United Rentals Annual Report 2005

FY2005 Annual Report · United Rentals
Loading PDF…
2005 annual report

®

united rentals is  the  world’s  largest  equipment  rental 

company,  uniquely  positioned  to  serve  a  diverse  customer  base  including  construction

and industrial customers, utilities, municipalities, homeowners and others. We offer our

customers  many  beneﬁts:  •  13,400  knowledgeable  employees  operating  an  integrated 

network  of  more  than  750  rental  locations  in  48  states,  10  Canadian  provinces  and

Mexico  •  The largest ﬂeet of rental equipment in the world — over 260,000 units with
an  original  cost  of  $3.9  billion  •  More  than  20,000  classes  of  equipment,  including 

construction equipment, industrial and heavy machinery, aerial work platforms, trafﬁc

control  equipment,  trench  safety  equipment  and  homeowner  items  •  Quality  new  and

used  equipment,  contractor  supplies,  parts  and  service  for  sale  •  A  well-developed 

infrastructure that supports our full range of services, including comprehensive safety

training  and  round-the-clock  emergency  assistance  •  Industry-leading  information 

technology that electronically links our branches and provides our customers with access

to  every  piece  of  equipment  in  our  ﬂeet  •  Customer-friendly  online  services,  including

URdata® account  management,  a  comprehensive  website  and  United  Rentals  Certiﬁed

Auctions on eBay® • Knowledgeable industry veterans who run our branches and ensure

that when a customer comes to us with a project need, they can Consider It Done.

Contents

Page 1
Financial Highlights  

Page 2 
Letter to Shareholders  

Page 8
Boca Raton 
Backhoe

Page 10
Washington, D.C. 
Boom Lift

Page 12
St. Louis
Reach Forklift

Page 14
Whistler
Portable Heat System

Page 16
New Orleans
Aerial Work Platforms

Page 18
Charleston
Telescopic Lift

Page 20
Salt Lake City
Slide Rail System

Page 22
Detroit
Warehouse Forklift

ﬁnancial highlights

($ millions, unless otherwise indicated)

2003

2004

2005

Total Revenues   ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..
Equipment Rental Revenues   ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..
Contractor Supplies Sales   ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..

$2,882
2,176
184

$3,094
2,289
225

$3,563
2,583
324

Dollar Utilization   ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..

57.1%

59.9%

65.1%

Original Equipment Cost ($ billions)   ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..

$    3.5

$    3.7

$    3.9

Total Revenues

Equipment Rental Revenues

$2,882

$3,094

$3,563

$4,000

3,000

2,000

1,000

0

’03

’04

‘05

$3,000

2,250

1,500

750

0

$2,176

$2,289

$2,583

’03

’04

‘05

Contractor Supplies Sales

Dollar Utilization

$4

3

2

1

0

$324

$184

$225

’03

’04

‘05

80%

60

40

20

0

57.1%

59.9%

65.1%

’03

’04

‘05

Original Equipment Cost
($ billions)

$3.7

$3.9

$3.5

’03

’04

‘05

1

$4

3

2

1

0

dear fellow shareholders

United  Rentals  delivered  significant  growth  and

record revenues in 2005. We increased our total revenues

15.2% to $3.56 billion, outpacing the gradual improvement

in  our  operating  environment.  This  acceleration  in  our 

revenue  growth  from  2004  was  driven  by  a  combination 

of  organic  growth  in  our  core  business,  rental  rate 

improvement,  and  expanding  contractor  supplies  sales, 

supported  by  growth  in  our  primary  end  market.  Our 

operating income in 2005 was $500 million and net income

was  $187  million,  up  95%  and  $271  million,  respectively,

from 2004. Diluted earnings per share were $1.80, exceed-

ing our outlook for the year. 

Net  cash  from  operations  and  the  proceeds  from  sales 

of  rental  equipment  were  $950  million.  Of  this  amount, 

we  spent  $578  million  for  replacement  capital  needed 

Our revenue growth was driven by a combination 

of organic growth in our core business, rental rate 

improvement, and expanding contractor supplies sales, 

supported by growth in our primary end market.

to  maintain  the  size  and  age  of  our  existing  rental  ﬂeet 

and  $163  million  to  expand  the  ﬂeet.  Our  free  cash  ﬂow,

after  total  rental  and  non-rental  capital  expenditures  of

$823 million, was $130 million. We invested $40 million of

this free cash ﬂow in acquisitions. 

We  achieved  improvements  in  several  key  operating

metrics in 2005. All three segments of our business gener-

ated  higher  returns,  and  total  revenues  grew  15.2%.  This

outpaced  growth  in  our  primary  end  market,  private 

2

non-residential construction, which increased 5.2% last year

according  to  Department  of  Commerce  data.  Dollar 

utilization was a record 65.1%, an increase of 5.2 percentage

points  from  2004.  Organic  growth  remained  strong

throughout  2005,  with  a  full-year  increase  of  11.8% 

in same-store rental revenues. This included a 23% increase

in  same-store  rental  revenues  for  our  trench  safety,  pump

and power business.

Early in 2005 we identiﬁed three key initiatives, which

we  have  vigorously  pursued.  These  initiatives  supported 

our  stated  goals  of  driving  revenue  growth,  improving 

our  margins  and  increasing  our  return  on  capital.  Our

immediate priorities were to drive a further improvement in

rental  rates,  maintain  strong  organic  growth,  and  expand

our contractor supplies business. 

Our employees understand that our rates initiative, 

with its corresponding impact on proﬁtability, 

allows us to continue to provide our customers 

with superior service and the largest and most 

diverse ﬂeet in the industry.  

We  made  progress  on  all  three  initiatives  in  2005. 

We  were  able  to  increase  rates  by  an  additional  6%, 

following  the  7.5%  increase  we  achieved  in  2004.  The 

combination  of  these  increases  helped  us  generate  more

than  $250  million  in  incremental  revenue  last  year,  and 

we  believe  there  are  additional  pricing  opportunities. 

Our employees understand that our rates initiative, with its

corresponding impact on proﬁtability, allows us to continue

to  provide  our  customers  with  superior  service  and  the

largest and most diverse ﬂeet in the industry. 

3

We  opened  37  new  locations  in  2005,  with  a  quarter 

of  them  focused  on  market  opportunities  in  trench 

safety,  pump  and  power  rentals.  In  addition,  we  enhanced

our network with two acquisitions, the HSS RentX Colorado

locations and Sandvick Equipment & Supply Company. The

Sandvick acquisition extended our presence in trench safe-

ty, where we lead the industry. 

We  also  completed  our  contractor  supplies  distribution

network with the opening of six regional warehouse facili-

ties, bringing the total to nine. We are now in a position to

expedite  deliveries  and  expand  our  product  lines.  The

growth in our contractor supplies sales was nothing short

of  explosive  in  2005.  Revenues  increased  44%  from  2004 

to  $324  million,  even  without  the  full  beneﬁt  of  our  new

infrastructure.  We  anticipate  that  our  contractor  supplies

program  will  continue  to  grow  in  importance,  both  ﬁnan-

cially and as a competitive differentiator. The 9,200 different

supply items we offer are a compelling example of the one-

stop shopping convenience we provide to our customers. 

These  accomplishments,  together  with  the  absence 

of  goodwill  impairment  and  reﬁnancing  charges  incurred

in  2004,  were  largely  responsible  for  the  improvement 

in  our  results  in  2005.  We  made  capital  investments  of 

$823 million, including $741 million invested in new rental

equipment,  which  allowed  us  to  grow  faster  than  our  end

markets.  Our  return  on  invested  capital  improved  2.4  per-

centage points to 12% in 2005 and we ended the year with

$316 million of cash. 

At  the  same  time,  we  had  a  number  of  internal 

challenges  to  address.  The  ongoing  inquiry  by  the

Securities  and  Exchange  Commission, 

initiated 

in 

2004,  resulted  in  an  extensive  internal  review  by  a  special

committee of our board of directors. We continue to cooperate

4

fully  with  the  SEC  in  an  effort  to  resolve  their  inquiry.

United  Rentals  is  dedicated  to  the  highest  standards  of 

conduct in our business. 

There  is  every  indication  that  2006  will  be  another

strong year for United Rentals. The construction market is

continuing to improve. At the same time, equipment rental

is  growing  in  importance  to  contractors  who  are  increas-

ingly  renting  equipment  as  an  alternative  to  owning  their

own.  For  our  part,  we  continue  to  drive  our  business 

forward with a passion for customer service and a determi-

nation to increase our return on capital. This requires good

people and we have more than 13,000 of the best. 

In  the  short-term,  we  have  extended  our  three  key  ini-

tiatives  in  2006.  We  expect  further  improvements  in  our

rental  rates,  which  represent  the  single  most  important

action  we  can  take  to  further  enhance  our  proﬁtability. 

We  also  expect  to  beneﬁt  from  the  investment  in  our 

contractor  supplies  infrastructure  and  achieve  further 

marketplace penetration. We remain focused on expanding

our network and plan to open another 30 to 35 new branch-

es in 2006. We also expect to continue to grow the business

by way of acquisition.

(from left) 
Martin Welch, executive vice president 
and chief ﬁnancial ofﬁcer,
Michael Kneeland, executive vice president — Operations,   
Wayland Hicks, chief executive ofﬁcer 

5

We will continue to increase the size of our rental ﬂeet

in  existing  locations  and  invest  in  high-growth  categories

such  as  trench  safety  services,  pump  rentals  and  power

generation. As always, our ﬂeet decisions are guided by the

evolving  needs  of  our  customers.  Our  2006  plan  calls  for 

the  investment  of  $175  million  to  $200  million  in  growth

capital for new rental equipment and $625 million to $650

million in replacement capital required to maintain the size

and age of our rental ﬂeet. 

In  2006,  our  plan  anticipates  that  we  will  continue  to

grow at a faster pace than private non-residential construc-

tion, our primary end market. End market growth, combined

with strategic investments and our inherent operating lever-

age,  should  generate  substantial  bottom  line  improvement.

We  expect  to  achieve  diluted  earnings  per  share  of  $2.13  to

$2.23 and $4.0 billion in total revenues.

Two years ago in my letter to shareholders, I stated that

our  goal  was  to  double  the  size  of  the  business  over  ﬁve

years following a recovery in our primary end market. We

are now in the second year following that recovery, and our

plans are solidly in place to realize that goal. We will accom-

plish this with the help of highly motivated employees and

the leadership of an experienced management team. 

Our 2006 plan anticipates diluted

earnings per share of $2.13 to $2.23

with $4.0 billion in total revenues.

I  am  particularly  pleased  that  Martin  Welch  joined 

us  early  this  year  as  executive  vice  president  and  chief

ﬁnancial ofﬁcer. Marty is a seasoned ﬁnancial leader with a

talent for establishing robust ﬁnancial organizations. 

Looking  beyond  2006,  the  North  American  equipment

rental market presents tremendous opportunities for United

Rentals, as do the related markets for equipment sales, serv-

ice and contractor supplies. The investments we have been

making in the business will enable us to take advantage of

these  growth  opportunities.  Our  results  in  2005  and  our

ﬁve-year  outlook  are  consistent  with  the  vision  that  has

shaped  our  company  since  its  inception  —  to  make  this 

business a success for every stakeholder in United Rentals.

Wayland Hicks
Chief Executive Ofﬁcer

April 30, 2006

7

boca

Opposite Page

In the Southeast, United Rentals responded around the clock as
Florida communities faced a seemingly endless series of storms. Our
people played a key role in setting up dozens of emergency staging
areas, many within 24 hours, as Florida Power & Light (FPL)
worked to restore power to millions of customers. “It was a remark-
able feat,” said Keith White (left), FPL logistics manager, integrated
supply chain. “It gave our crews the best conditions to work under so
that we could be as productive as possible, as quickly as possible.”
Rhys Butler (center), United Rentals’ national accounts coordinator,
and David Murphy (right), branch manager, coordinated the rental of
hundreds of light towers, forklifts, pallet jacks and emergency signs. 

raton

United  Rentals  grew  revenues  from  $3.09  billion  in  2004  to  $3.56  billion  in 

2005 in our primary market’s second year of recovery. Spending in our primary end

market,  private  non-residential  construction,  increased  5.2%  year-over-year.  We

expect spending in private non-residential construction — the driving force behind

our industry’s growth — to continue to grow at moderate levels in 2006. 

Growth is a deﬁning characteristic of the U.S. equipment rental industry, where

revenues  were  estimated  to  be  $31  billion  in  2005.  This  represents  a  compound

annual  growth  rate  of  more  than  9%  since  1990.  While  our  industry  has  proven 

sensitive to changes in construction activity and equipment demand, it also reacts

favorably  to  the  changing  needs  of  our  customers.  Paramount  among  these  needs 

is  the  trend  toward  renting  equipment  rather  than  owning  it.  Given  any  market 

conditions, more and more equipment end users are recognizing the many beneﬁts

of equipment rental. 

These beneﬁts include the elimination of large capital outlays and the avoidance

of  costs  related  to  storage,  maintenance,  insurance  and  other  ownership  responsi-

bilities. The appeal of renting has also been inﬂuenced by research and development

conducted by our industry’s leading manufacturers. As new and better equipment

technologies  come  to  market,  rental  companies  assume  the  costs  of  investing  in

9

Opposite Page

The impressive Woodrow Wilson Bridge project has a seven and a
half mile footprint that begins in Maryland and connects to Virginia
over the Potomac River. Crews are working to replace the existing
bridge and upgrade four interchanges to ease congestion in the area.
United Rentals’ Kevin Hernon (left), senior risk control manager, and
Susan Nichols (center), sales representative, were a familiar presence
at the site, where three bridge specialist companies have partnered
under the name Potomac Constructors. By 2008, they will have built
the largest drawspan bridge in the world. To date, United Rentals
has supplied more than 250 pieces of equipment, and yet that’s only
half the story. “We insist on same-day response time on service calls
and ongoing safety orientation for our workers,” said Jarred Musser
(right), ﬁeld engineer for Potomac Constructors. “These are two 
services that United Rentals performs very well.” 

washing

these technologies to make them available to customers. New models and expanded

rental ﬂeets result in better productivity for the end user, who can utilize the ideal

equipment for the job. Productivity — and ultimately satisfaction — is a tremendous

customer motivator in our business.

United  Rentals’  business  model  allows  our  company  to  capitalize  on  the  full

potential  of  an  expanding  marketplace.  In  2005,  for  example,  our  revenues  were

largely driven by strong organic growth, rental rate improvement and an increase

in contractor supplies sales, supported by growth in our primary end market. These

results are rooted in a widespread and effective branch network, superior equipment

ﬂeet,  knowledgeable  people  and  our  ability  to  provide  one-stop  shopping  conven-

ience.  By  meeting  our  customers’  every  jobsite  need,  we  are  able  to  ask  for  and

receive better rates. 

Our  branch  network  is  the  point  of  customer  contact  for  the  majority  of  our

business.  We  currently  operate  more  than  750  branches  that  serve  1.6  million 

customers in the United States, Canada and Mexico. The expansion of our rental net-

work  ﬁgures  prominently  into  our  growth  strategy.  Our  footprint  is  designed  to

capitalize on sustained construction activity by expanding our penetration in some

areas, and extending into other areas where our presence can attract new business. 

10

ton, d.c.

st.

An  important  component  of  our  branch  network  is  its  strategic  placement 

of rental assets — our equipment ﬂeet. The majority of our branches make up our

general rentals business. These locations offer a wide range of general construction

and industrial equipment for rent, including aerial work platforms. In addition, we

have dedicated branches associated with our trafﬁc control business, and our trench

safety, pump and power business. These locations carry specialized equipment and

provide  specialized  services  as  well.  In  total,  we  offer  more  than  20,000  classes  of

equipment for rent on an hourly, daily, weekly or monthly basis.

Purchases  of  new  rental  ﬂeet  are  carefully  planned  by  location,  to  optimize  our

investment. Branches are encouraged to share equipment and information, improving

utilization  and  customer  service.  Our  dollar  utilization  in  2005  reached  a  record

65.1%, up 5.2 percentage points from 2004. We routinely transfer equipment between

branches on a short-term or permanent basis. This is especially true when a particu-

lar asset might generate better returns at a neighboring branch, or when one of our

rental  locations  does  not  have  a  particular  piece  of  equipment  readily  available.

Occasionally, equipment is redeployed to meet extreme customer needs, as was the case

with hurricanes Katrina and Rita in 2005. Our emergency response call center was

able  to  route  equipment  and  contractor  supplies  to  the  hardest-hit  areas  of  the  Gulf

Coast, drawing on ﬂeet and employees from throughout our network.

12

Opposite Page

St. Louis Cardinals fans have been eagerly awaiting their new, 
downtown baseball stadium, with its custom-built village of retail
shops and attractions. The 130-ft.-tall structure covers more than 
12 acres and is equally impressive when viewed from the ground 
or from high atop one of our 80-ft. boom lifts. Kim Cliffe (left), 
sales representative for United Rentals, visited the site during con-
struction to review equipment requirements with Gordon Wright,
project supervisor for Sachs Electric Company. “Our companies 
share similar business perspectives,” said Wright. “Sachs Electric
was founded in 1925 based on a vision for providing every customer
with quality work and personal service. Our experience is that
United Rentals places the same importance on customer relation-
ships.” When the call went out for 20 boom lifts and 80 scissor lifts,
our company stepped up to the plate.

louis

whi

Opposite Page

Construction of the massive infrastructure for the 
2010 Olympic Winter Games began years in advance near 
Vancouver, British Columbia, where United Rentals helped 
general contractor PCL keep productivity humming through 
a cold Canadian winter. Diana Harrison (left), PCL site safety 
coordinator, and Douglas Head (right), sales representative 
for United Rentals, discussed climate control during work on 
the Delta Hotel in Whistler. “The Olympic construction plan 
is very ambitious. It requires intense cooperation among all 
the companies involved,” said Harrison. “We’ve built a relationship
with United Rentals as a national account. We consider them 
part of the team.” United Rentals was on site from start to ﬁnish,
supplying PCL with boom lifts, defrosters and dehumidiﬁers, 
as well as more than 60 industrial heating units.

stler

Our rental ﬂeet is at the heart of our competitive advantage. Its breadth, depth

and  age  are  all  important  considerations  to  our  customers.  Behind  the  scenes,  it 

is  the  extent  and  integration  of  our  resources  that  allow  us  to  meet  and  exceed 

customer expectations time and again.

In  addition  to  equipment  rentals,  our  branches  also  offer  new  and  used 

equipment  for  sale.  We  are  a  distributor  for  many  of  the  industry’s  leading 

manufacturers, including Genie®, JLG®, Mulitquip®, Wacker® and Honda USA®. Used

rental  equipment  is  principally  sold  by  our  sales  force,  which  has  access 

to  many  retail  markets  across  North  America.  In  2005,  our  company  launched 

United  Rentals  Certiﬁed  Auctions  on  eBay® to  establish  a  new  online  channel  for

used equipment sales. New and used equipment sales, like contractor supplies sales,

safety  training  and  our  other  services,  encourage  customer  loyalty  and  provide

cross-selling opportunities.

We  have  seen  signiﬁcant  growth  in  our  contractor  supplies  business.  This 

initiative is ﬁnancially and strategically important to our business plans: it drives 

incremental revenue and sets United Rentals apart as a one-stop shopping solution

for our customers. Our revenues from contractor supplies sales grew from $184 mil-

lion  in  2003,  to  $225  million  in  2004,  to  $324  million  in  2005.  We  market  a  wide

15

Opposite Page

Drawing on our national resources, United Rentals helped the 
Gulf Coast meet the challenges of a devastating hurricane season
head on. We responded to calls for assistance from federal, state and
local governments, private contractors and homeowners, providing
hundreds of pieces of equipment and thousands of contractor sup-
plies within 72 hours of Hurricane Katrina’s landfall. Our employees
helped set up communication channels and made equipment drops 
to staging areas such as the FEMA Village. Chris Miano (right), 
sales representative for United Rentals, worked side by side with 
customers such as Joseph Gioe, vice president of ﬁeld operations for
Broadmoore, to support the massive cleanup effort in New Orleans.
“We had, and continue to have, an overwhelming job ahead 
of us,” said Gioe. “Through all the exhaustion and uncertainty,
United Rentals’ equipment and people kept coming through.”

new 

orleans

range  of  construction  consumables,  tools,  small  equipment,  and  safety  supplies

through our sales force, branches and product catalogs. Our network of nine regional

distribution  centers,  completed  in  2005,  gives  us  the  ability  to  expedite  customer

orders for 9,200 in-stock items.

As  our  top  line  grew  by  more  than  15%  in  2005,  our  customer  mix  remained

largely the same. We serve a highly diversiﬁed customer base that varies by branch

and  reﬂects  several  factors,  including  ﬂeet  mix,  marketing  focus  and  the  local 

construction  economy.  Our  customers  include,  among  others,  construction  and

industrial  companies,  manufacturers,  municipalities  and  utilities.  We  rent  to

Fortune  500 companies  as  well  as  to  the  small  independent  contractor  and 

homeowner. In 2005, as in 2004, our largest customer accounted for less than 1% of

revenues and our top 10 customers accounted for less than 2% of revenues.

National  Accounts  is  a  distinct  component  of  our  customer  base,  with  a  sales

force  dedicated  to  establishing  and  servicing  these  national  and  multi-regional 

relationships.  We  offer  large  customers  a  consistent  level  of  service  across 

North America, and a single point of contact through our National Accounts Service

Center.  We  currently  serve  approximately  1,500  National  Accounts  customers  as

17

Opposite Page

The Cooper River Bridge project made history in 2005 when the
1,546-ft. structure connected Charleston and Mount Pleasant, S.C.,
with the longest cable-stay span in North America. United Rentals
partnered with general contractor Palmetto Bridge Company (PBC) 
to help the huge towers take shape, providing pumps, welders, light
towers, forklifts, water trucks, air compressors, contractor supplies,
and dozens of aerial lifts, including the 120-ft. boom shown here.
Warren Collier (left) and Dave Kampman (second from right), both 
senior superintendents with PBC, and Leuma Doctor (right), PBC 
deck hand, toured the site with Joey Bray and Kellie Copeland-Burnup,
district sales manager and aerial sales representative, respectively, 
for United Rentals. “Safety is priority one with us,” said Collier. 
“Our crews typically work hundreds of feet in the air. We trust 
the quality of equipment from United Rentals — the condition, the
maintenance, everything.”

charle

well  as  approximately  750  agencies  of  the  U.S.  government.  Revenues  from  these

customers  increased  to  more  than  $650  million  in  2005,  compared  with 

approximately $550 million in 2004.

To  provide  diverse  solutions  to  thousands  of  customers  each  day,  we  rely  on 

the  talents  of  a  strong  and  motivated  branch  management  team.  Our  branch 

managers  receive  guidance  in  the  form  of  performance  benchmarks  and  attend

monthly  operating  reviews.  At  the  same  time,  managers  are  empowered,  within

budgetary  guidelines,  to  make  daily  decisions  at  the  branch.  We  believe  that  our

managers are among the most knowledgeable and experienced in the industry. They

are in the best position to help us strengthen our brand and service reputation.

To  support  our  branch  operations  throughout  North  America,  we  have  imple-

mented a powerful technological framework that links our network and informs the

decision-making  of  our  branch  managers.  Each  branch  uses  our  RENTALMAN®

information technology system to communicate with other branches and with our

central data center. Rental transactions are processed on a real-time basis, so that an

employee at one location can check the current and future availability of equipment

at other locations in the area. 

18

ston

salt lake 

Opposite Page

In early 2005, the $64 million Point of the Mountain Aqueduct 
was little more than a trench carved out of the ground in 
Salt Lake City, Utah. By 2007, this massive pipeline will handle 
up to 77 million gallons of water a day. United Rentals’ trench 
safety experts teamed with general contractor W.W. Clyde to 
keep the 12-mile project on schedule. Tim Badberg (right), branch
manager for United Rentals, coordinated the installation of a 
custom-engineered slide rail shoring system that is one of the
longest conﬁgurations of its kind ever used in North America.
“United Rentals proved they have the expertise and resources 
necessary for a project of this scope,” said Kim Buller (left), 
Group IV operator, for W.W. Clyde. “Their trench safety experts 
have been at our right hand from day one.” Our branches also 
provided contractor supplies, conﬁned space equipment and 
safety fencing for the project.

city

In addition, our INFOMANAGER® software extracts raw data from transactions

and transforms it into meaningful information for management. These two systems

illustrate the critical importance we place on timely information in our business. By

providing  branch  management  with  local,  district  and  regional  intelligence,  our

managers  are  better  able  to  serve  customers  and  generate  returns  on  the  assets

assigned to them.

Our information technology is a considerable advantage in an industry that is

very competitive. We also insist that our employees understand the ﬁner points of

jobsite  needs  so  that  they  can  relate  to  customers  at  ground  level.  Our  company

draws a direct correlation between its commitment to customers and its commitment

to  employees.  We  want  to  attract  and  retain  talented,  energetic  and  experienced 

individuals  who  share  our  commitment  to  customer  service.  To  support  this,  our 

culture  emphasizes  ongoing  training  and  development  at  every  level.  In  2005  and

2004, our employees enhanced their skills in excess of 300,000 and 200,000 hours

of training, respectively. 

In 2005, we extended our commitment to employee development by executing a

number of initiatives rooted in employee suggestions. Many of these ideas came from

our  company’s  ongoing  Town  Hall  Meeting  series.  More  than  450  meetings  were

21

det

held  throughout  North  America  last  year  alone,  giving  over  8,000  employees  the

opportunity  to  address  senior  management  face-to-face.  Hundreds  of  suggestions

were  collected  from  truck  drivers,  salespeople,  bookkeepers,  mechanics,  managers

and  safety  ofﬁcers,  among  others.  By  year-end,  dozens  of  viable  suggestions  had

become reality, including a new online eLearning curriculum.

These many initiatives serve to support our company’s short-term and long-term

objectives for growth. United Rentals has proven it is relatively resistant to down-

turns and responsive to periods of growth. Now, in an improving marketplace, we

are focused on continuing to build value to customers and translating that value into

ﬁnancial returns. As demand for equipment increases, we expect that the utilization

rates for our equipment will continue to increase as well. Customers will seek out a

partner with the capabilities to meet a complete range of jobsite needs. Our compa-

ny  is  positioned  to  capitalize  on  its  strengths  and  to  continue  to  outpace  the 

relatively strong environment it operates in.

For further information on non-GAAP ﬁnancial measures and forward looking statements in the Letter to Shareholders and

this  narrative,  see  “Financial  Overview”  in  “Management’s  Discussion  and  Analysis  of  Financial  Condition  and  Results  of

Operations” and “Quantitative and Qualitative Disclosures about Market Risk” contained elsewhere in this report.

22

Opposite Page

Preparation for Super Bowl XL hit the ground running weeks before
the big game in Detroit, where event-related needs ranged from 
material handling and transportation to temporary lighting and
power. United Rentals demonstrated bench strength by delivering 
15 light towers, 20 message boards, and over a dozen other pieces 
of equipment to Ford Field. Carolyn Lesley (left), vice president of
operations for Noel Lesley Event Services, met with Bryce Mulligan
(right), branch manager for United Rentals, to map out a game plan.
“The Super Bowl showcases our country in front of the world’s eyes,”
said Lesley. “United Rentals was completely comfortable with the
pressure of staging an event of this magnitude. Everything worked
like clockwork, from installation to dismantling.”

roit

Contents

25 Selected Financial Data  
26 Management’s Discussion and Analysis of 

Financial Condition and Results of Operations  

45  Report of Independent Auditors  
46 Consolidated Balance Sheets  
47  Consolidated Statements of Operations  
48 Consolidated Statements of Cash Flows  
50 Notes to Consolidated Financial Statements  
76 United Rentals Rental Locations  
78  Corporate Information  

selected ﬁnancial data

The following selected ﬁnancial data reﬂects the results of operations and balance sheet data for the years
ended 2002 to 2005. The data below should be read in conjunction with, and is qualiﬁed by reference to,
MD&A and our consolidated ﬁnancial statements and notes thereto. The ﬁnancial information presented may
not be indicative of our future performance.

The following selected consolidated ﬁnancial data for 2003 and 2002 has been restated to reﬂect adjustments
resulting from matters discussed in the MD&A and in note 3 to our consolidated ﬁnancial statements (the
“Restatement Note”). We have not restated our previously reported consolidated ﬁnancial statements for the
ﬁscal years ended December 31, 2001 and 2000, and we have not presented any ﬁnancial data from those peri-
ods below. In light of the systems and records presently available to us, it is not possible for us to reconstruct
detailed ﬁnancial data for 2001 and prior periods with any amount of effort or expense due to the current
state of historical records used to prepare the ﬁnancial statements for such periods. The selected ﬁnancial
data for 2001 and 2000 would not have a material impact on a reader’s understanding of the Company’s ﬁnan-
cial results and condition as disclosed in this report. Previously published ﬁnancial information for 2001 and
earlier periods should not be relied upon. We encourage you to read MD&A and the Restatement Note for
further discussion of the restatement adjustments.

(in millions, except per share data)

Year Ended December 31,

2005

2004

2003
(Restated)

2002
(Restated)

Income Statement Data:
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and asset impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-rental depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense — subordinated convertible debentures . . . . . . . . . . . . . . . . . . . . .
Preferred dividends of a subsidiary trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (income) expense, net (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before provision (beneﬁt) for income taxes and cumulative 

effect of change in accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (beneﬁt) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before cumulative effect of change in accounting principle . . . . . . . .
Cumulative effect of change in accounting principle, net (2)
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)
Basic earnings (loss) available to common stockholders before cumulative 

$3,563
2,398
1,165
596
—
—
69
500
185
14
—
(9)

310
123
187
—
$ 187

$3,094
2,135
959
497
139
(1)
67
257
155
14
—
176

(88)
(4)
(84)
—
$ (84)

$2,882
2,100
782
449
297
—
72
(36)
209
—
15
43

(303)
(49)
(254)
—
$ (254)

$2,821
1,945
876
443
248
28
61
96
196
—
18
(1)

(117)
1
(118)
(288)
$ (406)

effect of change in accounting principle per share . . . . . . . . . . . . . . . . . . . . . . . .

$1.97

$(1.07)

$(3.29)

$(1.08)

Diluted earnings (loss) available to common stockholders before cumulative 

effect of change in accounting principle per share . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings (loss) available to common stockholders per share . . . . . . . . . . . . .
Diluted earnings (loss) available to common stockholders per share . . . . . . . . . . .
Other Financial Data:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subordinated convertible debentures (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company-obligated mandatorily redeemable convertible preferred securities 

of a subsidiary trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1.80
$1.97
$1.80

454

316
2,252
1,328
5,274
2,930
222

—
1,229

$(1.07)
$(1.07)
$(1.07)

$(3.29)
$(3.29)
$(3.29)

$(1.08)
$(4.88)
$(4.88)

445

403

385

303
2,123
1,293
4,882
2,945
222

—
1,026

79
2,062
1,412
4,694
2,817
222

—
1,069

19
1,835
1,681
4,667
2,513
—

227
1,246

(1) Other (income) expense, net primarily includes interest income in 2005. The 2004 expense primarily relates to $171 million of reﬁnancing

costs. The 2003 expense of $43 million includes $29 million of charges incurred in connection with the redemption of previously issued sub-
ordinated notes as well as an $11 million write-off of notes receivable that were deemed impaired.

(2) The cumulative effect of change in accounting principle in 2002 resulted from a goodwill impairment charge recognized upon the adoption

of a new accounting standard. See note 5 to our consolidated ﬁnancial statements included elsewhere in this report.

(3) A subsidiary trust issued trust preferred securities in 1998 and we recorded such preferred securities as a separate category on our balance

sheet. In 2003, the FASB issued FIN 46 and upon adoption of this standard as of December 31, 2003, we deconsolidated the trust. Upon decon-
solidation, the trust preferred securities were removed from our consolidated balance sheets at December 31, 2003 and the subordinated con-
vertible debentures that we issued to the subsidiary trust, which previously had been eliminated in our consolidated balance sheets, were no
longer eliminated in our consolidated balance sheets at December 31, 2003. The carrying amount of the trust preferred securities removed
from the consolidated balance sheets was the same as the carrying amount of the subordinated convertible debentures added to the consoli-
dated balance sheets. However, the subordinated convertible debentures are reﬂected as a component of liabilities on the consolidated balance
sheets at December 31, 2003, whereas the trust preferred securities were reﬂected as a separate category prior to December 31, 2003.

25

 
management’s discussion and analysis of
ﬁnancial condition and results of operations

(Dollars in millions, except per share data and unless otherwise indicated)

The following management discussion and analysis
gives effect to the restatement discussed below and in
the Restatement Note.

Executive Overview
We are the largest equipment rental company in the
world with an integrated network of 751 rental loca-
tions in the United States, Canada and Mexico.
Although the equipment rental industry is highly
fragmented and diverse, we believe we are well posi-
tioned to take advantage of this environment because
larger companies often have signiﬁcant competitive
advantages over smaller competitors. These advan-
tages include greater purchasing power, the ability to
provide customers with a broader range of equipment
and services as well as with newer and better main-
tained equipment, and greater ﬂexibility to transfer
equipment among branches.

We offer for rent over 20,000 classes of rental equip-
ment, including construction equipment, industrial
and heavy machinery, aerial work platforms, trafﬁc
control equipment, trench safety equipment and
homeowner items. Our revenues are derived from the
following sources: equipment rentals, sales of rental
(used) equipment, sales of new equipment, contractor
supplies sales and service and other. Rental equip-
ment revenues have historically accounted for more
than 70 percent of our total revenues and we expect
this trend to continue.

In August 2004, we received notice from the SEC that
it was conducting a non-public, fact-ﬁnding inquiry
of the Company. The SEC inquiry appears to relate to
a broad range of the Company’s accounting practices
and is not conﬁned to a speciﬁc period. In March
2005, our board of directors formed a Special Com-
mittee of independent directors to review matters
related to the SEC inquiry. Our board of directors
received and acted upon ﬁndings of the Special Com-
mittee in January 2006. The actions that we took
with respect to the Special Committee’s ﬁndings relat-
ing to the minor sale-leaseback transactions and the
trade packages, as well as some other accounting
matters, are discussed below. With respect to the
accounting for purchase business combinations, the
primary focus of the Special Committee’s inquiry was
our historical practices concerning the valuation of
rental equipment acquired in purchase business com-
binations and the practice of recognizing proﬁt on
sales of this equipment within one year of its acquisi-
tion. These practices are further discussed below.

The SEC inquiry is ongoing and we are continuing to
cooperate fully with the SEC.

Restatement and
Reclassiﬁcation of Previously
Issued Consolidated Financial
Statements, Certain Findings
of the Special Committee and
Related Matters
Subsequent to the ﬁling of our Form 10-K for the
year ended December 31, 2003, which included our
consolidated ﬁnancial statements for the years ended
December 31, 2003 and 2002, it was determined that
the Company’s originally issued ﬁnancial statements
for those periods required restatement to correct the
accounting for (i) the recognition of equipment rental
revenue; (ii) irregularities identiﬁed by the Special
Committee with respect to six short-term, or minor,
equipment sale-leaseback transactions; (iii) self-insur-
ance reserves; (iv) customer relationships; and (v) the
provision for income taxes. In addition, we identiﬁed
other matters for which we are not restating but for
which we have determined additional disclosure
would be useful.

Restatement of Financial Statements
The effects of the restatement adjustments on our
originally reported results of operations for the years
ended December 31, 2003 and 2002 and on our origi-
nally reported retained earnings at December 31,
2001, are summarized below.

Net Loss
Year Ended 
December 31,

Retained
Earnings at 
December 31,

2003

2002

$(259)

$(398)

2001

$467

(2)

20
8
(2)

24
(9)

15
(10)

5

(3)

2
(13)
(1)

(15)
6

(9)
1

(8)

(17)

(33)
(41)
—

(91)
35

(56)
(9)

(65)

As originally reported . . . . . . .
Adjustments for:

Equipment rental 

revenues (a) . . . . . . . . . . . .

Sale-leaseback 

transactions (b)

Self-insurance reserves (c)
Customer relationships (d)

. . . . . . . . .
. .
. .

Pre-tax impact . . . . . . . . . . . .
Related tax effects . . . . . . . . .

Adjustments, net of tax . . . . . . .
Income taxes (e) . . . . . . . . . . .

Total adjustments, net of tax . .

As restated . . . . . . . . . . . . . . . .

$(254)

$(406)

$402

Below is a summary of the nature and amount of the
adjustments reﬂected in the restatement (all amounts
are presented on a pre-tax basis unless otherwise
noted). As discussed above, in light of the systems
and records presently available to us, it is not possi-
ble for us to reconstruct detailed ﬁnancial data for
2001 and prior periods with any amount of effort or
expense. Accordingly, we do not have the ability to
restate, and we have not restated, our previously
reported consolidated ﬁnancial statements for the ﬁs-
cal years ended December 31, 2001 and 2000. How-
ever, we have provided below the impact on originally
reported pre-tax and/or net income for 2001 and 2000

26

of certain of the items for which we are restating, as
information for these discrete items is available to us
and we believe this information is useful.

(a) Recognition of equipment rental revenues. Our
originally reported results reﬂected the recognition
of equipment rental revenues based on the minimum
amounts which became due and payable under the
terms of our applicable rental contracts. We have
determined that equipment rental revenues should be
recognized on a straight-line basis and have restated
our previously reported results to reﬂect this correc-
tion of an error. Our restatement had the impact of
increasing/(decreasing) originally reported pre-tax
income for 2001, 2000 and for periods prior to 2000
by $6, $4, and $(27), respectively.

(b) Sale-leaseback transactions. In 2002, 2001, and
2000 we previously recognized gross proﬁts of $1,
$20 and $12, respectively, in conjunction with six
minor sale-leaseback transactions. It has been deter-
mined that the accounting for these transactions
involved irregularities, and we are restating our
ﬁnancial statements to properly reﬂect the account-
ing for these six transactions. At the dates of the
original minor sale-leaseback transactions, we recog-
nized a premium (excess proﬁt above fair value) on
these transactions. In exchange for receiving this
proﬁt premium, we agreed to disburse cash in later
periods as well as pay premiums for subsequent
equipment purchases (“subsequent purchases”). Our
restatement for the sale-leaseback transactions had
the impact of increasing/(decreasing) originally
reported pre-tax income for 2003, 2002, 2001 and
2000 by $20, $2, $(21), and $(12), respectively. These
restatement adjustments reﬂect the elimination of the
premium originally received in the minor sale-lease-
back transactions as well as the deferral of any proﬁt
until all of our obligations associated with the origi-
nally received premiums were settled. Additionally,
the adjustments reﬂect a reduction in previously
recorded depreciation expense because this expense
reﬂected capitalized equipment costs for subsequent
purchases that were overstated.

(c) Self-insurance reserves. We self-insure for certain
types of claims associated with our business, includ-
ing (i) workers compensation claims and (ii) claims
by third parties for injury or property damage
caused by our equipment or personnel. These types of
claims may take a substantial amount of time to
resolve and, accordingly, the ultimate liability associ-
ated with a particular claim may not be known for an
extended period of time. Our prior methodology for
developing self-insurance reserves was based on man-
agement estimates of ultimate liability which were
developed without obtaining actuarial valuations. In
2004, management adopted an estimation approach
based on third party actuarial calculations that prop-
erly reﬂects and incorporates actuarial assumptions.
Based on actuarial calculations performed by our
third party actuaries in late 2004 and 2005, we con-
cluded that the estimation process we previously
used did not adequately take into account certain fac-
tors and that, as a result, a restatement was required.
The factors that were not adequately addressed by
our historical estimation process included future
changes in the cost of known claims over time, cost
inﬂation and incurred but not reported claims. Our
restatement for the self-insurance reserves had the

impact of increasing/(decreasing) originally reported
pre-tax income for 2003, 2002, 2001, 2000 and for
periods prior to 2000 by $8, $(13), $(11), $(18) and
$(12), respectively.

(d) Customer relationships. In 2001, the FASB issued
Statement of Financial Accounting Standards No.
141, “Business Combinations” (“SFAS No. 141”),
which required the use of the purchase method of
accounting for business combinations and prohibited
the use of the pooling of interests method. SFAS No.
141 also changed the deﬁnition of intangible assets
acquired in a purchase business combination, provid-
ing speciﬁc criteria for the initial recognition and
measurement of intangible assets apart from good-
will. SFAS 141 applied to all business combinations
accounted for using the purchase method for which
the acquisition date is July 1, 2001 or later.

We have reviewed acquisitions we made since July 1,
2001 and have determined that a portion of the pur-
chase price for these acquisitions previously allocated
to goodwill should be recorded as a separate intangi-
ble asset — customer relationships. This restatement
reﬂects the amortization expense associated with the
reallocation of a portion of the purchase price from
goodwill (which is not amortized) to customer rela-
tionships (which are amortized). This correction of
an error had the impact of decreasing originally
reported pre-tax income for 2003 and 2002 by $2 and
$1, respectively.

(e) Income taxes. We have restated our income tax
provision to (i) correctly reﬂect all book-to-tax tempo-
rary differences (primarily depreciation and nonde-
ductible reserves and accruals); (ii) reﬂect appropriate
tax beneﬁts for net operating loss and alternative
minimum tax credits; (iii) calculate deferred taxes at
appropriate legal entity tax rates; and (iv) account for
the settlement of an IRS audit examination. Our
restatement for income taxes had the impact of
increasing/(decreasing) originally reported net
income for 2003, 2002, 2001, 2000 and for periods
prior to 2000 by $(10), $1, $ (3), $ (2) and $(4),
respectively.

Buy-out of operating lease. In addition to the
restatement matters discussed above, we have deter-
mined that $88 of costs for the year ended December
31, 2003 previously classiﬁed below operating income
should be reclassiﬁed to cost of equipment revenues
and included in operating income. This amount pri-
marily represents the amount in excess of the fair
value related to the buy-out of equipment under oper-
ating leases. This reclassiﬁcation, which has the
effect of reducing gross proﬁt and other expense
(income), net by $88, has no impact on originally
reported net income or earnings per share for the
year ended December 31, 2003.

Trade packages. During the period from the
fourth quarter of 2000 through 2002, the Company
sold used equipment to certain suppliers (referred to
as “trade packages”). In certain of the trade pack-
ages, prices may have included a premium above fair
value. In order to induce these suppliers to buy used
equipment at premium prices, the Company made
commitments or concessions to the suppliers. It has
been determined that the accounting for those trans-
actions involved irregularities and that the Company
improperly recognized revenue from the transactions

27

involving the undisclosed inducements. However,
because records were not created that would have
permitted the linkage of the sales and inducements
(as a result of instructions given by certain former
employees of the Company), the Company is unable to
determine the portion of the revenue and gross proﬁt
recognized in connection with trade packages with
these suppliers between 2000 and 2002 that was
improperly recognized. During this period, all sales
of used equipment to these suppliers (which includes
all trade package transactions) generated total
revenues and gross proﬁts of $38 and $9, respec-
tively. Notwithstanding the lack of records relating
to these transactions, the Company believes that
its ﬁnancial statements from and after 2002 are
materially correct with respect to the effect of
these transactions.

The Special Committee concluded that, based on the
evidence it reviewed, the practices regarding certain
trade packages and minor sale-leaseback transac-
tions described above appear to have been directed by
the Company’s two former chief ﬁnancial ofﬁcers.
Both of these individuals, who are no longer with the
Company, declined to cooperate with the Special Com-
mittee’s investigation. Based upon recommendations
of the Special Committee, the Company’s board of
directors directed the Company, among other things,
to evaluate potential claims relating to certain former
company personnel, including these individuals and
compensation and beneﬁts previously received by
them described elsewhere in this report.

Purchase Accounting. The Company was formed
and began operations in 1997 with the acquisition of
six equipment rental companies. During the subse-
quent three year period, we grew rapidly and com-
pleted approximately 230 additional acquisitions. By
the end of 1999, we were the largest equipment
rental company in the world, with annual revenues of
approximately $2.9 billion. With management’s focus
now turned toward organic growth, the pace of our
acquisitions signiﬁcantly slowed and from September
2001 through the date of this report we completed
only eight acquisitions. Substantially all of the busi-
ness combinations that we have completed since the
inception of the Company were accounted for as pur-
chases, however, there were several signiﬁcant busi-
ness combinations accounted for in the earlier period
that were accounted for as poolings.

Accounting standards applicable to purchase busi-
ness combinations require the acquiring company to
recognize the assets acquired and the liabilities
assumed based on their fair values at the time of
acquisition. Any excess between the cost of an
acquired company and the sum of the fair values of
tangible and identiﬁable intangible assets less liabili-
ties assumed should be recognized as goodwill.

In our historical accounting for these purchase busi-
ness combinations, long-lived ﬁxed assets (comprised
primarily of rental equipment) and goodwill gener-
ally represented the largest components of our acqui-
sitions. As a result, when we performed our purchase
price allocation process, the purchase price was pri-
marily allocated to these assets.

As discussed above, in March 2005, our Board of
Directors formed a Special Committee of independent
directors to review matters related to the SEC inquiry.

The Special Committee made certain ﬁndings related
to the Company’s historical practices concerning the
valuation of rental equipment acquired in purchase
business combinations. The committee concluded that
certain of these practices were not adequate between
1997 and August 2000. These practices included,
among other things, the use of inconsistent valuation
methodologies, some of which were reﬂected in mem-
oranda that were not provided to or reviewed by the
Company’s auditors, suggestions contained in those
memoranda that improper methods of valuation be
used (although the committee did not ﬁnd evidence
that such improper methods were generally applied),
inadequate supervision of personnel, inadequate coor-
dination with providers of outside valuations and
apparent confusion on the part of one of those
providers. The Special Committee concluded that cer-
tain Company personnel (whom the committee was
unable to identify) may have sought to manipulate
opening balance sheet values for equipment acquired
in purchase business combinations by causing them
to be understated and that these opening balance
sheet values may have been understated by an
amount the committee was unable to determine.

Following our review of our historical practices and
the ﬁndings of the Special Committee, the Company
considered whether the effect of the deﬁciencies iden-
tiﬁed by the committee required a restatement of pre-
viously reported results. These deﬁciencies in our
historical practices between 1997 and August 2000
may have resulted in inaccurate values being
ascribed to rental equipment that we acquired in pur-
chase business combinations, including in some cases
values that may have been below fair value. However,
we do not have the ability to revalue this equipment
because we are unable to currently determine its his-
torical physical condition and the records that cur-
rently exist for this equipment are not sufﬁcient to
establish the physical condition of the equipment at
the time of its acquisition.

The equipment valuations performed at the time of
the acquisition, some of which included a physical
inspection, reﬂected an assessment of the condition of
the equipment. While, as the Special Committee iden-
tiﬁed, there were various deﬁciencies in our historical
valuation practices, it is not possible to accurately
revalue this equipment to assess the reasonableness
of speciﬁc valuations. Therefore, we believe the only
feasible approach is to give effect to the valuations
that were performed contemporaneously with these
acquisitions. Accordingly, we have determined that
restatement is not appropriate. However, we have also
determined that it would be useful to illustrate what
our historical results would have been had these
equipment values been higher.

The analysis below reﬂects the hypothetical impact
on total gross proﬁt (including gross proﬁt on equip-
ment rentals as well as sales of rental equipment) and
net income (loss) for the years 2002 through 2005
had the rental equipment we acquired in purchase
acquisitions during the period between 1997 and
August 2000 been valued at an amount 10 percent
and 20 percent higher than it was previously valued.
The hypothetical impact on gross proﬁt does not
reﬂect costs and expenses that are considered operat-
ing expenses and are appropriately classiﬁed below
gross proﬁt.

28

Hypothetical impact of understatement of
equipment values (1)(2)(3)

As

20 percent
10 percent
Reported(4) Hypothetical Hypothetical

2002
Total gross proﬁt . . . . . .
Net loss . . . . . . . . . . . . .
2003
Total gross proﬁt . . . . . .
Net loss . . . . . . . . . . . . .
2004
Total gross proﬁt . . . . . .
Net loss . . . . . . . . . . . . .
2005
Total gross proﬁt . . . . . .
Net income . . . . . . . . . . .

$ 876
(406)

$ 782
(254)

$ 959
(84)

$1,165
187

$ 870
(410)

$ 779
(256)

$ 957
(85)

$1,164
186

$ 864
(413)

$ 777
(257)

$ 956
(86)

$1,163
186

(1) This analysis reﬂects the hypothetical revaluation of equipment

acquired in connection with purchase business combinations of the
type associated with our general rentals and trench safety, pump and
power segments, which constituted approximately 85 percent of all
acquisitions we completed during the subject period. We have not
reﬂected in this chart the favorable impact of reduced goodwill
impairment charges associated with a hypothetical reallocation of the
purchase price between goodwill and rental asset values.

(2) In light of the systems and records presently available to us, it is not
possible to perform this analysis for years prior to 2002. Because of
our current inability to push-down certain reconciling items on our
general ledger and sub-ledger to individual rental asset records, we
cannot calculate the amounts ultimately attributed to rental assets in
our historical purchase price allocation process. Accordingly, we do
not have a reasonable basis for applying this sensitivity analysis to
periods prior to 2002. However, we have performed an analysis of this
prior period in the table below.

(3) This analysis reﬂects the revaluation of equipment to reﬂect our

hypothetical total gross proﬁt had the rental equipment we acquired
during the relevant period been valued higher. To the extent the
revaluation of the equipment converted a gain to a hypothetical loss,
we limited the revaluation (increase in basis of the equipment) to an
amount that would reduce the gain to zero. Similarly, to the extent
that equipment was originally sold at a loss, the revaluation does not
increase the basis of the related equipment.

(4) The As Reported results reﬂect the results included in this report,

including restated results for 2003 and 2002.

Any potential impact on gross proﬁt and net income
(loss) had this rental equipment acquired between
1997 and August 2000 been valued 10 percent or
20 percent higher than it was previously valued
would not have a material impact on our reported
results of operations for 2002 through 2005. Accord-
ingly, notwithstanding deﬁciencies in the Company’s
historical valuation process as it relates to purchase
business combinations, the Company does not
believe a restatement is required and believes that
its ﬁnancial statements from and after 2002 are
materially correct with respect to the effect of
equipment valuations.

In addition to the deﬁciencies identiﬁed by the Special
Committee related to our historical practices
described above, instances were identiﬁed where
equipment acquired in purchase business combina-
tions between 1997 and August 2000 was sold within
a short time following the acquisition at gross mar-
gins that indicate the value initially ascribed to the
equipment may have been too low. For the reasons
described above, however, we are unable to assess the
reasonableness of allocations of basis to speciﬁc
acquired assets. Notwithstanding the impracticabil-
ity associated with making this assessment, however,
we believe it is useful to illustrate what our gross
proﬁt would have been for the period between 1998
and 2001 had our gross margin on sales of all rental
equipment (including equipment acquired in connec-
tion with purchase acquisitions) been different. The
analysis below reﬂects the hypothetical impact on
previously reported gross margins and gross proﬁts
on sales of all rental equipment for the years 1998
through 2001 had these gross margins been 40 per-
cent and 35 percent.

Hypothetical impact of reduced
gross margins (1)

Previously
Reported

Reduced
GM

Reduced
GM

1998
Gross margin . . . . . . . . .
Gross proﬁt
. . . . . . . . . .
1999
Gross margin . . . . . . . . .
Gross proﬁt
. . . . . . . . . .
2000
Gross margin . . . . . . . . .
Gross proﬁt
. . . . . . . . . .
2001
Gross margin . . . . . . . . .
Gross proﬁt
. . . . . . . . . .

45%

$ 54

42%

$ 99

40%

$140

40%

$ 58

40%

$48

40%

$94

40%
n/a

40%
n/a

35%

$ 42

35%

$ 83

35%

$122

35%

$ 52

(1) We have not reﬂected in this chart the favorable impact of reduced

goodwill impairment charges associated with a hypothetical
reallocation of the purchase price between goodwill and rental
asset values.

Any potentially overstated gross proﬁt associated
with these sales, the latest of which would have
occurred in August 2001, would not have a material
impact on our reported results of operations for 2002
through 2005. Accordingly, notwithstanding deﬁ-
ciencies in the Company’s historical valuation process
as it relates to purchase business combinations, the
Company does not believe a restatement is required
and believes that its ﬁnancial statements from and
after 2002 are materially correct with respect to the
effect of equipment valuations.

29

Financial Overview
Free Cash Flow GAAP Reconciliation
We deﬁne “free cash ﬂow” as (i) net cash provided by
operating activities less (ii) purchases of rental equip-
ment, purchases of other property and equipment
and buy-outs of equipment leases plus (iii) proceeds
from sales of rental equipment, proceeds from sales
of rental locations and proceeds from sales-leaseback
transactions. Management believes free cash ﬂow
provides useful additional information concerning
cash ﬂow available to meet future debt service obliga-
tions and working capital requirements. However,
free cash ﬂow is not a measure of ﬁnancial perfor-
mance or liquidity under Generally Accepted
Accounting Principles (“GAAP”). Accordingly, free
cash ﬂow should not be considered an alternative to
net income or cash ﬂow from operating activities as
indicators of operating performance or liquidity. The
table below provides a reconciliation between net cash
provided by operating activities and free cash ﬂow.

Full Year Ended 
December 31,

2005

2004

2003

Net cash provided by 

operating activities  . . . . . . .

$ 643

$ 737

$ 306

Purchases of rental 

equipment . . . . . . . . . . . . . . .

(741)

(592)

(379)

Purchases of property and 

equipment . . . . . . . . . . . . . . .
Buy-outs of equipment leases . .
Proceeds from sales of rental 

(82)
—

(57)
—

(33)
(304)

equipment . . . . . . . . . . . . . . .

307

275

233

Proceeds from sales of rental 

locations . . . . . . . . . . . . . . . .
Proceeds from sales-leaseback . .

3
—

—
23

—
—

Free Cash Flow  . . . . . . . . . . . .

$ 130

$ 386

$(177)

In 2005, we reported revenues and free cash ﬂow of
$3.6 billion and $130, respectively. Our 2005 revenue
growth of 15.2 percent outpaced our primary end
market, private non-residential construction, which
grew 5.0 percent in 2005 according to Department
of Commerce data. This revenue growth reﬂects
increased rental rates of 6.0 percent and a 5.2 per-
centage point increase in dollar equipment utilization
to 65.1 percent. (Dollar equipment utilization is cal-
culated with consideration to our equipment rental
revenue and the average original cost of equipment
in our rental ﬂeet.) In 2004, we reported revenues
and free cash ﬂow of $3.1 billion and $386, respec-
tively. Our 2004 revenue growth of 7.4 percent
outpaced our primary end market, private non-
residential construction, which grew 4.2 percent in
2004 according to Department of Commerce data.
This growth reﬂects increased rental rates of 7.5 per-
cent and a 2.8 percentage point increase in dollar
equipment utilization to 59.9 percent.

We signiﬁcantly improved our proﬁtability in 2005 as
compared to 2004. Our increased proﬁtability was
driven by a 6.0 percent growth in rental rates and a
44.0 percent increase in contractor supplies sales.
The improved proﬁtability also reﬂects a $122 reduc-
tion in goodwill impairment charges and a $101
reduction in reﬁnancing charges. In addition to
improving our proﬁtability, we reported free cash
ﬂow of $130 in 2005, after investing approximately
$839 in capital expenditures. Our rental ﬂeet had an

original equipment cost of $3.9 billion at December
31, 2005, as compared to $3.7 billion at December 31,
2004. We ended 2005 with a cash balance of approxi-
mately $316.

In 2004, we substantially reduced our net loss from
2003. This was accomplished through a 7.5 percent
growth in rental rates, a 22.3 percent increase in con-
tractor supplies sales, a 25.8 percent reduction in
interest expense and the expansion of our rental ﬂeet.
The reduced net loss also reﬂects a $117 reduction in
goodwill impairment charges, partially offset by
increased reﬁnancing costs of approximately $84.
Our rental ﬂeet had an original equipment cost of
$3.7 billion at December 31, 2004 as compared to
$3.5 billion at December 31, 2003. Additionally, we
reported free cash ﬂow of $386 in 2004, after invest-
ing $649 in capital expenditures. In 2004, we also
reﬁnanced approximately $2.1 billion of debt. This
reﬁnancing extended our debt maturities, reduced
interest expense and provided the company with
greater ﬁnancial ﬂexibility. As a result of our signiﬁ-
cantly improved operations and reﬁnancing activity,
we ended 2004 with a cash balance of $303.

In 2003, despite a weak non-residential construction
market, we substantially reduced our net loss and
increased our revenues 2.2 percent to $2.9 billion.
The reduced net loss reﬂected increased rental rates
of 2.0 percent. Additionally, the reduced net loss
reﬂected the absence of a $288 charge associated with
a cumulative effect of change in accounting principle
as well as a $17 restructuring charge, partially offset
by a $58 charge for the buy-out of equipment leases
and a $17 charge for reﬁnancing costs. In 2003, we
generated $306 in cash ﬂow from operations and our
free cash ﬂow was $(177).

We are committed to capitalizing on future growth
opportunities. Our goal is to grow revenues by approx-
imately 11 percent to approximately $4.0 billion in
2006. We are on track to achieve this objective and
expect organic growth, prudent acquisitions and the
expansion of complementary revenue streams such as
contractor supplies to contribute to our growth.

Revenues for each of the four years in the period
ended December 31, 2005 were as follows:

Year Ended December 31,

2005

2004

2003

2002
(Restated) (Restated)

Equipment rentals . . . . . . $2,583
Sales of rental 

equipment . . . . . . . . . . .
Sales of new equipment . . .
Contractor supplies 

sales . . . . . . . . . . . . . . .
Service and other . . . . . . . .

307
208

324
141

$2,289

$2,176

$2,152

275
178

225
127

233
170

184
119

223
170

160
116

Total revenues . . . . . . . . . . $3,563

$3,094

$2,882

$2,821

Percent Change

2005

2004

2003

Equipment rentals . . . . . . . . . . . . . . .
Sales of rental equipment . . . . . . . . . .
Sales of new equipment . . . . . . . . . . .
Contractor supplies sales . . . . . . . . . .
Service and other . . . . . . . . . . . . . . . .
Total revenues . . . . . . . . . . . . . . . . . .

12.8
11.6
16.9
44.0
11.0
15.2

5.2
18.0
4.7
22.3
6.7
7.4

1.1
4.5
—
15.0
2.6
2.2

30

Equipment rentals include our revenues from rent-
ing equipment, as well as related revenues such as
the fees we charge for equipment delivery, fuel,
repair of rental equipment and damage waivers. Sales
of rental equipment include our revenues from the
sale of used rental equipment. Contractor supplies
sales include our sales of supplies utilized by contrac-
tors, which include construction consumables, tools,
small equipment and safety supplies. Services and
other includes our repair services (including parts
sales) as well as the operations of our subsidiaries
that develop and market software for use by equip-
ment rental companies in managing and operating
multiple branch locations.

2005 total revenues of $3.6 billion increased 15.2 per-
cent compared with total revenues of $3.1 billion in
2004. The increase primarily results from a 12.8 per-
cent increase in equipment rentals and a 44.0 percent
increase in contractor supplies sales. The increase in
equipment rentals reﬂects a 6.0 percent increase in
rental rates and a 5.2 percentage point increase in
dollar equipment utilization. The increase in contrac-
tor supplies sales reﬂects increased volume as we
expanded our product offering. Equipment rentals
represented approximately 72 percent and 74 percent
of our revenues in 2005 and 2004, respectively.

2004 total revenues of $3.1 billion increased 7.4 per-
cent compared with total revenues of $2.9 billion in
2003. The increase resulted primarily from a 5.2 per-
cent increase in equipment rentals, an 18.0 percent
increase in sales of rental equipment and a 22.3 per-
cent increase in contractor supply sales. The increase
in equipment rentals reﬂects a 7.5 percent increase in
rental rates and a 2.8 percentage point increase in
dollar equipment utilization. The increase in contrac-
tor supplies sales reﬂects increased sales volume. The
increase in sales of rental equipment reﬂects
increased volume. Equipment rentals represented
approximately 74 percent and 76 percent of our rev-
enues in 2004 and 2003, respectively. 2003 total rev-
enues of $2.9 billion increased 2.2 percent compared
with total revenues of $2.8 billion in 2002. The
increase primarily relates to increased equipment
rental revenues and increased contractor supplies
sales. Equipment rentals represented approximately
76 percent of our revenues in 2003 and 2002.

Net income (loss) for each of the four years in the
period ended December 31, 2005 was as follows:

Year Ended December 31,

2005

2004

2003
(Restated)

2002
(Restated)

Net income (loss) . . . . . .

$187

$(84)

$(254)

$(406)

2005 net income was $187 or $1.80 per diluted share.

2004 net loss of $84, or $1.07 per diluted share,
included an after-tax charge of $122 ($139 pre-tax),
or $1.57 per diluted share, relating to goodwill
impairment and an after-tax charge of $101 ($171
pre-tax), or $1.30 per diluted share, related to reﬁ-
nancing costs.

2003 net loss of $254, or $3.29 per diluted share,
included an after-tax charge of $239 ($297 pre-tax),
or $3.10 per diluted share, relating to goodwill
impairment, an after-tax charge of $58 ($95 pre-tax),
or $0.75 per diluted share, relating to the buy-out of
equipment leases, and an after-tax charge of $17 mil-
lion ($29 pre-tax), or $0.22 per diluted share, related
to reﬁnancing costs.

2002 net loss of $406, or $4.88 per diluted share,
included an after-tax charge of $288 as a cumulative
effect of change in accounting principle, an after-tax
charge of $199 ($248 pre-tax), or $2.62 per diluted
share, relating to goodwill impairment, and an after-
tax charge of $17 ($28 pre-tax), or $0.23 per diluted
share, relating to a restructuring charge.

Critical Accounting Policies
We prepare our consolidated ﬁnancial statements in
accordance with U.S generally accepted accounting
principles. A summary of our signiﬁcant accounting
policies is contained in note 2 to our consolidated
ﬁnancial statements. In applying many accounting
principles, we make assumptions, estimates and/or
judgments. These assumptions, estimates and judg-
ments are often subjective and may change based on
changing circumstances or changes in our analysis.
Material changes in these assumptions, estimates
and judgments have the potential to materially alter
our results of operations. We have identiﬁed below
our accounting policies that we believe could poten-
tially produce materially different results were we
to change underlying assumptions, estimates and
judgments. Although actual results may differ
from those estimates, we believe the estimates are
reasonable and appropriate.

Revenue Recognition
We recognize equipment rental revenue on a straight-
line basis. Our rental contract periods are daily,
weekly or monthly. By way of example, if a customer
were to rent a piece of equipment and the daily,
weekly and monthly rental rates for that particular
piece were (in actual dollars) $100, $300 and $900,
respectively, we would recognize revenue of $32.14
per day. The daily rate is calculated by dividing the
monthly rate of $900 by 28 days, the monthly term.
As part of this straight-line methodology, when the
equipment is returned, we recognize as incremental
revenue the excess, if any, between the amount the
customer is contractually required to pay over the
cumulative amount of revenue recognized to date.

Revenues from the sale of rental equipment and new
equipment are recognized at the time of delivery to,
or pick-up by, the customer and when collectibility is
reasonably assured. Sales of contractor supplies are
also recognized at the time of delivery to, or pick-up
by, the customer. For construction-related contracts
in our trafﬁc control segment which comprise
approximately 8 percent of our total revenues, rev-
enues are recognized based on the percentage of
work completed. Use of the percentage-of-completion
method requires management to make estimates of
the expected total revenues, total costs and the extent
of progress toward completion.

31

Allowance for Doubtful Accounts
We maintain allowances for doubtful accounts. These
allowances reﬂect our estimate of the amount of our
receivables that we will be unable to collect. We base
our estimate on a combination of an analysis of our
accounts receivable on a speciﬁc accounts basis and
historical write-off experience. Our estimate could
require change based on changing circumstances,
including changes in the economy or in the particu-
lar circumstances of individual customers. Accord-
ingly, we may be required to increase or decrease
our allowance.

Useful Lives of Rental Equipment and
Property and Equipment
We depreciate rental equipment and property and
equipment over their estimated useful lives, after giv-
ing effect to an estimated salvage value which ranges
from 0 percent to 10 percent of cost. The useful life of
an asset is determined based on our estimate of the
period the asset will generate revenues, and the sal-
vage value is determined based on our estimate of the
minimum value we will realize from the asset after
such period. We may be required to change these esti-
mates based on changes in our industry or other
changing circumstances. If these estimates change in
the future, we may be required to recognize increased
or decreased depreciation expense for these assets.

Purchase Price Allocation
We have made a signiﬁcant number of acquisitions in
the past and expect that we will continue to make
acquisitions in the future. We allocate the cost of the
acquired enterprise to the assets acquired and liabili-
ties assumed based on their respective fair values at
the date of acquisition. With the exception of good-
will, long-lived ﬁxed assets generally represent the
largest component of our acquisitions. The long-lived
ﬁxed assets that we acquire are primarily rental
equipment, transportation equipment and real estate.
With limited exceptions, virtually all of the rental
equipment that we have acquired through purchase
business combinations has been classiﬁed as “To be
Used,” rather than as “To be Sold.” Equipment that
we acquire and classify as “To be Used” is recorded at
fair value, as determined by replacement cost to the
Company of such equipment. We use third party val-
uation experts to help calculate replacement cost.

In addition to long-lived ﬁxed assets, we also acquire
other assets and assume liabilities. These other assets
and liabilities typically include, but are not limited to,
parts inventory, accounts receivable, accounts
payable and other working capital items. Because of
their short-term nature, the fair values of these other
assets and liabilities generally approximate the book
values reﬂected on the acquired entities balance
sheets. However, when appropriate, we adjust these
book values for factors such as collectibility and exis-
tence. The intangible assets that we have acquired are
primarily goodwill, customer-related intangibles
(speciﬁcally customer relationships) and covenants
not-to-compete. Goodwill is calculated as the excess
of the cost of the acquired entity over the net of the
amounts assigned to the assets acquired and the

liabilities assumed. Customer relationships have
been valued based on an excess earnings or income
approach with consideration to projected cash ﬂows.
When speciﬁcally negotiated by the parties in the
applicable purchase agreements, we have valued non-
compete agreements based on the amounts assigned
to them in the purchase agreements as these
amounts represent the amounts negotiated in an
arm’s length transaction. When not negotiated by the
parties in the applicable purchase agreements, we
estimated the fair value of non-compete agreements
based on a percentage of the acquisition’s goodwill.

Impairment of Goodwill
We have made acquisitions in the past that included
the recognition of a signiﬁcant amount of goodwill.
Commencing January 1, 2002, goodwill is no longer
amortized, but instead is reviewed for impairment
annually or more frequently as events occur that
indicate a decline in fair value below its carrying
value. In general, this means that we must determine
whether the fair value of the goodwill, calculated in
accordance with applicable accounting standards, is
at least equal to the recorded value on our balance
sheet. If the fair value of the goodwill is less than the
recorded value, we are required to write-off the
excess goodwill as an operating expense.

Prior to January 1, 2004, we tested for goodwill
impairment on a branch-by-branch basis. Accord-
ingly, a goodwill write-off was required even if only
one or a limited number of our branches had an
impairment as of the testing date and even if there
was no impairment for all our branches on an aggre-
gate basis.

Commencing January 1, 2004, we began testing for
goodwill impairment at a regional, rather than a
branch level. We began testing for impairment at
this level because accounting standards require that
goodwill impairment testing be performed at the
reporting unit level. In 2004, following a reorganiza-
tion of our reporting structure, our regions became
our reporting units. This change in reporting units
may impact future goodwill impairment analyses
because there are substantially fewer regions (nine)
than there are branches (in excess of 700).

Impairment of Long-Lived Assets
We review the valuation of our long-lived assets on an
ongoing basis and assess the carrying value of such
assets if facts and circumstances suggest they may
be impaired. If this review indicates that the carrying
value of these assets may not be recoverable, then the
carrying value is reduced to its estimated fair value.
The determination of recoverability is based upon an
undiscounted cash ﬂow analysis over the asset’s
remaining useful life. We must make estimates and
assumptions when applying the undiscounted cash
ﬂow analysis. These estimates and assumptions may
prove to be inaccurate due to factors such as changes
in economic conditions, changes in our business
prospects or other changing circumstances. If these
estimates change in the future, we may be required to
recognize write-downs on our long-lived assets.

32

Income Taxes
We recognize deferred tax assets in accordance with
applicable accounting standards and we record
deferred tax assets based on current enacted tax rates
and laws. The future realization of the deferred tax
beneﬁts and carryforwards are determined by consid-
ering historical proﬁtability, projected future taxable
income, the expected timing of the reversals of exist-
ing temporary differences and tax planning strate-
gies. We generally evaluate projected taxable income
for a ﬁve-year period to determine the recoverability
of all deferred tax assets and, in addition, examine
the length of the carryforward to ensure that the
deferred tax assets are established at an amount that
is more likely than not to be realized. We have not
provided a valuation allowance related to our federal
deferred tax assets because we believe such assets
will be recovered during the carryforward period. If
sufﬁcient evidence becomes apparent that it is more
likely than not that our deferred tax assets will not be
utilized, we would be required to record a valuation
allowance for such assets, which would result in
additional income tax expense. We have provided a
valuation allowance related to certain state operating
loss carryforwards.

We are subject to ongoing tax examinations and
assessments in various jurisdictions. Accordingly, we
may incur additional tax expense based on the proba-
ble outcomes of such matters. In addition, when
applicable, we adjust the previously recorded tax
expense to reﬂect examination results. Our ongoing
assessments of the probable outcomes of the examina-
tions and related tax positions require judgment and
could increase or decrease our effective tax rate as
well as impact our operating results.

Reserves for Claims
We are exposed to various claims relating to our busi-
ness, including those for which we provide self-insur-
ance. Claims for which we self-insure include (i)
workers compensation claims and (ii) claims by third
parties for injury or property damage caused by our
equipment or personnel. These types of claims may
take a substantial amount of time to resolve and,
accordingly, the ultimate liability associated with a
particular claim may not be known for an extended
period of time. Our methodology for developing
self-insurance reserves is based on management
estimates which incorporate actuarial valuations that
are periodically prepared by our third party actuar-
ies. Our estimation process considers, among other
matters, the cost of known claims over time, cost
inﬂation and incurred but not reported claims. These
estimates may change based on, among other things,
changes in our claims history or receipt of additional
information relevant to assessing the claims. Fur-
ther, these estimates may prove to be inaccurate due
to factors such as adverse judicial determinations or
settlements at higher than estimated amounts.
Accordingly, we may be required to increase or
decrease our reserve levels.

Legal Contingencies
We are involved in a variety of claims, lawsuits, inves-
tigations and proceedings, as described in “Item 3 —
Legal Proceedings” and elsewhere in this report. We
determine whether an estimated loss from a contin-
gency should be accrued by assessing whether a loss
is deemed probable and can be reasonably estimated.
We assess our potential liability by analyzing our liti-
gation and regulatory matters using available infor-
mation. We develop our views on estimated losses in
consultation with outside counsel handling our
defense in these matters, which involves an analysis
of potential results, assuming a combination of litiga-
tion and settlement strategies. Should developments
in any of these matters cause a change in our deter-
mination as to an unfavorable outcome and result in
the need to recognize a material accrual, or should
any of these matters result in a ﬁnal adverse judg-
ment or be settled for signiﬁcant amounts, they could
have a material adverse effect on our results of opera-
tions in the period or periods in which such change
in determination, judgment or settlement occurs.

Results of Operations
As discussed in note 19 to the consolidated ﬁnancial
statements, our current reportable segments are gen-
eral rentals, trafﬁc control and trench safety, pump
and power. Prior to 2004, we had one reportable seg-
ment: general rentals. In the ﬁrst quarter of 2004, we
began reporting information for two reporting seg-
ments: general rentals and trafﬁc control. In 2005,
we began reporting for an additional segment, trench
safety, pump and power.

The general rentals segment includes the rental of
construction, aerial, industrial and homeowner
equipment and related services and activities. The
general rentals segment’s customers include con-
struction and industrial companies, manufacturers,
utilities, municipalities and homeowners. The gen-
eral rentals segment operates throughout the United
States and Canada and has one location in Mexico.
The trafﬁc control segment includes the rental of
equipment used in the management of trafﬁc-related
services and activities. The trafﬁc control segment’s
customers include construction companies involved
in infrastructure projects and municipalities. The
trafﬁc control segment operates in the United States.
The trench safety, pump and power segment includes
the rental of specialty construction products and
related services. The trench safety, pump and power
segment’s customers include construction companies
involved in infrastructure projects, municipalities
and industrial companies. This segment operates in
the United States and has one location in Canada.

33

These segments align the Company’s external seg-
ment reporting to how management evaluates and
allocates resources. The Company evaluates segment
performance based on segment operating results.

We completed acquisitions in each of 2002, 2003,
2004 and 2005 which are discussed further in note 4

to the consolidated ﬁnancial statements. In view of
the fact that our operating results for these years
were affected by acquisitions, we believe that our
results for these periods are not directly comparable,
although there is no material impact from these
acquisitions.

Revenues by segment for each of the four years in the period ended December 31, 2005 were as follows:

General
rentals

Trench safety, 
pump and power

Trafﬁc control

Total

2005
Equipment rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of new equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractor supplies sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2004
Equipment rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of new equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractor supplies sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2003
Equipment rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of new equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractor supplies sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2002
Equipment rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of new equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractor supplies sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,203
291
191
291
137

$3,113

$1,961
259
170
196
123

$2,709

$1,792
222
161
152
116

$2,443

$1,761
215
163
122
114

$2,375

$140
13
14
10
3

$180

$101
13
7
6
3

$130

$ 85
11
6
4
3

$109

$ 71
7
4
3
2

$ 87

$240
3
3
23
1

$270

$227
3
1
23
1

$255

$299
—
3
28
—

$330

$320
1
3
35
—

$359

$2,583
307
208
324
141

$3,563

$2,289
275
178
225
127

$3,094

$2,176
233
170
184
119

$2,882

$2,152
223
170
160
116

$2,821

Equipment rentals. Equipment rentals represent
our revenues from renting equipment.

2005 equipment rentals of $2,583 increased $294,
or 12.8 percent, reﬂecting a 6.0 percent increase
in rental rates and a 5.2 percentage point increase
in our dollar equipment utilization. Equipment
rentals represented approximately 72 percent of
total revenues in 2005. On a segment basis, equip-
ment rentals represented approximately 71 percent,
78 percent and 89 percent of total revenues for
general rentals, trench safety, pump and power and
trafﬁc control, respectively. General rentals equip-
ment rentals increased $242 or 12.3 percent reﬂect-
ing increased rental rates and a 10.6 percent increase
in same-store rental revenues. Trench safety, pump
and power equipment rentals increased $39, or
38.6 percent, reﬂecting a 22.8 percent increase in
same-store rental revenues. Trafﬁc control equipment
rentals increased $13, or 5.7 percent, reﬂecting a
19.2 percent increase in same-store rental revenues,
partially offset by reduced revenues associated with
closed locations.

2004 equipment rentals of $2,289 increased $113, or
5.2 percent, reﬂecting a 7.5 percent increase in rental
rates and a 2.8 percentage point increase in dollar

equipment utilization, partially offset by reduced vol-
ume. Equipment rentals represented approximately
74 percent of total revenues in 2004. On a segment
basis, equipment rentals represented approximately
72 percent, 78 percent and 89 percent of total rev-
enues for general rentals, trench safety, pump and
power and trafﬁc control, respectively. General
rentals equipment rentals increased $169, or 9.4 per-
cent, reﬂecting increased rental rates and a 10.9 per-
cent increase in same-store rental revenues. Trench
safety, pump and power equipment rentals increased
$16, or 18.8 percent, reﬂecting a 14 percent increase
in same-store rental revenues. Trafﬁc control equip-
ment rentals decreased $72, or 24.1 percent, reﬂect-
ing a reduction in the volume of rentals due to
continued weakness in state spending for infrastruc-
ture projects.

2003 equipment rentals of $2,176 increased $24, or
1.1 percent, reﬂecting a 2.0 percent increase in
rental rates. Equipment rentals represented approxi-
mately 76 percent of total revenues in 2003. On a
segment basis, equipment rentals represented approx-
imately 73 percent, 78 percent and 91 percent of total
revenues for general rentals, trench safety, pump and
power and trafﬁc control, respectively. General rentals
equipment rentals increased $31, or 1.8 percent.

34

Trench safety, pump and power equipment rentals
increased $14. Trafﬁc control equipment rentals
decreased $21, or 6.6 percent, reﬂecting a reduction
in the volume of rentals due to continued weakness
in state spending for infrastructure projects.

Sales of rental equipment. For each of the four
years in the period ended December 31, 2005, sales
of rental equipment have represented between 7 and
9 percent of our total revenues and our general
rentals segment accounted for approximately 95 per-
cent of these sales. Sales of rental equipment for
trafﬁc control and trench safety, pump and power
have been insigniﬁcant.

2005 sales of rental equipment of $307 increased
$32 or 11.6 percent as compared to 2004. The
11.6 percent increase as compared to 2004 reﬂected
an increase in the volume of equipment sold. 2004
sales of rental equipment of $275 increased $42 or
18.0 percent as compared to 2003. This increase
reﬂected an increase in the volume of equipment sold.
2003 sales of rental equipment of $233 increased
$10or 4.5 percent as compared to 2002. This increase
as compared to 2002 reﬂected an increase in the vol-
ume of equipment sold, as used equipment prices
remained relatively ﬂat.

Sales of new equipment. For each of the four years
in the period ended December 31, 2005, sales of new
equipment represented approximately 6 percent of
our total revenues. Our general rentals segment
accounted for approximately 95 percent of these sales.
Sales of new equipment for trafﬁc control and trench
safety, pump and power have been insigniﬁcant.

2005 sales of new equipment of $208 increased $30
or 16.9 percent as compared to 2004. The 16.9 per-
cent increase as compared to 2004 reﬂected an
increase in the number of units sold. 2004 sales of
new equipment of $178 increased $8 or 4.7 percent
as compared to 2003. The 4.7 percent increase as

compared to 2003 reﬂected an increase in the volume
of equipment sold. 2003 sales of new equipment of
$170 was unchanged from 2002.

Sales of contractor supplies. Sales of contractor sup-
plies represent our revenues associate with selling a
variety of contractor supplies including construction
consumables, tools, small equipment and safety sup-
plies. Contractor supplies sales have increased from
$160, or 5.7 percent of our total revenues, in 2002 to
$324, or 9.1 percent of our total revenues, in 2005.
Consistent with sales of rental and used equipment,
general rentals accounts for substantially all of our
contractor supplies sales. Between 2003 and 2005,
general rentals accounted for approximately 85 per-
cent of total sales of contractor supplies.

2005 sales of contractor supplies of $324 increased
$99 or 44.0 percent as compared to 2004. The 44.0
percent increase as compared to 2004 reﬂected an
increase in the volume of supplies sold. 2004 sales of
contractor supplies of $225 increased $41 or 22.3
percent as compared to 2003. The 22.3 percent
increase as compared to 2003 reﬂected an increase in
the volume of supplies sold. 2003 sales of contractor
supplies of $184 increased $24 or 15.0 percent as
compared to 2002. The 15.0 percent increase as com-
pared to 2002 reﬂected an increase in the volume of
supplies sold.

Service and other. Service and other represent our
revenues earned from providing services (including
parts sales). Consistent with sales of rental and new
equipment as well as sales of contractor supplies,
general rentals accounts for substantially all of our
service and other revenue. Between 2002 and 2005,
general rentals accounted for approximately 97 per-
cent of total service and other revenue. Service and
other revenue increased 2.8 percent, 6.7 percent and
11.0 percent in 2003, 2004 and 2005, respectively.

Segment Operating Proﬁt
Segment operating proﬁt and operating margin for each of the four years in the period ended December 31,
2005 were as follows:

General
rentals

Trench safety, 
pump and power

Trafﬁc control

Total

2005
Operating Proﬁt/(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2004
Operating Proﬁt/(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2003
Operating Proﬁt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2002
Operating Proﬁt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$472
15.2%

$416
15.4%

$234

9.6%

$338
14.2%

$48
26.7%

$31
23.8%

$23
21.1%

$22
25.3%

$(20)
(7.4)%

$(52)
(20.4)%

$ 4

1.2%

$ 12

3.3%

$500
14.0%

$395
12.8%

$261

9.1%

$372
13.2%

35

The following is a reconciliation of segment proﬁt to
total company operating income (loss):

Total segment proﬁt . . . . . .
Unallocated items:

Goodwill impairment 

charges . . . . . . . . . . . .
Restructuring and asset 
impairment charges . .

2005

2004

2003

2002

$500

$ 395

$ 261

$ 372

—

—

(139)

(297)

(248)

1

—

(28)

Operating income (loss) . . .

$500

$ 257

$ (36)

$ 96

General rentals. For each of the four years in the
period ended December 31, 2005, general rentals
accounted for at least 90 percent of the total operat-
ing proﬁt. This contribution percentage is consistent
with general rentals’ revenue contribution over the
same period, which has ranged from approximately
85 to 90 percent.

General rentals operating margin in 2005 decreased
0.2 percentage points from 2004. The reduction
in operating margin reﬂects an increase in selling,
general & administrative expenses. Operating mar-
gin in 2004 increased 5.8 percentage points from
2003. The improvement in operating margin reﬂects
a 7.5 percent increase in rental rates. Operating
margin in 2003 decreased 4.6 percentage points from
2002. The reduction in operating margin reﬂects
the incurrence of $88 of costs associated with the
buy-out of equipment leases as well as rental costs
outpacing revenue growth, particularly in repairs
and maintenance and delivery.

Trench safety, pump and power. Trench safety, pump
and power operating proﬁt increased $17 in 2005
reﬂecting a $50 increase in revenues. Operating
proﬁt in 2004 increased $8 reﬂecting the gross mar-
gin associated with the $21 increase in revenues.
Operating proﬁts in 2003 were essentially
unchanged from 2002.

Trafﬁc control. Trafﬁc control operating loss
decreased $32 in 2005. This improvement reﬂects a 6
percent increase in trafﬁc control equipment rental
revenues as well as cost reductions. Operating loss in
2004 increased $56 primarily reﬂecting the gross
margin associated with the $72, or 24.1 percent,
reduction in trafﬁc control equipment rental rev-
enues. Operating proﬁt in 2003 decreased $8 primar-
ily reﬂecting the gross margin associated with the
$21, or 6.6 percent, reduction in trafﬁc control equip-
ment rental revenues.

Gross Margin
We have historically realized higher gross margins
on sales of rental equipment than on sales of new
equipment. This is consistent with the marketplace in
general and not peculiar to United Rentals. Gross
margins by revenue classiﬁcation were as follows:

Total gross margin . . . . . . .
Equipment rentals . . . . .
Sales of rental 

equipment . . . . . . . . . .
Sales of new equipment . .
Contractor supplies 

sales . . . . . . . . . . . . . .
Service and other . . . . . .

Year Ended December 31,

2005

2004

2003

2002

32.7
34.8

26.7
18.3

23.8
49.7

31.0
31.7

28.3
17.4

27.3
49.2

27.2
26.2

36.9
13.5

27.2
45.0

31.0
31.6

33.2
14.7

27.4
45.8

2005 gross margin of 32.7 percent increased 1.7 per-
centage points from 2004. The improved margin per-
formance was primarily a result of a 3.1 percentage
point increase in equipment rentals gross margin,
partially offset by a 3.5 percentage point reduction in
gross margins on contractor supplies sales. The
improved equipment rental margin reﬂected a 6.0
percent increase in rental rates as well as a 5.2 per-
centage point improvement in dollar equipment uti-
lization. The reduction in contractor supplies sales
gross margin reﬂects costs incurred to open distribu-
tion centers in the United States and Canada. The
reduction in gross margins on sales of rental equip-
ment, as well as the increased margin realized in
sales of new equipment, reﬂect a change in the mix of
equipment sold.

2004 gross margin of 31.0 percent increased 3.8 per-
centage points from 2003. The improved margin per-
formance was primarily a result of a 5.5 percentage
point increase in equipment rentals gross margin,
partially offset by an 8.6 percentage point reduction
in gross margins on sales of rental equipment. The
improved equipment rental margin reﬂected a 7.5
percent increase in rental rates as well as a 2.8 per-
centage point improvement in dollar equipment uti-
lization. The reduction in gross margins on sales of
rental equipment, as well as the increased margin
realized on sales of new equipment, reﬂect a change
in the mix of equipment sold.

2003 gross margin of 27.2 percent decreased 3.8 per-
cent from 2002. This reduction primarily reﬂects a
5.4 percentage point reduction in equipment rentals
gross margin. The reduction in equipment rentals
gross margin reﬂects the incurrence of $88 of costs
associated with the buy-out of equipment leases.
Excluding this charge, equipment rental gross mar-
gins would have approximated 30.2 percent, reﬂect-
ing reduced equipment rentals in trafﬁc control as
well as cost increases associated with higher costs for
insurance and claims, ﬂeet repair and maintenance
and fuel and delivery.

Selling, general and administrative
expenses (SG&A)
SG&A expense information for each of the four years
in the period ended December 31, 2005 was as follows:

Year Ended December 31,

2005

2004

2003

2002

$596

$497

$449

$443

Total SG&A expenses . . . . .
SG&A as a percentage 

of revenue . . . . . . . . . . . .

16.7

16.1

15.6

15.7

SG&A expense primarily includes sales force compen-
sation, bad debt expense, advertising and marketing
expenses, third party professional fees, management
salaries and clerical and administrative overhead.

2005 SG&A expense of $596 increased 20.0 percent
as compared to 2004 and represented 16.7 percent of
revenue as compared to 16.1 percent in 2004. This
increase reﬂects increased commissions associated
with revenue growth as well as an increase in the
number of sales people. In addition to these higher
selling costs related to growth in the business, the
year-over-year growth in SG&A expense reﬂects nor-
mal inﬂationary increases as well as increased profes-
sional costs related to regulatory issues and related
matters of $28.

36

2004 SG&A expense of $497 increased 10.7 percent
as compared to 2003 and represented 16.1 percent of
revenue as compared to 15.6 percent in 2003. 2004
SG&A expense included charges of $7 associated
with the vesting of restricted stock granted to execu-
tives in 2001. As a percentage of revenue, SG&A
expense has been consistent for each of the three
years in the period ended December 31, 2004.

associated with leasehold improvements, (ii) the
amortization of deferred ﬁnancing costs and (iii) the
amortization of other intangible assets. Our other
intangible assets consist of non-compete agreements
as well as customer-related intangible assets. The
amount of non-rental depreciation and amortization
has approximated 2 percent of revenues for each of
the four years in the period ended December 31, 2005.

2003 SG&A expense of $449 increased 1.4 percent as
compared to 2002 and represented 15.6 percent of
revenue as compared to 15.7 percent in 2002. The
increase in 2003 as compared to 2002 was primarily
attributable to the accelerated vesting of restricted
shares granted in 2001. This charge was $12 in 2003
and there was no corresponding charge in 2002.

Goodwill impairment charge
Pursuant to an accounting standard adopted in 2002,
we no longer amortize goodwill. Instead, we are
required to periodically review our goodwill for
impairment. In general, this means that we must
determine whether the fair value of the goodwill, cal-
culated in accordance with applicable accounting stan-
dards, is at least equal to the recorded value shown on
our balance sheet. If the fair value of the goodwill is
less than the recorded value, we are required to write
off the excess goodwill as an expense.

We are required to review our goodwill for impair-
ment annually as of a scheduled review date; how-
ever, if events or circumstances suggest that our
goodwill could be impaired, we may be required to
conduct an earlier review. Our scheduled review date
is October 1 of each year; however, we reviewed our
trafﬁc control segment goodwill as of September 30,
2004 because continued weakness in this segment
suggested that the goodwill associated with this seg-
ment could be impaired.

In the fourth quarter of 2003, we recorded a goodwill
impairment charge of $297. Additionally, in the third
quarter of 2004, we recorded a goodwill impairment
charge of $139 to write off the remaining goodwill
associated with our trafﬁc control segment. The
charge in the fourth quarter of 2003 reﬂected weak-
ness in the ﬁnancial performance of certain of our
branches. The charge in the third quarter of 2004
reﬂected the unfavorable ﬁnancial performance of
our trafﬁc control operations.

Restructuring and asset impairment charge
The restructuring and asset impairment charge of
$(1) in 2004 relates to the reversal of excess restruc-
turing reserves established in prior years of $5,
partially offset by asset impairment charges of $4
related to our trafﬁc control segment.

Non-rental depreciation and amortization for
each of the four years in the period ended December
31, 2005 was as follows:

Year Ended December 31,

2005

2004

2003

2002

Non-rental depreciation 

and amortization . . . . . .

$69

$67

$72

$61

Non-rental depreciation and amortization includes
(i) depreciation expense associated with equipment
that is not offered for rent (such as vehicles, comput-
ers and ofﬁce equipment) and amortization expense

Interest expense for each of the four years in the
period ended December 31, 2005 was as follows:

Year Ended December 31,

2005

2004

2003

2002

Interest expense . . . . . . . . .

$185

$155

$209

$196

Interest expense for the year ended December 31,
2005 increased $30 or 19.4 percent as compared to
2004, reﬂecting the increase in interest rates applica-
ble to our ﬂoating rate debt. As of December 31, 2005,
approximately 45 percent of our total debt was ﬂoat-
ing rate debt. Interest expense for the year ended
December 31, 2004 decreased $54, or 25.9 percent, as
compared to 2003. This decrease was attributable to
lower interest rates on our debt primarily due to
(i) the debt reﬁnancings that we completed in the
fourth quarter of 2003 and in 2004 and (ii) the posi-
tive impact of interest rate swaps that increased the
portion of our interest expense that was based on
ﬂoating interest rates. As of December 31, 2004,
approximately 45 percent of our total debt was ﬂoat-
ing rate debt. Interest expense for the year ended
December 31, 2003 increased $13 or 6.8 percent. This
increase primarily reﬂected higher interest costs
related to the senior notes we issued in December
2002 and April 2003, partially offset by lower inter-
est rates on our variable rate debt. As described
below, in the ﬁrst quarter of 2004, we reﬁnanced
these senior notes with lower interest rate notes.

Interest expense — subordinated convertible
debentures and Preferred dividends of a
subsidiary trust for each of the four years in the
period ended December 31, 2005 was as follows:

Year Ended December 31,

2005

2004

2003

2002

$14

$14

—

—

Interest expense —

subordinate convertible 
debentures . . . . . . . . . . .

Preferred dividends of a 

subsidiary trust . . . . . . .

—

—

$15

$18

In August 1998, a subsidiary trust of Holdings sold
certain trust preferred securities and used the pro-
ceeds from such sale to purchase certain convertible
subordinated debentures from Holdings. The sub-
sidiary trust that issued the trust preferred securities
was consolidated with Holdings until December 31,
2003, when it was deconsolidated following the adop-
tion of a new accounting principle.

For periods prior to the deconsolidation, the divi-
dends on the trust preferred securities were reﬂected
as an expense on our consolidated statements of oper-
ations and the interest on the subordinated convert-
ible debentures was eliminated in consolidation and
thus was not reﬂected as an expense on our consoli-
dated statement of operations. For periods after the
deconsolidation, the dividends on the trust preferred

37

securities are no longer reﬂected as an expense on
our consolidated statements of operations and the
interest on the subordinated convertible debentures
is no longer eliminated in consolidation and thus
is now reﬂected as an expense on our consolidated
statements of operations. Because the interest on
the subordinated convertible debentures corresponds
to the dividends on the trust preferred securities,
this change does not alter the total amount of
expense reported.

Other (income) expense, net for each of the four
years in the period ended December 31, 2005 was
as follows:

Year Ended December 31,

2005

2004

2003

2002

Other (income) expense, 

net . . . . . . . . . . . . . . . . . .

$(9)

$176

$43

$(1)

2005 other income of $(9) primarily represents inter-
est income. 2004 other expense of $176 primarily
relates to approximately $171 of charges incurred in
the ﬁrst quarter of 2004 related to the reﬁnancing of
approximately $2.1 billion of debt. This reﬁnancing
is discussed further below; see “Liquidity and Capital
Resources.” 2003 other expense of $43 includes $29
of charges incurred in connection with the redemp-
tion of previously issued senior subordinated notes as
well as an $11 write-off of notes receivable that were
deemed impaired. The charge related to the redemp-
tion of notes primarily reﬂects the redemption price
premium and the write-off of previously capitalized
ﬁnancing costs related to such notes. The charge
associated with the notes receivable write-off relates
to notes received as consideration for non-core assets
that were disposed of in prior years.

Income Taxes
The following table summarizes our consolidated pro-
vision (beneﬁt) for income taxes and the related effec-
tive tax rate for each respective period:

2005

2004

2003

2002

Pre-tax income (loss)
Provision (beneﬁt) for 

. . . . .

$310

$(88)

$(303)

$(117)

income taxes . . . . . . . . . .
. . . . . .

Effective tax rate (1)

123
39.7%

(4)
4.5%

(49)
16.2%

1
(0.9)%

(1) A detailed reconciliation of the consolidated effective tax rate to the
U.S. federal statutory income tax rate is included in note 11 to our
consolidated ﬁnancial statements.

The difference between the 2005 consolidated effec-
tive tax rate of 39.7 percent and the U.S. federal
statutory income tax rate of 35.0 percent relates pri-
marily to state taxes and certain nondeductible
charges. The difference between the 2004 consoli-
dated effective tax rate of 4.5 percent and the U.S. fed-
eral statutory income tax rate of 35.0 percent relates
primarily to state taxes, the goodwill impairment
charge and other nondeductible charges. The differ-
ence between the 2003 consolidated effective tax rate
of 16.2 percent and the U.S. federal statutory income
tax rate of 35.0 percent relates primarily to state
taxes, the goodwill impairment charge, deferred
restatement charges and other nondeductible
charges. The difference between the 2002 consoli-
dated effective tax rate of (0.9) percent and the U.S.
federal statutory income tax rate of 35.0 percent
relates primarily to state taxes and the goodwill
impairment charges.

Our consolidated effective income tax rate will
change based on discrete events (such as audit settle-
ments) as well as other factors, including the geo-
graphical mix of income before taxes and the related
tax rates in those jurisdictions. We anticipate that
our 2006 annual consolidated effective tax rate will
approximate 40 percent.

Recent Accounting Pronouncements
See note 2 to the consolidated ﬁnancial statements
for a full description of recent accounting pro-
nouncements, including the respective dates of
adoption and effects on our results of operations
and ﬁnancial condition.

Liquidity and Capital Resources
Liquidity. We manage our liquidity using internal
cash management practices, which are subject to (1)
the statutes, regulations and practices of each of the
local jurisdictions in which we operate, (2) the legal
requirements of the agreements to which we are a
party and (3) the policies and cooperation of the
ﬁnancial institutions we utilize to maintain and pro-
vide cash management services.

Our principal existing sources of cash are cash gener-
ated from operations and from the sale of rental equip-
ment and borrowings available under our revolving
credit facility and receivables securitization facility. As
of December 31, 2005, we had (i) $450 of borrowing
capacity available under the revolving credit facility
portion of our $1.55 billion senior secured credit facil-
ity and (ii) $200 of borrowing capacity available under
our receivables securitization facility (reﬂecting the
size of the eligible collateral pool as of such date and
no loans outstanding). We believe that our existing
sources of cash will be sufﬁcient to support our exist-
ing operations over the next twelve months.

We expect that our principal needs for cash relating
to our existing operations over the next twelve
months will be to fund (i) operating activities and
working capital, (ii) the purchase of rental equipment
and inventory items offered for sale, (iii) payments
due under operating leases, (iv) debt service and
(v) acquisitions. We plan to fund such cash require-
ments from our existing sources of cash. In addition,
we may seek additional ﬁnancing through the securi-
tization of some of our equipment or real estate or
through the use of additional operating leases. For
information on the scheduled principal and interest
payments coming due on our outstanding debt and
on the payments coming due under our existing
operating leases, see “ — Certain Information
Concerning Contractual Obligations.”

The amount of our future capital expenditures will
depend on a number of factors, including general
economic conditions and growth prospects. We esti-
mate that our capital expenditures for 2006 will
range between $900 and $925. We expect that we
will fund such expenditures from proceeds from
the sale of used equipment, cash generated from
operations and, if required, borrowings available
under our revolving credit facility and receivables
securitization facility.

While emphasizing internal growth, we intend to
continue to expand through a disciplined acquisition
program. We will consider potential transactions of
varying sizes and may, on a selective basis, pursue

38

acquisition or consolidation opportunities involving
other public companies or large privately-held com-
panies. We expect to pay for future acquisitions using
cash, capital stock, notes and/or assumption of
indebtedness. To the extent that our existing sources
of cash described above are not sufﬁcient to fund
such future acquisitions, we will require additional
debt or equity ﬁnancing and, consequently, our
indebtedness may increase or the ownership of exist-
ing stockholders may be diluted as we implement our
growth strategy.

Transactions Completed in 2004
We reﬁnanced approximately $2.1 billion of debt in
2004 (“the Reﬁnancing”). The Reﬁnancing extended
debt maturities, reduced interest expense going
forward and provided the Company with greater
ﬁnancial ﬂexibility. As part of the Reﬁnancing,
the Company:

• amended and restated URI’s senior secured credit

facility (“New Credit Facility”) to replace URI’s pre-
vious $1.3 billion senior secured credit facility;

• sold $1 billion of URI’s 61⁄2 percent Senior Notes

Due 2012;

• sold $375 of URI’s 7 percent Senior Subordinated

Notes Due 2014;

• repaid $639 of term loans and $52 of borrowings

that were outstanding under the old credit facility;

• repurchased $845 principal amount of URI’s 103⁄4
percent Senior Notes Due 2008 (the “103⁄4 percent
Notes”), pursuant to a tender offer;

• redeemed $300 principal amount of URI’s out-

standing 91⁄4 percent Senior Subordinated Notes
Due 2009 (the “91⁄4 percent Notes”); and

• redeemed $250 principal amount of URI’s out-

standing 9 percent Senior Subordinated Notes Due
2009 (the “9 percent Notes”).

The Reﬁnancing was completed during the ﬁrst quar-
ter of 2004, except that (i) the redemption of the 9
percent Notes was completed on April 1, 2004 and a
portion of the term loan that is part of the New Credit
Facility was drawn on such date and (ii) an additional
$4 of the 103⁄4 percent Notes were repurchased on
April 7, 2004.

In connection with the Reﬁnancing, the Company
incurred aggregate charges of approximately $171.
These charges were attributable primarily to (i) the
redemption and tender premiums for notes redeemed
or repurchased as part of the Reﬁnancing and (ii) the
write-off of previously capitalized costs relating to
the debt reﬁnanced. These charges were recorded in
other (income) expense, net.

7 percent Senior Subordinated Notes. In January
2004, as part of the Reﬁnancing described above, URI
issued $375 aggregate principal amount of 7 percent
Senior Subordinated Notes (the “7 percent Notes”)
which are due February 15, 2014. The net proceeds
from the sale of the 7 percent Notes were approxi-
mately $369, after deducting offering expenses. The
7 percent Notes are unsecured and are guaranteed by
Holdings and, subject to limited exceptions, URI’s
domestic subsidiaries. The 7 percent Notes mature on
February 15, 2014 and may be redeemed by URI on

or after February 15, 2009, at speciﬁed redemption
prices that range from 103.5 percent in 2009 to 100.0
percent in 2012 and thereafter. In addition, on or
prior to February 15, 2007, URI may, at its option,
use the proceeds of public equity offerings to redeem
up to an aggregate of 35 percent of the outstanding 7
percent Notes at a redemption price of 107.0 percent.
The indenture governing the 7 percent Notes con-
tains certain restrictive covenants, including limita-
tions on (i) additional indebtedness, (ii) restricted
payments, (iii) liens, (iv) dividends and other pay-
ments, (v) preferred stock of certain subsidiaries,
(vi) transactions with afﬁliates, (vii) the disposition of
proceeds of asset sales and (viii) the Company’s ability
to consolidate, merge or sell all or substantially all of
its assets.

6 1⁄2 percent Senior Notes. In February 2004, as part of
the Reﬁnancing described above, URI issued $1 bil-
lion aggregate principal amount of 61⁄2 percent Senior
Notes (the “61⁄2 percent Notes”) which are due Febru-
ary 15, 2012. The net proceeds from the sale of the
61⁄2 percent Notes were approximately $985, after
deducting offering expenses. The 61⁄2 percent Notes
are unsecured and are guaranteed by Holdings and,
subject to limited exceptions, URI’s domestic sub-
sidiaries. The 61⁄2 percent Notes mature on February
15, 2012 and may be redeemed by URI on or after
February 15, 2008, at speciﬁed redemption prices
that range from 103.25 percent in 2008 to 100.0 per-
cent in 2010 and thereafter. In addition, on or prior
to February 15, 2007, URI may, at its option, use the
proceeds of public equity offerings to redeem up to an
aggregate of 35 percent of the outstanding 61⁄2 per-
cent Notes at a redemption price of 106.5 percent.
The indenture governing the 61⁄2 percent Notes con-
tains certain restrictive covenants, including limita-
tions on (i) additional indebtedness, (ii) restricted
payments, (iii) liens, (iv) dividends and other pay-
ments, (v) preferred stock of certain subsidiaries,
(vi) transactions with afﬁliates, (vii) the disposition of
proceeds of asset sales, (viii) the Company’s ability to
consolidate, merge or sell all or substantially all of its
assets and (ix) sale-leaseback transactions.

New Credit Facility. In the ﬁrst quarter of 2004, as
part of the Reﬁnancing described above, the Company
amended and restated URI’s senior secured credit
facility. The amended and restated facility includes
(i) a $650 revolving credit facility, (ii) a $150 institu-
tional letter of credit facility and (iii) a $750 term
loan. The revolving credit facility, institutional letter
of credit facility and term loan are governed by the
same credit agreement. URI’s obligations under the
credit facility are guaranteed by Holdings and, sub-
ject to limited exceptions, URI’s domestic subsidiaries
and are secured by liens on substantially all of the
assets of URI, Holdings and URI’s domestic sub-
sidiaries. Set forth below is certain additional infor-
mation concerning the amended and restated facility.

Revolving Credit Facility. The revolving credit
facility enables URI to borrow up to $650 on a
revolving basis and enables certain of the Com-
pany’s Canadian subsidiaries to borrow up to $150
(provided that the aggregate borrowings of URI
and the Canadian subsidiaries may not exceed
$650). A portion of the revolving credit facility,
up to $250, is available for issuance of letters of
credit. The revolving credit facility is scheduled

39

to mature and terminate in February 2009. As of
December 31, 2005 and 2004, the outstanding bor-
rowings under this facility were approximately
$137 and $133, respectively, and utilized letters
of credit were $64 and $50, respectively. All out-
standing borrowings under the revolving credit
facility at December 31, 2005 and December 31,
2004 were Canadian subsidiary borrowings.

U.S. dollar borrowings under the revolving credit
facility accrue interest, at the option of URI’s Cana-
dian subsidiaries, at either (a) the ABR rate (which
is equal to the greater of (i) the Federal Funds Rate
plus 0.5 percent and (ii) JPMorgan Chase Bank’s
prime rate) plus a margin of 1.25 percent, or (b) an
adjusted LIBOR rate plus a maximum margin of
2.25 percent.

Canadian dollar borrowings under the revolving
credit facility accrue interest, at the borrower’s
option, at either (a) the Canadian prime rate
(which is equal to the greater of (i) the CDOR rate
plus 1 percent and (ii) JPMorgan Chase Bank,
Toronto Branch’s prime rate) plus a margin of 1.25
percent, or (b) the B/A rate (which is equal to
JPMorgan Chase Bank, Toronto Branch’s B/A rate)
plus a maximum margin of 2.25 percent. The rate
applicable to Canadian borrowings outstanding
under the revolving credit facility was 5.29 and
4.81 at December 31, 2005 and 2004, respectively.

URI is also required to pay the lenders a commit-
ment fee equal to 0.5 percent per annum, payable
quarterly, in respect of undrawn commitments
under the revolving credit facility.

Institutional Letter of Credit Facility (“ILCF”). The
ILCF provides for up to $150 in letters of credit.
The ILCF is in addition to the letter of credit capac-
ity under the revolving credit facility. The total
combined letter of credit capacity under the revolv-
ing credit facility and the ILCF is $400. Subject to
certain conditions, all or part of the ILCF may be
converted into term loans. The ILCF is scheduled
to terminate in February 2011. As of both Decem-
ber 31, 2005 and 2004, the outstanding letters of
credit under the ILCF were approximately $150.

URI is required to pay a fee which accrues at the
rate of 0.1 percent per annum on the amount of
the ILCF. In addition, URI is required to pay par-
ticipation and other fees in respect of letters of
credit. For letters of credit obtained under both the
ILCF and the revolving credit facility, these fees
accrue at the rate of 2.25 percent per annum. In
May 2005, based on the Company’s ﬁrst quarter
2005 funded debt to cash ﬂow ratio, the participa-
tion fee was reduced to 2.0 percent.

Term Loan. The term loan was obtained in two
draws. An initial draw of $550 was made upon the
closing of the credit facility in February 2004 and
an additional draw of $200 was made on April 1,
2004. Amounts repaid in respect of the term loan
may not be reborrowed.

The term loan must be repaid in installments as
follows: (i) during the period from and including
June 30, 2004 to and including March 31, 2010,
URI must repay on each March 31, June 30,
September 30 and December 31 of each year an
amount equal to one-fourth of 1 percent of the

original aggregate principal amount of the term
loan and (ii) URI must repay on each of June 30,
2010, September 30, 2010, December 31, 2010,
and at maturity on February 14, 2011 an amount
equal to 23.5 percent of the original aggregate
principal amount of the term loan. As of December
31, 2005 and 2004, amounts outstanding under
the term loan were approximately $737 and
$744, respectively.

Borrowings under the term loan accrue interest, at
URI’s option, at either (a) the ABR rate plus a maxi-
mum margin of 1.25 percent, or (b) an adjusted
LIBOR rate plus a maximum margin of 2.25 per-
cent. The rate was 6.63 percent and 4.67 percent at
December 31, 2005 and 2004, respectively.

Covenants. Under the agreement governing the
New Credit Facility, the Company is required to,
among other things, satisfy certain ﬁnancial tests
relating to: (a) interest coverage ratio, (b) the ratio
of funded debt to cash ﬂow, (c) the ratio of senior
secured debt to tangible assets and (d) the ratio of
senior secured debt to cash ﬂow. If the Company
is unable to satisfy any of these covenants, the
lenders could elect to terminate the credit facility
and require the Company to repay the outstanding
borrowings under the credit facility. The Company
is also subject to various other covenants under
the agreements governing its credit facility and
other indebtedness. These covenants require the
Company to timely ﬁle audited annual and quar-
terly ﬁnancial statements with the SEC and limit
or prohibit, among other things, the Company’s
ability to incur indebtedness, make prepayments
of certain indebtedness, pay dividends, make
investments, create liens, make acquisitions, sell
assets and engage in mergers and acquisitions.
If at any time an event of default under the New
Credit Facility exists, the interest rate applicable
to each revolving and term loan will be based on
the highest margins above plus 2 percent.

Transactions Completed in 2005
Matters Relating to Consent Solicitation: In 2005,
the Company successfully solicited consents for
amendments to the indentures governing the
following securities:

• 61⁄2 percent Senior Notes due 2012

• 73⁄4 percent Senior Subordinated Notes due 2013

• 7 percent Senior Subordinated Notes due 2014

• 17⁄8 percent Convertible Senior Subordinated Notes

due 2023 (“Convertible Notes”)

• 61⁄2 percent Convertible Quarterly Income Pre-

ferred Securities due 2028 (“QUIPs”)

The indentures for these securities require annual
and other periodic reports to be ﬁled with the SEC.
On September 19, 2005, the Company obtained con-
sents from holders of these securities and entered
into supplemental indentures amending the applica-
ble covenants to allow the Company until March 31,
2006 to comply with the requirement to make timely
SEC ﬁlings (and waiving related defaults that
occurred prior to the effectiveness of the amend-
ments). In addition, the supplemental indenture relat-
ing to the Convertible Notes changed the conversion

40

rate from 38.9520 to 44.9438 shares of United
Rentals common stock for each $1,000 (“one thou-
sand dollars”) principal amount of Convertible Notes.
Pursuant to the terms of the consent solicitation, the
Company paid aggregate consent fees of approxi-
mately $34 to holders of its nonconvertible notes and
QUIPs. These costs are being amortized through the
maturity dates of the nonconvertible notes and
QUIPs. Amortization expense recorded in 2005 for
these costs was $1.

In March 2005, the Company successfully obtained
its lenders’ consent to an amendment to the New
Credit Facility that waived the covenant violation
from the delay in making certain SEC ﬁlings and
extended the Company’s deadline to make SEC ﬁlings
until June 29, 2005 for our 2004 Annual Report on
Form 10-K and until August 15, 2005 for our ﬁrst
quarter 2005 Form 10-Q. In June 2005, the Company
successfully obtained its lenders’ consent to an
amendment to the New Credit Facility that waived
the covenant violation from the delay in making cer-
tain SEC ﬁlings and extended the Company’s deadline
to make SEC ﬁlings until December 31, 2005 for our
2004 Annual Report on Form 10-K and for our 2005
Form 10-Qs. Both of these consents were obtained
without the payment of any consent fees. In Novem-
ber 2005, the Company successfully obtained its
lenders’ consent to an amendment to the New Credit
Facility that waived the covenant violation from the
delay in making certain SEC ﬁlings and extended the
Company’s deadline to make SEC ﬁlings until March
31, 2006. Consent fees in the amount of $1 were paid
to the lenders under the New Credit Facility.

On March 31, 2006, the Company obtained its
lenders’ consent to an additional amendment to the
New Credit Facility that (1) waived the covenant vio-
lation from the delay in making certain SEC ﬁlings,
(2) extended the Company’s deadline to make its SEC
ﬁlings until April 28, 2006 and (3) limited the Com-
pany’s ability to borrow under the New Credit Facility
to amounts necessary to ﬁnd obligations to be paid in
the ordinary course during the one-week period fol-
lowing the applicable borrowing until these SEC ﬁl-
ings are made.

Accounts Receivable Securitization: On May 31, 2005,
we obtained a new $200 accounts receivable securiti-
zation facility and terminated our then existing $250
accounts receivable securitization facility. The new
facility provides for generally lower borrowing costs
than the old facility. In addition, the new facility pro-
vides for a substantially longer term, with the sched-
uled termination date being May 29, 2009, compared
with September 30, 2006 under the old facility. There
were no outstanding borrowings under the old facil-
ity at the time it was terminated. In connection with
terminating the old facility, we incurred a charge of
approximately $1, representing the write-off of previ-
ously capitalized costs relating to the old facility.

The new facility enables one of our subsidiaries to
borrow up to $200 against a collateral pool of eligible
accounts receivable. Consistent with the old facility,
the borrowings under the new facility will be
reﬂected as debt on our consolidated balance sheets
and the receivables in the collateral pool will be
reﬂected as assets on our consolidated balance sheets.
However, such assets are only available to satisfy the

obligations of the borrower subsidiary, and once the
obligations of the borrower subsidiary are satisﬁed,
the remaining assets will be available to be divi-
dended to the parent.

Key terms of this facility include:

• borrowings may be made only to the extent that

the face amount of the receivables in the collateral
pool exceeds the outstanding loans by a speciﬁed
amount;

• the facility is structured so that the receivables in
the collateral pool are the lenders’ only source of
repayment;

• prior to expiration or early termination of the

facility, amounts collected on the receivables may,
subject to certain conditions, be retained by the
borrower, provided that the remaining receivables
in the collateral pool are sufﬁcient to secure the
then outstanding borrowings;

• after expiration or early termination of the facility,
no new amounts will be advanced under the facil-
ity and collections on the receivables securing the
facility will be used to repay the outstanding bor-
rowings; and

• the facility contains standard termination events

including, without limitation, a termination event
if (i) the long-term senior secured rating of URI
falls below either B+ from Standard & Poor’s Rat-
ing Services or B2 from Moody’s Investors Service
or (ii) our New Credit Facility is terminated. Our
current ratings are discussed below.

Outstanding borrowings under the facility generally
accrue interest at the commercial paper rate plus a
speciﬁed spread not to exceed 1.0 percent. There were
no outstanding borrowings under this facility at
December 31, 2005. We are also required to pay a
commitment fee based on the long-term senior
secured ratings of URI. This commitment fee was
0.55 percent at December 31, 2005.

Redemption of remaining 103⁄4 Senior Notes: In April
2005, the Company redeemed $12 principal amount
of URI’s 103⁄4 Senior Notes due 2008 (the “103⁄4 Notes”).
The principal repurchased represented the amounts
of the 103⁄4 Notes still outstanding after the 2004 ten-
der offer. In connection with this redemption, the
Company incurred charges of approximately $1.
These charges were attributed primarily to (i) the
redemption for notes redeemed and (ii) the write-off
of previously capitalized costs. These charges were
recorded in other (income) expense, net.

Loan Covenants and Compliance
As of December 31, 2005 and 2004, we were in com-
pliance with the covenants of the 7 percent Notes
and the 61⁄2 percent Notes, as amended, as discussed
above, as well as the covenants of our 73⁄4 percent
Senior Subordinated Notes due 2013, Convertible
Notes, the QUIPs and the New Credit Facility. As dis-
cussed above (see “Transactions Completed in 2005 —
Matters Relating to Consent Solicitations”), on
September 19, 2005, we amended the indentures
governing the above-described securities and our
New Credit Facility to allow the Company until
March 31, 2006 to comply with the requirement to
make timely SEC ﬁlings. As described above, on

41

March 31, 2006 the Company obtained its lenders’
consent to an additional amendment to the New
Credit Facility that extended the Company’s deadline
to make its SEC ﬁlings until April 28, 2006.

As of March 31, 2006 we have ﬁled our annual
reports on Form 10-K for the years ended December
31, 2005 and 2004; however, we have not yet ﬁled any
of our quarterly reports on Form 10-Q for the periods
ended in 2005. Therefore, as of March 31, 2006, we
are in violation of the amendments to our indentures
due to not ﬁling our quarterly reports (see “Risk Fac-
tors — We will be unable to ﬁle our delinquent quar-
terly reports on Form 10-Q by the end of the
extension period granted by holders of our bonds,
which will give our bondholders the right to declare
an event of default.”).

The Company is currently in compliance with the
New Credit Facility, as amended, as of March 31,
2006. However, if the Company were not to ﬁle the
required SEC reports by April 28, 2006, the Company
would be required to obtain an additional extension
or be in immediate default under the New Credit
Facility. If the Company’s bondholders declare an
event of default under any of the Company’s inden-
tures, the waiver of default contained in the March
31, 2006 amendment will nevertheless continue until
April 28, 2006. In addition, the amendment to our
New Credit Facility limits our ability to make borrow-
ings as discussed above.

At December 31, 2005 and 2004, we were in full com-
pliance with all our ﬁnancial covenants in the New
Credit Facility and the indentures governing our
notes and convertible securities. We consider our
most restrictive covenant to be the Minimum Interest
Coverage ratio. The minimum amount permitted
under this covenant is as follows:

Period

Ratio

June 30, 2004 through December 31, 2004 . . . . . . . . . . 1.35 to 1.0
January 1, 2005 through December 31, 2005 . . . . . . . . . 1.45 to 1.0
January 1, 2006 and thereafter . . . . . . . . . . . . . . . . . . . 1.65 to 1.0

Our actual minimum interest coverage ratios for the
years ended December 31, 2005 and 2004 were 2.22
and 2.06, respectively.

Sources and Uses of Cash
During 2005, we (i) generated cash from operations
of $643, (ii) generated cash from the sale of rental
equipment of $307 and (iii) utilized cash for debt
repayments and ﬁnancing costs of $74. We used cash
during this period principally to (i) purchase rental
equipment of $741, (ii) purchase other property and
equipment of $82 and (iii) purchase other companies,
net of cash acquired, of $40.

During 2004, we (i) generated cash from operations
of $737, (ii) generated cash from the sale of rental
equipment of $275 and (iii) utilized cash for debt
repayments, net of borrowings, and ﬁnancing costs
of $51. We used cash during this period principally to
(i) purchase rental equipment of $592, (ii) purchase
other property and equipment of $57 and (iii) pur-
chase other companies, net of cash acquired, of $102.

Our credit ratings as of March 31, 2006 were 
as follows:

Corporate 
Rating

Moody’s . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B2
BB–
BB

Outlook

Negative
Negative
Negative

Both our ability to obtain ﬁnancing and the related
cost of borrowing are affected by our credit ratings,
which are periodically reviewed by these rating agen-
cies. Our current credit ratings are below investment
grade and we expect our access to the public debt
markets to be limited to the non-investment grade
segment until our ratings reﬂect an investment
grade rating.

Certain Information Concerning Contractual Obligations
The table below provides certain information concerning the payments coming due under certain categories
of our existing contractual obligations as of December 31, 2005:

Debt excluding capital leases (1) . . . . . . . . . . . . . . . . . . . . .
Interest due on debt (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital leases (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases (1):

Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service agreements (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase obligations (4) . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .
Subordinated convertible debentures (5)

2006

$ 8
206
19

78
70
30
3
483
14

2007

$ 8
204
17

73
38
20
2
—
14

2008

$

8
203
12

63
31
13
1
—
14

2009

$145
192
7

50
9
9
—
—
14

2010

Thereafter

Total

$531
172
4

36
—
6
—
—
14

$2,167
295
4

$2,867
1,272
63

129
—
2
—
—
475

429
148
80
6
483
545

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$911

$376

$345

$426

$763

$3,072

$5,893

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

(2) Estimated interest payments have been calculated based on the principal amount of debt and the effective interest rates as of December 31, 2005.
(3) These represent service agreements with third parties to operate the distribution centers associated with our contractor supplies business.
(4) As of December 31, 2005, the Company had outstanding purchase orders with its equipment and inventory suppliers. These purchase orders,

which were negotiated in the ordinary course of business, aggregate approximately $483. These purchase commitments can be cancelled by the
Company, generally with 30 days notice and without cancellation penalties. The equipment and inventory receipts from the suppliers for these
purchases and related payments to the suppliers are expected to be completed throughout 2006.

(5) Includes interest payments.

42

Certain Information Concerning 
Restricted Stock
We have granted to employees other than executive
ofﬁcers and directors approximately 567,000 shares
of restricted stock that have not yet vested. The
shares vest in 2006, 2007 or 2008 or earlier upon a
change in control of the Company, death, disability,
retirement or certain terminations of employment,
and are subject to forfeiture prior to vesting on cer-
tain other terminations of employment, the violation
of non-compete provisions and certain other events.
If a holder of restricted stock sells his stock and
receives sales proceeds that are less than a speciﬁed
guaranteed amount set forth in the grant instru-
ment, we have agreed to pay the holder the shortfall
between the amount received and such speciﬁed
amount; however, the foregoing only applies to sales
that are made within ﬁve trading days of the vesting
date. The speciﬁed guaranteed amount is (i) $9.18 per
share with respect to approximately 326,000 shares,
$17.20 per share with respect to approximately 9,000
shares, and $27.26 per share with respect to approxi-
mately 8,000 shares scheduled to vest in 2006 and (ii)
$17.20 per share with respect to approximately
167,000 shares scheduled to vest in 2007 and (iii)
$19.86 per share with respect to approximately
57,000 shares scheduled to vest in 2008.

Certain Information Concerning Off-Balance
Sheet Arrangements
We lease real estate, rental equipment and non-rental
equipment under operating leases as a `regular busi-
ness activity. As part of some of our equipment oper-
ating leases, we guarantee that the value of the
equipment at the end of the term will not be less than
a speciﬁed projected residual value. If the actual
residual value for all equipment subject to such guar-
antees were to be zero, then our maximum potential
liability under these guarantees would be approxi-
mately $26. Under current circumstances we do not
anticipate paying signiﬁcant amounts under these
guarantees; however, we cannot be certain that
changes in market conditions or other factors will
not cause the actual residual values to be lower than
those currently anticipated. In accordance with FIN
45, “Guarantor’s Accounting and Disclosure Require-
ments for Guarantees, Including Indirect Guarantees
of Indebtedness of Others,” this potential liability was
not reﬂected on our balance sheet as of December 31,
2005 and 2004 or any prior date because the leases
associated with such guarantees were entered into
prior to January 1, 2003. For additional information
concerning lease payment obligations under our
operating leases, see “ — Certain Information Concern-
ing Contractual Obligations” above.

Certain Information Concerning Trust
Preferred Securities
In August 1998, a subsidiary trust of Holdings sold
$300 of QUIPs. The trust used the proceeds from the
sale of these securities to purchase 61⁄2 percent subor-
dinated convertible debentures due 2028 which
resulted in Holdings receiving all of the net proceeds
of the sale. The subsidiary trust that issued the trust
preferred securities was consolidated with Holdings
until December 31, 2003, when it was deconsolidated.

For periods prior to the deconsolidation, the divi-
dends on the trust preferred securities were reﬂected
as an expense on our consolidated statements of oper-
ations and the interest on the subordinated convert-
ible debentures was eliminated in consolidation and
thus was not reﬂected as an expense on our consoli-
dated statements of operations. For periods after the
deconsolidation, the dividends on the trust preferred
securities are no longer reﬂected as an expense on
our consolidated statements of operations and the
interest on the subordinated convertible debentures is
no longer eliminated in consolidation and thus is
now reﬂected as an expense on our consolidated state-
ments of operations. Because the interest on the sub-
ordinated convertible debentures corresponds to the
dividends on the trust preferred securities, this
change does not alter the total amount of expense
required to be recorded.

Relationship Between Holdings and URI
Holdings is principally a holding company and pri-
marily conducts its operations through its wholly
owned subsidiary URI and subsidiaries of URI. Hold-
ings provides certain services to URI in connection
with its operations. These services principally
include: (i) senior management services, (ii) ﬁnance
and tax related services and support, (iii) information
technology systems and support, (iv) acquisition
related services, (v) legal services, and (vi) human
resource support. In addition, Holdings leases certain
equipment and real property that are made available
for use by URI and its subsidiaries. URI has made,
and expects to continue to make, certain payments to
Holdings in respect of the services provided by Hold-
ings to URI. The expenses relating to URI’s payments
to Holdings are reﬂected on URI’s ﬁnancial state-
ments as selling, general and administrative
expenses. In addition, although not legally obligated
to do so, URI has in the past made, and expects that it
will in the future make, distributions to Holdings to,
among other things, enable Holdings to pay interest
on the convertible debentures that were issued to a
subsidiary trust of Holdings as described above.

As discussed above, our consolidated ﬁnancial state-
ments reﬂect (i) for periods prior to January 1, 2004,
expenses related to dividends on certain trust pre-
ferred securities issued by a subsidiary trust of Hold-
ings and (ii) for periods after January 1, 2004,
expenses related to certain subordinated convertible
debentures issued by Holdings to such subsidiary
trust; however, the foregoing expenses are not
reﬂected on the consolidated ﬁnancial statements of
URI because URI is not obligated with respect to the
foregoing securities. This is the principal reason for
the difference in the historical net income (loss)
reported on the consolidated ﬁnancial statements of
URI and the net income (loss) reported on the consoli-
dated ﬁnancial statements of Holdings.

43

quantitative and qualitative disclosures 
about market risk

Our exposure to market risk primarily consists of
(1) interest rate risk associated with our variable rate
debt and (2) foreign currency exchange rate risk pri-
marily associated with our Canadian operations.

Interest Rate Risk
We periodically utilize interest rate swap agreements
and interest rate cap agreements to manage our
interest costs and exposure to changes in interest
rates. As of December 31, 2005 and December 31,
2004, we had swap agreements with an aggregate
notional amount of $1.2 billion and cap agreements
with an agreement notional amount of $725. The
effect of the swap agreement was, at December 31,
2005 and December 31, 2004, to convert $1.2 billion
of our ﬁxed rate notes to ﬂoating rate instruments.
The ﬁxed rate notes being converted consisted of
(i) $445 of our 61⁄2 percent Notes through 2012,
(ii) $375 of our 7 percent Notes, and (iii) $375 of
our 73⁄4 percent senior subordinated notes
through 2013.

As of December 31, 2005, after giving effect to our
interest rate swap and cap agreements, we had an
aggregate of $1.3 billion of indebtedness that bears
interest at variable rates. For this purpose, the portion
of the term loan subject to the cap is considered ﬁxed.
The debt that is subject to ﬂuctuations in interest rates
includes $136 of borrowings under our revolver Cana-
dian facility, $1.2 billion in swaps, and $11 of term
loans not subject to an interest rate cap. The weighted-
average interest rates applicable to our variable rate
debt on December 31, 2005 were (i) 5.3 percent for the
revolving credit facility (represents the Canadian rate
since the amount outstanding was Canadian borrow-
ings), (ii) 6.6 percent for the term loan and (iii) 6.7 per-
cent for the debt subject to our swap agreements. As of
December 31, 2005, based upon the amount of our
variable rate debt outstanding, after giving effect to
our interest rate swap agreements, our annual earn-
ings would decrease by approximately $13.4 for each
one percentage point increase in the interest rates
applicable to our variable rate debt.

As of December 31, 2004, after giving effect to our
interest rate swap and cap agreements, we had an
aggregate of approximately $1.3 billion of indebted-
ness that bears interest at variable rates. For this
purpose, the portion of the term loan subject to the
cap is considered ﬁxed. The debt that is subject to
ﬂuctuations in interest rates includes $133 of bor-
rowings under our revolver Canadian facility, $1.2
billion in swaps, and $19 of term loans not subject to
an interest rate cap. The weighted-average interest
rates applicable to our variable rate debt on December
31, 2004 were (i) 4.8 percent for the revolving credit
facility (represents the Canadian rate since the
amount outstanding was Canadian borrowings),
(ii) 4.7 percent for the term loan and (iii) 4.7 percent
for the debt subject to our swap agreements. As of
December 31, 2004, based upon the amount of our
variable rate debt outstanding, after giving effect to
our interest rate swap agreements, our annual earn-
ings would decrease by approximately $13 for each
one percentage point increase in the interest rates
applicable to our variable rate debt.

The amount of our variable rate indebtedness may
ﬂuctuate signiﬁcantly as a result of changes in the
amount of indebtedness outstanding under our
revolving credit facility and receivables securitization
facility from time to time. For additional information
concerning the terms of our variable rate debt, see
note 10 to our consolidated ﬁnancial statements.

Currency Exchange Risk
The functional currency for our Canadian operations
is the Canadian dollar. As a result, our future earn-
ings could be affected by ﬂuctuations in the exchange
rate between the U.S. and Canadian dollars. Based
upon the level of our Canadian operations during
2004 and 2005 relative to the company as a whole,
a 10 percent change in this exchange rate would
not have a material impact on our earnings. In addi-
tion, we periodically enter into foreign exchange
contracts to hedge our transaction exposures. We
had no outstanding foreign exchange contracts as
of December 31, 2005, 2004 and 2003. We do not
engage in purchasing forward exchange contracts
for speculative purposes.

Forward-Looking Statements
Certain statements contained in this report and the
accompanying materials are forward-looking in
nature. These statements can be identiﬁed by the use
of forward-looking terminology such as “believes,”
“expects,” “plans,” “intends,” “projects,” “forecasts,”
“may,” “will,” “should,” “on track” or “anticipates” or
the negative thereof or comparable terminology, or by
discussions of strategy or outlook. The company’s busi-
ness and operations are subject to a variety of risks and
uncertainties and, consequently, actual results may
differ materially from those projected by any forward-
looking statements. Factors that could cause actual
results to differ from those projected include, but are
not limited to, the following: (1) unfavorable economic
and industry conditions can reduce demand and prices
for the company’s products and services, (2) govern-
mental funding for highway and other construction
projects may not reach expected levels, (3) the company
may not have access to capital that it may require,
(4) any companies that United Rentals acquires could
have undiscovered liabilities and may be difﬁcult to
integrate, (5) rates may increase less than anticipated
or costs may increase more than anticipated, (6) the
SEC inquiry is ongoing and there can be no assurance
that the outcome of the SEC inquiry or internal review
will not require additional changes in the company’s
accounting policies and practices, restatements of
ﬁnancial statements, revisions of guidance, and/or
otherwise be adverse to the company, and (7) the com-
pany may incur additional signiﬁcant expenses in
connection with the SEC inquiry of the company, the
related internal review or the class action lawsuits and
derivative actions that were ﬁled in light of the SEC
inquiry. Certain of these risks and uncertainties, as
well as others, are discussed in greater detail in the
company’s ﬁlings with the SEC. The company makes
no commitment to revise or update any forward-
looking statements in order to reﬂect events or circum-
stances after the date any such statement is made.

44

report of independent registered public
accounting ﬁrm on ﬁnancial statements

Board of Directors and Stockholders
United Rentals, Inc.

period ended December 31, 2005, in conformity with
U.S. generally accepted accounting principles.

We have audited the accompanying consolidated
balance sheets of United Rentals, Inc. and sub-
sidiaries (the Company) as of December 31, 2005,
2004 and 2003, and the related consolidated state-
ments of operations, stockholders’ equity, and cash
ﬂows for each of the four years in the period ended
December 31, 2005. These ﬁnancial statements are
the responsibility of the Company’s management.
Our responsibility is to express an opinion on these
ﬁnancial statements based on our audits.

We conducted our audits in accordance with auditing
standards of the Public Company Accounting Over-
sight Board (United States). Those standards require
that we plan and perform the audit to obtain reason-
able assurance about whether the ﬁnancial state-
ments are free of material misstatement. An audit
includes examining, on a test basis, evidence support-
ing the amounts and disclosures in the ﬁnancial
statements. An audit also includes assessing the
accounting principles used and signiﬁcant estimates
made by management as well as evaluating the over-
all ﬁnancial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the ﬁnancial statements referred to
above present fairly, in all material respects, the con-
solidated ﬁnancial position of United Rentals, Inc.
and subsidiaries at December 31, 2005, 2004 and
2003, and the consolidated results of their operations
and their cash ﬂows for each of the four years in the

As discussed in note 2 to the consolidated ﬁnancial
statements, the Company adopted Statement of
Financial Accounting Standards No. 142, “Goodwill
and Other Intangible Assets,” effective January 1,
2002.

As discussed in note 3 to the consolidated ﬁnancial
statements, the Company has restated its 2003 and
2002 ﬁnancial statements.

We also have audited, in accordance with the stan-
dards of the Public Company Accounting Oversight
Board (United States), the effectiveness of the Com-
pany’s internal control over ﬁnancial reporting as of
December 31, 2005, based on criteria established in
Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Tread-
way Commission and our report dated March 29, 2006
expressed an unqualiﬁed opinion on management’s
assessment of the effectiveness of internal control over
ﬁnancial reporting and an adverse opinion on the
effectiveness of internal control over ﬁnancial report-
ing because of the existence of a material weakness.

New York, New York
March 29, 2006

45

consolidated balance sheets

(In millions, except share data)

Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net of allowance for doubtful accounts of 

$45 in 2005, $53 in 2004 and $48 in 2003 . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets, net

Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subordinated convertible debentures . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity:
Preferred stock — $.01 par value, 5,000,000 shares authorized:

Series C perpetual convertible preferred stock — $.30 liquidation 
preference, 300,000 shares issued and outstanding . . . . . . . . .
Series D perpetual convertible preferred stock — $.15 liquidation 
preference, 150,000 shares issued and outstanding . . . . . . . . .

Common stock — $.01 par value, 500,000,000 shares authorized, 
77,302,915, 77,869,576, and 77,150,277 shares issued and 
outstanding in 2005, 2004 and 2003, respectively . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deﬁcit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

See accompanying notes.

December 31,

2005

2004

2003
(Restated)

$ 316

$ 303

$

79

572
174
154
2,252
445
1,328
33

490
119
120
2,123
397
1,293
37

483
106
118
2,062
407
1,412
27

$5,274

$4,882

$4,694

$ 211
420
2,930
222
262

4,045

$ 217
323
2,945
222
149

3,856

$ 151
272
2,817
222
163

3,625

—

—

—

—

—

—

1
1,345
(12)
(155)
50

1,229

1
1,349
(19)
(342)
37

1,026

1
1,330
(26)
(258)
22

1,069

$5,274

$4,882

$4,694

46

 
consolidated statements of operations

(In millions, except per share amounts)

Revenues:
Equipment rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of rental equipment . . . . . . . . . . . . . . . . . . . . . . . .
New equipment sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractor supplies sales . . . . . . . . . . . . . . . . . . . . . . . .
Service and other revenues . . . . . . . . . . . . . . . . . . . . . . .
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of Revenues:
Cost of equipment rentals, excluding depreciation . . . . .
Depreciation of rental equipment . . . . . . . . . . . . . . . . . .
Cost of rental equipment sales . . . . . . . . . . . . . . . . . . . .
Cost of new equipment sales . . . . . . . . . . . . . . . . . . . . . .
Cost of contractor supplies sales . . . . . . . . . . . . . . . . . . .
Cost of service and other revenue . . . . . . . . . . . . . . . . . .
Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill impairment
Restructuring and asset impairment charge . . . . . . . . .
Non-rental depreciation and amortization . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense — subordinated 

convertible debentures . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred dividends of a subsidiary trust . . . . . . . . . . . .
Other (income) expense, net . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before provision (beneﬁt) for income 

taxes and cumulative effect of change in 
accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (beneﬁt) for income taxes . . . . . . . . . . . . . . . .
Income (loss) before cumulative effect of change in 

accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . .

Cumulative effect of change in accounting principle, 

Year Ended December 31,

2005

2004

2003

2002
(Restated) (Restated)

$2,583
307
208
324
141
3,563

$2,289
275
178
225
127
3,094

$2,176
233
170
184
119
2,882

$2,152
223
170
160
116
2,821

1,299
385
225
170
247
72
2,398
1,165
596
—
—
69
500
185

14
—
(9)

310
123

187

1,185
378
197
147
163
65
2,135
959
497
139
(1)
67
257
155

14
—
176

1,275
331
147
147
134
66
2,100
782
449
297
—
72
(36)
209

—
15
43

1,147
324
149
145
116
64
1,945
876
443
248
28
61
96
196

—
18
(1)

(88)
(4)

(303)
(49)

(117)
1

(84)

(254)

(118)

net of tax beneﬁt of $61 . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
$ 187

—
$ (84)

—
$ (254)

(288)
$ (406)

Earnings (loss) per share — basic:
Income (loss) available to common stockholders 

before cumulative effect of change in 
accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . .

Cumulative effect of change in accounting 

$1.97

$(1.07)

$(3.29)

$(1.08)

principle, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) available to common stockholders . . . . .

—
$1.97

—
$(1.07)

—
$(3.29)

(3.80)
$(4.88)

Earnings (loss) per share — diluted:
Income (loss) available to common stockholders 

before cumulative effect of change in 
accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . .

Cumulative effect of change in accounting 

$1.80

$(1.07)

$(3.29)

$(1.08)

principle, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) available to common stockholders . . . . .

—
$1.80

—
$(1.07)

—
$(3.29)

(3.80)
$(4.88)

See accompanying notes.

47

consolidated statements of cash ﬂows

(In millions)

Cash Flows from Operating Activities
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income (loss) to net cash 

provided by operating activities:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . .
Gain on sales of rental equipment . . . . . . . . . . . . . . . . . .
Amortization of deferred compensation . . . . . . . . . . . . .
Restructuring charge . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill impairment
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase premiums for debt reﬁnancing . . . . . . . . . .
Write-off of notes receivable and deferred 

ﬁnancing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cumulative effect of a change in accounting principle, 

net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . .

Net cash provided by operating activities . . . . . . . . . . . .
Cash Flows from Investing Activities
Purchases of rental equipment . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .
Purchases of property and equipment
Proceeds from sales of rental equipment
. . . . . . . . . . . .
Buy-outs of equipment leases . . . . . . . . . . . . . . . . . . . . .
Purchases of other companies . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale leaseback . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of branches . . . . . . . . . . . . . . . . . . . .
In-process acquisition costs . . . . . . . . . . . . . . . . . . . . . .
Deposits on rental equipment purchases . . . . . . . . . . . .

Year Ended December 31,

2005

2004

2003

2002
(Restated) (Restated)

$ 187

$ (84)

$(254)

$(406)

454
(82)
8
—
—
—
—

—

—
112

(78)
(32)
11
(6)
69

643

(741)
(82)
307
—
(40)
—
3
—
—

445
(78)
23
(5)
139
4
151

—

—
(8)

10
12
43
62
23

737

(592)
(57)
275
—
(102)
23
—
—
—

403
(86)
26
—
297
—
21

24

—
(46)

(32)
(2)
(2)
(56)
13

306

(379)
(33)
233
(304)
(5)
—
—
—
—

385
(74)
11
2
248
—
—

—

288
(2)

(4)
—
11
2
17

478

(498)
(38)
223

(173)
—
—
(4)
(5)

Net cash used in investing activities . . . . . . . . . . . . . . . .

$(553)

$(453)

$(488)

$(495)

48

consolidated statements of cash ﬂows 
(continued)

Cash and cash equivalents at end of year . . . . . . . . . . . .

$ 316

$

(In millions)

Cash Flows from Financing Activities
Proceeds from debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of interest rate caps . . . . . . . . . . . . . . . . . . . . .
Payments of ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the exercise of common stock options . . .
Shares repurchased and retired . . . . . . . . . . . . . . . . . . .
Company-obligated mandatorily redeemable convertible 
preferred securities of a subsidiary trust repurchased 
and retired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash provided by (used in) ﬁnancing activities . . . . .
Effect of foreign exchange rates . . . . . . . . . . . . . . . . . . .

Net increase (decrease) in cash and cash equivalents . . .
Cash and cash equivalents at beginning of year . . . . . . .

Supplemental disclosure of 

cash ﬂow information

Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for taxes, net of refunds . . . . . . . . . . . . . . . . .
Supplemental schedule of non-cash 
investing and ﬁnancing activities

Conversion of operating leases to capital leases . . . . . . .
Conversion of convertible debt to common stock . . . . . .
Issuances of common stock as non-cash 

compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Company acquired the net assets and assumed 
certain liabilities of other companies as follows:

Assets, net of cash acquired . . . . . . . . . . . . . . . . . . . . . .
Less: liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . .

Due to seller and other payments . . . . . . . . . . . . . . . . . .

Net cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 40

$

See accompanying notes.

Year Ended December 31,

2005

2004

2003

2002
(Restated) (Restated)

$ —
(39)
—
(35)
2
(8)

$ 2,211
(2,225)
(14)
(37)
6
(5)

—

(80)
3

13
303

—

(64)
4

224
79

303

$ 879
(614)
—
(17)
1
—

(3)

246
(4)

60
19

$ 508
(492)
—
(6)
64
(27)

(38)

9
—

(8)
27

$ 79

$ 19

$ 197
8

$

175
(10)

$ 225
(3)

$ 212
(1)

—
—

—

43
(3)

40
—

—
—

—

119
(17)

102
—

102

—
—

1

4
—

4
1

5

$

31
3

—

172
(4)

168
5

$ 173

49

notes to consolidated ﬁnancial statements

(Dollars in millions, except per share data and unless otherwise indicated)

1. Organization and Basis 
of Presentation
United Rentals, Inc. (“Holdings,” “United Rentals” or
the “Company”) is principally a holding company and
conducts its operations primarily through its wholly
owned subsidiary, United Rentals (North America),
Inc. (“URI”), and subsidiaries of URI. Holdings’
primary asset is its sole ownership of all issued and
outstanding shares of common stock of URI. URI’s
various credit agreements and debt instruments
place restrictions on its ability to transfer funds to
its shareholder.

We rent equipment to a diverse customer base that
includes construction and industrial companies,
manufacturers, utilities, municipalities, homeowners
and others in the United States, Canada and Mexico.
In addition to renting equipment, we sell new and
used rental equipment, as well as related contractor
supplies, parts and service. The nature of our busi-
ness is such that short-term obligations are typically
met by cash ﬂow generated from long-term assets.
Therefore, the accompanying balance sheets are
presented on an unclassiﬁed basis.

The accompanying consolidated ﬁnancial statements
include our accounts and those of our wholly owned
subsidiaries. All signiﬁcant intercompany accounts
and transactions have been eliminated. Certain
reclassiﬁcations of prior year amounts have been
made to conform to the current year presentation.

2. Summary of Signiﬁcant
Accounting Policies
Cash Equivalents
We consider all highly liquid instruments with matu-
rities of three months or less when purchased to be
cash equivalents. Included in the cash balance at
December 31, 2005 is $75 that we agreed to maintain
in an investment account for a trafﬁc control sub-
sidiary to conduct trafﬁc control business with the
state of Florida. In March 2006, we signed an agree-
ment with the state of Florida whereby we are no
longer required to maintain these funds in any type
of account.

Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts. This
allowance reﬂects our estimate of the amount of our
receivables that we will be unable to collect.

Inventory
Inventory consists of new equipment, merchandise
and contractor supplies, tools, parts, fuel and related
supply items. Inventory is stated at the lower of cost
or market and is net of a reserve for obsolescence and
shrinkage of $16, $14, and $9 at December 31, 2005,
2004 and 2003, respectively. Cost is determined,
depending on the type of inventory, on either a
weighted average or ﬁrst-in, ﬁrst-out method.

Rental Equipment
Rental equipment is recorded at cost and depreciated
over the estimated useful lives of the equipment using
the straight-line method. The range of estimated
useful lives for rental equipment is two to ten years.
Rental equipment is depreciated to a salvage value of
zero to ten percent of cost. Ordinary repair and main-
tenance costs are charged to operations as incurred.
Repair and maintenance costs are included in cost
of revenues on our consolidated statements of opera-
tions. Repair and maintenance expense was $213,
$201, $184, and $144, for the years ended December
31, 2005, 2004, 2003 and 2002, respectively.

Property and Equipment
Property and equipment are recorded at cost and
depreciated over their estimated useful lives using
the straight-line method. The range of estimated use-
ful lives for property and equipment is two to thirty-
nine years. Ordinary repair and maintenance costs
are charged to operations as incurred. Leasehold
improvements are amortized using the straight-line
method over their estimated useful lives or the
remaining life of the lease, whichever is shorter.

Goodwill
Goodwill consists of the excess of cost over the fair
value of identiﬁable net assets of businesses acquired.
As discussed in note 4, goodwill is tested for impair-
ment on at least an annual basis. Prior to January 1,
2004, we tested for goodwill impairment on a branch-
by-branch basis. Accordingly, a goodwill write-off
was required even if only one or a limited number
of our branches had an impairment as of the testing
date and even if there was no impairment for all our
branches on an aggregate basis. Commencing Janu-
ary 1, 2004, we began testing for goodwill impair-
ment at a regional, rather than a branch, level. We
began testing for impairment at this level because
Statement of Financial Accounting Standards
(“SFAS”) No. 142, “Goodwill and Other Intangible
Assets” requires that goodwill impairment testing
be performed at the reporting unit level. In 2004,
following a reorganization of our reporting struc-
ture, our regions became our reporting units. This
change in reporting units may impact future good-
will impairment analyses because there are substan-
tially fewer regions (nine) than there are branches
(in excess of 700).

50

 
Other Intangible Assets
Other intangible assets consist of non-compete agree-
ments and customer-related intangibles (speciﬁcally
customer relationships). The non-compete agree-
ments are being amortized on a straight-line basis
over periods ranging from three to eight years. The
customer relationships are being amortized on a
straight-line basis over twelve years.

Long-Lived Assets
Long-lived assets are recorded at the lower of amor-
tized cost or fair value. As part of an ongoing review
of the valuation of long-lived assets, we assess the car-
rying value of such assets if facts and circumstances
suggest they may be impaired. If this review indicates
that the carrying value of these assets may not be
recoverable, as determined by an undiscounted cash
ﬂow analysis over the remaining useful life, the carry-
ing value would be reduced to its estimated fair value.

Derivative Financial Instruments
Under SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities”, all derivatives
are required to be recorded as assets or liabilities and
measured at fair value. Gains or losses resulting
from changes in the values of derivatives are recog-
nized immediately or deferred, depending on the use
of the derivative and whether or not it qualiﬁes as a

hedge. We periodically use derivative ﬁnancial instru-
ments in the management of our interest rate and
foreign currency exposures. Derivative ﬁnancial
instruments are not used for trading purposes.

Translation of Foreign Currency
Assets and liabilities of our subsidiaries operating
outside the United States which have a functional
currency other than U.S. dollars are translated
into U.S. dollars using exchange rates at the end of
the year. Revenues and expenses are translated at
average exchange rates effective during the year.
Foreign currency translation gains and losses are
included as a component of accumulated other com-
prehensive income (loss) within shareholders’ equity.

Fair Value of Financial Instruments
The carrying amounts reported in our consolidated
balance sheets for accounts receivable, accounts
payable, and accrued expenses and other liabilities
approximate fair value due to the immediate to short-
term maturity of these ﬁnancial instruments. The
fair values of the revolving credit facility and term
loan are determined using current interest rates for
similar instruments as of December 31, 2005, 2004
and 2003 and approximate the carrying value of
these ﬁnancial instruments due to the fact that the
underlying instruments include provisions to adjust
interest rates to approximate fair market value. The
estimated fair value of our other ﬁnancial instru-
ments at December 31, 2005, 2004 and 2003 have
been calculated based upon available market informa-
tion and are as follows:

Subordinated convertible debentures . . . . . . . .
Senior and senior subordinated notes . . . . . . . .
Other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2005

2004

2003

Carrying
Amount

$ 222
2,044
12

Fair
Value

$ 192
1,997
9

Carrying
Amount

$ 222
2,056
12

Fair
Value

$ 191
1,994
11

Carrying
Amount

$ 222
2,080
46

Fair
Value

$ 183
2,228
43

Revenue Recognition
Our rental contract periods are daily, weekly or
monthly and we recognize equipment rental revenue
on a straight-line basis. By way of example, if a cus-
tomer were to rent a piece of equipment and the daily,
weekly and monthly rental rates for that particular
piece were (in actual dollars) $100, $300 and $900,
respectively, we would recognize revenue of
$32.14/day. The daily rate is calculated by dividing
the monthly rate of $900 by 28 days, the monthly
term. As part of this straight-line methodology, when
the equipment is returned, we recognize as incremen-
tal revenue the excess, if any, between the amount the
customer is contractually required to pay over the
cumulative amount of revenue recognized to date.

Revenues from the sale of rental equipment and new
equipment are recognized at the time of delivery to,
or pick-up by, the customer and when collectibility is
reasonably assured. Sales of contractor supplies are
also recognized at the time of delivery to, or pick-up
by, the customer. For construction-related contracts
in our trafﬁc control segment which comprise
approximately 8 percent of our total revenues, rev-
enues are recognized based on the percentage of
work completed. Application of the percentage of
completion method is appropriate for these contracts
because these services are essential to the repair and

construction of tangible property such as roads,
highways, bridges and other infrastructure.

Advertising Expense
We advertise primarily through trade publications
and yellow pages. Advertising expense is recognized
over the period of the related beneﬁt. Advertising
expense was $22, $19, $8 and $8 for the years ended
December 31, 2005, 2004, 2003 and 2002, respectively.

Insurance
We are insured for general liability, workers’ compen-
sation, and automobile liability, subject to deductibles
per occurrence of $2 for general liability, $1 for work-
ers’ compensation and $2 for automobile liability as
of March 1, 2006. Losses within these deductible
amounts are accrued based upon the aggregate
liability for reported claims incurred, as well as an
estimated liability for claims incurred but not yet
reported. These liabilities are not discounted. The
company is self insured for group medical claims but
purchases “stop loss” insurance to protect itself from
any one loss exceeding $330,000 (actual dollars).

51

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

Use of Estimates
The preparation of ﬁnancial statements in conformity
with U.S. generally accepted accounting principles
requires management to make estimates and assump-
tions that affect the amounts reported in the ﬁnancial
statements and accompanying notes. Signiﬁcant esti-
mates include restructuring and goodwill impair-
ment charges, allowance for doubtful accounts,
useful lives for depreciation and amortization,
deferred income taxes, claim reserves, loss contingen-
cies and fair values of ﬁnancial instruments. Actual
results could materially differ from those estimates.

Concentrations of Credit Risk
Financial instruments that potentially subject us to
signiﬁcant concentrations of credit risk consist prin-
cipally of cash and cash equivalents and accounts
receivable. We maintain cash and cash equivalents
with high quality ﬁnancial institutions. Concentra-
tion of credit risk with respect to accounts receivable
is limited because a large number of geographically
diverse customers make up our customer base. Our
largest customer accounted for less than 1 percent of
total revenues in each of 2005 and 2004 and no sin-
gle customer represented greater than 1 percent of
total accounts receivable at December 31, 2005 and
2004. We control credit risk through credit
approvals, credit limits, and monitoring procedures.

Stock-Based Compensation
We account for stock-based compensation arrange-
ments using the intrinsic value method in accordance
with the provisions of Accounting Principles Board
(“APB”) Opinion No. 25, “Accounting for Stock
Issued to Employees”. At December 31, 2005, we had
six stock-based compensation plans (see note 14 to
our consolidated ﬁnancial statements). Since stock
options have been granted with exercise prices at or
greater than the fair value of the shares at the date of
grant, no compensation expense has been recognized.
Restricted stock awards that we have granted are rec-
ognized as deferred compensation. We recognize com-
pensation expense related to these restricted stock
awards over their vesting periods, or earlier, upon
acceleration of vesting. During 2004 and 2003, we
recognized increased amortization expense for the
accelerated vesting of approximately 404,000 and
866,000 shares of restricted stock, respectively. The
following table provides additional information

related to our stock-based compensation arrange-
ments for each of the four years in the period ended
December 31, 2005:

December 31,

2005

2004

2003

2002
(Restated) (Restated)

Net income (loss), 

as reported . . . . . . . .

$ 187

$ (84)

$ (254)

$ (406)

Plus: Stock-based 

compensation expense 
included in reported 
net income (loss), 
net of tax . . . . . . . . . .

Less: Stock-based 

compensation expense 
determined using the 
fair value method, 
net of tax . . . . . . . . . .

Pro forma net 

5

13

20

7

(6)

(17)

(23)

(11)

income (loss) . . . . . . .

$ 186

$ (88)

$ (257)

$ (410)

Basic earnings (loss) 

available to common 
stockholders per share:
As reported . . . . . .
Pro forma . . . . . . .

Diluted earnings (loss) 
available to common 
stockholders per share:
As reported . . . . . .
Pro forma . . . . . . .

$1.97
$1.96

$(1.07)
$(1.13)

$(3.29)
$(3.32)

$(4.88)
$(4.96)

$1.80
$1.79

$(1.07)
$(1.13)

$(3.29)
$(3.32)

$(4.88)
$(4.96)

The weighted average fair value of options granted
was $8.18, $7.33, $5.47 and $5.57 during 2005,
2004, 2003 and 2002, respectively. The fair value is
estimated on the date of grant using the Black-
Scholes option pricing model which uses subjective
assumptions which can materially affect fair value
estimates and, therefore, does not necessarily provide
a single measure of fair value of options. We used a
risk-free interest rate average of 3.9, 2.9, 1.81 and
2.01 percent in 2005, 2004, 2003 and 2002 respec-
tively, a volatility factor for the market price of our
common stock of 60, 62, 63 and 66 percent in 2005,
2004, 2003 and 2002, respectively, and a weighted-
average expected life of options of approximately
three years in 2005, 2004, 2003 and 2002. For pur-
poses of these pro forma disclosures, the estimated
fair value of options is amortized over the options’
vesting period.

New Accounting Pronouncements
During the years ended December 31, 2005 and 2004,
the Financial Accounting Standards Board (“FASB”)
issued several pronouncements of signiﬁcance to us
which are discussed in detail below. In addition, the
FASB issued several other pronouncements, includ-
ing standards on inventory (SFAS No. 151 “Inventory
Costs, an amendment of ARB 43, Chapter 4”),
exchanges of nonmonetary assets (SFAS No. 153
“Exchanges of Nonmonetary Assets”), and account-
ing changes (SFAS No. 154 “Accounting Changes
and Error Corrections”), with which we either cur-
rently comply or are not anticipating to have a signif-
icant impact on our future ﬁnancial condition or
results of operations.

52

In December 2004, the FASB issued Statement of
Financial Accounting Standards No. 123(R), “Share-
Based Payment” (“FAS 123(R)”), an amendment of
FAS No. 123, “Accounting for Stock-Based Compensa-
tion,” which supersedes APB 25 and requires compa-
nies to recognize compensation expense using a fair
value based method for costs related to share-based
payments, including stock options. As permitted by
the SEC, the requirements of FAS 123(R) are effective
for our ﬁscal year beginning January 1, 2006. Upon
adoption, we will elect to apply the modiﬁed prospec-
tive transition method and therefore we will not
restate the results of prior periods. The implementa-
tion of FAS 123(R) is not expected to have a material
impact on the Company.

FAS 123(R) also requires that the beneﬁts of tax
deductions in excess of recognized compensation cost
be reported as a ﬁnancing cash ﬂow, rather than as
an operating cash ﬂow as required under current lit-
erature. This requirement will reduce net operating
cash ﬂows and increase net ﬁnancing cash ﬂows in
periods after the effective date. While we can not esti-
mate what those amounts will be in the future
(because they depend on, among other things, when
employees exercise stock options and the fair value of
our common stock on the date of exercise), the
amount of operating cash ﬂows recognized in 2005
for such excess tax deductions was $1.

In March 2005, the FASB issued Interpretation No.
47, “Accounting for Conditional Asset Retirement
Obligations — an interpretation of FASB Statement
No. 143” (“FIN 47”). FIN 47 requires an entity to rec-
ognize a liability for the fair value of a conditional
asset retirement obligation if the fair value can be
reasonably estimated. A conditional asset retirement
obligation is a legal obligation to perform an asset
retirement activity in which the timing or method of
settlement are conditional upon a future event that
may or may not be within control of the entity. The
adoption of FIN 47 in 2005 did not have a material
impact on the Company.

3. Restatement

Restatement and Reclassiﬁcation of
Previously Issued Consolidated Financial
Statements and Related Matters
Subsequent to the ﬁling of our Form 10-K for the
year ended December 31, 2003, which included our
consolidated ﬁnancial statements for the years ended
December 31, 2003 and 2002, it was determined that
the Company’s originally issued ﬁnancial statements
for those periods required restatement to correct the
accounting for (i) the recognition of equipment rental
revenue; (ii) irregularities identiﬁed by the Special
Committee with respect to six short-term, or minor,
equipment sale-leaseback transactions; (iii) self-insur-
ance reserves; (iv) customer relationships; and (v) the
provision for income taxes.

The effects of the restatement adjustments on our
originally reported results of operations for the years
ended December 31, 2003 and 2002 and on our origi-
nally reported retained earnings at December 31,
2001, are summarized below.

Net Loss
Year Ended
December 31,

2003

2002

Retained
Earnings at
December 31,
2001

$(259)

$(398)

$467

As originally reported . . . . .
Adjustments for:

Equipment rental 

revenues (a) . . . . . . . . . .

(2)

Sale-leaseback 

transactions (b)

. . . . . . .

Self-insurance 

reserves (c) . . . . . . . . . . .

Customer 

relationships (d) . . . . . . .

Pre-tax impact . . . . . . . . . .
Related tax effects . . . . . . .

Adjustments, net of tax . . . .
Income taxes (e) . . . . . . . . .

Total adjustments, 

20

8

(2)

24
(9)

15
(10)

net of tax . . . . . . . . . . . . . .

5

(3)

2

(13)

(1)

(15)
6

(9)
1

(8)

As restated . . . . . . . . . . . . . .

$(254)

$(406)

(17)

(33)

(41)

—

(91)
35

(56)
(9)

(65)

$402

Below is a summary of the nature and amount of
the adjustments reﬂected in the restatement (all
amounts are presented on a pre-tax basis unless
otherwise noted). We have provided below the impact
on originally reported pre-tax and/or net income for
2001 and 2000 of certain of the items for which we
are restating.

(a) Recognition of equipment rental revenues. Our
originally reported results reﬂected the recognition
of equipment rental revenues based on the minimum
amounts which became due and payable under the
terms of our applicable rental contracts. We have
determined that equipment rental revenues should be
recognized on a straight-line basis and have restated
our previously reported results to reﬂect this correc-
tion of an error. Our restatement had the impact of
increasing/(decreasing) originally reported pre-tax
income for 2001, 2000 and for periods prior to 2000
by $6, $4 and $(27), respectively.

(b) Sale-leaseback transactions. In 2002, 2001, and
2000 we previously recognized gross proﬁts of $1,
$20 and $12, respectively, in conjunction with six
minor sale-leaseback transactions. It has been deter-
mined that the accounting for these transactions
constituted irregularities and we are restating our
ﬁnancial statements to properly reﬂect the account-
ing for these six transactions. At the dates of the
original minor sale-leaseback transactions, we recog-
nized a premium (excess proﬁt above fair value) on
these transactions. In exchange for receiving this
proﬁt premium, we agreed to disburse cash in later
periods as well as pay premiums for subsequent
equipment purchases (“subsequent purchases”).

53

Our restatement for the sale-leaseback transactions
had the impact of increasing/(decreasing) originally
reported pre-tax income for 2003, 2002, 2001 and
2000 by $20, $2, $(21), and $(12), respectively. These
restatement adjustments reﬂect the elimination of the
premium originally received in the minor sale-lease-
back transactions as well as the deferral of any proﬁt
until all of our obligations associated with the origi-
nally received premiums were settled. Additionally,
the adjustments reﬂect a reduction in previously
recorded depreciation expense because this expense
reﬂected capitalized equipment costs for subsequent
purchases that were overstated.

(c) Self-insurance reserves. We self-insure for certain
types of claims associated with our business, includ-
ing (i) workers compensation claims and (ii) claims
by third parties for injury or property damage
caused by our equipment or personnel. These types
of claims may take a substantial amount of time to
resolve and, accordingly, the ultimate liability associ-
ated with a particular claim may not be known for
an extended period of time. Our prior methodology
for developing self-insurance reserves was based on
management estimates of ultimate liability which
were developed without obtaining actuarial valua-
tions. In 2004, management adopted an estimation
approach based on third party actuarial calculations
that properly reﬂects and incorporates actuarial
assumptions. Based on actuarial calculations per-
formed by our third party actuaries in late 2004 and
2005, we concluded that the estimation process we
previously used did not adequately take into account
certain factors and that, as a result, a restatement
was required. The factors that were not adequately
addressed by our historical estimation process
included future changes in the cost of known
claims over time, cost inﬂation and incurred but
not reported claims. Our restatement for the self-
insurance reserves had the impact of increasing/
(decreasing) originally reported pre-tax income for
2003, 2002, 2001, 2000 and for periods prior to 2000
by $8, $(13), $(11), $(18) and $(12), respectively.

(d) Customer relationships. In 2001, the FASB issued
Statement of Financial Accounting Standards
No. 141, “Business Combinations” (“SFAS No. 141”),
which required the use of the purchase method of
accounting for business combinations and prohibited
the use of the pooling of interests method. SFAS No.
141 also changed the deﬁnition of intangible assets
acquired in a purchase business combination, provid-
ing speciﬁc criteria for the initial recognition and
measurement of intangible assets apart from good-
will. SFAS 141 applied to all business combinations
accounted for using the purchase method for which
the acquisition date is July 1, 2001, or later.

We have reviewed acquisitions we made since July 1,
2001 and have determined that a portion of the pur-
chase price for these acquisitions previously allocated
to goodwill should be recorded as a separate intangi-
ble asset — customer relationships. This restatement
reﬂects the amortization expense associated with the
reallocation of a portion of the purchase price from
goodwill (which is not amortized) to customer rela-
tionships (which are amortized). This correction of
an error had the impact of decreasing originally
reported pre-tax income for 2003 and 2002 by $2
and $1, respectively.

(e) Income taxes. We have restated our income tax pro-
vision to (i) correctly reﬂect all book-to-tax temporary
differences (primarily depreciation and nondeductible
reserves and accruals); (ii) reﬂect appropriate tax ben-
eﬁts for net operating loss and alternative minimum
tax credits; (iii) calculate deferred taxes at appropriate
legal entity tax rates; and (iv) account for the settle-
ment of an IRS audit examination. Our restatement
for income taxes had the impact of increasing/
(decreasing) originally reported net income for 2003,
2002, 2001, 2000 and for periods prior to 2000 by
$(10), $1, $(3), $(2) and $(4), respectively.

Buy-out of operating lease
In addition to the restatement matters discussed
above, we have determined that $88 of costs for the
year ended December 31, 2003 previously classiﬁed
below operating income should be reclassiﬁed to cost
of equipment rentals and included in operating
income. This amount primarily represents the
amount in excess of the fair value related to the buy-
out of equipment under operating leases. This reclas-
siﬁcation, which has the effect of reducing gross
proﬁt and other expense (income), net by $88, has no
impact on originally reported net income or earnings
per share for the year ended December 31, 2003.

Trade packages
During the period from the fourth quarter of 2000
through 2002, the Company sold used equipment to
certain suppliers (referred to as “trade packages”). In
certain of the trade packages, prices may have
included a premium above fair value. In order to
induce these suppliers to buy used equipment at pre-
mium prices, the Company made commitments or
concessions to the suppliers. It has been determined
that the accounting for those transactions involved
irregularities and that the Company improperly rec-
ognized revenue from the transactions involving the
undisclosed inducements. However, because records
were not created that would have permitted the link-
age of the sales and inducements (as a result of
instructions given by certain former employees of the
Company), the Company is unable to determine the
portion of the revenue and gross proﬁt recognized in

54

connection with trade packages with these suppliers
between 2000 and 2002 that was improperly recog-
nized. During this period, all sales of used equipment
to these suppliers (which includes all trade package
transactions) generated total revenues and gross
proﬁts of $38 and $9, respectively. Notwithstanding
the lack of records relating to these transactions, the
Company believes that its ﬁnancial statements from
and after 2002 are materially correct with respect to
the effect of these transactions.

The Special Committee concluded that, based on
the evidence it reviewed, the practices regarding
certain trade packages and minor sale-leaseback
transactions described above appear to have been
directed by the Company’s two former chief ﬁnancial
ofﬁcers. Both of these individuals, who are no longer
with the Company, declined to cooperate with the Spe-
cial Committee’s investigation. Based upon recom-
mendations of the Special Committee, the Company’s
board of directors directed the Company, among
other things, to evaluate potential claims relating to
certain former company personnel, including these
individuals and compensation and beneﬁts previously
received by them described elsewhere in this report.

Purchase Accounting
The Company was formed and began operations in
1997 with the acquisition of six equipment rental
companies. During the subsequent three year period,
we grew rapidly and completed approximately 230
additional acquisitions. By the end of 1999, we were
the largest equipment rental company in the world,
with annual revenues of approximately $2.9 billion.
With management’s focus now turned toward organic
growth, the pace of our acquisitions signiﬁcantly
slowed and from September 2001 through the date
of this report we completed only eight acquisitions.
Substantially all of the business combinations that
we have completed since the inception of the Com-
pany were accounted for as purchases, however,
there were several signiﬁcant business combinations
accounted for in the earlier period that were
accounted for as poolings.

Accounting standards applicable to purchase busi-
ness combinations require the acquiring company to
recognize the assets acquired and the liabilities
assumed based on their fair values at the time of
acquisition. Any excess between the cost of an
acquired company and the sum of the fair values of
tangible and identiﬁable intangible assets less liabili-
ties assumed should be recognized as goodwill.

In our historical accounting for these purchase busi-
ness combinations, long-lived ﬁxed assets (comprised
primarily of rental equipment) and goodwill gener-
ally represented the largest components of our acqui-
sitions. As a result, when we performed our purchase
price allocation process, the purchase price was
primarily allocated to these assets.

As discussed above, in March 2005, our Board of
Directors formed a Special Committee of independent
directors to review matters related to the SEC inquiry.
The Special Committee made certain ﬁndings related
to the Company’s historical practices concerning the
valuation of rental equipment acquired in purchase
business combinations. The committee concluded that
certain of these practices were not adequate between
1997 and August 2000. These practices included,
among other things, the use of inconsistent valuation
methodologies, some of which were reﬂected in memo-
randa that were not provided to or reviewed by the
Company’s auditors, suggestions contained in those
memoranda that improper methods of valuation be
used (although the committee did not ﬁnd evidence
that such improper methods were generally applied),
inadequate supervision of personnel, inadequate
coordination with providers of outside valuations
and apparent confusion on the part of one of those
providers. The Special Committee concluded that cer-
tain Company personnel (whom the committee was
unable to identify) may have sought to manipulate
opening balance sheet values for equipment acquired
in purchase business combinations by causing them
to be understated and that these opening balance
sheet values may have been understated by an amount
the committee was unable to determine.

Following our review of our historical practices and
the ﬁndings of the Special Committee, the Company
considered whether the effect of the deﬁciencies iden-
tiﬁed by the committee required a restatement of
previously reported results. These deﬁciencies in our
historical practices between 1997 and August 2000
may have resulted in inaccurate values being
ascribed to rental equipment that we acquired in pur-
chase business combinations, including in some cases
values that may have been below fair value. However,
we do not have the ability to revalue this equipment
because we are unable to currently determine its his-
torical physical condition and the records that cur-
rently exist for this equipment are not sufﬁcient to
establish the physical condition of the equipment at
the time of its acquisition.

The equipment valuations performed at the time of
the acquisition, some of which included a physical
inspection, reﬂected an assessment of the condition
of the equipment. While, as the Special Committee
identiﬁed, there were various deﬁciencies in our
historical valuation practices, it is not possible to
accurately revalue this equipment to assess the
reasonableness of speciﬁc valuations. Therefore, we
believe the only feasible approach is to give effect to
the valuations that were performed contemporane-
ously with these acquisitions. Accordingly, notwith-
standing deﬁciencies in the Company’s historical
valuation process as it relates to purchase business
combinations, the Company does not believe a restate-
ment is required and believes that its ﬁnancial state-
ments from and after 2002 are materially correct
with respect to the effect of equipment valuations.

55

Below are our consolidated statements of operations, consolidated balance sheet and consolidated statements
of cash ﬂows as restated and as previously reported.

Consolidated Statements of Operations

Year Ended December 31, 2003

Year Ended December 31, 2002

As Originally
Reported

Restated

As Originally
Reported

Restated

Revenues:

Equipment rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New equipment sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractor supplies sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service and other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenues:

Cost of equipment rentals, excluding depreciation . . . . . . . . . . . . . . .
Depreciation of rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of rental equipment sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of new equipment sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of contractor supplies sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service and other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total cost of revenues  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross proﬁt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . .
Goodwill impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and asset impairment charge . . . . . . . . . . . . . . . . . . . . . .
Non-rental depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . .

Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred dividends of a subsidiary trust
. . . . . . . . . . . . . . . . . . . . . . . .
Other (income) expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loss before provision for income taxes and cumulative effect 

of change in accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (beneﬁt) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loss before cumulative effect of change in accounting principle . . . . . .
Cumulative effect of change in accounting principle, net of tax 

beneﬁt of $61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,177
181
205
184
119

2,867

1,192
332
121
172
134
66

2,019

848
451
297
—
69

30
209
15
133

(327)
(68)

(259)

—

$2,176
233
170
184
119

2,882

1,275
331
147
147
134
66

2,100

782
449
297
—
72

(36)
209
15
43

(303)
(49)

(254)

—

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (259)

$ (254)

Loss per share — basic:

Loss available to common stockholders before 

cumulative effect of change in accounting principle . . . . . . . . . . . .
Cumulative effect of change in accounting principle, net . . . . . . . . . .

Loss available to common stockholders . . . . . . . . . . . . . . . . . . . . . . . .

Loss per share — diluted:

Loss available to common stockholders before

cumulative effect of change in accounting principle . . . . . . . . . . . .
Cumulative effect of change in accounting principle, net . . . . . . . . . .

Loss available to common stockholders . . . . . . . . . . . . . . . . . . . . . . . .

$ (3.35)
—

$ (3.35)

$ (3.35)
—

$ (3.35)

$ (3.29)
—

$ (3.29)

$ (3.29)
—

$ (3.29)

$2,155
176
214
160
116

2,821

1,138
326
117
174
116
64

1,935

886
439
248
28
59

111
196
18
(1)

(101)
8

(109)

(288)

$ (398)

$ (0.98)
(3.80)

$ (4.78)

$ (0.98)
(3.80)

$ (4.78)

$2,152
223
170
160
116

2,821

1,147
324
149
145
116
64

1,945

876
443
248
28
61

96
196
18
(1)

(117)
1

(118)

(288)

$ (406)

$ (1.08)
(3.80)

$ (4.88)

$ (1.08)
(3.80)

$ (4.88)

56

Consolidated Balance Sheet

ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net of allowance for doubtful accounts of $47 and $48, respectively . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subordinated convertible debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stockholders’ equity:

Preferred stock — $.01 par value, 5,000,000 shares authorized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock — $.01 par value, 500,000,000 shares authorized, 77,150,277 shares issued 

and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deﬁcit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows

December 31, 2003

As Originally
Reported

Restated

$

79
499
106
118
2,072
407
1,438
3

$

79
483
106
118
2,062
407
1,412
27

$4,722

$4,694

$ 151
226
2,817
222
165

3,581

—

1
1,329
(25)
(189)
25

1,141

$ 151
272
2,817
222
163

3,625

—

1
1,330
(26)
(258)
22

1,069

$4,722

$4,694

Year Ended
December 31, 2003

Year Ended 
December 31, 2002

As Originally
Reported

Restated

As Originally
Reported

Restated

Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . .

$ 19

$ 19

$ 27

$ 27

Cash ﬂows provided by operating activities . . . . . . . . . . . . . . . . . . . . . . .
Cash ﬂows used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash ﬂows provided by ﬁnancing activities . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . .

342
(537)
255
—

60

306
(488)
246
(4)

60

518
(536)
9
1

(8)

478
(495)
9
—

(8)

Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . .

$ 79

$ 79

$ 19

$ 19

57

4. Acquisitions

We completed two, three, one and two acquisitions
during the years ended December 31, 2005, 2004,
2003 and 2002, respectively. The results of opera-
tions of the businesses acquired in these acquisitions
have been included in our results of operations from
their respective acquisition dates.

In December 2005, we acquired Sandvick Equipment
& Supply Company, a trench safety company, with
annual revenues of approximately $21.

In June 2005, we acquired HSS RentX branch loca-
tions in Colorado. Total 2004 revenues of the
acquired branches were approximately $9. The
aggregate purchase price for these acquisitions was
approximately $42, less liabilities assumed of approx-
imately $10.

In October 2004, we acquired Atlantic Rentals Ltd.,
which had revenues in 2003 of approximately $32.

In February 2004, we acquired 843504 Alberta Ltd.
(formerly known as Skyreach Equipment, Ltd.),
which had annual revenues in 2003 of approximately
$35. The aggregate purchase price for these 2004
acquisitions was approximately $91, less liabilities
assumed of $22.

In June 2002, we acquired 35 rental locations from
National Equipment Services, Inc. The aggregate ini-
tial consideration we paid for this acquisition as well
as the other 2002 acquisition was approximately
$158, which was paid in cash.

The purchase prices for all acquisitions have been
allocated to the assets acquired and liabilities
assumed based on their respective fair values at their
respective acquisition dates. Purchase price alloca-
tions are subject to change when additional informa-
tion concerning asset and liability valuations is
completed. The preliminary purchase price alloca-
tions that are subject to change primarily consist of
rental and non-rental equipment valuations. These
allocations are ﬁnalized within twelve months of
the acquisition date and are not expected to result in
signiﬁcant differences between the preliminary and
ﬁnal allocations.

Pro forma combined results of operations giving
effect to these acquisitions would not vary materially
from historical results.

5. Goodwill and Other Intangible Assets

The following table presents the changes in the carrying amount of goodwill for each of the four years in the
period ended December 31, 2005:

General
rentals

Trench safety,
pump and power

Trafﬁc control

Balance at January 1, 2002 . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill related to acquisitions . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation and other adjustments . . . . .

Balance at December 31, 2002 . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill related to acquisitions . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation and other adjustments . . . . .

Balance at December 31, 2003 . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill related to acquisitions . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation and other adjustments . . . . .

Balance at December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . .
Goodwill related to acquisitions . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation and other adjustments . . . . .

$1,787
(395)
8
1

1,401
(226)
2
25

1,202
—
35
(14)

1,223
4
4

$ 35
(19)
66
—

82
(12)
—
—

70
—
—
—

70
27
—

$ 381
(183)
—
—

198
(59)
1
—

140
(139)
—
(1)

—
—
—

Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . .

$1,231

$ 97

$ —

Total

$2,203
(597)
74
1

$1,681
(297)
3
25

$1,412
(139)
35
(15)

$1,293
31
4

$1,328

(1) Includes cumulative effect of change in accounting principle.

We completed our initial impairment analysis in the
ﬁrst quarter of 2002 and recorded a charge of
approximately $349 ($288 net of tax). The charge
associated with the initial impairment analysis is
reﬂected on our statements of operations as a “Cumu-
lative Effect of Change in Accounting Principle.” We
completed subsequent impairment analyses in the
fourth quarter of 2002 and fourth quarter of 2003
and recorded additional impairment charges. The
additional charge in the fourth quarter of 2002 was
approximately $248 and the additional charge in the
fourth quarter of 2003 was approximately $297.
These charges are reﬂected on our statement of
operations as “goodwill impairment.”

The impairment charges recognized in 2003 and
2002 related to certain branches that decreased in
value. The factors that negatively affected the value
of these branches included the following: (i) contin-
ued weakness in non-residential construction spend-
ing which negatively affected the earnings of our
branches and (ii) to a lesser extent, operational weak-
ness at some branches and increased competition for
some branches. Fair values used in impairment test-
ing were based upon valuation techniques using mul-
tiples of earnings and revenues.

58

We are required to review our goodwill for impair-
ment annually as of a scheduled review date. How-
ever, if events or circumstances suggest that goodwill
could be impaired, we may be required to conduct an
earlier review. The scheduled review date is October 1
of each year; however, we reviewed our trafﬁc control
segment goodwill as of September 30, 2004 because

continued weakness in this segment suggested the
goodwill associated with this segment may have been
impaired. Based on this review, we recorded an
impairment charge of approximately $139 to write-
off the remaining goodwill associated with our trafﬁc
control segment. This charge is reﬂected on our
statements of operations as “goodwill impairment.”

Other intangible assets primarily consist of customer relationships and non-compete agreements. Intangible
assets were comprised of the following at December 31, 2005, 2004 and 2003:

Average Remaining
Amortization Period

2005

2004

Non-compete agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18 months
9 years

28 months
10 years

As of December 31, 2005

Gross
Carrying
Amount

$21
$40

Accumulated
Amortization

Net
Amount

$18
$10

$ 3
$30

As of December 31, 2004

As of December 31, 2003

Gross
Carrying
Amount

Accumulated
Amortization

Net
Amount

Non-compete agreements . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . .

$21
$39

$16
$ 7

$ 5
$32

Gross
Carrying
Amount

$18
$28

Accumulated
Amortization

Net
Amount

$15
$ 4

$ 3
$24

Amortization expense for other intangible assets was $5, $4, $6 and $5 for the years ended December 31,
2005, 2004, 2003 and 2002, respectively.

As of December 31, 2005, estimated amortization
expense for other intangible assets for each of the
next ﬁve years and thereafter is as follows:

2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4
4
4
4
4
13

$33

6. Restructuring Charges

We recorded restructuring charges of $28 (including
a non-cash component of approximately $3) and $29
(including a non-cash component of approximately
$11) in 2002 and 2001, respectively. The 2002 charge
involved the following principal elements: (i) 40
underperforming branches and ﬁve administrative
ofﬁces were closed or consolidated with other loca-
tions; (ii) the reduction of the Company’s workforce
by 412 through the termination of branch and admin-
istrative personnel, and (iii) an information technol-
ogy project was abandoned. The 2001 charge involved
the following principal elements: (i) 31 underperform-
ing branches were closed or consolidated with other
locations, (ii) ﬁve administrative ofﬁces were closed or
consolidated with other locations, (iii) the reduction of
the Company’s workforce by 489 through the termi-
nation of branch and administrative personnel, and
(iv) certain information technology hardware and
software was written-off.

The costs to vacate facilities primarily represent the
payment of obligations under leases, partially offset
by estimated sublease opportunities, the write-off of
capital improvements made to such facilities and the
write-off of related goodwill (only in 2001). The work-
force reduction costs primarily represent severance.
The information technology costs represent the pay-
ment of obligations under equipment leases relating
to the abandonment of certain information technol-
ogy projects. In connection with our restructuring
initiatives, we generally redeploy most of the rental
equipment from the closed branches to continuing
branches with the expectation that the redeployed
equipment will generate stronger results (i.e., higher
equipment utilization). In connection with these
activities, the continuing branches that absorb the
redeployed ﬂeet generally incur incremental operat-
ing costs as a result of having larger operations
and/or requiring additional personnel. Because we
have not historically tracked these items and because
we have a mobile ﬂeet with equipment being fre-
quently transferred or shared among branches, it is
not possible to quantify the true “cost savings” from
these restructurings.

The aggregate balance of the restructuring reserves
was $5, $8 and $17 as of December 31, 2005, 2004
and 2003, respectively. We estimate that approxi-
mately $2 of the amount accrued at December 31,
2005 will be spent during 2006 and approximately
$3 will be spent in subsequent periods.

59

The restructuring and asset impairment charges in the consolidated statements of operations were $–, $(1),
$–, and $28 in 2005, 2004, 2003 and 2002, respectively. Detailed information related to restructuring
program activity during each of the four years in the period ended December 31, 2005 is outlined below.

Costs to vacate
facilities

Workforce
reduction costs

Information
technology costs

Balance at December 31, 2001 . . . . . . . . . . . . . . . . . . . . . . .
Restructuring provision . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash payments charged against reserve . . . . . . . . . . . . . . .
Other non-cash charges against reserves . . . . . . . . . . . . . .

Balance at December 31, 2002 . . . . . . . . . . . . . . . . . . . . . . .
Cash payments charged against reserve . . . . . . . . . . . . . . .

Balance at December 31, 2003 . . . . . . . . . . . . . . . . . . . . . . .
Cash payments charged against reserve . . . . . . . . . . . . . . .
Reversal of excess reserves . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . .
Cash payments charged against reserve . . . . . . . . . . . . . . .

$ 3
24
(2)
(3)

22
(7)

15
(3)
(4)

8
(3)

Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . .

$ 5

$ 2
3
(2)
—

3
(2)

1
—
(1)

—
—

$ —

$ 2
1
(1)
—

2
(1)

1
(1)
—

—
—

Total

$ 7
28
(5)
(3)

27
(10)

17
(4)
(5)

8
(3)

$ —

$ 5

7. Rental Equipment

Rental equipment consists of the following:

Rental equipment . . . . . . . . . . .
Less accumulated 

December 31,

2005

2004

2003

$ 3,289

$3,082

$2,987

depreciation . . . . . . . . . . . . . .

(1,037)

(959)

(925)

Rental equipment, net

. . . . . . .

$ 2,252

$2,123

$2,062

8. Property and Equipment

Property and equipment consist of the following:

Land . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . .
Transportation and 

equipment . . . . . . . . . . . . . . .
Machinery and equipment . . . .
Furniture and ﬁxtures . . . . . . .
Leasehold improvements . . . . .

Less accumulated depreciation 
and amortization . . . . . . . . . .

2005

$ 65
131

322
53
93
90

754

(309)

Property and equipment, net . .

$ 445

December 31,

2004

$ 58
113

301
48
84
77

681

2003

$ 49
104

290
45
77
75

640

(284)

$ 397

(233)

$ 407

9. Accrued Expenses and
Other Liabilities
Accrued expenses and other liabilities consist of
the following:

December 31,

Self-insurance reserve . . . . . . .
Accrued compensation . . . . . . .
Financial derivative 

instruments . . . . . . . . . . . . . .
Interest payable . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . .
Accrued beneﬁt costs . . . . . . . .
Professional fees . . . . . . . . . . . .
Restructuring reserves . . . . . . .
. . . . . . . . . . . . . . . . . . .
Other(1)

Accrued expenses and 

2005

$ 88
72

54
45
20
14
11
5
111

2004

$ 81
49

31
43
20
15
8
8
68

2003

$ 92
27

4
49
26
13
2
17
42

other liabilities . . . . . . . . . . .

$420

$323

$272

(1) Other includes several items, none of which are individually

signiﬁcant.

60

10. Debt

Debt consists of the following:

Credit Facility, interest payable 
at a weighted average rate of 
5.29, 4.81 and 5.30 percent at 
December 31, 2005, 2004 and 
2003, respectively  . . . . . . . . .

Term Loan, interest payable at 
6.63, 4.67 and 4.20 percent 
at December 31, 2005, 2004 
and 2003, respectively . . . . . .
91⁄4 percent Senior Subordinated 

Notes, interest payable 
semi-annually  . . . . . . . . . . . .

9 percent Senior Subordinated 

Notes, interest payable 
semi-annually  . . . . . . . . . . . .
73⁄4 percent Senior Subordinated 

Notes, interest payable 
semi-annually  . . . . . . . . . . . .

7 percent Senior Subordinated 

Notes, interest payable 
semi-annually  . . . . . . . . . . . .

61⁄2 percent Senior Notes, 

interest payable 
semi-annually  . . . . . . . . . . . .

103⁄4 percent Senior Notes, 

interest payable 
semi-annually  . . . . . . . . . . . .

17⁄8 percent Convertible Senior 

Subordinated Notes, interest 
payable semi-annually  . . . . .

Other debt, including capital 
leases, interest payable at 
various rates ranging from 
5 percent to 10 percent at 
December 31, 2005, 2004 and 
2003, due through 2009  . . . .

December 31,

2005

2004

2003

$ 137

$ 133

$

52

737

744

639

—

—

—

—

300

250

525

525

525

375

375

1,000

1,000

—

—

—

12

861

144

144

144

12

12

46

$2,930

$2,945

$2,817

Transactions Completed in 2004
We reﬁnanced approximately $2.1 billion of debt
in 2004 (“the Reﬁnancing”). The Reﬁnancing
extended debt maturities, reduced interest expense
going forward and provided the Company with
greater ﬁnancial ﬂexibility. As part of the
Reﬁnancing, the Company:

• amended and restated URI’s senior secured credit

facility (“New Credit Facility”) to replace URI’s pre-
vious $1.3 billion senior secured credit facility;

• sold $1 billion of URI’s 61⁄2 percent Senior Notes

Due 2012;

• sold $375 of URI’s 7 percent Senior Subordinated

Notes Due 2014;

• repaid $639 of term loans and $52 of borrowings

that were outstanding under the old credit facility;

• repurchased $845 principal amount of URI’s 103⁄4
percent Senior Notes Due 2008 (the “103⁄4 percent
Notes”), pursuant to a tender offer;

• redeemed $300 principal amount of URI’s out-

standing 91⁄4 percent Senior Subordinated Notes
Due 2009 (the “91⁄4 percent Notes”); and

• redeemed $250 principal amount of URI’s out-

standing 9 percent Senior Subordinated Notes Due
2009 (the “9 percent Notes”).

The Reﬁnancing was completed during the ﬁrst quar-
ter of 2004, except that (i) the redemption of the 9
percent Notes was completed on April 1, 2004 and a
portion of the term loan that is part of the New Credit
Facility was drawn on such date and (ii) an additional
$4 of the 103⁄4 percent Notes were repurchased on
April 7, 2004.

In connection with the Reﬁnancing, the Company
incurred aggregate charges of approximately $171.
These charges were attributable primarily to (i) the
redemption and tender premiums for notes redeemed
or repurchased as part of the Reﬁnancing and (ii) the
write-off of previously capitalized costs relating to
the debt reﬁnanced. These charges were recorded in
other (income) expense, net.

7 percent Senior Subordinated Notes. In January
2004, as part of the Reﬁnancing described above, URI
issued $375 aggregate principal amount of 7 percent
Senior Subordinated Notes (the “7 percent Notes”)
which are due February 15, 2014. The net proceeds
from the sale of the 7 percent Notes were approxi-
mately $369, after deducting offering expenses. The
7 percent Notes are unsecured and are guaranteed by
Holdings and, subject to limited exceptions, URI’s
domestic subsidiaries. The 7 percent Notes mature
on February 15, 2014 and may be redeemed by URI
on or after February 15, 2009, at speciﬁed redemp-
tion prices that range from 103.5 percent in 2009 to
100.0 percent in 2012 and thereafter. In addition, on
or prior to February 15, 2007, URI may, at its option,
use the proceeds of public equity offerings to redeem
up to an aggregate of 35 percent of the outstanding
7 percent Notes at a redemption price of 107.0
percent. The indenture governing the 7 percent Notes
contains certain restrictive covenants, including limi-
tations on (i) additional indebtedness, (ii) restricted
payments, (iii) liens, (iv) dividends and other pay-
ments, (v) preferred stock of certain subsidiaries,
(vi) transactions with afﬁliates, (vii) the disposition of
proceeds of asset sales and (viii) the Company’s ability
to consolidate, merge or sell all or substantially all of
its assets.

61⁄2 percent Senior Notes. In February 2004, as part of
the Reﬁnancing described above, URI issued $1 bil-
lion aggregate principal amount of 61⁄2 percent Senior
Notes (the “61⁄2 percent Notes”) which are due Febru-
ary 15, 2012. The net proceeds from the sale of the
61⁄2 percent Notes were approximately $985, after
deducting offering expenses. The 61⁄2 percent Notes
are unsecured and are guaranteed by Holdings and,
subject to limited exceptions, URI’s domestic sub-
sidiaries. The 61⁄2 percent Notes mature on February
15, 2012 and may be redeemed by URI on or after
February 15, 2008, at speciﬁed redemption prices
that range from 103.25 percent in 2008 to 100.0 per-
cent in 2010 and thereafter. In addition, on or prior
to February 15, 2007, URI may, at its option, use the
proceeds of public equity offerings to redeem up to
an aggregate of 35 percent of the outstanding 61⁄2 per-
cent Notes at a redemption price of 106.5 percent.

61

The indenture governing the 61⁄2 percent Notes con-
tains certain restrictive covenants, including limita-
tions on (i) additional indebtedness, (ii) restricted
payments, (iii) liens, (iv) dividends and other pay-
ments, (v) preferred stock of certain subsidiaries,
(vi) transactions with afﬁliates, (vii) the disposition of
proceeds of asset sales, (viii) the Company’s ability to
consolidate, merge or sell all or substantially all of its
assets and (ix) sale-leaseback transactions.

New Credit Facility. In the ﬁrst quarter of 2004, as
part of the Reﬁnancing described above, the Company
amended and restated URI’s senior secured credit
facility. The amended and restated facility includes
(i) a $650 revolving credit facility, (ii) a $150 institu-
tional letter of credit facility and (iii) a $750 term
loan. The revolving credit facility, institutional letter
of credit facility and term loan are governed by the
same credit agreement. URI’s obligations under the
credit facility are guaranteed by Holdings and, sub-
ject to limited exceptions, URI’s domestic subsidiaries
and are secured by liens on substantially all of the
assets of URI, Holdings and URI’s domestic sub-
sidiaries. Set forth below is certain additional infor-
mation concerning the amended and restated facility.

Revolving Credit Facility. The revolving credit facility
enables URI to borrow up to $650 on a revolving
basis and enables certain of the Company’s Canadian
subsidiaries to borrow up to $150 (provided that the
aggregate borrowings of URI and the Canadian sub-
sidiaries may not exceed $650). A portion of the
revolving credit facility, up to $250, is available for
issuance of letters of credit. The revolving credit
facility is scheduled to mature and terminate in
February 2009. As of December 31, 2005 and 2004,
the outstanding borrowings under this facility were
approximately $137 and $133, respectively, and uti-
lized letters of credit were $64 and $50, respectively.
All outstanding borrowings under the revolving
credit facility at December 31, 2005 and December 31,
2004 were Canadian subsidiary borrowings.

U.S. dollar borrowings under the revolving credit
facility accrue interest, at the option of URI’s Cana-
dian subsidiaries, at either (a) the ABR rate (which is
equal to the greater of (i) the Federal Funds Rate plus
0.5 percent and (ii) JPMorgan Chase Bank’s prime
rate) plus a margin of 1.25 percent, or (b) an adjusted
LIBOR rate plus a maximum margin of 2.25 percent.

Canadian dollar borrowings under the revolving
credit facility accrue interest, at the borrower’s
option, at either (a) the Canadian prime rate (which is
equal to the greater of (i) the CDOR rate plus 1 per-
cent and (ii) JPMorgan Chase Bank, Toronto Branch’s
prime rate) plus a margin of 1.25 percent, or (b) the
B/A rate (which is equal to JPMorgan Chase Bank,
Toronto Branch’s B/A rate) plus a maximum margin
of 2.25 percent. The rate applicable to Canadian bor-
rowings outstanding under the revolving credit
facility was 5.29 and 4.81 at December 31, 2005 and
2004, respectively.

URI is also required to pay the lenders a commitment
fee equal to 0.5 percent per annum, payable quar-
terly, in respect of undrawn commitments under the
revolving credit facility.

Institutional Letter of Credit Facility (“ILCF”). The
ILCF provides for up to $150 in letters of credit. The
ILCF is in addition to the letter of credit capacity
under the revolving credit facility. The total combined
letter of credit capacity under the revolving credit
facility and the ILCF is $400. Subject to certain condi-
tions, all or part of the ILCF may be converted into
term loans. The ILCF is scheduled to terminate in
February 2011. As of both December 31, 2005 and
2004, the outstanding letters of credit under the ILCF
were approximately $150.

URI is required to pay a fee which accrues at the rate
of 0.1 percent per annum on the amount of the ILCF.
In addition, URI is required to pay participation and
other fees in respect of letters of credit. For letters of
credit obtained under both the ILCF and the revolving
credit facility, these fees accrue at the rate of 2.25 per-
cent per annum. In May 2005, based on the Com-
pany’s ﬁrst quarter 2005 funded debt to cash ﬂow
ratio, the participation fee was reduced to 2.0 percent.

Term Loan. The term loan was obtained in two draws.
An initial draw of $550 was made upon the closing
of the credit facility in February 2004 and an addi-
tional draw of $200 was made on April 1, 2004.
Amounts repaid in respect of the term loan may not
be reborrowed.

The term loan must be repaid in installments as fol-
lows: (i) during the period from and including June
30, 2004 to and including March 31, 2010, URI must
repay on each March 31, June 30, September 30 and
December 31 of each year an amount equal to one-
fourth of 1 percent of the original aggregate princi-
pal amount of the term loan and (ii) URI must repay
on each of June 30, 2010, September 30, 2010,
December 31, 2010, and at maturity on February 14,
2011 an amount equal to 23.5 percent of the original
aggregate principal amount of the term loan. As of
December 31, 2005 and 2004, amounts outstanding
under the term loan were approximately $737 and
$744, respectively.

Borrowings under the term loan accrue interest, at
URI’s option, at either (a) the ABR rate plus a maxi-
mum margin of 1.25 percent, or (b) an adjusted
LIBOR rate plus a maximum margin of 2.25 percent.
The rate was 6.63 and 4.67 at December 31, 2005 and
2004, respectively.

Covenants. Under the agreement governing the New
Credit Facility, the Company is required to, among
other things, satisfy certain ﬁnancial tests relating
to: (a) interest coverage ratio, (b) the ratio of funded
debt to cash ﬂow, (c) the ratio of senior secured debt
to tangible assets and (d) the ratio of senior secured
debt to cash ﬂow. If the Company is unable to satisfy
any of these covenants, the lenders could elect to ter-
minate the credit facility and require the Company to

62

repay the outstanding borrowings under the credit
facility. The Company is also subject to various other
covenants under the agreements governing its credit
facility and other indebtedness. These covenants
require the Company to timely ﬁle audited annual
and quarterly ﬁnancial statements with the SEC and
limit or prohibit, among other things, the Company’s
ability to incur indebtedness, make prepayments of
certain indebtedness, pay dividends, make invest-
ments, create liens, make acquisitions, sell assets and
engage in mergers and acquisitions. If at any time an
event of default under the New Credit Facility exists,
the interest rate applicable to each revolving and
term loan will be based on the highest margins above
plus 2 percent.

Transactions Completed in 2005
Matters Relating to Consent Solicitation: In 2005,
the Company successfully solicited consents for
amendments to the indentures governing the
following securities:

• 61⁄2 percent Senior Notes due 2012

• 73⁄4 percent Senior Subordinated Notes due 2013

• 7 percent Senior Subordinated Notes due 2014

• 17⁄ 8 percent Convertible Senior Subordinated Notes

due 2023 (“Convertible Notes”)

• 61⁄2 percent Convertible Quarterly Income Pre-

ferred Securities due 2028 (“QUIPs”)

The indentures for these securities require annual
and other periodic reports to be ﬁled with the SEC.
On September 19, 2005, the Company obtained
consents from holders of these securities and
entered into supplemental indentures amending the
applicable covenants to allow the Company until
March 31, 2006 to comply with the requirement to
make timely SEC ﬁlings (and waiving related
defaults that occurred prior to the effectiveness of the
amendments). In addition, the supplemental inden-
ture relating to the Convertible Notes changed the
conversion rate from 38.9520 to 44.9438 shares of
United Rentals common stock for each $1,000 (“one
thousand dollars”) principal amount of Convertible
Notes. Pursuant to the terms of the consent solicita-
tion, the Company paid aggregate consent fees of
approximately $34 to holders of its nonconvertible
notes and QUIPs. These costs are being amortized
through the maturity dates of the nonconvertible
notes and QUIPs securities. Amortization expense
recorded in 2005 for these costs was $1.

In March 2005, the Company successfully obtained
its lenders’ consent to an amendment to the New
Credit Facility that waived the covenant violation
from the delay in making certain SEC ﬁlings and
extended the Company’s deadline to make SEC ﬁlings
until June 29, 2005 for our 2004 Annual Report on
Form 10-K and until August 15, 2005 for our ﬁrst
quarter 2005 Form 10-Q. In June 2005, the Company
successfully obtained its lenders’ consent to an
amendment to the New Credit Facility that waived
the covenant violation from the delay in making cer-
tain SEC ﬁlings and extended the Company’s deadline
to make SEC ﬁlings until December 31, 2005 for our

2004 Annual Report on Form 10-K and for our 2005
Form 10-Qs. Both of these consents were obtained
without the payment of any consent fees. In Novem-
ber 2005, the Company successfully obtained its
lenders’ consent to an amendment to the New Credit
Facility that waived the covenant violation from the
delay in making certain SEC ﬁlings and extended the
Company’s deadline to make SEC ﬁlings until March
31, 2006. Consent fees in the amount of $1 were paid
to the lenders under the New Credit Facility.

On March 31, 2006, the Company obtained its
lenders’ consent to an additional amendment to the
New Credit Facility that (1) waived the covenant vio-
lation from the delay in making certain SEC ﬁlings,
(2) extended the Company’s deadline to make its SEC
ﬁlings until April 28, 2006 and (3) limited the Com-
pany’s ability to borrow under the New Credit Facility
to amounts necessary to fund obligations to be paid
in the ordinary course during the one-week period
following the applicable borrowing until these SEC
ﬁlings are made.

Accounts Receivable Securitization: On May 31, 2005,
we obtained a new $200 accounts receivable securiti-
zation facility and terminated our then existing $250
accounts receivable securitization facility. The new
facility provides for generally lower borrowing costs
than the old facility. In addition, the new facility pro-
vides for a substantially longer term, with the sched-
uled termination date being May 29, 2009, compared
with September 30, 2006 under the old facility. There
were no outstanding borrowings under the old facil-
ity at the time it was terminated. In connection with
terminating the old facility, we incurred a charge of
approximately $1, representing the write-off of previ-
ously capitalized costs relating to the old facility.

The new facility enables one of our subsidiaries to
borrow up to $200 against a collateral pool of eligible
accounts receivable. Consistent with the old facility,
the borrowings under the new facility will be
reﬂected as debt on our consolidated balance sheets
and the receivables in the collateral pool will be
reﬂected as assets on our consolidated balance sheets.
However, such assets are only available to satisfy the
obligations of the borrower subsidiary, and once the
obligations of the borrower subsidiary are satisﬁed,
the remaining assets will be available to be divi-
dended to the parent.

Key terms of this facility include:

• borrowings may be made only to the extent

that the face amount of the receivables in the
collateral pool exceeds the outstanding loans 
by a speciﬁed amount;

• the facility is structured so that the receivables

in the collateral pool are the lenders’ only source
of repayment;

• prior to expiration or early termination of the

facility, amounts collected on the receivables may,
subject to certain conditions, be retained by the
borrower, provided that the remaining receivables
in the collateral pool are sufﬁcient to secure the
then outstanding borrowings;

63

• after expiration or early termination of the facility,
no new amounts will be advanced under the facil-
ity and collections on the receivables securing the
facility will be used to repay the outstanding bor-
rowings; and

• the facility contains standard termination events

including, without limitation, a termination event
if (i) the long-term senior secured rating of URI
falls below either B+ from Standard & Poor’s Rat-
ing Services (“S&P”) or B2 from Moody’s Investors
Service (“Moody’s”) or (ii) our New Credit Facility
is terminated. At March 31, 2006, the Company’s
long-term senior secured debt was rated BB– by
S&P and B2 by Moody’s.

Outstanding borrowings under the facility generally
accrue interest at the commercial paper rate plus a
speciﬁed spread not to exceed 1.0 percent. There were
no outstanding borrowings under this facility at
December 31, 2005. We are also required to pay a
commitment fee based on the long-term senior
secured ratings of URI. This commitment fee was
0.55 percent at December 31, 2005.

Redemption of remaining 103⁄4 Senior Notes: In April
2005, the Company redeemed $12 principal amount
of URI’s 103⁄4 Senior Notes due 2008 (the “103⁄4 Notes”).
The principal repurchased represented the amounts
of the 103⁄4 Notes still outstanding after the 2004
tender offer. In connection with this redemption,
the Company incurred charges of approximately
$1. These charges were attributed primarily to (i) the
redemption for notes redeemed and (ii) the write-off
of previously capitalized costs. These charges were
recorded in other (income) expense, net.

Loan Covenants and Compliance
As of December 31, 2005 and 2004, we were in com-
pliance with the covenants of the 7 percent Notes and
the 61⁄2 percent Notes, as amended, as discussed
above, as well as the covenants of our 73⁄4 percent
Senior Subordinated Notes due 2013, Convertible
Notes due 2023, the QUIPs and the New Credit Facil-
ity. As discussed above (see “Transactions Completed
in 2005 — Matters Relating to Consent Solicitations”),
on September 19, 2005, we amended the indentures
governing the above-described securities and our
New Credit Facility to allow the Company until
March 31, 2006 to comply with the requirement to
make timely SEC ﬁlings. As described above, on
March 31, 2006 the Company obtained its lenders’
consent to the New Credit Facility that extended the
Company’s deadline to make its SEC ﬁlings until
April 28, 2006.

As of March 31, 2006 we have ﬁled our annual
reports on Form 10-K for the years ended December
31, 2004 and 2005; however we have not yet ﬁled any
of our quarterly reports on Form 10-Q for the periods
ended in 2005. Therefore, as of March 31, 2006, we
are in violation of the amendments to our indentures
due to not ﬁling our quarterly reports (see “Risk
Factors — We will be unable to ﬁle our delinquent
quarterly reports on Form 10-Q by the end of the
extension period granted by holders of our bonds,
which will give our bondholders the right to declare
an event of default.”)

The Company is currently in compliance with the
New Credit Facility, as amended, as of March 31,
2006. However, if the Company were not to ﬁle the
required SEC reports by April 28, 2006, the Company
would be required to obtain an additional extension
or be in immediate default under the New Credit
Facility. If the Company’s bondholders declare an
event of default under any of the Company’s inden-
tures, the waiver of default contained in the March
31, 2006 amendment will nevertheless continue until
April 28, 2006. In addition, the amendment to our
New Credit Facility limits our ability to make borrow-
ings as discussed above.

At December 31, 2005 and 2004, we were in full com-
pliance with all our ﬁnancial covenants in the New
Credit Facility and the indentures governing our
notes and convertible securities. We consider our
most restrictive covenant to be the Minimum Interest
Coverage ratio. The minimum amount permitted
under this covenant is as follows:

Period

Ratio

June 30, 2004 through December 31, 2004 . . . . . . . . . . 1.35 to 1.0
January 1, 2005 through December 31, 2005 . . . . . . . . . 1.45 to 1.0
January 1, 2006 and thereafter . . . . . . . . . . . . . . . . . . . 1.65 to 1.0

Our actual minimum interest coverage ratios for the
years ended December 31, 2005 and 2004 were 2.22
and 2.06, respectively.

Interest Rate Swap and Cap Agreements. As of
December 31, 2005 and December 31, 2004, we had
swap agreements with an aggregate notional amount
of $1.2 billion. The effect of these agreements was to
convert $1.2 billion of our ﬁxed rate notes to ﬂoating
rate instruments. The ﬁxed rate notes being con-
verted consisted of: (i) $445 of our 61⁄2 percent Notes,
(ii) $375 of our 73⁄4 percent Senior Subordinated Notes
through 2013 and (iii) $375 of our 7 percent Notes.
Our swap agreements that convert our ﬁxed rate
notes to ﬂoating rate instruments are designated as
fair value hedges. Changes in the fair values of our
fair value hedges, as well as the offsetting fair value
changes in the hedged items, are recorded on the
statements of operations. There was no ineffective-
ness related to our fair value hedges. As of December
31, 2005 and 2004, we had an unrealized loss of $54
and $31, respectively, based upon the fair value of our
fair value hedges.

64

As of December 31, 2005 and 2004, we had interest
rate cap agreements that effectively limit the interest
rate on $725 of our term loan. Our cap agreements
are designated as cash ﬂow hedges. Changes in the
fair values of our cash ﬂow hedges are recorded in
other comprehensive income and reclassiﬁed into
earnings in the same periods during which the
hedged transactions affect earnings. There was no
ineffectiveness related to our cash ﬂow hedges. As of
December 31, 2005 and 2004, we had an unrealized
gain of $2 and an unrealized loss of $4, respectively,
based upon the fair value of our cash ﬂow hedges.

Maturities. Maturities of the Company’s debt for each
of the next ﬁve years and thereafter at December 31,
2005 are as follows:

2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27
25
20
152
535
2,171

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,930

11. Income Taxes

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

Year ended December 31,

2005

2004

2003

2002

Domestic federal:

Current . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . .

$ 5
88

Domestic state:

Current . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . .

Total domestic

Foreign federal:

Current . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . .

Foreign provincial:

Current . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . .

93

2
17

19

112

2
5

7

1
3

4

Total foreign . . . . . . . . . . . .

11

$ —
1

1

2
(12)

(10)

(9)

2
1

3

—
2

2

5

$ —
(46)

(46)

—
(8)

(8)

(54)

2
1

3

—
2

2

5

$ —
(1)

(1)

1
—

1

—

2
(2)

—

—
1

1

1

$123

$ (4)

$(49)

$ 1

A reconciliation of the provision for income taxes and
the amount computed by applying the statutory fed-
eral income tax rate of 35 percent to income (loss)
before provision for income taxes and cumulative
effect of change in accounting principle is as follows:

Year ended December 31,

2005

2004

2003

2002

Computed tax at statutory 

tax rate . . . . . . . . . . . . . .

$109

$(31)

$(106)

$(41)

State income taxes, net of 

federal tax beneﬁt . . . . . .

Non-deductible goodwill 

impairment charges . . . .
Other(1) . . . . . . . . . . . . . . . .

12

—
2

(7)

(2)

33
1

47
12

1

42
(1)

$123

$ (4)

$ (49)

$ 1

(1) 2003 includes nondeductible executive deferred compensation of $5.

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

Intangibles . . . . . . . . . . . . . . . .
Reserves and allowances . . . . . .
Net operating loss and credit 

carryforwards(1)

. . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . .

Total Deferred Income 

2005

$

5
86

189
12

Tax Assets . . . . . . . . . . . . . . .

292

December 31,

2004

$ 41
81

295
9

426

2003

$ 55
77

248
5

385

Property and equipment . . . . . .

$(554)

$(575)

$(548)

Total Deferred Income 

Tax Liabilities . . . . . . . . . . . .

(554)

(575)

$(262)

$(149)

(548)

$(163)

(1) Includes valuation allowance related to state net operating loss

carryforwards of $8, $8 and $7, respectively.

The deferred tax assets and liabilities at December 31,
2004 include the effects of certain reclassiﬁcations
related to differences between the income tax provi-
sions and tax returns for prior years. These reclassi-
ﬁcations had no effect on net income. In addition to
the deferred tax liabilities described above, we have
reserves for certain tax-related matters resulting
from our acquisitions.

For ﬁnancial reporting purposes, income before
income taxes and cumulative effect of change in
accounting principle for our foreign subsidiaries was
$34, $20 and $5 for the years ended December 31,
2005, 2004 and 2003, respectively. At December 31,
2005, 2004, and 2003, unremitted earnings (deﬁcit)
of foreign subsidiaries were approximately $36, $14
and $(1), respectively. Since it is our intention to
indeﬁnitely reinvest these earnings, no United States
taxes have been provided for these amounts. Determi-
nation of the amount of unrecognized deferred tax
liability on these unremitted taxes is not practicable.

We have net operating loss carryforwards (“NOL’s”)
of $402 for federal income tax purposes that expire
through 2024. We have not recorded a valuation
allowance against this deferred tax asset because it is
deemed more likely than not that such beneﬁt will be
realized in the future.

65

12. Subordinated
Convertible Debentures
The subordinated convertible debentures included in
our consolidated balance sheets reﬂect the obligation
to our subsidiary that has issued preferred securities.
This subsidiary is not consolidated in our ﬁnancial
statements because we are not the primary beneﬁ-
ciary of the trust. As of December 31, 2005, 2004 and
2003, the aggregate amount of subordinated convert-
ible debentures outstanding was $222.

In August 1998, a subsidiary trust (the “Trust”) of
Holdings issued and sold in a private offering (the
“Preferred Securities Offering”) $300 of QUIPs. The
Trust used the proceeds from the Preferred Securities
Offering to purchase 61⁄2 percent convertible subordi-
nated debentures due 2028 (the “Debentures”) which
resulted in Holdings receiving all of the net proceeds
of the Preferred Securities Offering. Holdings in turn
contributed the net proceeds of the Preferred Securi-
ties Offering to URI. The QUIPs are non-voting secu-
rities, carry a liquidation value of $50 (“ﬁfty dollars”)
per security and were convertible into the Company’s
common stock at an initial rate of 1.146 shares per
security (equivalent to an initial conversion price of
$43.63 per share).

Holders of the QUIPs are entitled to preferential
cumulative cash distributions from the Trust at an
annual rate of 61⁄2 percent of the liquidation value,
accruing from the original issue date and payable
quarterly in arrears beginning February 1, 1999. The
distribution rate and dates correspond to the interest
rate and payment dates on the Debentures. Holdings
may defer interest payments on the Debentures for
up to twenty consecutive quarters, but not beyond
the maturity date of the Debentures. If interest pay-
ments on the Debentures are deferred, so are the
payments on the QUIPs. Under this circumstance,
Holdings will be prohibited from paying dividends
on any of its capital stock or making payments with
respect to its debt that rank pari passu with or junior
to the Debentures.

Holdings has executed a guarantee with regard to
payment of the QUIPs to the extent that the Trust has
insufﬁcient funds to make the required payments.

13. Preferred Stock

As of December 31, 2005, 2004 and 2003, we have
two classes of preferred stock outstanding. In total,
we are authorized to issue 5 million shares of pre-
ferred stock, $0.01 par value, of which an aggregate
of 450,000 have been issued.

Series C Preferred and Series D Preferred. There are
300,000 shares of our Series C Preferred outstanding
and 150,000 shares of our Series D Preferred out-
standing. The Series D Preferred includes 105,252
shares designated as Class D-l and 44,748 shares
designated as Class D-2. The rights of the two classes
of Series D Preferred are substantially the same,
except that only the Class D-l has the voting rights
described below.

Principal terms of the Series C Preferred and Series D
Preferred include the following (subject to the special
provisions described below that will apply in the
event of certain Non-Approved Change of Control
transactions): (i) each share is entitled to a liquida-
tion preference of $1,000 per share; (ii) at the holder’s
option, each share of Series C Preferred is convertible
into 40 shares of common stock subject to adjustment
(representing a conversion price of $25 per share
based on the liquidation preference) and each share
of Series D Preferred is convertible into 331⁄3 shares of
common stock subject to adjustment (representing a
conversion price of $30 per share based on the liqui-
dation preference); (iii) the holders of the Series C
Preferred and Series D Preferred (on an as converted
basis) and the holders of the common stock vote
together as a single class on all matters (except that
the Series C Preferred may vote as a separate class as
described in the next clause); (iv) the holders of the
Series C Preferred, voting separately as a single
class, may elect two directors (subject to reduction to
one, if the shares of Series C Preferred owned by spec-
iﬁed holders cease to represent, on an as converted
basis, at least eight million shares of common stock,
and reduction to zero, if such shares of Series C Pre-
ferred cease to represent at least four million shares
of common stock), (v) there are no stated dividends on
the Series C Preferred or Series D Preferred, but the
Series C Preferred and Series D Preferred, on an as
converted basis, will participate in any dividends
declared on the common stock, (vi) upon the occur-
rence of speciﬁed change of control transactions,
other than a Non-Approved Change of Control (as
deﬁned below), we must offer to redeem the Series C
Preferred and Series D Preferred at a price per share
equal to the liquidation preference plus an amount

66

equal to 6.25 percent of the liquidation preference
compounded annually from January 1999 in the case
of the Series C Preferred, and September 1999 in the
case of the Series D Preferred, to the redemption date,
(vii) if we issue for cash common stock (or a series of
preferred stock convertible into common stock) and
the price for the common stock is below the conver-
sion price of the Series C Preferred, then we must
offer to repurchase a speciﬁed portion of the out-
standing Series C Preferred at the price per share
set forth in the preceding clause, and (viii) if we issue
for cash common stock (or a series of preferred stock
convertible into common stock) for a price for the
common stock below the conversion price of the
Series D Preferred, then we must offer to repurchase
a speciﬁed portion of the outstanding Series D Pre-
ferred at the price per share speciﬁed in the second
preceding clause.

Special Rights of Series C Preferred and Series D
Preferred Upon Non-Approved Change of Control. In
general, a Non-Approved Change of Control transac-
tion is a change of control transaction that the Board
of Directors (the “Board”) has disapproved and which
the Board has not facilitated by such actions as weak-
ening or eliminating the Company’s Stockholder
Rights Plan. If a Non-Approved Change of Control
occurs, and the Board does not offer the holders of
the Series C Preferred and Series D Preferred essen-
tially the same redemption rights that apply to an
Approved Change of Control transaction: (i) the hold-
ers of the Series C Preferred would elect a majority of
the Board for a speciﬁed period, (ii) the holders of the
Series C Preferred and Series D Preferred would be
entitled to an additional 6.25 percent return on the
liquidation preference, compounded annually from
January 1999 for the Series C Preferred and from
September 1999 for the Series D Preferred, (iii) after
the holders of the common stock receive an amount
equivalent to the liquidation preference, the holders
of the Series C Preferred and Series D Preferred
would share with the holders of the common stock,
on an as converted basis, in any remaining amounts
available for distribution, and (iv) the Series C Pre-
ferred and Series D Preferred would accrue dividends
at a maximum annual rate, compounded annually,
equal to 18 percent of the liquidation preference.

14. Capital Stock

Warrants. As of December 31, 2005, 2004 and 2003,
there were outstanding warrants to purchase an
aggregate of 5.8, 6.9 and 7.0 million shares of com-
mon stock, respectively. The weighted average exer-
cise price of the warrants was $12.03, $11.74 and
$11.78 per share, as of December 31, 2005, 2004 and
2003, respectively. The warrants may be exercised
through 2011 and warrants to purchase 5.8, 6.9 and
7.0 million shares were exercisable as of December
31, 2005, 2004 and 2003, respectively.

Common Stock Repurchase Program. The Board has
authorized a repurchase program under which the
Company may, from time to time, repurchase shares
of its common stock or securities convertible into its
common stock. Under this program, the Company
was given authority to make up to $200 of purchases,
during the period from May 2000 to May 2003 and
up to $200 of additional purchases during the period
from May 2003 to March 2005. Pursuant to this pro-
gram, the Company (i) during 2001, repurchased and
retired 1.4 million shares of common stock at an
aggregate cost of approximately $25, (ii) during
2002, repurchased and retired 1.1 million shares of
common stock and repurchased 1.5 million shares
of our Preferred Securities at an aggregate cost of
approximately $65 for all the 2002 repurchases,
and (iii) during 2003, repurchased 100,000 shares
of our Preferred Securities at an aggregate cost of
approximately $4.

2001 Senior Stock Plan. In June 2001, our sharehold-
ers approved the adoption of the 2001 Senior Stock
Plan. This plan provides for the awarding of common
stock and other equity-linked awards to our ofﬁcers,
directors and a limited number of key employees. The
maximum number of shares of common stock that
can be issued under the plan is 4 million. The Com-
pany records each share that is awarded under this
plan at an amount that is not less than 100 percent of
the fair market value per share at the date of the
award. No shares may be awarded under this plan
after June 5, 2011. As of December 31, 2005 and
2004, 2.4 and 2.3 million shares, respectively, had
been awarded under this plan at a weighted-average
price of $21.94 and $21.97 per share, respectively,
with vesting periods up to ten years. Determinations
concerning the persons to receive awards, the form,
amount and timing of such awards and terms and
provisions of such awards are made by the Board (or
a committee appointed by the Board).

67

2001 Stock Plan. In March 2001, we adopted the 2001
Stock Plan. This plan provides for the awarding of
common stock and other equity-linked awards to cer-
tain employees (other than ofﬁcers and directors) and
others who render services to the Company. The max-
imum number of shares of common stock that can be
issued under the plan is 2 million. The Company
records each share that is awarded under this plan at
an amount that is not less than 100 percent of the
fair market value per share at the date of the award.
No shares may be awarded under this plan after
March 23, 2011. As of December 31, 2005 and 2004,
1.8 million shares had been awarded under this plan
at a weighted-average price of $16.28 and $16.27 per
share, respectively, with vesting periods up to three
and one-half years. Determinations concerning the
persons to receive awards, the form, amount and tim-
ing of such awards and terms and provisions of such
awards are made by the Board (or a committee
appointed by the Board).

We recognized compensation expense for the
issuance of common shares under the 2001 Senior
Stock Plan and the 2001 Stock Plan based on the
quoted market price on the date of the grants. Amor-
tization of deferred compensation is then recognized
on a straight-line basis over the related vesting
period. Amortization expense recognized for the
years ended December 31, 2005, 2004 and 2003 for
the awards in these plans was approximately $9, $20
and $26, respectively

1997 Stock Option Plan. Our 1997 Stock Option Plan
provides for the granting of options to purchase not
more than an aggregate of 5 million shares of com-
mon stock. Some or all of such options may be “incen-
tive stock options” within the meaning of the Internal
Revenue Code. All of our ofﬁcers, directors and
employees and other persons who perform services
on our behalf are eligible to participate in this plan.
Each option granted pursuant to this plan must pro-
vide for an exercise price per share that is at least
equal to the fair market value per share of common
stock on the date of grant. No options may be granted
under this plan after August 31, 2007. As of Decem-
ber 31, 2005, 2004 and 2003, options to purchase
an aggregate of 3.5, 3.8 and 3.9 million shares of
common stock, respectively, were outstanding under
this plan. The exercise price of each option, the
period during which each option may be exercised
and other terms and conditions of each option are
determined by the Board (or by a committee
appointed by the Board).

1998 Stock Option Plan. Our 1998 Stock Option Plan
provides for the granting of options to purchase not
more than an aggregate of 4.0 million shares of com-
mon stock. Some or all of the options issued under
the 1998 Stock Option Plan may be “incentive stock
options” within the meaning of the Internal Revenue
Code. All ofﬁcers, directors and a limited number of
key employees of the Company and its subsidiaries
are eligible to participate in the 1998 Stock Option
Plan. Each option granted pursuant to the 1998
Stock Option Plan must provide for an exercise price
per share that is at least equal to the fair market
value per share of common stock on the date of grant.

No options may be granted under the 1998 Stock
Option Plan after August 20, 2008. As of December
31, 2005, 2004 and 2003, options to purchase an
aggregate of 2.0, 2.3 and 2.3 million shares, respec-
tively, were outstanding pursuant to this plan to
executive ofﬁcers and directors. The exercise price of
each option, the period during which each option
may be exercised and other terms and conditions
of each option are determined by the Board (or by a
committee appointed by the Board).

1998 Supplemental Stock Option Plan. We adopted a
stock option plan pursuant to which options, for up
to an aggregate of 5.6 million shares of common
stock, may be granted to employees (who are not ofﬁ-
cers or directors) and to consultants and independent
contractors (who perform services for us or our sub-
sidiaries). As of December 31, 2005, 2004 and 2003,
options to purchase an aggregate of 3.4, 3.7 and 4.5
million shares of common stock, respectively, were
outstanding pursuant to this plan. The exercise price
of each option, the period during which each option
may be exercised and other terms and conditions
of each option are determined by the Board (or by a
committee appointed by the Board).

1997 Performance Award Plan. Effective February
20, 1997, U.S. Rentals (an acquired company)
adopted the 1997 Performance Award Plan under
which stock options and other awards could be
granted to key employees and directors at prices and
terms established by U.S. Rentals at the date of grant.
The options expire in 2007. As a result of our merger
with U.S. Rentals, all outstanding options to pur-
chase shares of U.S. Rentals common stock became
fully vested and were converted into options to pur-
chase our common stock. As of December 31, 2005,
2004 and 2003, options to purchase an aggregate of
1.5, 1.5 and 1.5 million shares, respectively, were out-
standing pursuant to this plan.

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

Weighted
Average
Exercise

Shares

Price(1)

Outstanding at December 31, 2001 . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at December 31, 2002 . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at December 31, 2003 . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding as of December 31, 2004 . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . .

16,422,014
722,550
(3,735,666)
(812,180)

12,596,718
85,200
(94,446)
(324,798)

12,262,674
811,575
(378,597)
(1,404,473)

11,291,179
157,500
(63,365)
(919,130)

Outstanding at December 31, 2005 . . . . .

10,466,184

Exercisable at December 31, 2004 . . . . . .
Exercisable at December 31, 2005 . . . . . .

10,931,199
10,272,936

$20.22
11.94
17.32
25.03

20.20
12.31
12.46
23.16

20.05
16.86
14.12
19.14

19.79
18.99
13.14
18.46

$19.93

$19.98
$19.97

68

As of December 31, 2005:

Range of Exercise Prices

$ 5.00 – $10.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.01 –  15.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.01 –  20.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20.01 –  25.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25.01 –  30.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30.01 –  35.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35.01 –  40.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40.01 –  45.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45.01 –  50.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1) In actual dollars, not millions.

Amount
Outstanding

387,517
2,344,478
1,563,874
4,678,038
655,187
545,690
90,900
185,500
15,000

10,466,184

Options Outstanding

Options Exercisable

Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise

Amount
Price(1) Exercisable

Weighted
Average
Exercise

Price(1)

5.5
3.3
6.3
3.9
3.3
2.8
2.5
2.1
2.5

4.0

$ 9.69
12.71
17.07
21.67
26.71
31.83
36.03
43.91
46.15

384,933
2,331,728
1,426,126
4,637,872
655,187
545,690
90,900
185,500
15,000

$ 9.69
12.71
16.96
21.68
26.71
31.83
36.03
43.91
46.15

$19.93

10,272,936

$19.97

At December 31, 2005, 2004 and 2003 there were
(i) 5.8, 6.9 and 7.0 million shares of common stock
reserved for the exercise of warrants, respectively,
(ii) 10.5, 11.3 and 12.3 million shares of common
stock reserved for issuance pursuant to options
granted under our stock option plans, respectively,
(iii) 5.1 million shares of common stock reserved for
the issuance of outstanding preferred securities of a
subsidiary trust, (iv) 17 million shares of common
stock reserved for the issuance of Series C and Series
D preferred stock and (v) 6.5, 5.6 and 5.8 million
shares of common stock reserved for the conversion
of convertible debt, respectively.

Stockholders’ Rights Plan. We adopted a Stockhold-
ers’ Rights Plan on September 28, 2001. This plan, as
well as other provisions of our charter and bylaws,
may have the effect of deferring hostile takeovers or
delaying or preventing changes in control or man-
agement of the Company, including transactions in
which our shareholders might otherwise receive a
premium for their shares over the then current mar-
ket prices. The rights expire on September 27, 2011.

15. Accumulated Other
Comprehensive Income
The following table sets forth the components of
the Company’s accumulated other comprehensive
income (loss):

Foreign
Currency
Translation
Adjustments

Derivatives
Qualifying
as Hedges

Accumulated
Other Com-
prehensive
Income/(Loss)

Balance at 

December 31, 2001 . . . .
2002 activity . . . . . . . . . . .

Balance at 

December 31, 2002 . . . .
2003 activity . . . . . . . . . . .

Balance at 

December 31, 2003 . . . .
2004 activity . . . . . . . . . . .

Balance at 

December 31, 2004 . . . .
2005 activity . . . . . . . . . . .

Balance at 

$(22)
4

(18)
40

22
17

39
10

$(7)
1

(6)
6

—
(2)

(2)
3

$(29)
5

(24)
46

22
15

37
13

December 31, 2005 . . . .

$ 49

$ 1

$ 50

69

16. Earnings Per Share

Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of com-
mon shares outstanding and, if dilutive, the Series C and Series D preferred shares as if converted to common
shares since such shares are participating securities. Diluted earnings per share includes the impact of other
diluted securities. The diluted share base for years where the numerator represents a loss excludes incremen-
tal weighted shares for the below-captioned “Effect of dilutive securities” due to their antidilutive effect. The
following table sets forth the computation of basic and diluted earnings per share:

Year Ended December 31,

2005

2004

2003

2002

Numerator:
Income (loss) before cumulative effect of change in 

accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$187

$(84)

$(254)

Plus: Liquidation preference in excess of amounts paid for 

convertible preferred securities . . . . . . . . . . . . . . . . . . . . . . .
Convertible debt interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
QUIPs interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of change in accounting principles, net . . . .

—
2
9
—

—
—
—
—

1
—
—
—

Income (loss) available to common stockholders . . . . . . . . . . . .

$198

$(84)

$(253)

$(118)

35
—
—
(288)

$(371)

Denominator:
Weighted-average common shares . . . . . . . . . . . . . . . . . . . . . .
Series C preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series D preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Denominator for basic earnings per 

77,813,488
12,000,000
5,000,000

77,610,726
—
—

76,959,151
—
—

75,787,693
—
—

share-weighted-average . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

94,813,488

77,610,726

76,959,151

75,787,693

Effect of dilutive securities:
Employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
QUIPs shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units and phantom shares . . . . . . . . . . . . . . .

Denominator for dilutive earnings per share — adjusted 

1,286,302
2,850,176
5,842,408
5,077,926
165,908

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .

110,036,208

77,610,726

76,959,151

75,787,693

Earnings (loss) per share — basic:
Income (loss) available to common stockholders before 

cumulative effect of change in accounting principle . . . . . . .
Cumulative effect of change in accounting principle, net . . . . .

Income (loss) available to common stockholders . . . . . . . . . . . .

Earnings (loss) per share — diluted:
Income (loss) available to common stockholders before 

cumulative effect of change in accounting principle . . . . . . .
Cumulative effect of change in accounting principle, net . . . . .

Income (loss) available to common stockholders . . . . . . . . . . . .

$1.97
—

$1.97

$1.80
—

$1.80

$(1.07)
—

$(1.07)

$(1.07)
—

$(1.07)

$(3.29)
—

$(3.29)

$(3.29)
—

$(3.29)

$(1.08)
(3.80)

$(4.88)

$(1.08)
(3.80)

$(4.88)

70

17. Commitments and
Contingencies
SEC Non-Public Fact Finding Inquiry and
Special Committee Review
As previously announced, on August 25, 2004, the
Company received a letter from the SEC in which the
SEC referred to an inquiry of the Company. The letter
transmitted a subpoena requesting certain of the
Company’s documents. The letter and the subpoena
referred to an SEC investigation entitled Inthe
Matter of United Rentals, Inc. The notice from the
SEC states that the inquiry does not mean that the
SEC has concluded that the Company or anyone else
has broken the law or that the SEC has a negative
opinion of any person, entity or security. As previ-
ously announced, the inquiry appears to relate to a
broad range of our accounting practices and is not
conﬁned to a speciﬁc period or the matters discussed
in this report.

The Company has since received additional document
subpoenas from the SEC. As previously announced,
in March 2005, the Company’s board of directors
formed a Special Committee of independent directors
to review matters related to the SEC inquiry. The Spe-
cial Committee retained independent counsel. The
board of directors received and acted upon ﬁndings
of the Special Committee on January 26, 2006. The
conclusions and recommendations of the Special
Committee are discussed in MD&A, and in Item 1
above and summarized in the Company’s press
release and the related current report on Form 8-K,
dated January 26, 2006.

The Company has provided documents in response
to the SEC subpoenas to the SEC or to the Special
Committee, which has, in turn, provided documents
to the SEC. The Company is cooperating fully with
the SEC in complying with the subpoenas. The
Company is also responding to the SEC’s informal
requests for information.

Shareholder Class Action Lawsuits and 
Derivative Litigation
As previously announced, following our public
announcement of the SEC inquiry referred to above,
three purported class action lawsuits were ﬁled
against us in the United States District Court for the
District of Connecticut. The plaintiff in each of the
lawsuits seeks to sue on behalf of a purported class
comprised of purchasers of our securities from Octo-
ber 23, 2003 to August 30, 2004. The lawsuits name
as the defendants our company, our chairman, our
vice chairman and chief executive ofﬁcer, our former
president and chief ﬁnancial ofﬁcer, and our former
corporate controller. The complaints allege, among
other things, that certain of our SEC ﬁlings and
other public statements contained false and mislead-
ing statements which resulted in damages to the
plaintiffs and the members of the purported class
when they purchased our securities. On the basis of
those allegations, plaintiffs in each action assert

claims (a) against all defendants under Section 10 (b)
of the Exchange Act and Rule 10b-5 promulgated
thereunder, and (b) against one or more of the
individual defendants under Section 20 (a) of such
Act. The complaints seek unspeciﬁed compensa-
tory damages, costs and expenses. On February 1,
2005, the Court entered an order consolidating
the three actions. On November 8, 2005, the Court
appointed City of Pontiac Policeman’s and Fireman’s
Retirement System as lead plaintiff for the purported
class. The consolidated action is now entitled 
Inre United Rentals, Inc. Securities Litigation. The
court has directed the parties to submit, by April 17,
2006, a proposed schedule for the ﬁling of a consoli-
dated amended complaint and responses to any
amended pleading. We intend to defend against these
actions vigorously.

In January 2005, an alleged shareholder ﬁled an
action in Connecticut State Superior Court, Judicial
District of Norwalk/Stamford at Stamford, purport-
edly suing derivatively on our behalf. The action,
entitled Gregory Riegel v. John N. Milne, et al.,
names as defendants certain of our current and/or
former directors and/or ofﬁcers, and us as a nominal
defendant. The complaint asserts, among other
things, that the defendants breached their ﬁduciary
duties to us by causing or allowing us to disseminate
misleading and inaccurate information to sharehold-
ers and the market and by failing to establish and
maintain adequate accounting controls, thus expos-
ing us to damages. The complaint seeks unspeciﬁed
compensatory damages, costs and expenses against
the defendants. The parties to the Riegel action have
agreed that the proceedings in this action will be
stayed pending the resolution of the anticipated
motions to dismiss in the purported shareholder
class actions.

In November 2004, we received a letter from counsel
for an alleged shareholder, raising allegations simi-
lar to the ones set forth in the derivative complaint
described above and demanding that we take action
in response to those allegations against certain of our
current and/or former directors and/or ofﬁcers. Fol-
lowing receipt of the letter, the board of directors
formed a special committee of the board to consider
the letter. In August 2005, this alleged shareholder
commenced an action in Connecticut State Superior
Court, Judicial District of Norwalk/Stamford at Stam-
ford, purporting to sue derivatively on our behalf.
The action, entitled Nathan Brundridge v. Leon D.
Black, et al., names as defendants certain of our cur-
rent and/or former directors and/or ofﬁcers, and
names us as a nominal defendant. The complaint in
this action asserts, among other things, that all of
the defendants breached ﬁduciary obligations to us
by causing or allowing us to disseminate misleading
and inaccurate information to shareholders and the
market, and by failing to establish and maintain ade-
quate accounting controls, thus exposing us to dam-
ages. The complaint in this action also asserts a claim

71

for unjust enrichment against our chairman, our vice
chairman and chief executive ofﬁcer, and our former
president and chief ﬁnancial ofﬁcer. The complaint
seeks unspeciﬁed compensatory damages, equitable
relief, costs and expenses against all of the defen-
dants. The complaint also seeks an order, in connec-
tion with plaintiff’s unjust enrichment claim,
directing the defendants against whom that claim is
asserted to disgorge certain compensation they
received from us with respect to ﬁscal years 2001,
2002 and 2003. The parties have agreed to submit to
the court, by April 17, 2006, a proposed schedule for
the ﬁling of any amended complaint and responses to
the operative complaint in the action. The parties’
agreement further provides that the time by which all
defendants must answer, move or otherwise respond
to the complaint shall be adjourned pending the par-
ties’ submission of the aforementioned schedule.

In August 2005, another alleged shareholder ﬁled an
action in the United States District Court for the Dis-
trict of Connecticut, purporting to sue derivatively on
our behalf. The action, entitled Natalie Gordon v.
Wayland R. Hicks, et al., names as defendants certain
of our current and/or former directors and/or ofﬁ-
cers, and names us as a nominal defendant. The com-
plaint in this action asserts claims against each of the
defendants for breach of ﬁduciary duty, abuse of con-
trol, gross mismanagement, waste of corporate assets
and unjust enrichment. Each of these claims is
premised on, among other things, the theory that the
individual defendants caused or permitted us to dis-
seminate misleading and inaccurate information to
shareholders and to the market, and failed to estab-
lish and maintain adequate accounting controls, thus
exposing us to damages. The complaint also asserts
(a) a claim that a former director breached ﬁduciary
obligations by selling shares of our common stock
while in possession of material, non-public informa-
tion, and (b) a claim against our chairman, our vice
chairman and chief executive ofﬁcer, and our former
president and chief ﬁnancial ofﬁcer for recovery of
certain incentive-based compensation under section
304 of the Sarbanes-Oxley Act. The complaint seeks
unspeciﬁed compensatory damages, equitable relief,
restitution, costs and expenses against all of the
defendants. The complaint also seeks an order declar-
ing that the defendants against whom the section
304 claim is directed are liable under the Sarbanes-
Oxley Act and directing them to reimburse us for all
bonuses or other incentive-based or equity-based com-
pensation they received for the ﬁscal years 1999
through 2004. The court has directed the parties to
submit, on or before April 17, 2006, a proposed
schedule for the ﬁling of any amended complaint and
responses to the operative complaint in the action.
Pending the submission and approval of the afore-
mentioned schedule, the court has adjourned the time
by which all defendants must answer, move, or other-
wise respond to the complaint in this action.

We are also a party to various other litigation mat-
ters, in most cases involving ordinary and routine
claims incidental to our business. We cannot estimate
with certainty our ultimate legal and ﬁnancial liabil-
ity with respect to such pending litigation matters.
However, we believe, based on our examination of
such matters, that our ultimate liability will not have

a material adverse effect on our ﬁnancial position,
results of operations or cash ﬂows.

Indemniﬁcation
The Company indemniﬁes its ofﬁcers and directors
pursuant to indemniﬁcation agreements and may in
addition indemnify these individuals as permitted by
Delaware law. Accordingly, in connection with the
purported class action lawsuit, three purported
shareholder derivative lawsuits and the SEC inquiry
and related review of the Special Committee described
above, the Company has advanced counsel fees and
other reasonable fees and expenses, actually and nec-
essarily incurred by the present and former directors
and ofﬁcers who are involved, in an aggregate
amount of approximately $2.6. Each of the individu-
als is required to execute an undertaking to repay
such expenses if he or she is ﬁnally found not to be
entitled to indemniﬁcation.

Operating Leases
We lease rental equipment, real estate and certain
ofﬁce equipment under operating leases. Certain
real estate leases require us to pay maintenance,
insurance, taxes and certain other expenses in
addition to the stated rental payments. Future mini-
mum lease payments, by year and in the aggregate,
for non-cancelable operating leases with initial or
remaining terms of one year or more are as follows
at December 31, 2005:

2006 . . . . . . . . . . . . . . . . . . . . .
2007 . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . .

Real

Other
Rental
Estate Equipment Equipment
Leases
Leases
Leases

$ 78
73
63
50
36
129

$429

$ 70
38
31
9
—
—

$148

$30
20
13
9
6
2

$80

As part of certain of our equipment operating leases,
we guarantee that the value of the equipment at the
end of the lease term will not be less than a speciﬁed
projected residual value. The use of these guarantees
helps to lower our monthly operating lease pay-
ments. We do not know at this time whether and to
what extent the actual residual values may be less
than the guaranteed residual values and, accord-
ingly, cannot quantify the amount that we may be
required to pay under these guarantees. If the actual
residual value for all equipment subject to such guar-
antees were to be zero, then our maximum potential
liability under these guarantees would be approxi-
mately $26. This potential liability was not reﬂected
on our balance sheet as of December 31, 2005, or any
prior date.

Rent expense under all non-cancelable real estate,
rental equipment and other equipment operating
leases totaled $174, $158, $176, and $185 for the
years ended December 31, 2005, 2004, 2003, and
2002, respectively. Our real estate leases provide for
varying terms, including leases subject to customary
escalation clauses, and include 56 leases that are on a
month-to-month basis and 43 leases that provide for a
remaining term of less than one year and do not pro-
vide a renewal option.

72

Restricted Stock Awards
We have granted to employees other than executive
ofﬁcers and directors approximately 567,000 shares
of restricted stock that have not yet vested. The
shares vest in 2006, 2007 or 2008 or earlier upon a
change in control of the Company, death, disability,
retirement or certain terminations of employment,
and are subject to forfeiture prior to vesting on cer-
tain other terminations of employment, the violation
of non-compete provisions and certain other events.
If a holder of restricted stock sells his stock and
receives sales proceeds that are less than a speciﬁed
guaranteed amount set forth in the grant instru-
ment, we have agreed to pay the holder the shortfall
between the amount received and such speciﬁed
amount; however, the foregoing only applies to sales
that are made within ﬁve trading days of the vesting
date. The speciﬁed guaranteed amount is (i) $9.18 per
share with respect to approximately 326,000 shares,
$17.20 per share with respect to approximately 9,000
shares, and $27.26 per share with respect to approxi-
mately 8,000 shares scheduled to vest in 2006 and
(ii) $17.20 per share with respect to approximately
167,000 shares scheduled to vest in 2007 and
(iii) $19.86 per share with respect to approximately
57,000 shares scheduled to vest in 2008.

Employee Beneﬁt Plans
We currently sponsor one deﬁned contribution 401(k)
retirement plan which is subject to the provisions of
ERISA. We also sponsor a deferred proﬁt sharing
plan for the beneﬁt of the full-time employees of our
Canadian subsidiaries. Under these plans, we match
a percentage of the participants’ contributions up to
a speciﬁed amount. Company contributions to the
plans were $6, $5, $5 and $5 in 2005, 2004, 2003 and
2002, respectively.

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

18. Related Party

We have from time to time purchased equipment and
parts from and sold equipment to Terex Corporation
(“Terex”) and expect to do so in 2006. One of our for-
mer directors (until June 2005) is chief executive ofﬁ-
cer, president and a director of Terex. We purchased
approximately $157, $124, $113 and $63 of equip-
ment and parts from Terex during 2005, 2004, 2003
and 2002, respectively. The increase from 2002 to
2003 was attributable to Terex’s acquisition of one of
the Company’s existing suppliers toward the end of
2002. We also sold approximately $7, $12, $1 and $ —
of equipment to Terex during 2005, 2004, 2003 and
2002, respectively. As of December 31, 2005, 2004

and 2003, amounts due to Terex were $10, $11 and
$6 and amounts due from Terex were $ — , $1 and $ —
respectively. Certain of the minor sale-leaseback
transactions that we restated for and that are dis-
cussed further in note 3 to our consolidated ﬁnancial
statements involved Terex. The accounting for these
transactions involved irregularities.

19. Segment Information

Our current reportable segments are general rentals,
trafﬁc control and trench safety, pump and power.
Prior to 2004, we had one reportable segment: gen-
eral rentals. In the ﬁrst quarter of 2004, we began
reporting information for two reporting segments:
general rentals and trafﬁc control. In 2005, there was
an additional change in our reporting segments. As a
result, we now have three reporting segments: gen-
eral rentals, trafﬁc control and trench safety, pump
and power.

The general rentals segment includes the rental of
construction, aerial, industrial and homeowner
equipment and related services and activities. The
general rentals segment’s customers include con-
struction and industrial companies, manufacturers,
utilities, municipalities and homeowners. The gen-
eral rentals segment operates throughout the United
States and Canada and has one location in Mexico.
The trafﬁc control segment includes the rental of
equipment used in the management of trafﬁc-related
services and activities. The trafﬁc control segment’s
customers include construction companies involved
in infrastructure projects and municipalities. The
trafﬁc control segment operates in the United States.
The trench safety, pump and power segment includes
the rental of specialty construction products and
related services. The trench safety, pump and power
segment’s customers include construction companies
involved in infrastructure projects, municipalities
and industrial companies. This segment operates in
the United States and has one location in Canada.

These segments align our external segment report-
ing to the manner in which management evaluates
and allocates resources. We evaluate segment perfor-
mance based on segment operating results. The
change in segments was attributable to changes in
organizational structure.

The accounting policies of our segments are the same
as those described in the summary of signiﬁcant
accounting policies in note 2 to our consolidated
ﬁnancial statements. Certain corporate costs, includ-
ing those related to selling, ﬁnance, legal, risk man-
agement, human resources, corporate management
and information technology systems, are deemed to
be of an operating nature and are allocated to each of
our segments based on the actual amount of costs
incurred in the prior year for SG&A and equipment
rental revenue generating activities.

73

The following table sets forth ﬁnancial information by segment. Information related to our consolidated bal-
ance sheets is presented as of December 31, 2005, 2004 and 2003.

Year Ended December 31,

2005

2004

2003

2002

Total revenues
General rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trench safety, pump and power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trafﬁc control

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total depreciation and amortization expense
General rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trench safety, pump and power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trafﬁc control

$3,113
180
270

$3,563

412
20
22

Total depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . .

$ 454

Segment operating income
General rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trench safety, pump and power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trafﬁc control

$ 472
48
(20)

Segment operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 500

Total capital expenditures
General rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trench safety, pump and power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trafﬁc control

Total capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total assets
General rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trench safety, pump and power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trafﬁc control

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 763
38
22

$ 823

$4,928
116
229

$5,274

$2,709
130
255

$3,094

$ 402
16
27

$ 445

$ 416
31
(52)

$ 395

$ 590
35
24

$ 649

$4,619
92
171

$4,882

$2,443
109
330

$2,882

$ 361
15
27

$ 403

$ 234
23
4

$ 261

$ 320
72
20

$ 412

$4,249
71
374

$4,694

$2,375
87
359

$2,821

$ 347
11
27

$ 385

$ 338
22
12

$ 372

$ 495
8
33

$ 536

The following is a reconciliation of segment operating income to total company operating income (loss):

Total segment proﬁt
Unallocated items:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and asset impairment charges . . . . . . . . . . . . . . . . . . . . . . .

2005

$500

—
—

Consolidated operating income (loss)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$500

Year Ended December 31,

2004

$ 395

(139)
1

$ 257

2003

$ 261

(297)
—

$ (36)

2002

$ 372

(248)
(28)

$ 96

74

We operate in the United States, Canada and Mexico. Geographic area information for the years ended Decem-
ber 31, 2005, 2004, 2003, and 2002 is as follows, except for balance sheet information which is presented as of
December 31, 2005, 2004 and 2003 only:

Year ended December 31,

2005

2004

2003

2002

Revenues from external customers
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rental equipment, net
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total consolidated rental equipment, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment, net
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total consolidated property and equipment, net . . . . . . . . . . . . . . . . . . . . . . .

Goodwill and other intangible assets, net
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total consolidated goodwill and other intangible assets, net . . . . . . . . . . . . .

$3,235
328

$3,563

$2,037
215

$2,252

$ 419
26

$ 445

$1,214
147

$1,361

$2,844
250

$3,094

$1,916
207

$2,123

$ 373
24

$ 397

$1,188
142

$1,330

$2,684
198

$2,882

$1,906
156

$2,062

$ 389
18

$ 407

$1,359
80

$1,439

$2,659
162

$2,821

20. Quarterly Financial Information (Unaudited)

As discussed in the Restatement Note, we have restated our originally reported 2003 results. The 2003 quar-
terly information below reﬂects the impact of those restatements. The ﬁrst, second and third quarters of 2004
have been restated for a bonus accrual as well as these matters.

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

For the year ended December 31, 2005:
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income available to common stockholders 

per share — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income available to common stockholders 

per share — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the year ended December 31, 2004:
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)
Income (loss) available to common stockholders 

$732
202
12

$.12

$.11

$ 643
163
—
(108)

per share — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(1.39)

Income (loss) available to common stockholders 

per share — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(1.39)

For the year ended December 31, 2003:
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) available to common stockholders 

$609
163
—
(3)

per share — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(.04)

Income (loss) available to common stockholders 

per share — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(.04)

$888
283
50

$.53

$.48

$771
245
—
40

$.42

$.39

$723
222
—
23

$.24

$.24

$980
352
76

$.80

$.71

$858
301
139
(46)

$(.58)

$(.58)

$802
260
—
33

$.36

$.35

Full
Year

$3,563
1,165
187

$1.97

$1.80

$3,094
959
139
(84)

$(1.07)

$(1.07)

$2,882
782
297
(254)

$963
328
49

$.52

$.47

$822
250
—
30

$.32

$.29

$ 748
137
297
(307)

$(3.97)

$(3.29)

$(3.97)

$(3.29)

75

united rentals 
rental locations

UNITED STATES

Alabama

Bessemer GR(2)
Birmingham GR
Dothan GR
Florence GR(2)
Madison GR
Mobile GR
Montgomery GR
Oxford GR

Alaska

Anchorage GR(2)
Fairbanks GR
Palmer GR
Soldotna GR
Wasilla GR

Arizona

Bullhead City GR
Cottonwood GR
Flagstaff GR(1), TC(1)
Fort Mohave TC
Kingman GR
Lake Havasu City GR
Phoenix GR(3), TC(2), TPP(3)
Prescott GR(1), TC(1)
Show Low GR
Tempe GR
Tucson GR(1), TC(1), TPP(1)

Arkansas

Bentonville GR
Fayetteville GR
Little Rock GR
Rogers GR

California

Antioch GR
Arroyo Grande GR
Bakersﬁeld GR(2), TPP(1)
Baldwin Park GR
Buena Park GR
Burbank GR(1), TPP(1)
Burlingame GR
Canoga Park GR
Carmichael GR
Castro Valley GR
Cathedral City GR
Chico GR
Chula Vista GR
Coachella TPP
Corona GR
Downey GR
Dublin GR
Elk Grove GR
Escondido GR(1), TPP(1)
Eureka GR
Folsom GR
Fontana GR(1), TPP(1)
Fremont GR(2)
Fresno GR(2), TPP(1)
Fullerton GR
Gardena GR
Gilroy GR
Hayward GR(1), TPP(1)
Hesperia GR
Huntington Beach GR
Indio GR
Lake Elsinore TC
Lakeside GR
Lancaster GR
Lodi GR

Delaware

Bear GR
Delmar GR
Frederica GR
Middletown GR
Newark GR

Florida

Bradenton GR
Clearwater GR(1), TC(1)
Davie GR
Deerﬁeld Beach GR
Fort Lauderdale TC
Fort Myers GR(1), TC(1)
Fort Pierce TC
Fort Walton Beach GR
Gainesville GR
Holly Hill GR
Homestead GR
Jacksonville GR(2), TPP(2)
Jupiter TC
Lakeland GR
Lauderhill TPP
Longwood GR
Melbourne GR
Miami GR(2)
Naples GR
Orlando GR(3), TC(1), TPP(2)
Panama City Beach GR
Pensacola GR(1), TPP(1)
Pompano Beach TPP
Port Saint Lucie GR
Tallahassee GR
Tampa GR(2), TPP(1)
West Palm Beach GR

Georgia

Acworth GR
Atlanta GR
Augusta GR
Bogart GR
Carrollton GR
Columbus GR
Conyers GR
Fairburn TPP
Forest Park GR(2), TPP(1)
Garden City GR
Leesburg GR
Macon GR
McDonough GR
Norcross GR
Ringgold GR
Sugar Hill GR
Villa Rica GR

Idaho

Boise GR
Lewiston GR

Illinois

Addison GR
Bloomington TC
Carbon Cliff GR
Carbondale TC
Champaign GR
Chicago GR
Fairview Heights TC
Machesney Park TC
Mokena GR
Moline TC
Rockford GR
Springﬁeld TC
Villa Park TC

Long Beach GR(2), TPP(1)
Los Alamitos GR
Madera GR
Marysville GR
Merced GR
Modesto GR(3), TPP(1)
Montclair GR
Monterey GR
Mountain View GR
Napa GR(2)
Oakland GR
Oxnard TC
Pico Rivera GR
Redding GR
Ridgecrest GR
Riverside TPP
Rocklin GR
Sacramento GR(3), TPP(1)
Salinas GR
San Diego GR
San Francisco GR
San Jose GR(3), TC(1), TPP(1)
San Juan Capistrano GR
San Leandro GR
San Luis 

Obispo GR(1), TPP(1)

Santa Ana GR
Santa Clarita GR
Santa Cruz GR
Santa Fe 

Springs GR(1), TC(1)

Santa Maria GR
Santa Rosa GR(1), TPP(1)
South Lake Tahoe GR
Stockton GR(2), TC(1)
Sunnyvale GR
Susanville GR
Tracy GR
Turlock GR
Vacaville GR
Van Nuys GR
Ventura GR(1), TC(1)
Visalia GR
Woodland GR

Colorado

Aurora GR
Avon GR
Boulder GR
Brighton GR
Castle Rock GR
Colorado Springs GR(1), 

TC(1), TPP(1)

Commerce City GR
Denver GR(1), TC(2), TPP(1)
Eagle GR
Fort Collins GR
Grand Junction GR
Littleton GR
Louisville GR
Loveland GR(1), TC(1)
Parker GR
Pueblo GR
Silverthorne GR

Connecticut

Bloomﬁeld GR
Danbury GR(2)
Darien GR
Fairﬁeld GR
Groton GR
Manchester GR
Milford GR
North Stonington GR
Old Saybrook GR
Plainville GR
Stamford GR
West Haven TPP

Indiana

Bloomington GR
Edinburgh GR
Evansville GR
Fort Wayne GR
Greenﬁeld GR
Indianapolis GR(3), 

TC(1), TPP(1)
Lafayette GR
Richmond GR
South Bend GR
Wanatah TC
West Terre Haute GR

Iowa

Cedar Rapids GR
Council Bluffs TPP
Des Moines GR
Dubuque GR
Grimes GR(1), TPP(1)
Mason City GR
Sioux City GR
Waterloo GR

Kansas

Kansas City TC
Salina TC
Topeka GR
Wichita GR(1), TC(1), TPP(1)

Kentucky

Georgetown GR
Lexington GR
Louisville GR(2)
Paducah GR

Louisiana

Baton Rouge TC
Gonzales GR(1), TPP(1)
Harvey TC
Lafayette GR
Monroe GR
Saint Rose GR
Shreveport GR

Maine

Bangor GR
Westbrook GR

Maryland

Annapolis GR
Baltimore GR(2)
Beltsville TPP
Bladensburg GR
Delmar GR
Frederick GR(3)
Gaithersburg GR
Joppa GR
Lexington Park GR
Pasadena GR
Prince Frederick TPP
Silver Spring GR
Upper Marlboro GR

Massachusetts

Agawam GR
Boston GR(2)
Canton GR
Everett GR
Kingston TPP
Ludlow GR
Millbury GR
Watertown GR
West Yarmouth GR
Worcester GR(1), TPP(1)

Michigan

Flint GR
Grand Rapids GR
Hudsonville GR
Portage GR
Romulus GR
Shelby GR
Taylor GR
Traverse City GR

Minnesota

Brainerd GR
Hermantown GR
Mankato GR
Minneapolis TC
Rochester GR(1), TC(1)
Rogers GR(1), TC(1)
Roseville GR
Saint Michael GR
Savage GR(1), TC(1), TPP(1)
Saint Paul GR(1), TC(1)

Mississippi

Gulfport GR
Olive Branch GR
Pearl GR

Missouri

Belton GR
Columbia TC
Earth City GR
Kansas City TPP
Liberty GR
North Kansas City GR
Saint Louis GR(1), TPP(1)
Springﬁeld GR
St. Joseph TC
Strafford TC
Weldon Spring GR

Montana

Billings TC
Missoula TC

Nebraska

Lincoln GR(2)
Norfolk GR
Omaha GR
Papillion GR

Nevada

Carson City GR
Elko GR
Gardnerville GR
LasVegas GR(1), TPP(2)
North Las Vegas TC
Reno GR(2), TPP(1)
Sparks GR

New Hampshire

Hudson GR
Manchester GR
West Lebanon GR

New Jersey

Bellmawr GR
Burlington GR
Carlstadt TC
Egg Harbor GR(2)

76

 
League City GR
Lubbock GR(1), TC(1)
Lufkin GR
Manor TC
New Braunfels GR
Odessa GR
Palestine GR
Plano GR
Rosenberg GR
Round Rock GR
San Antonio GR(2), TPP(1)
Sherman GR
Temple GR
The Woodlands GR
Tyler GR
Von Ormy GR
Wichita Falls TC

Utah

Kaysville GR
Orem GR
Saint George TC
Salt Lake City GR(2), TPP(1)
Sandy GR

Virginia

Chantilly GR
Charlottesville GR
Chesapeake GR(2)
Chester GR
Fairfax GR(1), TPP(1)
Fredericksburg GR
Glen Allen GR
Hampton GR
Herndon GR
Richmond GR
Roanoke GR
Winchester GR

Washington

Airway Heights GR
Auburn GR
Bellingham GR
Bonney Lake GR
Bothell GR
Bremerton GR
Burlington GR
Chehalis GR
Covington GR
Ellensburg GR
Federal Way GR
Gig Harbor GR
Kirkland GR
Longview GR
Marysville GR
Monroe GR
Pasco GR
Port Angeles GR
Puyallup GR
Renton GR
Seattle GR(1), TPP(1)
Spokane GR(1), TPP(1)
Tacoma TPP
Tukwila GR
Tumwater GR
Union Gap GR
Vancouver GR
Woodinville TPP

Elmwood Park GR
Piscataway GR
Richland TC
Ridgeﬁeld 

Park GR(1), TPP(1)

New Mexico

Albuquerque GR
Farmington GR
Las Cruces GR

New York

Batavia GR
Brooklyn GR
Carmel GR
Clifton Park GR
East Syracuse GR
Falconer GR
Flushing GR
Holtsville GR(2)
Middletown GR
New Windsor GR(2)
New York City GR(3)
Newburgh GR
Peekskill GR
Rochester GR(3)
Wappingers Falls GR(2)
White Plains GR
Williamsville GR

North Carolina

Arden GR
Charlotte GR(3), TPP(1)
Durham GR
Fayetteville GR
Garner GR
Greensboro GR(2)
Indian Trail GR
Jacksonville GR
Raleigh GR
Salisbury GR
Wilmington GR
Winston Salem GR

North Dakota

Bismarck GR(1), TC(1)
Fargo GR(1), TC(1)
Minot GR

Ohio

Brooklyn Heights TC
Cincinnati GR
Cleveland GR
Columbiana GR
Columbus GR(2), TPP(1)
East Liverpool GR
Independence GR
Marietta GR
North Olmsted TPP(2)
Perrysburg GR
Toledo GR

Oklahoma

Oklahoma City GR
Tulsa GR

Oregon

Bend GR
Clackamas GR
Corvallis GR
Eugene GR
Grants Pass GR
Gresham GR

Hillsboro GR
Medford GR(2)
Portland GR(3), TC(1), TPP(1)
Roseburg GR
Salem GR(1), TPP(1)
Seaside GR
Tigard GR
Tualatin GR

Pennsylvania

Chester TPP
Hatﬁeld TC
Lebanon GR
Mechanicsburg GR(1), TC(1)
Middletown GR
New Holland TC
Oakdale GR(2)
Palmyra GR
Philadelphia GR(1), TPP(1)
Quakertown GR
State College GR
Watsontown TC
Wilkes-Barre GR
Windber TC
York GR

Rhode Island

Smithﬁeld GR

South Carolina

Anderson GR
Charleston GR
Columbia GR
Conway GR
Greenville GR
North Charleston GR
Rock Hill GR
Spartanburg GR

South Dakota

Rapid City GR(1), TC(1)
Sioux Falls GR(1), TC(1)

Tennessee

Franklin GR
Kingsport GR
Knoxville GR(3)
Memphis GR(1), TPP(1)
Nashville GR(2)
Spring Hill GR

Texas

Amarillo TC
Arlington TPP
Austin GR(1), TC(1), TPP(1)
Beaumont GR(1), TPP(1)
Carrollton GR
Cedar Park GR
Conroe GR
Corpus 

Christi GR(1), TC(1), TPP(1)

Corsicana GR
Dallas TPP
Denton GR
El Paso GR
Fort Worth GR(3), TC(1)
Gainesville TC
Garland TC
Greenville GR
Houston GR(5), TC(1), TPP(1)
Irving GR(2)
Katy GR
Keller GR(1), TPP(1)
La Porte GR
Laredo GR

West Virginia

Nova Scotia

Fairmont GR
Huntington GR

Wisconsin

De Pere GR
Madison GR
Marshﬁeld GR
Milwaukee GR(3), TC(1)

Wyoming

Casper GR
Cheyenne TC

CANADA

Alberta

Calgary GR(2)
Edmonton GR
Fort McMurray GR
Lethbridge GR
Medicine Hat GR
Red Deer GR
St. Albert GR

British Columbia

Abbotsford GR(2), TPP(1)
Burnaby GR(2)
Campbell River GR
Chilliwack GR
Fort Saint John GR
Genelle GR
Kamloops GR
Langley GR
Maple Ridge GR
Nanaimo GR
North Vancouver GR
Port Coquitlam GR
Prince George GR
Richmond GR
Surrey GR
Vancouver GR
Victoria GR
Whistler GR
Whiterock GR

Manitoba

Flin Flon GR
Thompson GR
Winnipeg GR

New Brunswick

Bathurst GR
Campbellton GR
Edmundston GR
Fredericton GR
Jacksonville GR
Moncton GR
Newcastle GR
St. John GR
St. Stephen GR

Newfoundland

Arnold’s Cove GR
Corner Brook GR
Goose Bay GR
Grand Falls Windsor GR
Mount Pearl GR
St. Johns GR
Wabush GR

Bridgewater GR
Dartmouth GR
New Glasgow GR
Port Hawkesbury GR
Sydney GR
Truro GR

Ontario

Barrie GR(2)
Belleville GR
Bracebridge GR
Brampton GR
Brantford GR
Cambridge GR
Cigar Lake GR
Collingwood GR
Dryden GR
Guelph GR
Kenora GR
Kingston GR
Kitchener GR(2)
London GR(2)
Meaford GR
Mississauga GR
North Bay GR
Oshawa GR(2)
Ottawa GR
Saint Catherines GR
Sarnia GR
Scarborough GR
Stoney Creek GR(2)
Stratford GR
Sudbury GR
Toronto GR
Walkerton GR
Waterloo GR
Windsor GR

Prince Edward
Island

Charlottetown GR

Quebec

Chicoutimi GR
Longueuil GR
Mont Tremblant GR
Saint Laurent GR
Saint Leonard GR
Sept-Iles GR
Shawinigan GR
Trois-Rivieres GR
Vanier GR

Saskatchewan

Saskatoon GR

MEXICO

Nuevo Laredo

Escobedo GR

GR General Rentals
Trafﬁc Control
TC
TPP Trench Safety,

Pump and Power

77

corporate information

Board of Directors

Bradley S. Jacobs
Chairman

Wayland R. Hicks
Vice Chairman and
Chief Executive Ofﬁcer

Michael S. Gross (2, 3)
Lead Director
Founding Partner
Apollo Management, L.P.

Leon D. Black
Founding Principal
Apollo Management, L.P.

Howard L. 
Clark Jr. (2, 3, 4)
Vice Chairman 
Lehman Brothers Inc.

Singleton 
McAllister (3)
Partner 
Mintz, Levin, Cohen,
Ferris, Glovsky 
and Popeo

Brian D. 
McAuley (1, 2, 3, 4)
Partner 
NH II, LLC

John S. McKinney
Director

Jason 
Papastavrou, Ph.D (1, 4)
Chief Executive Ofﬁcer
ARIS Capital 
Management

Mark Suwyn (1, 4)
Chairman and 
Chief Executive Ofﬁcer
NewPage Corporation

Gerald Tsai Jr. (2, 3)
Director

Lawrence 
Wimbush (1)
Director

Committees of the Board
(1) Audit Committee

Brian D. McAuley, Chair

(2) Compensation 
Committee
Michael S. Gross, Chair

(3) Nominating and 

Corporate Governance 
Committee
Howard L. Clark Jr., Chair

(4) Special Committee

Brian D. McAuley, Chair

Executive
Ofﬁcers

Wayland R. Hicks
Vice Chairman and 
Chief Executive Ofﬁcer

Michael J. 
Kneeland
Executive 
Vice President 
Operations

Todd G. Helvie
Vice President 
Tax and Business
Development

Jeffrey M. Johnson
Vice President
Supply Chain and
Fleet Operations 

Martin E. Welch
Executive 
Vice President and
Chief Financial Ofﬁcer

Robert P. Krause
Vice President
Rocky Mountain
Region

United Rentals Stock Listing
United Rentals common stock is listed on the
New York Stock Exchange under the symbol
“URI.” The common stock is included in the
Standard & Poor’s MidCap 400 Index and the
Russell 2000 Index®.

United Rentals Common Stock Prices

2005

1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.

High . . . . $21.87
16.14
Low . . . . .
20.21
Close . . . .

$21.37
17.12
20.21

$20.99
16.46
19.71

$24.62
17.06
23.39

2004

William F. Locklin
Vice President
Southwest Region

Michael D. 
MacDonald
Senior Vice President 
Sales and Marketing

Elliott S. Mayer
Vice President and
Treasurer

High . . . . $23.35
15.76
Low . . . . .
17.77
Close . . . .

$19.94
15.62
17.89

$20.54
13.95
15.89

$19.16
15.09
18.90

Paul McDonnell
Vice President
Trench Safety, Pump &
Power Region 

Eric D. Mertz
Vice President
Internal Audit

Kenneth B. Mettel
Vice President 
Planning and Analysis

James T. Milde
Senior Vice President
and Chief Information
Ofﬁcer

Steven E. Nadelman
Senior Vice President 
Field Operations and
Corporate Real Estate

Kenneth J. Perkins
Vice President 
Southeast Region 

Craig A. Pintoff
Vice President
Human Resources

Fred L. Ransom
Vice President
Northeast Region 

Charles K.
Wessendorf
Vice President 
Investor Relations
and Corporate
Communications

Matthew C.
Womble
Vice President
Legal Affairs

On March 1, 2006, there were 428 holders of
record of our common stock. We believe that the
number of beneﬁcial owners is substantially
greater than the number of record holders,
because a large portion of our common stock is
held in broker “street names.”

We have not paid dividends on the common stock
since the Company’s inception. Under the terms of
certain agreements governing our outstanding
indebtedness, we are prohibited or restricted from
paying dividends on our common stock.

We have ﬁled with the SEC the certiﬁcations
required by Section 302 of the Sarbanes-Oxley Act
as an exhibit to our 2005 Annual Report on Form
10-K. We have also submitted to the NYSE in 2005
the CEO certiﬁcation required by the NYSE corpo-
rate governance rules in which our CEO certiﬁed
that he was not aware of any violation by the Com-
pany of the NYSE’s corporate governance listing
requirements other than (i) the Company had not
ﬁled its 2004 Annual Report, (ii) the Company had
not held an annual meeting in 2005 or ﬁled a proxy
statement in 2005 and (iii) the Company had not
distributed an annual report to shareholders in
2005. The Company has subsequently ﬁled its 2005
and 2004 Annual Reports on Form 10-K and is in
compliance with NYSE listing requirements.

Corporate Headquarters
United Rentals, Inc.
Five Greenwich Ofﬁce Park
Greenwich, CT 06831
Phone: (203) 622-3131
Fax: (203) 622-6080
unitedrentals.com

Independent Auditors
Ernst & Young LLP
5 Times Square
New York, NY 10036
(212) 773-3000

78

C
Y
N

,
.
c
n
I

,
s
e
v
I

&
r
o
l
y
a
T

y
b

d
e
c
u
d
o
r
p

d
n
a

d
e
n
g
i
s
e
D

Corporate
Vice Presidents

Raymond J. Alletto
Vice President 
Risk Management

Dale A. Asplund
Vice President 
Operations Services

Stephen D. Baird
Vice President
Corporate Security

Kurtis T. Barker
Vice President
Trafﬁc Control Region

Christopher M.
Brown
Vice President
Assistant Controller

Troy A. Cooper
Vice President and
Group Controller

Michael G. DeCata
Vice President
Contractor Supplies

Ernest P.
Delle Donne Jr.
Vice President
National Accounts and
Government Sales

Leroy J. Dieter Jr.
Vice President
Midwest Region

John J. Fahey
Vice President
Assistant Controller

Matthew Flannery
Vice President 
High Reach Region 

Honey S. Harris
Vice President
Gulf Region

Richard Haselwood
Vice President 
Government Affairs

Investor 
Information

2006 
Annual Meeting

Shareholder Information

For United Rentals
investor information,
including our 
quarterly earnings
releases, webcasts and
Securities Exchange
Act reports:

Tuesday, June 13, 2006
at 2:00 pm.

Delamar Greenwich
Harbor Hotel
500 Steamboat Road
Greenwich, CT 06830

For shareholder services 
24 hours a day:
Call toll-free 
(800) 937-5449
in the United States 
and Canada, or 
(718) 921-8200.

unitedrentals.com

Investment 
professionals may 
contact:

Charles K. Wessendorf
Vice President 
Investor Relations 
and Corporate 
Communications
cwessendorf@ur.com
(203) 618-7318

E-mail: 
investors@unitedrentals.com

To speak to a shareholder 
services representative, 
please call between 9:00 am 
and 5:00 pm Eastern Time, 
Monday through Friday.

• Account information
• Transfer requirements
• Lost certiﬁcates 
• Change of address
• Tax forms 

Write: 
American Stock
Transfer & Trust 
Company
40 Wall Street
New York, NY 10005

By overnight mail only:
American Stock
Transfer & Trust 
Company
6201 15th Avenue
Brooklyn, NY 11219
(718) 921-8210

www.amstock.com

Aerial Lifts

Skid-Steers

Excavators

Air Compressors

Pumps

Steel Trench Shields

Trafﬁc Control Arrow
Boards and Barricades

Contractor Supplies

United Rentals, Inc.
Five Greenwich Ofﬁce Park
Greenwich, CT 06831

unitedrentals.com