10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

OR

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

For the transition period from              to             

Commission File Number 1-14387

United Rentals, Inc.

Commission File Number 1-13663

United Rentals (North America), Inc.

(Exact Names of Registrants as Specified in Their Charters)

Delaware Delaware	06-1522496 06-1493538
(State of Incorporation)	(I.R.S. Employer Identification Nos.)

Five Greenwich Office Park, Greenwich, Connecticut	06831
(Address of Principal Executive Offices)	(Zip code)

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  x    Accelerated Filer  ¨    Non-Accelerated Filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

As of October 25, 2007, there were 85,786,079 shares of United Rentals, Inc. Common Stock, $.01 par value, outstanding. There is no market for the common stock of United Rentals (North America), Inc., all outstanding shares of which are owned by United Rentals, Inc.

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

UNITED RENTALS, INC.

UNITED RENTALS (NORTH AMERICA), INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007

INDEX

		Page
PART I	FINANCIAL INFORMATION
Item 1	Unaudited Condensed Consolidated Financial Statements	4
	United Rentals, Inc. Condensed Consolidated Balance Sheets as of September 30, 2007, September 30, 2006 and December 31, 2006 (unaudited)	4
	United Rentals, Inc. Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2007 and 2006 (unaudited)	5
	United Rentals, Inc. Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2007 (unaudited)	6
	United Rentals, Inc. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006 (unaudited)	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4	Controls and Procedures	31
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	32
Item 1A	Risk Factors	32
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6	Exhibits	34
	Signatures	35

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this report, including in Part I below under “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking in nature. Such statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “on-track,” “plan,” “intend” or “anticipate,” or the negative thereof or comparable terminology, or by discussions of strategy or outlook. You are cautioned that our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected by any forward-looking statements, and our common stock price may be subject to significant fluctuations.

Certain of such risks and uncertainties, including risks and uncertainties associated with the proposed acquisition of our Company by affiliates of Cerberus Capital Management, L.P., as reported in our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on July 24, 2007, are referred to below in Part II under “Item 1A—Risk Factors”, and described therein and/or in our Annual Report on Form 10-K for the year ended December 31, 2006. You should carefully consider such described risks and uncertainties, as well as the other information contained in this report.

You should also note that our forward-looking statements contained in this report speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. We make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in millions, except per share data)

	September 30, 2007		September 30, 2006		December 31, 2006
ASSETS
Cash and cash equivalents	$	112	$	140	$	119
Accounts receivable, net of allowance for doubtful accounts of $24, $36 and $34 at September 30, 2007, September 30, 2006 and December 31, 2006, respectively		582		541		502
Inventory		123		153		139
Assets of discontinued operation		—		160		107
Prepaid expenses and other assets		51		53		56
Deferred taxes		51		73		82
Total current assets		919		1,120		1,005
Rental equipment, net		2,918		2,659		2,561
Property and equipment, net		415		343		359
Goodwill and other intangible assets, net		1,407		1,370		1,376
Other long-term assets		58		69		65
Total assets	$	5,717	$	5,561	$	5,366
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current maturities of long-term debt	$	78	$	285	$	37
Accounts payable		248		263		218
Accrued expenses and other liabilities		273		292		322
Liabilities related to discontinued operation		—		31		22
Total current liabilities		599		871		599
Long-term debt		2,535		2,513		2,519
Subordinated convertible debentures		146		159		146
Deferred taxes		472		413		463
Other long-term liabilities		100		104		101
Total liabilities		3,852		4,060		3,828
Preferred stock—$0.01 par value, 5,000,000 shares authorized:
Series C perpetual convertible preferred stock—$1,000 per share liquidation preference, 300,000 shares issued and outstanding at September 30, 2007, September 30, 2006 and December 31, 2006		—		—		—
Series D perpetual convertible preferred stock—$1,000 per share liquidation preference, 150,000 shares issued and outstanding at September 30, 2007, September 30, 2006 and December 31, 2006		—		—		—
Common stock—$0.01 par value, 500,000,000 shares authorized, 85,801,507, 80,570,247 and 81,178,663 shares issued and outstanding at September 30, 2007, September 30, 2006 and December 31, 2006, respectively		1		1		1
Additional paid-in capital		1,479		1,424		1,421
Retained earnings		278		16		69
Accumulated other comprehensive income		107		60		47
Total stockholders’ equity		1,865		1,501		1,538
	$	5,717	$	5,561	$	5,366

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in millions, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2007			2006		2007			2006
Revenues:
Equipment rentals	$	719		$	693	$	1,947		$	1,874
Sales of rental equipment		78			87		243			248
New equipment sales		56			60		177			172
Contractor supplies sales		96			102		301			288
Service and other revenues		45			41		133			119
Total revenues		994			983		2,801			2,701
Cost of revenues:
Cost of equipment rentals, excluding depreciation		303			296		885			850
Depreciation of rental equipment		111			107		321			304
Cost of rental equipment sales		56			59		174			172
Cost of new equipment sales		47			48		147			141
Cost of contractor supplies sales		78			82		245			234
Cost of service and other revenue		20			20		60			58
Total cost of revenues		615			612		1,832			1,759
Gross profit		379			371		969			942
Selling, general and administrative expenses		152			156		447			453
Non-rental depreciation and amortization		13			10		38			37
Operating income		214			205		484			452
Interest expense, net		44			57		146			157
Interest expense—subordinated convertible debentures		2			4		7			11
Other income, net		(4	)		—		(7	)		—
Income from continuing operations before provision for income taxes		172			144		338			284
Provision for income taxes		61			56		128			112
Income from continuing operations		111			88		210			172
Income (loss) from discontinued operation, net of taxes		1			7		(1	)		(1	)
Net income	$	112		$	95	$	209		$	171
Basic earnings available to common stockholders:
Income from continuing operations	$	1.09		$	0.90	$	2.10		$	1.78
Income (loss) from discontinued operation		0.01			0.07		—			(0.01	)
Net income	$	1.10		$	0.97	$	2.10		$	1.77
Diluted earnings available to common stockholders:
Income from continuing operations	$	0.97		$	0.79	$	1.87		$	1.57
Income (loss) from discontinued operation		0.01			0.06		—			(0.01	)
Net income	$	0.98		$	0.85	$	1.87		$	1.56

See accompanying notes.

5

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in millions)

	Series C Perpetual Convertible Preferred Stock		Series D Perpetual Convertible Preferred Stock		Common Stock			Additional Paid-in Capital			Retained Earnings		Comprehensive Income		Accumulated Other Comprehensive Income
					Number of Shares	Amount
Balance, December 31, 2006	$	—	$	—	81	$	1	$	1,421		$	69			$	47
Comprehensive income:
Net income												209	$	209
Other comprehensive income:
Foreign currency translation adjustments														60		60
Comprehensive income													$	269
Exercise of common stock options					5		—		22
Amortization of stock compensation									15
Excess tax benefits from share-based payment arrangements, including release of deferred tax valuation allowance of $6									28
Shares repurchased and retired									(4	)
Forfeiture of stock compensation									(3	)
Balance, September 30, 2007	$	—	$	—	86	$	1	$	1,479		$	278			$	107

See accompanying notes.

6

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in millions)

	Nine Months Ended September 30,
	2007			2006
Cash Flows From Operating Activities:
Income from continuing operations	$	210		$	172
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		359			341
Amortization of deferred financing costs		7			8
Gain on sales of rental equipment		(69	)		(76	)
Gain on sales of non-rental equipment		(5	)		(2	)
Non-cash adjustments to equipment		(1	)		8
Write-off of deferred financing costs		—			8
Amortization of deferred compensation		12			11
Increase in deferred taxes		41			92
Changes in operating assets and liabilities:
Increase in accounts receivable		(79	)		(29	)
Decrease in inventory		16			4
Decrease in prepaid expenses and other assets		1			6
Increase in accounts payable		30			40
(Decrease) increase in accrued expenses and other liabilities		(38	)		6
Net cash provided by operating activities—continuing operations		484			589
Net cash provided by operating activities—discontinued operation		9			17
Net cash provided by operating activities		493			606
Cash Flows From Investing Activities:
Purchases of rental equipment		(785	)		(787	)
Purchases of non-rental equipment		(81	)		(50	)
Proceeds from sales of rental equipment		243			248
Proceeds from sales of non-rental equipment		20			13
Purchases of other companies		(23	)		(39	)
Net cash used in investing activities—continuing operations		(626	)		(615	)
Net cash provided by (used in) investing activities—discontinued operation		67			(11	)
Net cash used in investing activities		(559	)		(626	)
Cash Flows From Financing Activities:
Proceeds from debt		421			265
Payments on debt		(420	)		(423	)
Proceeds from the exercise of common stock options		22			64
Proceeds received in conjunction with partial termination of interest rate caps		—			3
Subordinated convertible debentures repurchased and retired, including premium of $1		—			(64	)
Shares repurchased and retired		(4	)		(1	)
Excess tax benefits from share-based payment arrangements		28			—
Net cash provided by (used in) financing activities		47			(156	)
Effect of foreign exchange rates		12			—
Net decrease in cash and cash equivalents		(7	)		(176	)
Cash and cash equivalents at beginning of period		119			316
Cash and cash equivalents at end of period	$	112		$	140

See accompanying notes.

7

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1. Organization and Basis of Presentation

General

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. (“URNA”), and subsidiaries of URNA. Holdings’ primary asset is its sole ownership of all issued and outstanding shares of common stock of URNA. URNA’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.

In April 2007, we announced that our board of directors had authorized the commencement of a process to explore a broad range of strategic alternatives to maximize shareholder value, including a possible sale of the Company, and had retained financial advisors in this process. On July 23, 2007, we announced that we had signed a definitive merger agreement to be acquired by affiliates of Cerberus Capital Management, L.P. (“Cerberus”), in a transaction valued at approximately $6.66 billion, inclusive of approximately $2.60 billion in outstanding debt obligations, but exclusive of transaction costs. Completion of the transaction is subject to customary closing conditions, including approval of the transaction by our stockholders, but not to a financing condition. On October 19, 2007, at a special meeting of our stockholders, the merger agreement was approved. We currently expect the transaction to close on or about November 16, 2007, but cannot guarantee this timing or result. For more detailed information, see our Current Reports on Form 8-K, filed with the SEC on July 24, 2007, October 19, 2007 and October 30, 2007. See also note 5 below for a description of two lawsuits filed following our announcement of the transaction.

We have prepared the accompanying unaudited condensed consolidated interim financial statements in accordance with the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2006 (the “2006 Form 10-K”) and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the 2006 Form 10-K. Certain reclassifications have been made to prior year financial information to conform to the current year presentation.

In our opinion, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented have been made. Interim results of operations are not necessarily indicative of the results of the full year.

Discontinued Operation

In December 2006, we entered into a definitive agreement to sell our traffic control business to HTS Acquisition, Inc., an entity newly-formed by affiliates of private equity investors Wynnchurch Capital Partners and Oak Hill Special Opportunities Fund, L.P. The transaction closed in February 2007 and we received net proceeds of $66.

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the results of operations of our traffic control business have been reported as a discontinued operation in the condensed consolidated statements of income. The assets and liabilities associated with the traffic control business have also been classified separately in our condensed consolidated balance sheets. Additionally, our condensed consolidated statements of cash flows separately report the cash flows of the discontinued operation within the operating and investing sections. Revenues related to our discontinued operation were approximately $0 and $87 for the three months ended September 30, 2007 and 2006, respectively, and $20 and $209 for the nine months ended September 30, 2007 and 2006, respectively. During the three months ended September 30, 2007 and 2006, we reported income from our discontinued operation of $1 ($1 after-tax) and $10 ($7 after-tax), respectively. During the nine months ended September 30, 2007 and 2006, we reported losses from our discontinued operation of $3 ($1 after tax) and $1 ($1 after tax), respectively.

Accounting Change

We adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109, on January 1, 2007. We did not record any

8

unrecognized income tax benefits as a result of the implementation of FIN 48. At the adoption date of January 1, 2007, we had $6 of unrecognized tax benefits. For the three and nine months ended September 30, 2007, there was an increase in our FIN 48 accrual of $1.9

Consistent with the classification in prior years, the Company classifies interest and penalties related to uncertain income tax positions in interest expense and selling, general, and administrative expenses, respectively, in its condensed consolidated statements of income. At the date of adoption, approximately $1 of interest expense and $0 of penalties are included in accrued expenses and other liabilities on our condensed consolidated balance sheet. For the three and nine months ended September 30, 2007, less than $1 of interest expense related to income tax was reflected in our condensed consolidated statements of income.

We file income tax returns in the U.S. and in several foreign jurisdictions. With few exceptions, we have completed our domestic income tax examinations, or the statute of limitations has expired in the respective jurisdictions, for years before 2005. The IRS commenced an audit of the 2005 taxable year during the second quarter of 2007 which is expected to be completed during the fourth quarter. At that time, the company expects that the FIN 48 accrual will be reduced by $1.9. In addition, our Canadian operating subsidiary is currently under examination for tax years 2003 through 2005. Included in the balance of unrecognized tax benefits at January 1, 2007 are certain tax positions for which it is reasonably possible that the total amounts of the unrecognized tax benefits could significantly change during the next twelve months. However, based on the status of the ongoing audit examinations and alternative settlement options available to the Company for certain of these tax positions, which could include legal proceedings, it is not possible to estimate the amount or timing of any such change to the previously recorded uncertain tax positions. Other than as discussed above, there have been no significant changes to the status of these audit examinations and settlement proceedings during the three and nine month periods ended September 30, 2007.

New Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of SFAS 115”, which allows for the option to measure financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. We do not believe the adoption of this statement will have a material effect on our financial condition or results of operations.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” which is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. This statement provides a single definition of fair value, together with a framework for measuring it, and requires new additional disclosure about the use of fair value to measure assets and liabilities. This statement also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy with the highest priority being quoted prices in active markets. While this statement does not add any new fair value measurements, it may change current practice. We are currently evaluating the potential impact of this statement.

In June 2006, the FASB ratified the consensus reached on EITF Issue No. 06-03, “How Sales Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (that is, Gross Versus Net Presentation)” (“EITF 06-03”). The EITF reached a consensus that the presentation of taxes on either a gross or net basis is an accounting policy decision that requires disclosure. EITF 06-03 is effective for our fiscal year beginning January 1, 2007. Sales tax amounts collected from customers have been recorded on a net basis. The adoption of EITF 06-03 did not have any effect on our financial position or results of operations.

2. Segment Information

Our reportable segments are general rentals 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 construction and industrial companies, manufacturers, utilities, municipalities and homeowners. The general rentals segment operates throughout the United States and Canada and has one location in Mexico. 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 reporting with how management evaluates and allocates resources. We evaluate segment performance based on segment operating results.

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Operating segment revenues and profitability for the three and nine months ended September 30, 2007 and 2006 were as follows:

	Three Months Ended September 30,				Nine months Ended September 30,
	2007		2006		2007		2006
Total reportable segment revenues
General rentals	$	932	$	921	$	2,632	$	2,535
Trench safety, pump and power		62		62		169		166
Total revenues	$	994	$	983	$	2,801	$	2,701
Total reportable segment depreciation and amortization expense
General rentals	$	119	$	111	$	342	$	324
Trench safety, pump and power		5		6		17		17
Total depreciation and amortization expense	$	124	$	117	$	359	$	341
Reportable segment operating income
General rentals	$	195	$	187	$	440	$	409
Trench safety, pump and power		19		18		44		43
Segment operating income	$	214	$	205	$	484	$	452
Total reportable segment capital expenditures
General rentals					$	836	$	797
Trench safety, pump and power						30		40
Total capital expenditures					$	866	$	837

	September 30, 2007		September 30, 2006		December 31, 2006
Total assets
General rentals	$	5,553	$	5,244	$	5,112
Trench safety, pump and power		164		157		147
Assets of discontinued operation		—		160		107
Total assets	$	5,717	$	5,561	$	5,366

3. Acquisitions

In February 2007, we acquired High Reach Equipment Services, LLC (“High Reach”). High Reach had one aerial equipment branch in Georgia and 2006 revenues of approximately $11. The aggregate purchase price for this acquisition was approximately $23. Pro forma combined results of operations giving effect to this acquisition would not vary materially from historical results.

4. Goodwill and Other Intangible Assets

The carrying amount of our goodwill was $1,359, $1,340 and $1,338 at September 30, 2007, September 30, 2006 and December 31, 2006, respectively. We are required to review our goodwill for impairment annually as of a scheduled review date. However, 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.

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Other intangible assets consist of customer relationships and non-compete agreements and are amortized over periods ranging from 3 to 12 years. Amortization expense for other intangible assets was $2 and $1 for the three months ended September 30, 2007 and 2006, respectively, and $5 and $3 for the nine months ended September 30, 2007 and 2006, respectively. The cost of other intangible assets and the related accumulated amortization as of September 30, 2007 was as follows:

	September 30, 2007
Gross carrying amount	$	83
Accumulated amortization		(35	)
Net amount	$	48

5. Legal and Regulatory Matters

SEC Non-Public Fact Finding Inquiry and Special Committee Review

In August 2004, we 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 our documents. The letter and the subpoena referred to an SEC investigation entitled In the Matter of United Rentals, Inc. The notice from the SEC stated that the inquiry did not mean that the SEC had concluded that the Company or anyone else had broken the law or that the SEC had a negative opinion of any person, entity or security. The inquiry appeared to relate to a broad range of our accounting practices and was not confined to a specific period.

In March 2005, our board of directors formed the Special Committee to review matters related to the SEC inquiry. The Special Committee retained independent counsel. The board of directors received and acted upon findings of the Special Committee in January 2006. The actions that we took with respect to the Special Committee’s findings and actions that we took with respect to certain other accounting matters, including the restatement of previously issued consolidated financial statements for 2003 and 2002, are discussed in our Annual Report on Form 10-K for the year ended December 31, 2005 (the “2005 Form 10-K”). We have provided documents in response to SEC subpoenas and informal requests as well as to the Special Committee, which has, in turn, provided documents to the SEC.

In July 2007, we received a letter from the staff of the SEC stating that the staff intends to recommend that the Commission authorize the staff to file an injunctive action against the Company for alleged violations of provisions relating to the maintenance of books and records, internal accounting controls, periodic filing requirements, as well as antifraud provisions as set forth in Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13 and 13b2-1 thereunder. The letter states that the relief the staff may recommend includes permanent injunctions and civil penalties. Under SEC procedures, we have the opportunity to respond to the SEC staff before the staff makes a formal recommendation as to whether any action should be brought by the SEC. The staff’s letter also states that the staff intends to request authorization to engage in settlement discussions with the Company. We intend to continue cooperating fully with the SEC in this matter.

The U.S. Attorney’s office has also requested information from the Company informally and by subpoena about matters related to the SEC inquiry. We are also cooperating fully with this office.

We cannot predict the outcome of these inquiries or when these matters might be resolved.

Shareholder Class Action Lawsuits and Derivative Litigation

Following our public announcement of the SEC inquiry, three purported class action lawsuits were filed against the Company in the United States District Court for the District of Connecticut. The plaintiff in each of the lawsuits initially sought to sue on behalf of a purported class comprised of purchasers of our securities from October 23, 2003 to August 30, 2004. The lawsuits initially named as the defendants the Company, our chairman, our vice chairman and then chief executive officer, our former president and chief financial officer, and our former corporate controller. These initial complaints alleged, among other things, that certain of our SEC filings and other public statements contained false and misleading 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 asserted claims (a) against all defendants under Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, and (b) against one or more of the individual defendants under Section 20(a) of the Exchange Act. The complaints sought unspecified compensatory 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 In re United Rentals, Inc. Securities Litigation.

11

On June 5, 2006, pursuant to a schedule agreed to by the parties and approved by the Court, lead plaintiff filed a consolidated amended complaint, which (a) added allegations relating to, among other things, the conclusions of the Special Committee and other matters disclosed in the 2005 Form 10-K, (b) amended the purported class period to include purchasers of our securities from February 28, 2001 to August 30, 2004 and (c) named as an additional defendant our first chief financial officer. In September 2006, we and certain of the individual defendants moved to dismiss the consolidated amended complaint in this action. Briefing with respect to these motions is now complete. We intend to continue to defend against this action vigorously. At this stage of the litigation, it is not possible to estimate the amount of loss or range of possible loss that might result from an adverse judgment or a settlement of this matter.

In January 2005 an alleged shareholder filed an action in Connecticut State Superior Court, Judicial District of Norwalk/Stamford at Stamford, purportedly suing derivatively on the Company’s behalf. The action, entitled Gregory Riegel v. John N. Milne, et al., named as defendants certain of our current and/or former directors and/or officers, and named the Company as a nominal defendant. The complaint asserted, among other things, that the defendants breached their fiduciary duties to the Company by causing or allowing the Company to disseminate misleading and inaccurate information to shareholders and the market and by failing to establish and maintain adequate accounting controls, thus exposing the Company 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 motions to dismiss in the purported shareholder class actions.

In November 2004 we received a letter from counsel for an alleged shareholder, raising allegations similar to the ones set forth in the derivative complaint described above and demanding that the Company take action in response to those allegations against certain of our current and/or former directors and/or officers. Following receipt of the letter, our board of directors formed a special committee to consider the letter. In August 2005, this alleged shareholder commenced an action in Connecticut State Superior Court, Judicial District of Norwalk/Stamford at Stamford, purporting to sue derivatively on the Company’s behalf. The action, entitled Nathan Brundridge v. Leon D. Black, et al., initially named as defendants certain of our current and/or former directors and/or officers, and named the Company as a nominal defendant. The initial complaint in this action asserted, among other things, that all of the defendants breached fiduciary obligations to the Company by causing or allowing the Company to disseminate misleading and inaccurate information to shareholders and the market, and by failing to establish and maintain adequate accounting controls, thus exposing the Company to damages. The initial complaint in this action also asserted a claim for unjust enrichment against our chairman and our vice chairman and then chief executive officer. The initial complaint sought unspecified compensatory damages, equitable relief, costs and expenses against all of the defendants. The initial complaint also sought an order, in connection with plaintiff’s unjust enrichment claim, directing the defendants against whom that claim was asserted to disgorge certain compensation they received from us with respect to fiscal years 2001, 2002 and 2003.

On June 5, 2006, pursuant to a schedule agreed to by the parties and approved by the Court, plaintiff in the Brundridge action filed an amended complaint, which (a) added allegations relating to, among other things, the conclusions of the Special Committee and other matters disclosed in the 2005 Form 10-K, and (b) named as an additional defendant our former president and chief financial officer and asserted the same claims against him as it previously asserted and continued to assert against our chairman and our vice chairman and then chief executive officer. In September 2006, we and certain of the individual defendants moved to dismiss the amended complaint in this action. In December 2006, plaintiff in this action filed its opposition to these motions to dismiss. Subsequently, the parties agreed that the proceedings in this action will be stayed pending resolution of the motions to dismiss in the purported shareholder class actions. The parties’ agreement provides that any party may terminate the stay at any time on 30 days’ written notice to the Court and all other parties, and defendants will have an opportunity to submit reply papers in further support of their motions to dismiss this action after the termination of the stay.

In August 2005 another alleged shareholder filed an action in the United States District Court for the District of Connecticut, purporting to sue derivatively on the Company’s behalf. The action, entitled Natalie Gordon v. Wayland R. Hicks, et al., named as defendants certain of our current and/or former directors and/or officers, and named the Company as a nominal defendant. The initial complaint in this action asserted claims against each of the defendants for breach of fiduciary duty, abuse of control, 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 the Company to disseminate misleading and inaccurate information to shareholders and to the market, and failed to establish and maintain adequate accounting controls, thus exposing the Company to damages. The initial complaint also asserted (a) a claim that a former director breached fiduciary obligations by selling shares of our common stock while in possession of material, non-public information, and (b) a claim against our chairman, our vice chairman and then chief executive officer, and our former president and chief financial officer for recovery of certain incentive-based compensation under

12

section 304 of the Sarbanes-Oxley Act. The initial complaint sought unspecified compensatory damages, equitable relief, restitution, costs and expenses against all of the defendants. The initial complaint also sought an order declaring that the defendants against whom the section 304 claim was directed are liable under the Sarbanes-Oxley Act and directing them to reimburse us for all bonuses or other incentive-based or equity-based compensation they received for the fiscal years 1999 through 2004.

On June 5, 2006, pursuant to a schedule agreed to by the parties and approved by the Court, plaintiff in the Gordon action filed an amended complaint, which (a) added allegations relating to, among other things, the conclusions of the Special Committee and other matters disclosed in the 2005 Form 10-K, and (b) named as additional defendants certain other of our current and/or former directors and/or officers. The amended complaint also asserted an additional claim against certain of our current and/or former directors for violation of Section 14(a) of the Exchange Act. In September 2006, we and certain of the individual defendants moved to dismiss the amended complaint in this action. Briefing with respect to these motions is now complete.

Following our July 23, 2007 announcement of the merger agreement with affiliates of Cerberus, two lawsuits against the proposed acquisition were filed. First, a putative class action complaint, entitled Donald Lefari v. United Rentals, Inc. et al., was filed in the Superior Court of the Judicial District of Stamford-Norwalk on July 23, 2007 (the “Lefari action”). This lawsuit purports to be brought on behalf of all common stockholders of the Company and names the Company and all of our directors and Cerberus as defendants. The operative complaint alleges, among other things, that our board of directors violated its fiduciary duties to the Company’s stockholders by entering into the merger agreement and that our proxy statement failed to disclose material information. Plaintiff Lefari sought to enjoin the proposed transaction on those bases. On September 19, 2007, the parties to the Lefari action entered into a memorandum of understanding to settle the action and a settlement agreement is expected to be negotiated by the parties. On September 28, 2007, the second lawsuit, Nathan Brundridge vs. Wayland R. Hicks et al., was also filed in the Superior Court of the State of Connecticut, Judicial District of Stamford-Norwalk (the “Brundridge II action”). This lawsuit names our current directors as defendants. The complaint alleges, among other things, that our board of directors failed to disclose all the material facts that the Company’s stockholders require in order to cast an informed vote for or against the proposal to adopt the merger agreement. If the court approves the anticipated settlement agreement in the Lefari action, that lawsuit will be dismissed with prejudice, and thereby release claims asserted by the plaintiff in the Brundridge II action.

We are also subject to a number of claims and proceedings that generally arise in the ordinary conduct of our business. These matters include, but are not limited to, general liability claims (including personal injury, product liability, and property and auto claims), indemnification and guarantee obligations, employee injuries and employment-related claims, self-insurance obligations and contract and real estate matters. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals for matters where we have established them, we currently believe that any liabilities ultimately resulting from these ordinary course claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows.

6. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common 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 following table sets forth the computation of basic and diluted earnings per share (shares in thousands):

	Three Months Ended September 30,				Nine months Ended September 30,
	2007		2006		2007			2006
Numerator:
Income from continuing operations	$	111	$	88	$	210		$	172
Income (loss) from discontinued operation, net of taxes		1		7		(1	)		(1	)
Net income		112		95		209			171
Convertible debt interest		—		—		1			1
Subordinated convertible debt interest		1		2		4			6
Net income available to common stockholders	$	113	$	97	$	214		$	178
Denominator:
Weighted-average common shares		84,142		80,598		82,537			79,124
Series C preferred		12,000		12,000		12,000			12,000

13

	Three Months Ended September 30,				Nine months Ended September 30,
	2007		2006		2007		2006
Series D preferred		5,000		5,000		5,000		5,000
Denominator for basic earnings per share—weighted-average		101,142		97,598		99,537		96,124
Effect of dilutive securities:
Employee stock options and warrants		3,701		4,710		4,775		6,257
Convertible shares		6,461		6,461		6,461		6,461
Subordinated convertible debentures		3,342		5,078		3,342		5,078
Restricted stock units and other		443		135		491		158
Denominator for dilutive earnings per share—adjusted weighted-average shares		115,089		113,982		114,606		114,078
Basic earnings available to common stockholders:
Income from continuing operations	$	1.09	$	0.90	$	2.10	$	1.78
Income (loss) from discontinued operation		0.01		0.07		—		(0.01	)
Net income	$	1.10	$	0.97	$	2.10	$	1.77
Diluted earnings available to common stockholders:
Income from continuing operations	$	0.97	$	0.79	$	1.87	$	1.57
Income (loss) from discontinued operation		0.01		0.06		—		(0.01	)
Net income	$	0.98	$	0.85	$	1.87	$	1.56

14

7. Condensed Consolidating Financial Information of Guarantor Subsidiaries

URNA is 100 percent owned by Holdings (the “Parent”) and has outstanding (i) certain indebtedness that is guaranteed by the Parent and (ii) certain indebtedness that is guaranteed by both Parent and substantially all of URNA’s United States subsidiaries (the “guarantor subsidiaries”). However, this indebtedness is not guaranteed by URNA’s foreign subsidiaries and certain of its United States subsidiaries (the “non-guarantor subsidiaries”). The guarantor subsidiaries are all 100 percent-owned and the guarantees are made on a joint and several basis and are full and unconditional (subject to subordination provisions and subject to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws). Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes that such information would not be material to investors; however, condensed consolidating financial information is presented. The condensed consolidating financial information of the Company and its subsidiaries is as follows:

15

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Dollars in millions)

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2007

	Parent		URNA		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Other and Eliminations			Total
ASSETS
Cash and cash equivalents	$	—	$	18	$	8		$	86		$	—		$	112
Accounts receivable, net		—		26		(18	)		574			—			582
Intercompany receivable (payable)		—		467		126			(593	)		—			—
Inventory		—		56		51			16			—			123
Prepaid expenses and other assets		—		12		34			5			—			51
Deferred taxes		—		51		—			—			—			51
Total current assets		—		630		201			88			—			919
Rental equipment, net		—		1,492		1,092			334			—			2,918
Property and equipment, net		42		196		148			29			—			415
Investments in subsidiaries		1,962		2,541		—			—			(4,503	)		—
Goodwill and other intangible assets, net		—		185		1,067			155			—			1,407
Other non-current assets		7		43		8			—			—			58
Total assets	$	2,011	$	5,087	$	2,516		$	606		$	(4,503	)	$	5,717
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current maturities of long-term debt	$	—	$	78	$	—		$	—		$	—		$	78
Accounts payable		—		80		139			29			—			248
Accrued expenses and other liabilities		—		248		103			8			(86	)		273
Total current liabilities		—		406		242			37			(86	)		599
Long-term debt		—		2,318		12			205			—			2,535
Subordinated convertible debentures		146		—		—			—			—			146
Deferred taxes		—		445		(9	)		36			—			472
Other liabilities		—		42		58			—			—			100
Total liabilities		146		3,211		303			278			(86	)		3,852
Total stockholders’ equity		1,865		1,876		2,213			328			(4,417	)		1,865
Total liabilities and equity	$	2,011	$	5,087	$	2,516		$	606		$	(4,503	)	$	5,717

16

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Dollars in millions)

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2006

	Parent		URNA		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Other and Eliminations			Total
ASSETS
Cash and cash equivalents	$	—	$	20	$	69		$	51		$	—		$	140
Accounts receivable, net		—		17		(25	)		549			—			541
Intercompany receivable (payable)		—		396		5			(401	)		—			—
Inventory		—		69		64			20			—			153
Assets of discontinued operation		—		—		160			—			—			160
Prepaid expenses and other assets		—		8		45			—			—			53
Deferred taxes		—		73		—			—			—			73
Total current assets		—		583		318			219			—			1,120
Rental equipment, net		—		1,477		929			253			—			2,659
Property and equipment, net		40		85		189			29			—			343
Investments in subsidiaries		1,612		2,325		—			—			(3,937	)		—
Goodwill and other intangible assets, net		—		167		1,063			140			—			1,370
Other non-current assets		8		51		9			1			—			69
Total assets	$	1,660	$	4,688	$	2,508		$	642		$	(3,937	)	$	5,561
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current maturities of long-term debt	$	—	$	285	$	—		$	—		$	—		$	285
Accounts payable		—		68		162			33			—			263
Accrued expenses and other liabilities		—		181		185			12			(86	)		292
Liabilities related to discontinued operation		—		—		31			—			—			31
Total current liabilities		—		534		378			45			(86	)		871
Long-term debt		—		2,163		7			343			—			2,513
Subordinated convertible debentures		159		—		—			—			—			159
Deferred taxes		—		406		(32	)		39			—			413
Other liabilities		—		59		45			—			—			104
Total liabilities		159		3,162		398			427			(86	)		4,060
Total stockholders’ equity		1,501		1,526		2,110			215			(3,851	)		1,501
Total liabilities and equity	$	1,660	$	4,688	$	2,508		$	642		$	(3,937	)	$	5,561

17

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Dollars in millions)

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2006

	Parent		URNA		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Other and Eliminations			Total
ASSETS
Cash and cash equivalents	$	—	$	40	$	3		$	76		$	—		$	119
Accounts receivable, net		—		9		7			486			—			502
Intercompany receivable (payable)		—		373		144			(517	)		—			—
Inventory		—		66		57			16			—			139
Assets of discontinued operation		—		—		107			—			—			107
Prepaid expenses and other assets		8		8		37			3			—			56
Deferred taxes		—		82		—			—			—			82
Total current assets		8		578		355			64			—			1,005
Rental equipment, net		—		1,427		891			243			—			2,561
Property and equipment, net		38		97		194			30			—			359
Investments in subsidiaries		1,638		2,352		—			—			(3,990	)		—
Goodwill and other intangible assets, net		—		177		1,065			134			—			1,376
Other non-current assets		—		52		13			—			—			65
Total assets	$	1,684	$	4,683	$	2,518		$	471		$	(3,990	)	$	5,366
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current maturities of long-term debt	$	—	$	37	$	—		$	—		$	—		$	37
Accounts payable		—		72		118			28			—			218
Accrued expenses and other liabilities		—		176		198			22			(74	)		322
Liabilities related to discontinued operation		—		—		22			—			—			22
Total current liabilities		—		285		338			50			(74	)		599
Long-term debt		—		2,350		7			162			—			2,519
Subordinated convertible debentures		146		—		—			—			—			146
Deferred taxes		—		440		(9	)		32			—			463
Other liabilities		—		44		57			—			—			101
Total liabilities		146		3,119		393			244			(74	)		3,828
Total stockholders’ equity		1,538		1,564		2,125			227			(3,916	)		1,538
Total liabilities and equity	$	1,684	$	4,683	$	2,518		$	471		$	(3,990	)	$	5,366

18

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

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

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Three Months Ended September 30, 2007

	Parent			URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Other and Eliminations			Total
Revenues:
Equipment rentals	$	—		$	345	$	289	$	85		$	—		$	719
Sales of rental equipment		—			42		27		9			—			78
New equipment sales		—			27		19		10			—			56
Contractor supplies sales		—			39		44		13			—			96
Service and other revenues		—			23		17		5			—			45
Total revenues		—			476		396		122			—			994
Cost of revenues:
Cost of equipment rentals, excluding depreciation		—			144		124		35			—			303
Depreciation of rental equipment		—			55		43		13			—			111
Cost of rental equipment sales		—			32		18		6			—			56
Cost of new equipment sales		—			22		17		8			—			47
Cost of contractor supplies sales		—			34		33		11			—			78
Cost of service and other revenues		—			10		7		3			—			20
Total cost of revenues		—			297		242		76			—			615
Gross Profit		—			179		154		46			—			379
Selling, general and administrative expenses		—			67		65		20			—			152
Non-rental depreciation and amortization		3			5		4		1			—			13
Operating Income		(3	)		107		85		25			—			214
Interest expense, net		—			40		—		4			—			44
Interest expense- subordinated convertible debentures		2			—		—		—			—			2
Other expense (income), net		—			4		9		(17	)		—			(4	)
Income from continuing operations before provision for income taxes		(5	)		63		76		38			—			172
Provision for income taxes		(1	)		21		27		14			—			61
Income from continuing operations		(4	)		42		49		24			—			111
Loss from discontinued operations, net of tax		—			—		1		—						1
Income (loss) before equity in net earnings of subsidiaries		(4	)		42		50		24			—			112
Equity in net earnings of subsidiaries		116			74		—		—			(190	)		—
Net income (loss)	$	112		$	116	$	50	$	24		$	(190	)	$	112

19

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

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

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Three Months Ended September 30, 2006

	Parent			URNA		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Other and Eliminations			Total
Revenues:
Equipment rentals	$	—		$	335	$	289		$	69		$	—		$	693
Sales of rental equipment		—			41		36			10			—			87
New equipment sales		—			28		24			8			—			60
Contractor supplies sales		—			40		50			12			—			102
Service and other revenues		—			22		15			4			—			41
Total revenues		—			466		414			103			—			983
Cost of revenues:
Cost of equipment rentals, excluding depreciation		—			145		119			32			—			296
Depreciation of rental equipment		—			54		41			12			—			107
Cost of rental equipment sales		—			30		23			6			—			59
Cost of new equipment sales		—			22		19			7			—			48
Cost of contractor supplies sales		—			32		41			9			—			82
Cost of service and other revenues		—			10		8			2			—			20
Total cost of revenues		—			293		251			68			—			612
Gross Profit		—			173		163			35			—			371
Selling, general and administrative expenses		—			62		76			18			—			156
Non-rental depreciation and amortization		2			6		3			(1	)		—			10
Operating Income		(2	)		105		84			18			—			205
Interest expense, net		3			56		(4	)		2			—			57
Interest expense- subordinated convertible debentures		4			—		—			—			—			4
Other expense (income), net		1			4		3			(8	)		—			—
Income from continuing operations before provision for income taxes		(10	)		45		85			24			—			144
Provision for income taxes		(4	)		17		34			9			—			56
Income from continuing operations		(6	)		28		51			15			—			88
Loss from discontinued operations, net of tax		—			—		7			—						7
Income (loss) before equity in net earnings of subsidiaries		(6	)		28		58			15			—			95
Equity in net earnings of subsidiaries		101			73		—			—			(174	)		—
Net income (loss)	$	95		$	101	$	58		$	15		$	(174	)	$	95

20

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

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

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Nine Months Ended September 30, 2007

	Parent			URNA		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Other and Eliminations			Total
Revenues:
Equipment rentals	$	—		$	954	$	779		$	214		$	—		$	1,947
Sales of rental equipment		—			126		89			28			—			243
New equipment sales		—			86		63			28			—			177
Contractor supplies sales		—			124		139			38			—			301
Service and other revenues		—			68		50			15			—			133
Total revenues		—			1,358		1,120			323			—			2,801
Cost of revenues:
Cost of equipment rentals, excluding depreciation		—			423		361			101			—			885
Depreciation of rental equipment		—			162		123			36			—			321
Cost of rental equipment sales		—			94		61			19			—			174
Cost of new equipment sales		—			69		55			23			—			147
Cost of contractor supplies sales		—			107		105			33			—			245
Cost of service and other revenues		—			32		20			8			—			60
Total cost of revenues		—			887		725			220			—			1,832
Gross Profit		—			471		395			103			—			969
Selling, general and administrative expenses		—			180		207			60			—			447
Non-rental depreciation and amortization		7			15		13			3			—			38
Operating Income		(7	)		276		175			40			—			484
Interest expense, net		—			138		—			8			—			146
Interest expense- subordinated convertible debentures		7			—		—			—			—			7
Other expense (income), net		—			24		17			(48	)		—			(7	)
Income from continuing operations before provision for income taxes		(14	)		114		158			80			—			338
Provision for income taxes		(5	)		43		59			31			—			128
Income from continuing operations		(9	)		71		99			49			—			210
Loss from discontinued operations, net of tax		—			2		(3	)		—						(1	)
Income (loss) before equity in net earnings of subsidiaries		(9	)		73		96			49			—			209
Equity in net earnings of subsidiaries		218			145		—			—			(363	)		—
Net income (loss)	$	209		$	218	$	96		$	49		$	(363	)	$	209

21

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

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

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Nine Months Ended September 30, 2006

	Parent			URNA		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Other and Eliminations			Total
Revenues:
Equipment rentals	$	—		$	920	$	775		$	179		$	—		$	1,874
Sales of rental equipment		—			123		99			26			—			248
New equipment sales		—			82		66			24			—			172
Contractor supplies sales		—			116		139			33			—			288
Service and other revenues		—			65		41			13			—			119
Total revenues		—			1,306		1,120			275			—			2,701
Cost of revenues:
Cost of equipment rentals, excluding depreciation		—			417		341			92			—			850
Depreciation of rental equipment		—			154		117			33			—			304
Cost of rental equipment sales		—			89		66			17			—			172
Cost of new equipment sales		—			66		55			20			—			141
Cost of contractor supplies sales		—			99		108			27			—			234
Cost of service and other revenues		—			31		20			7			—			58
Total cost of revenues		—			856		707			196			—			1,759
Gross Profit		—			450		413			79			—			942
Selling, general and administrative expenses		—			185		215			53			—			453
Non-rental depreciation and amortization		7			16		11			3			—			37
Operating Income		(7	)		249		187			23			—			452
Interest expense, net		3			150		(3	)		7			—			157
Interest expense- subordinated convertible debentures		11			—		—			—			—			11
Other expense (income), net		1			11		10			(22	)		—			—
Income from continuing operations before provision for income taxes		(22	)		88		180			38			—			284
Provision for income taxes		(9	)		35		71			15			—			112
Income from continuing operations		(13	)		53		109			23			—			172
Loss from discontinued operations, net of tax		—			—		(1	)		—						(1	)
Income (loss) before equity in net earnings of subsidiaries		(13	)		53		108			23			—			171
Equity in net earnings of subsidiaries		184			131		—			—			(315	)		—
Net income (loss)	$	171		$	184	$	108		$	23		$	(315	)	$	171

22

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Nine Months Ended September 30, 2007

	Parent			URNA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Other and Eliminations		Total
Net cash provided by operating activities - continuing operations	$	4		$	191		$	231		$	58		$	—	$	484
Net cash provided by operating activities - discontinued operation		—			—			9			—			—		9
Net cash provided by operating activities		4			191			240			58			—		493
Net cash used in investing activities - continuing operations		(11	)		(306	)		(236	)		(73	)		—		(626	)
Net cash provided by investing activities - discontinued operation		—			66			1			—			—		67
Net cash used in investing activities		(11	)		(240	)		(235	)		(73	)		—		(559	)
Net cash provided by financing activities		7			27			—			13			—		47
Effect of foreign exchange rate		—			—			—			12			—		12
Net increase (decrease) in cash and cash equivalents		—			(22	)		5			10			—		(7	)
Cash and cash equivalents at beginning of period		—			40			3			76			—		119
Cash and cash equivalents at end of period	$	—		$	18		$	8		$	86		$	—	$	112

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Nine Months Ended September 30, 2006

	Parent			URNA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Other and Eliminations		Total
Net cash provided by (used in) operating activities continuing operations	$	(1	)	$	515		$	193		$	(118	)	$	—	$	589
Net cash provided by operating activities - discontinued operation		—			—			17			—			—		17
Net cash provided by (used in) operating activities		(1	)		515			210			(118	)		—		606
Net cash used in investing activities - continuing operations		(10	)		(309	)		(235	)		(61	)		—		(615	)
Net cash used in investing activities - discontinued operation		—			—			(11	)		—			—		(11	)
Net cash provided by (used in) investing activities		(10	)		(309	)		(246	)		(61	)		—		(626	)
Net cash provided by (used in) financing activities		11			(386	)		—			219			—		(156	)
Effect of foreign exchange rate		—			—			—			—			—		—
Net increase (decrease) in cash and cash equivalents		—			(180	)		(36	)		40			—		(176	)
Cash and cash equivalents at beginning of period		—			200			105			11			—		316
Cash and cash equivalents at end of period	$	—		$	20		$	69		$	51		$	—	$	140

23

8. Subsequent Event

On October 16, 2007, we announced that URNA has commenced cash tender offers and consent solicitations for all of its outstanding 6  ¹/2 percent Senior Notes due 2012 (the “6  ¹/2 percent Notes”), 7  ³/4 percent Senior Subordinated Notes due 2013 (the “7  ³/4 percent Notes”) and 7 percent Senior Subordinated Notes due 2014 (the “7 percent Notes” and together with the 6  ¹/2 percent Notes and the 7  ³/4 percent Notes, the “Notes”). The Notes are comprised of (i) $1.0 billion principal amount of 6  ¹/2 percent Notes, (ii) $525 principal amount of 7  ³/4 percent Notes and (iii) $375 principal amount of 7 percent Notes. The tender offers and consent solicitations are being conducted in connection with, and are conditioned upon among other things the consummation of, the anticipated acquisition of the Company by affiliates of Cerberus. The full terms and conditions of the tender offers and consent solicitations are set forth in URNA’s Offer to Purchase and Consent Solicitation Statement and related Consent and Letter of Transmittal, each dated October 16, 2007. The tender offers will expire at 12:00 midnight, New York City time, on November 13, 2007, unless extended or earlier terminated. The consent solicitations expired at 5:00 p.m., New York city time, on October 29, 2007. As of that time, URNA had received sufficient consents with respect to all of the Notes (more than 98% of the principal amount in each case) to effect all proposed amendments to the indentures governing the Notes. For more information, please see our Current Report on Form 8-K, filed with the SEC on October 30, 2007.

24

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except per share data and unless otherwise indicated)

Executive Overview

We are the largest equipment rental company in the world with an integrated network of 696 rental locations in the United States, Canada and Mexico. Although the equipment rental industry is highly fragmented and diverse, we believe we are well positioned to take advantage of this environment because as a larger company, we have more resources and certain competitive advantages over our smaller competitors. These advantages include greater purchasing power, the ability to provide customers with a broader range of equipment and services as well as with newer and better maintained equipment, and greater flexibility to transfer equipment among branches.

We offer for rent over 20,000 classes of rental equipment, including construction equipment, industrial and heavy machinery, aerial work platforms, 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 equipment revenues have historically accounted for approximately 70 percent of our total revenues.

In April 2007, we announced that our board of directors had authorized the commencement of a process to explore a broad range of strategic alternatives to maximize shareholder value, including a possible sale of the Company, and had retained financial advisors in this process. We also announced the retirement of our Chief Executive Officer, Wayland R. Hicks, effective following the conclusion of our 2007 Annual Meeting of Stockholders, which occurred on June 4, 2007, and the naming of Michael J. Kneeland as interim Chief Executive Officer effective upon Mr. Hicks’ retirement. On July 23, 2007, we announced that we had signed a definitive merger agreement to be acquired by affiliates of Cerberus Capital Management, L.P. (“Cerberus”), in a transaction valued at approximately $6.66 billion, inclusive of approximately $2.60 billion in outstanding debt obligations, but exclusive of transaction costs. Completion of the transaction is subject to customary closing conditions, including approval of the transaction by our stockholders, but not to a financing condition. On October 19, 2007, at a special meeting of our stockholders, the merger agreement was approved. We currently expect the transaction to close on or about November 16, 2007, but cannot guarantee this timing or result. For more detailed information, see our Current Reports on Form 8-K, filed with the SEC on July 24, 2007, October 19, 2007 and October 30, 2007.

In August 2004, we 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 our documents. The letter and the subpoena referred to an SEC investigation entitled In the Matter of United Rentals, Inc. The notice from the SEC stated that the inquiry did not mean that the SEC had concluded that the Company or anyone else had broken the law or that the SEC had a negative opinion of any person, entity or security. The inquiry appeared to relate to a broad range of our accounting practices and was not confined to a specific period.

In March 2005, our board of directors formed the Special Committee to review matters related to the SEC inquiry. The Special Committee retained independent counsel. The board of directors received and acted upon findings of the Special Committee in January 2006. The actions that we took with respect to the Special Committee’s findings and actions that we took with respect to certain other accounting matters, including the restatement of previously issued consolidated financial statements for 2003 and 2002, are discussed in our Annual Report on Form 10-K for the year ended December 31, 2005 (the “2005 Form 10-K”). We have provided documents in response to SEC subpoenas and informal requests as well as to the Special Committee, which has, in turn, provided documents to the SEC.

In July 2007, we received a letter from the staff of the SEC stating that the staff intends to recommend that the Commission authorize the staff to file an injunctive action against the Company for alleged violations of provisions relating to the maintenance of books and records, internal accounting controls, periodic filing requirements, as well as antifraud provisions as set forth in Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13 and 13b2-1 thereunder. The letter states that the relief the staff may recommend includes permanent injunctions and civil penalties. Under SEC procedures, we have the opportunity to respond to the SEC staff before the staff makes a formal recommendation as to whether any action should be brought by the SEC. The staff’s letter also states that the staff intends to request authorization to engage in settlement discussions with the Company. We intend to continue cooperating fully with the SEC in this matter.

The U.S. Attorney’s office has also requested information from the Company informally and by subpoena about matters related to the SEC inquiry. We are also cooperating fully with this office.

Current and Future Strategy

We intend to use our extensive fleet, broad footprint, advanced information technology systems and industry experience to generate significant cash flow and strengthen our leadership position in the equipment rental industry. We plan to achieve these objectives by:

        Optimizing Our Field Operations. We intend to continue the process of analyzing and optimizing our field operations in order to improve fleet allocation, service and delivery and sales management efforts. We expect this process will create opportunities for branch closures as fleet assets are moved from low-return branches to high-return locations, as well as additional cost-saving opportunities such as consolidating administrative and back-office functions where possible. We believe optimizing our field operations should increase equipment utilization and reduce operating costs.

Reducing Operating Spend. In an effort to bring our cost structure in line with those of other leading equipment rental companies, we engaged a major consulting firm in the spring of 2007 to review our back-office functions related to the general and administrative aspects of our business and identify opportunities for increased efficiencies. Such firm identified a number of opportunities to consolidate duplicative functions, outsource back-office operations and automate processes. As a result, we have implemented a headcount reduction program and undertaken specific initiatives to reduce our selling, general and administrative expenses.

Accelerating Sourcing Initiatives. Our rental equipment purchases have been centralized which we believe has enabled us to negotiate more favorable pricing and other terms from our equipment providers. We launched a strategic sourcing initiative in 2006 that was designed to centralize our non-equipment purchases. We believe that centralizing the procurement of these items will enable us to leverage our significant spend to obtain better pricing and/or terms from our suppliers. We spent over $1.2 billion in 2006 on materials, services, contractor supplies, parts, and other non-equipment spend.

Optimizing Time Utilization. We continue to reassess existing fleet investments and realign certain incentive programs to increase the time utilization of our fleet assets. We intend to better allocate resources to where they are needed rather than where they are located, resulting in fleet rationalization opportunities. We also expect to implement stricter fleet investment policies to improve our return on capital. By coupling such initiatives with an increased focus on preventative maintenance and improved turn-around time for returned equipment, we believe that we can increase the time utilization of our fleet and serve our customer base with a smaller fleet.

Deemphasizing Contractor Supplies Business. We currently sell a variety of contractor supplies, such as construction consumables, tools, small equipment and safety supplies, through several channels, including our sales representatives, rental branches and U.S. and Canadian product catalogues. Although revenues from the contractor supplies business have grown from $125 in 2002 to $385 in 2006, this business requires that we maintain significant volumes of inventory in order to meet customer demand and carries a higher cost structure relative to our core equipment rental business. In 2006, the gross margin for our contractor supplies business was 21.6% versus 38.9% for our equipment rental operations (including depreciation).

Going forward, we intend to deemphasize our contractor supplies business and position it as a complementary offering to our equipment rental business. We expect this deemphasis to result in productivity improvements within our sales force, thus helping to improve equipment utilization and rental rates, as well as result in some headcount reduction. As part of the deemphasis, we expect to reduce the number of stock keeping units associated with these operations. Additionally, we have recently closed one of our nine distribution centers and we intend to further evaluate the closure of additional distribution centers.

Implement Like-Kind-Exchange Tax Savings Program. We use accelerated depreciation for tax purposes versus straight-line depreciation for accounting purposes. Sales of assets that have been fully depreciated for tax purposes can therefore give rise to significant tax liabilities. We intend to explore whether we can take advantage of tax deferral opportunities that may be available under Section 1031 of the Internal Revenue Code, which permits tax gains to be temporarily deferred as long as the proceeds from asset sales are reinvested in similar assets. We did not previously implement a similar program because of net operating loss carryforwards we had been utilizing in recent years.

25

As discussed in note 5 to our unaudited condensed consolidated financial statements, in addition to the matters referenced above, we are also subject to certain ongoing class action and derivative suits. Although we have not accrued any amounts related to the ultimate disposition of these or the above matters to date, any liabilities resulting from an adverse judgment or settlement of such matters may be material to our results of operations and cash flows during the period incurred. Other costs associated with the SEC inquiry, the U.S. Attorney’s office inquiry and the class action and derivative suits, including reimbursement of attorneys’ fees incurred by indemnified officers and directors, are expensed as incurred.

Results of Operations

As discussed in note 2 to our unaudited condensed consolidated financial statements, our reportable segments are general rentals 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 construction and industrial companies, manufacturers, utilities, municipalities and homeowners. The general rentals segment operates throughout the United States and Canada and has one location in Mexico. 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 reporting with how management evaluates and allocates resources. We evaluate segment performance based on segment operating results.

Our revenues and operating results fluctuate from quarter to quarter reflecting the seasonal rental patterns of our customers, with rental activity tending to be lower in the winter.

Revenues by segment were as follows:

	General rentals		Trench safety, pump and power		Total
Three months ended September 30, 2007
Equipment rentals	$	670	$	49	$	719
Sales of rental equipment		73		5		78
Sales of new equipment		53		3		56
Contractor supplies sales		92		4		96
Service and other		44		1		45
Total revenue	$	932	$	62	$	994
Three months ended September 30, 2006
Equipment rentals	$	645	$	48	$	693
Sales of rental equipment		83		4		87
Sales of new equipment		54		6		60
Contractor supplies sales		98		4		102
Service and other		41		—		41
Total revenue	$	921	$	62	$	983
Nine months ended September 30, 2007
Equipment rentals	$	1,815	$	132	$	1,947
Sales of rental equipment		231		12		243
Sales of new equipment		167		10		177
Contractor supplies sales		289		12		301
Service and other		130		3		133
Total revenue	$	2,632	$	169	$	2,801
Nine months ended September 30, 2006
Equipment rentals	$	1,745	$	129	$	1,874
Sales of rental equipment		238		10		248
Sales of new equipment		159		13		172
Contractor supplies sales		276		12		288
Service and other		117		2		119
Total revenue	$	2,535	$	166	$	2,701

26

Three months ended September 30, 2007 and 2006. Equipment rentals in 2007 of $719 increased $26, or 4 percent, reflecting a 4.0 percentage point increase in time utilization on a larger fleet, partially offset by a 2.0 percent decline in rental rates. Equipment rentals represented 72 percent of total revenues for the three months ended September 30, 2007. On a segment basis, equipment rentals represented approximately 72 percent and 79 percent of total revenues for general rentals and trench safety, pump and power, respectively. General rentals equipment rentals increased $25, or 4 percent, reflecting a 3.0 percent increase in same-store rental revenues.

Nine months ended September 30, 2007 and 2006. Equipment rentals in 2007 of $1,947 increased $73, or 4 percent, reflecting a 2.5 percentage point increase in time utilization on a larger fleet, partially offset by a 0.6 percent decline in rental rates. Equipment rentals represented 70 percent of total revenues for the nine months ended September 30, 2007. On a segment basis, equipment rentals represented 69 percent and 78 percent of total revenues for general rentals and trench safety, pump and power, respectively. General rentals equipment rentals increased $70, or 4 percent, reflecting a 3.1 percentage point increase in same-store rental revenues. Trench safety, pump and power equipment rentals increased $3, reflecting increases from cold starts. This benefit was partially offset by a 0.3 percentage point decline in same-store revenues, reflecting the absence of the benefit we received from hurricane-related business in the prior year period.

Sales of rental equipment. For the three and nine months ended September 30, 2007, sales of rental equipment represented approximately 9 percent of our total revenues and our general rentals segment accounted for approximately 95 percent of these sales. Sales of rental equipment for trench safety, pump and power were insignificant. For the three months ended September 30, 2007, sales of rental equipment decreased 10 percent reflecting a change in the mix of equipment sold as we generally sold older equipment in the third quarter 2007 as compared to the prior year.

Sales of new equipment. For the three and nine months ended September 30, 2007, sales of new equipment represented 6 percent of our total revenues and our general rentals segment accounted for approximately 95 percent of these sales. Sales of new equipment for trench safety, pump and power were insignificant. For the three months ended September 30, 2007, sales of new equipment decreased 7 percent reflecting reduced volume.

Sales of contractor supplies. Sales of contractor supplies represent our revenues associated with selling a variety of supplies, including construction consumables, tools, small equipment and safety supplies. Consistent with sales of rental and new equipment, general rentals accounts for substantially all of our contractor supplies sales. For the three months ended September 30, 2007, sales of contractor supplies decreased 6 percent, reflecting reduced volume resulting from a third quarter repositioning of this business to refocus the sales force on our core rental business and begin offering a narrower range of items for sale. We expect this repositioning to lead to stronger gross profit margins for contractor supplies, but on a reduced revenue base. For the nine months ended September 30, 2007, sales of contractor supplies increased 5 percent, reflecting increased volume during the first half of the year.

Service and other. Service and other primarily represents 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. For the three and nine months ended September 30, 2007, service and other revenue increased 10 and 12 percent, respectively. The third quarter results reflect improved pricing and volume while the nine month period reflects increased volume.

Segment Operating Profit

Segment operating profit and operating margin were as follows:

	General rentals			Trench safety, pump and power			Total
Three months ended September 30, 2007
Operating Profit	$	195		$	19		$	214
Operating Margin		20.9	%		30.6	%		21.5	%
Three months ended September 30, 2006
Operating Profit	$	187		$	18		$	205
Operating Margin		20.3	%		29.0	%		20.9	%
Nine months ended September 30, 2007
Operating Profit	$	440		$	44		$	484
Operating Margin		16.7	%		26.0	%		17.3	%
Nine months ended September 30, 2006
Operating Profit	$	409		$	43		$	452
Operating Margin		16.1	%		25.9	%		16.7	%

27

General rentals. For the three and nine months ended September 30, 2007, our operating margin improved 0.6 percentage points, reflecting improved selling, general and administrative expense leverage.

Trench safety, pump and power. For the three months ended September 30, 2007, our operating margin improved 1.6 percentage points, reflecting improved selling, general and administrative expense leverage.

Gross Margin. Gross margins by revenue classification were as follows:

	Three Months Ended September 30,				Nine months Ended September 30,
	2007		2006		2007		2006
Total gross margin	38.1	%	37.7	%	34.6	%	34.9	%
Equipment rentals	42.4	%	41.8	%	38.1	%	38.4	%
Sales of rental equipment	28.2	%	32.2	%	28.4	%	30.6	%
Sales of new equipment	16.1	%	20.0	%	16.9	%	18.0	%
Contractor supplies sales	18.8	%	19.6	%	18.6	%	18.8	%
Service and other	55.6	%	51.2	%	54.9	%	51.3	%

For the three months ended September 30, 2007, total gross profit margin increased 0.4 percentage points primarily reflecting improved gross margins from equipment rentals, partially offset by reduced gross margins on sales of used equipment as well as contractor supplies sales. Equipment rentals gross margin improved 0.6 percentage points reflecting reduced rental costs. The reduction in gross margins on sales of rental equipment reflects a change in the mix of equipment sold as a higher proportion of auction, as opposed to retail, sales occurred in the current period. The reduction in gross margin on contractor supplies sales reflects a change in product mix.

For the nine months ended September 30, 2007, total gross profit margin decreased 0.3 percentage points primarily reflecting reduced gross margins from equipment rentals and sales of rental equipment, partially offset by improved gross margins on service and other. Equipment rentals gross margin decreased 0.3 percentage points reflecting increased rental costs. Gross margins on sales of rental equipment decreased 2.2 percentage points reflecting a change in mix of equipment sold. The gross margin improvement in service and other primarily reflects increased revenues from the licensing of software.

Selling, general and administrative expenses (SG&A). SG&A expense information for the three and nine months ended September 30, 2007 and 2006 was as follows:

	Three Months Ended September 30,						Nine months Ended September 30,
	2007			2006			2007			2006
Total SG&A expenses	$	152		$	156		$	447		$	453
SG&A as a percentage of revenue		15.3	%		15.9	%		16.0	%		16.8	%

SG&A expense primarily includes sales force compensation, bad debt expense, information technology costs, advertising and marketing expenses, third party professional fees, management salaries and clerical and administrative overhead. For the three months ended September 30, 2007, SG&A expense of $152 decreased $4 as compared to 2006 and declined by 0.6 percentage points as a percentage of revenue. This improvement reflects reduced incentive compensation costs as well as a $1 reduction in the level of professional fees associated with regulatory matters. The benefit associated with these matters was partially offset by increased costs incurred in conjunction with our exploration of strategic alternatives and the amendment of our former Chairman’s service agreement, as well as normal inflationary increases.

For the nine months ended September 30, 2007, SG&A expense of $447 decreased $6 as compared to 2006 and declined by 0.8 percentage points as a percentage of revenue. This improvement reflects an $11 reduction in the level of professional fees related to regulatory matters and reduced bad debt expense of $7. The benefit associated with these matters was partially offset by increased costs associated with our exploration of strategic alternatives, the amendment of our former Chairman’s service agreement, and charges associated with the accelerated vesting, upon his June 4, 2007 retirement, of a restricted stock award (see income taxes discussion below) held by our former Chief Executive Officer, as well as normal inflationary increases. For the nine month period ended September 30, 2007, the year-over-year reduction in bad debt expense reflects improved accounts receivable collection experience, write-off trends and credit management.

28

Interest expense, net for the three and nine months ended September 30, 2007 and 2006 was as follows:

	Three Months Ended September 30,				Nine months Ended September 30,
	2007		2006		2007		2006
Interest expense, net	$	44	$	57	$	146	$	157

Interest expense for the three and nine months ended September 30, 2007 decreased by $13 and $11, respectively, and includes $7 and $3, respectively, of interest expense benefits associated with changes in the fair value of interest rate swaps which were de-designated as fair value hedges in February 2007. Interest expense for the three and nine months ended September 30, 2007 reflects the favorable mark-to-market impact of these swaps as well as lower average debt balances, partially offset by the increase in interest rates applicable to our floating rate debt.

Income taxes. The following table summarizes our continuing operations provision for income taxes and the related effective tax rate for the three and nine months ended September 30, 2007 and 2006:

	Three Months Ended September 30,						Nine months Ended September 30,
	2007			2006			2007			2006
Income from continuing operations	$	172		$	144		$	338		$	284
Provision for income taxes		61			56			128			112
Effective tax rate		35.5	%		38.9	%		37.9	%		39.4	%

The difference between the consolidated effective tax rates and the U.S. federal statutory income tax rate of 35 percent primarily relate to state taxes as well as certain non-deductible charges. During the third quarter of 2007, we recorded a benefit of $2 within the income tax provision as a result of the reversal of a valuation allowance. The valuation allowance was related to certain state tax net operating loss carry forwards. Additionally, within the tax provision, a charge of $3 was recorded in the second quarter related to the restricted stock grant referred to in the following paragraph and a benefit of $1 was recorded in the first quarter related to the release of a valuation allowance applicable to foreign tax credits.

Between June 2001 and March 31, 2007, we had been recognizing a tax benefit on compensation expense associated with a restricted stock award made to Mr. Hicks in June 2001. Because this award vested for tax purposes in 2002 and because Section 162(m) of the Internal Revenue Code limits the deductibility of a portion of his compensation, no tax benefit should have been recognized. Accordingly, our results for the second quarter of 2007 include a charge of $3 within the income tax provision, representing the reversal of the cumulative income tax benefit recognized in prior periods. The second quarter effective tax rate also reflects a non-deductible charge of $5 within SG&A for the remaining amortization of this award.

Our effective tax rate is based on recurring factors including the geographical mix of income before taxes and the related tax rates in those jurisdictions. In addition, our effective tax rate will change based on discrete or other nonrecurring events (such as audit settlements) that may not be predictable.

Liquidity and Capital Resources

Liquidity. We manage our liquidity using internal cash management practices, which are subject to (i) the policies and cooperation of the financial institutions we utilize to maintain and provide cash management services, (ii) the legal requirements of the agreements to which we are a party and (iii) the statutes, regulations and practices of each of the local jurisdictions in which we operate.

Our principal existing sources of cash are cash generated from operations, including from the sale of rental equipment, and borrowings available under our revolving credit facility and receivables securitization facility. As of September 30, 2007, we had (i) $490 of borrowing capacity available under the revolving credit facility portion of our $1.55 billion senior credit facility, (ii) $255 of borrowing capacity available under our receivables securitization facility and (iii) cash and cash equivalents of $112. We believe that our existing sources of cash will be sufficient to support our existing operations prior to the closing of the proposed acquisition of our Company by affiliates of Cerberus or, if the closing were not to occur, over the next twelve months.

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We expect that our principal needs for cash relating to our existing operations over the next twelve months (absent a closing of the announced merger) 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 requirements from our existing sources of cash. In addition, we may seek additional financing through the securitization of some of our equipment or real estate or through the use of additional operating leases.

If and when the announced merger closes, we expect our cash needs for debt service to increase significantly. Currently, we anticipate refinancing our existing senior secured credit facilities and accounts receivable securitization facility with new senior secured credit facilities providing up to $2.60 billion in aggregate borrowing capacity (approximately $1.54 billion of which we estimate will be drawn at closing). We also intend to sell approximately $2.55 billion in new second priority senior secured notes and draw down approximately $1.35 billion under a new senior unsecured bridge credit facility. Proceeds from these financings are to be used, in conjunction with an anticipated approximately $1.43 billion in equity financing, to pay for all costs associated with the merger, including the acquisition of our outstanding equity, the cash out of our existing equity awards, the retirement of the Notes pursuant to the terms of our currently pending tender offers, and the payment of transaction-related fees, costs and expenses.

Loan Covenants and Compliance. As of September 30, 2007, we were in compliance with the covenants and other provisions of our senior secured credit facility, the senior notes, the subordinated convertible debentures and our accounts receivables securitization facility.

Sources and Uses of Cash – Continuing Operations. During the nine months ended September 30, 2007, we (i) generated cash from operating activities of $484, (ii) generated cash from the sale of rental equipment of $243 and (iii) received proceeds from the exercise of common stock options of $22. We used cash during this period principally to (i) purchase rental and non-rental equipment of $866 and (ii) purchase other companies for $23.

During the nine months ended September 30, 2006, we (i) generated cash from operating activities of $589, (ii) generated cash from the sale of rental equipment of $248 and (iii) received proceeds from the exercise of common stock options of $64. We used cash during this period principally to (i) purchase rental and non-rental equipment of $837, (ii) fund payments on debt, net of proceeds received, of $158, (iii) retire $64 of subordinated convertible debentures and (iv) purchase other companies for $39.

Our credit ratings as of October 26, 2007 were as follows:

	Corporate Rating	Outlook
Moody’s	B1	RVRD	(1)
S&P	BB-	Negative
Fitch	BB-	Stable

(1) Ratings under review for possible downgrade.

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 agencies. 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.

Relationship between Holdings and URNA. Holdings is principally a holding company and primarily conducts its operations through its wholly owned subsidiary, URNA, and subsidiaries of URNA. Holdings provides certain services to URNA 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 URNA and its subsidiaries.

Item 3. 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 primarily 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 September 30, 2007, we had swap agreements with an aggregate notional amount of $1.2 billion. The effects of the swap agreements were, at September 30, 2007, 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 6  ¹/2 percent Notes through 2012, (ii) $375 of our 7 percent Notes through 2014, and (iii) $375 of our 7 ³/4 percent senior subordinated notes through 2013. Certain of

30

these swaps contain mutual put provisions which allow either party to terminate the swap for the market value of the swap as of certain specified dates between 2007 and 2009. In February 2007, swaps with a notional amount of $250 were modified and, as a result, these swaps have been de-designated as fair value hedges. Accordingly, there may be volatility in our future earnings.

As of September 30, 2007, after giving effect to our interest rate swap agreements, we had an aggregate of $1.7 billion of indebtedness that bears interest at variable rates. The debt that is subject to fluctuations in interest rates includes (i) $160 of borrowings under our revolving Canadian credit facility, (ii) $45 of borrowings under our accounts receivable securitization facility, (iii) $1.2 billion in debt that is subject to interest rate swaps and (iv) $329 of term loans. The weighted-average effective interest rates applicable to our variable rate debt as of September 30, 2007 were (i) 6.9 percent for the revolving credit facility (represents the Canadian rate since the amount outstanding was Canadian borrowings), (ii) 5.4 percent for the accounts receivable securitization facility, (iii) 7.9 percent for the debt subject to our swap agreements and (iv) 7.7 percent for the term loan. As of September 30, 2007, based upon the amount of our variable rate debt outstanding, after giving effect to our interest rate swap agreements, our net income would decrease by approximately $9 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.

Currency Exchange Risk. The functional currency for our Canadian operations is the Canadian dollar. As a result, our future earnings 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 2006 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 addition, we periodically enter into foreign exchange contracts to hedge our transaction exposures. We had no outstanding foreign exchange contracts as of September 30, 2007. We do not engage in purchasing forward exchange contracts for speculative purposes.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) of the Exchange Act, as of September 30, 2007. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2007.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2007 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under note 5 to our unaudited condensed consolidated financial statements of this report is incorporated by reference in answer to this item.

Item 1A. Risk Factors

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our 2006

Form 10-K, which risk factors are incorporated herein by reference, as well as to the additional risk factors described below. You should carefully consider these risk factors in conjunction with the other information contained in this report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted. In addition, these risk factors could cause significant fluctuations in the price of our common stock.

Our exploration of strategic alternatives, which has resulted in the signing of a definitive merger agreement with affiliates of Cerberus, may have an adverse impact on our business operations.

On April 10, 2007, we announced that our board of directors had authorized commencement of a process to explore a broad range of strategic alternatives to maximize shareholder value, including a possible sale of the Company. On July 23, 2007, we announced that we had signed a definitive merger agreement to be acquired by affiliates of Cerberus. There are various risks and uncertainties relating to the strategic alternatives process we have conducted and the resulting merger agreement, including:

• management and employees may be distracted by the process and transition and lose focus on normal business operations or have their time and resources significantly diverted;

• arriving at the merger agreement and implementing its terms is time consuming and expensive and may result in missing or not executing on near or long-term business opportunities;

• perceived uncertainties as to our post-merger direction may result in increased difficulties and expense in recruiting and retaining employees, particularly senior management, and may also impact our relationships with various other constituencies, such as customers and vendors; and

• the outcome of any legal proceedings that have been or may be instituted against us, members of our board of directors and others relating to the merger agreement.

Any of the foregoing could have a material negative impact on our operating results, our financial outlook and/or the price of our common stock.

Failure to complete the proposed merger could adversely affect the Company and our stock price.

Consummation of the proposed merger contemplated by our merger agreement with affiliates of Cerberus is subject to customary closing conditions described in the merger agreement. We cannot guarantee that these closing conditions will be satisfied, or that the proposed merger will be successfully completed.

In the event that the proposed merger is not completed:

• we may not be able to identify and consummate an attractive strategic alternative, and even if we do, we may not be able to successfully achieve the benefits thereof;

• we may lose key employees or members of management;

• our relationships with our other constituencies, such as our customers and vendors, may be substantially disrupted as a result of uncertainties with regard to our business and prospects;

• certain significant costs related to the proposed merger, such as legal and accounting fees, are payable by us whether or not the proposed merger is completed;

• under certain circumstances, if the proposed merger is not completed, the merger agreement requires us to pay a termination (break-up) fee of up to $100,000,000; and

• the market price of shares of our common stock is likely to decline to the extent that the current market price of those shares reflects a market assumption that the proposed merger will be completed.

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Any of the foregoing could have a material negative impact on our operating results, our financial outlook and/or the price of our common stock.

If the proposed merger closes, we will be highly leveraged and will need to devote a substantial portion of our cash flow to debt service, which could, among other things, stress our financial resources and make it more difficult for us to cope with a downtown in our business.

In order to finance the proposed merger, we expect to incur and carry substantial additional debt, both under refinanced senior secured credit facilities and a new senior unsecured bridge credit facility, as well as by the issuance of new second priority senior secured notes. Immediately after closing, we expect to have aggregate borrowings under such facilities (excluding approximately $138 of outstanding letters of credit) and notes of approximately $5.44 billion, with additional borrowing capacity under such facilities of approximately $919.

This high degree of leverage could:

• increase our vulnerability to adverse economic, industry or competitive developments;

• limit our flexibility in planning for, or reacting to, changes in our business or market conditions and place us at a competitive disadvantage compared to competitors;

• require us to devote a substantial portion of our cash flow to debt service and reduce the funds available for other purposes, including operations, capital expenditures and future business opportunities;

• affect our ability to obtain additional financing;

• decrease our profitability and/or cash flow; and

• increase the possibility that we will be unable to service our indebtedness and fund our operations.

If we are unable to service our indebtedness and fund our operations, we will be forced to adopt an alternative strategy that may include reducing or delaying capital expenditures, limiting our growth, seeking additional capital, selling assets and/or restructuring or refinancing our indebtedness. However, even if we adopt an alternative strategy, the strategy may not be successful and we may continue to be unable to service our indebtedness and fund our operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer

The following table provides information about purchases of the Company’s common stock by the Company during the third quarter of 2007:

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share
July 1, 2007 to July 31, 2007	66,353	$	32.54
August 1, 2007 to August 31, 2007	19,473	$	32.33
September 1, 2007 to September 30, 2007	1,139,504	$	32.23
Total	1,225,330

(1) The shares were surrendered to the Company by employees in order to satisfy tax withholding obligations upon the vesting of restricted stock. These shares were not acquired pursuant to any repurchase plan or program. August 2007 includes cashless exercise of 50,000 warrants, with 15,340 shares of common stock being reacquired and 34,660 shares of common stock issued. The shares were reacquired at $32.60 per share. September 2007 includes cashless exercise of 2,531,821 warrants, with 1,139,179 shares of common stock being reacquired and 1,392,642 shares of common stock issued. The shares were reacquired at $32.23 per share.

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Item 6. Exhibits

(a) Exhibits:

Exhibit Number	Description of Exhibit
2(a)	Agreement and Plan of Merger, dated as of July 22, 2007, among United Rentals, Inc., RAM Holdings, Inc. and RAM Acquisition Corp. (incorporated by reference to Exhibit 4.1 to the United Rentals, Inc. Current Report on Form 8-K filed on July 24, 2007 (the “July 2007 8-K”))
3(a)	Amended and Restated Certificate of Incorporation of United Rentals, Inc., (incorporated by reference to Exhibit 3.1 of United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1998)
3(b)	Certificate of Amendment, dated September 29, 1998, to the United Rentals, Inc. Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 4.2 to the United Rentals, Inc. Registration Statement on Form S-3, No. 333-70151)
3(c)	Certificate of Amendment, dated June 7, 2007, to the United Rentals, Inc. Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of United Rentals, Inc. Current Report on Form 8-K filed on June 8, 2007)
3(d)	By-laws of United Rentals, Inc. (amended as of April 4, 2007) (incorporated by reference to Exhibit 3.1 of United Rentals, Inc. Current Report on Form 8-K filed on April 4, 2007)
3(e)	Form of Certificate of Designation for Series C Perpetual Convertible Preferred Stock (incorporated by reference to Exhibit 3(f) of United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
3(f)	Form of Certificate of Designation for Series D Perpetual Convertible Preferred Stock (incorporated by reference to Exhibit 3(g) of United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
3(g)	Form of Certificate of Designation for Series E Junior Participating Preferred Stock (incorporated by reference to Exhibit A of Exhibit 4 of the United Rentals, Inc. Current Report on Form 8-K filed on October 5, 2001)
3(h)	Rights Agreement, dated September 28, 2001, between United Rentals, Inc. and American Stock Transfer & Trust Co., as Rights Agent (incorporated by reference to Exhibit 4 of the United Rentals, Inc. Current Report on Form 8-K filed on October 5, 2001)
3(i)	Amended and Restated Certificate of Incorporation of United Rentals (North America), Inc., (incorporated by reference to Exhibit 3.3 of the United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1998)
3(j)	By-laws of United Rentals (North America), Inc., (incorporated by reference to Exhibit 3.4 of the United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1998)
3(k)	First Amendment to the Rights Agreement, dated as of July 22, 2007, between United Rentals, Inc. and American Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.2 to the July 2007 8-K)
10(a)*	First Amendment, dated August 1, 2007, to the Employment Agreement between United Rentals, Inc. and Michael J. Kneeland
10(b)*	Retention Benefit Agreement, dated as of July 2, 2007, between United Rentals, Inc. and Michael J. Kneeland
10(c)*	Retention Benefit Agreement, dated as of July 2, 2007, between United Rentals, Inc. and Martin Welch III
10(d)*	Retention Benefit Agreement, dated as of July 2, 2007, between United Rentals, Inc. and Roger E. Schwed
31(a)*	Rule 13a-14(a) Certification by Chief Executive Officer
31(b)*	Rule 13a-14(a) Certification by Chief Financial Officer
32(a)*	Section 1350 Certification by Chief Executive Officer
32(b)*	Section 1350 Certification by Chief Financial Officer
99(a)	Voting Agreement, dated as of July 22, 2007, among RAM Holdings, Inc. and RAM Acquisition Corp. and the other parties thereto (incorporated by reference to Exhibit 99.1 to the July 2007 8-K)
99(b)	Warrant Holders Agreement, dated as of July 22, 2007, among RAM Holdings, Inc. and RAM Acquisition Corp. and the other parties thereto (incorporated by reference to Exhibit 99.2 to the July 2007 8-K)
99(c)	Class Action Complaint served by Nathan Brundridge, as Trustee of and for the Brundridge Living Trust in the Superior Court of the State of Connecticut, Judicial District of Stamford Norwalk, on September 28, 2007 (incorporated by reference to Exhibit 99.1 of the United Rentals, Inc. Current Report on Form 8-K filed on October 5, 2007)

* Filed herewith.

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SIGNATURES

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

	UNITED RENTALS, INC.
Dated: October 31, 2007	By:	/s/ TODD G. HELVIE
		Todd G. Helvie
		Senior Vice President and Controller
		/s/ JOHN J. FAHEY
		John J. Fahey
		Vice President-Assistant Corporate Controller and Principal Accounting Officer
	UNITED RENTALS (NORTH AMERICA), INC.
Dated: October 31, 2007	By:	/s/ TODD G. HELVIE
		Todd G. Helvie
		Senior Vice President and Controller
		/s/ JOHN J. FAHEY
		John J. Fahey
		Vice President-Assistant Corporate Controller and Principal Accounting Officer

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EX-10.A

EXHIBIT 10(a)

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

This First Amendment to Employment Agreement (“First Amendment”) between UNITED RENTALS, INC. (the “Company”) and MICHAEL J. KNEELAND (“Employee”) is hereby entered into as of the later date of signing by either of the parties below.

RECITALS:

WHEREAS, the parties entered into an Employment Agreement, dated as of June 5, 2006;

WHEREAS, on March 7, 2007, the Company appointed Employee to the position of Executive Vice President, Chief Operating Officer;

WHEREAS, the parties desire to amend the Employment Agreement to update the references to Employee’s title contained therein;

AND WHEREAS, all other provisions of the Employment Agreement shall remain unchanged;

NOW THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties mutually agree that:

All references in the Employment Agreement to the title of “Executive Vice President, Operations” shall be deleted and replaced by the title of “Executive Vice President, Chief Operating Officer.”

The terms and conditions of all other sections of the Employment Agreement shall remain unchanged and in full force and effect. For the avoidance of doubt, nothing in this First Amendment shall modify Employee’s current position as interim Chief Executive Officer of the Company or his current base salary.

IN WITNESS WHEREOF, the parties have executed this First Amendment to be effective as of the date identified below.

UNITED RENTALS, INC.
By:	/s/ Roger Schwed	/s/ Michael J. Kneeland
Name:	Roger Schwed	MICHAEL J. KNEELAND
Title:	General Counsel
Date:	August 1, 2007	Date: August 1, 2007

EX-10.B

EXHIBIT 10(b)

[United Rentals, Inc. Letterhead]

July 2, 2007

Michael J. Kneeland

320 Stamford Avenue

Stamford, CT 06902

Dear Michael:

As you know, United Rentals, Inc. (the “Company”), acting through the Compensation Committee of its Board of Directors (the “Committee”), has agreed to provide you with the retention benefit described below.

1. Eligibility for Retention Benefit. Provided you remain continuously employed by the Company until the Closing Date of the Change of Control, you shall become entitled to receive the Retention Benefit (as defined below).

2. Amount of Retention Benefit. The amount of Retention Benefit shall be determined by the Committee in its sole discretion, subject to a specified maximum of $350,000, and subject to applicable withholdings. At a date on or prior to the Closing Date, the Committee shall determine the amount and payment details of the Retention Benefit, if any.

3. Definitions. For purposes of this Agreement, the “Closing Date” shall be the date a Change of Control occurs. A “Change of Control” shall be deemed to have occurred if: (i) Any “person” is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Act”)) directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by then outstanding voting securities of the Company, or (ii) there shall be consummated a merger of the Company, the sale or disposition by the Company of all or substantially all of its assets within a 12-month period, or any other business combination of the Company with any other corporation, but not including any merger or business combination of the Company with any other corporation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or business combination. The term “persons” is defined in Section 13(d) of the Act, except that the term “person” shall not include (1) any person or an Affiliate of such person who as of the date of this Agreement owns 10% or more of the total voting power represented by the outstanding voting securities of the Company; and (2) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or a corporation which is owned directly or indirectly by the stockholders of the Company in substantially the same percentage as their ownership in the Company. An “Affiliate” of a person is a person that controls, is controlled by, or is under common control with such person

4. Breach . You understand and agree that the Retention Benefit constitutes additional consideration for, and is contingent upon, your continued observance of any obligations in your Employment Agreement. Accordingly, if the Company reasonably determines on or prior to the Closing Date that you have breached any such obligations or terminates your employment for Cause, the Company shall be entitled, in addition to its other common law and statutory remedies, to withhold any Retention Benefit payments.

5. Modification. No changes, modifications or amendments may be made to this Agreement without the written approval of both you and the Committee.

6. Other Benefit Provisions. The Retention Benefit is intended to be in addition to any other benefits you may currently be entitled to, whether under your Employment Agreement or otherwise, and in no way shall be interpreted as reducing or taking away any benefits you are legally entitled to receive.

7. Interpretation. This Agreement shall be interpreted and enforced pursuant to the laws of the State of Delaware. Prior to the Closing Date, the Committee shall be empowered to make all determinations or interpretations contemplated under this Agreement, which determinations and interpretations shall, if made in good faith, be binding and conclusive on you and the Company. All disputes shall be resolved (and after the Closing Date, all determinations or interpretations shall be made) by binding arbitration as provided in your Employment Agreement.

Please indicate your agreement to the foregoing by executing this Agreement where indicated below.

United Rentals, Inc.
By:	/s/ Craig A. Pintoff
	Craig A. Pintoff
Title:	VP – Human Resources

Agreed and acknowledged as of this 2 day of July, 2007.

/s/ Michael J. Kneeland

Michael J. Kneeland

2

EX-10.C

EXHIBIT 10(c)

[United Rentals, Inc. Letterhead]

July 2, 2007

Martin Welch, III

3022 West Ridge Court

Bloomfield Hills, MI 48302

Dear Martin:

As you know, United Rentals, Inc. (the “Company”), acting through the Compensation Committee of its Board of Directors (the “Committee”), has agreed to provide you with the retention benefit described below.

1. Eligibility for Retention Benefit. Provided you remain continuously employed by the Company until the Closing Date of the Change of Control, you shall become entitled to receive the Retention Benefit (as defined below).

2. Amount of Retention Benefit. The amount of Retention Benefit shall be determined by the Committee in its sole discretion, subject to a specified maximum of $350,000, and subject to applicable withholdings. At a date on or prior to the Closing Date, the Committee shall determine the amount and payment details of the Retention Benefit, if any.

3. Definitions. For purposes of this Agreement, the “Closing Date” shall be the date a Change of Control occurs. A “Change of Control” shall be deemed to have occurred if: (i) Any “person” is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Act”)) directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by then outstanding voting securities of the Company, or (ii) there shall be consummated a merger of the Company, the sale or disposition by the Company of all or substantially all of its assets within a 12-month period, or any other business combination of the Company with any other corporation, but not including any merger or business combination of the Company with any other corporation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or business combination. The term “persons” is defined in Section 13(d) of the Act, except that the term “person” shall not include (1) any person or an Affiliate of such person who as of the date of this Agreement owns 10% or more of the total voting power represented by the outstanding voting securities of the Company; and (2) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or a corporation which is owned directly or indirectly by the stockholders of the Company in substantially the same percentage as their ownership in the Company. An “Affiliate” of a person is a person that controls, is controlled by, or is under common control with such person

4. Breach . You understand and agree that the Retention Benefit constitutes additional consideration for, and is contingent upon, your continued observance of any obligations in your Employment Agreement. Accordingly, if the Company reasonably determines on or prior to the Closing Date that you have breached any such obligations or terminates your employment for Cause, the Company shall be entitled, in addition to its other common law and statutory remedies, to withhold any Retention Benefit payments.

5. Modification. No changes, modifications or amendments may be made to this Agreement without the written approval of both you and the Committee.

6. Other Benefit Provisions. The Retention Benefit is intended to be in addition to any other benefits you may currently be entitled to, whether under your Employment Agreement or otherwise, and in no way shall be interpreted as reducing or taking away any benefits you are legally entitled to receive.

7. Interpretation. This Agreement shall be interpreted and enforced pursuant to the laws of the State of Delaware. Prior to the Closing Date, the Committee shall be empowered to make all determinations or interpretations contemplated under this Agreement, which determinations and interpretations shall, if made in good faith, be binding and conclusive on you and the Company. All disputes shall be resolved (and after the Closing Date, all determinations or interpretations shall be made) by binding arbitration as provided in your Employment Agreement.

Please indicate your agreement to the foregoing by executing this Agreement where indicated below.

United Rentals, Inc.
By:	/s/ Craig A. Pintoff
	Craig A. Pintoff
Title:	VP – Human Resources

Agreed and acknowledged as of this 2nd day of July, 2007.

/s/ Martin Welch

Martin Welch, III

2

EX-10.D

EXHIBIT 10(d)

[United Rentals, Inc. Letterhead]

July 2, 2007

Roger E. Schwed

225 West 106^th Street

New York, NY 10025

Dear Roger:

As you know, United Rentals, Inc. (the “Company”), acting through the Compensation Committee of its Board of Directors (the “Committee”), has agreed to provide you with the retention benefit described below.

1. Eligibility for Retention Benefit. Provided you remain continuously employed by the Company until the Closing Date of the Change of Control, you shall become entitled to receive the Retention Benefit (as defined and in the manner specified below). Notwithstanding the foregoing, you shall also become entitled to receive the Retention Benefit if your employment with the Company is terminated prior to the Closing Date as the result of your death or Disability, by you for Good Reason or by the Company without Cause (as such terms are defined in your Employment Agreement)

2. Amount of Retention Benefit. The total Retention Benefit shall equal $325,000, subject to applicable withholdings. One-half of the Retention Benefit shall be paid on the Closing Date and one-half will be paid six-months after the Closing Date (without regard to whether you are still employed at that time by the Company).

3. Definitions. For purposes of this Agreement, the “Closing Date” shall be the date a Change of Control occurs. A “Change of Control” shall be deemed to have occurred if: (i) Any “person” is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Act”)) directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by then outstanding voting securities of the Company, or (ii) there shall be consummated a merger of the Company, the sale or disposition by the Company of all or substantially all of its assets within a 12-month period, or any other business combination of the Company with any other corporation, but not including any merger or business combination of the Company with any other corporation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or business combination. The term “persons” is defined in Section 13(d) of the Act, except that the term “person” shall not include (1) any person or an Affiliate of such person who as of the date of this Agreement owns 10% or more of the total voting power represented by the outstanding voting securities of the Company; and (2) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or a corporation which is owned directly or indirectly by the stockholders of the Company in substantially the same percentage as their ownership in the Company. An “Affiliate” of a person is a person that controls, is controlled by, or is under common control with such person

4. Breach . You understand and agree that the Retention Benefit constitutes additional consideration for, and is contingent upon, your continued observance of any obligations in your Employment Agreement. Accordingly, if the Company reasonably determines prior to the Closing Date that you have breached any such obligations, or terminates your employment for Cause, the Company shall be entitled, in addition to its other common law and statutory remedies, to withhold any Retention Benefit payments.

5. Modification. No changes, modifications or amendments may be made to this Agreement without the written approval of both you and the Committee.

6. Other Benefit Provisions. The Retention Benefit is intended to be in addition to any other benefits you may currently be entitled to, whether under your Employment Agreement or otherwise, and in no way shall be interpreted as reducing or taking away any benefits you are legally entitled to receive.

7. Interpretation. This Agreement shall be interpreted and enforced pursuant to the laws of the State of Delaware. Prior to the Closing Date, the Committee shall be empowered to make all determinations or interpretations contemplated under this Agreement, which determinations and interpretations shall, if made in good faith, be binding and conclusive on you and the Company. All disputes shall be resolved (and after the Closing Date, all determinations or interpretations shall be made) by binding arbitration as provided in your Employment Agreement.

Please indicate your agreement to the foregoing by executing this Agreement where indicated below.

United Rentals, Inc.
By:	/s/ Craig A. Pintoff
	Craig A. Pintoff
Title:	VP – Human Resources

Agreed and acknowledged as of this 2^nd day of July, 2007.

/s/ Roger E. Schwed

Roger E. Schwed

2

EX-31.A

EXHIBIT 31(a)

CERTIFICATIONS

I, Michael J. Kneeland, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Rentals, Inc. and United Rentals (North America), Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;

4. The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5. The registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.

October 31, 2007

/s/ Michael J. Kneeland

Michael J. Kneeland

Chief Executive Officer

EX-31.B

EXHIBIT 31(b)

CERTIFICATIONS

I, Martin E. Welch III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Rentals, Inc. and United Rentals (North America), Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;

4. The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5. The registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.

October 31, 2007

/s/ MARTIN E. WELCH III

Martin E. Welch III

Chief Financial Officer

EX-32.A

EXHIBIT 32(a)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of United Rentals, Inc. and United Rentals (North America), Inc. (the “Companies”) on Form 10-Q for the period ended September 30, 2007 as filed with the Securities and Exchange Commission (the “Report”), I, Michael J. Kneeland, Chief Executive Officer of the Companies, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

/s/ Michael J. Kneeland

Michael J. Kneeland

Chief Executive Officer

October 31, 2007

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Companies and will be retained by the Companies and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.B

EXHIBIT 32(b)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of United Rentals, Inc. and United Rentals (North America), Inc. (the “Companies”) on Form 10-Q for the period ended September 30, 2007 as filed with the Securities and Exchange Commission (the “Report”), I, Martin E. Welch III, Chief Financial Officer of the Companies, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

/s/ MARTIN E. WELCH III

Martin E. Welch III

Chief Financial Officer

October 31, 2007

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Companies and will be retained by the Companies and furnished to the Securities and Exchange Commission or its staff upon request.