UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

FOR THE FISCAL YEAR ENDED: DECEMBER 31, ~~2010~~ 2011

-OR-

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

Commission File No. 333-144625-01 ~~333-144625~~

333-144625

RSC Holdings III, LLC

(Exact name of registrant as specified in its charter)

RSC Equipment Rental, Inc.

(Exact name of registrant as specified in its charter)

Delaware Arizona (State or other jurisdiction of incorporation or organization)		41-2218971 86-0933835 (I.R.S. Employer Identification No.)
Delaware Arizona		41-2218971 86-0933835
6929 E. Greenway Pkwy Scottsdale, Arizona (Address of principal executive offices)		85254 (zip code)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
6929 E. Greenway Pkwy Scottsdale, Arizona		85254
(Address of principal executive offices)		(zip code)

~~Securities~~Registrant’s ~~registered~~telephone ~~pursuant~~number, toincluding ~~Section 12(b)~~area ~~of the Act~~code: ~~None Securities registered pursuant to Section 12(g) of the Act: None~~

(480) 905-3300

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

The Registrants meet the conditions set forth in General Instructions I (1)(a) and (b) of Form 10-K and are therefore filing this Form with the reduced disclosure format as permitted.

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined under Rule 405 of the Securities ~~Act. YES o NO þ~~

~~Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the~~ Act. YES o¨ NO þ

Indicate by checkmark ~~whether~~if the registrant ~~(1) has~~is ~~filed~~not ~~all reports~~ required to befile ~~filed~~reports by pursuant to Section 13 or Section 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~~. YES þ¨ NO o þ

Indicate by ~~check~~checkmark ~~mark~~ whether the registrant (1) has ~~submitted~~filed ~~electronically~~all ~~and~~reports ~~posted~~required onto ~~its corporate~~be ~~web~~filed ~~site,~~by ifSection 13 ~~any,~~or ~~every~~15(d) ~~Interactive~~of ~~Data~~the ~~File~~Securities ~~required~~Exchange toAct ~~be submitted and posted pursuant to Rule 405~~ of ~~Regulation S-T~~1934 during the preceding 12 months (or for such shorter period that the registrant was required to ~~submit~~file such reports) and ~~post~~(2) has been subject to such ~~files)~~filing requirements for the past 90 days. YES oþ NO o ¨

Indicate by ~~checkmark~~check ifmark ~~disclosure~~whether ofthe ~~delinquent~~registrant ~~filers~~has ~~pursuant~~submitted toelectronically ~~Item 405~~and ofposted ~~Regulation S-K~~on ~~is not~~its ~~contained~~corporate ~~herein~~web site, ~~and~~if ~~will~~any, ~~not~~every beInteractive ~~contained,~~Data File required to ~~the~~be ~~best~~submitted ofand ~~registrant’s~~posted ~~knowledge,~~pursuant into Rule ~~definitive~~405 ~~proxy~~of orRegulation ~~information~~S-T ~~statements~~during ~~incorporated~~the bypreceding ~~reference~~12 inmonths ~~Part III~~(or offor ~~this~~such ~~Form~~shorter ~~10-K or~~period ~~any~~that ~~amendment~~the registrant was required to ~~this~~submit ~~Form~~and ~~10-K~~post such files). YES þ NO ¨

Indicate by checkmark ~~whether~~if ~~the~~disclosure ~~registrant~~of isdelinquent afilers ~~large~~pursuant ~~accelerated~~to ~~filer,~~Item 405 anof Regulation ~~accelerated~~S-K ~~filer,~~is ~~a non-accelerated~~not ~~filer~~contained orherein, ~~smaller~~and ~~reporting~~will ~~company.~~not ~~(See~~be contained, to the ~~definitions~~best of ~~“large~~registrant’s ~~accelerated filer~~knowledge,” ~~“accelerated~~in ~~filer”~~definitive ~~and~~proxy ~~“smaller~~or ~~reporting~~information ~~company”~~statements incorporated by reference in ~~Rule 12b-2~~Part III of ~~the~~this ~~Exchange~~Form ~~Act~~10-K or any amendment to this Form 10-K. ~~(Check~~ ~~one):~~ þ

~~Large~~Indicate ~~accelerated~~by ~~filer~~checkmark owhether ~~Accelerated~~the ~~filer~~registrant ois ~~Non~~a large accelerated filer, þan ~~(Do~~accelerated ~~not~~filer, a ~~check~~non-accelerated iffiler aor smaller reporting company). ~~Smaller~~(See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” oin Rule

~~Indicate by checkmark whether the registrant is a shell company (as defined in Rule~~ 12b-2 of the Exchange Act.) ~~YES~~(Check oone): ~~NO þ~~

NoLarge ~~voting~~accelerated orfiler ~~non-voting~~¨ ~~equity~~Accelerated ~~securities~~filer of¨ ~~the registrants were held by non~~Non-~~affiliates~~accelerated offiler ~~the registrants~~þ asSmaller ofreporting ~~June 30,~~company ~~2010,~~¨ or(Do asnot ofcheck ~~February 4,~~if ~~2011.~~a Assmaller ofreporting ~~February 4, 2011, all of the common stock of the registrant is owned by its ultimate parent~~ company~~, RSC Holdings Inc.~~ )

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) YES ¨ NO þ

No voting or non-voting equity securities of the registrants were held by non-affiliates of the registrants as of June 30, 2011, or as of January 26, 2012. As of January 20, 2012, all of the common stock of the registrant is owned by its ultimate parent company, RSC Holdings Inc.

Documents Incorporated by Reference: None.

TABLE OF CONTENTS

Cautionary Note for Forward-Looking Statements			ii
PART I			1
Item 1. Business			1
Item 1A. Risk Factors			1011
Item 1B. Unresolved Staff Comments			2227
Item 2. Properties			2227
Item 3. Legal Proceedings			2227
Item 4. Reserved			2327
PART II			2327
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			2327
Item 6. Selected Financial Data			2430
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2733
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			4754
Item 8. Financial Statements and Supplementary Data			4854
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			4854
Item 9A. Controls and Procedures			4855
Item 9B. Other Information			4956
PART III			4956
Item 10. Directors, Executive Officers and Corporate Governance			4956
Item 11. Executive Compensation			4956
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			5057
Item 13. Certain Relationships and Related Transactions, and Director Independence			5059
Item 14. Principal Accountant Fees and Services			5061
PART IV			5163
Item 15. Exhibits and Financial Statement Schedules			5163
EX-31.1
EX-31.2
EX-32.1

Introductory Note

Unless the context otherwise requires, in this Annual Report on Form 10-K, (i) “RSC” means RSC Equipment Rental, Inc. and RSC Equipment Rental of Canada, Ltd, which are our operating ~~entities~~ entities and indirect wholly-owned subsidiaries of RSC Holdings, (ii) “RSC Holdings” means RSC Holdings Inc., formerly known as Atlas Copco North America Inc., or ACNA, our ultimate parent company, (iii) “we,” “us” and “our” means RSC Holdings III, LLC and RSC and its consolidated subsidiaries, and when used in connection with disclosure relating to our publicly traded equity securities, RSC Holdings, (iv) “Ripplewood” means RSC Acquisition LLC and RSC Acquisition II LLC, (v) “Oak Hill” means OHCP II RSC, LLC, OHCMP II RSC, LLC and OHCP II RSC COI, LLC, (vi) the “Sponsors” means Ripplewood and Oak Hill, (vii) “ACAB” means Atlas Copco AB, (viii) “ACA” means Atlas Copco Airpower n.v., a wholly owned subsidiary of ACAB, (ix) “ACF” means Atlas Copco Finance S.à.r.l., a wholly owned subsidiary of ACAB, and (x) “Atlas” means ACAB, ACA and ACF, except as otherwise set forth in this Annual Report on ~~Form 10-K.~~

Form 10-K.

Cautionary Note for Forward-Looking Statements

All statements other than statements of historical facts included in this Annual Report on Form 10-K, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “plan”, “seek”, “will”, “should”, “expect”, “intend”, “estimate”, “anticipate”, “believe” or “continue” or the negative thereof or variations thereon or similar terminology.

Forward-looking statements include the statements in this Annual Report on Form 10-K regarding, among other things: management forecasts; efficiencies; cost savings and opportunities to increase productivity and profitability; income and margins; liquidity; anticipated growth; economies of scale; the economy; future economic performance; our ability to maintain liquidity during adverse economic cycles and unfavorable external events; our business strategy; future acquisitions and dispositions; litigation; potential and contingent liabilities; management’s plans; taxes; and refinancing of existing debt.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations are set forth below and disclosed in “Risk Factors” in Part I, Item 1A and elsewhere in this Annual Report on Form 10-K. Factors that could cause actual results or outcomes to differ materially from those projected include, but are not limited to, the following:

• the effect of an economic downturn or other factors resulting in a decline in ~~non-residential~~ construction, non-construction maintenance, capital improvements and capital investment; • intense rental rate price pressure from competitors, some of whom are heavily indebted and may significantly reduce their prices to generate cash to meet debt covenants; from contractor customers some of whom are bidding contracts at cost or below to secure work for their remaining best employees; from industrial customers who generally are experiencing profitability shortfalls in the current economic climate and in return are asking all of their most significant suppliers for price reductions and cost reduction ideas; • the rental industry’s ability to continue to sell used equipment through both the retail and auction markets at prices sufficient to enable us to maintain orderly liquidation values that support our borrowing base to meet our minimum availability and to avoid covenant compliance requirements for leverage and fixed charge coverage contained in our New Senior ABL Revolving Facility; • our ability to comply with our debt covenants; • risks related to the credit markets’ willingness to continue to lend to borrowers with a B rating; • our ability to generate cash and/or incur additional indebtedness to finance equipment purchases; • exposure to claims for personal injury, death and property damage resulting from the use of equipment rented or sold by us;

•

intense rental rate price pressure from competitors, some of whom are heavily indebted and may significantly reduce their prices to generate cash to meet debt covenants; from contractor customers; some of whom are bidding contracts at cost or below to secure work for their remaining best employees; from industrial customers who generally are experiencing profitability shortfalls in the current economic climate and in return are asking all of their most significant suppliers for price reductions and cost reduction ideas;

•

the rental industry’s ability to continue to sell used equipment through both the retail and auction markets at prices sufficient to enable us to maintain orderly liquidation values that support our borrowing base to meet our minimum availability and to avoid covenant compliance requirements for leverage and fixed charge coverage contained in our New Senior ABL Revolving Facility;

•

our ability to comply with our debt covenants;

•

risks related to the credit markets’ willingness to continue to lend to borrowers with a B rating;

•

our ability to generate cash and/or incur additional indebtedness to finance equipment purchases;

• ~~the~~exposure ~~effect of changes in laws and regulations, including those relating~~ to ~~employment~~claims ~~legislation,~~for ~~the~~personal ~~environment and customer privacy~~injury, ~~among~~death ~~others; • fluctuations in fuel~~ and, ~~or supply costs; • heavy reliance on centralized information technology systems; • claims that the software products and information systems on which we rely infringe on the intellectual~~ property ~~rights~~damage ofresulting ~~others;~~from ~~and •~~ the ~~other~~use ~~factors described in Part I, Item 1A~~ of ~~this~~equipment ~~Annual~~rented ~~Report~~or onsold ~~Form~~by ~~10-K under the caption “Risk Factors.”~~us;

In• ~~light of these risks, uncertainties and assumptions,~~ the ~~forward-looking~~effect ~~statements~~of ~~contained~~changes in ~~this~~ ~~Annual~~laws ~~Report on Form 10-K might not prove to be accurate~~ and ~~you should not place undue reliance upon them. All forward-looking statements speak only as of the filing date of this Annual Report on Form 10-K~~regulations, ~~and~~including wethose ~~undertake~~relating ~~no obligation~~ to ~~update~~employment ~~or revise publicly any forward-looking statements~~legislation, ~~whether~~the asenvironment aand ~~result~~customer ~~of new information~~privacy, ~~future~~among ~~events or otherwise.~~ others;

•

fluctuations in both fuel and supply costs;

•

heavy reliance on centralized information technology systems;

•

claims that the software products and information systems on which we rely infringe on the intellectual property rights of others;

•

litigation in respect of the merger with United Rentals, Inc. (“URI”);

•

possibility that costs or difficulties related to the merger transactions will be greater than expected;

•

the risk that the completed transaction does not occur for any reason; and

•

the other factors described in Part I, Item 1A of this Annual Report on Form 10-K under the caption “Risk Factors.”

Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events or otherwise. You should carefully consider the factors discussed above in evaluating these forward-looking statements. For additional information or factors that could materially influence forward-looking statements included in this report, see the risk factors in Part I, Item 1A. under the caption “Risk Factors” in this Annual Report on Form 10-K.

Additional Note

In connection with the proposed transaction between URI and RSC Holdings, a preliminary version of the registration statement and joint proxy statement/prospectus was filed with the SEC by URI on January 17, 2012. The preliminary version is not yet final and will be amended. Neither this Annual Report on Form 10-K nor the preliminary registration statement and joint proxy statement/prospectus filed with the SEC is a substitute for the definitive version of the registration statement and joint proxy statement/prospectus or any other documents that URI or RSC Holdings may file with the SEC or send to its stockholders in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE VERSION OF THE REGISTRATION STATEMENT, JOINT PROXY STATEMENT/ PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

You will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about URI and RSC Holdings, at the SEC’s website at http://www.sec.gov. You will also be able to obtain these documents, free of charge, when filed, by directing a request by mail or telephone to RSC Holdings, Attn: Investor Relations, 6929 E. Greenway Parkway, Suite 200, Scottsdale, AZ 85254, telephone: (480) 281-6956, or from our website, www.RSCrental.com.

RSC Holdings and its directors, executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies from the stockholders of RSC Holdings in connection with the proposed transaction. Information about the directors and executive officers of RSC Holdings and their ownership of RSC Holdings’ common stock is described in Part III, Item 12 of this Annual Report on Form 10-K under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”. Additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed transaction. You may obtain free copies of this document as described in the preceding paragraph.

iii

PART I

Item 1. Business

Our Company

Overview

We are one of the largest equipment rental providers in North America. We operate through a an integrated network of ~~454~~440 rental locations across ten regions in 4043 U.S. states and three Canadian provinces and service customers primarily in the industrial or non-construction, and ~~non-residential~~ construction markets. For ~~2010~~2011, we generated 8586.92% of our revenues from equipment rentals, and we ~~derived~~ derived the remaining 1413.18% of our revenues from sales of used rental equipment, merchandise and other related items. We believe our focus on high margin rental revenues, active fleet management and superior customer service has enabled us to achieve attractive returns on capital employed over a business cycle.

We rent a broad selection of equipment, primarily to industrial or non-construction related companies, and ~~non-residential~~ construction companies, ranging from large equipment such as backhoes, forklifts, air compressors, scissor lifts, aerial work platform booms and skid-steer loaders to smaller items such as pumps, generators, welders and electric hand tools. We also sell used equipment, parts, merchandise and supplies for customers’ maintenance, repair and operations. As of December 31, ~~2010~~2011, our rental equipment fleet had an original equipment fleet cost of approximately $2.37 billion covering over 900 categories of equipment. We strive to differentiate our offerings through superior levels of equipment availability, reliability and service. The strength of our fleet lies in its condition. We actively manage the condition of our fleet in order to provide customers with well -maintained and reliable equipment. We believe our fleet is one of the best maintained among our key competitors, with 9998% of our fleet current with its manufacturer’s recommended preventive maintenance at December 31, ~~2010~~2011. Our disciplined fleet management process supports us in maintaining rental rate discipline and optimizing fleet utilization and capital expenditures. We employ a high degree of equipment sharing and mobility within regions to increase equipment utilization and adjust the fleet size in response to changes in customer demand. Integral to our equipment rental operations is the sale of used equipment and in addition, we sell merchandise complementary to our rental activities.

Organizational Overview

Prior to November 27, 2006, RSC Holdings was wholly owned by Atlas Copco AB (“ACAB”) and Atlas Copco Airpower n.v. (“ACA”), a wholly owned subsidiary of ACAB (together with ACAB, “Atlas”). On October 6, 2006, ~~ACAB~~Atlas ~~and ACA~~ announced that ~~they~~it had entered into a recapitalization agreement ~~(the~~pursuant to which Ripplewood Holdings L.L.C. (“~~Recapitalization Agreement~~Ripplewood”), ~~pursuant~~and toOak ~~which~~Hill Capital Partners (“Oak Hill” and collectively with Ripplewood, “the Sponsors”) ~~acquired~~would acquire 85.5% of RSC Holdings (the “Recapitalization”). The Recapitalization closed on November 27, 2006 ~~(the “Recapitalization Closing Date”)~~. Prior to the closing of the Recapitalization, RSC Holdings formed RSC Holdings I, LLC, which is a direct wholly owned subsidiary of RSC Holdings; RSC Holdings II, LLC, which is a direct wholly owned subsidiary of RSC Holdings I, LLC; and RSC Holdings III, LLC, which is a direct wholly owned subsidiary of RSC Holdings II, LLC. RSC Equipment Rental, Inc. is a direct subsidiary of RSC Holdings III, LLC; and RSC Equipment Rental of Canada Ltd., is a direct subsidiary of RSC Equipment Rental, Inc. RSC is the operating entity of RSC Holdings.

As of the closing of the Recapitalization, on November 27, 2006, we borrowed $1,124.0 million under a senior secured asset-based loan facilities (the “Old Senior ABL Facilities”) and $1,130.0 million under a senior second-lien term loan facility (the “Second Lien Term Facility”). The Old Senior ABL Facilities consisted of a $1,450.0 million revolving credit facility (the “Old Senior ABL Revolving Facility”) and a term loan facility in the initial amount of $250.0 million (the “Old Senior ABL Term Loan”). We repaid the Old Senior ABL Term Loan in full in July 2009. We repaid the Second Lien Term Facility in full in January 2011. On February 9, 2011, we entered into a new senior secured asset-based loan facility (the “New Senior ABL Revolving Facility”) and repaid in full the Old Senior ABL Revolving Facility.

RSC Holdings is the sole member of RSC Holdings I, LLC, which, in turn, is the sole member of RSC Holdings II, LLC, which, in turn, is the sole member of RSC Holdings III, LLC. RSC Holdings III, LLC is the parent of RSC. Because RSC Holdings III, LLC is a limited liability company that does not have a Board of Directors, its business and affairs are managed by the Board of Directors of RSC Holdings, its ultimate parent.

As of December 31, 2010 Oak Hill, Ripplewood and ACF own 33.6%, 4.3% and 7.3%, respectively of RSC Holdings’ issued and outstanding common stock.

As of December 31, 2011 Oak Hill owned 33.4% of RSC Holdings’ issued and outstanding common stock.

On December 15, 2011, RSC Holdings entered into a definitive merger agreement (the “Merger Agreement”) with URI pursuant to which RSC Holdings will be merged (the “Merger”) with and into URI, with URI continuing as the surviving corporation of the Merger. Upon completion of the Merger, each issued and outstanding share of RSC Holdings’ common stock (other than shares owned by RSC Holdings, URI or any of their direct or indirect wholly owned subsidiaries, in each case not held on behalf of third parties, and shares with respect to which appraisal rights are properly exercised and not withdrawn) will be converted into the right to receive (i) $10.80 in cash and (ii) 0.2783 of a share of URI common stock, in each case without interest. The board of directors of each of RSC Holdings and URI has unanimously approved the Merger and the Merger Agreement and has recommended that its stockholders vote in favor of the adoption of the Merger Agreement.

The Merger is expected to close by the end of the first half of 2012 and is subject to customary closing conditions, including approval of stockholders and necessary regulatory approvals.

Business Strategy

Drive profitable volume growth. Through our high quality fleet, large scale and national footprint and superior customer service, we intend to take advantage of the long-term opportunities for profitable growth primarily within the North American equipment rental market by:

• continuing to drive the profitability of existing locations and pursuing same store growth; • investing in and maintaining our high quality fleet to meet local customer demands; • leveraging our reputation for superior customer service to increase our customer base; • increasing our market penetration by opening new locations in targeted markets to leverage existing infrastructure and customer relationships; • increasing our presence in complementary rental and service offerings to increase same store revenues, margins and return on investment; • aligning incentives for local management teams with our strategy; and • pursuing selected acquisitions in attractive markets, subject to economic conditions.

•

investing in and maintaining our high quality fleet to meet local customer demands;

•

leveraging our reputation for superior customer service to increase our customer base;

•

increasing our market penetration by opening new locations in targeted markets to leverage existing infrastructure and customer relationships;

•

increasing our presence in complementary rental and service offerings to increase same store revenues, margins and return on investment;

•

aligning incentives for local management teams with our strategy; and

•

pursuing selected acquisitions in attractive markets, subject to economic conditions.

Prioritize profit margins, free cash flow generation and return on capital. We intend to manage our operations by continuing to:

• focus on the higher margin rental business; • actively manage the quality, reliability and availability of our fleet and offer superior customer service to support our premium pricing strategy; • evaluate each new investment in fleet based on local demand and expected returns; • deploy and allocate fleet among our operating regions based on pre-specified return thresholds; • use our size and market presence to achieve economies of scale in capital investment; • actively sell under-utilized fleet to balance supply with demand, thereby right-sizing the fleet; • close locations with unfavorable long-term prospects; and • focus on industrial or non-construction growth by actively investing in people, branch locations and service offerings.

•

actively manage the quality, reliability and availability of our fleet and offer superior customer service to support our premium pricing strategy;

•

evaluate each new investment in fleet based on local demand and expected returns;

•

deploy and allocate fleet among our operating regions based on pre-specified return thresholds;

•

use our size and market presence to achieve economies of scale in capital investment;

•

actively sell under-utilized fleet to balance supply with demand, thereby right-sizing the fleet;

•

close locations with unfavorable long-term prospects; and

•

focus on industrial or non-construction growth by actively investing in people, branch locations and service offerings.

Further enhance our industry leading customer service. We believe that our position as a leading provider of rental equipment is driven in large part by our superior customer service. Continuing to provide superior customer service and maintaining our reputation for such service will provide us an opportunity to further expand our customer base and increase our share of the fragmented North American equipment rental market.

Business

Our business is focused on equipment rental, including sales of used rental equipment and the sale of merchandise that is related to the use of our rental equipment.

We offer for rent over 900 categories of equipment on a daily, weekly or monthly basis. The type of equipment that we offer ranges from large equipment such as backhoes, forklifts, air compressors, scissor lifts, aerial work platform booms and skid-steer loaders to smaller items such as pumps, generators, welders and electric hand tools.

We routinely sell used rental equipment and invest in new equipment to manage the size and composition of our fleet and to adjust to changes in demand for specific rental products. We realize what we believe to be attractive sales prices for our used equipment due to our rigorous preventive maintenance program. We sell used rental equipment primarily through our existing location network and, to a lesser extent through other means, including equipment auctions and brokers. As a convenience for our customers, we offer for sale a broad selection of contractor supplies, including safety equipment such as hard hats and goggles, consumables such as blades and gloves, tools such as ladders and shovels and certain other ancillary products. We also sell a small amount of new equipment.

Operations

We currently operate in two geographic divisions, the Gulf and Northern divisions, overseeing a total of ten operating regions. Each division is overseen by a divisional senior vice president and each region is headed by a regional vice president. Decisions regarding the acquisition and deployment of fleet are made by the executive management team, which includes the divisional senior vice presidents.

Our operating regions typically have six to seven districts headed by a district manager overseeing six to seven rental locations and each location is managed by a location manager. As of December 31, ~~2010~~2011 our Canadian region, which is part of the Northern Division, ~~has~~had ~~five districts~~four districts and 1918 rental locations. In ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, 6.49%, 56.24% and 5.52%, respectively, of our revenue was derived from Canada. As of December 31, ~~2010~~2011 and ~~2009~~2010, 6.2% and 56.42% of our long-lived assets, and 54.18% and 45.31% of our total assets were located in Canada. See Note 1819 to our consolidated financial statements for further business segment and geographic information.

Operating within guidelines established and overseen by our executive management team, regional and district personnel are able to make decisions based on the needs of their customers. Our executive management team conducts monthly operating reviews of regional performance and also holds formal meetings with representatives of each operating region throughout the year. These meetings encompass operational and financial reviews, leadership development and regional near-term strategy. Regional vice presidents, district managers and location managers are responsible for management and customer service in their respective areas and are directly responsible for the financial performance of their respective region, district and location, and their variable compensation is tied to the profitability of their area.

Customers

We have long and stable relationships with most of our customers, including the majority of our top 20 accounts. During 2010, we serviced approximately 224,000 customers, primarily in the industrial or non-construction, and non-residential construction markets. During 2010, no one customer accounted for more than 2% of our rental revenues, and our top 10 customers combined represented less than 15% of our rental revenues. We do not believe the loss of any one customer would have a material adverse effect on our business.

We have a diversified customer base consisting of two major end-markets: industrial or non-construction; and non-residential construction markets. Our customers represent a wide variety of industries, such as, petrochemical, paper/pulp, food processing and non-residential construction. Further, non-residential construction is comprised of different segments, including: office, power, commercial, healthcare and educational construction. Serving a number of different industries enables us to reduce our dependence on a single or limited number of customers in the same business. Activity in the construction market tends to be susceptible to seasonal fluctuations in certain parts of the country, resulting in changes in demand for our rental equipment.

Customers from the industrial or non-construction, and non-residential construction markets accounted for approximately 97% of our rental revenues for 2010. Non-residential construction customers vary in size from national and regional to local companies and private contractors and typically make use of the entire range of rental equipment and supplies that we offer. Non-residential construction projects vary in terms of length, type of equipment required and location requiring responsive and flexible services.

Customers

We have long and stable relationships with most of our customers, including the majority of our top 20 accounts. During 2011, we serviced approximately 202,000 customers, primarily in the industrial or non-construction, and construction markets. During 2011, no one customer accounted for more than 2% of our rental revenues, and our top 10 customers combined represented less than 10% of our rental revenues. We do not believe the loss of any one customer would have a material adverse effect on our business.

We have a diversified customer base consisting of two major end-markets: industrial or non-construction; and construction markets. Our customers represent a wide variety of industries, such as, petrochemical, mining, paper/pulp, food processing and construction. Further, construction is comprised of different segments, including: office, power, commercial, healthcare and educational construction. Serving a number of different industries enables us to reduce our dependence on a single or limited number of customers in the same business. Activity in the construction market tends to be susceptible to seasonal fluctuations in certain parts of the country, resulting in changes in demand for our rental equipment.

Construction customers vary in size from national and regional to local companies and private contractors and typically make use of the entire range of rental equipment and supplies that we offer. Construction projects vary in terms of length, type of equipment required and location requiring responsive and flexible services.

Rental services for industrial or non-construction customers can be grouped into the following activities:

• “run and maintain,” which relates to day to day maintenance; ~~• “turnaround,” which relates to major planned general overhaul of operations; and • “capital projects,” which relate to smaller expansion or modification work.~~

In• ~~our experience~~“turnaround,” industrial or non-construction customers engage in long-term service contracts with trusted suppliers to meet their equipment requirements. In order to capitalize on this trend, we operate rental yards on-site at the facilities of some of our largest industrial or non-construction customers pursuant to one to five year agreements that may be cancelled by either party upon 30 days’ notice. Under these agreements, we typically agree to service all of our customers’ equipment rental needs, including products we do not typically rent. The purpose of our one to five year agreements is to provide framework for the business relationship in the event future rental transactions occur. Specifically, these agreements establish, among other things, the term of the onsite rental yard, administrative responsibilities, equipment availability, pricing, jobsite conditions, invoicing, dispute resolution, etc. The fact that we operate an onsite rental yard is not a guarantee that a customer will have a rental need. Revenue is recognized if and when a customer rents equipment from one of our onsite yards at which ~~time~~relates a separate rental agreement is executed. Rental revenue, which accrues in accordance with the rates outlined in the service contract, is recognized over the applicable rental period. We have also developed a proprietary software application, Total Control®, which provides our industrial or non-construction customers with a single in-house software application that enables them to ~~monitor~~major ~~and~~planned ~~manage~~general ~~all their~~overhaul rental equipment. This software can be integrated into the customers’ enterprise resource planning system. Total Control® is a unique customer service tool that enables us to develop strong, long-term relationships with our larger customers. Our customers are not charged for the use of ~~Total~~operations; ~~Control®, nor do we charge higher rates for rental equipment rented through Total Control®.~~ and

~~Residential~~• ~~construction~~“capital ~~customers~~projects,” ~~are~~which ~~located~~relate ~~throughout~~to ~~our~~smaller ~~operating~~expansion ~~regions~~or ~~and~~modification ~~accounted for approximately 3% of our rental revenues for 2010~~work.

~~Customer~~In ~~Service.~~our Toexperience, ~~ensure~~industrial ~~prompt~~or ~~response~~non-construction customers engage in long-term service contracts with trusted suppliers to ~~customer~~meet ~~needs~~their equipment requirements. In order to capitalize on this trend, we operate arental ~~24/7~~yards inon-~~house call~~site ~~center,~~at ~~which~~the wefacilities ~~believe~~of ~~gives~~some usof aour ~~competitive~~largest ~~advantage~~industrial byor ~~providing~~non-construction ~~our~~ customers ~~full~~pursuant to one to five year agreements that ~~access~~generally may be cancelled by either party upon 30 days’ notice. Under these agreements, we typically agree to service all of our ~~employees~~customers’ onequipment ~~call~~rental needs, ~~enabling~~including ~~appropriate~~products ~~support~~we atdo ~~any~~not ~~time~~typically rent. ~~Our~~The ~~in-house~~purpose ~~call~~of our one ~~center~~to ~~staff~~five year agreements is ~~highly~~to ~~trained~~provide ~~and~~a ~~has~~framework ~~access~~for tothe ~~our~~business ~~customer~~relationship ~~related~~in ~~databases~~the ~~providing~~event ~~clients~~future rental transactions occur. Specifically, these agreements establish, among other things, the term of the onsite rental yard, administrative ~~with~~responsibilities, ~~best-in-class~~equipment ~~service~~availability, pricing, jobsite conditions, invoicing, dispute resolution, and other responsibilities. WeThe ~~also~~fact ~~pursue~~that we operate an onsite rental yard is not a ~~number~~guarantee ofthat ~~initiatives~~a tocustomer ~~assess~~will have a rental need. Revenue is recognized if and ~~enhance~~when a customer rents equipment from one of our onsite yards at which time a separate rental agreement is executed. Rental revenue, which accrues in accordance with the rates outlined in the service contract, is recognized over the ~~satisfaction~~applicable rental period. ~~Using~~We anhave ~~independent~~also ~~third~~developed ~~party~~a weproprietary ~~contact~~software ~~approximately~~application, 23Total Control®,~~000~~ which ofprovides our industrial or non-construction customers ~~annually~~ with a single in-house software application that enables them to ~~determine~~monitor ~~their~~and ~~overall~~manage ~~satisfaction~~all ~~levels~~their rental equipment. WeThis ~~also~~software ~~use~~can anbe ~~independent~~integrated ~~third~~into ~~party~~the tocustomers’ enterprise resource ~~test~~planning ~~the~~system. ~~quality~~Total ofControl® ~~our~~is ~~service~~a ~~levels~~unique bycustomer ~~performing~~service ~~secret~~tool ~~shop~~that ~~calls~~enables us to ~~evaluate~~develop ~~effectiveness~~strong, long-term relationships with our larger customers. Our customers are not charged for the use of Total Control®, ~~identify~~nor ~~coaching~~do ~~opportunities~~we ~~and~~charge tohigher ~~evaluate~~rates ~~courtesy~~for ~~and~~rental ~~staff~~equipment ~~knowledge~~rented through Total Control®.

~~Industry~~Customer ~~Overview~~Service. To ensure prompt response to customer needs, we operate a 24/7 in-house call center, which we believe gives us a competitive advantage by providing our customers full access to all our employees on call, enabling appropriate support at any time. Our in-house call center staff is highly trained and has access to our customer related databases providing clients with best-in-class service. We also pursue a number of initiatives to assess and enhance customer satisfaction. Using an independent third party, we contact approximately 20,000 of our customers annually to determine their overall satisfaction levels. We also use an independent third party to test the quality of our service levels by performing secret shop calls to evaluate effectiveness with customers, identify coaching opportunities and to evaluate courtesy and staff knowledge.

Based on industry sources, we estimate the U.S. construction equipment rental industry had rental revenues of approximately $22 billion in 2010. This represents a compound annual growth rate of approximately 6% since 1990.

The industry’s principal end-markets for rental equipment are industrial or non-construction, non-residential construction and residential construction markets. While the construction industry has to date been the principal user of rental equipment, industrial or non-construction companies, utilities and others are increasingly using rental equipment for plant maintenance, turnaround projects and other operations. According to U.S. Department of Commerce data (which is preliminary and has not been adjusted for inflation), the value of non-residential construction put in place in the United States increased approximately 10% in 2008 compared with 2007 and decreased 8% in 2009 compared to 2008, and decreased 14% in 2010 compared to 2009.

Given the improving economic environment, third party economists estimate that both non-residential construction activity and industrial or non-construction activity will be up for the full year 2011. We expect 2011 to be a year of strong positive growth with rental volume and rates comparing favorably to 2010.

Industry Overview

Based on industry sources, we estimate the U.S. construction equipment rental industry had rental revenues of approximately $25 billion in 2011. This represents a compound annual growth rate of approximately 6.5% since 1990.

The industry’s principal end-markets for rental equipment are industrial or non-construction and construction markets. While the construction industry has to date been the principal user of rental equipment, industrial or non-construction companies, utilities and others are increasingly using rental equipment for plant maintenance, turnaround projects and other operations. According to U.S. Department of Commerce data (which is preliminary and has not been adjusted for inflation), the value of non-residential construction put in place in the United States decreased 9% in 2009 compared to 2008, and decreased 15% in 2010 compared to 2009. For the eleven months ended November 30, 2011 the value of non-residential construction put in place in the United States decreased 3% compared to the eleven months ended November 30, 2010.

We believe that long-term industry growth, apart from reflecting general economic conditions and cyclicality is driven by end-user markets that increasingly recognize the many advantages of renting equipment rather than owning, including:

• avoiding the large capital investment required for equipment purchases; • accessing a broad selection of equipment and selecting the equipment best suited for each particular job; • reducing storage, maintenance and transportation costs; and • accessing the latest technology without investing in new equipment.

•

accessing a broad selection of equipment and selecting the equipment best suited for each particular job;

•

reducing storage, maintenance and transportation costs; and

•

accessing the latest technology without investing in new equipment.

Fleet

As of December 31, ~~2010~~2011, our rental fleet had an original equipment fleet cost of $2.37 billion covering over 900 categories of equipment, and in ~~2010~~2011, our rental revenues were $1,~~060~~312.3 5 million. Rental terms for our equipment vary depending on the customer’s needs, and the average rental term in 2011 ~~2010~~ was approximately 12 13 days. We believe that the size of our purchasing program and the relative importance of our business to our suppliers allow us to purchase fleet at favorable prices and on favorable payment terms. We believe that our highly disciplined approach to acquiring, deploying, sharing, maintaining and divesting our fleet represents a key competitive advantage. The following table provides a breakdown of our fleet in terms of original equipment fleet cost as of December 31, ~~2010~~2011.

Equipment Rental Fleet Breakdown

As of December 31, 2010	% of Total
As of December 31, 2011	% of Total
Aerial work platform (AWP) booms		31.54
Fork lifts		21.85
Earth moving		15.53
AWP scissors		109.12
Trucks		5.49
Air compressors		34.91
Generators/Light towers		3.38
Compaction		2.1
Other		6.47

Fleet Management Process. We believe that our disciplined fleet management process, whereby new investments are evaluated on strict return guidelines and used equipment sales targets are set at a local level to right-size the fleet, supports optimal fleet utilization. Consistent with our decentralized operating structure, each region is responsible for the quality of its allocated fleet, providing timely fleet maintenance, fleet movement, sales of used equipment and fleet availability. This process is led by regional fleet directors who make investment/divestment decisions within strict return on investment guidelines. Local revenues are forecasted on a location-by-location basis. Regional vice presidents use this information to develop near term regional customer demand estimates and appropriately allocate investment requirements on the basis of targeted utilization and rental rates.

The regional fleet process is overseen by our corporate fleet management, which is responsible for the overall allocation of the fleet among and between the regions. We evaluate all electronic investment requests by regional fleet directors and develop and enforce a ceiling for the fleet size for each region based on short-term local outlook, return and efficiency requirements and need at the time, and identify under-utilized equipment for sale or internal transfer to right-size the fleet at a local and company level.

Corporate fleet management will accept a new capital investment request only if such investment is deemed to achieve a pre-specified return threshold and if the request cannot be satisfied through internal fleet reallocation. Divestments or fleet transfers are evaluated when the fleet generates returns below the pre-specified threshold. If corporate fleet management cannot identify a need for a piece of equipment in any region, the equipment is targeted for sale. Our rigorous preventive maintenance program enables us to realize attractive sales prices for used rental equipment relative to the underlying environment. We sell used rental equipment through our existing location network and, to a lesser extent through other means, including equipment auctions and brokers.

5We also continuously monitor the profitability of our equipment through our information management systems. Each piece of equipment is tracked and evaluated on a number of performance criteria, including time utilization rate, average billing rate, preventive maintenance, age and, most importantly, return on investment. We utilize this data to help guide the transfer of equipment to locations where the highest utilization rates, highest prices and best returns can be achieved. Pricing decisions are made at a local level to reflect current market conditions. Daily reports, which allow for review of agreements by customer or contract, enable local teams to make real time adjustments to market conditions and monitor developing trends.

~~Table~~We made proprietary improvements to our information management systems to integrate our maintenance and reservation management systems, which prioritize equipment repairs based on customer reservations and time in shop. The majority of ~~Contents~~major repairs are outsourced to enable us to focus on maintenance and parts replacement. We implemented a rigorous preventive maintenance program that increases reliability, decreases maintenance costs and improves fleet availability and the ultimate sales price we realize on the sale of used equipment. At December 31, 2011, 98% of our fleet was current on its manufacturer’s recommended preventive maintenance.

We also continuously monitor the profitability of our equipment through our information management systems. Each piece of equipment is tracked and evaluated on a number of performance criteria, including time utilization rate, average billing rate, preventive maintenance, age and, most importantly, return on investment. We utilize this data to help guide the transfer of equipment to locations where the highest utilization rates, highest prices and best returns can be achieved. We have tools to identify optimal pricing strategies for rental equipment at the local level. Pricing decisions are made at a local level to reflect current market conditions. Daily reports, which allow for review of agreements by customer or contract, enable local teams to make real time adjustments to market conditions and monitor developing trends.

We have also made proprietary improvements to our information management systems, such as integrating our maintenance and reservation management systems, which prioritize equipment repairs based on customer reservations and time in shop. The majority of major repairs are outsourced to enable us to focus on maintenance and parts replacement. We have also implemented a rigorous preventive maintenance program that increases reliability, decreases maintenance costs and improves fleet availability and the ultimate sales price we realize on the sale of used equipment. At December 31, 2010, 99% of our fleet was current on its manufacturer’s recommended preventive maintenance.

Fleet Procurement. We believe that our size and focus on long-term supplier relationships enable us to purchase equipment directly from manufacturers at favorable prices and on favorable terms. We do not enter into long-term purchase agreements with equipment suppliers because we wish to preserve our ability to respond quickly and beneficially to changes in demand for rental equipment. To ensure security of supply, we do, however, maintain non-binding arrangements with our key suppliers and we communicate frequently with them so that they can plan their production capacity needs. Accordingly, original equipment manufacturers deliver equipment to our facilities based on our current needs in terms of quantity and timing. We have negotiated favorable payment terms with the majority of our equipment suppliers. We believe that our ability to purchase equipment on what we believe are favorable terms represents a key competitive advantage afforded to us by the scale of our operations.

Generally, we purchase rental equipment from two suppliers for each major category that we offer for rent. We believe that while selectively partnering with these existing suppliers, if needed, we could readily replace any of the suppliers if it were no longer advantageous to purchase equipment from them. Our major equipment suppliers include companies such as JLG, Skyjack, Bobcat and John Deere. In ~~2010~~2011, we purchased $~~327~~616.1 2 million of new rental equipment compared to $46327.4 1 million and $~~258~~46.7 4 million in ~~2009~~2010 and ~~2008~~2009, respectively.

Fleet Condition. We believe our diverse equipment fleet is one of the best maintained and most reliable among our key competitors. At December 31, 2010, the average age of our fleet was 44 months and we expect our fleet age to improve in 2011 due primarily to our anticipated capital purchases. Through our fleet management process discussed above under “Fleet Management Process,” we actively manage the condition of our fleet to provide customers with well maintained and reliable equipment and to support our premium pricing strategy.

Sales and Marketing. We market our products and services through:

• a branch-based sales force operating out of our network of locations; • local and national advertising efforts; • our self-service, web-based solution: RSC Online®; • specialized Business Development Managers focusing on regional and national customers; and • specialized National Account Managers focusing on our largest strategic relationships.

Sales Force. We believe that our sales force is one of the industry’s most productive and highly trained. As of December 31, 2010, we had an inside sales team performing a variety of functions such as handling inbound customer rental requests and servicing customers at each branch and outside sales employees servicing existing customers and soliciting new business on construction or industrial sites. Our sales force uses a customer relationship software application to target customers in their specific area, and we develop customized marketing programs for use by our sales force by analyzing each customer group for profitability, buying behavior and product selection. In 2010, we converted our customer relationship management system from a proprietary platform to Salesforce.com. All members of our sales force are required

toFleet ~~attend~~Condition. We ~~in-house~~believe ~~training~~our ~~sessions~~diverse toequipment ~~develop~~fleet ~~product~~is ~~and~~one ~~application~~of ~~knowledge,~~the ~~sales~~best ~~techniques~~maintained and ~~financial~~most ~~acumen~~reliable among our key competitors. ~~Our~~At ~~sales~~December 31, ~~force~~2011, isthe ~~supported~~average byage ~~regional~~of ~~sales~~our ~~and~~fleet ~~marketing~~was 42 months, which improved from 44 months at December 31, 2010 due primarily to capital purchases. Through our fleet management ~~managers~~process discussed above under “Fleet Management Process,” ~~district~~we ~~sales~~actively ~~managers~~manage the condition of our fleet to provide customers with well- maintained and ~~corporate~~reliable ~~marketing~~equipment and ~~sales~~to ~~departments~~support our premium pricing strategy.

Sales and Marketing. We market our products and services through:

•

a branch-based sales force operating out of our network of locations;

•

local and national advertising efforts;

•

our self-service, web-based solution: RSC Online^®;

•

specialized Business Development Managers focusing on regional and national customers; and

•

specialized National Account Managers focusing on our largest strategic relationships.

Sales Force. We believe that our sales force is one of the industry’s most productive and highly trained. As of December 31, 2011, we had an inside sales team performing a variety of functions such as handling inbound customer rental requests and servicing customers at each branch and outside sales employees servicing existing customers and soliciting new business on construction or industrial sites. Our sales force uses a customer relationship software application to target customers in their specific area, and we develop customized marketing programs for use by our sales force by analyzing each customer group for profitability, buying behavior and product selection. In 2010, we converted our customer relationship management system from a proprietary platform to Salesforce.com. All members of our sales force are required to attend in-house training sessions to develop product and application knowledge, sales techniques and financial acumen. Our sales force is supported by regional sales and marketing managers, district sales managers and corporate marketing and sales departments.

RSC Online^®. We provide our customers with a self-service, web-based solution, RSC Online^®. Our customers can reserve equipment online, review reports, use our report writer tool to create customized reports, terminate rental equipment reservations, schedule pick-ups and make electronic payments 24 hours a day, 7 days a week. In addition, we maintain a home page on the Internet (www.rscrental.com) that includes a description of our products and services, our geographic locations and our online catalogue of used rental equipment for sale, as well as live 24/7 “click to chat” support.

Information Systems

We operate a highly customized rental information management system through which key operational and financial information is made available on a daily basis. Our management team uses this information to monitor current business activities closely, looking at customer trends and proactively managing changes in the marketplace. Our enterprise resource management system is comprised of third-party licensed software and a number of proprietary enhancements covering, among others, financial performance, fleet utilization, service, maintenance and pricing. The system fully integrates all location operations such as rentals, sales, service and cash management, with the corporate activities, including finance, fixed asset and inventory management. All rental transactions are processed real-time through a centralized server and the system can be accessed by employees at the point of sale to determine equipment availability, pricing and other relevant customer specific information. Primary business servers are outsourced including the provision of a disaster recovery system.

Members of our management can access all of these systems and databases throughout the day at all of our locations or remotely through a secure key to analyze items such as:

•

fleet utilization and return on investment by individual asset, equipment category, location, district or region;

•

pricing and discounting trends by location, district, region, salesperson, equipment category or customer;

•

revenue trends by location, district, region, salesperson, equipment category or customer; and

•

financial results and performance of locations, districts, regions and the overall company.

We believe that our use of information technology is a key component in our successful performance and that continued investment in this area will help us maintain and improve upon our customer satisfaction, responsiveness and flexibility.

Intellectual Property

We have registered the marks RSC and RSC Equipment Rental and certain other trademarks in the United States and Canada. We have not registered all of the trademarks we own and use in the business. Generally, registered trademarks have perpetual life, provided that ~~they~~the trademarks are renewed on a timely basis and continue to be used properly as trademarks.

Competition

The equipment rental industry is highly competitive and highly fragmented, with a few companies operating on a national scale and a large number of companies operating on a regional or local scale. We are one of the principal national-scale industry participants in the United States and Canada; the other national-scale industry participants being ~~United Rentals~~URI, ~~Inc.,~~ Hertz Equipment Rental Corporation and Sunbelt Rentals. Certain of our key regional competitors are Neff Rental, Inc., NES, Ahern Rentals, Inc. and Sunstate Equipment Co. A number of individual Caterpillar dealers also participate in the equipment rental market in the United States and Canada.

Competition in the equipment rental industry is intense, and is defined by equipment availability, reliability, service and price. Our competitors may seek to compete aggressively on the basis of pricing or fleet availability. To the extent that we choose to match our competitors’ downward pricing, it could have a material adverse impact on our results of operations. To the extent that we choose not to match or remain within a reasonable competitive distance from our competitors’ pricing, it could also have an adverse impact on our results of operations, as we may lose rental volume.

the extent that we choose not to match or remain within a reasonable competitive distance from our competitors’ pricing, it could also have an adverse impact on our results of operations, as we may lose rental volume. In 2010, supply exceeded demand, resulting in downward pressure on rental rates and used equipment prices within the industry.

Business Environment and Outlook

Our revenues and operating results are driven in large part by activities in the industrial or non-construction market and the ~~non-residential~~ construction market. ~~On a combined basis we currently derive approximately 97% of our rental revenues from these two markets.~~

The industrial or non-construction market generated approximately 5960% of our rental revenues during the year ended December 31, ~~2010.~~2011, ~~The~~while ~~non-residential~~the construction market generated approximately 3840% of our rental revenues ~~during the year ended December 31, 2010~~. During 2009, ~~we saw~~both athe ~~continued~~industrial ~~weakening~~or non-construction ofand ~~demand in~~ the ~~non-residential~~ construction market ~~which~~had ~~resulted~~weakened, resulting in a decrease in the demand for our rental equipment and downward pressure on our rental rates. ~~These trends~~During ~~continued into~~ the ~~first~~second quarter of 2010. ~~Demand~~and incontinuing throughout the ~~industrial~~remainder orof ~~non-construction~~2010, market ~~also~~conditions ~~weakened~~improved. ~~through~~This ~~2009,~~translated ~~however,~~into ~~not~~strengthening todemand ~~the~~for ~~same~~our ~~extent~~rental asequipment ~~the~~which ~~non-residential construction~~continued ~~market.~~into ~~Generally~~2011, ~~the~~resulting ~~industrial~~in orincreased ~~non-construction~~fleet ~~market~~on isrent ~~less~~of ~~exposed~~18.7% ~~to cyclicality~~at ~~than~~December 31, ~~the~~2011 ~~non-residential~~as ~~construction~~compared ~~market.~~to WeDecember 31, ~~responded~~2010. toThe ~~the~~improvement in ~~economic~~fleet ~~slowdown~~on ~~by employing~~rent awas ~~number~~achieved ofthrough ~~financial~~increased ~~and~~utilization ~~operational~~in ~~measures~~2011, which ~~enabled~~was ~~us to right-size our business~~68.8%, ~~generate~~63.7% ~~positive cash flow~~ and ~~utilize~~57.6% ~~any~~for ~~excess~~the ~~cash~~three ~~flow~~years toending ~~repay~~December 31, ~~outstanding~~2011, ~~amounts on~~2010 ~~our~~and ~~Old~~2009, ~~Senior ABL Revolving Facility~~respectively.

~~During~~Although ~~the~~economic ~~second~~conditions ~~quarter~~in ofour ~~2010~~underlying ~~and~~end ~~continuing~~markets ~~throughout~~remained ~~the~~relatively ~~remainder~~unchanged ofin ~~2010~~2011, ~~market conditions~~we ~~improved,~~experienced ~~which~~increased ~~translated into strengthening~~ demand for ~~our~~ rental equipment. asWe ~~fleet on~~believe ~~rent~~that the increased ~~approximately~~demand ~~22.8%~~in atexcess ~~December 31,~~of ~~2010~~the asimprovements ~~compared~~in toour ~~December 31,~~end ~~2009.~~markets ~~This compares~~was togenerated aby ~~decrease~~our ofcustomers ~~approximately~~increased ~~25.8%~~willingness atto ~~December 31,~~rent ~~2009~~rather asthan ~~compared~~purchase ~~to December 31, 2008~~equipment. InWe ~~addition,~~responded ~~fleet~~to ~~utilization~~this ~~for~~increase ~~the~~in ~~year~~demand ~~ended~~by ~~December 31,~~investing $616.2 ~~2010~~million ~~was~~in ~~63.7%,~~rental anfleet ~~increase of~~and ~~610~~improving ~~basis~~utilization ~~points~~to ~~from 57~~68.68% for the year ended December 31, ~~2009.~~2011 ~~Although~~or ~~rental~~510 ~~rates declined~~basis 6points from 63.37% infor the year ended December 31, 2010~~, the year-over-year rental rate decline in the fourth quarter of 2010 was 1~~.~~9%,~~ ~~which~~Rental ~~compares~~rates toincreased ~~the year-over-year rental rate declines of~~ 4.~~4%, 8.4% and~~ 9.9% in the ~~quarters~~year ended ~~September~~December ~~30, 2010, June 30, 2010 and March~~ 31, ~~2010,~~ ~~respectively. We expect year-over-year rental rates in the first quarter of~~ 2011 ~~to be comparable to the first quarter of 2010~~. We also expect fleet on rent and utilization to continue to compare favorably to the prior year during the first quarter of 2011 and while pricing remains challenging, year-over-year comparisons for rental revenues in the first quarter of 2011 are expected to be favorable.

We expect that the demand for rental equipment will continue to outpace our underlying end markets in the first quarter of 2012. We also expect fleet on rent, utilization and rental revenues to continue to compare favorably to the prior year during the first quarter of 2012. Rental rates are directly related to rental demand and we expect positive growth during the first quarter of 2012 over those rates achieved in the first quarter of 2011.

Employees

As of December 31, ~~2010~~2011, we had 4,~~427~~721 employees. Employee benefits in effect include group life insurance, medical and dental insurance and a defined contribution benefit plan. Labor contracts covering the terms of employment of approximately ~~146~~182 of our employees are presently in effect under 1316 collective bargaining agreements with local unions relating to 2731 separate ~~rental~~ rental locations in 1315 U.S. states. We may be unable to negotiate new labor contracts on terms advantageous to us or without labor interruptions. We have had no material work stoppage as a result of labor problems during the last ~~eight~~nine years. We believe our labor relations to be good.

Regulatory Matters

Environmental, Health and Safety Matters

Our operations are subject to a variety of federal, state, local and foreign environmental, health and safety laws and regulations. These laws regulate releases of petroleum products and other hazardous substances into the environment as well as storage, treatment, transport and disposal of wastes, wastewater, storm water and air quality and the remediation of soil and groundwater contamination. These laws also regulate our ownership and operation of tanks used for the storage of petroleum products and other regulated substances.

We have made, and will continue to make, expenditures to comply with environmental laws and regulations, including, among others, expenditures for the investigation and cleanup of contamination at or emanating from currently and formerly owned and leased properties, as well as contamination at other locations at which our wastes have reportedly been identified. Some of these laws impose strict and in certain circumstances joint and several liability on current and former owners or operators of contaminated sites for costs of investigation and remediation. We cannot assure you that compliance ~~with~~ with existing or future environmental, health and safety requirements will not require material expenditures by us or otherwise harm our consolidated financial position, profitability or cash flow.

8We have two facilities that are in various stages of environmental remediation. Our activity primarily relates to investigating and remediating soil and groundwater contamination at these facilities, which contamination may have been caused by historical operations (including operations conducted prior to our involvement at a site) or releases of regulated materials from underground storage tanks or other sources.

existing or future environmental, health and safety requirements will not require material expenditures by us or otherwise harm our consolidated financial position, profitability or cash flow.

We have four facilities that are in various stages of environmental remediation. Our activity primarily relates to investigating and remediating soil and groundwater contamination at these current and former facilities, which contamination may have been caused by historical operations (including operations conducted prior to our involvement at a site) or releases of regulated materials from underground storage tanks or other sources.

We rely heavily on outside environmental engineering and consulting firms to assist us in complying with environmental laws. While our environmental, health and safety compliance costs are not expected to have a material impact on our financial position, we incur costs to purchase and maintain wash racks and storage tanks and to minimize any unexpected releases of regulated materials from such sources.

Transportation, Delivery and Sales Fleet

We lease vehicles for transportation and delivery of rental equipment and vehicles used by our sales force under capital leases with leases typically ranging from 50 to 96 months. Our delivery fleet includes tractor trailers, delivery trucks and service vehicles. The vehicles used by our sales force are primarily pickup trucks. Capital lease obligations amounted to $7792.~~8 million~~2 ~~and~~million and $8477.8 million at December 31, ~~2010~~2011 and ~~2009~~2010, respectively, and we had approximately 3,~~600~~ 862 and 3,~~400~~ 600 units leased at December 31, ~~2010~~2011 and ~~2009~~2010, respectively.

Management

Set forth below are the names, ages and positions of our executive officers as of ~~February~~January 1026, ~~2011~~ 2012.

Name	Age		Position
Erik Olsson		4849	President, Chief Executive Officer and Director
Patricia Chiodo		4546	Senior Vice President and Chief Financial Officer
Kevin Groman		40	Senior Vice President, General Counsel and Corporate Secretary
Juan Corsillo		45	Senior Vice President Sales, Marketing and Corporate Operations
Kevin Groman		41	Senior Vice President, General Counsel and Corporate Secretary
Phillip Hobson		44	Senior Vice President, Operations
David Ledlow		51	Senior Vice President, Operations
Mark Krivoruchka		57	Senior Vice President, Human Resources
Mark Krivoruchka		56	Senior Vice President, Human Resources
David Ledlow		52	Senior Vice President, Operations
Juan Corsillo		44	Senior Vice President Sales, Marketing and Corporate Operations

Erik Olsson has served as President, Chief Executive Officer and a Director of RSC since 2006. Mr. Olsson joined RSC in 2001 as Chief Financial Officer and in 2005 became RSC’s Chief Operating Officer. During the 13 years prior to 2001, Mr. Olsson held a number of senior financial management positions in various global businesses at Atlas Copco Group in Sweden, Brazil and the United States, including his last assignment as Chief Financial Officer for Milwaukee Electric Tool Corporation in Milwaukee, WI from 1998 to 2000.

Patricia Chiodo has served as Senior Vice President and Chief Financial Officer of RSC since October 2010. From February 2005 to October 2010, Ms. Chiodo served as Vice President, Controller of RSC. Ms. Chiodo joined RSC in August 2002 as the Assistant Controller. Prior to joining RSC, Ms. Chiodo was a partner and Chief Financial Officer for Equipment Remark International, an equipment remarketing company, and Chief Financial Officer for Road Machinery Co., a heavy equipment distributor. Prior to that, Ms. Chiodo was a Senior Accountant for Price Waterhouse.

Juan Corsillo has served as Senior Vice President, Sales, Marketing and Corporate Operations of RSC since March 2010. Mr. Corsillo has more than 20 years of experience in sales and marketing roles in the financial services industry, including 17 years with the General Electric Company in Toronto, San Francisco and Connecticut. In recent years, Mr. Corsillo has held a number of senior commercial leadership roles at various GE Capital entities, including Senior Vice President of Commercial Excellence of GE Capital Americas from January 2009 to March 2010, Chief Commercial Officer of GE Capital Solutions from December 2005 to January 2009 and Chief Marketing Officer of US Equipment Financing from April 2003 to December 2005.

Kevin Groman has served as Senior Vice President, General Counsel and Corporate Secretary of RSC since December 2006. Prior to joining RSC, Mr. Groman served as Vice President, Associate General Counsel, Deputy Compliance Officer and Assistant Secretary of PetSmart, Inc., a specialty pet retail supplies and service company. Mr. Groman held various positions at PetSmart from 2000 to 2006. From 1995 to 2000, Mr. Groman held several counsel positions including Senior Counsel and Assistant Secretary with CSK Auto Corporation, an auto parts retailer operating under the names Checker, Schuck’s, and Kragen Auto Parts Stores.

Phillip Hobson has served as Senior Vice President, Operations of RSC, overseeing the Northern Division since June 2009. Prior to this position, Mr. Hobson served as Senior Vice President, Corporate Operations of RSC from February 2007 to June 2009. From 2005 to 2007, Mr. Hobson served as Vice President, Innovation, and as RSC’s Director of Internal Audit from 2004 to 2005. From 2002 to 2004, he served as Director of Financial Planning, and he joined RSC in 1998, as a financial analyst. Prior to joining RSC, Mr. Hobson held various financial management related positions with Sunstate Equipment Co. and the Northwest Division of Pizza Hut.

9Mark Krivoruchka has served as Senior Vice President, Human Resources of RSC since March 2010. From August 2007 to October 2009, Mr. Krivoruchka was Senior Vice President of Global Human Resources and Communications with Cooper Tire. Mr. Krivoruchka was the Senior Vice President of Human Resources Integration at Whirlpool from June 2006 to February 2007. He also served as Maytag’s Senior Vice President-Human Resources until that company was acquired by Whirlpool. He also served as President/General Manager of Hoover Floor Care Products until it was sold by Whirlpool.

financial analyst. Prior to joining RSC, Mr. Hobson held various financial management related positions with Sunstate Equipment Co. and the Northwest Division of Pizza Hut.

David Ledlow has served as Senior Vice President, Operations of RSC since 2006 and currently oversees the Gulf Division. Mr. Ledlow joined Rental Service Corporation, a predecessor to RSC, in 1984 and has occupied positions in outside sales, sales management, regional management, and served as Regional Vice President for the Southeast Region from 1996 to 2000 and Vice President of operations for the Western/Mountain Region from 2001 to 2006. Prior to joining RSC, Mr. Ledlow was Vice President of Sales at Walker Jones Equipment, a company later acquired by Rental Service Corporation, a predecessor to RSC.

Mark Krivoruchka has served as Senior Vice President, Human Resources of RSC since March 2010. From August 2007 to October 2009, Mr. Krivoruchka was Senior Vice President of Global Human Resources and Communications with Cooper Tire. Mr. Krivoruchka was the Senior Vice President of Human Resources Integration at Whirlpool from June 2006 to February 2007. He also served as Maytag’s Senior Vice President-Human Resources until that company was acquired by Whirlpool. He also served as President/General Manager of Hoover Floor Care Products until it was sold by Whirlpool.

Juan Corsillo has served as Senior Vice President, Sales, Marketing and Corporate Operations of RSC since March 2010. Mr. Corsillo has more than 20 years of experience in sales and marketing roles in the financial services industry, including 17 years with the General Electric Company in Toronto, San Francisco and Connecticut. In recent years, Mr. Corsillo has held a number of senior commercial leadership roles at various GE Capital entities, including Senior Vice President of Commercial Excellence of GE Capital Americas from January 2009 to March 2010, Chief Commercial Officer of GE Capital Solutions from December 2005 to January 2009 and Chief Marketing Officer of US Equipment Financing from April 2003 to December 2005.

Available Information

We make available, free of charge through our Internet web-site (www.RSCrental.com), our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file such material, or furnish it to the Securities and Exchange Commission (“SEC”).

The public may read and copy materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet web-site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Item 1A. Risk Factors

Our business is subject to a number of important risks and uncertainties. Based on the information currently known to us, we believe that the following information identifies all known material risk factors relating to our business. Any of these risks may have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~Risks~~11 ~~Related to Our Business~~

Our business has been and may continue to be hurt by an economic downturn, a decline in non-residential construction or industrial or non-construction activities, or a decline in the amount of equipment that is rented.

For the year ended December 31, 2010, our non-residential construction and industrial or non-construction customers together accounted for approximately 97% of our rental revenues. Weakness in non-residential construction or industrial or non-construction activity, or a decline in the desirability of renting equipment, may decrease the demand for our equipment or depress the prices we charge for our products and services. In addition, an economic downturn in those regions where we have significant operations could disproportionately harm our financial condition, results of operations and cash flows. We have identified below certain factors which may cause weakness, either temporary or long-term, in the non-residential construction and industrial or non-construction, sectors:

Risks Related to Our Business

Our business has been and may continue to be hurt by an economic downturn, a decline in construction or industrial or non-construction activities, or a decline in the amount of equipment that is rented.

Weakness in construction or industrial or non-construction activity, or a decline in the desirability of renting equipment, may decrease the demand for our equipment or depress the prices we charge for our products and services. In addition, an economic downturn in those regions where we have significant operations could disproportionately harm our financial condition, results of operations and cash flows. We have identified below certain factors which may cause weakness, either temporary or long-term, in the construction and industrial or non-construction, sectors:

•

weakness or a downturn in the overall economy, including the onset of, or prolonged exposure to, a recession;

• reduced access to capital markets for our customers’ funding of projects due to a weakness or downturn in the overall economy or otherwise; • an increase in the cost of construction materials; • an increase in interest rates; • adverse weather conditions or natural disasters, including an active hurricane season in the Gulf of Mexico region, where we have a large concentration of customers; or • terrorism or hostilities involving the United States or Canada.

A• ~~weakness~~a decrease in ~~the~~expected ~~non-residential~~levels ~~construction~~of ~~and~~infrastructure ~~industrial or non-construction sectors caused by these or other factors would harm our revenues~~spending, ~~financial~~including ~~condition,~~lower ~~profitability~~than ~~and cash~~expected ~~flows~~government asfunding ~~well~~for aseconomic ~~our ability to service debt, and may reduce residual values realized on the disposition of our rental equipment, negatively impacting our borrowing availability.~~ stimulus;

•

an increase in the cost of construction materials;

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an increase in interest rates;

•

adverse weather conditions or natural disasters, including an active hurricane season in the Gulf of Mexico region, where we have a large concentration of customers; or

•

terrorism or hostilities involving the United States or Canada.

A weakness in the construction and industrial or non-construction sectors caused by these or other factors would harm our revenues, financial condition, profitability and cash flows as well as our ability to service debt, and may reduce residual values realized on the disposition of our rental equipment, negatively impacting our borrowing availability.

We face intense competition that may lead to our inability to increase or maintain our prices, which could have a material adverse impact on our results of operations.

The equipment rental industry is highly competitive and highly fragmented. Many of the markets in which we operate are served by numerous competitors, ranging from national equipment rental companies like ourselves, to smaller multi-regional companies and small, independent businesses with a limited number of locations. We also may compete with dealers who both sell and rent equipment directly to customers and the open market for used equipment. Some of our principal competitors are less leveraged than we are, have greater financial resources, may be more geographically diversified, may have greater name recognition than we do and may be better able to withstand adverse market conditions within the industry. We generally compete on the basis of, among other things, quality and breadth of service, expertise, reliability, price and the size, mix and relative attractiveness of our rental equipment fleet, which is significantly affected by the level of our capital expenditures. If we are required to reduce or delay capital expenditures for any reason, including due to restrictions contained in the New Senior ABL Revolving Facility, or the indentures governing ~~the~~our ~~2014 Senior Unsecured~~ Notes ~~(the “2014 Notes”)~~, the ~~2017 Senior Secured Notes (the “2017 Notes”), the 2019 Senior Unsecured Notes (the “2019 Notes”) or the 2021 Senior Unsecured Notes (the “2021 Notes”) (collectively the “Notes”), the~~ resulting aging of our rental equipment fleet may cause us to lose our competitive advantage and adversely impact our pricing. In addition, our competitors are competing aggressively on the basis of pricing and may continue to drive prices further down. To the extent that we choose to match our competitors’ downward pricing, it could harm our results of operations. To the extent that we choose not to match or remain within a reasonable competitive distance from our competitors’ pricing, it could also harm our results of operations, as we may lose customers and rental volume.

We may also encounter increased competition from existing competitors or new market entrants in the future, which could harm our revenues, financial condition, profitability and cash flows as well as our ability to service debt.

Our revenues and operating results may fluctuate and unexpected or sustained periods of decline have had and may continue to have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our revenues and operating results have varied historically from period to period and may continue to do so. We have identified below certain ~~of the~~ factors which may cause our revenues and operating results to vary:

• downturn in the North American economy, including the reduced access to capital markets for our customers’ funding of projects, or reduced government funding for infrastructure and other construction, any sustained periods of inflation or deflation, and the resulting negative impact it has on the financial strength of our customers; ~~• changes in demand for our equipment~~ or the ~~prices~~cost ~~we charge due to changes in economic conditions, competition or other factors; • the timing~~ of ~~expenditures for new~~ equipment ~~and~~that ~~the~~we ~~disposal~~purchase offrom ~~used equipment, including the ability to effectively and efficiently reduce~~ our ~~fleet size by selling in the open market for used equipment~~vendors; ~~• changes in the interest rates applicable to our variable rate debt; • general economic conditions in the markets where we operate;~~

11 • changes in demand for our equipment or the prices we charge due to changes in economic conditions, competition or other factors;

•

the timing of expenditures for new equipment and the disposal of used equipment, including the ability to effectively and efficiently reduce our fleet size by selling in the open market for used equipment;

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changes in the interest rates applicable to our variable rate debt;

•

general economic conditions in the markets where we operate;

•

the cyclical nature of our customers’ businesses, particularly those operating in the construction and industrial or non-construction sectors;

•

rental rate and fleet size changes in response to competitive factors;

•

our inability to maintain our price levels during long-term periods of economic decline;

•

bankruptcy or insolvency of our competitors leading to a larger than expected amount of used equipment in the open market;

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bankruptcy or insolvency of our customers, thereby reducing demand for used rental equipment;

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reduction in the demand for used equipment may result in lower sales prices and volume for used equipment sales;

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aging of our fleet, ultimately resulting in lower sales prices and volume for used equipment sales;

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seasonal rental patterns, with rental activity tending to be lowest in the winter;

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severe weather and seismic conditions temporarily affecting the regions where we operate;

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downturn in oil and petrochemical-related sectors from which we derive a large share of our industrial revenue;

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timing of acquisitions of companies and new location openings and related costs;

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labor shortages, work stoppages or other labor difficulties;

•

other cost fluctuations, such as costs for employee-related compensation and healthcare benefits;

• the cyclical nature of our customers’ businesses, particularly those operating in the non-residential construction and industrial or non-construction sectors; • rental rate changes in response to competitive factors; • our inability to maintain our price levels during long-term periods of economic decline; • bankruptcy or insolvency of our competitors leading to a larger than expected amount of used equipment in the open market; • bankruptcy or insolvency of our customers, thereby reducing demand for used rental equipment; • reduction in the demand for used equipment may result in lower sales prices and volume for used equipment sales; • aging of our fleet, ultimately resulting in lower sales prices and volume for used equipment sales; • seasonal rental patterns, with rental activity tending to be lowest in the winter; • downturn in oil and petrochemical-related sectors from which we derive a large share of our industrial revenue; • timing of acquisitions of companies and new location openings and related costs; • labor shortages, work stoppages or other labor difficulties; • disruptions of fuel supplies or increases in fuel prices; • possible unrecorded liabilities of acquired companies; • our effectiveness in integrating acquired businesses and new locations into our existing operations; and • possible write-offs or exceptional charges due to changes in applicable accounting standards, goodwill impairment, impairment of obsolete or damaged equipment or other assets, or the refinancing of our existing debt.

•

enactment of and compliance with new regulations affecting our operations;

•

possible unrecorded liabilities of acquired companies;

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our effectiveness in identifying and integrating acquired businesses and new locations into our existing operations;

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our pending merger with URI; and

•

possible write-offs or exceptional charges due to changes in applicable accounting standards, goodwill impairment, impairment of obsolete or damaged equipment or other assets, or the refinancing of our existing debt.

One or a number of these factors could harm our revenues, financial condition, profitability and cash flows, as well as our ability to service debt, and may reduce residual values realized on the disposition of our rental equipment, negatively impacting our borrowing availability.

The ~~non-residential~~ construction market is currently experiencing a downturn which, if sustained, could harm our business, liquidity and results of operations.

Our business derives a material portion of its revenues from customers in the ~~non-residential~~ construction market and the general slowdown and volatility of the U.S. economy is having an adverse effect on this business. ~~The non-residential construction industry is expected to grow in early 2011, although commercial construction, a segment of non-residential construction, is expected to grow at a slower pace.~~ From time to time, our business that serves the ~~non-residential~~ construction industry has also been adversely affected in various parts of the country by declines in ~~non-residential~~ construction starts due to, among other things, changes in tax laws affecting the real estate industry, high interest rates and reduced level of residential construction activity. Continued weakness in the U.S. economy and general uncertainty about ~~current~~ current economic conditions will continue to pose a risk to our business as participants in this industry may postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which would have a continued material negative effect on the demand for our products.

Our reliance on available borrowings under the New Senior ABL Revolving Facility and cash from operating activities is necessary to operate our business and subjects us to a number of risks, many of which are beyond our control.

We rely significantly on available borrowings under the New Senior ABL Revolving Facility to operate our business. As of ~~February~~December 931, 2011, we had $~~646~~628.8 1 million of available borrowings under the New Senior ABL Revolving Facility. The amount of available borrowings under the New Senior ABL Revolving Facility is determined by a formula, subject to maximum borrowings, that includes several factors, most significant of which is the orderly liquidation value (“OLV”), of our rental fleet. The OLV of our fleet is calculated by a third party and reflects the average of prices paid for used rental equipment at retail and auction. If our OLV were to decrease significantly, or if our access to such financing were unavailable, reduced, or were to become significantly more expensive for any reason, including, without limitation, due to our inability to meet the coverage ratio or leverage ratio tests in the New Senior ABL Revolving Facility, if such compliance was required, or to satisfy any other condition in the facilities or due to an increase in interest rates generally, we may not be able to fund daily operations which may cause material harm to our business, which could affect our ability to operate our business as a going concern. In addition, if any of our lenders experience difficulties that render them unable to fund future draws on the New Senior ABL Revolving Facility, we may not be able to access all or a portion of these funds, which could have similar adverse consequences.

12In addition, if we are unable to generate excess cash from operating activities after servicing our debt due to negative economic or industry trends including, among others, those set forth above under “—Our business has been and may continue to be hurt by an economic downturn, a decline in construction or industrial or non-construction, activities or a decline in the amount of equipment that is rented” and “—We face intense competition that may lead to our inability to increase or maintain our prices, which could have a material adverse impact on our results of operations,” and we are not able to finance new equipment acquisitions, we may not be able to make necessary equipment rental acquisitions at all.

amount of available borrowings under the New Senior ABL Revolving Facility is determined by a formula, subject to maximum borrowings, that includes several factors, most significant of which is the orderly liquidation value (“OLV”), of our rental fleet. The OLV of our fleet is calculated by a third party and reflects the average of prices paid for used rental equipment at retail and auction. If our OLV were to decrease significantly, or if our access to such financing were unavailable, reduced, or were to become significantly more expensive for any reason, including, without limitation, due to our inability to meet the coverage ratio or leverage ratio tests in the New Senior ABL Revolving Facility, if such compliance was required, or to satisfy any other condition in the facilities or due to an increase in interest rates generally, we may not be able to fund daily operations which may cause material harm to our business, which could affect our ability to operate our business as a going concern.

In addition, if we are unable to generate excess cash from operating activities after servicing our debt due to negative economic or industry trends including, among others, those set forth above under “—Our business has been and may continue to be hurt by an economic downturn, a decline in non-residential construction or industrial or non-construction, activities or a decline in the amount of equipment that is rented” and “—We face intense competition that may lead to our inability to increase or maintain our prices, which could have a material adverse impact on our results of operations,” and we are not able to finance new equipment acquisitions, we may not be able to make necessary equipment rental acquisitions at all.

The effects of the recent economic crisis have had and may continue to have a negative impact on our revenue, operating results, or financial condition.

The recent economic crisis has caused disruptions and extreme volatility in financial markets, increased rates of default and bankruptcy, and has reduced demand for equipment rental. These macroeconomic developments have had and could continue to have a negative impact on our revenue, profitability, financial condition and liquidity in a number of ways, such as reduced used equipment demand which in turn could have a negative impact on the OLV for our rental equipment fleet. Additionally, current or potential customers may delay or decrease equipment rentals or may delay paying us or be unable to pay us for prior equipment rentals and services. Also, if the banking system or the financial markets deteriorate further, fail to improve or remain volatile, the funding for and realization of capital projects may continue to decrease, which may continue to impact the demand for our rental equipment and services.

Our expenses could increase and our relationships with our customers could be hurt if there is an adverse change in our relationships with our equipment suppliers or if our suppliers are unable to provide us with products we rely on to generate revenues.

All of our rental equipment consists of products that we purchase from various suppliers and manufacturers, and over the last several years, we have reduced the number of suppliers from which we purchase rental equipment to approximately two suppliers for almost all the major equipment categories that we offer for rent. We rely on these suppliers and manufacturers to provide us with equipment which we then rent to our customers. We have not entered into any long-term equipment supply arrangements with manufacturers. To the extent we are unable to rely on these suppliers and manufacturers, due to an adverse change in our relationships with them, if they fail to continue operating as a going concern due to the current economic environment or otherwise, if they significantly raised their costs, if a large amount of our rental equipment is subject to ~~simultaneous~~ simultaneous recalls that would prevent us from renting such rental equipment for a significant period of time, or such suppliers or manufacturers simply are unable to supply us with equipment or needed replacement parts in a timely manner, our business could be adversely affected through higher costs or the resulting potential inability to service our customers. We may experience delays in receiving equipment from some manufacturers due to factors beyond our control, including raw material shortages, and, to the extent that we experience any such delays, our business could be hurt by the resulting inability to service our customers and harm to our reputation. In addition, the payment terms we have negotiated with the suppliers that provide us with the majority of our equipment may not be available to us at a later time.

If we are unable to collect on contracts with customers, our operating results would be adversely affected.

One of the reasons some of our customers find it more attractive to rent equipment than own equipment is the need to deploy their capital elsewhere. ~~This has been particularly true in industries with high growth rates such as the non-residential construction industry.~~ Some of our customers may have liquidity issues and ultimately may not be able to fulfill the terms of their rental agreements with us. If we are unable to manage credit risk issues adequately, or if a large number of customers should have financial difficulties at the same time, our credit losses could increase above historical levels and our operating results would be adversely affected. Further, delinquencies and credit losses generally can be expected to increase during economic slowdowns or recessions.

If our operating costs increase as our rental equipment fleet ages and we are unable to pass along such costs, our earnings will decrease.

As our fleet of rental equipment ages, the cost of maintaining such equipment, if not replaced within a certain period of time, will likely increase. As of December 31, ~~2010~~2011, the average age of our rental equipment fleet was approximately 4442 months, updown ~~four~~two months, from 4044 months at December 31, ~~2009~~2010. Rental fleet purchases, which totaled $~~327~~616.1 2 million in the year ended December 31, ~~2010~~2011, were ~~not~~ at a pace sufficient to ~~offset~~slightly reduce the ~~growth in~~ overall fleet age. The costs of maintenance may materially increase in the future. Any material increase in such costs could have a material adverse ~~affect~~effect on our revenues, profitability and financial condition.

Our operational measures designed to increase revenue while continuing to control operating costs may not generate the improvements and efficiencies we expect.

We have responded to the economic slowdown by employing a number of operational measures designed to increase revenue while continuing to pursue our strategy of reducing operating costs where available. The extent to which these strategies will achieve the desired goals and efficiencies in ~~2011~~2012 and beyond is uncertain, as their success depends on a number of factors, some of which are beyond our control. Even if we carry out these measures in the manner we currently expect, we may not achieve the improvements or efficiencies we anticipate, or on the timetable we anticipate. There may be unforeseen productivity, revenue or other consequences resulting from our strategies that will adversely affect us. Therefore, there can be no guarantee that our strategies will prove effective in achieving desired profitability or margins.

The cost of new equipment we use in our rental equipment fleet could increase and therefore we may spend more for replacement equipment, and in some cases we may not be able to procure equipment on a timely basis due to supplier constraints.

The cost of new equipment used in our rental equipment fleet could increase, primarily due to factors beyond our control, such as inflation, complying with governmental regulations, higher interest rates, increased material costs, including increases in the cost of steel, which is a primary material used in most of the equipment we use, and increases in the cost of fuel, which is used in the manufacturing process and in delivering equipment to us. Such increases could materially adversely impact our financial condition and results of operations in future periods. In addition, based on changing demands of our customers, the types of equipment we rent to our customers may become obsolete resulting in a negative impact to our financial condition based on the increased capital expenditures required to replace the obsolete equipment, and our potential inability to sell the obsolete equipment in the used equipment market.

An impairment of our goodwill could have a material non-cash adverse impact on our results of operations.

We review goodwill for impairment at least annually and whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable ~~and at least annually~~. We have performed our annual impairment tests for goodwill during the fourth quarter of ~~2010~~2011 and based on our analyses, there was no goodwill impairment recognized during ~~2010~~2011. If we make changes in our ~~business~~ business strategy or if external conditions adversely affect our business operations, we may be required to record an impairment charge for goodwill in the future, which could have a material adverse impact on our results of operations and financial condition.

Our rental equipment fleet is subject to residual value risk upon disposition.

The market value of any given piece of rental equipment could be less than its depreciated value at the time it is sold. The market value of used rental equipment depends on several factors, including:

• the market price for new equipment of a like kind; • wear and tear on the equipment relative to its age and the performance of preventive maintenance; • the time of year that it is sold; • worldwide and domestic demand for used equipment, including the amount of used equipment we, along with our competitors, supply to the used equipment market; and • general economic conditions.

14 • wear and tear on the equipment relative to its age and the performance of preventive maintenance;

•

the existence and capacities of different sales outlets;

•

the time of year that it is sold;

•

the age of the equipment at the time it is sold;

•

worldwide and domestic demand for used equipment, including the amount of used equipment we, along with our competitors, supply to the used equipment market; and

•

general economic conditions.

We include in income from operations the difference between the sales price and the depreciated value of an item of equipment sold. Changes in our assumptions regarding depreciation could change our depreciation expense as well as the gain or loss realized upon disposal of equipment. Sales of our used rental equipment at prices that fall significantly below our projections, or our inability to sell such equipment at all, could have a negative impact on our results of operations.

Disruptions in our information technology systems could limit our ability to effectively monitor and control our operations and adversely affect our operating results.

Our information technology systems facilitate our ability to monitor and control our operations and adjust to changing market conditions. Any disruptions in these systems or the failure of these systems to operate as expected could, depending on the magnitude of the problem, materially adversely affect our financial condition or operating results by limiting our capacity to effectively monitor and control our operations and adjust to changing market conditions in a timely manner. In addition, because our systems contain information about individuals and businesses, our failure to maintain the security of the data we hold, whether the result of our own error or the malfeasance or errors of others, could harm our reputation or give rise to legal liabilities leading to lower revenues, increased costs and other potential material adverse effects on our results of operations.

Our business relies to some extent on third-party contractors to provide us with various services to assist us with conducting our business, which could adversely affect our business upon the termination or disruption of our third-party contractor relationships.

Our operations rely on third-party contractors to provide us with timely services to assist us with conducting our business. Any material disruption, termination, or substandard provision of these services could adversely affect our brand, customer relationships, operating results and financial condition. In addition, if a third-party contractor relationship is terminated, we may be adversely affected if we are not able to enter into a similar agreement with an alternate provider in a timely manner or on terms that we consider favorable. Further, in the event a third-party relationship is terminated and we are unable to enter into a similar relationship, we may not have the internal capabilities to perform such services in a cost-effective manner.

Oak Hill or its affiliates may compete directly against us.

Corporate opportunities may arise in the area of potential competitive business activities that may be attractive to us as well as to Oak Hill or its affiliates, including through potential acquisitions by Oak Hill or its affiliates of competing businesses. Competition could intensify if an affiliate or subsidiary of Oak Hill were to enter into or acquire a business similar to our equipment rental operations. Oak Hill and its affiliates may be inclined to direct relevant corporate opportunities to entities which they control individually rather than to us. In addition, our amended and restated certificate of incorporation provides that Oak Hill is under no obligation to communicate or offer any corporate opportunity to us, even if such opportunity might reasonably have been expected to be of interest to us or our subsidiaries.

IfAcquisition werelated ~~acquire~~activities ~~any businesses in the future, they~~ could ~~prove difficult to integrate,~~ disrupt our business, or have an adverse effect on our results of operations.

WeFrom ~~intend to pursue growth primarily through internal growth, but from~~ time to time we may consider ~~opportunistic~~pursuing mergers or acquisitions, which may be significant. Any future ~~acquisition~~material merger or acquisition would involve numerous risks including, without limitation:

• potential disruption of our ongoing business and distraction of management;, •including ~~difficulty integrating~~ the ~~acquired~~failure ~~business;~~to ~~and~~pursue •other ~~exposure~~beneficial ~~to unknown liabilities.~~opportunities;

If• wedifficulty ~~make~~integrating ~~acquisitions in~~ the ~~future,~~acquired acquisition-related accounting charges may affect our balance sheet and results of operations. In addition, the financing of any significant acquisition may result in changes in our capital structure, including the incurrence of additional indebtedness. We may not be successful in addressing these risks or any other problems encountered in connection with any acquisitions. business;

If• weavailability ~~fail~~of toborrowed ~~retain~~funds or ~~attract~~common ~~key~~stock ~~management~~with ~~and~~sufficient ~~personnel,~~market weprice ~~may be unable~~ to ~~implement~~complete ~~our business~~the ~~plan.~~ acquisition;

15 • ability to obtain any requisite government or regulatory approvals;

•

potential diversion of management and employee attrition, during the period prior to the completion of a potential merger or acquisition, and the potential effect on our business and relations with customers, service providers and other stakeholders, whether or not the potential merger or acquisition is completed;

•

restrictions on the conduct of business prior to the completion of a proposed merger or acquisition, which may delay or prevent the undertaking of various business opportunities that may arise pending completion of the potential merger or acquisition;

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failure to achieve anticipated synergies, economies of scale and cost reductions within an expected time period;

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contractual restrictions that limit our ability to pursue alternative opportunities;

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damage to reputation and goodwill and payment of applicable termination fees and expenses due to failure to consummate a proposed merger or acquisition;

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potential for lawsuits and adverse judgments that may prevent a proposed merger or acquisition from becoming effective or becoming effective within the expected timeframe; and

•

exposure to unknown, unexpected or unrecorded liabilities.

If we make acquisitions in the future, acquisition-related accounting charges may affect our balance sheet and results of operations. In addition, the financing of any significant merger or acquisition may result in changes in our capital structure, including the incurrence of additional indebtedness. We may not be successful in addressing these risks or any other problems encountered in connection with any mergers or acquisitions. For risk factors specifically related to the Merger, see “Risks Related to the Merger”.

If we fail to retain or attract key management and personnel, we may be unable to implement our business plan.

One of the most important factors in our ability to profitably execute our business plan is our ability to attract, develop and retain qualified personnel, including our Chief Executive Officer and operational management. Our success in attracting and retaining qualified people is dependent on the resources available in individual geographic areas and the impact on the labor supply due to general economic conditions as well as our ability to provide a competitive compensation package, including the implementation of adequate drivers of retention and rewards based on performance, and work environment. The departure of any key personnel and our inability to enforce non-competition agreements could have a negative impact on our business.

The impairment of financial institutions may adversely affect us.

We have exposure to counterparties with which we execute transactions, including U.S. and foreign commercial banks, insurance companies, investment banks, investment funds and other ~~financial~~ financial institutions, some of which may be exposed to bankruptcy, liquidity, default or similar risks, especially in connection with recent financial market turmoil. Many of these transactions could expose us to risk in the event of the bankruptcy, receivership, default or similar event involving a counterparty. For example, as of ~~February~~December 931, 2011, we had $~~646~~628.8 1 million of available borrowings under the New Senior ABL Revolving Facility. If any of the lenders that are parties to ~~the~~ the New Senior ABL Revolving Facility experience difficulties that render them unable to fund future draws on the facility, we may not be able to access all or a portion of these funds. The inability to make future draws on the New Senior ABL Revolving Facility or any new revolving facilities could have a material adverse effect on our liquidity which could negatively affect our business, results of operations or ability to maintain the overall quality of our rental equipment fleet.

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

We are exposed to various possible claims relating to our business. These possible claims include those relating to (1) personal injury or death caused by equipment rented or sold by us, (2) motor vehicle accidents involving our vehicles and our employees, (3) employment-related claims, (4) property damage and pollution related claims, and (5) commercial claims. Our insurance policies have deductibles or self-insured retentions of $1.0 million for general liability and $1.5 million for automobile liability, on a per occurrence basis; $0.5 million per occurrence for workers’ compensation claims; and $0.25 million per occurrence for pollution coverage. Currently, we believe that we have adequate insurance coverage for the protection of our assets and operations. However, litigation is inherently unpredictable, and the outcome of some of these claims, proceedings and other contingencies could require us to take or refrain from taking actions which could adversely affect our operations or could result in large verdicts. Additionally, defending against claims, lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources from other matters. Our insurance may not fully protect us for certain types of claims, such as claims for punitive damages or for damages arising from intentional misconduct, which are often alleged in third party lawsuits. In addition, we may be exposed to uninsured liability at levels in excess of our policy limits.

We establish and regularly evaluate our loss reserves to address claims, or portions thereof, not covered by our insurance policies. If we are found liable for any significant claims that exceed our loss reserves or are not covered by insurance, our liquidity and operating results could be materially adversely affected. It is possible that our insurance carrier may disclaim coverage for any class action and derivative lawsuits against us. It is also possible that some or all of the insurance that is currently available to us will not be available in the future on economically reasonable terms or not available at all. In addition, whether we are covered by insurance or not, certain claims may have the potential for negative publicity surrounding such claims, which could adversely affect our business and lead to lower revenues, as well as additional similar claims being filed.

We may be unable to maintain an effective system of internal control over financial reporting and comply with Section 404 of the Sarbanes-Oxley Act of 2002 and other related provisions of the U.S. securities laws.

We are required to file certain reports, including annual and quarterly periodic reports, under the Exchange Act. The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every reporting company to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of ~~the~~our ~~company’s~~ internal control over financial reporting. An independent registered public accounting firm must report on the effectiveness of our internal control over financial reporting. Compliance with the reporting obligations under the U.S. securities laws places additional burdens on our management, operational and financial ~~resources~~ resources and systems. To the extent that we are unable to maintain effective internal control over financial reporting and/or disclosure controls and procedures, we may be unable to produce reliable financial reports and/or public disclosure, detect and prevent fraud and comply with the reporting obligations under the U.S. securities laws, on a timely basis. Any such failure could harm our business or result in the violation of the reporting covenant in the indentures governing the Notes and the New Senior ABL Revolving Facility. In addition, failure to maintain effective internal control over financial reporting and/or disclosure controls and procedures could result in the loss of investor confidence in the reliability of our financial statements and public disclosure and a loss of customers, which in turn could harm our business.

public disclosure, detect and prevent fraud and comply with the reporting obligations under the U.S. securities laws, on a timely basis. Any such failure could harm our business or result in the violation of the reporting covenant in the Indentures governing the Notes and the New Senior ABL Revolving Facility. In addition, failure to maintain effective internal control over financial reporting and/or disclosure controls and procedures could result in the loss of investor confidence in the reliability of our financial statements and public disclosure and a loss of customers, which in turn could harm our business.

Environmental, health and safety laws, regulations and requirements and the costs of complying with them, or any liability or obligation imposed under them, could adversely affect our financial position, results of operations or cash flow.

Our operations are subject to a variety of federal, state, local and foreign environmental, health and safety laws and regulations. These laws regulate releases of petroleum products and other hazardous substances into the environment, the storage, treatment, transport and disposal of wastes, and the remediation of soil and groundwater contamination. These laws also regulate our ownership and operation of tanks used for the storage of petroleum products and other regulated substances. In addition, certain of our customers require us to maintain certain safety levels. Failure to maintain such levels could lead to a loss of such customers.

We have made, and will continue to make, expenditures to comply with environmental, health and safety laws and regulations, including, among others, expenditures for the investigation and cleanup of contamination at or emanating from currently and formerly owned and leased properties, as well as contamination at other locations at which our wastes have reportedly been identified. Some of these laws impose strict and in certain circumstances joint and several liability on current and former owners or operators of contaminated sites and other potentially responsible parties for investigation, remediation and other costs.

In addition, as climate change issues have become more prevalent, federal, state and local governments, as well as foreign governments, have begun to respond to these issues with increased legislation and regulations. Such legislation and regulations could negatively affect us, our suppliers and our customers. This may cause us to incur additional direct costs in complying with any new environmental legislation or regulations, as well as increased indirect costs resulting from our suppliers, customers, or both incurring additional compliance costs that could get passed through to us.

Compliance with existing or future environmental, health and safety requirements may require material expenditures by us or otherwise harm our consolidated financial position, results of operations or cash flow.

Our costs of doing business could increase as a result of changes in ~~U.S.~~ federal, state, provincial or local regulations.

Our operations are principally affected by various statutes, regulations and laws in the U.S. states and Canadian provinces in which we operate. While we are not engaged in a “regulated” industry, we are subject to various laws applicable to businesses generally, including laws ~~affecting~~ affecting land usage, zoning, transportation, information security and privacy, labor and employment practices, competition, immigration and other matters. In addition, certain new or proposed regulations with respect to the banking and finance industries, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and amendments to Regulation AB, could restrict our access to certain financing arrangements and increase our financing costs, which could have a material adverse impact on our financial position and results of operations. Further, we may be indirectly exposed to changes in regulations which affect our customers. Changes in ~~U.S.~~ federal, state, provincial or local regulations governing our business could increase our costs of doing business. Moreover, changes to ~~U.S.~~ federal, state, provincial and local tax regulations could increase our costs of doing business. We cannot provide assurance that we will not incur material costs or liabilities in connection with regulatory requirements. We cannot predict whether future developments in law and regulations concerning our businesses will affect our business financial condition and results of operations in a negative manner.

We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business.

Our ability to compete effectively depends in part upon protection of our rights in trademarks, copyrights and other intellectual property rights we own or license, including proprietary software. Our use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to protect our intellectual property and other proprietary rights may not be adequate. Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties that our services or our use of intellectual property infringe their intellectual property rights. Any litigation or claims brought by or against us could result in substantial costs and diversion of our resources. A successful claim of patent, trademark, copyright or other intellectual property infringement against us could prevent us from providing services, which could harm our business, financial condition or results of operations. In addition, a breakdown in our internal policies and procedures may lead to an unintentional disclosure of our proprietary, confidential or material non-public information, which could in turn harm our business, financial condition or results of operations.

Certain existing stockholders of RSC Holdings have significant control over our company and large ownership positions that could be sold, transferred or distributed.

Oak Hill, ~~ACF~~ and RSC Holdings are the current parties to an Amended and Restated Stockholders Agreement dated ~~May~~October 296, ~~2007,~~2011 ~~as amended further by Amendment No. 1 dated August 24, 2009, and Amendment No. 2 dated January 21, 2010~~ (the “Stockholders Agreement”), pursuant to which Oak Hill currently has the right to nominate ~~four~~three members of RSC Holdings’ Board of Directors. ~~In January 2011, in connection with the terms and conditions of the Stockholders Agreement, Ripplewood was no longer a party thereto.~~ As of December 31, ~~2010~~2011, Oak Hill ~~and ACF collectively~~ owned ~~approximately 41~~33.4% of the outstanding shares of our common stock and ~~together~~ may exercise control over matters requiring stockholder approval of our policies and affairs. Due to the Stockholders Agreement, Oak Hill has significant influence with respect to: (1) the election of RSC Holdings’ Board of Directors; (2) the approval or disapproval of any other matters requiring stockholder approval; and (3) the affairs, policies and direction of our business. The interests of RSC Holdings’ existing stockholders may conflict with the interests of other security holders. In addition, actual or possible sales, transfers or distributions of substantial amounts of the common stock of RSC Holdings by Oak Hill or ACF, or the perception of the forgoing by investors, may cause the trading price of RSC Holdings’ common stock to decline and could adversely affect our ability to obtain financing in the future.

stockholder approval; and (3) the affairs, policies and direction of our business. The interests of RSC Holdings’ existing stockholders may conflict with the interests of other security holders. In addition, actual or possible sales, transfers or distributions of substantial amounts of our common stock by Oak Hill, or the perception of the forgoing by investors, may cause the trading price of our common stock to decline and could adversely affect our ability to obtain financing in the future.

We face risks related to changes in our ownership.

Certain of our agreements with third parties, including our real property leases, require the consent of such parties in connection with any change in ownership of us. We will generally seek such consents and waivers; although we may not seek certain consents if our not obtaining them will not, in our view, have a material adverse effect on our consolidated financial position or results of operations. If we fail to obtain any required consent or waiver, the applicable third parties could seek to terminate their agreement with us and, as a result, our ability to conduct our business could be impaired until we are able to enter into replacement agreements, which could harm our results of operations or financial condition.

Risks Related to the Merger

Failure to consummate the Merger could adversely affect our business, financial condition and results of operations.

The Merger is subject to many conditions which must be satisfied or waived in order to complete the Merger, including, but not limited to, receipt of the requisite RSC Holdings and URI stockholder approvals and receipt of the necessary regulatory consents (including anti-trust) and approvals. Although we expect, as of the date of this Annual Report on Form 10-K, to consummate the Merger, it is possible that the Merger may not occur. If the Merger is not completed for any reason, the price of our common stock may decline to the extent that the market price of our common stock reflects positive market assumptions that the Merger will be completed or based on the market’s perception as to why the Merger was not completed. In addition, if the Merger is not consummated a comparable transaction may not occur in the future.

We may also be subject to additional risks if the Merger is not completed, including:

•

under certain circumstances specified in the Merger Agreement, we may be required to pay URI a termination fee of $60 million or reimburse the expenses of URI up to a maximum of $20 million;

•

substantial costs related to the Merger, such as legal, accounting, filing, financial advisory and financial printing fees may not be recovered; and

•

potential disruption to our business and distraction of our workforce and management team.

There can be no assurance that the conditions to closing of the Merger will be satisfied or waived or that the Merger will be completed.

Whether or not the Merger is consummated, the announcement and pendency of the transaction creates uncertainty and could impact or cause disruption in our business and could adversely affect our business and results of operations.

While the Merger is pending the attention of our management may be directed towards the completion of the Merger and may be diverted from the day to day business operations of RSC. In addition, uncertainty about the effects of the Merger on employees and members may have an adverse effect on us. Although we are taking steps to reduce any adverse effects, these uncertainties may impair their ability to attract, retain and motivate key personnel until the transaction is completed and for a period of time thereafter. Additionally, the uncertainty could cause our

customers, suppliers, partners and others that deal with us to defer entering into contracts with us or making other decisions concerning RSC or seek to change or cancel existing business relationships with us. The uncertainty and difficulty of integration in the combined company could also cause our key employees to lose motivation or leave their employment.

The Merger Agreement also restricts us from taking certain actions (including, among others, making certain acquisitions, amending organizational documents, making, declaring or paying certain dividends, entering into certain material contracts and incurring certain indebtedness) until the Merger is completed or the Merger Agreement is terminated. These restrictions may prevent us from pursuing otherwise attractive business opportunities and making other changes to our business in response to events or circumstances that may arise prior to the completion of the Merger. We may also become subject to lawsuits and adverse judgments related to the Merger, causing disruption in our business.

The Merger is subject to the receipt of consents and clearances from regulatory authorities that may impose conditions that could have an adverse effect on us or that could delay or, if not obtained, could prevent completion of the Merger.

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the Competition Act (Canada), the Merger cannot be completed until each of URI and RSC Holdings has made the required notifications and given certain information and materials to the Federal Trade Commission and/or the Department of Justice in the United States and the Commissioner of Competition in Canada and the specified waiting periods have expired or been terminated. Although each of URI and RSC Holdings has agreed in the Merger Agreement to use its reasonable best efforts to obtain the requisite governmental approvals, the necessary approvals may not be obtained, and there may be adverse consequences to our business resulting from the failure to obtain these regulatory approvals or from conditions that could be imposed in connection with obtaining these approvals, including divestitures or other operating restrictions upon RSC Holdings and its subsidiaries.

The Merger Agreement limits RSC’s ability to pursue alternatives to the Merger.

Under the Merger Agreement, RSC Holdings has agreed that it will not solicit, initiate or knowingly encourage any inquiries or proposals, engage in, continue or otherwise participate in any discussions or negotiations, or provide to any person any non-public information or data, in each case regarding any “acquisition proposal” (as defined in the Merger Agreement) or otherwise knowingly facilitate any effort or attempt to make such an acquisition proposal. These restrictions are, however, subject to certain limited exceptions. Additionally, RSC Holdings is subject to such “no-shop” provisions until the earlier of (i) the effective time of the Merger and (ii) the termination of the Merger Agreement in accordance with its terms. Furthermore, under specified circumstances, RSC Holdings or URI may be required to pay a termination fee of $60 million to the other party if the Merger is not completed, including in the event RSC Holdings or URI breaches its “no-shop” provisions in any material respect or terminates the Merger Agreement to accept a “superior proposal” (as defined in the Merger Agreement). RSC Holdings or URI may also be required to reimburse the other party for its expenses, up to a maximum amount of $20 million under certain circumstances, in the event its stockholders do not approve the adoption of the Merger Agreement.

These provisions may discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of RSC Holdings from considering or proposing that acquisition even if it were prepared to pay consideration with a higher price per share than that to be paid in the Merger, or may result in a potential competing acquiror proposing to pay a lower per share price to acquire RSC Holdings than it might otherwise have proposed to pay.

Risks Related to Our Indebtedness

We have substantial debt, which could adversely affect our financial condition, our ability to obtain financing in the future and our ability to react to changes in our business and make payments on our indebtedness.

We22 have a substantial amount of debt. As of December 31, 2010, we had $2,069.2 million of debt outstanding. Upon the closing of our New Senior ABL Revolving Facility, as of February 9, 2011, we had $2,314.5 million of debt outstanding. Our substantial debt could have important consequences. For example, it could:

• make it more difficult for us to satisfy our obligations to the holders of our Notes and to the lenders under our New Senior ABL Revolving Facility, resulting in possible defaults on and acceleration of such debt; • require us to dedicate a substantial portion of our cash flow from operations to make payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures, acquisitions or other general corporate purposes; • increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations, because a portion of our borrowings, including under the New Senior ABL Revolving Facility, bears interest at variable rates; • place us at a competitive disadvantage to our competitors with proportionately less debt or comparable debt at more favorable interest rates; • limit our ability to refinance our existing indebtedness on favorable terms or at all or borrow additional funds in the future for, among other things, working capital, capital expenditures, acquisitions or debt service requirements; • limit our flexibility in planning for, or reacting to, changing conditions in our business and industry; and • limit our ability to react to competitive pressures, or make it difficult for us to carry out capital spending that is necessary or important to our growth strategy and our efforts to improve operating margins.

We have a substantial amount of debt. As of December 31, 2011, we had $2,322.3 million of debt outstanding. Our substantial debt could have important consequences. For example, it could:

•

make it more difficult for us to satisfy our obligations to the holders of our Notes and to the lenders under our New Senior ABL Revolving Facility, resulting in possible defaults on and acceleration of such debt;

•

require us to dedicate a substantial portion of our cash flow from operations to make payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures, acquisitions or other general corporate purposes;

•

increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations, because a portion of our borrowings, including under the New Senior ABL Revolving Facility, bears interest at variable rates;

•

cause credit rating agencies to lower our credit ratings, which would increase our cost of borrowing and could adversely affect our access to capital markets;

•

place us at a competitive disadvantage to our competitors with proportionately less debt or comparable debt at more favorable interest rates;

•

limit our ability to refinance our existing indebtedness on favorable terms or at all or borrow additional funds in the future for, among other things, working capital, capital expenditures, acquisitions or debt service requirements;

•

limit our flexibility in planning for, or reacting to, changing conditions in our business and industry; and

•

limit our ability to react to competitive pressures, or make it difficult for us to carry out capital spending that is necessary or important to our growth strategy and our efforts to improve operating margins.

Any of the foregoing impacts of our substantial indebtedness could harm our business, financial condition and results of operations.

Despite our current indebtedness levels, we and our subsidiaries may be able to incur substantial additional debt, which could further exacerbate the risks associated with our current substantial debt.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the instruments governing our indebtedness do not prohibit us or fully prohibit us or our subsidiaries from doing so. As of ~~February~~December 931, 2011, our New Senior ABL Revolving Facility provided us commitments for additional aggregate borrowings of approximately $1,~~100~~210.0 million subject to, among other things, our maintenance of a sufficient borrowing base under such facility. The New Senior ABL Revolving Facility permits additional borrowings beyond the committed financing under such facility under certain circumstances. If new indebtedness is added to our current debt levels, the related risks that we now face would increase. In addition, the instruments governing our indebtedness do not prevent us or our subsidiaries from incurring obligations that do not constitute indebtedness.

Restrictive covenants in certain of the agreements and instruments governing our indebtedness may adversely affect our financial and operational flexibility.

The New Senior ABL Revolving Facility contains covenants that, among other things, restrict our ability to:

• incur additional indebtedness or provide guarantees; • engage in mergers, acquisitions or dispositions of assets; • enter into sale-leaseback transactions; • make dividends or other restricted payments; • prepay other indebtedness; • engage in certain transactions with affiliates; • make investments; • change the nature of our business; • incur liens; • enter into currency, commodity and other hedging transactions; and • amend specified debt agreements.

In• ~~addition,~~engage under the New Senior ABL Revolving Facility, we will become subject to additional borrowing base reporting requirements upon excess availability falling below $100.0 million. In addition, we will come under close supervision by our lenders and we will then be subject to financial covenants, including covenants that will obligate us to maintain (1) a specified leverage ratio of 5.25 to 1.00, decreasing to 5.00 to 1.00 on December 31, 2011, and (2) a specified fixed charge coverage ratio of 1.00 to 1.00 upon excess availability falling below the greater of $125.0 million and 12.5% of the sum of the total commitments under the New Senior ABL Revolving Facility. Our ability to comply with these covenants in ~~future periods and our available borrowing capacity under the New Senior ABL Revolving Facility will depend on our ongoing financial and operating performance~~mergers, ~~which~~acquisitions inor ~~turn~~dispositions ~~will be subject to economic conditions and to financial, market and competitive factors, many~~ of which are beyond our control. Our ability to comply with these covenants in future periods will also depend substantially on the pricing of our products and services, our success at implementing cost reduction initiatives and our ability to successfully implement our overall business strategy. assets;

19 • enter into sale-leaseback transactions;

•

make dividends or other restricted payments;

~~Each~~• ofprepay ~~the Notes’ Indentures contains restrictive covenants that, among~~ other ~~things, limit our ability and the ability of our restricted subsidiaries to:~~ indebtedness;

• ~~incur~~engage ~~additional~~in ~~debt; • pay dividends or distributions on their capital stock or repurchase their capital stock; • make~~ certain ~~investments; • create liens on their assets to secure debt; • enter into certain~~ transactions with affiliates; • create limitations on the ability of the restricted subsidiaries to make dividends or distributions to their respective parents; • merge or consolidate with another company; and • transfer and sell assets.

~~These~~• covenants could have a material adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition or other corporate opportunities and to fund our operations. Also, although the Notes’ Indentures limit our ability to make ~~restricted payments, these restrictions are subject to significant exceptions and qualifications.~~ investments;

~~Our~~• ~~ability~~change ~~to comply with~~ the ~~covenants~~nature ~~and restrictions contained in the New Senior ABL Revolving Facility and the Notes’ Indentures may be affected by economic, financial and industry conditions beyond our control. The breach~~ of any of these covenants or restrictions could result in a default under either the New Senior ABL Revolving Facility or such indentures that would permit the applicable lenders or noteholders, as the case may be, to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. In any such case, we may be unable to make borrowings under the New Senior ABL Revolving Facility and may not be able to repay the amounts due under the New Senior ABL Revolving Facility and the Notes. Any of the events described in this paragraph could have a material adverse effect on our ~~financial condition and results of operations and could cause us to become bankrupt or insolvent.~~ business;

•

incur liens;

•

enter into currency, commodity and other hedging transactions; and

•

amend specified debt agreements.

In addition, under the New Senior ABL Revolving Facility, we will become subject to additional borrowing base reporting requirements upon excess availability falling below $100.0 million. In addition, we will come under close supervision by our lenders and we will then be subject to financial covenants, including covenants that will obligate us to maintain (1) a specified leverage ratio of 5.00 to 1.00, and (2) a specified fixed charge coverage ratio of 1.00 to 1.00 upon excess availability falling below the greater of $125.0 million and 12.5% of the sum of the total commitments under the New Senior ABL Revolving Facility. Our ability to comply with these covenants in future periods and our available borrowing capacity under the New Senior ABL Revolving Facility will depend on our ongoing financial and operating performance, which in turn will be subject to economic conditions and to financial, market and competitive factors, many of which are beyond our control. Our ability to comply with these covenants in future periods will also depend substantially on the pricing of our products and services, our success at implementing cost reduction initiatives and our ability to successfully implement our overall business strategy.

Each of the Notes’ indentures contains restrictive covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to:

•

incur additional debt;

•

pay dividends or distributions on their capital stock or repurchase their capital stock;

•

make certain investments;

•

create liens on their assets to secure debt;

•

enter into certain transactions with affiliates;

•

create limitations on the ability of the restricted subsidiaries to make dividends or distributions to their respective parents;

•

merge or consolidate with another company; and

•

transfer and sell assets.

These covenants could have a material adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition or other corporate opportunities and to fund our operations. Also, although the Notes’ indentures limit our ability to make restricted payments, these restrictions are subject to significant exceptions and qualifications.

The breach of any of these covenants or restrictions could result in a default under either the New Senior ABL Revolving Facility or such indentures that would permit the applicable lenders or noteholders, as the case may be, to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. In any such case, we may be unable to make borrowings under the New Senior ABL Revolving Facility and may not be

able to repay the amounts due under the New Senior ABL Revolving Facility and the Notes. Any of the events described in this paragraph could have a material adverse effect on our financial condition and results of operations and could cause us to become bankrupt or insolvent.

We may not be able to generate sufficient cash to make payments on all of our debt, and our ability to refinance all or a portion of our debt or obtain additional financing depends on many factors beyond our control. As a result, we may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful.

Our ability to make scheduled payments on, or to refinance our obligations under, our debt , will depend on our financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to ~~the~~ financial and business factors, many of which may be beyond our control. We may not maintain a level of cash flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital or restructure our debt. In the future, our cash flow and capital resources may not be sufficient for payments of interest on and principal of our debt, and such alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. We may not be able to refinance any of our indebtedness or obtain additional financing, particularly because of our anticipated high levels of debt and the debt incurrence restrictions imposed by the agreements governing our debt, as well as prevailing market conditions. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. The instruments governing our indebtedness, restrict our ability to dispose of assets and use the proceeds from any such dispositions. We may not be able to consummate those sales, or if we do, the timing of any such sales may not be advantageous to us and the proceeds that we realize may not be adequate to meet debt service obligations when due.

A significant portion of our outstanding indebtedness is secured by substantially all of our consolidated assets. As a result of these security interests, such assets would only be available to satisfy claims of our general creditors or to holders of our equity securities if we were to become insolvent to the extent the value of such assets exceeded the amount of our indebtedness and other obligations. In addition, the existence of these security interests may adversely affect our financial flexibility.

Indebtedness under the New Senior ABL Revolving Facility and the 2017 Notes are secured by a lien on substantially all our assets, including pledges of substantially all of the assets of RSC Holdings III, LLC, which consist primarily of the capital stock of RSC and, in the case of the New Senior ABL Revolving Facility, pledges of substantially all of the assets of RSC Holdings II, LLC, which consist primarily of the capital stock of RSC Holdings III, LLC. The 2014 Notes, the 2019 Notes and the 2021 Notes are unsecured and therefore do not have the benefit of such collateral. Accordingly, if an event of default were to occur under the New Senior ABL Revolving Facility or the 2017 Notes, the senior secured lenders under such facility or the holders of the 2017 Notes would have a prior right to our assets, to the exclusion of our general creditors, including the holders of our 2014 Notes, 2019 Notes and 2021 Notes. In that event, our assets would first be used to repay in full all indebtedness and other obligations secured by them (including all amounts outstanding under the New Senior ABL Revolving Facility and the 2017 Notes), resulting in all or a portion of our assets being unavailable to satisfy the claims of our unsecured indebtedness.

20As of December 31, 2011, substantially all of our consolidated assets, including our equipment rental fleet, had been pledged for the benefit of the lenders under our New Senior ABL Revolving Facility and the holders of the 2017 Notes. As a result, the lenders under such facility and the holders of the 2017 Notes would have a prior claim on such assets in the event of our bankruptcy, insolvency, liquidation or reorganization, and we may not have sufficient funds to pay all of our creditors and holders of our unsecured indebtedness may receive less, ratably, than the holders of our secured debt, and may not be fully paid, or may not be paid at all, even when other creditors receive full payment for their claims. In that event, holders of our equity securities would not be entitled to receive any of our assets or the proceeds therefrom. In addition, the pledge of these assets and other restrictions may limit our flexibility in raising capital for other purposes. Because substantially all of our assets are pledged under these financing arrangements, our ability to incur additional secured indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have an adverse effect on our financial flexibility.

capital stock of RSC and, in the case of the New Senior ABL Revolving Facility, pledges of substantially all of the assets of RSC Holdings II, LLC, which consist primarily of the capital stock of RSC Holdings III, LLC. The 2014 Notes, the 2019 Notes and the 2021 Notes are unsecured and therefore do not have the benefit of such collateral. Accordingly, if an event of default were to occur under the New Senior ABL Revolving Facility or the 2017 Notes, the senior secured lenders under such facility or the holders of the 2017 Notes would have a prior right to our assets, to the exclusion of our general creditors, including the holders of our 2014 Notes, 2019 Notes and 2021 Notes. In that event, our assets would first be used to repay in full all indebtedness and other obligations secured by them (including all amounts outstanding under the New Senior ABL Revolving Facility and the 2017 Notes), resulting in all or a portion of our assets being unavailable to satisfy the claims of our unsecured indebtedness.

As of February 9, 2011, substantially all of our consolidated assets, including our equipment rental fleet, had been pledged for the benefit of the lenders under our New Senior ABL Revolving Facility and the holders of the 2017 Notes. As a result, the lenders under such facility and the holders of the 2017 Notes would have a prior claim on such assets in the event of our bankruptcy, insolvency, liquidation or reorganization, and we may not have sufficient funds to pay all of our creditors and holders of our unsecured indebtedness may receive less, ratably, than the holders of our secured debt, and may not be fully paid, or may not be paid at all, even when other creditors receive full payment for their claims. In that event, holders of our equity securities would not be entitled to receive any of our assets or the proceeds therefrom. In addition, the pledge of these assets and other restrictions may limit our flexibility in raising capital for other purposes. Because substantially all of our assets are pledged under these financing arrangements, our ability to incur additional secured indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have an adverse effect on our financial flexibility.

An increase in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability.

Indebtedness we have and may incur under the New Senior ABL Revolving Facility bears interest at variable rates. As a result, an increase in interest rates, whether because of an increase in market interest rates or an increase in our own cost of borrowing, would increase the cost of servicing our indebtedness and could materially reduce our profitability. In addition, recent turmoil in the credit markets has reduced the availability of debt financing, which may result in increases in the interest rates and borrowing spreads at which lenders are willing to make future debt financing available to us. The impact of such an increase would be more significant than it would be for some other companies because of our substantial indebtedness.

Risks Related to our Common Stock and Market and Economic Factors

Our operating and financial performance in any given period might not meet the guidance we may have provided to the public.

We may provide public guidance on our expected operating and financial results for future periods. Although we believe that this guidance provides investors and analysts with a better understanding of management’s expectations for the future, and is useful to our investors and potential investors, such guidance is comprised of forward-looking statements subject to the risks and uncertainties described in this report and in our other public filings and public statements. Actual results may differ from the projected guidance we may provide. If in the future, our operating or financial results for a particular period do not meet the guidance we may provide, or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of ~~our~~RSC ~~securities~~Holdings’ common stock could significantly decline.

The certificate of incorporation, and by-laws of RSC Holdings and Delaware law may discourage takeovers and business combinations that its stockholders might consider in their best interests.

A number of provisions in the certificate of incorporation and by-laws of RSC Holdings may have the effect of delaying, deterring, preventing or rendering more difficult a change in control of RSC Holdings that ~~its~~our stockholders might consider in their best interests. These provisions include:

• establishment of a classified Board of Directors, with staggered terms; • granting to the Board of Directors sole power to set the number of directors and to fill any vacancy on the Board of Directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise; • limitations on the ability of stockholders to remove directors;

21 • granting to the Board of Directors sole power to set the number of directors and to fill any vacancy on the Board of Directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise;

•

limitations on the ability of stockholders to remove directors;

•

the ability of the Board of Directors to designate and issue one or more series of preferred stock without stockholder approval, the terms of which may be determined at the sole discretion of the Board of Directors;

•

prohibition on stockholders from calling special meetings of stockholders;

•

establishment of advance notice requirements for stockholder proposals and nominations for election to the Board of Directors at stockholder meetings; and

•

prohibiting stockholders from acting by written consent.

These provisions may prevent the stockholders of RSC Holdings from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of RSC Holdings’ common stock if they are viewed as discouraging takeover attempts in the future. In addition, RSC Holdings has opted out of Section 203 of the Delaware General Corporation Law, which would have otherwise imposed additional requirements regarding mergers and other business combinations.

•The ~~the~~certificate ~~ability~~ of ~~the~~incorporation ~~Board of Directors to designate~~ and ~~issue~~by-laws ~~one or more series~~ of ~~preferred~~RSC ~~stock~~Holdings ~~without~~may ~~stockholder~~also ~~approval,~~make ~~the~~it ~~terms~~difficult offor stockholders ~~which~~to ~~may~~replace beor ~~determined~~remove atRSC ~~the~~Holdings ~~sole~~management. ~~discretion~~These ofprovisions ~~the~~may ~~Board~~facilitate ofmanagement ~~Directors;~~entrenchment •that ~~prohibition~~may ondelay, ~~stockholders~~deter, ~~from~~render ~~calling~~more ~~special~~difficult ~~meetings~~or ofprevent ~~stockholders;~~a •change ~~establishment~~in ofour ~~advance~~control, ~~notice~~which ~~requirements~~may ~~for~~not ~~stockholder~~be ~~proposals~~in ~~and nominations for election to~~ the ~~Board~~best interests of ~~Directors at stockholder meetings; and • prohibiting~~ its stockholders ~~from acting by written consent~~.

These provisions may prevent the stockholders of RSC Holdings from receiving the benefit from any premium to the market price of its common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of RSC Holdings’ common stock if they are viewed as discouraging takeover attempts in the future. In addition, RSC Holdings has opted out of Section 203 of the Delaware General Corporation Law, which would have otherwise imposed additional requirements regarding mergers and other business combinations.

The certificate of incorporation and by-laws of RSC Holdings may also make it difficult for stockholders to replace or remove RSC Holdings’ management. These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of its stockholders.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of December 31, ~~2010~~2011, we operated through an integrated network of ~~454~~440 rental locations across 4043 states in the United States and three Canadian provinces. Of these locations, ~~435~~422 were in ~~the~~ the United States and 1918 were in Canada. As of December 31, ~~2009~~2010, we operated ~~457~~454 rental locations. Of these locations, ~~438~~435 were in the United States and 19 were in Canada. We lease the real estate for all but three of our locations. The majority of our ~~leases~~locations ~~are~~have ~~for~~remaining ~~five~~lease ~~year~~ terms ~~with~~of less than 60 months and contain renewal options.

Our rental locations are generally situated in industrial or commercial zones. The typical location is approximately 78,500 square feet in size, located on approximately 2.0 acres and includes a customer service center, an equipment service area and storage facilities for equipment. Our corporate headquarters are located in Scottsdale, Arizona, where we occupy approximately 44,825 square feet under a lease that expires in 2013.

Item 3. Legal Proceedings

We are party to legal proceedings and potential claims arising in the ordinary course of our business, including claims related to employment matters, contractual disputes, personal injuries and property damage. In addition, various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against us and our subsidiaries.

Litigation is subject to many uncertainties, and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings, including those discussed above, could be decided unfavorably to us or any of our subsidiaries involved. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe that any current pending legal proceedings to which we are a party will materially harm our business, results of operations, cash flows or financial condition.

Item 4. Reserved

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our equity securities are not publicly traded and are 100% owned by RSC Holdings II, LLC. RSC Holdings is the ultimate parent of RSC Holdings II, LLC.

Dividends

RSC Holdings did not declare or pay any cash dividends on its common stock during fiscal year 2011 or 2010. RSC Holdings does not have a formal dividend policy. The Board of Directors periodically considers the advisability of declaring and paying dividends in light of existing circumstances. RSC Holdings’ ability to pay dividends to holders of its common stock is limited as a practical matter by the New Senior ABL Revolving Facility and the indentures governing the Notes, insofar as RSC Holdings may seek to pay dividends out of funds made available to it, because its subsidiaries’ debt facilities directly or indirectly restrict ~~RSC~~its ~~Holdings~~ subsidiaries’ ability to pay dividends or or make loans to it.

23 28

Recent Performance

Stock Performance Graph. The performance graph and related information shall not be deemed “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended except to the extent that we specifically incorporate it by reference into such filing.

The following graph compares the cumulative total stockholders’ return on RSC Holdings common stock with the Russell 2000 index and a peer group. The peer group consists of 14 companies that have the same standard industrial classification code (“SIC”) as RSC Holdings as well as 3 companies that have similarities to RSC Holdings but which have different SIC codes. RSC Holdings’ SIC code description is 7359—Services-Equipment Rental & Leasing, NEC. The results are based on an assumed $100 invested on May 23, 2007, the day our common stock began trading or April 30, 2007 in the index, including reinvestment of dividends, through December 31, 2011.

LOGO

Item 6. Selected Financial Data

The following table presents selected consolidated financial information and other operational data for our business. You should read the following information in conjunction with Item 7 of this Annual Report on Form 10-K entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

	Years Ended December 31,
	2010			2009			2008			2007			2006
	2011			2010			2009			2008			2007
	($ in thousands, except per share data)
Consolidated statements of operations data:
Revenues:
Equipment rental revenue	$	1,~~060~~312,~~266~~507		$	1,~~073~~060,~~021~~266		$	1,~~567~~073,~~254~~021		$	1,~~543~~567,~~175~~254		$	1,~~368~~543,~~712~~175
Sale of merchandise		4955,~~313~~241			5149,~~951~~313			7251,~~472~~951			8072,~~649~~472			9280,~~524~~649
Sale of used rental equipment		~~124~~154,~~845~~466			~~158~~124,~~482~~845			~~125~~158,~~443~~482			~~145~~125,~~358~~443			~~191~~145,~~652~~358
Total revenues		1,~~234~~522,~~424~~214			1,~~283~~234,~~454~~424			1,~~765~~283,~~169~~454			1,~~769~~765,~~182~~169			1,~~652~~769,~~888~~182
Cost of revenues:
Cost of equipment rentals, excluding depreciation (1)		563,513			540,945			685,600			634,215			585,538
Cost of equipment rentals, excluding depreciation		651,651			563,513			540,945			685,600			634,215
Depreciation of rental equipment		~~272~~300,~~610~~377			~~285~~272,~~668~~610			~~317~~285,~~504~~668			~~295~~317,~~248~~504			~~253~~295,~~379~~248
Cost of merchandise sales		3536,~~701~~817			3635,~~743~~701			4936,~~370~~743			5349,~~936~~370			6153,~~675~~936
Cost of used rental equipment sales		~~104~~101,~~491~~141			~~148~~104,~~673~~491			90148,~~500~~673			~~103~~90,~~076~~500			~~145~~103,~~425~~076
Total cost of revenues		~~976~~1,~~315~~089,986			1976,~~012,029~~315			1,~~142~~012,~~974~~029			1,~~086~~142,~~475~~974			1,~~046~~086,~~017~~475
Gross profit		~~258~~432,~~109~~228			~~271~~258,~~425~~109			~~622~~271,~~195~~425			~~682~~622,~~707~~195			~~606~~682,~~871~~707
Operating expenses:
Selling, general and administrative (1)		146,791			148,163			175,703			163,465			143,698
Selling, general and administrative		183,145			146,791			148,163			175,703			163,465
Management fees and recapitalization expenses (2)(3)		—			—			—			23,000			10,836
Merger costs and management fees (1)		10,954			—			—			—			23,000
Depreciation and amortization of non-rental equipment and intangibles		4042,~~213~~427			4340,~~984~~213			4943,~~567~~984			4649,~~226~~567			3846,~~783~~226
Other operating gains, net		(54,~~592~~000	)		(~~517~~5,592	)		(~~1,010~~517	)		(41,~~850~~010	)		(64,~~968~~850	)
Total operating expenses, net		~~181~~232,~~412~~526			~~191~~181,~~630~~412			~~224~~191,~~260~~630			~~227~~224,~~841~~260			~~186~~227,~~349~~841
Operating income		76199,~~697~~702			7976,~~795~~697			~~397~~79,~~935~~795			~~454~~397,~~866~~935			~~420~~454,~~522~~866
Interest expense, net		~~194~~224,~~471~~518			~~189~~194,~~689~~471			~~201~~189,~~849~~689			~~243~~201,~~908~~849			~~197~~243,~~085~~908
(Gain) loss on extinguishment of debt, net (4)		—			(13,916	)		—			9,570			—
Loss (gain) on extinguishment of debt, net (2)		15,342			—			(13,916	)		—			9,570
Other (income) expense, net		(539	)		707			658			(1,126	)		(311	)
Other expense (income), net		260			(539	)		707			658			(1,126	)
(Loss) income before (benefit) provision for income taxes		(~~117~~40,~~235~~418	)		(96117,~~685~~235	)		~~195~~(96,~~428~~685	)		~~202~~195,~~514~~428			~~233~~202,~~748~~514
(Benefit) provision for income taxes (5)		(43,719	)		(37,325	)		72,939			79,260			86,568
(Benefit) provision for income taxes		(10,514	)		(43,719	)		(37,325	)		72,939			79,260
Net (loss) income	$	(7329,~~516~~904	)	$	(5973,~~360~~516	)	$	~~122~~(59,~~489~~360	)	$	~~123~~122,~~254~~489		$	~~137~~123,~~180~~254
Preferred dividends		—			—			—			—			(7,997	)
Net (loss) income available for common stockholders	$	(73,516	)	$	(59,360	)	$	122,489		$	123,254		$	129,183
Weighted average shares outstanding used in computing net (loss) income per common share:
Basic and diluted		1,000			1,000			1,000			1,000			1,000
Net (loss) income per common share:
Basic and diluted (6)	$	(73.52	)	$	(59.36	)	$	122.49		$	123.25		$	129.18
Basic and diluted	$	(29.90	)	$	(73.52	)	$	(59.36	)	$	122.49		$	123.25

24 30

	Years Ended December 31,
	2010			2009			2008			2007			2006
	2011			2010			2009			2008			2007
	($ in thousands)
Other financial data:
Depreciation of rental equipment and depreciation and amortization of non-rental equipment and intangibles	$	~~312~~342,~~823~~804		$	~~329~~312,~~652~~823		$	~~367~~329,~~071~~652		$	~~341~~367,~~474~~071		$	~~292~~341,~~162~~474
Capital expenditures:
Rental	$	~~327~~616,~~107~~159		$	46327,~~386~~107		$	~~258~~46,~~660~~386		$	~~580~~258,~~194~~660		$	~~721~~580,~~258~~194
Non-rental		511,~~766~~837			45,~~952~~766			154,~~319~~952			2015,~~674~~319			2820,~~592~~674
Proceeds from sales of rental equipment and non-rental equipment		(~~127~~161,~~796~~539	)		(~~170~~127,~~975~~796	)		(~~131~~170,~~987~~975	)		(~~156~~131,~~678~~987	)		(~~207~~156,~~613~~678	)
Insurance proceeds from rental equipment and property claims		~~(4,368~~—	)		(54,~~267~~368	)		—(5,267	)		—			—
Net capital expenditures (inflows)	$	~~200~~466,~~709~~457		$	~~(124~~200,~~904~~709	)	$	~~141~~(124,~~992~~904	)	$	~~444~~141,~~190~~992		$	~~542~~444,~~237~~190
Other operational data (unaudited):
Fleet utilization (7)		63.7	%		57.6	%		70.1	%		72.8	%		72.0	%
Fleet utilization (3)		68.8	%		63.7	%		57.6	%		70.1	%		72.8	%
Average fleet age at period end (months)		4442			4044			3340			2633			2526
Same store rental revenue growth / (decline) (8)		0.5	%		(28.9	)%		2.4	%		11.1	%		18.9	%
Employees (4)		4,721			4,427			4,153			5,014			5,486
Employees (9)		4,427			4,153			5,014			5,486			5,187
Original equipment fleet cost at period end (in millions) (5)	$	2,666		$	2,345		$	2,324		$	2,695		$	2,670
Original equipment fleet cost at period end (in millions) (10)	$	2,345		$	2,324		$	2,695		$	2,670		$	2,346
Consolidated balance sheet data:
Rental equipment, net	$	1,~~336~~573,~~424~~193		$	1,~~384~~336,~~999~~424		$	1,~~766~~384,~~978~~999		$	1,~~929~~766,~~514~~978		$	1,~~738~~929,~~670~~514
Total assets (11)		2,717,975			2,772,012			3,297,228			3,473,380			3,316,305
Total assets		3,140,973			2,717,975			2,772,012			3,297,228			3,473,380
Debt		2,~~069~~322,~~181~~282			2,~~172~~069,~~109~~181			2,~~569~~172,~~067~~109			2,~~736~~569,~~225~~067			32,~~006~~736,~~426~~225
Total liabilities (11)		2,755,252			2,748,371			3,254,108			3,517,478			3,750,938
Total liabilities		3,179,392			2,755,252			2,748,371			3,254,108			3,517,478
Total stockholders’ (deficit) equity		(3738,~~277~~419	)		23(37,~~641~~277	)		4323,~~120~~641			~~(44~~43,~~098~~120	)		(~~434~~44,~~633~~098	)

(1)		Certain amounts in the consolidated statements of operations for the years ended December 31, 2009, 2008, 2007 and 2006 have been reclassified to conform with the current year presentation and consist of reclassifying the salaries and associated benefit expenses for business development managers to selling, general and administrative expense from cost of equipment rentals excluding depreciation. The reclassification resulted in a reduction to previously reported cost of equipment rentals, excluding depreciation and a corresponding increase to previously reported selling, general and administrative expense of $7.5 million, $7.0 million, $6.8 million and $5.7 million in the years ended December 31, 2009, 2008, 2007 and 2006, respectively.
(2)		In conjunction with the Recapitalization, we entered into a monitoring agreement whereby we would pay management fees of $1.5 million per quarter to the Sponsors. The monitoring agreement was terminated in connection with our initial public offering and a $20.0 million termination fee (also included in management fees) was paid.
(3)		The 2006 amount includes recapitalization expenses of approximately $10.3 million for fees and expenses related to the consummation of the Recapitalization that were not otherwise capitalized or applied to stockholders’ equity.
(4)		(Gain) loss on extinguishment of debt, net for the year ended December 31, 2009 consists of a $17.6 million net gain from the repayment of debt outstanding under the Second Lien Term Facility offset by a $3.7 million loss associated with the repayment of our Old Senior ABL Term Loan. The $17.6 million net gain associated with the repayment of our Second Lien Term Facility includes a $26.9 million gain, which represents the difference between the carrying value of debt repaid under the Second Lien Term Facility and the repurchase price offset by $2.9 million of creditor and third party fees incurred in connection with the repayment and the associated amendments to our Old Senior ABL Facilities credit agreement and Second Lien Term Facility agreement as well

(1)	In 2011, in connection with our pending Merger with URI we incurred approximately $7.7 million of transaction expenses and paid approximately $3.3 million in discretionary bonuses to certain members of our senior management team related to the execution of the Merger Agreement.

25In conjunction with the Recapitalization, we entered into a monitoring agreement whereby we would pay management fees of $1.5 million per quarter to the Sponsors. The monitoring agreement was terminated in connection with our 2007 initial public offering and a $20.0 million termination fee (also included in management fees) was paid.

(2)

Loss on extinguishment of debt, net was $15.3 million for the year ended December 31, 2011 and consists of (i) the write-off of $5.1 million of unamortized deferred financing costs associated with our Second Lien Term Facility, which we repaid in January 2011, (ii) the write-off of $2.2 million of unamortized deferred financing costs and $5.6 million of call premiums associated with partial repayment of our 2014 Notes in February 2011, and (iii) the write-off of $2.4 million of unamortized deferred financing costs associated with the Old Senior ABL Revolving Facility, which was replaced with the New Senior ABL Revolving Facility in February 2011.

(Gain) on extinguishment of debt, net for the year ended December 31, 2009 consists of a $17.6 million net gain from the repayment of debt outstanding under the Second Lien Term Facility offset by a $3.7 million loss associated with the repayment of our Old Senior ABL Term Loan. The $17.6 million net gain associated with the

		as $6.4 million of unamortized deferred financing costs that were expensed. The $3.7 million loss from the extinguishment of our Old Senior ABL Term Loan includes $1.4 million of creditor fees incurred to amend the Old Senior ABL Facilities credit agreement in connection with the repayment of the Old Senior ABL Term Loan and $2.3 million of unamortized deferred financing costs that were expensed.
		Loss on extinguishment of debt for the year ended December 31, 2007 includes a $4.6 million prepayment penalty related to the $230.7 million repayment of Second Lien Term Facility debt and the write-off of $5.0 million of deferred financing costs associated with the repayment.
(5)		Prior to the Recapitalization, RSC Holdings had other lines of businesses and the consolidated tax return of RSC Holdings for those periods included the results from those other lines of businesses. Our income taxes as presented in the consolidated financial statements for the period prior to the Recapitalization are calculated on a separate tax return basis that does not include the results from those other lines of businesses. Under Atlas’ ownership, RSC Holdings managed its tax position and remitted tax payments for the benefit of its entire portfolio of businesses, and its tax strategies were not necessarily reflective of the tax strategies that we would have followed or do follow as a stand-alone company. Tax payments were not made for the Company on a stand-alone basis prior to the Recapitalization.
(6)		For purposes of calculating basic and diluted net income per common share, net income for the year ended December 31, 2006 has been adjusted for preferred stock dividends.
(7)		Fleet utilization is defined as the average aggregate dollar value of equipment rented by customers (based on original equipment fleet cost) during the relevant period, divided by the average aggregate dollar value of all equipment owned (based on original equipment fleet cost) during the relevant period.

repayment of our Second Lien Term Facility includes a $26.9 million gain, which represents the difference between the carrying value of debt repaid under the Second Lien Term Facility and the repurchase price offset by $2.9 million of creditor and third party fees incurred in connection with the repayment and the associated amendments to our Old Senior ABL Facilities credit agreement and Second Lien Term Facility agreement as well as $6.4 million of unamortized deferred financing costs that were expensed. The $3.7 million loss from the our Old Senior ABL Term Loan includes $1.4 million of creditor fees incurred to amend the Old Senior ABL Facilities credit agreement in connection with the repayment of the Old Senior ABL Term Loan and $2.3 million of unamortized deferred financing costs that were expensed.

Loss on extinguishment of debt, net for the year ended December 31, 2007 includes a $4.6 million prepayment penalty related to the $230.7 million repayment of Second Lien Term Facility debt and the write-off of $5.0 million of deferred financing costs associated with the repayment.

(3)

Fleet utilization is defined as the average aggregate dollar value of equipment rented by customers (based on original equipment fleet cost) during the relevant period, divided by the average aggregate dollar value of all equipment owned (based on original equipment fleet cost) during the relevant period.

The following table shows the calculation of fleet utilization for each period presented.

	For the Years Ended December 31,
	2010			2009			2008			2007			2006
	2011			2010			2009			2008			2007
	(in millions)
	($ in millions)
Average aggregate dollar value of all equipment owned (original cost)	$	2,~~339~~551.92		$	2,~~484~~339.79		$	2,~~731~~484.27		$	2,~~535~~731.72		$	2,~~197~~535.87
Average aggregate dollar value of equipment on rent		1,~~491~~756.05			1,~~431~~491.50			1,~~913~~431.95			1,~~844~~913.9			1,~~582~~844.89
Fleet utilization		6368.78	%		5763.67	%		7057.16	%		7270.81	%		72.08	%

(8)		Same store rental revenue growth or decline is calculated as the year-over-year change in rental revenue for locations that are open at the end of the period reported and have been operating under our direction for more than 12 months.
(9)		Employee count is given as of the end of the period indicated and the data reflects the actual headcount as of each period presented.
(10)		Original Equipment Fleet Cost (“OEC”) is defined as the original dollar value of rental equipment purchased from the original equipment manufacturer (“OEM”). Fleet purchased from non-OEM sources is assigned a comparable OEC dollar value at the time of purchase.
(11)		In 2010, the Company changed to a classified balance sheet presentation. Consolidated balance sheet data at December 31, 2009, 2008, 2007 and 2006 have been reclassified to conform to this presentation. As a result of this change, total assets and total liabilities increased by $43.7 million, $28.7 million, $19.0 million and $11.3 million at December 31, 2009, 2008, 2007 and 2006, respectively, from the previously reported amounts. This change was due to the separate presentation of current deferred tax assets, net, which was previously reported within deferred tax liabilities, net.

(4)	Employee count is given as of the end of the period indicated and the data reflects the actual headcount as of each period presented.

26 (5) Original Equipment Fleet Cost (“OEC”) is defined as the original dollar value of rental equipment purchased from the original equipment manufacturer (“OEM”). Fleet purchased from non-OEM sources is assigned a comparable OEC dollar value at the time of purchase.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are one of the largest equipment rental providers in North America. We operate through a an integrated network of ~~454~~440 rental locations across ten regions in 4043 U.S. states and three Canadian provinces. and service customers primarily in the industrial or non-construction, and construction markets. We rent a broad selection of equipment ranging from large equipment such as backhoes, forklifts, air compressors, scissor lifts, aerial work platform booms and skid-steer loaders to smaller items such as pumps, generators, welders and electric hand tools. We also sell used equipment, parts, merchandise and supplies for customers’ maintenance, repair and operations and new equipment.

For the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, we generated approximately 8586.92%, 8385.69% and 8883.86% of our revenues from equipment rentals, respectively, and we derived the remaining 1413.18%, 16 14.41% and 1116.24% of our revenues from sales of used rental equipment, merchandise and other related items, respectively.

The following table summarizes our total revenues, (loss~~) income~~ before (benefit~~) provision~~ for income taxes and net (loss~~) income~~ for the years ended December 31, 2011, 2010, ~~2009~~ and ~~2008~~2009 (in 000s):

	Years Ended December 31,
	2010			2009			2008
	2011			2010			2009
Total revenues	$	1,~~234~~522,~~424~~214		$	1,~~283~~234,~~454~~424		$	1,~~765~~283,~~169~~454
(Loss) income before (benefit) provision for income taxes		(117,235	)		(96,685	)		195,428
Loss before benefit for income taxes		(40,418	)		(117,235	)		(96,685	)
Net (loss) income		(73,516	)		(59,360	)		122,489
Net loss		(29,904	)		(73,516	)		(59,360	)

We manage our operations through the application of a disciplined, yet highly flexible business model, in which we utilize various financial and operating metrics to measure our operating performance and make decisions on the acquisition and disposal of rental fleet and the allocation of resources to and among our locations. Key metrics that we regularly review on a consolidated basis include Adjusted EBITDA, fleet utilization, average fleet age and original equipment fleet cost. The following is a summary of these key operating metrics:

	Years Ended December 31,
	2010			2009			2008
	2011			2010			2009
Adjusted EBITDA (in millions) (a)	$	~~393~~560.35		$	~~413~~393.73		$	~~768~~413.07
Fleet utilization (b)		6368.78	%		5763.67	%		7057.16	%
Average fleet age at period end (months) (c)		4442			4044			3340
Original equipment fleet cost at period end (in millions) (d)	$	2,~~345~~666		$	2,~~324~~345		$	2,~~695~~324

(a) Defined as consolidated net (loss) income before net interest expense, income taxes and depreciation and amortization and before certain other items, including (gain) loss on extinguishment of debt, net, merger costs, share-based compensation and other (income) expense, net. Adjusted EBITDA is not a recognized measure under GAAP. See reconciliation between net (loss) income and Adjusted EBITDA and reconciliation between net cash provided by operating activities and Adjusted EBITDA under “Liquidity and Capital Resources —- Adjusted EBITDA”. (b) Defined as the average aggregate dollar value of equipment rented by customers (based on original equipment fleet cost or “OEC”) during the relevant period, divided by the average aggregate dollar value of all equipment owned (based on OEC) during the relevant period. (c) Defined as the number of months since an equipment unit was first placed in service, weighted by multiplying individual equipment ages by their respective original costs and dividing the sum of those individual calculations by the total original cost. Equipment refurbished by the original equipment manufacturer is considered new. (d) Defined as the original dollar value of rental equipment purchased from the original equipment manufacturer (“OEM”). Fleet purchased from non-OEM sources is assigned a comparable OEC dollar value at the time of purchase.

27 (b) Defined as the average aggregate dollar value of equipment rented by customers (based on Original Equipment Fleet Cost or “OEC”) during the relevant period, divided by the average aggregate dollar value of all equipment owned (based on OEC) during the relevant period.

(c)

Defined as the number of months since an equipment unit was first placed in service, weighted by multiplying individual equipment ages by their respective original costs and dividing the sum of those individual calculations by the total original cost. Equipment refurbished by the original equipment manufacturer is considered new.

(d)	Defined as the original dollar value of rental equipment purchased from the original equipment manufacturer (“OEM”). Fleet purchased from non-OEM sources is assigned a comparable OEC dollar value at the time of purchase.

During the year ended December 31, ~~2010~~2011, our Adjusted EBITDA ~~decreased~~increased $20167.4 2 million, or 442.95%, from $~~413~~393.7 3 million in ~~2009~~2010 to $~~393~~560.3 5 million in ~~2010~~2011. The ~~decrease~~increase is due primarily to a $35164.3 1 million ~~decrease~~increase in equipment rental margins, ~~offset~~excluding depreciation, and by a $1033.5 0 million increase in used rental equipment sales margins. Equipment rental margins were ~~lower~~higher during ~~2010~~2011 due to a 64.39% ~~decrease~~increase in rental rates and toimproved aoperating ~~lesser extent higher fuel prices, which resulted in increases in freight and fuel expense~~efficiencies. ~~Offsetting these negative factors was a $10.4 million decrease in location closure and severance costs as compared to the prior year period.~~ Used rental equipment sales margins were higher during ~~2010~~2011 due to an improvement in margins on used rental equipment sold through both retail and auction channels.

For the year ended December 31, ~~2010~~2011 our fleet utilization increased ~~610~~510 basis points as compared to the prior year ~~period~~. The increase was due to rising demand for our rental equipment ~~as well as a reduction in average OEC during 2010 resulting from our initiative to adjust our fleet levels to more appropriately match our business needs~~. During 2009 our utilization continued to decline due to lower demand for our rental equipment brought on by a weakening of demand in the non-residential construction market and to a lesser extent, a weakening of demand in the industrial or non-construction market. This weakening of demand continued into the first quarter of 2010 as utilization for the three months ended March 31, 2010 was lower than the comparable prior year period. Market conditions improved during ~~the~~2011 ~~remainder of 2010~~ resulting in strengthening demand for our rental equipment as fleet on rent increased approximately 2218.87% at December 31, ~~2010~~2011 as compared to December 31, ~~2009~~2010. This compares to aan ~~decrease~~increase of approximately 2522.8% at December 31, ~~2009~~ 2010 as compared to December 31, ~~2008~~2009.

Average fleet age at December 31, ~~2010~~2011 was 44 42 months, updown ~~four~~two months, from 40 44 months at December 31, ~~2009~~2010. Rental fleet purchases, which totaled $~~327~~616.1 2 million in the year ended December 31, ~~2010~~2011, were ~~not~~ at a pace sufficient to ~~offset~~slightly ~~the~~reduce ~~growth in~~ overall fleet age.

For trends affecting our business and the markets in which we operate see “Business Environment and Outlook,” “Recent Developments” and “Factors Affecting our Results of Operations” each presented below and the section entitled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

Business Environment and Outlook

~~During~~Although ~~the~~economic ~~second~~conditions ~~quarter~~in ofour ~~2010~~underlying ~~and~~end ~~continuing~~markets ~~throughout~~remained ~~the~~relatively ~~remainder~~unchanged ofin ~~2010~~2011, ~~market conditions~~we ~~improved,~~experienced ~~which~~increased ~~translated into strengthening~~ demand for ~~our~~ rental equipment. asWe ~~fleet on~~believe ~~rent~~that the increased ~~approximately~~demand ~~22.8%~~in atexcess ~~December 31,~~of ~~2010~~the asimprovements ~~compared~~in toour ~~December 31,~~end ~~2009.~~markets ~~This compares~~was togenerated aby ~~decrease~~our ofcustomers ~~approximately~~increased ~~25.8%~~willingness atto ~~December 31,~~rent ~~2009~~rather asthan ~~compared~~purchase ~~to December 31, 2008~~equipment. InWe ~~addition,~~responded ~~fleet~~to ~~utilization~~this ~~for~~increase ~~the~~in ~~year~~demand ~~ended~~by ~~December 31,~~investing $616.2 ~~2010~~million ~~was~~in ~~63.7%,~~rental anfleet ~~increase~~and ~~of 610~~improving ~~basis~~utilization ~~points~~to ~~from 57~~68.68% for the year ended December 31, ~~2009.~~2011 ~~Although~~or ~~rental~~510 ~~rates~~basis ~~declined 6~~points from 63.37% infor the year ended December 31, 2010~~, the year-over-year rental rate decline in the fourth quarter of 2010 was 1~~.~~9%,~~ ~~which~~Rental ~~compares~~rates toincreased ~~the year-over-year rental rate declines of~~ 4.~~4%, 8.4% and~~ 9.9% in the ~~quarters~~year ended ~~September~~December ~~30, 2010, June 30, 2010 and March~~ 31, ~~2010, respectively.~~ ~~We expect year-over-year rental rates in the first quarter of~~ 2011 ~~to be comparable to the first quarter of 2010~~. We also expect fleet on rent and utilization to continue to compare favorably to the prior year during the first quarter of 2011 and while pricing remains challenging, year-over-year comparisons for rental revenues in the first quarter of 2011 are expected to be favorable.

28We expect that the demand for rental equipment will continue to outpace our underlying end markets in the first quarter of 2012. We also expect fleet on rent, utilization and rental revenues to continue to compare favorably to the prior year during the first quarter of 2012. Rental rates are directly related to rental demand and we expect positive rate growth during the first quarter of 2012 over those rates achieved in the first quarter of 2011.

Recent ~~Developments~~ Development

On December 15, 2011, RSC Holdings entered into the Merger Agreement with URI. Upon completion of the Merger, each issued and outstanding share of RSC Holdings’ common stock (other than shares owned by RSC Holdings, URI or any of their direct or indirect wholly owned subsidiaries, in each case not held on behalf of third parties, and shares with respect to which appraisal rights are properly exercised and not withdrawn) will be converted into the right to receive (i) $~~650~~10.80 in cash and (ii) 0.2783 ~~million~~of ~~Senior~~a ~~Unsecured~~share ~~Notes~~of ~~Offering~~URI common stock, in each case without interest. The board of directors of each of RSC Holdings and URI has unanimously approved the Merger and the Merger Agreement and has recommended that its stockholders vote in favor of the adoption of the Merger Agreement.

~~On January 19, 2011, we completed a private offering of $650.0 million aggregate principal amount of 8.25% senior unsecured notes due February 2021 (the ‘‘2021 Notes”).~~ The ~~proceeds~~Merger ~~from~~is ~~the~~expected ~~sale of the 2021 Notes were used~~ to ~~repay the outstanding balance on our Second Lien~~ ~~Term~~close ~~Facility,~~by ~~which totaled $479.4 million plus accrued interest of $0.7 million as of January 19, 2011, redeem on February 21, 2011 a portion of~~ the ~~2014~~end ~~Notes as described below, settle our outstanding interest rate swap obligations, which totaled $35.1 million as~~ of ~~January 19, 2011 and pay approximately $13.0 million in transaction costs. The transaction costs were capitalized and are being amortized over~~ the ~~term~~first ofhalf ~~the 2021 Notes. On January 18, 2011, we sent a notice~~ of ~~our~~2012 ~~election to redeem $117.0 million of the aggregate principal of the 2014 Notes to the trustee, who distributed to the holders,~~ and ~~such~~is ~~redemption~~subject ~~will occur on February 21, 2011. In addition~~ to ~~the~~customary ~~repayment~~closing ~~of the $117.0 million of the aggregate principal of our 2014 Notes~~conditions, weincluding ~~will~~approval ~~pay accrued interest~~ of ~~$2.5~~stockholders ~~million~~ and ~~incur~~necessary aregulatory ~~call premium of $5~~approvals.6 million, which will be funded with the remaining proceeds from the 2021 Notes and in part from a draw on our New Senior ABL Revolving Facility. As a result of the Second Lien Term Facility repayment and the partial repayment of the 2014 Notes, we will expense $7.3 million of unamortized deferred financing costs, which together with the $5.6 million in call premiums, will be characterized as a loss on extinguishment of debt in 2011. The settlement of our interest rate swaps resulted in a charge of $33.9 million, which will be characterized as interest expense in 2011.

~~New~~Acquisition ~~Senior ABL Revolving Facility~~

On ~~February 9~~July 8, 2011, we ~~entered~~acquired ~~into~~ the ~~New~~assets ~~Senior~~and ~~ABL~~operations ~~Revolving~~of Independent ~~Facility,~~Aerial ~~which~~Equipment ~~replaced~~(“IAE”), ~~our~~a ~~Old~~privately ~~Senior~~held ~~ABL~~equipment ~~Revolving~~rental ~~Facility, and borrowed $383~~company.0 ~~million~~Substantially all of ~~loans under~~ the ~~New~~assets ~~Senior~~and ~~ABL~~operations, ~~Revolving~~which ~~Facility. The~~consist ~~proceeds~~primarily of ~~these~~rental ~~loans~~fleet ~~were~~and ~~used~~three tostores ~~repay~~in ~~the~~New ~~outstanding~~Jersey, ~~balance~~Pennsylvania onand ~~our Old Senior ABL Revolving Facility~~Maryland, ~~which~~were acquired ~~totaled~~in ~~$370.2~~exchange ~~million~~for ~~plus~~cash ~~accrued~~consideration ~~interest and other fees~~ of approximately $149.1 million, ~~and~~subject to ~~pay~~certain ~~$11.0~~post-close ~~million in transaction costs including legal fees~~adjustments. ~~The~~ ~~transaction~~We ~~costs~~financed ~~were capitalized~~the ~~and~~acquisition ~~are~~of ~~being~~IAE ~~amortized~~by ~~over~~borrowing the ~~term~~funds offrom the New Senior ABL Revolving Facility. ~~Our~~ ~~New~~In ~~Senior~~connection ~~ABL~~with ~~Revolving Facility,~~the ~~which is due February 2016~~acquisition, ~~provides~~we ~~commitments~~recorded ~~for~~$13.3 ~~additional~~million ~~aggregate borrowings~~ of ~~approximately~~goodwill and $~~1,100~~5.06 million ~~subject to, among other things, our maintenance~~ of aintangible ~~sufficient~~assets ~~borrowing~~with ~~base~~finite ~~under~~useful ~~such facility~~lives. ~~The~~ ~~borrowing~~Additionally, ~~base~~we ~~reporting~~incurred ~~requirements that~~$0.1 wemillion ~~are~~in ~~subject~~transaction ~~to,~~costs. ~~under~~We ~~the~~did ~~New~~not ~~Senior~~assume ~~ABL~~any ~~Revolving~~liabilities. ~~Facility~~The ~~are~~purchase ~~substantially~~price ~~similar~~allocation is subject to ~~those~~change ~~under~~during the ~~Old~~acquisition ~~Senior ABL Revolving Facility~~period.

Factors Affecting Our Results of Operations

Our revenues and operating results are driven in large part by activities in the industrial or non-construction market and the ~~non-residential~~ construction market. These markets are cyclical with activity levels that tend to increase in line with growth in gross domestic product and decline during times of economic weakness; however, the industrial or the non-construction market is historically less exposed to cyclicality than ~~non-residential~~the construction market. In addition, activity in the construction market tends to be susceptible to seasonal fluctuations in certain parts of the country. This results in changes in demand for our rental equipment. The cyclicality and seasonality of the equipment rental industry result in variable demand and, therefore, our revenues and operating results may fluctuate from period to period.

29 35

Results of Operations

Revenues:

• Equipment rental revenue consists of fees charged to customers for use of equipment owned by us over the term of the rental as well as other fees charged to customers for items such as delivery and pickup, fuel and damage waivers. • Sale of merchandise revenues represents sales of contractor supplies, replacement parts, consumables and ancillary products and, to a lesser extent, new equipment. • Sale of used rental equipment represents revenues derived from the sale of rental equipment that has previously been included in our rental fleet.

•

Sale of merchandise revenues represents sales of contractor supplies, replacement parts, consumables and ancillary products and new equipment.

•

Sale of used rental equipment represents revenues derived from the sale of rental equipment that has previously been included in our rental fleet.

Cost of revenues:

• Cost of equipment rentals, excluding depreciation, consists primarily of wages and benefits for employees involved in the delivery and maintenance of rental equipment, rental location facility costs and rental equipment repair and maintenance expenses. • Depreciation of rental equipment consists of straight-line depreciation of equipment included in our rental fleet. • Cost of merchandise sales represents the costs of acquiring those items. • Cost of used rental equipment sales represents the net book value of rental equipment at the date of sale.

•

Depreciation of rental equipment consists of straight-line depreciation of equipment included in our rental fleet.

•

Cost of merchandise sales represents the costs of acquiring those items.

•

Cost of used rental equipment sales represents the net book value of rental equipment at the date of sale.

Selling, general and administrative costs primarily include sales force compensation, information technology costs, advertising and marketing, professional fees and administrative overhead.

Depreciation and amortization of non-rental equipment and intangibles consists of straight-line depreciation of vehicles and equipment used to support our operations, leasehold improvements and amortization of intangible assets with finite useful lives.

Merger costs consist of transaction expenses relating to our pending Merger with URI and discretionary bonuses paid to certain members of our senior management team related to the execution of the URI Merger Agreement.

Other operating (gains) losses, net are gains and losses resulting from the disposition of non-rental assets. Other operating gains and losses represent the difference between proceeds received upon disposition of non-rental assets (if any) and the net book value of the asset at the time of disposition. Other operating (gains) losses, net also include insurance proceeds from rental and equipment claims in excess of losses incurred as well as proceeds received in connection with legal settlements.

For trends affecting our business and the markets in which we operate see “Factors Affecting Our Results of Operations” above and also “Risk Factors —– Related to Our Business” in Part I, Item 1A of this Annual Report on Form 10-K.

30 36

Year Ended December 31, 2011 Compared with Year Ended December 31, 2010

The following table sets forth for each of the periods indicated our statements of operations data and expresses revenue and expense data as a percentage of total revenues for the periods presented (in 000s):


							Percent of Revenue
	Years Ended						Years Ended
	December 31,						December 31,						Increase (Decrease)
	2011			2010			2011			2010			2011 versus 2010
Revenues:
Equipment rental revenue	$	1,312,507		$	1,060,266			86.2	%		85.9	%	$	252,241		23.8	%
Sale of merchandise		55,241			49,313			3.6			4.0			5,928		12.0
Sale of used rental equipment		154,466			124,845			10.2			10.1			29,621		23.7

Total revenues		1,522,214			1,234,424			100.0			100.0			287,790		23.3

Cost of revenues:
Cost of equipment rentals, excluding depreciation		651,651			563,513			42.8			45.6			88,138		15.6
Depreciation of rental equipment		300,377			272,610			19.7			22.1			27,767		10.2
Cost of merchandise sales		36,817			35,701			2.4			2.9			1,116		3.1
Cost of used rental equipment sales		101,141			104,491			6.6			8.5			(3,350	)	(3.2	)

Total cost of revenues		1,089,986			976,315			71.6			79.1			113,671		11.6

Gross profit		432,228			258,109			28.4			20.9			174,119		67.5

Operating expenses:
Selling, general and administrative		183,145			146,791			12.0			11.9			36,354		24.8
Depreciation and amortization of non-rental equipment and intangibles		42,427			40,213			2.8			3.3			2,214		5.5
Merger costs		10,954			—			0.7			—			10,954		n/a
Other operating gains, net		(4,000	)		(5,592	)		(0.3	)		(0.5	)		1,592		(28.5	)

Total operating expenses, net		232,526			181,412			15.3			14.7			51,114		28.2

Operating income		199,702			76,697			13.1			6.2			123,005		160.4
Interest expense, net		224,518			194,471			14.7			15.8			30,047		15.5
Loss on extinguishment of debt, net		15,342			—			1.0			—			15,342		n/a
Other expense (income), net		260			(539	)		0.0			0.0			799		(148.2	)

Loss before benefit for income taxes		(40,418	)		(117,235	)		(2.7	)		(9.5	)		76,817		(65.5	)
Benefit for income taxes		(10,514	)		(43,719	)		(0.7	)		(3.5	)		33,205		(76.0	)

Net loss	$	(29,904	)	$	(73,516	)		(2.0	)%		(6.0	)%	$	43,612		(59.3	)

Total revenues increased $287.8 million, or 23.3%, from $1,234.4 million for the year ended December 31, 2010 to $1,522.2 million for the year ended December 31, 2011. Equipment rental revenue increased $252.2 million, or 23.8%, from $1,060.3 million for the year ended December 31, 2010 to $1,312.5 million for the year ended December 31, 2011. The increase in equipment rental revenue is primarily the result of a $199.8 million, or 18.9%, increase in rental volume and a $52.4 million, or 4.9%, increase in rental rates. The increase in rental volume is inclusive of a $3.4 million increase due to currency rate changes.

Sale of merchandise revenues increased $5.9 million, or 12.0%, from $49.3 million for the year ended December 31, 2010 to $55.2 million for the year ended December 31, 2011. The increase was driven primarily by increases in parts and new equipment sales.

Revenues from the sale of used rental equipment increased $29.6 million, or 23.7%, from $124.8 million for the year ended December 31, 2010 to $154.5 million for the year ended December 31, 2011. The increase was due to an approximate 12% increase in volume combined with improved pricing in both auction and retail channels. Used equipment sales at OEC for the year ended December 31, 2011 totaled $320.8 million and represented a normal part of the rental fleet life cycle.

Cost of equipment rentals, excluding depreciation, increased $88.1 million, or 15.6%, from $563.5 million for the year ended December 31, 2010 to $651.7 million for the year ended December 31, 2011, due primarily to the 18.9% increase in rental volume. Cost of equipment rentals excluding depreciation, as a percentage of equipment rental revenues decreased from 53.1% for the year ended December 31, 2010 to 49.6% for the year ended December 31, 2011 primarily due to a 4.9% increase in rental rates. Unlike increases in rental volume, increases in equipment rental rates are not accompanied by an increase in cost of equipment rentals.

Depreciation of rental equipment increased $27.8 million, or 10.2%, from $272.6 million for the year ended December 31, 2010 to $300.4 million for the year ended December 31, 2011. The increase in depreciation of rental equipment was due largely to an approximate 9% net increase in average OEC. As a percent of equipment rental revenues, depreciation of rental equipment decreased from 25.7% in the year ended December 31, 2010 to 22.9% in the year ended December 31, 2011. This decrease was due primarily to an increase in fleet utilization in 2011 as compared to 2010, and to a smaller extent, an increase in rental rates.

Cost of merchandise sales increased $1.1 million, or 3.1%, from $35.7 million for the year ended December 31, 2010 to $36.8 million for the year ended December 31, 2011. Gross margin for merchandise sales increased from 27.6% for the year ended December 31, 2010 to 33.4% for the year ended December 31, 2011. The margin increase is due to normal fluctuations among the various sales categories.

Cost of used rental equipment sales decreased $3.4 million, or 3.2%, from $104.5 million for the year ended December 31, 2010 to $101.1 million for the year ended December 31, 2011. Gross margin for the sale of used rental equipment increased from 16.3% for the year ended December 31, 2010 to 34.5% for the year ended December 31, 2011. The increase was reflected in higher prices on used equipment sold through both retail and auction channels and was driven by strengthening demand for used rental equipment.

Selling, general and administrative expenses increased $36.4 million, or 24.8%, from $146.8 million for the year ended December 31, 2010 to $183.1 million for the year ended December 31, 2011. The increase is due primarily to increases in administrative and sales force wages and benefits, travel and meeting costs and professional fees. Total sales force compensation increased $14.0 million for the year ended December 31, 2011 compared to the year ended December 31, 2010 and includes a $7.4 million increase in commissions. The increase in sales commission was due to increases in equipment rental revenues and the sale of used rental equipment, and the remaining increase in sales force costs is due primarily to an overall increase in our sales force headcount and activities. Total administrative wages and benefits increased $8.4 million, including an increase of $6.0 million in incentive compensation. Travel and meeting costs increased approximately $8.8 million and professional fees increased $5.0 million. As a percentage of total revenues, selling, general and administrative expenses remained relatively flat for the year ended December 31, 2011 at 12.0 % compared to 11.9% for the year ended December 31, 2010.

Depreciation and amortization of non-rental equipment and intangibles increased $2.2 million, or 5.5%, from $40.2 million for the year ended December 31, 2010 to $42.4 million for the year ended December 31, 2011. The increase is due to additions of non-rental delivery vehicles and trailers to support the increased rental activity and the amortization of the intangible assets recorded in 2011 related to the IAE acquisition.

Merger costs for the year ended December 31, 2011 consists of $7.7 million of transaction expenses related to our pending Merger with URI and $3.3 million of discretionary bonuses paid to certain members of our senior management team related to the execution of the Merger Agreement. There were no comparable amounts in the year ended December 31, 2010.

Other operating gains, net were $4.0 million for the year ended December 31, 2011 and consisted primarily of gains on the sale of non-rental delivery vehicles and trailers. Other operating gains, net were $5.6 million in the year ended December 31, 2010 and consisted primarily of $3.4 million of insurance proceeds in excess of losses incurred for rental equipment and property claims attributable to flood and hurricane damage and $1.0 million of proceeds received in connection with a legal settlement. The gain associated with the flood and hurricane damage represents proceeds in excess of previously indemnified losses. Recoveries in excess of losses incurred are considered gain contingencies and are not recognized until they are received.

Interest expense, net increased $30.0 million, or 15.5%, from $194.5 million for the year ended December 31, 2010 to $224.5 million for the year ended December 31, 2011. The increase was due to the settlement of our interest rate swaps and reverse swaps in January 2011, offset by decreases due to lower debt rates on our 2021 Notes and our New Senior ABL Revolving Facility as compared to the average rate on our Second Lien Term Facility, which was repaid in January 2011, the rate on our 2014 Notes, that were partially repaid in February 2011, and the average rate on our Old Senior ABL Facility, which was repaid in February 2011. In connection with our interest rate swap settlements, we paid $35.1 million of which $33.9 million was recognized as interest expense in 2011. The difference of $1.2 million was recognized as interest expense in November 2009 when certain of our interest rate swaps were de-designated as cash flow hedges.

The benefit for income taxes was $10.5 million and $43.7 million for the year ended December 31, 2011 and 2010, respectively. The effective tax rate for the years ending December 31, 2011 and 2010 was 26.0% and 37.3%, respectively. The decrease in our effective tax rate in 2011 versus 2010, is due to a lower pretax loss from 2010 to 2011 and an increase in permanent items. Our effective tax rate normally differs from the U.S. federal statutory rate of 35% primarily due to certain non-deductible permanent items, state income taxes and certain state minimum and gross receipts taxes, which are incurred regardless of whether we earn income.

Year Ended December 31, 2010 Compared with Year Ended December 31, 2009

							Percent of Revenue
	Years Ended						Years Ended
	December 31,						December 31,						Increase (Decrease)
	2010			2009			2010			2009			2010 versus 2009
Revenues:
Equipment rental revenue	$	1,060,266		$	1,073,021			85.9	%		83.6	%	$	(12,755	)	(1.2	)%
Sale of merchandise		49,313			51,951			4.0			4.0			(2,638	)	(5.1	)
Sale of used rental equipment		124,845			158,482			10.1			12.4			(33,637	)	(21.2	)
Total revenues		1,234,424			1,283,454			100.0			100.0			(49,030	)	(3.8	)
Cost of revenues:
Cost of equipment rentals, excluding depreciation		563,513			540,945			45.6			42.1			22,568		4.2
Depreciation of rental equipment		272,610			285,668			22.1			22.3			(13,058	)	(4.6	)
Cost of merchandise sales		35,701			36,743			2.9			2.9			(1,042	)	(2.8	)
Cost of used rental equipment sales		104,491			148,673			8.5			11.6			(44,182	)	(29.7	)
Total cost of revenues		976,315			1,012,029			79.1			78.9			(35,714	)	(3.5	)
Gross profit		258,109			271,425			20.9			21.1			(13,316	)	(4.9	)
Operating expenses:
Selling, general and administrative		146,791			148,163			11.9			11.5			(1,372	)	(0.9	)
Depreciation and amortization of non-rental equipment and intangibles		40,213			43,984			3.3			3.4			(3,771	)	(8.6	)
Other operating gains, net		(5,592	)		(517	)		(0.5	)		(0.0	)		(5,075	)	n/a
Total operating expenses, net		181,412			191,630			14.7			14.9			(10,218	)	(5.3	)
Operating income		76,697			79,795			6.2			6.2			(3,098	)	(3.9	)
Interest expense, net		194,471			189,689			15.8			14.8			4,782		2.5
Gain on extinguishment of debt, net		—			(13,916	)		—			(1.1	)		13,916		n/a
Other (income) expense, net		(539	)		707			0.0			0.1			(1,246	)	n/a
Loss before benefit for income taxes		(117,235	)		(96,685	)		(9.5	)		(7.5	)		(20,550	)	n/a
Benefit for income taxes		(43,719	)		(37,325	)		(3.5	)		(2.9	)		(6,394	)	n/a
Net loss	$	(73,516	)	$	(59,360	)		(6.0	)%		(4.6	)%	$	(14,156	)	n/a

Total revenues decreased $49.0 million, or 3.8%, from $1,283.5 million for the year ended December 31, 2009 to $1,234.4 million for the year ended December 31, 2010. Equipment rental revenue decreased $12.8 million, or 1.2%, from $1,073.0 million for the year ended December 31, 2009 to $1,060.3 million for the year ended December 31, 2010. The decrease in equipment rental revenue is primarily the result of a $67.4 million, or 6.3%, decrease in rental rates offset by a $54.6 million, or 4.5%, increase in rental volume. The increase in rental volume includes a $6.3 million increase due to currency rate changes.

Sale of merchandise revenues decreased $2.6 million, or 5.1%, from $52.0 million for the year ended December 31, 2009 to $49.3 million for the year ended December 31, 2010. The decrease was due to a decline in sales of replacement parts, which was driven primarily by a change in mix.

Revenues from the sale of used rental equipment decreased $33.6 million, or 21.2%, from $158.5 million for the year ended December 31, 2009 to $124.8 million for the year ended December 31, 2010. The decrease was due to an approximate 28% decrease in volume offset by improved pricing in both auction and retail channels. During 2010, we intentionally slowed our sales of certain categories of used rental equipment to preserve fleet in response to rising demand. Increased demand for our rental equipment in 2010 was evidenced by our fleet utilization, which increased 610 basis points to 63.7% for the year ended December 31, 2010 from 57.6% for the year ended December 31, 2009. We also purchased $327.1 million of new rental fleet. Our sales of used rental equipment in the year ended December 31, 2010 represent a normal part of the rental fleet life cycle.

31 40

Cost of equipment rentals, excluding depreciation, increased $22.6 million, or 4.2%, from $540.9 million for the year ended December 31, 2009 to $563.5 million for the year ended December 31, 2010, and is consistent with the increase in rental volume. Although the year over year increase in cost of equipment rentals, excluding depreciation was consistent with the increase in rental volume, location closure and severance costs were $11.3 million higher during the year ended December 31, 2009 as compared to the year ended December 31, 2010. The impact of this decrease was offset by higher fuel prices which contributed to increases in freight and fuel expense of $7.1 million and $5.7 million, respectively, in the year ended December 31, 2010 as compared to the year ended December 31, 2009. Cost of equipment rentals excluding depreciation, as a percentage of equipment rental revenues increased from 50.4% for the year ended December 31, 2009 to 53.1% for the year ended December 31, 2010. The increase is due primarily to a 6.3% decrease in equipment rental rates.

Depreciation of rental equipment decreased $13.1 million, or 4.6%, from $285.7 million for the year ended December 31, 2009 to $272.6 million for the year ended December 31, 2010. The decrease is due to a decline in the average OEC for the year ended December 31, 2010 as compared with the year ended December 31, 2009. The decrease in the average OEC resulted from our actions throughout 2009 to reduce rental fleet in response to weakened demand. As a percent of equipment rental revenues, depreciation of rental equipment decreased 90 basis points, from 26.6% in the year ended December 31, 2009 to 25.7% in the year ended December 31, 2010. This decrease is due primarily to an increase in fleet utilization during the year ended December 31, 2010.

Cost of merchandise sales decreased $1.0 million, or 2.8%, from $36.7 million for the year ended December 31, 2009 to $35.7 million for the year ended December 31, 2010, due in part to the decrease in merchandise sales revenue. Gross margin for merchandise sales decreased from 29.3% for the year ended December 31, 2009 to 27.6% for the year ended December 31, 2010. The decrease was attributable to a decline in margins on replacement parts, which was driven primarily by a change in mix. Margins on general merchandise sales remained unchanged.

Cost of used rental equipment sales decreased $44.2 million, or 29.7%, from $148.7 million for the year ended December 31, 2009 to $104.5 million for the year ended December 31, 2010. The decrease is due primarily to a 21.2% decrease in sales of used rental equipment for the year ended December 31, 2010. Gross margin for the sale of used rental equipment increased from 6.2% for the year ended December 31, 2009 to 16.3% for the year ended December 31, 2010. The increase in gross margin was due to an improvement in margins on used equipment sold through both retail and auction channels.

Selling, general and administrative expenses decreased $1.4 million, or 0.9%, from $148.2 million for the year ended December 31, 2009 to $146.8 million for the year ended December 31, 2010. The decrease is due to a $5.3 million decrease in the provision for doubtful accounts as well as a combined decrease of $1.9 million in direct marketing costs, professional fees and equipment leasing costs. These decreases were offset by a $6.0 million increase in administrative wages and benefits including a $1.6 million increase in severance costs, a $1.3 million increase in variable compensation and a $1.0 million increase in employee training costs. Selling, general and administrative expenses increased as a percentage of total revenues from 11.5% for the year ended December 31, 2009 to 11.9% for the year ended December 31, 2010.

Depreciation and amortization of non-rental equipment and intangibles decreased $3.8 million, or 8.6%, from $44.0 million for the year ended December 31, 2009 to $40.2 million for the year ended December 31, 2010. The decrease is primarily due to a smaller average fleet of capitalized lease vehicles during the year ended December 31, 2010 as compared to the year ended December 31, 2009. The decrease was also driven by a decrease in the net book value of leasehold improvements, which resulted from leasehold improvements that had reached the end of their useful lives and from the write-off of unamortized leasehold improvements for location closures occurring during the year ended December 31, 2009.

Other operating gains, net were $5.6 million for the year ended December 31, 2010 and consisted primarily of $3.4 million of insurance proceeds in excess of losses incurred for rental equipment and property claims attributable to flood and hurricane damage and $1.0 million of proceeds received in connection with a legal settlement. Recoveries in excess of losses incurred are considered gain contingencies and are not recognized until they are received.

~~Interest~~41 expense, net increased $4.8 million, or 2.5%, from $189.7 million for the year ended December 31, 2009 to $194.5 million for the year ended December 31, 2010, due to higher interest rates under our 2017 Notes and 2019 Notes, which were issued in the second half of 2009, as compared to interest rates on our Second Lien Term Facility, which was partially repaid in 2009. The impact of the higher rates was partially offset by lower debt levels as well as the de-designation of certain interest rate swaps in the fourth quarter of 2009, which resulted in the accelerated recognition of our

Interest expense, net increased $4.8 million, or 2.5%, from $189.7 million for the year ended December 31, 2009 to $194.5 million for the year ended December 31, 2010, due to higher interest rates under our 2017 Notes and 2019 Notes, which were issued in the second half of 2009, as compared to interest rates on our Second Lien Term Facility, which was partially repaid in 2009. The impact of the higher rates was partially offset by lower debt levels as well as the de-designation of certain interest rate swaps in the fourth quarter of 2009, which resulted in the accelerated recognition of our interest expense that would have been incurred during 2010 had the de-designation not occurred. In addition, amortization of deferred financing costs increased as a result of the 2017 and 2019 Notes issuances.

Gain (loss) on extinguishment of debt, net was $13.9 million for the year ended December 31, 2009 and consists of the following (in 000s):

	Second Lien			Old Senior ABL
	Second LienTerm Facility			Old Senior ABLFacility			Total
	Term Facility			Facility			Total
Net gain from repurchase of debt for less than par value	$	26,919		$	—		$	26,919
Fees incurred to repurchase debt		(807	)		—			(807	)
Fees incurred to amend credit facilities		(2,057	)		(1,448	)		(3,505	)
		24,055			(1,448	)		22,607
Write-off of unamortized deferred financing costs		(6,414	)		(2,277	)		(8,691	)
Gain (loss) on extinguishment of debt, net	$	17,641		$	(3,725	)	$	13,916

The benefit for income taxes was $43.7 million and $37.3 million for the years ended December 31, 2010 and 2009, respectively. The benefit for income taxes was due to pre-tax net losses of $117.2 million and $96.7 million for the years ended December 31, 2010 and 2009, respectively. The effective tax rate for the years ended December 31, 2010 and 2009 was 37.3% and 38.6%, respectively. Our effective tax rate normally differs from the U.S. federal statutory rate of 35% due to certain non-deductible permanent items, state income taxes and certain state minimum and gross receipts taxes, which are incurred regardless of whether we earn income. The effective tax rate for 2009 also includes a $2.7 million discrete income tax benefit relating to the true-up of our deferred tax liabilities from filing our 2008 federal, state and foreign tax returns and an offsetting expense recognized during the second quarter of 2009 relating to the expiration of share appreciation rights granted by ~~ACAB~~Atlas to certain employees of RSC.

33 42

Year Ended December 31, 2009 Compared with Year Ended December 31, 2008

							Percent of Revenue
	Years Ended						Years Ended
	December 31,						December 31,						Increase (Decrease)
	2009			2008			2009			2008			2009 versus 2008
Revenues:
Equipment rental revenue	$	1,073,021		$	1,567,254			83.6	%		88.8	%	$	(494,233	)	(31.5	)%
Sale of merchandise		51,951			72,472			4.0			4.1			(20,521	)	(28.3	)
Sale of used rental equipment		158,482			125,443			12.4			7.1			33,039		26.3
Total revenues		1,283,454			1,765,169			100.0			100.0			(481,715	)	(27.3	)
Cost of revenues:
Cost of equipment rentals, excluding depreciation		540,945			685,600			42.1			38.8			(144,655	)	(21.1	)
Depreciation of rental equipment		285,668			317,504			22.3			18.0			(31,836	)	(10.0	)
Cost of merchandise sales		36,743			49,370			2.9			2.8			(12,627	)	(25.6	)
Cost of used rental equipment sales		148,673			90,500			11.6			5.1			58,173		64.3
Total cost of revenues		1,012,029			1,142,974			78.9			64.8			(130,945	)	(11.5	)
Gross profit		271,425			622,195			21.1			35.2			(350,770	)	(56.4	)
Operating expenses:
Selling, general and administrative		148,163			175,703			11.5			10.0			(27,540	)	(15.7	)
Depreciation and amortization of non-rental equipment and intangibles		43,984			49,567			3.4			2.8			(5,583	)	(11.3	)
Other operating gains, net		(517	)		(1,010	)		(0.0	)		(0.1	)		493		(48.8	)
Total operating expenses, net		191,630			224,260			14.9			12.7			(32,630	)	(14.6	)
Operating income		79,795			397,935			6.2			22.5			(318,140	)	(79.9	)
Interest expense, net		189,689			201,849			14.8			11.4			(12,160	)	(6.0	)
Gain on extinguishment of debt, net		(13,916	)		—			(1.1	)		—			(13,916	)	n/a
Other expense, net		707			658			0.1			0.0			49		n/a
(Loss) income before (benefit) provision for income taxes		(96,685	)		195,428			(7.5	)		11.1			(292,113	)	n/a
(Benefit) provision for income taxes		(37,325	)		72,939			(2.9	)		4.1			(110,264	)	n/a
Net (loss) income	$	(59,360	)	$	122,489			(4.6	)%		6.9	%	$	(181,849	)	n/a

Total revenues decreased $481.7 million, or 27.3%, from $1,765.2 million for the year ended December 31, 2008 to $1,283.5 million for the year ended December 31, 2009. Equipment rental revenue decreased $494.2 million, or 31.5%, from $1,567.3 million for the year ended December 31, 2008 to $1,073.0 million for the year ended December 31, 2009. The decrease in equipment rental revenue is primarily the result of a $374.3 million, or 23.9%, decrease in rental volume and a $119.9 million, or 7.7%, decrease in rental rates. The decrease in rental volume includes a $4.3 million decrease due to currency rate changes offset by a $5.6 million increase due to the July 2008 acquisition of American Equipment Rentals (“AER”).

Sale of merchandise revenues decreased $20.5 million, or 28.3%, from $72.5 million for the year ended December 31, 2008 to $52.0 million for the year ended December 31, 2009. The decrease is due primarily to a decline in rental volume and an increase in location closures.

Revenues from the sale of used rental equipment increased $33.0 million, or 26.3%, from $125.4 million for the year ended December 31, 2008 to $158.5 million for the year ended December 31, 2009. During 2009 we continued our initiative to sell used rental equipment, which began in the fourth quarter of 2008, in response to a drop in rental demand that was greater than the normal seasonal decline.

Cost of equipment rentals, excluding depreciation, decreased $144.7 million, or 21.1%, from $685.6 million for the year ended December 31, 2008 to $540.9 million for the year ended December 31, 2009, due primarily to cost reductions resulting from our actions in response to a 23.9% decline in rental equipment volume. These actions, which include location

closures, headcount reductions and cost management initiatives, contributed to a $59.2 million reduction in wages and benefits. The reduction to wages and benefits includes a $14.1 million decrease in management variable compensation and an $8.5 million decrease in overtime costs. The decrease in cost of equipment rentals, excluding depreciation, also consisted of a $29.6 million reduction in fuel expense, which was driven by a decline in both volume and price, a $16.8 million reduction in equipment service repairs and maintenance expense, a $7.4 million decrease in freight costs and a $6.7 million decrease in insurance costs due primarily to reductions in our workers compensation and general liability reserve accruals arising from favorable claims experience. Cost of equipment rentals excluding depreciation, as a percentage of equipment rental revenues increased from 43.7% for the year ended December 31, 2008 to 50.4% for the year ended December 31, 2009. The increase is due primarily to a 7.7% decrease in equipment rental rates.

Depreciation of rental equipment decreased $31.8 million, or 10%, from $317.5 million for the year ended December 31, 2008 to $285.7 million for the year ended December 31, 2009. The decrease is due to a decline in the original equipment fleet cost during the year ended December 31, 2009 as compared with the year ended December 31, 2008. The decline in the original equipment fleet cost is attributable to an increase in used equipment sales that were not replaced by current year capital expenditures. As a percent of equipment rental revenues, depreciation of rental equipment increased from 20.3% in the year ended December 31, 2008 to 26.6% in the year ended December 31, 2009. This increase is due to a 31.5% drop in equipment rental revenue in the year ended December 31, 2009 as compared to the year ended December 31, 2008.

Cost of merchandise sales decreased $12.6 million, or 25.6%, from $49.4 million for the year ended December 31, 2008 to $36.7 million for the year ended December 31, 2009, which corresponds with the decrease in merchandise sales revenue. Gross margin for merchandise sales decreased slightly from 31.9% for the year ended December 31, 2008 to 29.3% for the year ended December 31, 2009.

Cost of used rental equipment sales increased $58.2 million, or 64.3%, from $90.5 million for the year ended December 31, 2008 to $148.7 million for the year ended December 31, 2009. The increase is due primarily to the 26.3% increase in sales of used rental equipment for the year ended December 31, 2009. Gross margin for the sale of used rental equipment decreased from 27.9% for the year ended December 31, 2008 to 6.2% for the year ended December 31, 2009. An increase in the market supply of used equipment available for sale and lower realized retail prices combined with an increase in our use of low margin auction channels contributed to the lower margin.

Selling, general and administrative expenses decreased $27.5 million, or 15.7%, from $175.7 million for the year ended December 31, 2008 to $148.2 million for the year ended December 31, 2009. The decrease is due primarily to a $20.9 million decrease in sales force wages and benefits and to a lesser extent a $3.9 million decrease in direct marketing costs and a $1.8 million reduction in professional fees. The decrease in the sales force wages and benefits, which includes an $11.5 million decrease in sales commissions, was driven by a headcount reduction resulting from a decrease in demand for our rental equipment primarily in the non-residential construction market and the 24 locations that we closed during 2009. Selling, general and administrative expenses increased as a percentage of total revenues from 10.0% for the year ended December 31, 2008 to 11.5% for the year ended December 31, 2009. The increase as a percentage of revenues is due primarily to a 7.7% decrease in equipment rental rates and to a lesser extent a $1.8 million increase in bad debt expense and the existence of certain fixed costs, such as facility costs, which remained constant despite a decrease in total revenues.

Depreciation and amortization of non-rental equipment and intangibles decreased $5.6 million, or 11.3%, from $49.6 million for the year ended December 31, 2008 to $44.0 million for the year ended December 31, 2009. The decrease is primarily due to a reduction in the number of capitalized leased vehicles during the year ended December 31, 2009 as compared to the year ended December 31, 2008. The decrease was also driven by non-rental asset dispositions resulting from location closures occurring during the year ended December 31, 2009.

Interest expense, net decreased $12.2 million, or 6.0%, from $201.8 million for the year ended December 31, 2008 to $189.7 million for the year ended December 31, 2009, due to lower debt balances offset by $6.7 million of non-cash charges for interest rate swaps that were de-designated in 2009 and are no longer accounted for as cash flow hedges.

Gain (loss) on extinguishment of debt, net was $13.9 million for the year ended December 31, 2009 and consists of the following (in 000s):

	Second Lien			Old Senior ABL
	Term Facility			Facility			Total
Net gain from repurchase of debt for less than par value	$	26,919		$	—		$	26,919
Fees incurred to repurchase debt		(807	)		—			(807	)
Fees incurred to amend credit facilities		(2,057	)		(1,448	)		(3,505	)
		24,055			(1,448	)		22,607
Write-off of unamortized deferred financing costs		(6,414	)		(2,277	)		(8,691	)
Gain (loss) on extinguishment of debt, net	$	17,641		$	(3,725	)	$	13,916

The benefit for income taxes was $37.3 million for the year ended December 31, 2009 as compared to a provision for income taxes of $72.9 million for the year ended December 31, 2008. The benefit for income taxes was due to a pre-tax net loss for the year ended December 31, 2009 while the provision for income taxes was due to pre-tax net income for the year ended December 31, 2008. The effective tax rate for the years ended December 31, 2009 and 2008 was 38.6% and 37.3%, respectively. The effective tax rate for year ended December 31, 2009 differs from the U.S. federal statutory rate of 35% primarily due to certain non-deductible permanent items, state income taxes, and a $2.7 million income tax benefit, which resulted from lower than estimated federal, Canadian and certain U.S. state tax rates and their application to our deferred tax liabilities. The rate for the year ended December 31, 2008 was similarly impacted by a $3.2 million income tax benefit relating to the true-up of our deferred tax liabilities from filing our 2007 federal, state and foreign tax returns.

Liquidity and Capital Resources

Cash Flows and Liquidity

Our primary source of capital is from cash generated by our rental operations including cash received from the sale of used rental equipment, and secondarily from borrowings available under our New Senior ABL Revolving Facility. Our business is highly capital intensive, requiring significant investments in order to expand our rental fleet during periods of growth and smaller investments required to maintain and replace our rental fleet during times of weakening rental demand.

Cash flows from operating activities as well as the sale of used rental equipment enable us to fund our operations and service our debt obligations including the continued repayment of our New Senior ABL Revolving Facility. We continuously monitor utilization of our rental fleet and if warranted we divest excess fleet, which generates additional cash flow. In addition, due to the condition and relative age of our fleet; we have the ability to significantly reduce capital expenditures during difficult economic times, therefore allowing us to redirect this cash towards further debt reduction during these periods. The following table summarizes our sources and uses of cash for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009 (in 000s):

	Years Ended December 31,
	2010			2009			2008
	2011			2010			2009
				(in 000s)
Net cash provided by operating activities	$	323,800		$	324,860		$	269,956
Net cash provided by operating activities	$	324,860		$	269,956		$	363,439
Net cash (used in) provided by investing activities		(515,555	)		(200,709	)		124,904
Net cash (used in) provided by investing activities		(200,709	)		124,904			(175,230	)
Net cash provided by (used) in financing activities		193,874			(126,081	)		(405,194	)
Net cash used in financing activities		(126,081	)		(405,194	)		(184,434	)
Effect of foreign exchange rates on cash		(796	)		905			1,199
Effect of foreign exchange rates on cash		905			1,199			(144	)
Net increase (decrease) in cash and cash equivalents	$	1,323		$	(1,025	)	$	(9,135	)
Net (decrease) increase in cash and cash equivalents	$	(1,025	)	$	(9,135	)	$	3,631

As of December 31, ~~2010~~2011, we had cash and cash equivalents of $34.5 8 million, aan ~~decrease~~increase of $1.03 million from December 31, ~~2009~~2010. As of December 31, ~~2009~~2010, we had cash and cash equivalents of $43.5 million, a decrease of $9.1.0 million from December 31, ~~2008~~2009. Generally, we manage our cash flow by using any excess cash, after considering our working capital and capital expenditure needs, to pay down the outstanding balance of our New Senior ABL Revolving Facility.

Operating activities —– Net cash provided by operating activities during the year ended December 31, ~~2010~~2011 consisted of the add-back of non-cash items and other adjustments of $~~305~~301.08 million and achanges ~~decrease~~ in operating assets (net of operating liabilities) of $9351.4 9 million offset by a net loss of $7329.5 9 million. The most significant change in operating assets and liabilities was an increase in accounts payable, which was primarily attributable to capital purchases, resulting in a cash inflow of $~~145~~50.5 7 million and an increase in accrued expenses and other liabilities which was primarily due to increased compensation, interest amounts and $7.7 million of Merger costs, partially offset by aan ~~reduction~~increase in accounts receivable, resulting in a net cash outflow of $4537.1 0 million.

Net cash provided by operating activities during the year ended December 31, ~~2009~~2010 consisted of the add-back of non-cash items and other adjustments of $~~294~~305.6 0 million and a decrease in operating assets (net of operating liabilities) of $3493.7 4 million offset by a net loss of $5973.3 5 million. The most significant change in operating assets and liabilities was aan ~~reduction~~increase in accounts ~~receivable~~ payable, which was primarily attributable to capital purchases, resulting in a cash inflow of $99145.8 5 million offset by ~~the~~an ~~settlement~~increase ofin accounts receivable ~~payable~~ resulting in a net cash outflow of $6345.1 million.

Net cash provided by operating activities during the year ended December 31, ~~2008~~2009 consisted of ~~net~~ ~~income of $122.5 million and~~ the add-back of non-cash items and other adjustments of $~~395~~294.3 6 million ~~offset~~and bya andecrease ~~increase~~ in operating assets (net of operating liabilities) of $~~154~~34.4 7 million offset by a net loss of $59. 3 million. The most significant change in operating assets and liabilities was a reduction in accounts receivable resulting in a cash inflow of $99.8 million offset by the settlement of accounts payable resulting in a net cash outflow of $~~153~~63.2 1 million.

~~Investing~~43 activities — Net cash used in investing activities during the year ended December 31, 2010 consisted of $332.9 million of capital purchases offset by $127.8 million of proceeds received from the sale of rental and non-rental equipment and $4.4 million of insurance proceeds associated with rental equipment and property claims. Capital expenditures, which include purchases of rental and non-rental equipment, increased $281.5 million in 2010 as compared to 2009, due to rising rental demand during 2010 and the anticipation of rising rental demand in 2011.

Net cash provided by investing activities during the year ended December 31, 2009 consisted primarily of proceeds received from the sale of rental and non-rental equipment of $171.0 million. We also received $5.3 million of insurance

~~proceeds~~Investing ~~associated~~activities ~~with~~– ~~rental~~Net ~~equipment~~cash ~~and~~used ~~property~~in investing activities during the year ~~claims.~~ended ~~Capital~~December 31, ~~expenditures~~2011 consisted primarily of $51628.3 0 million ~~include~~of capital purchases ofoffset ~~rental~~by ~~and non-rental equipment~~$161.5 ~~During~~million ~~2009~~of weproceeds ~~intentionally~~received ~~reduced~~from ~~our~~the ~~capital~~sale ~~expenditures~~of rental and ~~continued~~non-rental ~~our~~equipment. ~~efforts to~~Capital ~~accelerate~~expenditures ~~the~~include ~~sales~~purchases of ~~used~~ rental and non-rental equipment. inAdditionally, ~~response~~we toacquired athe ~~drop~~net inassets ~~rental~~of ~~demand,~~IAE ~~which began~~for in$49.1 ~~the~~million ~~fourth~~during ~~quarter~~the ofcurrent ~~2008~~year period.

Net cash used in investing activities during the year ended December 31, ~~2008~~2010 consisted of ~~capital~~ ~~expenditures of~~ $~~274~~332.0 9 million ~~and~~of ~~cash~~capital ~~consideration~~purchases ~~paid~~offset inby ~~connection with the AER asset acquisition of~~ $33127.2 8 million. ~~These~~of ~~expenditures were offset by~~ proceeds received from the sale of rental and non-rental equipment ofand $~~132~~4.0 4 million of insurance proceeds associated with rental equipment and property claims. Capital expenditures, which include ~~the~~purchases ~~purchase~~ of rental and non-rental equipment, increased $281.5 million in 2010 as compared to 2009, due to rising rental demand during 2010 and the anticipation of rising rental demand in 2011.

~~Financing activities —~~ Net cash ~~used~~provided inby ~~financing~~investing activities during the year ended ~~December~~ December 31, ~~2010~~2009 ~~consists~~consisted primarily of ~~$97.0 million~~proceeds ~~net~~received ~~payments~~from onthe ~~our~~sale ~~Old~~of ~~Senior~~rental ~~ABL~~and ~~Revolving~~non-rental ~~Facility and~~equipment of $30171.2 0 million. ofWe ~~repayments~~also onreceived ~~our capital leases~~$5.3 ~~Pursuant~~million toof aninsurance ~~intercompany~~proceeds ~~revolving agreement~~associated ~~between~~with ~~RSC~~rental ~~Equipment~~equipment ~~Rental of Canada, Ltd~~ and ~~RSC~~property ~~Equipment Rental, Inc~~claims., ~~the Company~~Capital ~~will~~expenditures ~~periodically~~of ~~transfer~~$51.3 ~~excess~~million ~~cash~~include ~~generated~~purchases ~~from~~of ~~its~~rental ~~Canadian~~and ~~operations~~non-rental ~~to the U~~equipment.S. inDuring ~~order to~~2009, ~~pay~~we ~~down~~intentionally ~~the~~reduced ~~outstanding~~our ~~balance~~capital onexpenditures ~~its~~and ~~Old~~continued ~~Senior~~our ~~ABL~~efforts ~~Revolving~~to ~~Facility.~~accelerate ~~The~~the ~~outstanding balance~~sales of ~~the~~used ~~intercompany~~rental ~~loan~~equipment in ~~U.S.~~response ~~dollars~~to ~~was~~a ~~approximately~~drop ~~$27.0 million~~in rental ~~at December 31~~demand, ~~2010.~~ ~~Interest~~which ~~payable~~began ~~under~~in the ~~Old~~fourth ~~Senior~~quarter ~~ABL~~of ~~Revolving Facility normally exceeds that earned under an interest bearing cash account~~2008.

Financing activities –

$650.0 million Senior Unsecured Notes Offering

On January 19, 2011, we completed a private offering of $650.0 million aggregate principal amount of 8.25% senior unsecured notes due February 2021 (the “2021 Notes”). The proceeds from the sale of the 2021 Notes were used to repay the outstanding balance on our Second Lien Term Facility, which totaled $479.4 million plus accrued interest of $0.7 million, redeem a portion of the 2014 Notes in February 2011 as described below, settle our outstanding interest rate swap obligations of $35.1 million and pay a portion of the transaction costs incurred with the issuance of the 2021 Notes. The transaction costs, which totaled $14.6 million, were capitalized as deferred financing costs and are being amortized as interest expense over the term of the 2021 Notes using the effective interest rate method. On February 21, 2011, we redeemed $117.0 million of aggregate principal of our 2014 Notes, paid accrued interest of $2.5 million on the 2014 Notes and incurred a call premium of $5.6 million, which was funded with the remaining proceeds from the 2021 Notes and in part from a draw on our New Senior ABL Revolving Facility. As a result of the Second Lien Term Facility repayment and the partial repayment of the 2014 Notes, we expensed $7.3 million of unamortized deferred financing costs, which together with the $5.6 million in call premiums, is characterized as a loss on extinguishment of debt, net in the consolidated statement of operations for the year ended December 31, 2011. The settlement of our interest rate swaps resulted in a charge of $33.9 million, which is characterized as interest expense in the consolidated statement of operations for the year ended December 31, 2011.

During the year ended December 31, 2011, we initiated and completed an exchange offer, in which the holders of the 2021 Notes could exchange such unregistered notes for new, registered notes. The terms of the new, registered notes offered in the exchange offer are identical in all material respects to the terms of the unregistered notes, except that the new notes were issued in a transaction registered under the Securities Act of 1933 and generally are not subject to restrictions on transfer.

New Senior ABL Revolving Facility

On February 9, 2011, we entered into the New Senior ABL Revolving Facility, which replaced our Old Senior ABL Revolving Facility, and we borrowed $383.0 million of loans under our New Senior ABL Revolving Facility. The proceeds of these loans were used to repay the outstanding balance on our Old Senior ABL Revolving Facility, which totaled $370.2 million plus accrued interest and other fees totaling $1.1 million, and to pay a portion of transaction costs including legal fees. Total transaction costs of $12.3 million were capitalized as deferred financing costs and are being amortized to interest expense over the term of the New Senior ABL Revolving Facility. In addition, we wrote off $2.4 million of unamortized deferred financing costs associated with the Old Senior ABL Revolving Facility, which is included in the loss on extinguishment of debt, net in the consolidated statement of operations for the year ended December 31, 2011.

Additionally, on September 28, 2011, we amended the New Senior ABL Revolving agreement to increase the commitment for aggregate borrowings by approximately $110.0 million. Of this amount $85.0 million represents additional U.S. commitments and $25.0 million represents Canadian commitments. No other material modifications were made. Our New Senior ABL Revolving Facility, which matures on February 2016, now provides commitments for aggregate borrowings of approximately $1,210.0 million subject to, among other things, our maintenance of a sufficient borrowing base under such facility. In connection with our expansion of the New Senior ABL Revolving Facility, we incurred transaction costs of $0.7 million that will be amortized to interest expense over the remaining term of the New Senior ABL Revolving Facility as amended. The borrowing base reporting requirements that we are subject to under the New Senior ABL Revolving Facility are substantially similar to those under our Old Senior ABL Revolving Facility. Financing activities for the year ended December 31, 2011 include net cash proceeds of $488.0 million on our New Senior ABL Revolving Facility and net cash payments of $304.2 million on our Old Senior ABL Revolving Facility.

Net cash used in financing activities during the year ended December 31, 2011 includes $29.7 million of repayments on our capital leases. Pursuant to an intercompany revolving agreement between RSC Equipment Rental of Canada Ltd. and RSC Equipment Rental, Inc., we will periodically transfer excess cash generated from our Canadian operations to the U.S. operations in order to pay down the outstanding balance on our Senior ABL Revolving Facility. There were intercompany loan balances in U.S. dollars of approximately $17.0 million at December 31, 2011. Interest payable under the Senior ABL Revolving Facility normally exceeds that earned under an interest bearing cash account.

Net cash used in financing activities during the year ended December 31, 2010 consists primarily of $97.0 million net payments on our Old Senior ABL Revolving Facility and $30.2 million of repayments on our capital leases. Pursuant to an intercompany revolving agreement between RSC Equipment Rental of Canada Ltd and RSC Equipment Rental, Inc., we will periodically transfer excess cash generated from our Canadian operations to the U.S. in order to pay down the outstanding balance on our Old Senior ABL Revolving Facility. The outstanding balance of the intercompany loan in U.S. dollars was approximately $27.0 million at December 31, 2010. Interest payable under the Old Senior ABL Revolving Facility normally exceeds that earned under an interest bearing cash account.

Net cash used in financing activities during the year ended December 31, 2009 consists primarily of $280.0 million net payments on our Old Senior ABL Revolving Facility, $244.4 million of payments to extinguish our Old Senior ABL Term Loan and $393.0 million of prepayments on our Second Lien Term Facility. We also repaid $40.4 million on our capital lease obligations and paid $32.8 million of deferred and non-deferred financing costs the majority of which relate to the offerings of our 2017 and 2019 Notes, the related amendments and the Second Lien Term Facility repurchases. These cash outflows were offset by $389.3 million of proceeds received in connection with the issuance of the 2017 Notes and $196.9 million of proceeds received in connection with the issuance of the 2019 Notes.

Net cash used in financing activities during the year ended December 31, 2008 consists primarily of $145.6 million net payments on our Old Senior ABL Revolving Facility, $2.5 million of payments on our Old Senior ABL Term Loan and $38.1 million of repayments on our capital lease obligations.

Indebtedness

We are highly leveraged and a substantial portion of our liquidity needs arise from debt service requirements and from funding our costs of operations and capital expenditures. As of December 31, ~~2010~~2011, we had $2.1 3 billion of indebtedness outstanding, consisting ~~primarily~~ of $~~304~~488.2 0 million under the ~~Old~~New Senior ABL Revolving Facility, $~~479~~503.4 0 million ~~under~~of ~~the~~2014 ~~Second~~Notes, ~~Lien~~$400.0 ~~Term Facility~~million of 2017 Notes, $~~620~~200.0 million of ~~2014~~2019 Notes, $~~400~~650.0 million of ~~2017~~2021 Notes and $~~200~~92.0 2 million ofunder ~~2019 Notes~~capital lease obligations. The 2017 Notes and the 2019 Notes are presented net of unamortized original issue discounts of $98.4 3 million and $2.8 6 million, respectively, in our consolidated balance sheet at December 31, ~~2010.~~ ~~On January 19,~~ 2011~~, we completed the offering of our 2021 Notes and repaid the Second Lien Term Facility in full~~. We will also use a portion of the proceeds from the 2021 Notes offering to redeem a portion of our 2014 Notes on February 21, 2011. On February 9, 2011, we entered into a credit agreement governing the New Senior ABL Revolving Facility and repaid the Old Senior ABL Revolving Facility in full. See “Recent Developments”. As of February 9, 2011, we had $2.3 billion of indebtedness outstanding, consisting primarily of $383.0 of indebtedness under the New Senior ABL Revolving Facility, $620.0 million of 2014 Notes, $400.0 million of 2017 Notes, $200.0 million of 2019 Notes and $650.0 million of 2021 Notes.

As45 of December 31, 2010, we had an outstanding balance of $304.2 million on our Old Senior ABL Revolving Facility leaving $714.6 million available for future borrowings. The available borrowings of $714.6 million are net of outstanding letters of credit and the net fair value liability for our interest rate swap agreements before the adjustment for credit-risk. During the year ended December 31, 2010, we borrowed $179.0 million under the Old Senior ABL Revolving Facility and repaid $276.0 million. On February 9, 2011, we repaid our Old Senior ABL Revolving Facility in full with proceeds from our New Senior ABL Revolving Facility. As of February 9, 2011, we had an outstanding balance of $383.0 million under our New Senior ABL Revolving Facility and approximately $646.8 million available for borrowings.

Substantially all of our rental equipment and all our other assets are subject to liens under our New Senior ABL Revolving Facility and our 2017 Notes and none of such assets are available to satisfy the general claims of our creditors.

~~The~~Availability under the New Senior ABL Revolving Facility ~~contains~~is abased ~~number~~on ofa ~~covenants~~borrowing ~~that,~~base ~~among other things,~~equal ~~limit or restrict RSC’s ability~~ to ~~incur~~a ~~additional~~percentage indebtedness; provide guarantees; engage in mergers, acquisitions or dispositions; enter into sale-leaseback transactions; make dividends and other restricted payments; prepay other indebtedness; engage in certain transactions with affiliates; make investments; change the nature of ~~its business; incur liens; with respect to RSC Holdings II, LLC, take actions other than those enumerated; and amend specified debt agreements. The indentures governing~~ the ~~Notes~~net ~~also~~rental ~~contain restrictive covenants that~~equipment, among other things, limit RSC’s ability to incur additional debt; pay dividends or distributions on RSC Holdings’ capital stock or repurchase RSC Holdings’ capital stock; make certain investments; create liens to secure debt; enter into certain transactions with affiliates; create limitations on the ~~ability~~value of our ~~restricted subsidiaries~~receivables toand ~~make~~inventory ~~dividends~~subject ~~or distributions~~ to ~~their~~a ~~parents;~~maximum ~~merge~~availability orof ~~consolidate~~$1,210 ~~with another company; and transfer and sell assets~~million. InAs ~~addition,~~of ~~under the New Senior ABL Revolving Facility~~December 31, ~~upon~~ ~~excess availability falling below $100.0 million~~2011, wethe ~~will become subject to more frequent~~ borrowing base ~~reporting~~was ~~requirements~~$1,510.5 million and ~~upon~~we ~~the~~had ~~excess~~an ~~availability~~outstanding ~~falling~~balance ~~below the greater~~ of $~~125~~488.0 million ~~and~~on ~~12.5%~~our ~~of the sum of the total commitments under the~~ New Senior ABL Revolving Facility, ~~the borrowers will be required to comply with specified financial ratios and tests, including a minimum fixed charge coverage ratio of 1~~$93.009 tomillion ~~1.00 and a maximum leverage ratio as~~ of ~~the~~ ~~last~~outstanding ~~day~~letters of ~~each~~credit, ~~quarter~~leaving ~~of 5~~$628.~~25 to~~ 1~~.00,~~ ~~decreasing~~million toavailable ~~5.00~~for tofuture 1borrowings.00 ~~on December 31, 2011.~~

AsSubstantially all of ~~December 31, 2010,~~ our ~~fixed~~rental ~~charge~~equipment ~~coverage~~and ~~ratio~~all ~~was~~our ~~1.22~~other toassets ~~1.00~~are ~~and~~subject ~~the leverage ratio was 5.18~~ to ~~1.00,~~liens asunder ~~calculated~~our inNew ~~accordance with the Old~~ Senior ABL Revolving Facility~~. However,~~ because excess availability was $714.6 million as of December 31, 2010 the covenant ratios tests did not apply. Had excess availability fallen below $140.0 million as of December 31, 2010 compliance with these financial ratios would have been required and weour ~~would~~2017 ~~have violated the maximum leverage ratio requirement~~Notes, ~~which would be an event of default. Under the New Senior ABL Revolving Facility, the covenant rations~~ and ~~tests~~none ~~apply if excess availability falls below the greater~~ of ~~$125.0 million~~such ~~and~~assets ~~12.5%~~are ofavailable ~~the sum of total commitments. We do not expect excess availability~~ to ~~fall~~satisfy ~~below~~ the ~~greater of $125.0 million and 12.5% of the sum of the total~~ ~~commitments~~general ~~under~~claims the New Senior ABL Revolving Facility at any time during the next twelve months and therefore do not expect that we will be required to comply with the specified ratios and tests during that time. If an event of ~~default~~our ~~occurred, the Company would seek a waiver of the covenants and could incur upfront fees and increased interest costs~~creditors. ~~However, there can be no assurances that such a waiver could be obtained.~~

The New Senior ABL Revolving Facility contains a number of covenants that, among other things, limit or restrict RSC’s ability to incur additional indebtedness; provide guarantees; engage in mergers, acquisitions or dispositions; enter into sale-leaseback transactions; make dividends and other restricted payments; prepay other indebtedness; engage in certain transactions with affiliates; make investments; change the nature of its business; incur liens; with respect to RSC Holdings II, LLC, take actions other than those enumerated; and amend specified debt agreements. The respective indentures governing the Notes also contain restrictive covenants that, among other things, limit RSC’s ability to incur additional debt; pay dividends or distributions on RSC Holdings capital stock or repurchase RSC Holdings capital stock; make certain investments; create liens to secure debt; enter into certain transactions with affiliates; create limitations on the ability of our restricted subsidiaries to make dividends or distributions to their parents; merge or consolidate with another company; and transfer and sell assets. In addition, under the New Senior ABL Revolving Facility, upon excess availability falling below $100.0 million, we will become subject to more frequent borrowing base reporting requirements and upon the excess availability falling below the greater of $125.0 million and 12.5% of the sum of the total commitments under the New Senior ABL Revolving Facility, the borrowers will be required to comply with specified financial ratios, including a minimum fixed charge coverage ratio of 1.00 to 1.00 and a maximum leverage ratio as of the last day of each quarter of 5.25 to 1.00, decreasing to 5.00 to 1.00 on December 31, 2011.

As of December 31, 2011, excess availability on our New Senior ABL Revolving Facility was $628.1 million and we were therefore not required to comply with either the fixed charge coverage ratio or leverage ratio. Had excess availability fallen below the greater of $125.0 million and 12.5% of the sum of the total commitments under the New Senior ABL Revolving Facility as of December 31, 2011, compliance with these financial ratios would have been required and we would have violated the minimum fixed charge coverage ratio requirement, which would be an event of default. We do not expect excess availability to fall below the greater of $125.0 million and 12.5% of the sum of the total commitments under the New Senior ABL Revolving Facility at any time during the next twelve months and therefore do not expect that we will be required to comply with the specified financial ratios during that time. If an event of default occurred, we would seek a waiver of the covenants and could incur upfront fees and increased interest costs. However, there can be no assurances that such a waiver could be obtained.

Outlook

We believe that cash generated from operations, together with amounts available under the New Senior ABL Revolving Facility, will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs and capital expenditure requirements for ~~at least~~ the next twelve months and the foreseeable future. Our future financial and operating performance, ability to service or refinance our debt and ability to comply with covenants and restrictions contained in our debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See “Cautionary Note for Forward-Looking Statements” on page ii and “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

From time to time, we evaluate various alternatives for the use of excess cash generated from our operations including paying down debt, funding acquisitions and repurchasing common stock or debt securities. ~~Unless~~Our ~~certain payment conditions are satisfied, the New Senior ABL Revolving Facility limits our~~ capacity to repurchase common stock, make cash dividends or make optional payments on unsecured debt securities is limited to $100.0 ~~This~~million ~~limitation~~by the New Senior ABL Revolving Facility at ~~February~~December 931, 2011 ~~was~~unless ~~$100~~certain payment conditions are satisfied.~~0 million.~~

39 46

Contractual Obligations

The following table details the contractual cash obligations for debt, operating leases and purchase obligations as of December 31, ~~2010~~2011.

	Payments Due by Period
			Less than						More than
	Total		Less than1 Year		1-3 Years		3-5 Years		More than5 Years
	Total		1 Year		1-3 Years		3-5 Years		5 Years
	(in millions)
Contractual Obligations
Debt (1)	$	2,~~003~~241.60	$	—	$	~~783~~503.60	$	~~620~~488.0	$	~~600~~1,250.0
Capital leases (1)		7792.82		2527.34		3439.57		1417.25		37.86
Interest on debt and capital leases (2)		~~805~~1,086.3		~~175~~181.71		~~312~~356.89		~~175~~248.54		~~141~~299.39
Operating leases		~~170~~173.7		5354.82		7466.18		2936.40		1316.47
Purchase obligations (3)		7728.6		7728.6		—		—		—
Total	$	3,~~135~~621.08	$	~~332~~291.43	$	~~1,205~~966.04	$	~~839~~789.19	$	~~758~~1,574.52

(1)		Principal payments are reflected when contractually required, and no early paydowns or increase of debt since December 31, 2010 are reflected, including the repayment of our Second Lien Term Facility in January 2011 and the partial redemption of our 2014 Notes, the repayment of the Old Senior ABL Revolving Facility and increase in debt under the New Senior ABL Revolving Facility in February 2011, as previously described under “Recent Developments”. Principal payments on the Old Senior ABL Revolving Facility are presented within the “1-3 Years” column above.
(2)		Estimated interest for debt for all periods presented is calculated using the interest rate available as of December 31, 2010 and includes calculated payments due under our interest rate swap agreements as well as fees for the unused portion of our Old Senior ABL Revolving Facility. See Note 5 to our consolidated financial statements for additional information. The above table does not reflect settlement of certain interest rate swap agreements and estimated interest payments associated with the New Senior ABL Revolving Facility. See “Recent Developments.”
(3)		As of December 31, 2010, we had outstanding purchase orders with our equipment suppliers. These purchase orders, which were negotiated in the ordinary course of business, total approximately $77.6 million. Generally, these purchase orders can be cancelled by us with 30 days’ notice and without cancellation penalties.

(1)	Principal payments are reflected when contractually required.

As(2) ofEstimated ~~December 31,~~interest ~~2010,~~for wedebt ~~have~~for ~~$6.3 million~~all ofperiods ~~unrecognized~~presented ~~tax~~is ~~benefits,~~calculated ~~including~~using the ~~associated~~ interest ~~and~~rate ~~penalties,~~available ~~which~~as ~~are~~of ~~not~~December ~~covered~~31, by2011 ~~our~~and ~~indemnification~~includes ~~agreement~~fees ~~with Atlas.~~for ~~The~~the ~~timing~~unused portion of ~~cash~~our ~~payments,~~Senior ifABL ~~any,~~Revolving isFacility. ~~uncertain~~See ~~and~~Note ~~therefore~~5 noto ~~such~~our ~~payments~~consolidated ~~are reflected~~financial instatements ~~the~~for ~~above~~additional ~~table~~information.

(3)

As of December 31, 2011, we had outstanding purchase orders with our equipment suppliers. These purchase orders, which were negotiated in the ordinary course of business, total approximately $28.6 million. Generally, these purchase orders can be cancelled by us with 30 days’ notice and without cancellation penalties.

Capital Expenditures

The table below shows rental equipment and property and non-rental equipment capital expenditures and related disposal proceeds received by year for ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009. Net capital expenditures (inflows) for 2010 and 2009 exclude insurance proceeds from rental equipment and property claims of $4.4 million and $5.3 million, respectively.

	Rental Equipment							Property and Non-Rental Equipment
					Net Capital							Net Capital
	Gross CapitalExpenditures		DisposalProceeds		Net CapitalExpenditures(Inflows)			Gross CapitalExpenditures		DisposalProceeds		Net CapitalExpenditures(Inflows)
	Gross Capital		Disposal		Expenditures			Gross Capital		Disposal		Expenditures
	Expenditures		Proceeds		(Inflows)			Expenditures		Proceeds		(Inflows)
	(in millions)
2010	$	327.1	$	124.8	$	202.3		$	5.8	$	3.0	$	2.8
2011	$	616.2	$	154.5	$	461.7		$	11.8	$	7.1	$	4.7
2010		327.1		124.8		202.3			5.8		3.0		2.8
2009		46.4		158.5		(112.1	)		5.0		12.5		(7.5	)
2008		258.7		125.4		133.3			15.3		6.5		8.8

Adjusted EBITDA

As a supplement to the financial statements in this Annual Report on Form 10-K, which are prepared in accordance with GAAP, we also present Adjusted EBITDA. Adjusted EBITDA is generally consolidated net (loss) income before net interest expense, income taxes and depreciation and amortization and before certain other items, including loss (gain) on extinguishment of debt, net, merger costs, share-based compensation and other (income) expense, net. We We present Adjusted EBITDA because we believe the calculation is useful to investors in evaluating our financial performance and as a liquidity measure. Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP and there are material limitations to its usefulness on a stand alone basis. Adjusted EBITDA does not include reductions for cash payments for our obligations to service our debt, fund our working capital and pay our income taxes. In addition, certain items excluded from Adjusted EBTIDA such as interest, income taxes, depreciation and amortization are significant components in understanding and assessing our financial performance. All companies do not calculate Adjusted EBITDA in the same manner and our presentation may not be comparable to those presented by other companies. Investors should use Adjusted EBITDA in addition to, and not as an alternative to, net (loss) income or net cash provided by operating activities as defined under GAAP.

40 47

~~Adjusted~~The ~~EBITDA~~table isbelow ~~not~~provides a ~~measure~~reconciliation ofbetween ~~performance calculated~~net in accordance with GAAP and there are material limitations to its usefulness on a stand alone basis. Adjusted EBITDA does not include reductions for cash payments for our obligations to service our debtloss, ~~fund our working capital and pay our income taxes. In addition, certain items excluded from Adjusted EBTIDA such~~ as ~~interest,~~determined ~~income taxes, depreciation and amortization are significant components~~ in ~~understanding~~accordance ~~and assessing our financial performance. All companies do~~with ~~not~~GAAP, ~~calculate Adjusted EBITDA in the same manner~~ and ~~our presentation may not be comparable to those presented by other companies. Investors should use~~ Adjusted EBITDA: ~~in addition to, and not as an alternative to, net (loss) income or net cash provided by operating activities as defined under GAAP.~~

The table below provides a reconciliation between net (loss) income, as determined in accordance with GAAP, and Adjusted EBITDA:


	Years Ended December 31,
	2011			2010			2009
	(in 000s)
Net loss	$	(29,904	)	$	(73,516	)	$	(59,360	)
Depreciation of rental equipment and depreciation and amortization of non-rental equipment and intangibles		342,804			312,823			329,652
Interest expense, net		224,518			194,471			189,689
Benefit for income taxes		(10,514	)		(43,719	)		(37,325	)

EBITDA	$	526,904		$	390,059		$	422,656


Adjustments:
Loss (gain) on extinguishment of debt, net		15,342			—			(13,916	)
Merger costs		10,954			—			—
Share-based compensation		7,051			3,753			4,224
Other (income) expense, net		260			(539	)		707

Adjusted EBITDA	$	560,511		$	393,273		$	413,671

	Years Ended December 31,
	2010			2009			2008
	(in 000s)
Net (loss) income	$	(73,516	)	$	(59,360	)	$	122,489
Depreciation of rental equipment and depreciation and amortization of non-rental equipment and intangibles		312,823			329,652			367,071
Interest expense, net		194,471			189,689			201,849
(Benefit) provision for income taxes		(43,719	)		(37,325	)		72,939
EBITDA	$	390,059		$	422,656		$	764,348
Adjustments:
Gain on extinguishment of debt, net		—			(13,916	)		—
Share-based compensation		3,753			4,224			2,993
Other (income) expense, net		(539	)		707			658
Adjusted EBITDA	$	393,273		$	413,671		$	767,999

The table below provides a reconciliation between net cash provided by operating activities, as determined in accordance with GAAP, and Adjusted EBITDA:

	Years Ended December 31,
	2010			2009			2008
	2011			2010			2009
	(in 000s)
Net cash provided by operating activities	$	~~324~~323,~~860~~800		$	~~269~~324,~~956~~860		$	~~363~~269,~~439~~956
Gain on sales of rental and non-rental property and equipment, net of non-cash write-offs		1955,~~376~~458			719,~~091~~376			267,~~106~~091
Gain on settlement of insurance property claims		~~3,426~~—			—3,426			—
Cash paid for interest		~~181~~197,~~272~~803			~~155~~181,~~295~~272			~~199~~155,~~210~~295
Cash (received) paid for taxes, net		(26,539	)		(8,632	)		30,988
Cash received for taxes, net		(13,130	)		(26,539	)		(8,632	)
Other (income) expense, net		~~(539~~260	)		~~707~~(539	)		~~658~~707
Changes in other operating assets and liabilities		(~~108~~3,~~583~~680	)		(10108,~~746~~583	)		~~147~~(10,~~598~~746	)
Adjusted EBITDA	$	~~393~~560,~~273~~511		$	~~413~~393,~~671~~273		$	~~767~~413,~~999~~671

Free Cash Flow

We also present free cash flow as a supplement to the financial statements. We define free cash flow as net cash provided by operating activities plus net capital inflows (expenditures). All companies do not calculate free cash flow in the same manner, and our presentation may not be comparable to those presented by other companies. We believe free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital needs. However, free cash flow is a non-GAAP measure in addition to, and not as an alternative to, net (loss) income or net cash provided by operating activities as defined under GAAP. Moreover, free cash flow does not represent remaining cash flows available for discretionary expenditures because the measure does not deduct payment required for debt maturities.

41 48

The table below reconciles free cash flow, a non-GAAP measure, to net cash provided by operating activities, which is the most directly comparable financial measure determined in accordance with GAAP (in 000s):

	Years Ended December 31,
	2010			2009			2008
	2011			2010			2009
	(in 000s)
Net cash provided by operating activities	$	323,800		$	324,860		$	269,956
Net cash provided by operating activities	$	324,860		$	269,956		$	363,439
Purchases of rental equipment		(616,159	)		(327,107	)		(46,386	)
Purchases of rental equipment		(327,107	)		(46,386	)		(258,660	)
Purchases of property and equipment		(11,837	)		(5,766	)		(4,952	)
Purchases of property and equipment		(5,766	)		(4,952	)		(15,319	)
Proceeds from sales of rental equipment		154,466			124,845			158,482
Proceeds from sales of rental equipment		124,845			158,482			125,443
Proceeds from sales of property and equipment		7,073			2,951			12,493
Proceeds from sales of property and equipment		2,951			12,493			6,544
Insurance proceeds from rental equipment and property claims		—			4,368			5,267
Insurance proceeds from rental equipment and property claims		4,368			5,267			—
Net capital (expenditures) inflows		(466,457	)		(200,709	)		124,904
Net capital (expenditures) inflows		(200,709	)		124,904			(141,992	)
Free cash flow	$	(142,657	)	$	124,151		$	394,860
Free cash flow	$	124,151		$	394,860		$	221,447

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results, however, may materially differ from our calculated estimates ~~and this difference would be reported in our current operations~~.

We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements and changes in these judgments and estimates may impact future results of operations and financial condition. For additional ~~discussion~~ discussion of our accounting policies see Note 23 to our consolidated financial statements for the year ended December 31, ~~2010~~2011 included in this Annual Report on Form 10-K.

Rental Equipment

At December 31, ~~2010~~2011 and ~~2009~~2010, we ~~have~~had rental equipment with a net book value of $1.3 6 billion and $1.4 3 billion, representing 4950.20% and 49.92% of our total assets, respectively. We exercise judgment with regard to rental equipment in the following areas: (1) determining whether an expenditure is eligible for capitalization or if it should be expensed as incurred, (2) estimating the useful life and salvage value and determining the depreciation method of a capitalized asset, and (3) if events or changes in circumstances warrant an assessment, determining if and to what extent an asset has been impaired. The accuracy of our judgments impacts the amount of depreciation expense we recognize, the amount of gain or loss on the ultimate disposal of these ~~assets~~ assets including those resulting from the sale of used rental equipment, whether a long-lived asset is impaired and, if an asset is impaired, the amount of the loss related to the impaired asset that is recognized.

Costs associated with the acquisition of rental equipment including those necessary to prepare an asset for its intended use are capitalized. Expenditures associated with the repair or maintenance of a capital asset are expensed as incurred. Expenditures that are expected to provide future benefits to us or that extend the useful life of rental equipment are capitalized. We have factory-authorized arrangements for the refurbishment of certain types of rental equipment. Since refurbishments extend the assets’ useful lives, the cost of refurbishments are added to the assets’ net book value. The combined cost is then depreciated over the remaining estimated useful life of the refurbished asset, which averages 48 months.

~~The~~49 useful lives that we assign to rental equipment represents the estimated number of years that the property and equipment is expected to contribute to the revenue generating process based on our current operating strategy. The range of estimated lives for rental equipment is one to ten years. We believe that the cost of our rental equipment expires evenly over time and we therefore depreciate these assets on a straight-line basis over their useful lives. The salvage value that we assign to rental equipment represents the estimated residual value of assets at the end of their estimated useful life. Except for certain small dollar rental items, the salvage value that we assign to new rental equipment is 10% of cost while the salvage value of refurbished rental equipment is 10% of the asset’s net book value at the time of refurbishment plus the cost to refurbish. During 2010, we purchased $327.1 million of new rental equipment. Had we assigned a salvage value of zero

The useful lives that we assign to rental equipment represent the estimated number of years that the property and equipment is expected to contribute to the revenue generating process based on our current operating strategy. The range of estimated lives for rental equipment is one to ten years. We believe that the cost of our rental equipment is consumed ratably over time and we therefore depreciate these assets on a straight-line basis over their useful lives. The salvage value that we assign to rental equipment represents the estimated residual value of assets at the end of their estimated useful life. Except for certain small dollar rental items, the salvage value that we assign to new rental equipment is 10% of cost while the salvage value of refurbished rental equipment is 10% of the asset’s net book value at the time of refurbishment including the cost to refurbish. During 2011, we purchased $616.2 million of new rental equipment. Had we assigned a salvage value of zero to these assets we would have recognized $57.1 2 million of additional ~~depreciation~~ depreciation expense during ~~2010~~2011. Conversely, had we assigned a salvage value of 20% instead of 10% we would have recognized $13.2 0 million less depreciation expense during ~~2010~~2011.

Impairment of Long-Lived Assets

Our long-lived assets to be held and used consist primarily of our rental fleet, which we segregate into approximately ten major category classes based on functionality. We evaluate our long-lived assets for impairment whenever events or circumstances indicate that the carrying value of a long-lived asset (or an asset group) may not be recoverable. Events or changes in circumstances that could suggest possible impairment include but are not limited to: a significant decrease in the market price of our rental fleet, a significant adverse change in the business climate that could affect the value of our rental fleet or a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of our rental fleet. On a monthly basis, we analyze the fair value of our rental fleet in conjunction with our projections regarding future cash flows that we expect to generate from the continued use of our rental fleet. The fair value of our rental fleet in relation to the assets’ carrying amount is the primary factor we consider in determining whether our rental fleet should be tested for recoverability.

Should an impairment indicator be present, recoverability is assessed by comparing the estimated future cash flows of the category classes, on an undiscounted basis, to carrying values. The category class represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the undiscounted cash flows exceed the carrying value, the asset group is recoverable and no impairment is present. If the undiscounted cash flows are less than the carrying value, the impairment is measured as the difference between the carrying value and the fair value of the asset group.

During ~~2009~~2011 aand ~~continued~~2010, ~~weakening of demand in~~ the ~~non-residential~~used ~~construction~~equipment market ~~resulted~~ incontinued ato ~~decrease~~improve inrelative ~~the~~to ~~demand~~2009; ~~for~~enabling ~~our~~us ~~rental~~to ~~equipment and downward pressure on our rental~~sell ~~rates~~$154.5 Asmillion aand ~~result, our fleet utilization decreased 1,250 basis points from 70~~$124.1%8 ~~for the year ended December 31~~million, ~~2008 to 57.6% for the year ended December 31~~respectively, ~~2009~~of ~~and~~used rental equipment ~~rental~~at ~~revenue decreased~~gross ~~$494.2 million,~~margins orof 3134.5%, ~~from~~and ~~$1,567~~16.3 ~~million for the year ended December 31, 2008 to $1,073~~%.~~0 million~~ ~~for~~As ~~the~~of ~~year ended~~ December 31, ~~2009. Despite these year over year decreases~~2011, the fair value of our rental fleet remained in excess of the assets’ carrying amounts when reviewed at a category class level. In addition, the used equipment market, which consists of retail and auction channels, remained liquid throughout 2009 and enabled us to sell significant amounts of rental fleet at positive margins. During the year ended December 31, 2009, we reduced our fleet at OEC by $371 million, or 13.8%, from $2.7 billion at December 31, 2008, due primarily to sales of used rental equipment. Our sales of used rental equipment were $158.5 million during the year ended December 31, 2009 at a gross margin of 6.2%. The liquidity of the used rental equipment market during 2009 enabled us to significantly increase our sales of used rental equipment while simultaneously restricting our capital purchases, thus resulting in significant cash inflows from operating and investing activities. Cash provided by operating activities and cash provided by investing activities, was $270.0 million and $124.9 million, respectively, for the year ended December 31, 2009.

~~During~~After ~~2010,~~considering the ~~used~~fair ~~equipment~~values ~~market~~of ~~continued~~our torental ~~improve~~fleet ~~relative~~(at toa ~~2009~~category ~~and~~class ~~2008~~level) ~~enabling us~~relative to ~~sell~~the assets’ ~~$124.8 million~~carrying ofamounts ~~used~~in ~~rental~~addition ~~equipment~~to atthe aconsistent ~~gross~~positive ~~margin~~margins ofwe ~~16.3%.~~generate Asfrom the sale of ~~December 31~~used rental equipment, ~~2010,~~ ~~the~~we ~~fair~~concluded ~~value~~impairment ofindicators ~~our~~were ~~rental~~not ~~fleet~~present ~~remained~~and init ~~excess~~was oftherefore not necessary to test the assets’ ~~carrying~~for recoverability ~~amounts~~during ~~when reviewed~~the atyears aended ~~category~~December 31, ~~class~~2011, ~~level~~2010 and 2009.

After considering the fair values of our rental fleet (at a category class level) relative to the assets’ carrying amounts in addition to the consistent positive margins we generate from the sale of used rental equipment, we concluded impairment indicators were not present and it was therefore not necessary to test the assets for recoverability during the years ended December 31, 2010, 2009 and 2008.

Business Combinations

Under GAAP, a business acquisition is recorded by allocating the cost of the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date. Goodwill represents the excess of the purchase price over the fair value of the net assets, including the amount assigned to identifiable intangible assets. The determination of the fair value of assets acquired and liabilities assumed asrequires ~~part of the AER acquisition, which was consummated in July 2008, required~~ us to make certain fair value estimates, primarily related to receivables, inventory, rental equipment and intangible assets. These estimates require significant judgment and include a variety of assumptions in determining the fair value of the assets acquired and liabilities assumed including current replacement cost for similar assets, estimated future cash flows and growth rates. ~~We recorded goodwill of $10.7 million and other identifiable intangible assets of $4.9 million in connection~~

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with the AER acquisition. Other identifiable intangible assets, which consist of customer relationships, noncompete covenants and a tradename, were valued at $3.1 million, $1.5 million and $0.3 million, respectively. The values assigned to the other identifiable intangibles are being amortized to expense over their estimated useful lives.

Goodwill

At ~~both~~ December 31, ~~2010~~2011 and ~~2009~~2010, we had goodwill of $949.7 million and $936.3 million, respectively. Goodwill is not amortized. Instead, goodwill is required to be tested for impairment annually and between annual tests if an event occurs or circumstances change that might indicate impairment. We perform our annual goodwill impairment test during the fourth quarter of our calendar year.

The goodwill impairment test involves a two-step process. The first step of the test, used to identify potential impairment, compares the estimated fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test must be performed to measure the amount of the impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as goodwill recognized in a business combination. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Historically, we have passed the first step of the goodwill impairment testing, thus the second step of the impairment test has been unnecessary.

~~Our~~We ~~Company~~are is comprised of two divisions, ~~(or~~the ~~operating~~Gulf ~~segments)~~and ~~that~~Northern divisions, which are aggregated into one reportable segment because they are operationally and economically similar and because aggregation is consistent with the basic principles of segment reporting. We concluded our divisions are reporting units for purposes of testing goodwill because the component levels below our divisions do not constitute a business ~~based on the accounting guidance in ASC Section 350-20-55-3~~. During the fourth quarter of ~~2010~~2011, we tested goodwill for impairment by comparing the fair value of each reporting unit to their respective carrying values, including goodwill. The fair values, which were estimated using an income approach valuation technique, represent the amount at which our reporting units could be sold in an orderly transaction between market participants at the measurement date. This approach was unchanged from prior years’ methodology. Under the income approach, the fair values were estimated based on the discounted future cash flows resulting from the continued use and disposition of each reporting unit. Based on our ~~2010~~2011 fourth quarter goodwill impairment test, the fair values of our reporting units were determined to substantially exceed their respective carrying amounts. In addition, we concluded the sum of these fair values was reasonably consistent with the Company’s enterprise value adjusted for a market premium. The Company’s enterprise value consists of the fair value of the Company’s debt plus the Company’s equity capitalization.

The determination of fair value under the income approach requires significant judgment on our part. Our judgment is required in developing assumptions about revenue growth, changes in working capital, selling, general and administrative expenses, capital expenditures and the selection of an appropriate discount rate. The estimated future cash flows and projected capital expenditures used under the income approach are based on our business plans and forecasts, which consider historical results adjusted for future expectations.

~~Had~~Based weon ~~instead~~our ~~determined~~analyses, ~~the~~there ~~fair~~was ~~values~~no ofgoodwill ~~either~~impairment orrecognized ~~both~~during ~~reporting~~the ~~units~~years ~~were~~ended ~~less~~December 31, ~~than their~~2011, ~~respective~~2010 ~~carrying~~and ~~amounts,~~2009. weIf ~~believe~~during ~~the~~2012 ~~entire~~market ~~amount~~conditions ofdeteriorate ~~goodwill~~and ~~assigned~~our tooutlook ~~either or~~deteriorates ~~both~~from ~~reporting~~the ~~units~~projections ~~would~~we beused ~~impaired~~in ~~under step two of~~ the 2011 goodwill impairment test, ~~because~~we ~~the implied~~could ~~fair~~have ~~values of our reporting units~~ goodwill ~~would~~impairment ~~approximate~~during ~~zero~~2012. AtGoodwill ~~the date of our~~ impairment ~~review, we concluded that the fair values of our reporting units, which represents an estimate of consideration that~~ would benot ~~paid~~impact ~~by an acquirer in exchange for~~ our ~~reporting~~debt ~~units as part of a business combination, would be allocated entirely to our identifiable net assets, including unrecognized intangible assets with no residual amount assigned to goodwill~~covenants.

Based on our analyses, there was no goodwill impairment recognized during the years ended December 31, 2010, 2009 and 2008. If during 2011 market conditions deteriorate and our outlook deteriorates from the projections we used in the 2010 goodwill impairment test, we could have goodwill impairment during 2011. Goodwill impairment would not impact our debt covenants.

Reserve for Claims

Our insurance program for general liability, automobile, workers’ compensation and pollution claims involves deductibles or self-insurance, with varying risk retention levels. Claims in excess of these risk retention levels are covered by insurance, up to certain policy limits. We are fully self-insured for medical claims. Our excess loss coverage for general liability, automobile, workers’ compensation and pollution claims starts at $1.0 million, $1.5 million, $0.5 million and $0.25 million, respectively. We establish reserves for reported claims that are asserted and for claims that are believed to have been incurred but not yet reported. These reserves reflect an estimate of the amounts that we will be required to pay in connection with these claims. The estimate of reserves is based upon assumptions relating to the probability of losses and historical settlement experience. These estimates may change

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~~by insurance, up to certain policy limits. We are fully self-insured for medical claims.~~ Our excess loss coverage for general liability, automobile, workers’ compensation and pollution claims starts at $1.0 million, $1.5 million, $0.5 million and $0.25 million respectively. We establish reserves for reported claims that are asserted and for claims that are believed to have been incurred but not yet reported. These reserves reflect an estimate of the amounts that we will be required to pay in connection with these claims. The estimate of reserves is based ~~upon assumptions relating to the probability of losses and historical settlement experience. These estimates may change based~~ on, among other events, changes in claims history or receipt of additional information relevant to assessing the claims. Furthermore, these estimates may prove to be inaccurate due to factors such as adverse judicial determinations or settlements at higher than estimated amounts. Accordingly, we may be required to increase or decrease the reserves. During the fourth quarter of 2010, we reduced our general liability reserve accrual by $1.4 million, with a corresponding reduction to expense. During the fourth quarter of 2009, we reduced our workers compensation and general liability reserve accruals by $4.3 million and $4.6 million, respectively, with a corresponding reduction to expense. The reductions in both 2010 and 2009 were due to a decrease in the actuarially determined ultimate loss estimates, which were driven in part by improved claims experience.

Derivative Instruments and Hedging Activities

Our derivative financial instruments are recognized on the balance sheet at fair value. Changes in the fair value of our derivatives, which are designated as cash flow hedges, are recorded in other comprehensive income (loss) to the extent that the hedges are highly effective. Ineffective portions of cash flow hedges, if any, are recognized in current period earnings in interest expense. Gains and losses on derivative instruments not designated as hedging instruments are recognized in current period earnings, in interest expense. Hedge effectiveness is calculated by comparing the fair value of the derivative to a hypothetical derivative that would be a perfect hedge of the hedged transaction. Other comprehensive income or loss is reclassified into ~~current~~ current period earnings when the hedged transaction affects earnings. Gains and losses on derivative instruments that are de-designated as cash flow hedges and cannot be re-designated under a different hedging relationship are reclassified from accumulated other comprehensive income (loss) to current period earnings in interest expense at the time of the de-designation. As of December 31, 2011 there were no derivative instruments outstanding.

Revenue Recognition

We rent equipment primarily to the industrial or non-construction market and the ~~non-residential~~ construction market. We record unbilled revenue for revenues earned in each reporting period, which have not yet been billed to the customer. Rental contract terms may be daily, weekly, or monthly and may extend across financial reporting periods. Rental revenue is recognized over the applicable rental period.

We recognize revenue on used rental equipment and merchandise sales when title passes to the customer, the customer takes ownership, assumes risk of loss, and ~~collectibility~~collectability is reasonably assured. There are no rights of return or warranties offered on product sales.

We recognize both net and gross re-rent revenue. We have entered into alliance agreements with certain suppliers whereby we ~~will~~ rent equipment from the supplier and subsequently re-rent such equipment to a customer. Under the alliance agreements, the collection risk from the end user is passed to the original supplier and revenue is presented on a net basis. When no alliance agreement exists, re-rent revenue is presented on a gross basis.

Share-Based Compensation

WeShare-based ~~measure~~compensation ~~the~~for ~~cost~~all ofshare-based ~~employee~~payment ~~services~~awards ~~received~~granted inis ~~exchange for an award of equity instruments~~ based on the grant-date fair value ~~of the award and the estimated number of awards that are expected to vest~~. Generally, ~~equity~~share-based ~~instruments~~payment awards ~~granted~~ to our employees vest in equal increments over a four-year service period from the date of grant. The grant date fair value of the award, adjusted for expected forfeitures, is amortized to expense on a straight-line basis over the service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. ~~For~~As ~~the~~of ~~years ending~~ December 31, ~~2010,~~2011 ~~2009~~there ~~and~~was ~~2008,~~$16.5 wemillion ~~recognized share~~of unrecognized stock-based compensation ~~expense~~(net of ~~$3.8 million,~~forfeitures) ~~$4.2 million~~related ~~and~~to $3unvested awards which are expected to vest over a weighted average period of approximately of 2.~~0 million,~~3 ~~respectively~~years related to our share-based compensation plans.

In 2010, we granted 0.8 million stock options with a total fair value of $3.4 million. In 2009, we granted 0.8 million stock options with a total fair value of $3.8 million. The grant date fair value of these options was estimated using a Black-Scholes pricing model, which takes into account the following six factors: (1) the current price of the underlying stock on the date of grant, (2) the exercise price of the option, (3) the expected dividend yield, (4) the expected volatility of the underlying stock over the option’s expected life, (5) the expected term of the option, and (6) the risk-free interest rate during

the expected term of the option. Of these factors, we exercise judgment with regard to selecting both the expected volatility of the underlying stock and the expected life of the option. Expected volatility is estimated through a review of our historical stock price volatility and that of our competitors, adjusted for future expectations. The expected term of the options is estimated using expected term data disclosed by comparable companies and through a review of other factors expected to influence behavior such as expected volatility. Additionally, we determined that the expected term should be analyzed using two groupings of options holders for valuation purposes. We also exercise judgment with regard to estimating the number of awards that are expected to vest, which is based on historical experience adjusted for future expectations. For options granted during 2010, we used an average volatility factor of 67.7% and an average expected term of 5.9 years. The estimated forfeiture rate on options granted during 2010 was 7.5%. Changes in assumptions used can materially affect the fair value estimates. For awards granted in 2010, a 10% increase in volatility would have resulted in a $0.2 million, or 6.6% increase, in fair value. A 10% increase in the expected term assumption would have resulted in a $0.1 million, or 2.8% increase, in fair value. A 10% increase in both the volatility factor and the expected term assumption would have resulted in a $0.4 million, or 10.4% increase, in fair value. Although a change in the expected term would necessitate other changes since the risk-free interest rate and volatility assumptions are specific to the term, we did not attempt to adjust those assumptions for purposes of the above sensitivity analysis.

Income Taxes

We are subject to federal income taxes, foreign income taxes and state income taxes in those jurisdictions in which we operate. We exercise judgment with regard to income taxes in the following areas: (1) interpreting whether expenses are deductible in accordance with federal and state tax codes, (2) estimating annual effective federal and state income tax rates and (3) assessing whether deferred tax assets are, more likely than not, expected to be realized. The accuracy of these judgments impacts the amount of income tax expense we recognize each period.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period that includes the enactment date. Provisions for deferred income taxes are recorded to the extent of withholding taxes and incremental taxes, if any, that arise from repatriation of dividends from those foreign subsidiaries where local earnings are not permanently reinvested. A valuation allowance is provided for deferred tax assets when realization of such assets is not considered to be more likely than not. Adjustments to the valuation allowance are made periodically based on management’s assessment of the recoverability of the related assets. We measure and record tax contingency accruals for differences between tax positions taken in a tax return and amounts recognized in the financial statements. Benefits from a tax position are recognized in the financial statements if and when we determine that it is more likely than not that a tax position will be sustained upon examination. This assessment presumes the taxing authority has full knowledge of all relevant information. The amount of benefit recognized in the financial statements is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

Provisions for deferred income taxes are recorded to the extent of withholding taxes and incremental taxes, if any, that arise from repatriation of dividends from those foreign subsidiaries where local earnings are not permanently reinvested. A valuation allowance is provided for deferred tax assets when realization of such assets is not considered to be more likely than not. Adjustments to the valuation allowance are made periodically based on management’s assessment of the recoverability of the related assets. We measure and record tax contingency accruals for differences between tax positions taken in a tax return and amounts recognized in the financial statements. Benefits from a tax position are recognized in the financial statements if and when we determine that it is more likely than not that a tax position will be sustained upon examination. This assessment presumes the taxing authority has full knowledge of all relevant information. The amount of benefit recognized in the financial statements is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

As a matter of law, we are subject to examination by federal, foreign and state taxing authorities. Although we believe that the amounts reflected in our tax returns substantially comply with the applicable federal, foreign and state tax regulations, the Internal Revenue Service (the “IRS”), the Canada Revenue Agency (“CRA”) and the various state taxing authorities can take positions contrary to our position based on their interpretation of the law. A tax position that is challenged by a taxing authority could result in an adjustment to our income tax liabilities and related tax provision.

Recent Accounting Pronouncements

In ~~February 2010~~September 2011, the Financial Accounting Standards Board (the “FASB”) issued ~~amended~~an accounting standards update relating to testing goodwill for impairment. The update simplifies how a company ~~guidance~~tests ongoodwill ~~subsequent~~for ~~events~~impairment by allowing both public and nonpublic entities an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under ~~this~~that ~~amended guidance~~option, ~~SEC~~an entity ~~filers~~would ~~are~~ no longer be required to ~~disclose~~ calculate the ~~date~~fair ~~through~~value ~~which~~of ~~subsequent~~a ~~events~~reporting ~~have~~unit ~~been~~unless ~~evaluated~~the inentity ~~originally~~determines, ~~issued~~based ~~and revised~~on ~~financial~~that ~~statements~~qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments ~~guidance~~are ~~was~~ effective ~~immediately~~for annual and weinterim ~~have~~goodwill ~~adopted~~impairment ~~this~~tests ~~new guidance~~performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. We do not anticipate that adoption of these amendments will have a material impact on our financial condition, results of operations or cash flows.

In ~~January 2010~~June 2011, the FASB issued ~~guidance~~an amendment to ~~improve~~the existing ~~disclosures~~guidance ~~about~~on ~~fair~~the ~~value measurements~~presentation of comprehensive income. ~~Specifically,~~Under the amended guidance, ~~requires~~entities ~~new~~have ~~disclosures~~the ~~for~~option ~~transfers~~to inpresent ~~and~~the ~~out~~components of ~~levels~~ 1net income and 2other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Entities no longer have the ~~fair~~option ~~value~~of ~~measurement~~presenting ~~hierarchy,~~the ~~and~~components ~~expands~~of ~~disclosures~~other ~~related~~comprehensive toincome ~~activity~~within ~~associated~~the ~~with~~statement ~~level~~of 3changes ~~fair~~in ~~value~~stockholders’ ~~measurements~~equity. ~~The new~~For ~~disclosures~~public entities, ~~which~~the ~~are~~amendment is effective on a retrospective basis for ~~interim~~fiscal years, and ~~annual~~interim ~~reporting~~ periods within those years, beginning after December 15, ~~2009~~2011, ~~had~~which nofor ~~impact~~us onis ~~our~~the ~~disclosures~~first atquarter ~~December 31,~~in ~~2010~~2012. The adoption of this amendment will result in a change to our current presentation of comprehensive income.

46In November 2011, the FASB issued an update deferring the effective date for amendments to the presentation of reclassifications of items out of accumulated other comprehensive income. We do not anticipate that the adoption of this update will have a material impact on our financial position, results of operations or cash flows.

In May 2011, the FASB issued amendments to the existing guidance on fair value measurement. The amendments are intended to create consistency between U.S. generally accepted accounting standards and International Financial Reporting Standards on measuring fair value and disclosing information about fair value measurements. The amendments clarify the application of existing fair value measurement requirements including (i) the application of the highest and best use valuation premise concepts, (ii) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (iii) quantitative information required for fair value measurements categorized within Level 3. In addition, the amendments require additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. For public entities, the amendments are effective for interim and annual periods beginning after December 15, 2011, which for us is calendar year 2012. These changes are required to be applied prospectively. We do not anticipate that the adoption of these amendments will have a material impact on our financial condition, results of operations or cash flows.

In October 2009, the FASB issued updated guidance on multiple-deliverable revenue arrangements. Specifically, the guidance amends the existing criteria for separating consideration received in multiple-deliverable arrangements, eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. The guidance also establishes a hierarchy for determining the selling price of a deliverable, which is based on vendor-specific objective evidence; third-party evidence; or management estimates. Expanded disclosures related to multiple-deliverable revenue arrangements will also be required. The new guidance is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, which for us is on or after January 1, 2011. We do not expect the application of this new standard to have a significant impact on our consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk associated with changes in interest rates and foreign currency exchange rates.

Interest Rate Risk

~~Excluding the effect~~ As of ~~our hedge agreements, as of~~ December 31, ~~2010 we had a significant amount of debt under the Old Senior ABL Revolving Facility and the Second Lien Term Facility, and as of February 9,~~ 2011, we had a significant amount of debt under the New Senior ABL Revolving Facility, with variable rates of interest based generally on adjusted London inter-bank offered rate (“LIBOR”), or an alternate interest rate, ~~in each case,~~ plus an applicable margin (or, in the case of Canadian dollar borrowings under the ~~Old~~New Senior ABL Revolving Facility, ~~or the New Senior ABL Revolving Facility, as applicable,~~ variable borrowing costs based generally on bankers’ acceptance discount rates, plus a stamping fee equal to an applicable margin, or on the Canadian prime rate, plus an applicable margin). Increases in interest rates could therefore significantly increase the associated interest payments that we are required to make on this debt. We have assessed our exposure to changes in interest rates by analyzing the sensitivity to our earnings assuming various changes in market interest rates. Assuming a hypothetical increase of 1% in interest rates on our debt portfolio, ~~as of December 31, 2010,~~ our net interest expense for the year ended December 31, ~~2010~~2011 would have increased by an estimated $34.~~2 million.~~8 ~~Excluding the effect of our hedge agreements, interest expense would have increased $9.0~~ million ~~for the same period assuming a hypothetical increase of 1%~~.

WeAs entered into four forward-starting interest rate swap agreements in September 2007 under which we exchanged our benchmark floating-rate interest payments for fixed-rate interest payments. The agreements are intended to hedge only the benchmark portion of interest associated with a portion of the Second Lien Term Facility. Interest on this debt is based on a fluctuating rate of interest measured by reference to a benchmark interest rate, plus a borrowing margin, which was 3.5% for the LIBOR option at December 31, ~~2010.~~2011, ~~The~~75% ~~agreements cover a combined notional amount~~ of ~~debt~~ ~~totaling~~our $~~700~~2,322.0 3 million, of ~~which~~debt ~~$500.0 million~~had ~~is for a five~~fixed-~~year~~rate ~~period with a weighted average fixed~~ interest ~~rate~~and ~~of 4.66~~25% ~~and~~had ~~$200.0 million is for a three~~floating-~~year period with a weighted average fixed interest~~ rate ~~of 4~~interest.~~57%.~~ ~~The~~To ~~swaps~~hedge ~~became~~exposure ~~effective~~to onmarket ~~October 5~~conditions, ~~2007~~reduce ~~and are settled on a quarterly basis. In connection with an October 2009 partial prepayment of outstanding principal on~~ the ~~Second~~volatility ~~Lien Term Facility, we reduced the notional amount~~ of ~~one~~financing ofcosts ~~these~~and ~~interest rate~~achieve ~~swaps~~a ~~from~~desired ~~$100.0 million to $71.5 million. In November 2009, we prepaid an additional $192.1 million of principal on the Second Lien Term Facility thereby reducing the outstanding~~ balance ~~to $479.4 million.~~between ~~As a result of this prepayment, $192.1 million of the notional amounts on our interest~~ fixed-rate ~~swaps~~and ~~were de~~floating-designated as cash flow hedges as they no longer hedge the variability in expected future cash flows associated with the variable interest on the Second Lien Term Facility. In order to offset our exposure to the de-designated interest rate ~~swaps~~debt, we ~~entered into~~have ~~two reverse~~ utilized interest rate ~~swap~~swaps ~~agreements in November 2009~~ under which weit has exchanged ~~a portion of our fixed~~floating-rate interest payments for ~~floating~~fixed-rate interest payments. ~~These~~As ~~agreements cover a combined notional amount~~ of ~~debt totaling $192.1~~December ~~million~~31, ~~of which $171.5 million is for a one-year period and $20.6 million is for a three-year period. The reverse swaps became effective October 5~~2011, ~~2009~~ ~~and~~we ~~are~~do ~~settled~~not onhave aany ~~quarterly~~interest ~~basis. The reverse swap with a notional amount of $171.5 million expired on October 5, 2010. Two of the original~~ swaps ~~with~~in ~~a combined notional amount of $171~~effect.~~5 million~~ ~~also expired on October 5, 2010.~~

We entered into an additional interest rate swap agreement in January 2008, under which we exchanged our benchmark floating-rate interest payment for a fixed-rate interest payment. This agreement was intended to hedge the benchmark portion of interest associated with a portion of the Old Senior ABL Revolving Facility. Interest on this debt was based on a fluctuating rate of interest measured by reference to a benchmark interest rate, plus a borrowing margin. This agreement covered a notional amount of debt totaling $250.0 million, for a two-year term at a fixed interest rate of 2.66%. The swap, which was settled on a quarterly basis, was effective on April 5, 2008, and expired on April 5, 2010.

Considering the $479.4 million of the Second Lien Term Facility that was hedged as of December 31, 2010, 81.5% of our $2,069.2 million of debt at December 31, 2010 had fixed rate interest.

Currency Exchange Risk

The functional currency for our Canadian operations is the Canadian dollar. In the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, 6.49%, 56.24% and 5.52%, respectively, of our revenues were generated by our Canadian operations. As a result, our future earnings could be affected by fluctuations in ~~the~~ the exchange rate between the U.S. and Canadian dollars. Based upon the level of our Canadian operations during the year ended December 31, ~~2010~~2011, relative to our operations as a whole, a 10% increase in the value of the Canadian dollar as compared to the U.S. dollar would have reduced net loss by approximately $01.8 1 million for the year ended December 31, ~~2010~~2011.

Inflation

The increased acquisition cost of rental equipment is the primary inflationary factor affecting us. Many of our other operating expenses are also expected to increase with inflation. Management does not expect that the effect of inflation on our overall operating costs will be greater for us than for our competitors.

Item 8. Financial Statements and Supplementary Data

Consolidated Financial Statements

Our consolidated financial statements required by this item are in Appendix F to this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of our disclosure controls and procedures was performed under the supervision of, and with the participation of, management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

An evaluation of our internal controls over financial reporting was performed under the supervision of, and with the participation of, management, including our Chief Executive Officer and Chief Financial Officer, to determine whether any changes have occurred during the quarter ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that no changes in our internal control over financial reporting have occurred during the quarter ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2010~~2011. In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control —– Integrated Framework. Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, ~~2010~~2011.

Our independent registered public accounting firm, KPMG LLP, has issued an audit report on the effectiveness of our internal control over financial reporting. This report has been included ~~herein~~ on page F-3 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

An evaluation of our internal controls over financial reporting was performed under the supervision of, and with the participation of, management, including our Chief Executive Officer and Chief Financial Officer, to determine whether any changes have occurred during the quarter ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that no changes in our internal control over financial reporting have occurred during the quarter ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required concerning our executive officers is contained in Part I, Item 1 of this Annual Report on 10-K under “Business — Management”.

All other information omitted pursuant to General Instruction I to Form 10-K.

Item 11. Executive Compensation

Omitted pursuant to General Instruction I to Form 10-K.

49 56

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table summarizes the securities authorized for issuance pursuant to our equity compensation plans as of December 31, ~~2010:~~ 2011:

Number of securities

Plan Category

Number of securities tobe issued upon exerciseof outstanding options,warrants and rights(a)

Weighted-averageexercise price ofoutstanding options,warrants and rights(b)

Number of securitiesremaining available forfuture issuance underequity compensationplans (excluding securitiesreflected in column (a))(c)

remaining available for

Equity compensation plans approved by security holders (1)(2)

6,390,484

8.92

2,595,814

Number of securities to

Weighted-average

future issuance under

be issued upon exercise

exercise price of

equity compensation

of outstanding options,

outstanding options,

plans (excluding securities

warrants and rights

reflected in column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders (1)(2)

6,294,886

8.03

3,297,545

Equity compensation plans not approved by security holders

—

Total

6,~~294~~390,~~886~~484

8.0392

32,~~297~~595,~~545~~814

(1)		Represents the RSC Holdings Inc. Amended and Restated Stock Incentive Plan.
(2)		The weighted-average exercise price does not include outstanding restricted stock units.

(1)	Represents the RSC Holdings Inc. Amended and Restated Stock Incentive Plan.

~~All~~(2) ~~other~~The ~~information~~weighted-average ~~required~~exercise toprice bedoes ~~filed~~not ~~under~~include ~~this~~outstanding ~~Item 12~~restricted isstock ~~incorporated herein by reference to RSC Holdings’ definitive proxy statement, which will be filed with the SEC within 120 days of December 31, 2010~~units.

Security Ownership of Certain Beneficial Owners, Directors, and Officers

The following table sets forth information as of January 13, 2012, with respect to the ownership of the common stock of RSC Holdings by:

•

each person known by the Company to own beneficially more than 5% of its common stock;

•

each of the Directors;

•

each of our named executive officers and

•

all of the Company’s executive officers and Directors as a group.

The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities for which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage of outstanding shares, but not for purposes of computing any other person’s ownership percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Subject to the foregoing, the percentage of beneficial ownership is based on 104,304,444 shares of RSC Holdings’ common stock outstanding as of January 13, 2012.

Except as otherwise indicated in the footnotes to this table, each of the beneficial owners listed has, to the Company’s knowledge, sole voting and investment power with respect to the indicated shares of common stock. Unless otherwise indicated, the address for each individual and entity listed below is c/o RSC Holdings Inc., 6929 East Greenway Parkway, Scottsdale, Arizona 85254, Attention: Corporate Secretary


	Shares Beneficially Owned
	Number of Shares Beneficially Owned Pursuant to Stock Options (5)		Number of Shares Beneficially Owned Pursuant to RSU’s (5)		Total Beneficial Ownership
Name and Address of Beneficial Owner	Shares		Shares		Shares		%
OHCP II RSC LLC (1)		—		—		23,910,939		23.0	%
OHCP RSC COI LLC (1)		—		—		8,688,850		8.3	%
OHCMP II RSC LLC (1)		—		—		2,155,540		2.1	%
Lord, Abbett & Co. LLC (2)		—		—		5,590,200		5.4	%
Barrow, Hanley, Mewhinney & Strauss, LLC (3)		—		—		5,528,731		5.3	%
Erik Olsson		752,025		—		913,289		*
David Ledlow		335,839		—		427,796		*
Patricia Chiodo		131,116		—		169,432		*
Juan Corsillo		52,628		10,767		63,395		*
Mark Krivoruchka		—		—		—		*
James H. Ozanne		—		84,316		103,630		*
Donald C. Roof		—		49,336		65,336		*
Pierre E. Leroy		—		45,603		57,603		*
Edward Dardani (4)		—		—		10,065		*
Denis J. Nayden (4)		—		—		9,521		*
J. Taylor Crandall (4)		—		—		9,521		*
David T. Brown		—		3,242		3,242		*
All Directors and executive officers as a group (14 persons) (5)		1,634,385		193,264		2,292,194		2.2	%

*	Less than 1%

(1)

Represents shares held by funds associated with Oak Hill Capital Management, LLC: (i) OHCP II RSC, LLC, whose sole member is Oak Hill Capital Partners II, L.P., whose general partner is OHCP GenPar II, L.P., whose general partner is OHCP MGP II, LLC; (ii) OHCMP II RSC, LLC, whose sole member is Oak Hill Capital Management Partners II, L.P, whose general partner is OHCP GenPar II, L.P.,k whose general partner is OHCP MGP II, LLC; and (iii) OHCP II RSC COI, LLC, who managing member is OHCP GenPar II, L.P., whose general partner is OHCP MGP II, L.L.C.J, Taylor Crandall, John Fant, Steve Gruber, Greg Kent, Kevin G. Levy, Denis J. Nayden, Ray Pinson, and Mark A. Wolfson, as managers of OHCP MGP II, LLC, may be deemed to share beneficial ownership of the shares shown as beneficially owned by OHCP II RSC, LLC, OHCMP II RSC, LLC and OHCP II RSC COI, LLC. Such persons disclaim such beneficial ownership.

(2)

Based upon a Schedule 13F filed by Lord, Abbett & Co. LLC on November 14, 2011, in which Lord, Abbett & Co. LLC reported that it had sole voting power over 4,885,300 of such shares and sole investment discretion over 5,590,200 of such shares as of September 30, 2011. The address for Lord, Abbett & Co. LLC is 90 Hudson Street, Jersey City, NJ 07302.

(3)

Based upon a Schedule 13F filed by Barrow, Hanley, Mewhinney & Strauss, LLC on November 8, 2011, in which Barrow, Hanley, Mewhinney & Strauss, LLC reported that it had sole voting power over 2,616,300 of such shares and investment discretion over 5,528,731 of such shares as of September 30, 2011. The address for Barrow, Hanley, Mewhinney & Strauss, LLC is 2200 Ross Ave, Suite 3100, Dallas, TX 75201.

(4)

Does not include shares of common stock held by OHCP II RSC, LLC, OHCMP II RSC, LLC and OHCP II RSC COI, LLC, funds associated with Oak Hill Capital Management, LLC. Messrs. Nayden, Crandall, Dardani, and Monsky are Directors of RSC Holdings and RSC and executives of Oak Hill Capital Management, LLC. Such persons disclaim beneficial ownership of the shares held by OHCP II RSC, LLC, OHCMP II RSC, LLC and OHCP II RSC COI, LLC.

(5)	Includes shares held and stock options and RSU’s which are currently exercisable or which will become exercisable or vested on or before March 13, 2012, for our Directors and executive officers.

Changes in Control

On December 15, 2011, RSC Holdings entered into the Merger Agreement with URI pursuant to which RSC Holdings will merge with and into URI, with URI continuing as the surviving corporation of the Merger. Upon the effective time of the Merger, each share of RSC Holdings’ common stock will be converted into the right to receive (i) $10.80 in cash and (ii) 0.2783 of a validly issued, fully paid and non-assessable share of URI common stock. Please see Part I, Item 1 of this Annual Report on Form 10-K under the caption “Organizational Overview” for more information on the Merger.

Item 13. Certain Relationships and Related Transactions, and Director Independence

~~The~~Transactions ~~information required to be filed under this Item 13 is incorporated herein by reference to RSC Holdings’ definitive proxy statement, which will be filed~~ with ~~the~~Related ~~SEC~~Persons ~~within 120 days of December 31, 2010.~~

Stockholders Agreement

In connection with the recapitalization in November 2006, RSC Holdings entered into the Stockholders Agreement with ACF, Oak Hill, and Ripplewood. In January 2011, Ripplewood’s ownership dropped below 4 million shares of common stock of RSC Holdings, and pursuant to the terms and conditions of the Stockholders Agreement, Ripplewood was no longer a party thereto. On October 6, 2011, we entered into an Amended and Restated Stockholders Agreement with affiliates of Oak Hill that, among other things, gives Oak Hill the right to designate three nominees for election to the Board of Directors and approve the four additional non-employee directors. ACF was released and waived its rights under the Stockholders Agreement in connection with this Amended and Restated Stockholders Agreement, and as such is no longer a party to such agreement.

The Amended and Restated Stockholders Agreement also grants to Oak Hill, so long as it holds at least 5% of the total shares of common stock outstanding at such time, the right, subject to certain limitations, to cause RSC Holdings, at its own expense, to use its best efforts to register such securities held by Oak Hill for public resale. The exercise of this right is not limited to a certain number of requests. In the event RSC Holdings registers any of its common stock, Oak Hill, or any other stockholder that becomes a party to the Amended and Restated Stockholders Agreement, has the right to require RSC Holdings to use its best efforts to include shares of common stock of RSC Holdings held by it, subject to certain limitations, including as determined by the underwriters. The Amended and Restated Stockholders Agreement also provides for RSC Holdings to indemnify the stockholders party to that agreement and their affiliates in connection with the registration of RSC Holdings’ securities.

Transaction and Indemnification Agreements

In connection with our initial public offering, we entered into the Cost Reimbursement Agreement with Oak Hill and Ripplewood, pursuant to which we reimbursed them for expenses incurred in connection with certain advisory and other services. The Cost Reimbursement Agreement does not limit expense amounts subject to reimbursement. In 2011, RSC Holdings did not reimburse Oak Hill or Ripplewood for any expenses.

In connection with the recapitalization, RSC Holdings and RSC also entered into an Indemnification Agreement with Oak Hill, Ripplewood, and ACF, pursuant to which RSC Holdings and RSC will indemnify Oak Hill, Ripplewood, and ACF, and their respective affiliates, directors, officers, partners, members, employees, agents, advisors, representatives, and controlling persons, against certain liabilities arising out of the recapitalization or the performance of the Monitoring Agreement and certain other claims and liabilities. In connection with RSC

Holdings’ initial public offering, RSC Holdings entered into indemnification agreements with each of our Directors and its executive officers. The Indemnification Agreement provides the Directors and executive officers with contractual rights for indemnification and expense advancement rights provided under our By-Laws.

Agreements and Relationships with ACAB

Sales and rentals to ACAB of $104,000, $206,000 and $419,000 in 2011, 2010 and 2009, respectively, are included in revenues in the accompanying consolidated statements of operations. Amounts paid to ACAB for rental equipment and other purchases and for equipment rental were $55.3 million, $46.4 million and $14.5 million in 2011, 2010 and 2009, respectively. Amounts payable to ACAB were $18.2 million and $22.0 million at December 31, 2011 and 2010, respectively.

As part of the Recapitalization, ACAB assumed certain liabilities of the Company existing on the closing date, including tax liabilities for personal property and real estate. Additionally, ACAB agreed to indemnify the Company of any and all liabilities for income taxes which are imposed on the Company for a taxable period prior to the closing date of the Recapitalization. As the legal obligation for any such payments still resides with the Company, on the date of the Recapitalization, the Company recorded a receivable for any recorded liabilities to be paid by ACAB. At both December 31, 2011 and 2010, the Company had receivables of $0.6 million for such amounts, which are recorded within other long-term assets in the consolidated balance sheets.

Related Party Transaction Approval Policy

The Audit and Risk Committee is responsible for the review, approval, or ratification of “related-person transactions” between us and our related persons. Under SEC rules, a related person is a director, officer, nominee for director, or 5% stockholder of RSC Holdings since the beginning of the last fiscal year and their immediate family members. Transactions involving related persons are reviewed by RSC Holdings’ Audit and Risk Committee. The internal disclosure committee determines whether a related person could have a significant interest in such a transaction and any such transaction is forwarded to the Audit and Risk Committee for review. The Audit and Risk Committee determines whether the related person has a material interest in a transaction and may approve, ratify, rescind, or take other action with respect to the transaction in its discretion.

Pursuant to the Code of Business Conduct and Ethics adopted by our Board of Directors, any member of our Board of Directors who believes he or she has an actual or potential conflict of interest with us is obligated to notify the Office of the General Counsel and the Nominating and Corporate Governance Committee as promptly as practicable. That Director should not participate in any decision by our Board of Directors, or any committee of our Board of Directors, that in any way relates to the matter that gives rise to the conflict or potential conflict of interest until the issue has been resolved to the satisfaction of the Nominating and Corporate Governance Committee or the Board of Directors. The following is a description of certain relationships and transactions that we have entered into with our related persons.

Director Independence

On November 29, 2006, Atlas Copco AB (“ACAB”), Atlas Copco Finance S.à.r.l. (“ACF”), investment funds associated with Ripplewood Holdings L.L.C. (“Ripplewood”) and Oak Hill Capital Management, LLC (“Oak Hill” and together with Ripplewood, the “Sponsors”) and RSC Holdings, entered into a Recapitalization Agreement pursuant to which the Sponsors acquired approximately 85% of RSC Holdings’ common stock. The parties to the Recapitalization Agreement were also parties to a Stockholders Agreement, which, as amended, gave Oak Hill the right to designate four nominees for election to the Board of Directors. Each stockholder that was a party to the Stockholders Agreement was required to take all necessary action to cause the nominees of Oak Hill to be elected, which actions included recommending the nominees to our Board of Directors for inclusion in the slate of nominees recommended by the Board of Directors to our stockholders for election. Please see the information set forth under the caption “Stockholders Agreement” above for more information on the Stockholders Agreement.

Prior to October 1, 2010, Oak Hill, Ripplewood and ACF collectively owned over 50% of the outstanding shares of our common stock. As a result, we were a “controlled company” for the purposes of the NYSE listing requirements, and therefore, we were eligible for, and elected to take advantage of, exemptions from certain NYSE

listing requirements that would otherwise require our Board of Directors to have a majority of independent directors and our compensation and nominating and corporate governance committees to be comprised entirely of independent directors. In 2010, Ripplewood and ACF completed a number of open markets sales of our common stock, and as a result of such sales, we no longer qualified as a “controlled company” as of October 1, 2010, as Oak Hill, Ripplewood and ACF held less than 50% of our outstanding shares. In January 2011, Ripplewood’s ownership dropped below 4 million shares of common stock of RSC Holdings, and pursuant to the terms and conditions of the Stockholders Agreement, Ripplewood was no longer a party thereto. On October 6, 2011, we entered into an Amended and Restated Stockholders Agreement with affiliates of Oak Hill that, among other things, gives Oak Hill the right to designate three nominees for election to the Board of Directors and approve the four additional non-employee directors. ACF was released and waived its rights under the Stockholders Agreement in connection with this Amended and Restated Stockholders Agreement, and as such is no longer a party to such agreement. As of January 26, 2012, Oak Hill owned approximately 33.4% of the outstanding shares of our common stock.

We are currently in full compliance with NYSE listing requirements related to board and committee composition as a company that no longer qualifies as a “controlled company.” Our current Board of Directors has eight members, comprised of Mr. Olsson, an employee Director, and seven non-employee Directors, each of whom the Board has determined to be independent, as “independence” is defined under the applicable rules and regulations governing “independence,” including the federal securities laws and NYSE rules, as applicable. There are currently no vacancies. Under our Corporate Governance Guidelines, our Board of Directors periodically reviews the relationships between the non-employee Directors and RSC Holdings as part of the assessment of Director independence. No Director will be deemed independent unless our Board of Directors affirmatively determines that the Director has no material relationship with us, directly or as an officer, stockholder or partner of an organization that has a relationship with us.

Item 14. Principal Accountant Fees and Services

Fees for services performed by KPMG LLP, our independent registered public accounting firm, during 2010 and ~~2009~~2011, were:

	2010		~~2009~~2011
Audit fees(1)	$	1,281,400	$	1,~~562~~424,~~300~~800
Audit-related fees(2)		37,300		32153,~~500~~680
Tax fees(3)		5,500		40125,~~000~~278
All other fees		0		0
Total	$	1,324,200	$	1,~~634~~703,~~800~~758

(1) Audit fees for ~~2010~~2011 were for services rendered in connection with the audit of the financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2010~~2011, and reviews of the financial statements included in our Quarterly Reports on Form 10-Q for ~~2010~~2011. Audit fees for ~~2010~~2011 also included fees for non-recurring services associated with the filing of our registration statement on Form S-4, which related to ~~the exchange offer on~~ our ~~outstanding~~2021 ~~high-yield debt securities~~Notes. Audit fees for ~~2009~~2010 were for services rendered in connection with the audit of the financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010, and reviews of the financial statements included in our Quarterly Reports on Form 10-Q for 2010. Audit fees for 2010 also included fees for non-recurring services associated with the filing of our registration statement on Form S-4, which related to the exchange offer on our outstanding high-yield debt securities.

50 (2) Audit-related fees for 2011 were for services rendered in connection with acquisition related items, audits of our employee benefit plan and a debt covenant compliance review. Audit-related fees for 2010 were for services rendered in connection with the audits of our employee benefit plan and a debt covenant compliance review.

(3)	Tax fees for 2011 were for services rendered in connection with acquisition related items and a review or our Canadian tax return. Tax fees for 2010 were for services rendered in connection with a review of our Canadian tax return.

		reviews of the financial statements included in our Quarterly Reports on Form 10-Q for 2009. Audit fees for 2009 also included $0.2 million of fees associated with the preparation of comfort letters issued in connection with our 2009 high-yield debt issuances, which consisted of a $400.0 million senior secured notes offering and a $200.0 million senior notes offering.
(2)		Audit-related fees for 2010 and 2009 were for services rendered in connection with the audits of our employee benefit plan and a debt covenant compliance review.
(3)		Tax fees for 2010 were for services rendered in connection with a review of our Canadian tax return. Tax fees for 2009 were for services rendered in connection with an analysis of our tax accounting methods.

Pre-approval Procedures

The Audit and Risk Committee has established procedures for the pre-approval of all audit and permitted non-audit related services provided by our independent registered public accounting firm. ~~The~~ The procedures include, in part, that: (i) the Audit and Risk Committee, on an annual basis, shall pre-approve the independent registered public accounting firm’s engagement letter/annual service plan; (ii) the Audit and Risk Committee Chair has been delegated the authority to pre-approve any permitted non-audit services up to $25,000 per individual proposed service; (iii) the Audit and Risk Committee must pre-approve any permitted non-audit services that exceed $25,000 per ~~individual~~ individual proposed service; and (iv) at each regularly scheduled Audit and Risk Committee meeting: (a) the Chairman of the Audit and Risk Committee will review any services that were pre-approved since the last Audit and Risk Committee meeting; and (b) a review will be conducted of the services performed and fees paid since the last Audit and Risk Committee meeting. All fees described above were pre-approved by the Audit and Risk Committee.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K.

1. Consolidated Financial Statements: The consolidated financial statements of RSC Holdings III, LLC are included as Appendix F of this Annual Report on Form 10-K. See Index to Financial Statements on page F-1.

2. Exhibits: The exhibits which are filed with this Annual Report on Form 10-K or which are incorporated herein by reference are set forth in the Exhibit Index on page E-1.

51 63

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Scottsdale, State of Arizona, on ~~February~~January 1026, ~~2011~~2012.

RSC ~~Holdings~~HOLDINGS III, LLC RSC EQUIPMENT RENTAL, INC. By: /s/ Erik Olsson Name: Erik Olsson Title: Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Erik Olsson and Patricia D. Chiodo and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Erik Olsson	Chief Executive Officer,	February 10, 2011
/s/ Erik Olsson Erik Olsson	Chief Executive Officer, President and Director* (Principal Executive Officer)	January 26, 2012
Erik Olsson	President and Director*
/s/ Patricia D. Chiodo Patricia D. Chiodo	Senior Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer)	January 26, 2012
	(Principal Executive Officer)
/s/ Denis Nayden Denis Nayden	Chairman of the Board, Director*	January 26, 2012
/s/ Patricia D. Chiodo Patricia D. Chiodo	Senior Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer)	February 10, 2011
/s/ David T. Brown David T. Brown	Director*	January 26, 2012
/s/ Denis Nayden	Chairman of the Board, Director*	February 10, 2011
/s/ J. Taylor Crandall J. Taylor Crandall	Director*	January 26, 2012
Denis Nayden
/s/ Edward Dardani Edward Dardani	Director*	January 26, 2012
/s/ J. Taylor Crandall	Director*	February 10, 2011
/s/ Pierre Leroy Pierre Leroy	Director*	January 26, 2012
J. Taylor Crandall
/s/ James Ozanne James Ozanne	Director*	January 26, 2012
/s/ Edward Dardani	Director*	February 10, 2011
/s/ Donald C. Roof Donald C. Roof	Director*	January 26, 2012
Edward Dardani
/s/ Pierre Leroy	Director*	February 10, 2011
Pierre Leroy
/s/ John R. Monsky	Director*	February 10, 2011
John R. Monsky
/s/ James Ozanne	Director*	February 10, 2011
James Ozanne
/s/ Donald C. Roof	Director*	February 10, 2011
Donald C. Roof

*	Member of the Board of Directors of RSC Holdings Inc. and RSC Equipment Rental, Inc. RSC Holdings III, LLC is an indirect, wholly-owned subsidiary of RSC Holdings Inc. and the board functions of RSC Holdings III, LLC are performed by RSC Holdings Inc.

52 64

RSC HOLDINGS III, LLC AND SUBSIDIARIES


		Incorporated By Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date		Filed Herewith
2.1	Recapitalization Agreement, dated as of October 6, 2006, by and among Atlas Copco AB, Atlas Copco Finance S.à.r.l., Atlas Copco North America Inc., RSC Acquisition LLC, RSC Acquisition II LLC, OHCP II RSC, LLC, OHCMP II RSC, LLC and OHCP II RSC COI, LLC	S-1	333-140644	2.1		2/13/2007

2.2	Agreement and Plan of Merger, dated as of December 15, 2011, by and between United Rentals, Inc. and RSC Holdings Inc.	8-K	333-144625	2.1		12/21/2011

3.1	Articles of Incorporation of RSC Equipment Rental, Inc.	S-4	333-144625	3.1		7/17/2007

3.2	Articles of Amendment to the Articles of Incorporation of RSC Equipment Rental, Inc.	S-4	333-144625	3.2		7/17/2007

3.3	Amended and Restated By-Laws of RSC Equipment Rental, Inc.	S-4	333-144625	3.3		7/17/2007

3.4	Certificate of Formation of RSC Holdings III, LLC	S-4	333-144625	3.4		7/17/2007

3.5	Amended and Restated Limited Liability Company Agreement of RSC Holdings III, LLC	S-4	333-144625	3.5		7/17/2007

4.1	Indenture, dated as of November 27, 2006, by and among Rental Service Corporation, RSC Holdings III, LLC, the subsidiary guarantors, if any, from time to time parties thereto, and Wells Fargo Bank, National Association	S-1	333-140644	4.1		2/13/2007

4.2	Registration Rights Agreement, dated November 27, 2006, by and among Rental Service Corporation, RSC Holdings III, LLC, Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and GE Capital Markets, Inc.	S-1	333-140644	4.2		2/13/2007

4.3	U.S. Guarantee and Collateral Agreement, dated as of November 27, 2006, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation, certain domestic subsidiaries of RSC Holdings III, LLC that may become party thereto from time to time, and Deutsche Bank AG, New York Branch, as U.S. collateral agent and U.S. administrative agent	S-1	333-140644	4.5		2/13/2007

4.4	Canadian Security Agreement, dated as of November 27, 2006, by and between Rental Service Corporation of Canada Ltd. and Deutsche Bank AG, Canada Branch as Canadian collateral agent	S-1	333-140644	4.6		2/13/2007

4.5	Guarantee and Collateral Agreement, dated as of November 27, 2006, by and between RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation, certain domestic subsidiaries of RSC Holdings III, LLC that may become party thereto from time to time, and Deutsche Bank AG, New York Branch as collateral agent and administrative agent	S-1	333-140644	4.7		2/13/2007

4.6	Intercreditor Agreement, dated as of November 27, 2006, by and among RSC Holdings, II, LLC, RSC Holdings III, LLC, Rental Service Corporation, each other grantor from time to time party thereto, Deutsche Bank AG, New York Branch as U.S. collateral agent under the first-lien loan documents and Deutsche Bank AG, New York Branch in its capacity as collateral agent under the second-lien loan documents	S-1	333-140644	4.8		2/13/2007

ANNUAL REPORT ON FORM 10-K

EXHIBIT INDEX

		Incorporated By Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit		Filing Date	Filed Herewith
2.1	Recapitalization Agreement, dated as of October 6, 2006, by and among Atlas Copco AB, Atlas Copco Finance S.à.r.l., Atlas Copco North America Inc., RSC Acquisition LLC, RSC Acquisition II LLC, OHCP II RSC, LLC, OHCMP II RSC, LLC and OHCP II RSC COI, LLC	S-1	333-140644		2.1	2/13/2007
3.1	Articles of Incorporation of RSC Equipment Rental, Inc.	S-4	333-144615		3.1	7/16/2007
3.2	Articles of Amendment to the Articles of Incorporation of RSC Equipment Rental, Inc.	S-4	333-144615		3.2	7/16/2007
3.3	Amended and Restated By-Laws of RSC Equipment Rental, Inc.	S-4	333-144615		3.3	7/16/2007
3.4	Certificate of Formation of RSC Holdings III, LLC	S-4	333-144615		3.4	7/16/2007
3.5	Amended and Restated Limited Liability Company Agreement of RSC Holdings III, LLC	S-4	333-144615		3.5	7/16/2007
4.1	Indenture, dated as of November 27, 2006, by and among Rental Service Corporation, RSC Holdings III, LLC and Wells Fargo Bank, National Association	S-1	333-140644		4.1	2/13/2007
4.2	Registration Rights Agreement, dated November 27, 2006, by and among Rental Service Corporation, RSC Holdings III, LLC, Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and GE Capital Markets, Inc.	S-1	333-140644		4.2	2/13/2007
4.3	U.S. Guarantee and Collateral Agreement, dated as of November 27, 2006, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation and certain domestic subsidiaries of RSC Holdings III, LLC that may become party thereto from time to time, Deutsche Bank AG, New York Branch, as collateral agent and administrative agent	S-1	333-140644		4.5	2/13/2007
4.4	Canadian Security Agreement, dated as of November 27, 2006, by and among Rental Service Corporation of Canada Ltd., Deutsche Bank AG, Canada Branch as Canadian collateral agent	S-1	333-140644		4.6	2/13/2007
4.5	Guarantee and Collateral Agreement, dated as of November 27, 2006, by and between RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation, and certain domestic subsidiaries of RSC Holdings III, LLC that may become party thereto from time to time and Deutsche Bank AG, New York Branch as collateral agent and administrative agent	S-1	333-140644		4.7	2/13/2007
4.6	Intercreditor Agreement, dated as of November 27, 2006, by and among RSC Holdings, II, LLC, RSC Holdings III, LLC, Rental Service Corporation, each other grantor from time to time party thereto, Deutsche Bank AG, New York Branch as U.S. collateral agent under the first-lien loan documents and Deutsche Bank AG, New York Branch in its capacity as collateral agent under the second-lien loan documents	S-1	333-140644		4.8	2/13/2007

E-1

RSC HOLDINGS III, LLC AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

EXHIBIT INDEX (CONTINUED)

		Incorporated By Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit			Filing Date	Filed Herewith
ExhibitNumber	Exhibit Description	Form	File No.	Exhibit		Filing Date	FiledHerewith
4.7	Amended and Restated Stockholders Agreement	S-4	333-144625		4.7		7/17/2007
4.6.1	First Amendment to Intercreditor Agreement, dated as of July 1, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., each other grantor from time to time party thereto, Deutsche Bank AG, New York Branch, as U.S. collateral agent under the First-Lien Loan Documents (as defined therein)	8-K	333-144625	4.2		7/2/2009
4.7.1	Amendment No. 1 to Amended and Restated Stockholders Agreement, dated August 24, 2009	8-K	333-144625		4.7.1		8/24/2009
4.7	Amended and Restated Stockholders Agreement	S-4	333-144625	4.7		7/17/2007
4.7.2	Amendment No. 2 to Amended and Restated Stockholders Agreement, dated January 21, 2010	8-K	333-144625		4.7.2		1/27/2010
4.7.1	Amendment No. 1 to Amended and Restated Stockholders Agreement, dated August 24, 2009	8-K	333-144625	4.7.1		8/24/2009
4.8	Indenture, dated as of July 1, 2009, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC, Wells Fargo Bank, National Association, as Trustee, and Deutsche Bank AG, New York Branch, as Note Collateral Agent	8-K	333-144625		4.1		7/2/2009
4.7.2	Amendment No. 2 to Amended and Restated Stockholders Agreement, dated January 21, 2010	8-K	333-144625	4.7.2		1/27/2010
4.9	First Amendment to Intercreditor Agreement, dated as of July 1, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., each other grantor from time to time party thereto, Deutsche Bank AG, New York Branch, as U.S. collateral agent under the First-Lien Loan Documents (as defined therein)	8-K	333-144625		4.2		7/2/2009
4.7.3	Second Amended and Restated Stockholders Agreement, dated as of October 6, 2011	10-Q	333-144625	4.7		10/20/2011
4.10	First Lien Intercreditor Agreement, dated as of July 1, 2009, by and among RSC Holdings III, LLC, RSC Equipment Rental, Inc., Deutsche Bank AG, New York Branch, as U.S. collateral agent under the Senior Loan Documents (as defined therein) and as collateral agent under the First Lien Last Out Note Documents (as defined therein	8-K	333-144625		4.3		7/2/2009
4.8	Indenture, dated as of July 1, 2009, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC, the subsidiary guarantors, if any, from time to time parties thereto, Wells Fargo Bank, National Association, as Trustee, and Deutsche Bank AG, New York Branch, as Note Collateral Agent	8-K	333-144625	4.1		7/2/2009
4.11	Collateral Agreement, dated as of July 1, 2009, by and between RSC Equipment Rental, Inc., RSC Holdings III, LLC, certain domestic subsidiaries of RSC Holdings III, LLC that may become party thereto from time to time and Deutsche Bank AG, New York Branch, as Note Collateral Agent	8-K	333-144625		4.4		7/2/2009
4.9	First Lien Intercreditor Agreement, dated as of July 1, 2009, by and among RSC Holdings III, LLC, RSC Equipment Rental, Inc., each other grantor from time to time party thereto, Deutsche Bank AG, New York Branch, in its capacity as U.S. collateral agent under the Senior Loan Documents (as defined therein) and Deutsche Bank AG, New York Branch, in its capacity as collateral agent under the First Lien Last Out Note Documents (as defined therein)	8-K	333-144625	4.3		7/2/2009
4.12	Indenture, dated as of November 17, 2009, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC and Wells Fargo Bank, National Association, as Trustee	8-K	333-144625		4.1		11/17/2009
4.9.1	First Amendment to First Lien Intercreditor Agreement, dated as of February 9, 2011, by and among RSC Holdings III, LLC, RSC Equipment Rental, Inc. and Deutsche Bank AG New York Branch, as U.S. collateral agent under the Senior Loan Documents (as defined therein)	8-K	333-144625	4.3		2/14/2011
4.13	Registration Rights Agreement, dated as of November 17, 2009, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC and Deutsche Bank Securities Inc. and the other initial purchasers named therein	8-K	333-144625		4.2		11/17/2009
4.10	Collateral Agreement, dated as of July 1, 2009, by and between RSC Holdings III, LLC, RSC Equipment Rental, Inc., certain domestic subsidiaries of RSC Holdings III, LLC that may become party thereto from time to time and Deutsche Bank AG, New York Branch, as Note Collateral Agent	8-K	333-144625	4.4		7/2/2009
4.14	Indenture, dated as of January 19, 2011, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC and Wells Fargo Bank, National Association, as Trustee	8-K	333-144625		4.1		1/20/2011
4.11	Indenture, dated as of November 17, 2009, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC, the subsidiary guarantors, if any, from time to time parties thereto, and Wells Fargo Bank, National Association, as Trustee	8-K	333-144625	4.1		11/17/2009
4.15	Registration Rights Agreement, dated as of January 19, 2011, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC and Deutsche Bank Securities Inc. and the other initial purchasers named therein	8-K	333-144625		4.2		1/20/2011
10.1+	Amended and Restated Stock Incentive Plan	DEF 14A	001-33485		B		4/18/2008
10.2+	Form of Employee Stock Option Agreements	S-1	333-140644		10.2		2/13/2007

E-2

RSC HOLDINGS III, LLC AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

EXHIBIT INDEX (CONTINUED)

Incorporated By Reference

Exhibit

Filed

ExhibitNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

FiledHerewith

Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith

4.12

Registration Rights Agreement, dated as of November 17, 2009, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC and Deutsche Bank Securities Inc. and the other initial purchasers named therein

8-K

333-144625

4.2

11/17/2009

10.3+

Form of Employee Stock Subscription Agreements

S-1

333-140644

10.3

2/13/2007

4.13

Indenture, dated as of January 19, 2011, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC, the subsidiary guarantors, if any, from time to time parties thereto, and Wells Fargo Bank, National Association, as Trustee

8-K

333-144625

4.1

1/20/2011

4.14

Registration Rights Agreement, dated as of January 19, 2011, by and among RSC Equipment Rental, Inc., RSC Holdings III, LLC and Deutsche Bank Securities Inc. and the other initial purchasers named therein

8-K

333-144625

4.2

1/20/2011

4.15

U.S. Guarantee and Collateral Agreement, dated as of February 9, 2011, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., and certain domestic subsidiaries of RSC Holdings III, LLC that may become party thereto from time to time, Deutsche Bank AG New York Branch, as collateral agent and administrative agent

8-K

333-144625

4.1

2/14/2011

4.17

Canadian Security Agreement, dated as of February 9, 2011, by and among RSC Equipment Rental of Canada Ltd., Deutsche Bank AG Canada Branch as Canadian collateral agent

8-K

333-144625

4.2

2/14/2011

10.1+

Amended and Restated Stock Incentive Plan

DEF14A

001-33485

4/18/2008

10.2+

Form of Employee Stock Option Agreement

S-1

333-140644

10.2

2/13/2007

10.3+

Form of Employee Stock Subscription Agreement

S-1

333-140644

10.3

2/13/2007

10.4+

Form of Employment Agreement for executive officers

S-1

333-140644

10.4

2/13/2007

10.5

Indemnification Agreement, dated as of November 27, 2006, by and among Atlas Copco North America Inc., Rental Service Corporation, RSC Acquisition LLC, RSC Acquisition II LLC, OHCP II RSC, LLC, OHCMP OOII RSC, LLC, OHCP II RSC COI, LLC, Ripplewood Holdings L.L.C., Oak Hill Capital Management, LLC and Atlas Copco Finance S.à.r.l.

S-1

333-140644

10.5

2/13/2007

10.6

Monitoring Agreement, dated as of November 27, 2006, by and among RSC Holdings Inc., Rental Service Corporation, Ripplewood Holdings L.L.C. and Oak Hill Capital Management, LLC

S-1

333-140644

10.6

2/13/2007

10.7

Credit Agreement, dated as of November 27, 2006, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation, Rental Service Corporation of Canada Ltd., Deutsche Bank AG, New York Branch, Deutsche Bank AG, Canada Branch, Citicorp North America, Inc., Bank of America, N.A., LaSalle Business Credit, LLC and Wachovia Capital Finance Corporation (Western)

S-1/A

333-140644

10.7

3/27/2007

10.8

Second Lien Term Loan Credit Agreement, dated as of November 27, 2006, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation, Deutsche Bank AG, New York Branch, Citicorp North America, Inc., GE Capital markets, Inc., Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and General Electric Capital Corporation

S-1/A

333-140644

10.8

3/27/2007

10.9+

RSC Holdings Inc. 2007 Annual Incentive Plan

S-1/A

333-140644

10.9

4/18/2007

10.10+

Form of Indemnification Agreement

S-1/A

333-140644

10.10

5/21/2007

10.11+

Form of Cost Reimbursement Agreement

S-1/A

333-140644

10.11

5/21/2007

10.12+

Form of Director Restricted Stock Unit Agreement

S-1/A

333-140644

10.12

5/21/2007

10.13

Executive Employment and Non competition Agreement by and between David Mathieson and RSC Holdings Inc. effective January 2, 2008

8-K

333-144625

10.1

12/3/2007

10.14

RSC Non-Qualified Deferred Compensation Savings Plan

10-K

001-33485

10.14

2/25/2009

10.15

Form of First Amendment to the Amended and Restated Executive Employment and Noncompetition Agreement — President and Chief Executive Officer

8-K

333-144625

10.1

3/5/2009

E-3

RSC HOLDINGS III, LLC AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

EXHIBIT INDEX (CONTINUED)

Incorporated By Reference

Exhibit Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

ExhibitNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

FiledHerewith

10.16

Form of First Amendment to the Executive Employment and Noncompetition Agreement — Senior Vice President

8-K

333-144625

10.2

3/5/2009

10.7

Credit Agreement, dated as of November 27, 2006, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation, Rental Service Corporation of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. collateral agent and U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent and Canadian collateral agent, Citicorp North America, Inc., Bank of America, N.A., LaSalle Business Credit, LLC and Wachovia Capital Finance Corporation (Western), Deutsche Bank Securities Inc. and Citigroup Global Markets Inc.

S-1/A

333-140644

10.7

3/27/2007

10.17

First Amendment to Credit Agreement, dated as of June 26, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent, and the other financial institutions party thereto from time to time

8-K

333-144625

10.1

7/2/2009

10.7.1

First Amendment to Credit Agreement, dated as of June 26, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent, and the several banks and other financial institutions party thereto from time to time

8-K

333-144625

10.1

7/2/2009

10.18

Second Amendment to Credit Agreement, dated as of July 30, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent, and the other financial institutions party thereto from time to time

8-K

333-144625

10.1

7/31/2009

10.7.2

Second Amendment to Credit Agreement, dated as of July 30, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent, and the several banks and other financial institutions party thereto from time to time

8-K

333-144625

10.1

7/31/2009

10.19

Amended and Restated Credit Agreement, dated as of July 30, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. collateral agent and U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent and Canadian collateral agent, and the other financial institutions party thereto

8-K

333-144625

Annex A to Exhibit 10.1

7/31/2009

10.7.3

8-K

333-144625

AnnexA toExhibit10.1

7/31/2009

10.20

First Amendment to Second-Lien Term Loan Credit Agreement, dated as of August 21, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., Deutsche Bank AG, New York Branch, as administrative agent, and the other financial institutions party thereto

8-K

333-144625

10.1

8/24/2009

10.7.4

First Amendment to Amended and Restated Credit Agreement, dated as of November 9, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent, and the banks and other financial institutions party thereto from time to time

8-K

333-144625

10.1

11/17/2009

10.21

First Amendment to Amended and Restated Credit Agreement, dated as of November 9, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. collateral agent and U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent and Canadian collateral agent, and the other financial institutions party thereto

8-K

333-144625

10.1

11/17/2009

E-4

RSC HOLDINGS III, LLC AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

EXHIBIT INDEX (CONTINUED)

Incorporated By Reference

Exhibit Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

ExhibitNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

FiledHerewith

10.22

Second Amendment to Second-Lien Term Loan Credit Agreement, dated as of November 9, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., Deutsche Bank AG, New York Branch, as administrative agent, and the other financial institutions party thereto

8-K

333-144625

10.2

11/17/2009

10.8

Second-Lien Term Loan Credit Agreement, dated as of November 27, 2006, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, Rental Service Corporation, Deutsche Bank AG, New York Branch, as administrative agent and collateral agent, Citicorp North America, Inc., GE Capital markets, Inc., Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and General Electric Capital Corporation

S-1/A

333-140644

10.8

3/27/2007

10.23

Amended and Restated Executive Employment and Non competition Agreement by and between Patricia D. Chiodo and RSC Holdings Inc. effective November 28, 2006

10-Q

333-144625

10.1

4/23/2010

10.8.1

First Amendment to Second-Lien Term Loan Credit Agreement, dated as of August 21, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., various lenders, and Deutsche Bank AG, New York Branch, as administrative agent

8-K

333-144625

10.1

8/24/2009

10.24+

Form of Stock Option Agreement

8-K

001-33485

10.1

4/23/2010

10.8.2

Second Amendment to Second-Lien Term Loan Credit Agreement, dated as of November 9, 2009, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., various lenders, and Deutsche Bank AG, New York Branch, as administrative agent

8-K

333-144625

10.2

11/17/2009

10.25+

Form of Stock Option Agreement for Long-Term Incentive Equity Awards

8-K

001-33485

10.2

4/23/2010

10.9+

RSC Holdings Inc. 2007 Annual Incentive Plan

S-1/A

333-140644

10.9

4/18/2007

10.26+

Form of Employee Restricted Stock Unit Agreement

8-K

001-33485

10.3

4/23/2010

10.10+

Form of Indemnification Agreement

S-1/A

333-140644

10.10

5/21/2007

10.27

Executive Employment and Noncompetition Agreement, by and between Patricia D. Chiodo and RSC Holdings Inc., effective October 1, 2010

8-K

333-144625

10.1

9/27/2010

10.11+

Form of Cost Reimbursement Agreement

S-1/A

333-140644

10.11

5/21/2007

31.1

Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended

10.12+

Form of Director Restricted Stock Unit Agreement

S-1/A

333-140644

10.12

5/21/2007

31.2

Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended

10.13

Executive Employment and Non competition Agreement by and between David Mathieson, RSC Holdings Inc. and RSC Equipment Rental, Inc., effective January 2, 2008

8-K

333-144625

10.1

12/3/2007

32.1*

Certifications of Chief Executive Officer and Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended

10.14

RSC Non-Qualified Deferred Compensation Savings Plan

10-K

001-33485

10.14

2/25/2009

10.15

Form of First Amendment to the Amended and Restated Executive Employment and Noncompetition Agreement – President and Chief Executive Officer

8-K

333-144625

10.1

3/5/2009

10.16

Form of First Amendment to the Executive Employment and Noncompetition Agreement – Senior Vice President

8-K

333-144625

10.2

3/5/2009

10.17

Amended and Restated Executive Employment and Noncompetition Agreement by and between Patricia D. Chiodo and RSC Holdings Inc., effective as of November 28, 2006

10-Q

333-144625

10.1

4/23/2010

10.18+

Form of Stock Option Agreement

8-K

001-33485

10.1

4/23/2010

+		Compensation plans or arrangements in which directors or executive officers are eligible to participate.
*		The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of RSC Holdings III, LLC or RSC Equipment Rental, Inc., under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

E-5

RSC HOLDINGS III, LLC AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

EXHIBIT INDEX (CONTINUED)

Incorporated By Reference

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed
Herewith

10.19+

Form of Stock Option Agreement for Long-Term Incentive Equity Awards

8-K

001-33485

10.2

4/23/2010

10.20+

Form of Employee Restricted Stock Unit Agreement

8-K

001-33485

10.3

4/23/2010

10.21

Executive Employment and Noncompetition Agreement, by and between Patricia D. Chiodo, RSC Holdings Inc. and RSC Equipment Rental, Inc., effective as of October 1, 2010

8-K

333-144625

10.1

9/27/2010

10.22

Credit Agreement, dated as of February 9, 2011, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG New York Branch, Deutsche Bank AG Canada Branch, Wells Fargo Capital Finance, LLC, Bank of America, N.A., General Electric Capital Corporation, J.P. Morgan Securities LLC and Barclays Capital

8-K

333-144625

10.1

2/14/2011

10.22.1

Incremental Amendment, dated as of September 28, 2011, by and among RSC Holdings II, LLC, RSC Holdings III, LLC, RSC Equipment Rental, Inc., RSC Equipment Rental of Canada Ltd., Deutsche Bank AG, New York Branch, as U.S. administrative agent, Deutsche Bank AG, Canada Branch, as Canadian administrative agent, and the other financial institutions party thereto

8-K

333-144625

10.1

10/4/2011

10.23

Executive Employment and Noncompetition Agreement by and between Juan Corsillo and RSC Holdings Inc. effective March 15, 2010

10-Q

333-144625

10.2

4/21/2011

10.24

Form of December 16, 2011 Amendment to Executive Employment Agreements

8-K

333-144625

99.1

12/21/2011

31.1

Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended

31.2

Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended

32.1*

Certifications of Chief Executive Officer and Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended

101.INS**

XBRL Instance Document

101.SCH**

XBRL Taxonomy Extension Schema Document

101.CAL**

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**

XBRL Taxonomy Extension Label Linkbase Document

E-6

RSC HOLDINGS III, LLC AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

EXHIBIT INDEX (CONTINUED)

Incorporated By Reference

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed
Herewith

101.PRE**

XBRL Taxonomy Extension Presentation Linkbase Document

+	Compensation plans or arrangements in which directors or executive officers are eligible to participate.

The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of RSC Holdings III, LLC or RSC Equipment Rental, Inc., under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

E-7

INDEX TO FINANCIAL STATEMENTS

RSC HOLDINGS III, LLC AND SUBSIDIARIES

The following financial statements of the Company and its subsidiaries required to be included in Item 15(a)(1) of Form 10-K are listed below:

	Page
Audited Consolidated Financial Statements:		F-2
Report of Independent Registered Public Accounting Firm		F-2
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at December 31, 2010 and 2009		F-4
Consolidated Balance Sheets at December 31, 2011 and 2010		F-4
Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008		F-5
Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009		F-5
Consolidated Statements of Stockholders’ (Deficit) Equity and Comprehensive Income (Loss) for the years ended December 31, 2010, 2009 and 2008		F-6
Consolidated Statements of Stockholders’ (Deficit) Equity and Comprehensive Loss for the years ended December 31, 2011, 2010 and 2009		F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008		F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009		F-7
Notes to Consolidated Financial Statements		F-9
Supplementary Financial Data:
The supplementary financial data of the Registrant and its subsidiaries required to be included in Item 15(a)(2) of Form 10-K have been omitted as not applicable or because the required information is included in the Consolidated Financial Statements or in the notes thereto.

Supplementary Financial Data: The supplementary financial data of the Registrant and its subsidiaries required to be included in Item 15(a)(2) of Form 10-K have been omitted as not applicable or because the required information is included in the Consolidated Financial Statements or in the notes thereto.

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders ~~RSC~~ ~~Holdings III, LLC:~~

~~We have audited the accompanying consolidated balance sheets of~~ RSC Holdings III, LLC: and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ (deficit) equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We have audited the accompanying consolidated balance sheets of RSC Holdings III, LLC and subsidiaries (the Company) as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ (deficit) equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RSC Holdings III, LLC and subsidiaries as of December 31, ~~2010~~2011 and ~~2009~~2010, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, ~~2010~~2011, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, ~~2010~~2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated ~~February~~ January 1026, ~~2011~~2012 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Phoenix, Arizona ~~February 10,~~ ~~2011~~

January 26, 2012

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders ~~RSC~~ ~~Holdings III, LLC:~~

~~We have audited~~ RSC ~~Holdings III, LLC’s internal control over financial reporting as of~~ ~~December 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). RSC~~ Holdings III, LLC~~’s management~~: is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting. Our responsibility is to express an opinion on RSC Holdings III, LLC’s internal control over financial reporting based on our audit.

We have audited RSC Holdings III, LLC’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). RSC Holdings III, LLC’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting. Our responsibility is to express an opinion on RSC Holdings III, LLC’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control over financial reporting based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

In our opinion, RSC Holdings III, LLC maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2010~~2011, based on criteria established in Internal Control — Integrated Framework issued by the COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of RSC Holdings III, LLC and subsidiaries as of December 31, ~~2010~~2011 and ~~2009~~2010, and the related consolidated statements of operations, stockholders’ (deficit) equity and comprehensive ~~income (~~loss), and cash flows for each of the years in the three-year period ended December 31, ~~2010~~2011, and our report dated ~~February~~January 1026, ~~2011~~ 2012 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Phoenix, Arizona ~~February 10,~~ ~~2011~~

January 26, 2012

F-3

RSC HOLDINGS III, LLC AND SUBSIDIARIES ~~CONSOLIDATED~~ ~~BALANCE SHEETS (In thousands, except share data)~~

	December 31,
	2010		2009
Assets
Cash and cash equivalents	$	3,510	$	4,535
Accounts receivable, net		228,532		181,975
Inventory		14,171		14,421
Deferred tax assets, net		17,912		43,746
Prepaid expense and other current assets		13,798		13,202
Total current assets		277,923		257,879
Rental equipment, net		1,336,424		1,384,999
Property and equipment, net		110,779		123,197
Goodwill and other intangibles, net		939,302		940,063
Deferred financing costs		44,205		55,539
Other long-term assets		9,342		10,335
Total assets	$	2,717,975	$	2,772,012

CONSOLIDATED BALANCE SHEETS

~~Liabilities~~(In ~~and~~thousands, ~~Stockholders’~~except ~~(Deficit~~share data) ~~Equity~~

Accounts payable	$	193,819		$	46,275
	December 31,
Accrued expenses and other current liabilities		119,608			131,378
	2011			2010
Current portion of long-term debt		25,294			27,329
Assets
Total current liabilities		338,721			204,982
Cash and cash equivalents	$	4,833		$	3,510
Long-term debt		2,043,887			2,144,780
Accounts receivable, net		267,879			228,532
Deferred tax liabilities, net		330,862			356,491
Inventory		15,909			14,171
Other long-term liabilities		41,782			42,118
Deferred tax assets, net		122,862			17,912
Total liabilities		2,755,252			2,748,371
Prepaid expense and other current assets		14,422			13,798
Total current assets		425,905			277,923
Rental equipment, net		1,573,193			1,336,424
Property and equipment, net		123,114			110,779
Goodwill and other intangibles, net		957,129			939,302
Deferred financing costs		52,484			44,205
Other long-term assets		9,148			9,342
Total assets	$	3,140,973		$	2,717,975
Liabilities and Stockholders’ Deficit
Accounts payable	$	258,811		$	193,819
Accrued expenses and other current liabilities		140,725			119,608
Current portion of long-term debt		27,417			25,294
Total current liabilities		426,953			338,721
Long-term debt		2,294,865			2,043,887
Deferred tax liabilities, net		429,074			330,862
Other long-term liabilities		28,500			41,782
Total liabilities		3,179,392			2,755,252
Commitments and contingencies
Common stock, no par value, (1,000 shares authorized, issued and outstanding at December 31, 2010 and December 31, 2009)		293,462			288,761
Common stock, no par value, (1,000 shares authorized, issued and outstanding at December 31, 2011 and December 31, 2010)		305,622			293,462
Accumulated deficit		(~~332~~362,~~831~~735	)		(~~259~~332,~~315~~831	)
Accumulated other comprehensive income (loss)		2,092			(5,805	)
Accumulated other comprehensive income		18,694			2,092
Total stockholders’ (deficit) equity		(37,277	)		23,641
Total stockholders’ deficit		(38,419	)		(37,277	)
Total liabilities and stockholders’ (deficit) equity	$	2,717,975		$	2,772,012
Total liabilities and stockholders’ deficit	$	3,140,973		$	2,717,975

See accompanying notes to consolidated financial statements.

F-4

RSC HOLDINGS III, LLC AND SUBSIDIARIES ~~CONSOLIDATED~~ ~~STATEMENTS OF OPERATIONS (In thousands, except per share data)~~

	Years Ended December 31,
	2010			2009			2008
Revenues:
Equipment rental revenue	$	1,060,266		$	1,073,021		$	1,567,254
Sale of merchandise		49,313			51,951			72,472
Sale of used rental equipment		124,845			158,482			125,443
Total revenues		1,234,424			1,283,454			1,765,169
Cost of revenues:
Cost of equipment rentals, excluding depreciation		563,513			540,945			685,600
Depreciation of rental equipment		272,610			285,668			317,504
Cost of merchandise sales		35,701			36,743			49,370
Cost of used rental equipment sales		104,491			148,673			90,500
Total cost of revenues		976,315			1,012,029			1,142,974
Gross profit		258,109			271,425			622,195
Operating expenses:
Selling, general and administrative		146,791			148,163			175,703
Depreciation and amortization of non-rental equipment and intangibles		40,213			43,984			49,567
Other operating gains, net		(5,592	)		(517	)		(1,010	)
Total operating expenses, net		181,412			191,630			224,260
Operating income		76,697			79,795			397,935
Interest expense, net		194,471			189,689			201,849
Gain on extinguishment of debt, net		—			(13,916	)		—
Other (income) expense, net		(539	)		707			658
(Loss) income before (benefit) provision for income taxes		(117,235	)		(96,685	)		195,428
(Benefit) provision for income taxes		(43,719	)		(37,325	)		72,939
Net (loss) income	$	(73,516	)	$	(59,360	)	$	122,489
Weighted average shares outstanding used in computing net (loss) income per common share:
Basic and diluted		1,000			1,000			1,000
Net (loss) income per common share:
Basic and diluted	$	(73.52	)	$	(59.36	)	$	122.49

CONSOLIDATED STATEMENTS OF OPERATIONS

~~See~~(In ~~accompanying~~thousands, ~~notes~~except toper ~~consolidated~~share ~~financial~~data) ~~statements.~~


	Years Ended December 31,
	2011			2010			2009
Revenues:
Equipment rental revenue	$	1,312,507		$	1,060,266		$	1,073,021
Sale of merchandise		55,241			49,313			51,951
Sale of used rental equipment		154,466			124,845			158,482

Total revenues		1,522,214			1,234,424			1,283,454

Cost of revenues:
Cost of equipment rentals, excluding depreciation		651,651			563,513			540,945
Depreciation of rental equipment		300,377			272,610			285,668
Cost of merchandise sales		36,817			35,701			36,743
Cost of used rental equipment sales		101,141			104,491			148,673

Total cost of revenues		1,089,986			976,315			1,012,029

Gross profit		432,228			258,109			271,425

Operating expenses:
Selling, general and administrative		183,145			146,791			148,163
Depreciation and amortization of non-rental equipment and intangibles		42,427			40,213			43,984
Merger costs		10,954			—			—
Other operating gains, net		(4,000	)		(5,592	)		(517	)

Total operating expenses, net		232,526			181,412			191,630

Operating income		199,702			76,697			79,795
Interest expense, net		224,518			194,471			189,689
Loss (gain) on extinguishment of debt, net		15,342			—			(13,916	)
Other expense (income), net		260			(539	)		707

Loss before benefit for income taxes		(40,418	)		(117,235	)		(96,685	)
Benefit for income taxes		(10,514	)		(43,719	)		(37,325	)

Net loss	$	(29,904	)	$	(73,516	)	$	(59,360	)


Weighted average shares outstanding used in computing net loss per common share:
Basic and diluted		1,000			1,000			1,000

Net loss per common share:
Basic and diluted	$	(29.90	)	$	(73.52	)	$	(59.36	)

F-5

RSC HOLDINGS III, LLC AND SUBSIDIARIES ~~CONSOLIDATED~~ ~~STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY AND COMPREHENSIVE INCOME (LOSS) (In thousands, except share data)~~

												Accumulated
												Other
	Common Stock					Accumulated			Comprehensive			Comprehensive
	Shares		Amount			Deficit			Income (Loss)			Income (Loss)			Total
Balance, January 1, 2008		1,000	$	279,817		$	(336,118	)				$	12,203		$	(44,098	)
Components of comprehensive income:
Net income		—		—			122,489		$	122,489			—			122,489
Foreign currency translation adjustments		—		—			—			(19,796	)		(19,796	)		(19,796	)
Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $16,959		—		—			—			(27,205	)		(27,205	)		(27,205	)
Total comprehensive income									$	75,488
Capital contributions		—		1,471			—						—			1,471
Excess tax benefits, net		—		122			—						—			122
Recapitalization adjustment		—		—			7,144						—			7,144
Share-based compensation		—		2,993			—						—			2,993
Balance, December 31, 2008		1,000		284,403			(206,485	)					(34,798	)		43,120
Components of comprehensive loss:
Net loss		—		—			(59,360	)	$	(59,360	)		—			(59,360	)
Foreign currency translation adjustments		—		—			—			14,065			14,065			14,065
Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $9,109		—		—			—			14,928			14,928			14,928
Total comprehensive loss									$	(30,367	)
Capital contributions		—		256			—						—			256
Excess tax benefits, net		—		(122	)		—						—			(122	)
Recapitalization adjustment		—		—			6,530						—			6,530
Share-based compensation		—		4,224			—						—			4,224
Balance, December 31, 2009		1,000	$	288,761		$	(259,315	)				$	(5,805	)	$	23,641
Components of comprehensive loss:
Net loss		—		—			(73,516	)	$	(73,516	)		—			(73,516	)
Foreign currency translation adjustments		—		—			—			5,755			5,755			5,755
Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $1,370		—		—			—			2,142			2,142			2,142
Total comprehensive loss									$	(65,619	)
Capital contributions		—		948			—						—			948
Share-based compensation		—		3,753			—						—			3,753
Balance, December 31, 2010		1,000	$	293,462		$	(332,831	)				$	2,092		$	(37,277	)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

AND COMPREHENSIVE LOSS

(In thousands, except share data)


	Common Stock					Accumulated Deficit			Comprehensive Income (Loss)			Accumulated Other Comprehensive Income (loss)			Total
	Shares		Amount			Accumulated Deficit			Comprehensive Income (Loss)			Accumulated Other Comprehensive Income (loss)			Total
Balance, January 1, 2009		1,000	$	284,403		$	(206,485	)				$	(34,798	)	$	43,120

Components of comprehensive loss:
Net loss		—		—			(59,360	)	$	(59,360	)		—			(59,360	)
Foreign currency translation adjustments		—		—			—			14,065			14,065			14,065
Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $9,109		—		—			—			14,928			14,928			14,928

Total comprehensive loss									$	(30,367	)

Capital contributions		—		256			—						—			256
Excess tax benefits, net		—		(122	)		—						—			(122	)
Recapitalization adjustment		—		—			6,530						—			6,530
Share-based compensation		—		4,224			—						—			4,224


Balance, December 31, 2009		1,000	$	288,761		$	(259,315	)				$	(5,805	)	$	23,641


Components of comprehensive loss:
Net loss		—		—			(73,516	)	$	(73,516	)		—			(73,516	)
Foreign currency translation adjustments		—		—			—			5,755			5,755			5,755
Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $1,370		—		—			—			2,142			2,142			2,142

Total comprehensive loss									$	(65,619	)

Capital contributions		—		948			—						—			948
Share-based compensation		—		3,753			—						—			3,753


Balance, December 31, 2010		1,000	$	293,462		$	(332,831	)				$	2,092		$	(37,277	)


Components of comprehensive loss:
Net loss		—		—			(29,904	)	$	(29,904	)		—			(29,904	)
Foreign currency translation adjustments		—		—			—			(3,028	)		(3,028	)		(3,028	)
Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $12,550		—		—			—			19,630			19,630			19,630

Total comprehensive loss									$	(13,302	)


Capital contributions		—		5,109			—						—			5,109
Share-based compensation		—		7,051			—						—			7,051


Balance, December 31, 2011		1,000	$	305,622		$	(362,735	)				$	18,694		$	(38,419	)

See accompanying notes to consolidated financial statements.

F-6

RSC HOLDINGS III, LLC AND SUBSIDIARIES ~~CONSOLIDATED~~ ~~STATEMENTS OF CASH FLOWS~~

	Years Ended December 31,
	2010			2009			2008
				(In thousands)
Cash flows from operating activities:
Net (loss) income	$	(73,516	)	$	(59,360	)	$	122,489
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		312,823			329,652			367,071
Amortization of deferred financing costs		12,782			11,768			9,713
Amortization of original issue discount		1,117			453			—
Share-based compensation expense		3,753			4,224			2,993
Gain on sales of rental and non-rental property and equipment, net of non-cash writeoffs		(19,376	)		(7,091	)		(26,106	)
Deferred income taxes		(2,697	)		(37,332	)		41,772
Gain on extinguishment of debt, net		—			(13,916	)		—
Gain on settlement of insurance property claims		(3,426	)		—			—
Interest expense, ineffective hedge		42			6,832			—
Excess tax benefits from share-based payment arrangements		—			—			(122	)
Changes in operating assets and liabilities:
Accounts receivable, net		(45,109	)		99,772			(1,083	)
Inventory		288			5,519			1,625
Other assets		452			1,191			(3,221	)
Accounts payable		145,482			(63,068	)		(153,183	)
Accrued expenses and other liabilities		(7,755	)		(8,688	)		1,491
Net cash provided by operating activities		324,860			269,956			363,439
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired		—			—			(33,238	)
Purchases of rental equipment		(327,107	)		(46,386	)		(258,660	)
Purchases of property and equipment		(5,766	)		(4,952	)		(15,319	)
Proceeds from sales of rental equipment		124,845			158,482			125,443
Proceeds from sales of property and equipment		2,951			12,493			6,544
Insurance proceeds from rental equipment and property claims		4,368			5,267			—
Net cash (used in) provided by investing activities		(200,709	)		124,904			(175,230	)
Cash flows from financing activities:
Proceeds from Senior ABL Revolving Facility		179,000			321,166			240,437
Proceeds from issuance of 2017 Notes		—			389,280			—
Proceeds from issuance of 2019 Notes		—			196,954			—
Payments on Senior ABL Revolving Facility		(276,000	)		(601,193	)		(386,068	)
Payments on Senior ABL Term Loan		—			(244,375	)		(2,500	)
Payments on Second Lien Term Facility		—			(392,986	)		—
Payments on capital leases and other debt		(30,194	)		(40,427	)		(38,102	)
Payments for deferred financing costs		(1,756	)		(28,487	)		(929	)
Payments for non-deferred financing costs		—			(4,312	)		—
Capital contributions from RSC Holdings		948			256			1,593
Increase (decrease) in outstanding checks in excess of cash balances		1,921			(1,070	)		1,135
Net cash used in financing activities		(126,081	)		(405,194	)		(184,434	)
Effect of foreign exchange rates on cash		905			1,199			(144	)
Net (decrease) increase in cash and cash equivalents		(1,025	)		(9,135	)		3,631
Cash and cash equivalents at beginning of year		4,535			13,670			10,039
Cash and cash equivalents at end of year	$	3,510		$	4,535		$	13,670
Supplemental disclosure of cash flow information:
Cash paid for interest	$	181,272		$	155,295		$	199,210
Cash (received) paid for taxes, net		(26,539	)		(8,632	)		30,988

CONSOLIDATED STATEMENTS OF CASH FLOW


	Years Ended December 31,
	2011			2010			2009
	(In thousands)
Cash flows from operating activities:
Net loss	$	(29,904	)	$	(73,516	)	$	(59,360	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		342,804			312,823			329,652
Amortization of deferred financing costs		10,018			12,782			11,768
Amortization of original issue discount		1,246			1,117			453
Share-based compensation expense		7,051			3,753			4,224
Gain on sales of rental and non-rental property and equipment, net of non-cash write-offs		(55,458	)		(19,376	)		(7,091	)
Deferred income taxes		(19,099	)		(2,697	)		(37,332	)
Loss (gain) on extinguishment of debt, net		15,342			—			(13,916	)
Gain on settlement of insurance property claims		—			(3,426	)		—
Interest expense net, on ineffective hedge		(104	)		42			6,832
Changes in operating assets and liabilities:
Accounts receivable, net		(37,005	)		(45,109	)		99,772
Inventory		(1,652	)		288			5,519
Other assets		(623	)		452			1,191
Accounts payable		50,664			145,482			(63,068	)
Accrued expenses and other liabilities		40,520			(7,755	)		(8,688	)

Net cash provided by operating activities		323,800			324,860			269,956

Cash flows from investing activities:
Cash paid for acquisition		(49,098	)		—			—
Purchases of rental equipment		(616,159	)		(327,107	)		(46,386	)
Purchases of property and equipment		(11,837	)		(5,766	)		(4,952	)
Proceeds from sales of rental equipment		154,466			124,845			158,482
Proceeds from sales of property and equipment		7,073			2,951			12,493
Insurance proceeds from rental equipment and property claims		—			4,368			5,267

Net cash (used in) provided by investing activities		(515,555	)		(200,709	)		124,904

Cash flows from financing activities:
Proceeds from Old Senior ABL Revolving Facility		72,000			179,000			321,166
Proceeds from New Senior ABL Revolving Facility		630,000			—			—
Proceeds from issuance of 2021 Notes		650,000			—			—
Proceeds from issuance of 2017 Notes		—			—			389,280
Proceeds from issuance of 2019 Notes		—			—			196,954
Payments on Old Senior ABL Revolving Facility		(376,195	)		(276,000	)		(601,193	)
Payments on New Senior ABL Revolving Facility		(142,000	)		—			—
Payments on Senior ABL Term Loan		—			—			(244,375	)
Payments on 2014 Notes		(117,000	)		—			—
Payments for call premium on 2014 Notes		(5,562	)		—			—
Payments on Second Lien Term Facility		(479,395	)		—			(392,986	)
Payments on capital leases and other debt		(29,652	)		(30,194	)		(40,427	)
Payments for deferred financing costs		(28,101	)		(1,756	)		(28,487	)
Payments for non-deferred financing costs		—			—			(4,312	)
Capital Contributions from RSC Holdings		5,109			948			256
Increase (decrease) in outstanding checks in excess of cash balances		14,670			1,921			(1,070	)

Net cash provided by (used in) financing activities		193,874			(126,081	)		(405,194	)

Effect of foreign exchange rates on cash		(796	)		905			1,199

Net increase (decrease) in cash and cash equivalents		1,323			(1,025	)		(9,135	)
Cash and cash equivalents at beginning of year		3,510			4,535			13,670

Cash and cash equivalents at end of year	$	4,833		$	3,510		$	4,535


Supplemental disclosure of cash flow information:
Cash paid for interest	$	197,803		$	181,272		$	155,295
Cash received for taxes, net		(13,130	)		(26,539	)		(8,632	)

See accompanying notes to consolidated financial statements.

F-7

RSC HOLDINGS III, LLC AND SUBSIDIARIES ~~CONSOLIDATED~~ ~~STATEMENTS OF CASH FLOWS (CONTINUED)~~

	Years Ended December 31,
	2010		2009		2008
			(In thousands)
Supplemental schedule of non-cash investing and financing activities:
Purchase of assets under capital lease obligations	$	23,149	$	1,136	$	20,176
Accrued deferred financing costs		326		634		—
Acquisition of net assets of another company:
Assets, net of cash acquired					$	33,421
Net cash paid						(33,238	)
Liabilities assumed					$	183

CONSOLIDATED STATEMENTS OF CASH FLOW (CONTINUED)


	Years Ended December 31,
	2011		2010		2009
	(In thousands)
Supplemental schedule of non-cash investing and financing activities:
Purchase of assets under capital lease obligations	$	44,098	$	23,149	$	1,136
Accrued deferred financing costs		301		326		634

See accompanying notes to consolidated financial statements.

F-8

RSC HOLDINGS III, LLC AND SUBSIDIARIES ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Organization

Business and Basis of Presentation

Description of Business

RSC Holdings III, LLC and its wholly owned subsidiaries (collectively, the “Company”) are engaged primarily in the rental of a diversified line of construction and industrial equipment, geographically dispersed throughout the United States and Canada. The Company is a wholly owned subsidiary of RSC Holdings Inc. (“RSC Holdings”). RSC Holdings III, LLC is a limited liability company that does not have a Board of Directors, its business and affairs are managed by the Board of Directors of RSC Holdings, its ultimate parent. For the year ended December 31, ~~2010~~2011, the Company generated approximately 8586.92% of its revenues from equipment rentals, and it derived the remaining 1413.18% of its revenues from sales of used rental equipment, merchandise and other ~~related~~ related items.

Basis of Presentation and Consolidation

The accompanying consolidated financial statements include the accounts of RSC Holdings ~~III, LLC~~Inc. and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Prior to November 27, 2006, RSC Holdings was wholly owned by Atlas Copco AB (“ACAB”) and Atlas Copco Airpower n.v. (“ACA”), a wholly owned subsidiary of ACAB (together with ACAB, “Atlas”). On October 6, 2006, Atlas announced that it had entered into a recapitalization agreement ~~(the~~ ~~“Recapitalization Agreement”)~~ pursuant to which Ripplewood Holdings L.L.C. (“Ripplewood”) and Oak Hill Capital Partners (“Oak Hill” and collectively with Ripplewood, “the Sponsors”) would acquire 85.5% of RSC Holdings (the “Recapitalization”). The Recapitalization closed on November 27, 2006. The Recapitalization was accomplished through (a) the repurchase by RSC Holdings of a portion of its issued and outstanding stock from Atlas and (b) a cash equity investment in RSC Holdings by the Sponsors for stock. The Recapitalization was accounted for as a leveraged recapitalization with no change in the book basis of assets and liabilities. As of December 31, 2011, neither Ripplewood nor Atlas was an affiliate of the Company.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management of the Company to make a number of estimates and assumptions ~~relating~~that toaffect the amounts reported ~~amount~~in ~~of assets and liabilities,~~ the ~~disclosure of contingent assets and liabilities at the date of the~~ consolidated financial statements and ~~the~~accompanying ~~reported amounts of revenues and expenses during the period~~notes. Significant items subject to such estimates and assumptions include the carrying amounts of long-lived assets, goodwill, and inventories; the allowance for doubtful accounts; deferred income taxes; environmental liabilities; reserves for claims; assets and obligations related to ~~employee~~ employee benefits; the fair value of derivative instruments and determination of share-based compensation amounts. Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates.

~~Reclassification~~ (2) Recent Development

~~Certain~~On ~~amounts~~December 15, in2011, ~~the~~RSC ~~consolidated~~Holdings ~~statements~~entered ofinto ~~operations~~a ~~for~~definitive ~~the~~merger ~~years~~agreement ~~ended~~(the ~~December 31,~~“Merger Agreement”) ~~2009~~with ~~and~~URI ~~December 31,~~pursuant ~~2008~~to ~~have~~which ~~been~~RSC ~~reclassified~~Holdings towill ~~conform~~be ~~with~~merged (the ~~current~~“Merger”) ~~year~~with ~~presentation. These~~and ~~reclassifications~~into ~~were~~URI, ~~also~~with ~~made~~URI tocontinuing as the ~~prior~~surviving ~~period~~corporation ~~unaudited~~of ~~quarterly~~the ~~financial data presented in Note 19~~Merger. ~~The~~Upon ~~Company~~completion ~~believes~~of the ~~current~~Merger, ~~presentation~~each ~~better~~issued ~~reflects~~and ~~the~~outstanding ~~nature~~share of RSC Holdings’ ~~the~~common ~~underlying~~stock ~~financial~~(other ~~statement~~than ~~items.~~shares ~~The~~owned ~~reclassifications~~by ~~have~~RSC noHoldings, ~~effect~~URI onor ~~operating income,~~any ~~net~~of ~~(loss) income~~their direct or ~~net~~indirect ~~(loss) income~~wholly ~~per~~owned ~~common~~subsidiaries, ~~share~~in ~~and~~each ~~consist~~case not held on behalf of ~~reclassifying~~third ~~the salaries~~parties, and ~~associated~~shares ~~benefit~~with ~~expenses~~respect ~~for~~to ~~business~~which ~~development~~appraisal ~~managers~~rights toare ~~selling,~~properly ~~general~~exercised and ~~administrative~~not ~~expense~~withdrawn) ~~from~~will ~~cost~~be ofconverted ~~equipment~~into ~~rentals,~~the ~~excluding~~right ~~depreciation.~~to ~~The reclassification~~receive ~~resulted~~(i) $10.80 in acash ~~reduction~~and to(ii) 0.2783 ~~previously~~of ~~reported~~a ~~cost~~share of ~~equipment~~URI ~~rentals~~common stock, ~~excluding~~ ~~depreciation~~in ~~and~~each acase ~~corresponding~~without ~~increase~~interest. toThe ~~previously~~board ~~reported~~of ~~selling,~~directors ~~general~~of ~~and administrative~~each ~~expense~~ of ~~$7.5 million~~RSC Holdings and ~~$7.0 million~~URI inhas ~~years~~unanimously ~~ended~~approved the ~~December 31,~~Merger ~~2009~~and the Merger Agreement and ~~2008, respectively.~~ has recommended that its

F-9

RSC HOLDINGS III, LLC AND SUBSIDIARIES ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Classified~~NOTES ~~Balance~~TO ~~Sheet~~ CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At stockholders ~~December 31,~~vote ~~2010,~~in ~~the~~favor ~~Company~~of ~~changed to a classified balance sheet, which separately presents~~ the ~~current~~adoption ~~and non-current portions~~ of ~~assets~~the ~~and~~Merger ~~liabilities~~Agreement. AsThe aMerger ~~result,~~is ~~the consolidated~~expected ~~balance sheet at December 31, 2009 has been reclassified~~ to ~~conform~~close toby the ~~current year~~end ~~presentation.~~of ~~This~~the ~~change~~first inhalf ~~classification~~of ~~resulted~~2012 ~~in an increase in total assets~~ and ~~liabilities~~is ofsubject ~~$43.7~~to ~~million at~~customary ~~December~~closing 31conditions, ~~2009~~including approval ~~from the previously reported amount, due to the separate presentation~~ of ~~current~~stockholders ~~deferred~~and ~~tax~~necessary ~~assets, net,~~regulatory ~~which was previously reported within deferred tax liabilities, net~~approvals.

~~(2)~~Merger costs in the accompanying consolidated statement of operations for the year ended December ~~Summary~~31, 2011 consists of ~~Significant~~$7.7 ~~Accounting~~million ~~Policies~~of transaction expenses related to the Company’s pending Merger with URI and $3.3 million of discretionary bonuses paid to certain members of the Company’s senior management team related to the execution of the URI Merger Agreement.

The Company entered into certain advisory agreements related to the Merger that would require payments of approximately $27.0 million upon consummation of the Merger Agreement. Accordingly, no such amounts are recorded in the 2011 consolidated statement of operations. The Company expects to incur additional professional fees in 2012 in connection with the Merger.

(3) Summary of Significant Accounting Policies

Cash Equivalents

The Company considers all highly liquid instruments with insignificant interest rate risk and with maturities of three months or less at purchase to be cash equivalents.

Accounts Receivable

Accounts receivable are stated net of allowances for doubtful accounts of $7.0 1 million and $~~10.~~7 .0 million at December 31, ~~2010~~2011 and ~~2009~~2010, respectively. Management develops its estimate of this allowance based on the Company’s historical experience, its understanding of the Company’s current economic circumstances, and its own judgment as to the likelihood of ultimate payment. Actual receivables are written-off against the allowance for doubtful accounts when the Company has determined the balance will not be collected. Bad debt expense is reflected as a component of selling, general and administrative expenses in the consolidated statements of operations.

The Company’s customer base is large and geographically diverse. No single customer accounts for more than 2% of the Company’s rental revenues for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~ 2009. No single customer accounts for more than 3% of total receivables at both December 31, ~~2010~~ 2011 and ~~2009~~2010. Accounts receivable consist of the following at(in 000s):

	December 31,
	2010			2009
	2011			2010
	(in 000s)
Trade receivables	$	272,362		$	214,003
Trade receivables	$	214,003		$	187,496
Income taxes receivable		590			20,650
Income taxes receivable		20,650			5,123
Other receivables		1,992			888
Other receivables		888			97
Less allowance for doubtful accounts		(7,065	)		(7,009	)
Less allowance for doubtful accounts		(7,009	)		(10,741	)
Accounts receivable, net	$	267,879		$	228,532
Accounts receivable, net	$	228,532		$	181,975

Included in income taxes receivable at December 31, 2010 are net operating loss carrybacks of $19.1 million and state, federal and Canadian overpayments of $1.6 ~~million.~~ ~~Included in income taxes receivable at December 31, 2009 are $5.1~~ million ~~of state, federal and Canadian overpayments~~. At December 31, 2009, the Company also had net operating loss carrybacks of $20.9 million, which were classified within deferred tax assets, net in the consolidated balance sheet at December 31, 2009 due to uncertainty at that time regarding the extent of the Company’s eligible carryback. The $20.9 million of carrybacks classified within deferred tax assets, net at December 31, 2009 were collected during the year ended December 31, 2010.

F-10

RSC HOLDINGS III, LLC AND SUBSIDIARIES ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~The~~NOTES ~~following~~TO ~~table~~CONSOLIDATED ~~summarizes~~FINANCIAL ~~activity~~STATEMENTS ~~for~~(CONTINUED) ~~allowance for doubtful accounts:~~

	2010			2009			2008
				(in 000s)
Beginning balance at January 1,	$	10,741		$	9,197		$	6,801
Provision for bad debt		4,701			9,962			8,146
Charge offs, net		(8,433	)		(8,418	)		(5,750	)
Ending balance at December 31,	$	7,009		$	10,741		$	9,197

The following table summarizes activity for allowance for doubtful accounts (in 000s):


	2011			2010			2009
Beginning balance at January 1,	$	7,009		$	10,741		$	9,197
Provision for bad debt		3,420			4,701			9,962
Charge offs, net		(3,364	)		(8,433	)		(8,418	)

Ending balance at December 31,	$	7,065		$	7,009		$	10,741

Rental Equipment

Rental equipment is recorded at cost and depreciated over the estimated useful lives of the equipment using the straight-line method. The range of estimated lives for rental equipment is one to ten years. Rental equipment is depreciated to a salvage value of zero to ten percent of cost. The incremental costs related to acquiring rental equipment and subsequently renting such equipment are expensed as incurred. Ordinary repair and maintenance costs are charged to operations as incurred. When rental fleet is disposed of, the related cost and accumulated depreciation are removed from their respective accounts, and any gains or losses are included in gross profit.

The Company has factory-authorized arrangements for the refurbishment of certain types of rental equipment. The Company continues to record depreciation expense while the equipment is out on refurbishment. The cost of refurbishment is added to the existing net book value of the asset. The combined cost is then depreciated over the remaining estimated useful life of the refurbished asset, which averages 48 months.

The following table provides a breakdown of rental equipment at(in 000s):

	December 31,
	2010			2009
	2011			2010
	(in 000s)
Rental equipment	$	2,723,960		$	2,426,267
Rental equipment	$	2,426,267		$	2,401,605
Less accumulated depreciation		(1,150,767	)		(1,089,843	)
Less accumulated depreciation		(1,089,843	)		(1,016,606	)
Rental equipment, net	$	1,573,193		$	1,336,424
Rental equipment, net	$	1,336,424		$	1,384,999

Property and Equipment

Property and equipment is recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets ranging from three to thirty years. Leasehold improvements are amortized over the life of the lease or life of the asset, whichever is shorter. Maintenance and repair costs are charged to expense as incurred. Expenditures ~~that~~ that increase productivity or extend the life of an asset are capitalized. Depreciation expense for leased equipment is included in depreciation and amortization of non-rental equipment and intangibles. Upon disposal, the related cost and accumulated depreciation are removed from their respective accounts, and any gains or losses are included in other operating gains, net.

F-11

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Filing Compare · RSC Holdings III, LLC