markets.

Open New Rental Locations. Because most of the businesses that we acquired
grew through developing start-up rental locations, many of our managers have
substantial experience in this area. We intend to leverage this experience by
selectively opening new rental locations in attractive markets where there are
no suitable acquisition targets available or where the economics of a start-up
location are more attractive than buying an existing business.

Increase Cost Savings. We work to reduce costs by efficiently integrating
new and existing operations, eliminating duplicative costs, centralizing
common functions, consolidating locations that serve the same areas, and using
our purchasing power to negotiate discounts from suppliers.

Continue To Emphasize Management Systems And Controls. We intend to further
strengthen our management systems and controls, which currently include:

. a 12-person internal audit department that is responsible for ensuring
that we have adequate financial, operating, and management information
controls throughout our organization;

. a team of 25 regional and district controllers that monitors each branch
for compliance with financial and accounting procedures established at
corporate headquarters; and

. a 35-person risk management and safety department that is responsible
for: (1) developing and implementing safety programs and procedures, (2)
developing our customer and employee training programs and (3)
investigating and managing any claims that may be asserted against us.

RECENT DEVELOPMENTS

On April 5, 1999, United Rentals commenced a tender offer (the "Offer") to
purchase all outstanding shares of common stock of Rental Service Corporation,
a Delaware corporation ("Rental Service"), at a price of $22.75 per share, net
to the seller in cash, without interest. The terms and conditions of the Offer
are set

forth in a Schedule 14D-1 Tender Offer Statement, as amended, that has been
filed by us with the SEC pursuant to Section 14(d)(1) of the Securities
Exchange Act. The purpose of the Offer and a related proposed second-step
merger is to enable us to acquire control of, and ultimately the entire equity
interest in, Rental Service. We cannot at this time predict whether we will
succeed in acquiring Rental Service. For additional information concerning the
Offer and certain related litigation, see Part I--Item 2 of this Report under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Tender Offer for Rental Service Corporation" and Part 2--Item I of
this Report under "Other Information--Legal Proceedings."

INDUSTRY BACKGROUND

Industry Size And Growth

We estimate that the U.S. equipment rental industry (including used and new
equipment sales by rental companies) generates annual revenues in excess of $20
billion. The combined equipment rental revenues of the 100 largest equipment
rental companies have increased at an estimated compound annual rate of
approximately 23% from 1992 through 1997 (based upon 1992 revenues and 1997 pro
forma revenues, giving effect to certain acquisitions completed after the
beginning of 1997, reported by the Rental Equipment Register, an industry trade
publication). In addition to reflecting general economic growth, we believe
that the growth in the equipment rental industry reflects the following trends:

Recognition Of Advantages Of Renting. Equipment users are increasingly
recognizing the many advantages that equipment rental may offer compared
with ownership. They recognize that by renting they can: (1) avoid the
large capital investment required for equipment purchases, (2) reduce
storage and maintenance costs, (3) supplement the equipment that they own
and thereby increase the range and number of jobs that they can work on,
(4) access a broad selection of equipment and select the equipment best
suited for each particular job, (5) obtain equipment as needed and minimize
the costs associated with idle equipment, and (6) access the latest
technology without investing in new equipment. These advantages frequently
allow equipment users to reduce their overall costs by renting, rather than
buying, the equipment they need.

Increase In Rentals By Contractors. There has been a fundamental shift in
the way contractors meet their equipment needs. While contractors have
historically used rental equipment on a temporary basis--to provide for
peak period capacity, meet specific job requirements or replace broken
equipment--many contractors are now also using rental equipment on an
ongoing basis to meet their long-term equipment requirements.

Although growth in the equipment rental industry has to date been largely
driven by the increase in rentals by the construction industry, we believe that
other equipment users may increasingly contribute to future industry growth.
For example, many industrial companies require equipment for operating,
repairing, maintaining and upgrading their facilities, and renting this
equipment will often be more cost-effective than purchasing because typically
this equipment is not used full-time. We believe that the cost and other
advantages of renting, together with the general trend toward the corporate
outsourcing of non-core competencies, may increasingly lead industrial
companies to rent equipment. We also believe that these same considerations may
lead other equipment users--such as municipalities, government agencies and
utilities--to increasingly rent equipment. Because the penetration of these
markets by the equipment rental industry is very low in comparison to its
penetration of the construction market, we believe there is significant
potential for additional growth in these markets.

Industry Fragmentation

The equipment rental industry is highly fragmented. It consists of a small
number of multi-location regional or national operators and a large number of
relatively small, independent businesses that serve discrete local markets.
This fragmentation is reflected in the following data:

. in 1997, there were only 10 equipment rental companies that had
equipment rental revenues in excess of $100 million and approximately
100 equipment rental companies that had equipment rental revenues
between $5 million and $100 million (based upon rental revenues for 1997
as reported by the Rental Equipment Register, an industry trade
publication);

. we estimate that there are more than 20,000 companies with annual
equipment rental revenues of less than $5 million; and

. we estimate that the 100 largest equipment rental companies combined
have less than a 30% share of the market.

We believe that the fragmented nature of the industry presents substantial
consolidation and growth opportunities for companies with access to capital
and the ability to implement a disciplined acquisition program. We also
believe that our management team's extensive experience in acquiring and
effectively integrating acquisition targets should enable us to capitalize on
these opportunities.

UNITED RENTALS, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

March 31, December 31,
1999 1998
---------------- ------------------
(In thousands, except share data)

ASSETS
Cash and cash equivalents................ $ 110,846 $ 20,410
Accounts receivable, net of allowance for
doubtful accounts of $47,289 in 1999 and
$41,201 in 1998......................... 260,445 233,282
Inventory................................ 98,794 70,994
Prepaid expenses and other assets........ 98,161 59,395
Rental equipment, net.................... 1,237,583 1,143,006
Property and equipment, net.............. 202,655 185,511
Intangible assets, net of accumulated
amortization of $20,807 in 1999 and
$14,520 in 1998......................... 1,045,100 922,065
---------------- ----------------
$ 3,053,584 $ 2,634,663
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable....................... $ 197,601 $ 121,940
Debt................................... 1,260,545 1,314,574
Deferred income taxes.................. 50,756 43,560
Accrued expenses and other
liabilities........................... 129,601 128,359
---------------- ----------------
Total liabilities.................... 1,638,503 1,608,433
Commitments and contingencies
Company-obligated mandatorily redeemable
convertible preferred securities of
a subsidiary trust...................... 300,000 300,000
Stockholders' equity:
Preferred stock--$.01 par value,
5,000,000 shares authorized, no shares
issued and outstanding................
Series A perpetual convertible
preferred stock--$.01 par value,
$300,000,000 liquidation preference,
300,000 shares authorized, issued and
outstanding in 1999................... 3
Common stock--$.01 par value,
500,000,000 shares authorized in 1999
and 1998, 71,561,838 in 1999 and
68,427,999 in 1998 shares issued and
outstanding........................... 715 684
Additional paid-in capital............. 1,061,632 689,018
Retained earnings...................... 53,034 36,809
Accumulated other comprehensive
income................................ (303) (281)
---------------- ----------------
Total stockholders' equity........... 1,115,081 726,230
---------------- ----------------
$ 3,053,584 $ 2,634,663
================ ================

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

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
March 31,
--------------------
1999 1998
--------- ---------
(In thousands,
except per share
data)

Revenues:
Equipment rentals...................................... $ 288,385 $ 126,611
Sales of rental equipment.............................. 35,943 16,048
Sales of new equipment, merchandise and other
revenues.............................................. 67,981 28,482
--------- ---------
Total revenues.......................................... 392,309 171,141
Cost of revenues:
Cost of equipment rentals, excluding depreciation...... 125,819 63,196
Depreciation of rental equipment....................... 59,113 29,280
Cost of rental equipment sales......................... 20,842 8,014
Cost of new equipment and merchandise sales and other
operating costs....................................... 52,544 22,740
--------- ---------
Total cost of revenues.................................. 258,318 123,230
--------- ---------
Gross profit............................................ 133,991 47,911
Selling, general and administrative expenses............ 65,260 26,154
Non-rental depreciation and amortization................ 12,170 5,496
--------- ---------
Operating income........................................ 56,561 16,261
Interest expense........................................ 24,373 5,787
Preferred dividends of a subsidiary trust............... 4,875
Other (income) expense, net............................. (206) (796)
--------- ---------
Income before provision for income taxes................ 27,519 11,270
Provision for income taxes.............................. 11,294 4,566
--------- ---------
Net income.............................................. $ 16,225 $ 6,704
========= =========
Basic earnings per share................................ $ 0.24 $ 0.11
========= =========
Diluted earnings per share.............................. $ 0.18 $ 0.11
========= =========

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

UNITED RENTALS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)

Series A
Perpetual Convertible
Preferred Stock Common Stock
--------------------- -----------------
Accumulated
Additional Other
Number Number Paid-in Retained Comprehensive Comprehensive
of Shares Amount of Shares Amount Capital Earnings Income Income
------------ --------- ---------- ------ ---------- -------- ------------- -------------
(In thousands, except share data)

Balance, December 31,
1998................... 68,427,999 $684 $ 689,018 $36,809 $(281)
Comprehensive income:
Net income............. 16,225 $16,225
Other comprehensive
income:
Foreign currency
translation
adjustments........... (22) (22)
-------
Comprehensive income.... $16,203
=======
Issuance of Series A
perpetual convertible
preferred stock........ 300,000 $ 3 286,997
Issuance of common
stock.................. 2,292,069 23 65,175
Exercise of common stock
options................ 841,770 8 20,442
------------ -------- ---------- ---- ---------- ------- -----
Balance, March 31,
1999................... 300,000 $ 3 71,561,838 $715 $1,061,632 $53,034 $(303)
============ ======== ========== ==== ========== ======= =====

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

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended
March 31,
-------------------
1999 1998
-------- ---------
(In thousands)

Cash Flows From Operating Activities:
Net income............................................... $ 16,225 $ 6,704
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 71,283 34,776
Amortization of original issue discount and deferred
financing fees......................................... 890
Gain on sale of rental equipment........................ (15,101) (8,034)
Deferred income taxes................................... 7,115 1,115
Changes in operating assets and liabilities:
Accounts receivable..................................... (15,025) (133)
Inventory............................................... (21,930) (2,333)
Prepaid expenses and other assets....................... (15,485) (4,519)
Accounts payable........................................ 68,463 9,883
Accrued expenses and other liabilities.................. 14 (2,246)
-------- ---------
Net cash provided by operating activities........... 96,449 35,213
Cash Flows From Investing Activities:
Purchases of rental equipment............................ (114,990) (91,498)
Purchases of property and equipment...................... (25,809) (15,937)
Proceeds from sales of rental equipment.................. 35,943 16,048
In-process acquisition costs............................. (585) (759)
Payment of contingent purchase price..................... (661)
Purchases of other companies............................. (144,046) (146,240)
-------- ---------
Net cash used in investing activities............... (250,148) (238,386)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock, net of issuance
costs................................................... 65,198 206,707
Proceeds from issuance of Series A Preferred, net of
issuance costs.......................................... 287,000
Proceeds from debt....................................... 444,971 210,625
Payments of debt......................................... (548,784) (224,065)
Payment of debt financing costs.......................... (4,250) (655)
Distribution to stockholders............................. (79)
-------- ---------
Net cash provided by financing activities........... 244,135 192,533
-------- ---------
Net increase (decrease) in cash and cash equivalents..... 90,436 (10,640)
Cash and cash equivalents at beginning of period......... 20,410 72,411
-------- ---------
Cash and cash equivalents at end of period............... $110,846 $ 61,771
======== =========
Supplemental disclosure of cash flow information:
Cash paid for interest................................... $ 23,648 $ 4,798
Cash paid for income taxes............................... $ 2,942 $ 3,488
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............................ $210,818 $ 287,878
Liabilities assumed..................................... (62,377) (123,821)
Less:
Amounts paid in common stock and warrants............. (17,817)
Amounts paid through issuance of debt................. (4,395)
-------- ---------
Net cash paid....................................... $144,046 $ 146,240
======== =========

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

UNITED RENTALS (NORTH AMERICA), INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

March 31, December 31,
1999 1998
---------- ------------
(In thousands, except
share data)

ASSETS
Cash and cash equivalents............................ $ 119,709 $ 20,410
Accounts receivable, net of allowance for doubtful
accounts of $47,289 in 1999 and $41,201 in 1998..... 260,445 233,282
Inventory............................................ 98,794 70,994
Prepaid expenses and other assets.................... 23,027 43,176
Rental equipment, net................................ 1,237,583 1,143,006
Property and equipment, net.......................... 185,573 170,537
Intangible assets, net of accumulated amortization of
$20,807 in 1999 and $14,520 in 1998................. 1,045,100 922,065
---------- ----------
$2,970,231 $2,603,470
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable................................... $ 177,092 $ 108,426
Debt............................................... 1,260,545 1,314,574
Deferred income taxes.............................. 50,756 43,560
Accrued expenses and other liabilities............. 93,636 115,558
---------- ----------
Total liabilities................................ 1,582,029 1,582,118
Commitments and contingencies
Stockholder's equity:
Common stock--$0.01 par value, 3,000 shares
authorized, 1,000 shares issued and outstanding...
Additional paid-in capital......................... 1,336,543 984,345
Retained earnings.................................. 51,962 37,288
Accumulated other comprehensive income............. (303) (281)
---------- ----------
Total stockholder's equity....................... 1,388,202 1,021,352
---------- ----------
$2,970,231 $2,603,470
========== ==========

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

UNITED RENTALS (NORTH AMERICA), INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
March 31,
--------------------
1999 1998
--------- ---------
(In thousands)

Revenues:
Equipment rentals...................................... $ 288,385 $ 126,611
Sales of rental equipment.............................. 35,943 16,048
Sales of new equipment, merchandise and other reve-
nues.................................................. 67,981 28,482
--------- ---------
Total revenues........................................... 392,309 171,141
Cost of revenues:
Cost of equipment rentals, excluding depreciation...... 125,819 63,196
Depreciation of rental equipment....................... 59,113 29,280
Cost of rental equipment sales......................... 20,842 8,014
Cost of new equipment and merchandise sales and other
operating costs....................................... 52,544 22,740
--------- ---------
Total cost of revenues................................... 258,318 123,230
--------- ---------
Gross profit............................................. 133,991 47,911
Selling, general and administrative expenses............. 65,260 26,154
Non-rental depreciation and amortization................. 11,646 5,496
--------- ---------
Operating income......................................... 57,085 16,261
Interest expense......................................... 24,373 5,787
Other (income) expense, net.............................. (346) (796)
--------- ---------
Income before provision for income taxes................. 33,058 11,270
Provision for income taxes............................... 13,509 4,566
--------- ---------
Net income............................................... $ 19,549 $ 6,704
========= =========

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

UNITED RENTALS (NORTH AMERICA), INC.

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(Unaudited)

Common Stock
---------------- Additional Accumulated
Number Paid-In Retained Comprehensive Other Comprehensive
of Shares Amount Capital Earnings Income Income
--------- ------ ---------- -------- ------------- -------------------
(In thousands, except share data)

Balance, December 31,
1998................... 1,000 $ 984,345 $37,288 $(281)
Comprehensive income:
Net income............. 19,549 $19,549
Other comprehensive
income:
Foreign currency
translation
adjustments.......... (22) (22)
-------
Comprehensive income.... $19,527
=======
Contributed capital from
parent................. 352,198
Dividend distribution to
parent................. (4,875)
----- --- ---------- ------- ------
Balance, March 31,
1999................... 1,000 $1,336,543 $51,962 $(303)
===== === ========== ======= ======

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

UNITED RENTALS (NORTH AMERICA), INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended
March 31,
-------------------
1999 1998
-------- ---------
(In thousands)

Cash Flows From Operating Activities:
Net income............................................... $ 19,549 $ 6,704
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 70,759 34,776
Amortization of original issue discount and deferred
financing fees......................................... 890
Gain on sale of rental equipment........................ (15,101) (8,034)
Deferred income taxes................................... 7,115 1,115
Changes in operating assets and liabilities:
Accounts receivable..................................... (15,025) (133)
Inventory............................................... (21,930) (2,333)
Prepaid expenses and other assets....................... 26,586 (4,519)
Accounts payable........................................ 61,468 9,883
Accrued expenses and other liabilities.................. (26,756) (2,246)
-------- ---------
Net cash provided by operating activities............. 107,555 35,213
Cash Flows From Investing Activities:
Purchases of rental equipment............................ (114,990) (91,498)
Purchases of property and equipment...................... (23,177) (15,937)
Proceeds from sales of rental equipment.................. 35,943 16,048
In-process acquisition costs............................. (585) (759)
Payment of contingent purchase price..................... (661)
Purchases of other companies............................. (144,046) (146,240)
-------- ---------
Net cash used in investing activities................. (247,516) (238,386)
Cash Flows From Financing Activities:
Proceeds from debt....................................... 444,971 210,625
Payments of debt......................................... (548,784) (224,065)
Payment of debt financing costs.......................... (4,250) (655)
Capital contribution by parent........................... 352,198 206,707
Dividend distribution to parent.......................... (4,875) (79)
-------- ---------
Net cash provided by financing activities............. 239,260 192,533
-------- ---------
Net increase (decrease) in cash and cash equivalents..... 99,299 (10,640)
Cash and cash equivalents at beginning of period......... 20,410 72,411
-------- ---------
Cash and cash equivalents at end of period............... $119,709 $ 61,771
======== =========
Supplemental disclosure of cash flow information:
Cash paid for interest................................... $ 23,648 $ 4,798
Cash paid for income taxes............................... $ 2,942 $ 3,488
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............................ $210,818 $ 287,878
Liabilities assumed..................................... (62,377) (123,821)
Less:
Amounts paid in common stock and warrants by parent... (17,817)
Amounts paid through issuance of debt................. (4,395)
-------- ---------
Net cash paid....................................... $144,046 $ 146,240
======== =========

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

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

General

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. URI was
incorporated in August 1997, initially capitalized in September 1997 and
commenced equipment rental operations in October 1997. 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. Prior to such
reorganization, the name of URI was United Rentals, Inc. References herein to
"United Rentals" or 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. 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 Company's consolidated statement of operations and statement of cash
flows for the three month period ended March 31, 1998, have been restated to
include the accounts of certain acquisitions completed in 1998 that were
accounted for as poolings-of-interests (See Note 2).

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, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. 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, 1998.

Impact of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes a new model for
accounting for derivatives and hedging activities. The Company is required to
adopt SFAS No. 133 beginning January 1, 2000. The adoption of SFAS No. 133 is
not expected to have a material effect on the Company's consolidated financial
position or results of operations.

2.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 and
Equipment Co. ("Rental Tools"). This transaction was accounted for as a
pooling-of-interests and, accordingly, the consolidated statements of
operations and cash flows for the three month period ended March 31, 1998 were
restated to include the accounts 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.

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On September 29, 1998, a merger (the "Merger") of United Rentals, Inc. and
U.S. Rentals, Inc. ("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. The
Merger was accounted for as a pooling-of-interests and, accordingly, the
consolidated statements of operations and cash flows for the three month
period ended March 31, 1998 were restated to include the accounts of U.S.
Rentals.

Acquisitions Accounted for as Purchases

During the three months ended March 31, 1999, the Company completed 21
acquisitions 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.

The aggregate initial consideration paid by the Company for such
acquisitions that were accounted for as purchases was $138.9 million and
consisted of approximately $134.5 million in cash and $4.4 million in seller
notes. In addition, the Company repaid or assumed outstanding indebtedness of
the companies acquired in such acquisitions in the aggregate amount of $49.8
million. The Company also agreed in connection with three of such acquisitions
to pay additional amounts to the former owners based upon specified future
revenues and/or new store openings. Such amounts are limited to a specified
maximum amount which varies from $100,000 to $200,000, with the average being
$133,000.

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, 1999 and
1998 as though (i) each acquisition summarized above which was consummated
during the three months ended March 31, 1999, was made on January 1, 1999, in
the case of the results for the three months ended March 31, 1999, and (ii)
each acquisition which was consummated during the period January 1, 1998 to
March 31, 1999 as described above and in Note 3 to the Notes to Consolidated
Financial Statements included in the Company's 1998 Annual Report on Form 10-K
was made on January 1, 1998 in the case of the results for the three months
ended March 31, 1998 (in thousands, except per share data):

Three Months Ended
March 31,
-------------------
1999 1998
--------- ---------

Revenues.............................................. $ 404,436 $ 330,632
Net income............................................ 16,089 7,039
Basic earnings per share.............................. $ 0.23 $ 0.11
Diluted earnings per share............................ $ 0.18 $ 0.11

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.

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

3. Revolving Credit Facility

URI obtained a credit facility (the "Credit Facility") dated as of September
29, 1998, with a group of financial institutions. The Credit Facility enables
URI to borrow up to $772.5 million on a revolving basis and permits a Canadian
subsidiary of URI to directly borrow up to $40 million under the Credit
Facility (provided that the aggregate borrowings of URI and the Canadian
subsidiary do not exceed $772.5 million). The Credit Facility terminates on
September 26, 2003, at which time all outstanding indebtedness is due. There
was no indebtedness outstanding under the Credit Facility at March 31, 1999.

4.Senior Subordinated Notes

On March 23, 1999, URI issued $250 million aggregate principal amount of 9%
Senior Subordinated Notes which are due April 1, 2009. URI used approximately
$102.0 million of the net proceeds from the sale of such notes to repay all of
the then outstanding indebtedness under the Credit Facility and used the
balance of such net proceeds from this offering for acquisitions, capital
expenditures and general corporate purposes.

5. Issuance Of 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"). The net proceeds from the
sale of the Series A Preferred were approximately $287.0 million. Holdings
contributed such net proceeds to URI and URI used such net proceeds to repay
all of the then outstanding indebtedness under the Credit Facility. The Series
A Preferred is convertible into 12,000,000 shares of Holdings common stock at
$25 per share based upon the liquidation preference of $1,000 per share of
Series A Preferred, subject to adjustment.

6. 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 $64.8 million (after deducting underwriting discounts and
estimated offering expenses). Holdings contributed such net proceeds to URI
and URI used such net proceeds to repay outstanding indebtedness under the
Credit Facility.

7. 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,
--------------
1999 1998
------- ------

Numerator:
Net income.............................................. $16,225 $6,704
======= ======
Denominator:
Denominator for basic earnings per share weighted-aver-
age shares............................................. 69,012 58,622
Effect of dilutive securities:
Employee stock options................................ 5,499 1,179
Warrants.............................................. 4,430 3,731
Series A Preferred.................................... 12,000
------- ------
Denominator for diluted earnings per share--adjusted
weighted-average shares................................ 90,941 63,532
======= ======
Basic earnings per share.................................. $ 0.24 $ 0.11
======= ======
Diluted earnings per share................................ $ 0.18 $ 0.11
======= ======

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. Condensed Consolidating Financial Information Of Guarantor Subsidiaries

Certain indebtedness of URI 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). All expenses incurred by URI have been charged by URI to its
guarantor and non guarantor subsidiaries. Separate consolidated financial
statements of the guarantor subsidiaries have not been presented because
management has determined that such information would not be material to
investors. However, condensed consolidating financial information as of March
31, 1999 and December 31, 1998 and for the three months ended March 31, 1999
and 1998, are presented. The condensed consolidating financial information of
URI and its subsidiaries are as follows:

CONDENSED CONSOLIDATING BALANCE SHEET

March 31, 1999
---------------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
---------- ------------ ------------ ------------ ------------
(In thousands)

ASSETS
Cash and cash equiva-
lents.................. $ 96,236 $ 21,275 $ 2,198 $ 119,709
Accounts receivable,
net.................... 243,287 17,158 260,445
Intercompany receivable
(payable).............. 1,042,152 (925,760) (116,392)
Inventory............... 91,005 7,789 98,794
Prepaid expenses and
other assets........... 17,673 5,354 23,027
Rental equipment, net... 1,163,447 74,136 1,237,583
Property and equipment,
net.................... 178,659 6,914 185,573
Investment in subsidiar-
ies.................... 1,468,016 $(1,468,016)
Intangible assets, net.. 965,107 79,993 1,045,100
---------- ---------- --------- ----------- ----------
$2,624,077 $1,737,020 $ 77,150 $(1,468,016) $2,970,231
========== ========== ========= =========== ==========
LIABILITIES AND STOCK-
HOLDER'S EQUITY
Liabilities:
Accounts payable....... $ 5,157 $ 160,114 $ 11,821 $ 177,092
Debt................... 1,232,372 23,315 4,858 1,260,545
Deferred income tax-
es.................... 44,158 6,598 50,756
Accrued expenses and
other liabilities..... 17,466 73,847 2,323 93,636
---------- ---------- --------- ----------- ----------
Total liabilities.... 1,254,995 301,434 25,600 1,582,029
Commitments and contin-
gencies
Stockholder's equity:
Common stock............
Additional paid-in capi-
tal.................... 1,317,120 1,381,689 48,913 $(1,411,179) 1,336,543
Retained earnings....... 51,962 53,897 2,940 (56,837) 51,962
Accumulated other com-
prehensive income...... (303) (303)
---------- ---------- --------- ----------- ----------
Total stockholder's
equity.............. 1,369,082 1,435,586 51,550 (1,468,016) 1,388,202
---------- ---------- --------- ----------- ----------
$2,624,077 $1,737,020 $ 77,150 $(1,468,016) $2,970,231
========== ========== ========= =========== ==========

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 1998
---------------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
---------- ------------ ------------ ------------ ------------
(In thousands)

Assets
Cash and cash equiva-
lents.................. $ 1,774 $ 16,257 $ 2,379 $ 20,410
Accounts receivable,
net.................... 218,285 14,997 233,282
Intercompany receivable
(payable).............. 898,641 (820,958) (77,683)
Inventory............... 65,401 5,593 70,994
Prepaid expenses and
other assets........... 30,963 10,816 1,397 43,176
Rental equipment, net... 1,099,539 43,467 1,143,006
Property and equipment,
net.................... 165,803 4,734 170,537
Investment in subsidiar-
ies.................... 1,390,706 $(1,390,706)
Intangible assets, net.. 29 867,061 54,975 922,065
---------- ---------- ------- ----------- ----------
$2,322,113 $1,622,204 $49,859 $(1,390,706) $2,603,470
========== ========== ======= =========== ==========
Liabilities And Stock-
holder's Equity
Liabilities:
Accounts payable....... $ 3,250 $ 98,680 $ 6,496 $ 108,426
Debt................... 1,286,118 23,976 4,480 1,314,574
Deferred income tax-
es.................... 43,560 43,560
Accrued expenses and
other liabilities..... 30,535 82,112 2,911 115,558
---------- ---------- ------- ----------- ----------
Total liabilities.... 1,319,903 248,328 13,887 1,582,118
Commitments and contin-
gencies
Stockholder's equity:
Common stock...........
Additional paid-in
capital................ 964,922 1,338,576 34,265 $(1,353,418) 984,345
Retained earnings...... 37,288 35,300 1,988 (37,288) 37,288
Accumulated other com-
prehensive income...... (281) (281)
---------- ---------- ------- ----------- ----------
Total stockholder's
equity.............. 1,002,210 1,373,876 35,972 (1,390,706) 1,021,352
---------- ---------- ------- ----------- ----------
$2,322,113 $1,622,204 $49,859 $(1,390,706) $2,603,470
========== ========== ======= =========== ==========

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 1999
-----------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
--- ------------ ------------ ------------ ------------
(In thousands)

Revenues:
Equipment rentals..... $275,037 $13,348 $288,385
Sales of rental equip-
ment................. 33,264 2,679 35,943
Sales of new equip-
ment, merchandise and
other revenues....... 62,845 5,136 67,981
------- -------- ------- -------- --------
Total revenues.......... 371,146 21,163 392,309
Cost of revenues:
Cost of equipment
rentals, excluding
depreciation......... 118,630 7,189 125,819
Depreciation of rental
equipment............ 56,340 2,773 59,113
Cost of rental equip-
ment sales........... 19,529 1,313 20,842
Cost of new equipment
and merchandise sales
and other operating
costs................ 48,869 3,675 52,544
------- -------- ------- -------- --------
Total cost of revenues.. 243,368 14,950 258,318
------- -------- ------- -------- --------
Gross profit............ 127,778 6,213 133,991
Selling, general and ad-
ministrative
expenses............... 61,383 3,877 65,260
Non-rental depreciation
and amortization....... 11,003 643 11,646
------- -------- ------- -------- --------
Operating income........ 55,392 1,693 57,085
Interest expense........ 24,278 95 24,373
Other (income) expense,
net.................... (141) (205) (346)
------- -------- ------- -------- --------
Income before provision
for income taxes ...... 31,255 1,803 33,058
Provision for income
taxes.................. 12,658 851 13,509
------- -------- ------- -------- --------
Income before equity in
net earnings
of subsidiaries........ 18,597 952 $(19,549)
Equity in net earnings
of subsidiaries........ $19,549 19,549
------- -------- ------- -------- --------
Net income.............. $19,549 $ 18,597 $ 952 $(19,549) $ 19,549
======= ======== ======= ======== ========

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 1998
----------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
--- ------------ ------------ ------------ ------------
(In thousands)

Revenues:
Equipment rentals..... $124,345 $2,266 $126,611
Sales of rental equip-
ment................. 15,534 514 16,048
Sales of new equip-
ment, merchandise and
other revenues....... 26,953 1,529 28,482
------ -------- ------ ------- --------
Total revenues.......... 166,832 4,309 171,141
Cost of revenues:
Cost of equipment
rentals, excluding
depreciation......... 61,820 1,376 63,196
Depreciation of rental
equipment............ 28,701 579 29,280
Cost of rental equip-
ment sales........... 7,606 408 8,014
Cost of new equipment
and merchandise sales
and other operating
costs................ 21,412 1,328 22,740
------ -------- ------ ------- --------
Total cost of revenues.. 119,539 3,691 123,230
------ -------- ------ ------- --------
Gross profit............ 47,293 618 47,911
Selling, general and ad-
ministrative
expenses............... 25,468 686 26,154
Non-rental depreciation
and amortization....... 5,419 77 5,496
------ -------- ------ ------- --------
Operating income
(loss)................. 16,406 (145) 16,261
Interest expense........ 5,741 46 5,787
Other (income) expense,
net.................... (795) (1) (796)
------ -------- ------ ------- --------
Income (loss) before
provision for
income taxes .......... 11,460 (190) 11,270
Provision for income
taxes.................. 4,643 (77) 4,566
------ -------- ------ ------- --------
Income (loss) before eq-
uity in net earnings of
subsidiaries........... 6,817 (113) $(6,704)
Equity in net earnings
of subsidiaries........ $6,704 6,704
------ -------- ------ ------- --------
Net income (loss)....... $6,704 $ 6,817 $ (113) $(6,704) $ 6,704
====== ======== ====== ======= ========

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Three Months Ended March 31, 1999
----------------------------------------------------------------
Guarantor Non-guarantor
URI Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------- ------------ ------------
(In thousands)

Net cash provided by
(used in) operating
activities............. $ (752) $ 98,711 $ 9,596 $ 107,555
Cash flows from
investing activities:
Purchase of rental
equipment............. (103,437) (11,553) (114,990)
Purchase of property
and equipment......... (22,935) (242) (23,177)
Proceeds from sales of
rental equipment...... 33,264 2,679 35,943
In-process acquisition
costs................. (585) (585)
Payment of contingent
purchase price........ (661) (661)
Purchase of other
companies............. (144,046) (144,046)
--------- -------- ------- ---- ---------
Net cash used in
investing
activities.......... (144,046) (93,693) (9,777) (247,516)
Cash flows from
financing activities:
Proceeds from debt..... 444,971 444,971
Payments of debt....... (548,784) (548,784)
Payment of debt
financing costs....... (4,250) (4,250)
Capital contribution
by parent............. 352,198 352,198
Dividend distribution
to parent............. (4,875) (4,875)
--------- -------- ------- ---- ---------
Net cash provided by
financing
activities.......... 239,260 239,260
Net increase
(decrease) in cash
and cash
equivalents........... 94,462 5,018 (181) 99,299
Cash and cash
equivalents at
beginning of period... 1,774 16,257 2,379 20,410
--------- -------- ------- ---- ---------
Cash and cash
equivalents at end of
period................ $ 96,236 $ 21,275 $ 2,198 $ 119,709
========= ======== ======= ==== =========
Supplemental disclosure
of cash flow
information:
Cash paid during the
period:
Interest............. $ 21,099 $ 2,454 $ 95 $ 23,648
Income taxes......... $ 1,620 $ 1,322 $ 2,942
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.............. $ 210,818 $ 210,818
Liabilities assumed.... (62,377) (62,377)
Less:
Amounts paid through
issuance of debt.... (4,395) (4,395)
--------- -------- ------- ---- ---------
Net cash paid...... $ 144,046 $ 144,046
========= ======== ======= ==== =========

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Three Months Ended March 31, 1998
----------------------------------------------------------------
Guarantor Non-guarantor
URI Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------- ------------ ------------
(In thousands)

Net cash provided by
(used in) operating
activities............. $ (9,301) $ 42,819 $ 1,695 $ 35,213
Cash flows from
investing activities:
Purchase of rental
equipment............. (90,212) (1,286) (91,498)
Purchase of property
and equipment......... (15,937) (15,937)
Proceeds from sales of
rental equipment...... 15,534 514 16,048
In-process acquisition
costs................. (759) (759)
Purchase of other
companies............. (138,170) (8,070) (146,240)
--------- -------- ------- ---- ---------
Net cash used in
investing
activities.......... (138,170) (99,444) (772) (238,386)
Cash flows from
financing activities:
Proceeds from debt..... 132,675 61,049 16,901 210,625
Payments of debt....... (204,828) (1,413) (17,824) (224,065)
Payment of debt
financing costs....... (655) (655)
Capital contribution
by parent............. 206,456 251 206,707
Dividend distribution
to parent............. (79) (79)
--------- -------- ------- ---- ---------
Net cash provided by
(used in) financing
activities.......... 133,648 59,808 (923) 192,533
Net increase
(decrease) in cash
and cash
equivalents........... (13,823) 3,183 (10,640)
Cash and cash
equivalents at
beginning of period... 68,608 3,803 72,411
--------- -------- ------- ---- ---------
Cash and cash
equivalents at end of
period................ $ 54,785 $ 6,986 $ 61,771
========= ======== ======= ==== =========
Supplemental disclosure
of cash flow
information:
Cash paid during the
period:
Interest............. $ 1,066 $ 3,686 $ 46 $ 4,798
Income taxes......... $ 107 $ 3,381 $ 3,488
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.............. $ 279,808 $ 8,070 $ 287,878
Liabilities assumed.... (123,821) (123,821)
Less:
Amounts paid in
common stock and
warrants by parent.. (17,817) (17,817)
--------- -------- ------- ---- ---------
Net cash paid...... $ 138,170 $ 8,070 $ 146,240
========= ======== ======= ==== =========

9. Subsequent Events

Completed Acquisitions

Subsequent to March 31, 1999 (through May 4, 1999), the Company completed
the acquisitions of six equipment rental companies. The aggregate
consideration paid by the Company for these acquisitions was $14.2 million in
cash. In addition, the Company repaid or assumed outstanding indebtedness of
the companies acquired in such acquisitions in the aggregate amount of $5.5
million. The Company funded the consideration for these acquisitions with
borrowings under the Company's revolving credit facility.

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Tender Offer for Rental Service Corporation

On April 5, 1999, the Company, though its wholly owned subsidiary, UR
Acquisition Corporation ("UR Acquisition"), commenced a tender offer (the
"Offer") to purchase all outstanding shares of common stock of Rental Service
Corporation, a Delaware corporation ("Rental Service"), at a price of $22.75
per share, net to the seller in cash, without interest. The terms and
conditions of such offer are set forth in a Schedule 14D-1 Tender Offer
Statement, as amended, that has been filed by the Company with the SEC
pursuant to Section 14(d)(1) of the Securities Exchange Act. The purpose of
this offer and a related proposed second-step merger is to enable the Company
to acquire control of, and ultimately the entire equity interest in, Rental
Service. The Company cannot at this time predict whether the Company will
succeed in acquiring Rental Service.

In connection with the tender offer, the Company entered into a commitment
letter with Goldman Sachs Credit Partners L.P. ("GSCP"), pursuant to which
GSCP has committed to provide the Company with financing in an aggregate
amount of up to $2 billion. Such commitment is subject to a number of
customary conditions including, among others, the tender offer being completed
and neither the Company nor Rental Service experiencing a material adverse
change affecting its general affairs, prospects, financial position,
stockholders' equity or results of operations.

The Company expects to use the proceeds of the financing under the
commitment letter to purchase shares of Rental Service pursuant to the Offer,
to refinance certain of its existing debt and for other corporate purposes.
The Company estimates that the net increase in its aggregate indebtedness
would be approximately $1.46 billion as a result of obtaining the financing
contemplated by the commitment letter.

Litigation Relating to the Tender Offer

On April 5, 1999, United Rentals and UR Acquisition filed a complaint
against Rental Service, the members of the Rental Service Board of Directors
(the "Rental Service Board") and NationsRent, Inc. ("NationsRent") (the
"Delaware Litigation") in the Chancery Court of the State of Delaware (the
"Delaware Court"), alleging, among other things, breaches of fiduciary duties
by the Rental Service Board in connection with the Agreement and Plan of
Merger, dated as of January 20, 1999, between Rental Service and NationsRent
(the "NationsRent Merger Agreement"). The complaint seeks an order, among
other things, (i) invalidating the option Rental Service granted NationsRent
to purchase approximately 19.9% of Rental Service's common stock in certain
circumstances (the "NationsRent Option") and the termination fee payable by
Rental Service to NationsRent if the NationsRent Merger Agreement is
terminated under certain circumstances (the "NationsRent Termination Fee") and
(ii) compelling the Rental Service Board to approve the Offer and the proposed
merger with United Rentals (the "Proposed United Rentals Merger") for purposes
of Section 203 of the Delaware General Corporation Law (the "DGCL"). United
Rentals believes that the Rental Service Board has violated its fiduciary duty
to act to maximize the value obtained for all Rental Service stockholders by
agreeing to the NationsRent Option and the NationsRent Termination Fee which
are designed to inhibit, among other things, a superior offer for Rental
Service from United Rentals or anyone else. On April 8, 1999, the Delaware
Court granted United Rentals' motion for expedited discovery and set May 17,
1999 for a hearing to consider plaintiffs' motion for a preliminary injunction
in connection with the foregoing.

On April 7, 1999, United Rentals also commenced litigation against Rental
Service, NationsRent and James L. Kirk, the Chairman and Chief Executive
Officer of NationsRent, in the United States District Court for the District
of Connecticut (the "Connecticut Court") alleging, among other things,
violations of the federal proxy and tender offer rules (the "Connecticut
Litigation"). United Rentals believes that certain statements made by officers
of both Rental Service and NationsRent following the announcement of the Offer
by United Rentals were in violation of the federal proxy and tender offer
rules.

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(i), the "Counterclaim") against United Rentals seeking declaratory and
injunctive relief from the Connecticut Court. The Counterclaim alleges, among
other things, that United Rentals violated Sections 14(d) and 14(e) of the
Securities and Exchange Act, by allegedly misstating, concealing and failing
to adequately disclose certain material terms of the Offer relating to the
financing thereof. In the Counterclaim, Rental Service claimed that United
Rentals and its representatives have stated that the Offer is "fully financed"
and provides "certainty" while allegedly failing to state that the Offer is
subject to what Rental Service claims is a financing condition. The
Counterclaim further alleges that United Rentals' alleged effort to conceal
the "financing condition" and "financing uncertainty" deprives Rental
Service's stockholders of the protections of Section 14(e) of the Securities
and Exchange Act and, among other things, seeks to enjoin the Offer and compel
United Rentals to make corrective disclosures. On April 20, 1999, Rental
Service filed a motion for a preliminary injunction in the Connecticut
Litigation to prevent United Rentals from proceeding with the Offer (the
"Preliminary Injunction") on the basis of the allegations set forth in the
Counterclaim as described above.

On April 20, 1999, United Rentals filed a motion to dismiss the Counterclaim
and a supporting memorandum of law (collectively, the "Motion to Dismiss")
with respect to the Connecticut Litigation. In the Motion to Dismiss, United
Rentals argues that the Connecticut Court should dismiss the Counterclaim
because United Rentals has received a commitment letter (the "Commitment
Letter") from Goldman Sachs Credit Partners L.P., a copy of which has been
filed as an exhibit to United Rentals' Tender Offer Statement on Schedule 14D-
1, and, as such, United Rentals considers the Offer to be "fully financed." As
disclosed in the Offer to Purchase dated April 5, 1999 (together with any
amendments or supplements thereto the "Offer to Purchase"), the Offer is
subject to United Rentals receiving the funds contemplated by the Commitment
Letter; however, the Offer is not subject to United Rentals seeking any other
commitment for, or sources of, any financing necessary to consummate the Offer
and the Proposed United Rentals Merger. While Rental Service alleges that
United Rentals failed to prominently state that the Offer is subject to a
financing condition, the "Introduction" to the Offer to Purchase states that
the Offer is conditioned on "receipt of the financing pursuant to the
Commitment Letter" and the customary conditions to the Commitment Letter are
summarized in "Section 10--Source and Amount of Funds" of the Offer to
Purchase. As a result of the foregoing, United Rentals believes (i) its Motion
to Dismiss should be granted and (ii) the Counterclaim and the Preliminary
Injunction are without merit, and United Rentals intends to vigorously defend
itself against these actions.

On April 22, 1999, Rental Service filed an amended counterclaim (the
"Amended Counterclaim") in the Connecticut Court alleging violations of the
Clayton Act and seeking, by way of a preliminary injunction, to enjoin United
Rentals from attempting to elect six United Rentals officers and/or directors
originally nominated by United Rentals to the Rental Service Board. The
Amended Counterclaim alleges that if United Rentals succeeded in electing such
officers and directors to the Rental Service Board, interlocking directorships
would exist among competing corporations in violation of the Clayton Act.
United Rentals believes the Amended Counterclaim and motion for preliminary
injunction are without merit and intends to vigorously defend against such
motion. However, United Rentals believes that it is in the best interests of
Rental Service stockholders that United Rentals be able to move forward
expeditiously with its solicitation of consents and afford Rental Service
stockholders the opportunity to act on the proposals set forth in United
Rentals' consent solicitation statement. Accordingly, in order to avoid delay
in the consent solicitation as a result of the allegations presented in the
Amended Counterclaim, each nominee originally designated by United Rentals who
is an officer and/or a director of United Rentals has withdrawn as a nominee,
and a total of nine persons who are not directors or officers of United
Rentals or its affiliates have been designated by United Rentals as nominees
to the Rental Service Board.

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Merger Agreement. NationsRent also seeks an unspecified amount of money
damages and punitive damages. United Rentals believes the Florida Litigation
is without merit, and intends to vigorously defend against this action.

On May 4, 1999, United Rentals filed a motion for an order restraining
NationsRent from prosecuting the Florida Litigation and a supporting
memorandum of law in the Delaware Court to restrain NationsRent from further
prosecuting the Florida Litigation.

On May 5, 1999, the Delaware Court, after a hearing, issued a preliminary
injunction enjoining NationsRent from taking any further steps in connection
with, or proceeding further with, the Florida Litigation until further order
of the Delaware Court. As a result of the Delaware Court's ruling, NationsRent
was ordered to withdraw its pending motions in the Florida Litigation.

On May 10, 1999, United Rentals filed its first amended and supplemental
complaint (the "First Amended Complaint") with respect to the Delaware
Litigation. United Rentals, in the First Amended Complaint, alleges, among
other things, breaches of fiduciary duties by the Rental Service Board in
connection with the NationsRent Merger Agreement, breach of the duty of candor
by Rental Service and the Rental Service Board, breach of fiduciary duties by
the Rental Service Board in connection with Section 203 of the DGCL, and that
NationsRent has aided and abetted the Rental Service Board in their breaches
of fiduciary duty. United Rentals seeks an order, among other things, (i)
invalidating the NationsRent Option and the NationsRent Termination Fee, (ii)
declaring that the adoption of the Rights Agreement, dated as of April 16,
1999, between Rental Service and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agreement") and the failure to redeem the rights
issued pursuant to the Rights Agreement, each constitute breaches of the
fiduciary duties of the Rental Service Board and (iii) compelling the Rental
Service Board to approve the Offer and the Proposed United Rentals Merger for
purposes of Section 203 of the DGCL.

On May 11, 1999, NationsRent filed a motion for summary judgment (the
"NationsRent Summary Judgment Motion") with respect to the Delaware
Litigation. The NationsRent Summary Judgment Motion attempts to dismiss United
Rentals' claims against NationsRent set forth in the First Amended Complaint.
United Rentals believes the NationsRent Summary Judgment Motion is without
merit and intends to vigorously defend against this motion.

On May 13, 1999, United Rentals filed a memorandum of law in opposition to
Rental Service's motion for a preliminary injunction (the "Preliminary
Injunction Opposition Motion") with respect to Rental Service's Amended
Counterclaim. In the Preliminary Injunction Opposition Motion, United Rentals
states that the Connecticut Court should reject Rental Service's motion for a
preliminary injunction because Rental Service cannot satisfy any of the
standards required to be met for the issuance of a preliminary injunction.

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

The following discussion reviews the Company's operations for the three
months ended March 31, 1999 and 1998 and should be read in conjunction with
the Unaudited Consolidated Financial Statements and related Notes thereto of
the Company included herein and the Consolidated Financial Statements and
related Notes thereto included in the Company's 1998 Annual Report on Form 10-
K.

Introduction

The Company commenced equipment rental operations in October 1997 and has
completed 117 acquisitions (through May 4, 1999), including a merger with U.S.
Rentals (the "U.S. Rentals Merger") which was completed in September 1998.

Three of the acquisitions completed by the Company (including the U.S.
Rentals Merger) were accounted for as "poolings-of-interests," and the
Company's financial statements have been restated to include the accounts of
two of the companies acquired in such transactions (but were not restated for
one that was not material, which has been combined with the Company effective
July 1, 1998). See Note 2 to the Notes to the Unaudited Consolidated Financial
Statements of the Company included elsewhere herein. The other 114
acquisitions completed by the Company were accounted for as "purchases". The
results of operations of the businesses acquired in these acquisitions are
included in the Company's financial statements only from their respective
dates of acquisition. In view of the fact that the Company's operating results
for 1999 and 1998 were impacted by acquisitions that were accounted for as
purchases, the Company believes that the results of its operations for such
periods are not directly comparable.

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.

General

The Company primarily derives 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 rental equipment, (iii) the sale of new equipment and (iv) the sale of
related merchandise and parts.

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

The Company records rental equipment expenditures at cost and depreciates
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 and (ii) the amortization of intangible assets. The
Company's 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.

Results of Operations

Three months ended March 31, 1999 and 1998

Revenues. Total revenues for the first three months of 1999 were $392.3
million, representing an increase of 129.2% over total revenues of $171.1
million for the first three months of 1998. The Company's revenues in

the first three months of 1999 and 1998 were attributable to: (i) equipment
rental ($288.4 million, or 73.5% of revenues, in the first three months of
1999 compared to $126.6 million, or 74.0% of revenues, in the first three
months of 1998), (ii) sales of rental equipment ($35.9 million, or 9.2% of
revenues, in the first three months of 1999 compared to $16.0 million, or 9.4%
of revenues, in the first three months of 1998) and (iii) sales of new
equipment, merchandise and other revenues ($68.0 million, or 17.3% of
revenues, in the first three months of 1999 compared to $28.5 million, or
16.6% of revenues, in the first three months of 1998).

The 129.2% increase in total revenues in the first three months of 1999
reflected (i) increased revenues at locations open more than one year (which
accounted for approximately 26.2 percentage points) and (ii) new rental
locations acquired through acquisitions and the opening of start-up locations
(which accounted for approximately 103.0 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 expansion of the product
lines offered by the Company 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 in order
to maintain the quality of the Company's rental fleet.

Gross Profit. Gross profit increased to $134.0 million in the first three
months of 1999 from $48.0 million in the first three months of 1998. This
increase in gross profit was primarily attributable to the increase in
revenues described above. The Company's gross profit margin by source of
revenue in the first three months of 1999 and 1998 was: (i) equipment rental
(35.9% in the first three months of 1999 and 27.0% in the first three months
of 1998), (ii) sales of rental equipment (42.0% in the first three months of
1999 and 50.1% in the first three months of 1998) and (iii) sales of new
equipment, merchandise and other revenues (22.7% in the first three months of
1999 and 20.2% in the first three months of 1998). The increase in the gross
profit margin from rental revenues in the first three months of 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 the first three months of 1999 primarily reflected a shift in mix
towards more late-model used equipment, which generally generates lower gross
profit margins than somewhat older equipment. The increase in the gross profit
margin from sales of new equipment, merchandise and other revenue in the first
three months of 1999 primarily reflected the benefits of greater purchasing
power and a shift in the sales mix to higher margin items.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $65.3 million, or 16.6% of total
revenues, during the first three months of 1999 and $26.2 million, or 15.3% of
total revenues, during the first three months of 1998. The increase in SG&A as
a percentage of revenues in the first three months of 1999 primarily reflected
the additional expenses for management and corporate overhead that the Company
incurred as it continued to build the management team and infrastructure
required to support its growth strategy.

Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $12.2 million, or 3.1% of total revenues, in the first three
months of 1999 and $5.5 million, or 3.2% of total revenues, in the first three
months of 1998. The increase in the dollar amount of non-rental depreciation
and amortization in the first three months of 1999 primarily reflected the
amortization of goodwill attributable to acquisitions completed subsequent to
the first quarter of 1998.

Interest Expense. Interest expense increased to $24.4 million in the first
three months of 1999 from $5.8 million in the first three months of 1998. This
increase primarily reflected the fact that the Company's indebtedness
significantly increased in 1999, principally to fund acquisitions.

Preferred Dividends of a Subsidiary Trust. During the first three months of
1999, preferred dividends of a subsidiary trust of Holdings were $4.9 million.
These dividends relate to preferred securities issued in August 1998 by such
subsidiary trust.

Other (Income) Expense. Other income was $0.2 million in the first three
months of 1999 compared with $0.8 million in the first three months of 1998.

Income Taxes. Income taxes increased to $11.3 million, or an effective rate
of 41.0%, in the first three months of 1999 from $4.6 million, or an effective
rate of 40.5%, in the first three months of 1998.

Liquidity and Capital Resources

Recent Financings

Set forth below is certain information concerning certain financing
transactions completed by the Company in the first quarter of 1999.

Series A Perpetual Convertible Preferred Stock. In January 1999, Holdings
sold 300,000 shares of its Series A Perpetual Convertible Preferred Stock
("Series A Preferred") to Apollo Investment Fund IV, L.P. and Apollo Overseas
Partners IV, L.P. The net proceeds from the sale of the Series A Preferred
were approximately $287.0 million (after deducting issuance fees and
expenses). For additional information concerning the Series A Preferred see
Item 2 of Part II of this Report.

Common Stock. During March 1999, Holdings completed a public offering of
2,290,000 shares of its common stock. The net proceeds to the Company from
this offering were approximately $64.8 million (after deducting underwriting
discounts and estimated offering expenses).

9% Senior Subordinated Notes. In March 1999, URI sold $250 million aggregate
principal amount of 9% Senior Subordinated Notes Due 2009 ("9% Notes") for
aggregate consideration of $245.0 million (after deducting the initial
purchaser's discount and estimated offering expenses). 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 104.50% in 2004 to
100.00% 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 by Holdings
to redeem up to 35% of the outstanding 9% Notes, at a redemption price of
109.00%. The indenture governing the 9% 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.

Sources and Uses of Cash

During the first three months of 1999, the Company (i) generated cash from
operations of approximately $96.4 million, (ii) generated cash from the sale
of rental equipment of approximately $35.9 million, (iii) had proceeds of
$287.0 million from the sale of the Series A Preferred, (iv) had proceeds of
$65.2 million from the issuance of common stock and (v) had proceeds of $245.0
million from the sale of the 9% Notes. The Company used cash during this
period principally to (i) pay consideration for acquisitions (approximately
$144.0 million), (ii) purchase rental equipment (approximately $115.0 million)
and (iii) purchase other property and equipment (approximately $25.8 million).

Certain Balance Sheet Changes

The acquisitions and the equipment purchases made by the Company in the
first three months of 1999 (and the financing of such acquisitions and
purchases) were the principal reasons for the increase in the following items
at March 31, 1999 compared with December 31, 1998: accounts receivable,
inventory, prepaid expenses and other assets, rental equipment, property and
equipment, intangible assets, accounts payable, and accrued expenses and other
liabilities. The financing transactions completed by the Company in the first
quarter of 1999 (and the use of a portion of the net proceeds to repay
indebtedness) were the principal reasons for (i) the increase in cash and the
decrease in debt at March 31, 1999, compared with December 31, 1998 and (ii)
the increase in stockholders' equity at March 31, 1999, compared with December
31, 1998.

Certain Information Concerning the Company's Credit Facility

URI has a revolving credit facility (the "Credit Facility") that enables URI
to borrow up to $772.5 million on a revolving basis and permits a Canadian
subsidiary of URI 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 $772.5 million). The Credit Facility terminates on
September 26, 2003, at which time all outstanding indebtedness is due. As of
May 10, 1999, there was $66.0 million of indebtedness outstanding under the
Credit Facility (not including undrawn outstanding letters of credit in the
amount of $2.1 million).

Cash Requirements Related to Operations

The Company's principal existing sources of cash are borrowings available
under the Credit Facility ($704.4 million available as of May 10, 1999) and
cash generated from operations.

The Company expects that its principal needs for cash relating to its
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 of items offered for sale and (iii) debt service. The Company plans
to fund such cash requirements relating to its existing operations from its
existing sources of cash described above.

The Company estimates that equipment expenditures over the next 12 months
will be approximately $475.0 million for the existing operations of the
Company. These expenditures are comprised of approximately $255.0 million of
expenditures to maintain the average age of the Company's rental fleet and
$220.0 million of discretionary expenditures to increase the size of the
Company's rental fleet. The Company expects that it will fund such
expenditures from a combination of approximately $190.0 million of proceeds
expected to be generated from the sale of used equipment, cash generated from
operations and, if required, borrowings available under the Credit Facility.
In addition, the Company expects that it will be required to make equipment
expenditures in connection with new acquisitions. The Company cannot quantify
at this time the amount of equipment expenditures that will be required in
connection with new acquisitions.

Principal elements of the Company's strategy include continued expansion
through a disciplined acquisition program and the opening of new rental
locations. The Company expects to pay for future acquisitions using cash,
capital stock, notes and/or assumption of indebtedness. To the extent that the
Company's existing sources of cash described above are not sufficient to fund
such future acquisitions, the Company will require additional financing and,
consequently, the Company's indebtedness may increase as the Company
implements its growth strategy. There can be no assurance, however, that any
additional financing will be available or, if available, will be on terms
satisfactory to the Company.

Based upon the terms of the Company's currently outstanding indebtedness,
the Company is scheduled to repay approximately $14.3 million during 1999. In
addition, the Company may be required at any time to repay a $21.5 million
demand note that the Company assumed in connection with the U.S. Rentals
Merger.

Tender Offer for Rental Service Corporation

On April 5, 1999, the Company, through its wholly owned subsidiary, UR
Acquisition Corporation ("UR Acquisition), commenced a tender offer to
purchase all outstanding shares of common stock of Rental Service Corporation,
a Delaware corporation ("Rental Service"), at a price of $22.75 per share, net
to the seller in cash, without interest. The terms and conditions of such
offer are set forth in a Schedule 14D-1 Tender Offer Statement, as amended,
that has been filed by the Company with the SEC pursuant to Section 14(d)(1)
of the Securities Exchange Act. The purpose of this offer and a related
proposed second-step merger is to enable the Company to acquire control of,
and ultimately the entire equity interest in, Rental Service. The Company
cannot at this time predict whether it will succeed in acquiring Rental
Service.

The Company estimates that the total amount of funds required to complete
the tender offer and proposed second-step merger, refinance certain of its
indebtedness and pay the costs and expenses relating to the tender offer and
second-step merger is approximately $1.26 billion.

The Company expects to use the proceeds of the financing under the
commitment letter to purchase shares of Rental Service pursuant to the tender
offer, to refinance certain of its existing debt and for other corporate
purposes. The Company estimates that the net increase in its aggregate
indebtedness would be approximately $1.46 billion as a result of obtaining the
financing contemplated by the commitment letter.

The Company has capitalized certain direct out-of-pocket expenses relating
to the tender offer (such as financing commitment fees, merger and acquisition
advisory fees and professional fees). If the Company determines that the
acquisition of Rental Service will not be completed, the Company will be
required to charge these capitalized costs against earnings. As of May 10,
1999, these capitalized costs amounted to approximately $4.4 million. The
Company expects that the aggregate amount of these costs will increase as the
Company continues to pursue the tender offer.

Relationship Between Holdings and URI

Holdings is principally a holding company and primarily conducts its
operations through its wholly owned subsidiary URI and subsidiaries of URI.
Holdings provides certain services to URI in connection with its operations.
These services principally include: (i) senior management services, (ii)
finance 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 the
Company. 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.

Year 2000 Compliance

The Company has been informed by its software vendors that the Company's new
management information system is year 2000 compliant. The Company has,
therefore, not developed any contingency plans relating to year 2000 issues
and has not budgeted any funds for year 2000 issues. Although the Company
believes that its system is year 2000 compliant, there can be no assurance
that unanticipated year 2000 problems will not arise which, depending on the
nature and magnitude of the problem, could have a material adverse effect on
the Company's business and financial condition. Furthermore, year 2000
problems involving third parties may have a negative impact on the Company's
customers or suppliers, the general economy or on the ability of businesses
generally to receive essential services (such as telecommunications, banking
services, etc.). Any such problem could have a material adverse effect on the
Company's business and financial condition. The Company is unable at this time
to assess the possible impact on its business of year 2000 problems involving
any third party.

Fluctuations in Operating Results

The Company expects that its revenues and operating results may fluctuate
from quarter to quarter due to a number of factors, including: seasonal rental
patterns of the Company's customers (with rental activity tending

to be lower in the winter); changes in general economic conditions in the
Company's markets; the timing of acquisitions and the opening of start-up
locations and related costs; the effect of the integration of acquired
businesses and start-up locations; the timing of expenditures for new
equipment and the disposition of used equipment; and price changes in response
to competitive factors.

The Company is continually involved in the investigation and evaluation of
potential acquisitions. In accordance with generally accepted accounting
principles, the Company capitalizes 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. The Company's policy is to charge against earnings any
capitalized expenditures relating to any potential or pending acquisition that
the Company determines will not be consummated. There can be no assurance that
the Company in future periods 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 the Company's results of operations.

The Company 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. The Company expects 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 the Company's margins until the location achieves normalized
profitability.

There may be a lag between the time that the Company purchases new equipment
and begins 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 the Company's rental equipment, may
periodically reduce margins.

General Economic Conditions and Inflation

The Company's operating results may be adversely affected by (i) changes in
general economic conditions, including changes in construction and industrial
activity, or increases in interest rates, or (ii) adverse weather conditions
that may temporarily decrease construction and industrial activity in a
particular geographic area. Although the Company cannot accurately anticipate
the effect of inflation on its operations, the Company believes that inflation
has not had, and is not likely in the foreseeable future to have, a material
impact on its results of operations.

Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes a new model for
accounting for derivatives and hedging activities. The Company will adopt SFAS
No. 133 beginning January 1, 2000. The adoption of SFAS No. 133 is not
expected to have a material effect on the Company's consolidated financial
position or results of operations.

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

Sensitivity to Changes in Construction and Industrial Activities

Our equipment is principally used in connection with construction and
industrial activities. Consequently, a downturn in construction or industrial
activity may lead to a decrease in demand for our equipment, which could
adversely affect our business. We have identified below certain of the factors
which may cause such a downturn, either temporarily or long-term:

.a general slow-down of the economy;

.an increase in interest rates; or

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

Acquired Companies Not Historically Operated as a Combined Business

The businesses that we acquired have been in existence an average of 29
years and some have been in existence for more than 50 years. However, these
businesses were not historically managed or operated as a single business.
Although we believe that we can successfully manage and operate the acquired
businesses as a single business, we cannot be certain of this.

Limited Operating History

We commenced equipment rental operations in October 1997 and have grown
through a combination of internal growth and the acquisition of 117 companies
(through May 4, 1999), including a merger in September 1998 with U.S. Rentals.
Due to the relatively recent commencement of our operations, we have only a
limited history upon which you can base an assessment of our business and
prospects.

Risks Relating to Growth Strategy

Key elements of our growth strategy are to continue to expand through a
combination of internal growth, a disciplined acquisition program and the
opening of new rental locations. We have identified below some of the risks
relating to our growth strategy:

Availability of Acquisition Targets and Sites for Start-Up Locations. We may
encounter substantial competition in our efforts to acquire additional rental
companies and sites for start-up locations. Such competition could have the
effect of increasing the prices that we will have to pay in order to acquire
such businesses and sites. We cannot guarantee that any additional businesses
or sites that we may wish to acquire will be available to us on terms that are
acceptable to us.

Need to Integrate New Operations. Our ability to realize the expected
benefits from completed and future acquisitions depends, in large part, on our
ability to integrate new operations with our existing operations in a timely
and effective manner. Accordingly, we devote substantial efforts to the
integration of new operations. We cannot, however, guarantee that these
efforts will always be successful. In addition, under certain circumstances,
these efforts could adversely affect our existing operations.

Debt Covenants. Certain of the agreements governing our outstanding
indebtedness provide that we may not make acquisitions unless certain
financial conditions are satisfied or the consent of the lenders is obtained.
Our ability to grow through acquisitions may be constrained as a result of
these provisions.

Certain Risks Related to Start-Up Locations. We expect that start-up
locations may initially have a negative impact on our results of operations
and margins for a number of reasons, including that (1) we will incur
significant start-up expenses in connection with establishing each start-up
location and (2) it will generally take some time following the commencement
of operations for a start-up location to become profitable. Although we
believe that start-ups can generate long-term growth, we cannot guarantee that
any start-up location will become profitable within any specific time period,
if at all.

Dependence on Additional Capital to Finance Growth

We will require substantial capital in order to execute our growth strategy.
We will require capital for, among other purposes, completing acquisitions,
establishing new rental locations, and acquiring rental equipment. 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 ability to implement
our growth strategy could be limited.

Possible Undiscovered Liabilities of Acquired Companies

Prior to making an acquisition, we seek to assess the liabilities of the
target company that we will become responsible for as a result of the
acquisition. Nevertheless, we may fail to discover certain of such liabilities.
We seek to reduce our risk relating to these possible hidden liabilities by
generally obtaining the agreement of the seller to idemnify and reimburse us in
the event that we discover any material hidden liabilities. However, this type
of agreement, if obtained, may not fully protect us against hidden liabilities
because (1) the seller's obligation to reimburse us is generally limited in
duration and/or amount and (2) the seller may not have sufficient financial
resources to reimburse us. Furthermore, when we acquire a public company (such
as when we acquired U.S. Rentals) we generally do not obtain this type of
agreement.

Dependence on Management

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. Furthermore, if we lose the services of
certain members of senior management, it is an event of default under the
agreements governing our credit facility and certain of our other indebtedness,
unless we appoint replacement officers satisfactory to the lenders within 30
days. We do 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.

Quarterly Fluctuations of Operating Results

We expect that our revenues and operating results may fluctuate from quarter
to quarter due to a number of factors, including:

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

. changes in general economic conditions in our markets, including changes
in construction and industrial activities;

. the timing of acquisitions, new location openings, and related
expenditures;

. the effect of the integration of acquired businesses and start-up
locations;

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

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

. price changes in response to competitive factors.

Liability and Insurance

We are exposed to various possible claims relating to our business. These
include claims 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 $0.5 million and limited to a
maximum of $97 million per occurrence;

. we do not maintain coverage for environmental liability, 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.

Environmental and Safety Regulations

There are numerous federal, state and local laws and regulations governing
environmental protection and occupational health and safety matters. These
include laws and regulations that govern wastewater discharges, the use,
treatment, storage and disposal of solid and hazardous wastes and materials,
air quality and the remediation of contamination associated with the release
of hazardous substances. Under these laws, an owner or lessee of real estate
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, as well as related costs of investigation and property damage and
substantial penalties, and (2) 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
our use of hazardous materials to clean and maintain equipment and our
disposal of solid and hazardous waste and wastewater from equipment washing.
We also 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. Based on the conditions currently
known to us, we believe that any unreserved environmental remediation and
compliance costs required with respect to those conditions will not have a
material adverse effect on our business. However, we cannot be certain that we
will not identify 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, or that environmental and safety
requirements will not become more stringent or be interpreted and applied more
stringently in the future. 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, which could result in a gain or loss depending on fluctuations in
exchange rates, and the need to comply with foreign laws.

Year 2000 Issues

Our software vendors have informed us that our recently-installed management
information system is year 2000 compliant. We have, therefore, not developed
any contingency plans relating to year 2000 issues and have not budgeted any
funds for year 2000 issues. Although we believe that our system is year 2000
compliant, unanticipated year 2000 problems may arise which, depending on the
nature and magnitude of the problem, could adversely affect our business.
Furthermore, year 2000 problems involving third parties may have a negative

impact on our customers or suppliers, the general economy or on the ability of
businesses generally to receive essential services (such as
telecommunications, banking services, etc.). Any such problem could adversely
affect our business. We are unable at this time to assess the possible impact
on our business of year 2000 problems involving any third party.

Restrictive Covenants

The agreements governing our existing long-term indebtedness contain, and
future agreements governing our long-term indebtedness may also contain,
certain restrictive financial and operating covenants which affect, and in
many respects significantly 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. These covenants may significantly limit our
operating and financial flexibility.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risks relating to changes in interest rates and foreign currency
exchanges rates were reported in Item 7A of the Company's Annual Report on
Form 10-K for the year ended December 31, 1998. There has been no material
change in these market risks since the end of the fiscal year 1998.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Litigation Relating to the Tender Offer

On April 5, 1999, United Rentals, Inc. (through its wholly owned subsidiary
UR Acquisition Corporation) commenced an offer to purchase all outstanding
shares of common stock of Rental Service Corporation, a Delaware corporation
("Rental Service"), at a price of $22.75 per share, net to the seller in cash,
without interest. The terms and conditions of such offer (the "Offer") are set
forth in a Schedule 14D-1 Tender Offer Statement, as amended, that has been
filed by United Rentals with the SEC pursuant to Section 14(d)(1) of the
Securities Exchange Act. The purpose of the Offer and a related proposed
second-step merger is to enable United Rentals to acquire control of, and
ultimately the entire equity interest in, Rental Service. In order to expedite
the Offer, United Rentals will seek (by soliciting consents from the
stockholders of Rental Service) to remove the existing board of directors of
Rental Service and elect a new board nominated by United Rentals. Set forth
below is certain information concerning certain legal proceedings relating to
the Offer.

On April 5, 1999, United Rentals filed a complaint against Rental Service,
the members of the Rental Service Board of Directors (the "Rental Service
Board") and NationsRent (the "Delaware Litigation") in the Chancery Court of
the State of Delaware (the "Delaware Court"), alleging, among other things,
breaches of fiduciary duties by the Rental Service Board in connection with
the Agreement and Plan of Merger, dated as of January 20, 1999, between Rental
Service and NationsRent (the "NationsRent Merger Agreement"). The complaint
seeks an order, among other things, (i) invalidating the option Rental Service
granted NationsRent to purchase approximately 19.9% of Rental Service's common
stock in certain circumstances (the "NationsRent Option") and the termination
fee payable by Rental Service to NationsRent if the NationsRent Merger
Agreement is terminated under certain circumstances (the "NationsRent
Termination Fee") and (ii) compelling the Rental Service Board to approve the
Offer and the proposed merger with United Rentals (the "Proposed United
Rentals Merger") for purposes of Section 203 of the Delaware General
Corporation Law (the "DGCL"). United Rentals believes that the Rental Service
Board has violated its fiduciary duty to act to maximize the value obtained
for all Rental Service stockholders by agreeing to the NationsRent Option and
the NationsRent Termination Fee which are designed to inhibit, among other
things, a superior offer for Rental Service from United Rentals or anyone
else. On April 8, 1999, the Delaware Court granted United Rentals' motion for
expedited discovery and set May 17, 1999 for a hearing to consider plaintiffs'
motion for a preliminary injunction in connection with the foregoing.

On April 16, 1999, Rental Service (i) answered the complaint filed by United
Rentals with respect to the Connecticut Litigation, and (ii) filed a
counterclaim (collectively with the answer described in the previous clause
(i), the "Counterclaim") against United Rentals seeking declaratory and
injunctive relief from the Connecticut Court. The Counterclaim alleges, among
other things, that United Rentals violated Sections 14(d) and 14(e) of the
Securities and Exchange Act, by allegedly misstating, concealing and failing
to adequately disclose certain material terms of the Offer relating to the
financing thereof. In the Counterclaim, Rental Service claimed that United
Rentals and its representatives have stated that the Offer is "fully financed"
and provides "certainty" while allegedly failing to state that the Offer is
subject to what Rental Service claims is a financing condition. The
Counterclaim further alleges that United Rentals' alleged effort to conceal
the "financing condition" and "financing uncertainty" deprives Rental
Service's stockholders of the protections of Section 14(e) of the Securities
and Exchange Act and, among other things, seeks to enjoin the Offer and compel
United Rentals to make corrective disclosures. On April 20, 1999, Rental
Service filed a motion for a preliminary injunction in the Connecticut
Litigation to prevent United Rentals from proceeding with the Offer (the
"Preliminary Injunction") on the basis of the allegations set forth in the
Counterclaim as described above.

On April 30, 1999, NationsRent filed a complaint against United Rentals, UR
Acquisition, Bradley S. Jacobs, John N. Milne and Goldman, Sachs & Co. in the
Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida
(the "Florida Litigation") seeking injunctive and other relief against United
Rentals and to enjoin United Rentals from, among other things, allegedly
tortiously interfering with the NationsRent Merger Agreement. NationsRent also
seeks an unspecified amount of money damages and punitive damages. United
Rentals believes the Florida Litigation is without merit, and intends to
vigorously defend against this action.

Item 2. Changes in Securities and Use of Proceeds

Sale of Unregistered Securities

Set forth below is certain information concerning sales by the Company of
unregistered securities during the first quarter of 1999. The issuances by the
Company of the securities sold in the transactions referenced below were not
registered under the Securities Act of 1933, pursuant to the exemption
contemplated by Section 4(2) thereof for transactions not involving a public
offering.

1. In January 1999, the Company issued, in connection with three
acquisitions, convertible notes in the aggregate principal amount of
$3,880,000 which provide for a weighted average exercise price of $36.81
per share.

2. In January 1999, Holdings sold 300,000 shares of its Series A Perpetual
Convertible Preferred Stock ("Series A Preferred") to Apollo Investment
Fund IV, L.P. and Apollo Overseas Partners IV, L.P. (collectively
"Apollo"). The net proceeds to the Company from the sale of the Series A
Preferred were approximately $287.0 million (after deducting issuance
fees and expenses).

3. In January 1999, the Company issued 2,069 shares of common stock to an
executive officer pursuant to an employment agreement.

Certain Information Concerning Series A Preferred

Holdings has designated 300,000 shares of Preferred Stock as Series A
Perpetual Convertible Preferred Stock. A complete description of the terms of
the Series A Preferred is set forth in the Certificate of Designation therefor
(the "Designation"), a copy of which is filed as an exhibit to this Report.
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 Designation.

Dividends. The Series A Preferred bears no stated dividend. However, in the
event that Holdings declares or pays any dividends or other distributions upon
its 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 thereof, into shares of common stock
initially at the rate of 40 shares of common stock for each share of Series A
Preferred (equivalent to an initial 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 Designation.

Voting. 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.

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 the
provisions described above, then the holders of the Series A Preferred have
the right to vote for the election of directors 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.

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 Designation.

Ranking. The Series A Preferred ranks senior to the common stock with
respect to distributions upon the liquidation, winding-up or dissolution of
Holdings.

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 Holdings' capital stock, the holders of Series A 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 A Preferred (the "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 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.

Redemption; Automatic Conversion. If Holdings is subject to a Change in
Control (as defined in the Designation) 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 Liquidation Preference thereof plus an amount equal to
6.25% of the Liquidation Preference, compounded annually from January 7, 1999
to the purchase date (the "Call Price"). Upon the occurrence of a Change in
Control in connection with 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 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.

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, at 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) (a "Reduced Price Offering"), then Holdings must make an offer to apply
towards the purchase of outstanding shares of Series A Preferred, at the Call
Price, 40% of the amount by which the net cash proceeds from any such Reduced
Price Offering and for all other Reduced Price Offerings consummated during
the preceding 12 months (but excluding any Reduced Price Offerings prior to
June 30, 2001) exceeds an aggregate of $50,000,000, less a credit for all
amounts theretofore paid for such purchases during such 12-month period.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

Exhibit
Number Description of Exhibit
------- ----------------------

3(a) Amended and Restated Certificate of Incorporation of United Rentals,
Inc., in effect as of the date hereof (incorporated by reference to
exhibit 3.1 of United Rentals, Inc. Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998)
3(b) Certificate of Amendment to the United Rentals, Inc. Certificate of
Incorporation dated September 29, 1998 (incorporated by reference to
Exhibit 4.2 to the United Rentals, Inc. Registration Statement on Form
S-3, No. 333-70151)
3(c) By-laws of United Rentals, Inc., in effect as of the date hereof
(incorporated by reference to exhibit 3.2 of United Rentals, Inc.
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998)

Exhibit
Number Description of Exhibit
------- ----------------------

3(d) 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)
3(e) Amended and Restated Certificate of Incorporation of United Rentals
(North America), Inc., in effect as of the date hereof (incorporated
by reference to Exhibit 3.3 of the United Rentals (North America),
Inc. Quarterly Report on Form 10-Q for the quarter ended June 30,
1998)
3(f) By-laws of United Rentals (North America), Inc., in effect as of the
date hereof (incorporated by reference to Exhibit 3.4 of the United
Rentals (North America), Inc. Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998)
4(a) Registration Rights Agreement relating to Series A Perpetual
Convertible Preferred Stock dated as of December 21, 1998 among United
Rentals, Inc., Bradley S. Jacobs, Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV, L.P. (incorporated by reference to
exhibit 4(p) of United Rentals, Inc. Annual Report on Form 10-K for
the Year Ended December 31, 1998).
4(b) Indenture dated March 23, 1999 among United Rentals (North America),
Inc., the Guarantors named therein and The Bank of New York, as
trustee (incorporated by reference to exhibit 4(q) of United Rentals,
Inc. Annual Report on Form 10-K for the Year Ended December 31, 1998).
4(c) Notes Registration Rights Agreement dated as of March 23, 1999 among
United Rentals (North America), Inc., the subsidiaries of United
Rentals (North America), Inc. named therein, and the initial
purchasers named therein (incorporated by reference to exhibit 4(r) of
United Rentals, Inc. Annual Report on Form 10-K for the Year Ended
December 31, 1998).
10(a) Preferred Stock Purchase Agreement dated December 21, 1998 between
United Rentals, Inc., Apollo Investment Fund IV, L.P. and Apollo
Overseas Partners IV, L.P. (incorporated by reference to exhibit 10(y)
of United Rentals, Inc. Annual Report on Form 10-K for the Year Ended
December 31, 1998).
10(b) Form of U.S. Underwriting Agreement for the public offering by United
Rentals, Inc. of 2,290,000 shares of United Rentals, Inc. common stock
completed on March 9, 1999 (incorporated by reference to Exhibit 1(a)
to the United Rentals, Inc. Registration Statement on Form S-3, No.
333-71775).
10(c) Purchase Agreement dated March 16, 1999 relating to the initial sale
by United Rentals (North America), Inc. of $250 million aggregate
principal amount of 9% Senior Subordinated Notes due 2009
(incorporated by reference to exhibit 10(dd) of United Rentals, Inc.
Annual Report on Form 10-K for the Year Ended December 31, 1998).
10(d) Commitment letter dated April 4, 1999 between United Rentals (North
America), Inc. and Goldman Sachs Credit Partners L.P. (incorporated by
reference to exhibit (b)(1) of United Rentals, Inc. Schedule 14D-1
dated April 5, 1999).
27 Financial Data Schedule
27.1 Financial Data Schedule
(b) Reports on Form 8-K:

1 Current Report on Form 8-K dated February 18, 1999 (earliest event
reported February 17, 1999), Item 5 was reported. The registrant
announced that William Berry, its president, was diagnosed with
melanoma skin cancer and will begin a medical leave of absence.

2 Current Report on Form 8-K dated March 19, 1999 (earliest event
reported March 16, 1999), Item 5 was reported. The registrant
announced the pricing of a $250 million offering of 9% Senior
Subordinated Notes.

SIGNATURES

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

United Rentals, Inc.

Dated: May 14, 1999 /s/ Michael J. Nolan
By: _________________________________
Michael J. Nolan
Chief Financial Officer
(Principal Financial Officer)

Dated: May 14, 1999 /s/ John S. McKinney
By: _________________________________
John S. McKinney
Vice President
(Chief Accounting Officer)

United Rentals (North America), Inc.

Dated: May 14, 1999 /s/ Michael J. Nolan
By: _________________________________
Michael J. Nolan
Chief Financial Officer
(Principal Financial Officer)

Dated: May 14, 1999 /s/ John S. McKinney
By: _________________________________
John S. McKinney
Vice President
(Chief Accounting Officer)