UNITED RENTALS INC, S-1/A, 1997-12-03

UNITED RENTALS INC
S-1/A, 1997-12-03
EQUIPMENT RENTAL & LEASING, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 3, 1997

REGISTRATION NO. 333-39117

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

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------
UNITED RENTALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 7353 06-1493538
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)

FOUR GREENWICH OFFICE PARK
GREENWICH, CONNECTICUT 06830
(203) 622-3131
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

BRADLEY S. JACOBS
UNITED RENTALS, INC.
FOUR GREENWICH OFFICE PARK
GREENWICH, CONNECTICUT 06830
(203) 622-3131
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

----------------
Copies of all communications to:

JOSEPH EHRENREICH, ESQ. STEPHEN M. BESEN, ESQ. PHYLLIS G. KORFF, ESQ.
EHRENREICH EILENBERG WEIL, GOTSHAL & MANGES LLP SKADDEN, ARPS, SLATE,
KRAUSE & ZIVIAN LLP 767 FIFTH AVENUE MEAGHER & FLOM LLP
11 EAST 44TH STREET NEW YORK, NEW YORK 10153 919 THIRD AVENUE
NEW YORK, NEW YORK 10017 (212) 310-8000 NEW YORK, NEW YORK 10022
(212) 986-9700 (212) 735-3000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A)
OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in a concurrent offering outside the United
States and Canada (the "International Prospectus"). The two prospectuses are
identical except for the front and back cover pages, the inside front cover
page, and the section entitled "Underwriting." The form of the U.S. Prospectus
is included herein and is followed by the alternate pages to be used in the
International Prospectus. Each of the alternate pages for the International
Prospectus included herein is labeled "Alternate Page for International
Prospectus." Final forms of each Prospectus will be filed with the Securities
and Exchange Commission under Rule 424(b).
<PAGE>

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED DECEMBER 3, 1997
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
7,000,000 SHARES

LOGO

COMMON STOCK

----------

All of the shares of Common Stock, $.01 par value (the "Common Stock"),
offered hereby are being offered by United Rentals, Inc., a Delaware
corporation (the "Company").

Of the Common Stock offered hereby, 5,600,000 shares are being offered
initially in the United States and Canada by the U.S. Underwriters (the "U.S.
Offering"), and 1,400,000 shares are being offered initially in a concurrent
international offering outside the United States and Canada by the
International Managers (the "International Offering", and together with the
U.S. Offering, the "Offerings"). The initial public offering price and the
underwriting discount per share are identical for each of the Offerings. See
"Underwriting."

Prior to the Offerings, there has been no public market for the Common Stock.
It is currently estimated that the initial public offering price will be
between $12.00 and $14.00 per share. For information relating to factors to be
considered in determining the initial public offering price, see
"Underwriting." Shares of Common Stock are being offered for sale to certain
employees, directors and business associates of, and certain other persons
designated by, the Company at the initial public offering price. Such
employees, directors and other persons are expected to purchase, in the
aggregate, not more than 10% of the Common Stock offered in the Offerings.

The Common Stock has been approved for listing on the New York Stock Exchange
under the symbol "URI", subject to official notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................................... $ $ $
- ----------------------------------------------------------------------------------
Total(3)....................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses of the Offerings payable by the Company estimated
at $1,500,000.
(3) The Company has granted the U.S. Underwriters and the International
Managers options to purchase up to an additional 840,000 shares and 210,000
shares of Common Stock, respectively, in each case exercisable within 30
days of the date hereof, solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to the Company will be $ , $ and $ ,
respectively. See "Underwriting."

----------

The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and to
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the shares of Common Stock will be made in New York,
New York, on or about , 1997.

----------
MERRILL LYNCH & CO.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEUTSCHE MORGAN GRENFELL

----------

The date of this Prospectus is , 1997.
<PAGE>

Certain persons participating in the Offerings may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Such transactions may include stabilizing, the purchase of Common Stock to
cover syndicate short positions and the imposition of penalty bids. For a
description of these activities, see "Underwriting."

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
notes thereto appearing elsewhere in this Prospectus. Unless otherwise
indicated, the terms "United Rentals" and "the Company" refer collectively to
United Rentals, Inc. and its subsidiaries. The Company commenced rental
operations in October 1997 by acquiring six established equipment rental
companies (the "Initial Acquired Companies"). All financial and operating data
for the Company contained herein with respect to 1996 and the first nine months
of 1997 is on a pro forma basis giving effect to the acquisition of the Initial
Acquired Companies and the financing thereof as of the beginning of the
specified period. Unless otherwise indicated, the information contained in this
Prospectus assumes no exercise of the Underwriters' over-allotment options.

THE COMPANY

United Rentals currently operates 12 rental locations in five states:
California (6), Colorado (1), North Carolina (3), Texas (1), and Utah (1). The
Company's locations are managed by experienced professionals who have been
involved in the equipment rental industry an average of 24 years and have
substantial knowledge of the local markets served. These managers are former
owners/employees of the businesses acquired by the Company. The types of rental
equipment offered by the Company include a broad range of light to heavy
construction and industrial equipment (such as pumps, generators, forklifts,
backhoes, cranes, bulldozers, aerial lifts and compressors), general tools and
equipment (such as hand tools and garden and landscaping equipment) and special
event equipment (such as tents, tables and chairs). The equipment mix varies at
each of the Company's locations, with some locations offering a general mix and
some specializing in specific equipment categories. As of November 30, 1997,
the Company's rental equipment included approximately 11,800 units (not
including special event equipment), had an original purchase price of
approximately $65.7 million and had a weighted average age (based on original
purchase price) of approximately four years.

The Company estimates that the U.S. equipment rental industry (including used
and new equipment sales by rental companies) generates annual revenues in
excess of $20 billion. The combined equipment rental revenues of the 100
largest equipment rental companies have increased at an estimated compound
annual rate of approximately 21% from 1992 through 1996 (based upon revenues
reported by the Rental Equipment Register, an industry trade publication). The
Company believes that this growth primarily reflects increasing recognition by
customers of the many advantages that equipment rental may offer compared with
ownership, including the ability to: (i) avoid the large capital investment
required for equipment purchases, (ii) reduce storage and maintenance costs,
(iii) supplement owned equipment, thereby increasing the range and number of
jobs that can be worked on, (iv) access a broad selection of equipment and
select the equipment best suited for each particular job, (v) obtain equipment
as needed and minimize the costs associated with idle equipment, and (vi)
access the latest technology without investing in new equipment.

The equipment rental industry is highly fragmented and consists of a small
number of multi-location regional or national operators and a large number of
relatively small, independent businesses serving discrete local markets. Based
upon rental revenues reported by the Rental Equipment Register: (i) there are
only five equipment rental companies that had 1996 equipment rental revenues in
excess of $100 million (with the largest company having 1996 equipment rental
revenues of approximately $400 million), (ii) the largest 100 equipment rental
companies combined have less than a 20% share of the market based on 1996
equipment rental revenues

3
<PAGE>

and the Company's estimate of the size of the market (with the largest company
having a market share of less than 3%), and (iii) there are approximately 100
equipment rental companies that had 1996 equipment rental revenues between $5
million and $100 million. In addition, the Company estimates that there are
more than 20,000 companies with annual equipment rental revenues of less than
$5 million. The Company believes that the fragmented nature of the industry
presents substantial consolidation and growth opportunities for companies with
access to capital and the ability to implement a disciplined acquisition
program and effectively integrate and operate acquired companies.

GROWTH STRATEGY

The Company's growth strategy is to expand through a disciplined acquisition
program, the opening of new rental locations and internal growth and to further
diversify its equipment categories and customer markets. The Company believes
that as it expands it should gain competitive advantages relative to smaller
operators, including greater purchasing power, a lower cost of capital, the
ability to provide customers with a broader range of equipment and services and
with newer and better maintained equipment, and greater flexibility to transfer
equipment among locations in response to customer demand.

The Company is seeking to acquire companies of varying size, including
relatively large companies to serve as platforms for regional development and
smaller companies to complement existing or anticipated locations. In
evaluating potential acquisition targets, the Company considers a number of
factors, including the quality of the target's rental equipment and management,
the opportunities to improve operating margins and increase internal growth at
the target, the economic prospects of the region in which the target is
located, the potential for additional acquisitions in the region, and the
competitive landscape in the target's markets. The Company will seek expansion
opportunities in the United States and Canada and will pursue acquisition
candidates with varying types of equipment and customer specializations. The
Company believes that geographic and customer diversification will allow the
Company to participate in the overall growth of the equipment rental industry
and reduce the Company's sensitivity to fluctuations in regional economic
conditions or changes that affect particular market segments.

The Company believes that there will be significant opportunities to improve
operating margins at acquired companies through the efficient integration of
new and existing operations, the elimination of duplicative costs, reduction in
overhead, the centralization of functions such as purchasing and information
technology, and the application of best practices. The Company also believes
that a lack of capital has constrained expansion and modernization at many
small and mid-sized equipment rental companies and that as a result there is
significant potential to increase internal growth at many acquired companies
through capital investment. The Company will seek to increase internal growth
by investing in additional and more modern equipment, using advanced
information technology systems to improve asset utilization and tracking,
increasing sales and marketing efforts, expanding the customer segments and
geographic areas served, and opening complementary locations.

BACKGROUND

The Company was founded by eight of the Company's officers, who contributed
an aggregate of $44.4 million in cash to the capital of the Company. Each of
the founders was formerly a senior executive of United Waste Systems, Inc.
("United Waste"), a solid waste management company that was sold in August
1997, or a senior member of United Waste's acquisition team. United Waste
executed a growth strategy that combined a disciplined acquisition program
(including over 200 acquisitions completed from January 1995 through August
1997), the integration and optimization of acquired facilities, and internal
growth. The Company believes that the extensive experience of its management
team in acquiring and effectively integrating and operating acquisition targets
should enable the Company to capitalize on consolidation opportunities in the
equipment rental industry.

United Rentals, Inc. was incorporated under the laws of the State of Delaware
in August 1997, initially capitalized in September 1997 and commenced rental
operations in October 1997 by acquiring the six Initial Acquired Companies. The
executive offices of the Company are located at Four Greenwich Office Park,
Greenwich, Connecticut 06830, and its telephone number is (203) 622-3131.

4
<PAGE>

THE OFFERINGS

<TABLE>
<C> <S>
Common Stock offered hereby ..... 7,000,000 shares(1)
Common Stock to be outstanding
after the Offerings ............ 23,376,156 shares(1)(2)
Use of Proceeds ................. The net proceeds from the Offerings will be
used (i) to repay approximately $31 million
of outstanding indebtedness under the
Company's $55 million revolving credit
facility (the "Credit Facility") and (ii)
for future acquisitions, capital
expenditures and general corporate
purposes. See "Use of Proceeds."
New York Stock Exchange Symbol .. URI
</TABLE>
- --------
(1) Assumes no exercise of the over-allotment options granted by the Company to
the Underwriters.

(2)Does not include (i) 6,344,058 shares issuable upon the exercise of
outstanding warrants ("Warrants"), all of which are currently exercisable at an
exercise price of $10.00 per share, (ii) 797,500 shares issuable upon the
exercise of outstanding options granted pursuant to the Company's 1997 Stock
Option Plan, which provide for exercise prices ranging from $10.00 to $30.00
per share, the weighted average exercise price being $12.49 per share, (iii)
4,202,500 shares reserved for possible future grants of options under the
Company's 1997 Stock Option Plan, and (iv) shares issuable upon conversion of a
$300,000 convertible note which provides for a conversion price per share equal
to 120% of the initial public offering price per share in the Offerings. Also
does not reflect adjustments which may change the number of shares issued as
consideration for the acquisition of one of the Initial Acquired Companies. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Consideration Paid for Initial Acquired Companies," "Management--
Capital Contributions by Officers and Directors" and "Description of Capital
Stock--Warrants, Options and Convertible Notes."

RISK FACTORS

See "Risk Factors" beginning on page 7 for a discussion of certain risks that
should be considered in connection with an investment in the Common Stock
offered hereby.

5
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The Company was incorporated in August 1997, initially capitalized in
September 1997, and commenced rental operations in October 1997 by acquiring
the six Initial Acquired Companies. The following unaudited pro forma income
statement data with respect to each of the periods set forth below gives effect
to the acquisition of each of the Initial Acquired Companies, the financing of
each such acquisition and all issuances of Common Stock after the beginning of
the period, as if all such transactions had occurred at the beginning of the
period presented. The following unaudited pro forma balance sheet data as of
September 30, 1997 gives effect to the acquisition of each of the Initial
Acquired Companies, the financing of each such acquisition, and all issuances
of Common Stock after September 30, 1997, as if all such transactions had
occurred on such date. The following unaudited pro forma as adjusted balance
sheet data gives effect to the foregoing and to completion of the Offerings at
an assumed initial public offering price of $13.00 per share (the midpoint of
the estimated price range) and the application of a portion of the estimated
net proceeds therefrom to repay outstanding indebtedness under the Credit
Facility. See "Use of Proceeds" and "Capitalization."

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------- ------------------------------------
PERIOD FROM
AUGUST 14, 1997 NINE MONTHS
(INCEPTION) THROUGH YEAR ENDED ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1996 SEPTEMBER 30, 1997
------------------- ----------------- ------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues.......... $ -- $51,889 $ 42,095
Gross profit............ -- 19,349 15,210
Operating income
(loss)................. (348) 7,160 5,542
Interest expense ....... -- 1,641 1,231
Other (income) expense,
net.................... (75) (412) (482)
------- ------- --------
Income (loss) before in-
come taxes............. (273) 5,931 4,793
Income taxes............ -- 2,372 1,917
------- ------- --------
Net income (loss)....... $ (273) $ 3,559 $ 2,876
======= ======= ========
Earnings (loss) per com-
mon share.............. $ (0.02) $ 0.20 $ 0.16
======= ======= ========
<CAPTION>
AS OF SEPTEMBER 30, 1997
--------------------------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
------------------- ----------------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equiva-
lents.................. $54,638 $ 50 $ 56,807
Rental equipment, net... -- 37,117 37,117
Total assets............ 54,851 93,107 149,865
Debt.................... -- 26,683 300
Stockholders' equity.... 54,699 60,518 143,659
</TABLE>

6
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In addition to the other information in this Prospectus, the
following Risk Factors should be considered carefully in evaluating an
investment in the Common Stock.

RECENTLY FORMED COMPANY; ABSENCE OF OPERATING HISTORY

The Company was incorporated in August 1997, initially capitalized in
September 1997, and commenced equipment rental and related operations in
October 1997 by acquiring the six Initial Acquired Companies. The Company's
historical financial statements included herein only cover the period from
inception through September 30, 1997, and principally reflect the initial
activities of the Company relating to the Company's organization, search for
acquisition candidates and development of the management team and
infrastructure required to support its growth strategy and manage the expanded
operations that the Company is seeking to build. Since the acquisitions of the
Initial Acquired Companies were closed subsequent to September 30, 1997 and
accounted for as purchases, the Company's historical financial statements do
not reflect the results of the acquired businesses even though such businesses
have been in existence an average of 25 years. Consequently, the Company has
no operating history relating to its business upon which an evaluation of the
Company and its prospects can be based.

INITIAL ACQUIRED COMPANIES NOT HISTORICALLY OPERATED AS A COMBINED BUSINESS

Although the Initial Acquired Companies have been in existence an average of
25 years, the businesses of these companies have not historically been
operated as a combined business. There can be no assurance that the Company
will be able to integrate successfully the businesses of the Initial Acquired
Companies (or the businesses of any companies acquired in the future), to
operate them profitably on a combined basis, or to effectively manage the
combined business. Failure by the Company to successfully integrate or
effectively manage the Initial Acquired Companies could have a material
adverse effect on the Company's results of operations and financial condition.

START-UP LOSSES

During the period from August 14, 1997 (inception) through September 30,
1997, the Company had a net loss of $273,000. This loss reflected the fact
that during this period (which preceded the commencement of the Company's
equipment rental operations) the Company had no revenues but incurred costs
relating to the Company's organization, search for acquisition candidates and
development of the management team and infrastructure required to support its
growth strategy and manage the expanded operations that the Company is seeking
to build. The Company may also report a net loss for the fourth quarter of
1997, reflecting the fact that (i) the Company in the fourth quarter continued
to incur substantial expenses for the foregoing purposes and (ii) the results
of the Initial Acquired Companies will only be included in the Company's
results for a portion of the quarter. The Pro Forma Consolidated Financial
Statements of the Company included elsewhere herein give pro forma effect to
the acquisitions of the Initial Acquired Companies and the financing thereof,
as more fully described in the Notes to such statements. On such a pro forma
basis, the Company had revenues of $51.9 million and $42.1 million during 1996
and the first nine months of 1997, respectively, and net income during such
periods of $3.6 million and $2.9 million, respectively. Such pro forma
results, however, are not necessarily indicative of the actual results of
operations that would have occurred had the acquisitions of the Initial
Acquired Companies occurred at the beginning of the respective periods
presented or of the results that may occur in the future. There can be no
assurance that the Company will achieve profitability in the near term, if at
all.

RISKS RELATING TO GROWTH STRATEGY

Principal components of the Company's growth strategy include continued
expansion through an ongoing acquisition program, the opening of start-up
locations, and internal growth. However, there can be no assurance

7
<PAGE>

that the Company will successfully implement its growth strategy or that, if
implemented, such strategy will result in profitability. The Company's growth
strategy involves a number of risks and uncertainties, including:

Availability of Acquisition Targets and Sites for Start-up Locations. The
Company may encounter substantial competition in its efforts to identify and
acquire appropriate acquisition candidates and sites for start-up locations,
which could have the effect of increasing prices for acquisitions or such
sites. There can be no assurance that the Company will succeed in identifying
appropriate acquisition candidates or sites for start-up locations or that the
Company will be able to acquire any acquisition candidate or site that it does
identify on terms that are acceptable to the Company.

Need to Integrate New Operations. As the Company grows, the Company intends
to focus substantial efforts on the efficient integration of new operations,
the elimination of duplicative costs and reduction in overhead. There can be
no assurance, however, that the Company will be successful in these efforts or
that these efforts may not in certain circumstances adversely affect existing
operations.

Need to Recruit Additional Personnel. The Company will require additional
personnel in order to implement its growth strategy and support expanded
operations. Accordingly, the Company is in the process of recruiting
additional operating, acquisition, finance and other personnel from the
equipment rental industry and from other industries. There can be no
assurance, however, that the Company will succeed in recruiting the requisite
qualified personnel as and when needed.

Certain Risks Related to Start-up Locations. The Company to date has not
established any start-up locations and there can be no assurance that the
Company will successfully establish any such locations in the near term or at
all. The Company expects that start-up locations may initially have a negative
impact on results of operations and margins due to several factors, including:
(i) the Company will incur significant start-up expenses in connection with
establishing each start-up location and (ii) it will generally take some time
following the commencement of operations at a start-up location before
profitability can be achieved. There can be no assurance that any start-up
location will become profitable within the first several years of operations,
if at all.

DEPENDENCE ON ADDITIONAL CAPITAL TO FINANCE GROWTH

The Company's growth strategy will require substantial capital investment.
Capital will be required by the Company for, among other purposes, completing
acquisitions, establishing new rental locations, integrating completed
acquisitions, acquiring rental equipment and maintaining the condition of its
rental equipment. The Company intends to pay for future acquisitions using
cash, capital stock, notes and/or assumption of indebtedness. To the extent
that cash generated internally and cash available under the Credit Facility is
not sufficient to provide the capital required for such purposes and future
operations, the Company will require additional debt and/or equity financing
in order to provide for such capital. There can be no assurance, however, that
such financing will be available or, if available, will be available on terms
satisfactory to the Company. Failure by the Company to obtain sufficient
additional capital in the future could limit the Company's ability to
implement its business strategy. Future debt financings, if available, may
result in increased interest and amortization expense, increased leverage,
decreased income available to fund further acquisitions and expansion, and may
limit the Company's ability to withstand competitive pressures and render the
Company more vulnerable to economic downturns. Future equity financings may
dilute the equity interest of existing stockholders.

POSSIBLE UNDISCOVERED LIABILITIES OF ACQUIRED COMPANIES

Although the Company performs a due diligence investigation of each business
that it acquires, there may nevertheless be liabilities of the Initial
Acquired Companies or future acquired companies that the Company fails or is
unable to discover during its due diligence investigation and for which the
Company, as a successor owner, may be responsible. The Company seeks to
minimize the impact of these liabilities by obtaining indemnities and
warranties from the seller which may be supported by deferring payment of a
portion of the purchase price. However, these indemnities and warranties, if
obtained, may not fully cover the liabilities due to their limited scope,
amount, or duration, the financial limitations of the indemnitor or warrantor,
or other reasons.

8
<PAGE>

DEPENDENCE ON MANAGEMENT

The Company is highly dependent upon its senior management team. The loss of
the services of any member of senior management may have a material adverse
effect on the Company. The Company's Credit Facility provides that the failure
of certain members of the Company's current senior management to continue to
hold executive positions with the Company for a period of 30 consecutive days
constitutes an event of default under the Credit Facility unless replacement
officers satisfactory to the lenders are appointed. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources." The Company does not presently maintain "key
man" life insurance with respect to members of senior management.

The Company's rental locations are managed by regional and local managers
who have an average of 24 years of experience in the equipment rental industry
and substantial knowledge of the local markets served. These managers are
former owners/employees of the businesses acquired by the Company. The loss of
one or more of these managers may have a material adverse effect on the
Company in the event that the Company is unable to find a suitable replacement
in a timely manner.

The Company's present dependence on regional and local managers is
heightened by the fact that the Company's founding senior management team,
while having substantial acquisition and operating experience in other
industries (particularly the solid waste industry), does not have experience
in the equipment rental industry.

NEED FOR INTEGRATED INFORMATION TECHNOLOGY SYSTEMS

Due to the recent formation of the Company, the Company has not yet fully
implemented the type of integrated information technology systems that it will
require in order to effectively integrate, manage and optimize its operations.
Consequently, each acquired business is currently using the systems that it
had in place at the time it was acquired. The Company is currently in the
process of selecting and implementing the information technology systems
required for its existing operations. The Company estimates that it will take
approximately six months to complete this process and that the cost relating
thereto will be in the range of $500,000 to $1 million (including the costs
incurred to date, which have not been material). However, there can be no
assurance that the Company will not encounter unexpected delays and costs in
connection with implementing such systems or that such systems when installed
will function in accordance with the Company's expectations. Furthermore, the
Company expects that it will be required to upgrade and expand its information
technology systems on an ongoing basis as it expands its operations and
completes acquisitions. The Company cannot at this time quantify the
expenditures that will be required in connection with any such future upgrades
or expansions, but such expenditures may be substantial.

COMPETITION

The equipment rental industry is highly fragmented and competitive. The
Company's competitors include public companies or divisions of public
companies; regional competitors which operate in one or more states; small,
independent businesses with one or two rental locations; and equipment vendors
and dealers who both sell and rent equipment directly to customers. Certain of
the Company's competitors are larger and have greater financial resources than
the Company. There can be no assurance that the Company will not encounter
increased competition from existing competitors or new market entrants or that
equipment manufacturers will not commence, or increase their efforts, to rent
or sell equipment directly to the Company's customers. In addition, to the
extent that competitors seek to gain or retain market share by reducing
prices, the Company may be required to lower its prices, thereby affecting
operating results. See "Business--Competition."

SENSITIVITY TO GENERAL ECONOMIC AND WEATHER CONDITIONS

The Company believes that the equipment rental business is sensitive to
changes in economic conditions and that demand for rental equipment can be
reduced significantly by adverse weather conditions. There can be no assurance
that the Company's business and financial condition will not be adversely
affected by (i) changes in general economic conditions, including national,
regional and local changes in construction and industrial activity, (ii)
increases in interest rates that may result in a higher cost of capital to the
Company, or (iii) adverse weather conditions that may decrease construction
and industrial activity.

9
<PAGE>

QUARTERLY FLUCTUATIONS OF OPERATING RESULTS

The Company expects that its revenues and operating results may fluctuate
from quarter to quarter due to a number of factors, including: seasonal rental
patterns of the Company's customers (with rental activity tending to be lower
in the winter); changes in general economic conditions in the Company's
markets; the timing of acquisitions and the opening of start-up locations
(which generally will require a period of time to become profitable) and
related costs; the effect of the integration of acquired businesses and start-
up locations; the timing of expenditures for new equipment and the disposition
of used equipment; and price changes in response to competitive factors. These
factors, among others, may result in the Company's results of operations in
some future periods not meeting expectations, which could have a material
adverse impact on the market price of the Common Stock.

LIABILITY AND INSURANCE

The Company is subject to various possible claims, including claims for
personal injury or death caused by equipment rented or sold by the Company or
motor vehicle accidents involving Company delivery and service personnel and
compensation and other employment related claims. Although each of the Initial
Acquired Companies maintains its own insurance, the Company is in the process
of acquiring insurance subject to deductibles on a company-wide basis.
However, certain types of claims such as claims for punitive damages or for
damages arising from intentional misconduct, which are often alleged in third
party lawsuits, might not be covered by the Company's insurance. There can be
no assurance that insurance will be available to the Company on economically
reasonable terms, if at all, that existing or future claims will not exceed
the level of the Company's insurance, or that the Company will have sufficient
capital available to pay any uninsured claims.

ENVIRONMENTAL REGULATION

The Company uses hazardous materials, such as solvents, to clean and
maintain its rental equipment and generates and disposes of wastes such as
used motor oil, radiator fluid, solvents and batteries. In addition, the
Company currently dispenses, or may in the future dispense, petroleum products
from underground and above-ground storage tanks located at certain rental
locations. These and other activities of the Company are subject to various
federal, state and local laws and regulations governing the generation,
handling, storage, transportation, treatment and disposal of hazardous
substances and wastes. Under such laws, an owner or lessee of real estate may
be liable for, among other things, (i) the costs of removal or remediation of
certain hazardous or toxic substances located on, in, or emanating from, such
property, as well as related costs of investigation and property damage and
substantial penalties for violations of such laws, and (ii) environmental
contamination at facilities where its waste is or has been disposed. Such laws
often impose such liability without regard to whether the owner or lessee knew
of, or was responsible for, the presence of such hazardous or toxic
substances. Although the Company investigates each business or property that
it acquires or leases and believes there are no existing material liabilities
relating to non-compliance with environmental laws and regulations, there can
be no assurance that there are no undiscovered potential liabilities relating
to non-compliance with environmental laws and regulations, that historic or
current operations have not resulted in undiscovered conditions that will
require investigation and/or remediation under environmental laws, or that
future uses or conditions will not result in the imposition of environmental
liability upon the Company or expose the Company to third-party actions such
as tort suits. Furthermore, there can be no assurance that changes in
environmental regulations in the future will not require the Company to make
significant capital expenditures to change methods of disposal of hazardous
materials or otherwise alter aspects of its operations. See "Business--
Environmental Regulation."

BROAD DISCRETION ON APPLICATION OF PROCEEDS

The Company's business plan is general in nature and subject to change based
upon changing conditions and opportunities. As a result, the Company will have
broad discretion in applying the portion of the net proceeds not allocated to
the repayment of outstanding indebtedness under the Credit Facility (as well
as the proceeds of any future borrowings under the Credit Facility). The
Company may use the net proceeds for future acquisitions. The Company at
present is not party to any definitive agreements relating to future
acquisitions.

10
<PAGE>

CONCENTRATED CONTROL

Immediately following completion of the Offerings, the officers and
directors of the Company will own an aggregate of 13,150,714 shares of Common
Stock, representing approximately 56% of the Company's outstanding Common
Stock (including 10,000,000 shares, representing approximately 43% of the
Company's outstanding Common Stock, beneficially owned by Bradley S. Jacobs,
Chairman and Chief Executive Officer of the Company) and will therefore be
able to elect the entire Board of Directors of the Company and to control the
Company's management and affairs. See "Principal Stockholders."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will
develop after the Offerings or, if a trading market does develop, that it will
be sustained or that the shares of Common Stock could be resold at or above
the initial public offering price. The initial public offering price of the
Common Stock offered hereby will be determined through negotiations between
the Company and the representatives of the Underwriters and may not be an
indication of the actual value of the stock or of the price at which the
Common Stock will actually trade after the Offerings. After completion of the
Offerings, the market price of the Common Stock could be subject to
significant variation due to fluctuations in the Company's operating results,
changes in earnings estimates by securities analysts, the degree of success
the Company achieves in implementing its business strategy, changes in
business or regulatory conditions affecting the Company, its customers or its
competitors, and other factors. In addition, the financial markets may
experience volatility that affects the market prices of companies in ways
unrelated to the operating performance of such companies, and such volatility
may adversely affect the market price of the Common Stock.

IMMEDIATE AND SUBSTANTIAL DILUTION

The purchasers of the Common Stock offered hereby will experience immediate
and substantial dilution of $8.60 per share (assuming an initial public
offering price of $13.00 per share, the midpoint of the estimated price
range), representing the amount by which the purchase price of the Common
Stock offered hereby will exceed the pro forma net tangible book value of the
Common Stock as of September 30, 1997. If the Company issues additional Common
Stock in the future, including shares that may be issued in connection with
future acquisitions, purchasers of Common Stock in the Offerings may
experience further dilution in net tangible book value per share of Common
Stock. See "Dilution."

ABSENCE OF DIVIDENDS

The Company has never paid any dividends on its Common Stock and has no
plans to pay dividends on its Common Stock in the foreseeable future. Under
the terms of the Credit Facility, the Company is prohibited from paying
dividends on the Common Stock. See "Dividend Policy."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock (including shares issued upon
exercise of warrants or options), or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock.
The number of outstanding shares of Common Stock available for sale in the
public market will be limited by (i) agreements with the Underwriters pursuant
to which the Company, each of its officers and directors, and the holders of
the 318,712 shares issued as consideration for acquisitions have agreed not to
sell or otherwise dispose of any shares of Common Stock (including shares that
may be acquired upon the exercise of currently exercisable warrants) for a
period of 180 days after the date of this Prospectus without the prior written
consent of Merrill Lynch & Co., on behalf of the Underwriters (except that the
Company may issue shares as consideration for acquisitions, provided that the
Company may not issue in excess of 500,000 shares for acquisitions unless the
recipients of any excess shares agree to be subject to the foregoing lock-up
agreement with respect to such excess shares); (ii) agreements with the
Company (the "Stockholder Lock-up Agreements") pursuant to which each other
holder of currently outstanding shares of Common Stock has agreed not to sell
or

11
<PAGE>

otherwise transfer such shares without the prior written consent of the
Company (such agreements to lapse with respect to one-third of such shares on
the first, second and third anniversaries of the closing of the Offerings,
respectively); and (iii) an agreement with the Underwriters pursuant to which
the Company has agreed not to waive any Stockholder Lock-up Agreement for a
period of 180 days after the date of this Prospectus without the prior written
consent of Merrill Lynch & Co., on behalf of the Underwriters. See
"Underwriting." Subject to the foregoing agreements, substantially all of the
Company's outstanding shares of Common Stock and all shares that may hereafter
be issued upon the exercise of outstanding warrants will be eligible for sale
pursuant to a shelf registration statement covering such shares that the
Company intends to file prior to completion of the Offerings. The Company
expects to have such shelf registration statement declared effective upon the
completion of the Offerings. This registration statement will (subject to the
above-mentioned agreements and restrictions) enable the holders of such shares
to publicly dispose of such shares from time to time.

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Certificate of Incorporation and By-
laws, as well as applicable Delaware law, may have the effect of discouraging
unsolicited acquisition proposals or making it more difficult for a third
party to gain control of the Company. These provisions provide, among other
things, that (i) the Board of Directors shall be divided into three classes,
with directors of each class serving for a staggered three-year period, (ii)
directors may be removed only for cause and only upon the affirmative vote of
at least 66 2/3% of the voting power of all the then outstanding shares of
stock entitled to vote, (iii) stockholders may not act by written consent,
(iv) stockholder nominations and proposals may only be made if specified
advance notice requirements are complied with, (v) stockholders are precluded
from calling a special meeting of stockholders, and (vi) the Board of
Directors has the authority to issue up to 5,000,000 shares of preferred stock
in one or more series and to fix the powers, preferences and rights of any
such series without stockholder approval. Moreover, under certain conditions,
Section 203 of the Delaware General Corporation Law may prevent the Company
from engaging in a "business combination" with an "interested stockholder."
See "Certain Charter and By-law Provisions."

USE OF PROCEEDS

The net proceeds to the Company from the Offerings are estimated to be $83.1
million ($95.8 million if the Underwriters' over-allotment option is exercised
in full), assuming an initial public offering price of $13.00 per share (the
midpoint of the estimated price range) and after deduction of the estimated
underwriting discount and offering expenses. The Company expects to use such
net proceeds (i) to repay approximately $31 million of outstanding
indebtedness under the Company's Credit Facility and (ii) for future
acquisitions, capital expenditures and general corporate purposes. Pending use
of the net proceeds for such purposes, the Company plans to invest the net
proceeds in short-term, investment-grade, interest-bearing securities.

Under the terms of the Credit Facility, the Company may borrow on a
revolving basis up to $55 million until October 8, 2000, at which time all
outstanding loans must be paid in full. Outstanding loans under the Credit
Facility bear interest at a rate per annum equal to, at the Company's option,
either the Eurodollar Rate (Reserve Adjusted) (as defined in the loan
agreement providing for the Credit Facility) applicable to each interest
period plus 1.5% to 2.5% per annum or the Alternate Reference Rate (as defined
in such loan agreement) from time to time in effect plus 0% to .25% per annum.
At November 30, 1997, the weighted average interest rate on the outstanding
indebtedness was 7.5%. The proceeds from the outstanding indebtedness under
the Credit Facility have been used by the Company to fund acquisitions. The
repayment of the outstanding indebtedness under the Credit Facility from the
proceeds of the Offerings will give the Company additional flexibility to
reborrow funds under the Credit Facility for future acquisitions, capital
expenditures and general corporate purposes. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" for additional information regarding the Credit Facility.

12
<PAGE>

DIVIDEND POLICY

The Company intends to retain all earnings for the foreseeable future for
use in the operation and expansion of its business and, accordingly, the
Company currently has no plans to pay dividends on its Common Stock. The
payment of any future dividends will be determined by the Board of Directors
in light of conditions then existing, including the Company's earnings,
financial condition and capital requirements, restrictions in financing
agreements, business conditions and other factors. Under the terms of the
Credit Facility, the Company is prohibited from paying dividends on its Common
Stock. In addition, under Delaware law, the Company is prohibited from paying
any dividends unless it has capital surplus or net profits available for this
purpose. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

DILUTION

At September 30, 1997, the pro forma net tangible book value (tangible
assets less liabilities) of the Company was $19.6 million, or $1.20 per share
of Common Stock, after giving effect to the acquisition of the Initial
Acquired Companies, the financing of each such acquisition, and all issuances
of Common Stock after September 30, 1997. After giving effect to the foregoing
and also giving effect to the sale by the Company of 7,000,000 shares of
Common Stock in the Offerings (assuming an initial public offering price of
$13.00 per share, the midpoint of the estimated price range, and after
deduction of the estimated underwriting discount and estimated expenses in
connection with the Offerings), the pro forma net tangible book value of the
Company at September 30, 1997 would have been $102.8 million, or approximately
$4.40 per share of Common Stock. This represents an immediate increase in pro
forma net tangible book value of approximately $3.20 per share to existing
stockholders and an immediate dilution of pro forma net tangible book value of
$8.60 per share to new investors purchasing shares in the Offerings. Dilution
is determined by subtracting pro forma net tangible book value per share of
Common Stock after the Offerings from the initial public offering price. The
following table illustrates the per share dilution:

<TABLE>
<CAPTION>
PER SHARE
---------
<S> <C> <C>
Assumed initial public offering price...................... $13.00
Pro forma net tangible book value per share before the Of-
ferings................................................... $1.20
Increase in net tangible book value per share attributable
to purchase of shares by new investors.................... 3.20
-----
Pro forma net tangible book value after the Offerings...... 4.40
------
Dilution to purchasing stockholders........................ $ 8.60
======
</TABLE>

The following table summarizes, on a pro forma basis as of the date of this
Prospectus, the following information with respect to the existing
stockholders of the Company (excluding stockholders who acquired shares as
consideration for acquisitions) and the purchasers of the shares offered
hereby: (i) the number of shares of Common Stock purchased from the Company,
(ii) the total consideration paid for such shares (assuming an initial public
offering price of $13.00 per share, the midpoint of the estimated price
range), and (iii) the average price per share paid for such shares.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ -------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)..... 16,057,444 69.6% $ 53,874,625 37.2% $ 3.36
Purchasing stockholders...... 7,000,000 30.4 91,000,000 62.8 13.00
---------- ----- ------------ ----- ------
Total...................... 23,057,444 100.0% $144,874,625 100.0% $ 6.28
========== ===== ============ ===== ======
</TABLE>
- --------
(1) Certain officers of the Company purchased 12,685,714 units consisting of
one share of Common Stock and one-half of a Warrant at a price of $3.50
per unit. The Company estimates that the amount attributable to the share
of Common Stock included in the unit was $3.25. See "Management--Capital
Contributions by Officers and Directors."

13
<PAGE>

CAPITALIZATION

The following table sets forth (i) the capitalization of the Company as of
September 30, 1997, on an historical basis, (ii) such capitalization on a pro
forma basis giving effect to the acquisition of each of the Initial Acquired
Companies, the financing of each such acquisition, and all issuances of Common
Stock after September 30, 1997, and (iii) such pro forma capitalization as
adjusted to give effect to the sale of the 7,000,000 shares offered hereby at
an assumed initial public offering price of $13.00 per share (the midpoint of
the estimated range) and the application of a portion of the net proceeds to
repay indebtedness as described under "Use of Proceeds." This table should be
read in conjunction with the Consolidated Financial Statements and related
Notes thereto and the Pro Forma Consolidated Financial Statements and related
Notes thereto of the Company included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Debt:
Credit Facility............................... $ -- $26,383 $ --
Convertible debt.............................. -- 300 300
------- ------- --------
Total debt.................................. -- 26,683 300
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000
shares authorized; no shares issued and out-
standing..................................... -- -- --
Common Stock, $.01 par value, 75,000,000
shares authorized; 15,714,587 shares issued
and outstanding, 16,376,156 shares issued and
outstanding pro forma, and 23,376,156 shares
issued and outstanding pro forma as adjust-
ed(1)........................................ 157 164 234
Additional paid-in capital...................... 54,815 60,628 143,698
Accumulated deficit............................. (273) (273) (273)
------- ------- --------
Total stockholders' equity.................. 54,699 60,519 143,659
------- ------- --------
Total capitalization............................ $54,699 $87,202 $143,959
======= ======= ========
</TABLE>
- --------

(1) Does not include (i) 6,344,058 shares issuable upon the exercise of
outstanding Warrants, all of which are currently exercisable at an
exercise price of $10.00 per share, (ii) 797,500 shares issuable upon the
exercise of outstanding options which provide for exercise prices ranging
from $10.00 to $30.00 per share, the weighted average exercise price being
$12.49 per share, (iii) 4,202,500 shares reserved for possible future
grants of options under the Company's 1997 Stock Option Plan, and (iv)
shares issuable upon conversion of a $300,000 convertible note which
provides for a conversion price per share equal to 120% of the initial
public offering price per share in the Offerings. Also does not reflect
adjustments which may change the number of shares issued as consideration
for the acquisition of one of the Initial Acquired Companies. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Consideration Paid for Initial Acquired Companies,"
"Management--Capital Contributions by Officers and Directors" and
"Description of Capital Stock--Warrants, Options and Convertible Notes."

14
<PAGE>

SELECTED HISTORICAL AND PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION

The following table presents (i) selected unaudited historical income
statement and balance sheet data for the Initial Acquired Companies on a
combined basis and (ii) selected historical and pro forma income statement and
balance sheet data for the Company. The historical income statement and
balance sheet data for the Company are derived from the audited Financial
Statements of the Company included elsewhere in this Prospectus. The data
presented below with respect to the Company should be read in conjunction with
the Financial Statements and related Notes thereto and the Pro Forma
Consolidated Financial Statements and related Notes thereto of the Company
included elsewhere in this Prospectus.

The following unaudited pro forma income statement data with respect to each
of the periods set forth below gives effect to the acquisition of each of the
Initial Acquired Companies, the financing of each such acquisition and all
issuances of Common Stock after the beginning of the period, as if all such
transactions had occurred at the beginning of the period presented. The
following unaudited pro forma balance sheet data as of September 30, 1997
gives effect to the acquisition of each of the Initial Acquired Companies, the
financing of each such acquisition, and all issuances of Common Stock after
September 30, 1997, as if all such transactions had occurred on such date. The
unaudited pro forma income statement data is not necessarily indicative of the
actual results of operations that would have occurred had the foregoing
transactions occurred at the beginning of the respective periods presented or
of the results that may occur in the future. The following unaudited pro forma
as adjusted balance sheet data gives effect to the foregoing and to completion
of the Offerings at an assumed initial public offering price of $13.00 per
share (the midpoint of the estimated range) and the application of a portion
of the estimated net proceeds therefrom to repay outstanding indebtedness
under the Credit Facility. See "Use of Proceeds" and "Capitalization."

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------------------------------------------------------- ----------------------
COMBINED INITIAL ACQUIRED COMPANIES UNITED RENTALS, INC. COMPANY
------------------------------------------------------------- -------------------- ----------------------
NINE MONTHS
ENDED PERIOD FROM NINE MONTHS
YEAR ENDED DECEMBER 31, SEPTEMBER 30, AUGUST 14, 1997 YEAR ENDED ENDED
------------------------------------------- ---------------- (INCEPTION) THROUGH DECEMBER SEPTEMBER
1992 1993 1994 1995 1996 1996 1997 SEPTEMBER 30, 1997 31, 1996 30, 1997
------- ------- ------- ------- ------- ------- ------- -------------------- ---------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA:
Total revenues.... $30,792 $32,549 $38,179 $44,159 $51,889 $37,463 $42,095 $ -- $51,889 $42,095
Total cost of
operations....... 22,025 22,961 24,829 28,563 34,737 25,427 28,224 -- 32,540 26,885
------- ------- ------- ------- ------- ------- ------- ------ ------- -------
Gross profit...... 8,767 9,588 13,350 15,596 17,152 12,036 13,871 -- 19,349 15,210
Selling, general
and
administrative
expense.......... 7,005 7,772 9,898 11,537 12,435 7,780 9,172 348 10,853 8,634
Non-rental
depreciation and
amortization..... 294 300 427 502 527 408 438 -- 1,336 1,034
------- ------- ------- ------- ------- ------- ------- ------ ------- -------
Operating income
(loss)........... 1,468 1,516 3,025 3,557 4,190 3,848 4,261 (348) 7,160 5,542
Interest expense.. 750 770 846 1,416 2,123 1,555 1,860 -- 1,641 1,231
Other (income)
expense.......... (353) (336) (412) (306) (412) (285) (407) (75) (412) (482)
------- ------- ------- ------- ------- ------- ------- ------ ------- -------
Income (loss)
before taxes..... 1,071 1,082 2,591 2,447 2,479 2,578 2,808 (273) 5,931 4,793
Pro forma income
taxes(1)......... 428 433 1,036 979 992 1,031 1,123 -- 2,372 1,917
------- ------- ------- ------- ------- ------- ------- ------ ------- -------
Pro forma net
income
(loss)(1)........ $ 643 $ 649 $ 1,555 $ 1,468 $ 1,487 $ 1,547 $ 1,685 $ (273) $ 3,559 $ 2,876
======= ======= ======= ======= ======= ======= ======= ====== ======= =======
Earnings (loss)
per share........ $(0.02) $ 0.20 $ 0.16
====== ======= =======
Dividends on
Common Stock..... -- -- --
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------------------------------------------------------------------- --------- -----------
COMBINED INITIAL ACQUIRED COMPANIES UNITED RENTALS, INC. COMPANY
------------------------------------------------- -------------------- ---------------------
AS OF DECEMBER 31, AS OF
--------------------------------------- SEPTEMBER
1992 1993 1994 1995 1996 30, 1997 AS OF SEPTEMBER 30, 1997
------- ------- ------- ------- ------- --------- ------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents.......... $ 2,544 $ 2,374 $ 2,349 $ 4,193 $ 3,227 $ 4,573 $ 54,638 $ 50 $ 56,807
Rental equipment,
net.................. 10,112 10,730 14,270 20,244 27,145 31,138 -- 37,117 37,117
Total assets.......... 19,049 20,380 25,254 37,022 43,681 50,520 54,851 93,107 149,865
Debt.................. 8,660 10,104 12,608 21,267 25,959 33,102 -- 26,683 300
Stockholders' equity.. 8,449 9,003 9,638 10,941 12,308 11,664 54,699 60,518 143,659
</TABLE>
- -------

(1) Certain of the Initial Acquired Companies had elected to be treated as
Subchapter S Corporations prior to being acquired by the Company. In
general, the income or loss of a Subchapter S Corporation is passed
through to its owners rather than being subjected to taxes at the entity
level. Pro forma net income or loss for the Initial Acquired Companies
reflects a provision for income taxes as if all such companies were liable
for federal and state income taxes as taxable corporate entities for all
periods presented.

15
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Financial
Statements and related Notes thereto, the unaudited Pro Forma Consolidated
Financial Statements and related Notes thereto and the "Selected Historical
and Pro Forma Consolidated Financial Information" of the Company included
elsewhere in this Prospectus.

INTRODUCTION

The Company was organized in August 1997, initially capitalized in September
1997, and commenced rental operations in October 1997 by acquiring the six
Initial Acquired Companies. These acquisitions were all accounted for as
purchases and, accordingly, the results of operations of the Initial Acquired
Companies will be included in the Company's financial statements from the
respective dates of acquisition.

The Company's historical financial statements included herein cover the
period from August 14, 1997 (inception) through September 30, 1997 and do not
reflect any rental operations (which commenced in October 1997). The Company
had a net loss during this period of $273,000 reflecting the fact that, while
the Company had no revenues during this period, the Company incurred expenses
in connection with the Company's organization, search for acquisition
candidates and development of the management team and infrastructure required
to support its growth strategy and manage the expanded operations that the
Company is seeking to build. Although the Company's results of operations for
the fourth quarter of 1997 will reflect the results of the Initial Acquired
Companies, the Company may also report a net loss for this quarter, reflecting
the fact that (i) the Company in the fourth quarter of 1997 continued to incur
substantial expenses for the foregoing purposes and (ii) the results of the
Initial Acquired Companies will only be included in the Company's results for
a portion of the fourth quarter since the acquisitions closed after the
beginning of the quarter.

GENERAL

The Initial Acquired Companies primarily derived revenues from the following
sources: (i) equipment rental (including additional fees that may be charged
for equipment delivery, fuel, repair of rental equipment, and damage waivers),
(ii) the sale of used rental equipment, (iii) the sale of new equipment, and
(iv) the sale of related merchandise and parts. Rental revenues accounted for
68.8% and 66.4% of the Company's pro forma revenues during 1996 and the first
nine months of 1997, respectively.

Cost of operations consist primarily of depreciation costs associated with
rental equipment, the cost of repairing and maintaining rental equipment, the
cost of used and new equipment sold, personnel costs, occupancy costs,
supplies, and expenses related to information systems. The Company records
rental equipment expenditures at cost and depreciates equipment using the
straight-line method over the estimated useful life (which ranges from 4 to 6
years), after giving effect to a 10% estimated salvage value.

Selling, general and administrative expense includes advertising and
marketing expenses, management salaries, and clerical and administrative
overhead.

Depreciation and amortization, excluding rental equipment, includes (i)
depreciation expense associated with equipment that is not offered for rent
(such as vehicles, computers and office equipment) and depreciation expense
associated with leasehold improvements and (ii) the amortization of intangible
assets. The Company's intangible assets include goodwill, which represents the
excess of the purchase price of acquired companies over the estimated fair
market value of the assets acquired.

The acquisition of the Initial Acquired Companies by the Company altered the
cost structure of the Initial Acquired Companies due to changes relating to
depreciation and amortization, interest expense, compensation to former owners
and lease expense for real estate. Accordingly, the Company believes that the
historical results of

16
<PAGE>

operations of the Initial Acquired Companies are not indicative of future
results and, therefore, the discussion below focuses on the pro forma results
of the Company rather than on the historical results of the Initial Acquired
Companies.

CONSIDERATION PAID FOR INITIAL ACQUIRED COMPANIES

The aggregate consideration paid by the Company for the Initial Acquired
Companies was $57.7 million and consisted of approximately $53.6 million in
cash, 318,712 shares of Common Stock (the "Stock Consideration") and a
$300,000 convertible note. In addition, the Company agreed to pay the former
owners of one of the Initial Acquired Companies a percentage of such company's
future revenues until an aggregate of $2.8 million has been paid. Following
completion of the Offerings, the Stock Consideration will be valued based upon
the average daily closing price of the Common Stock during the 60-day period
immediately following completion of the Offerings. If the Stock Consideration
as so valued is not equal to $3.8 million, the Stock Consideration will be
adjusted (by the Company issuing additional shares or by the holders returning
to the Company a portion of the Stock Consideration) as required to make the
Stock Consideration as so valued equal to $3.8 million. Additionally, the
Company repaid all of the outstanding indebtedness of the Initial Acquired
Companies in the aggregate amount of $33.9 million.

PRO FORMA RESULTS OF OPERATIONS

The Pro Forma Consolidated Financial Statements included herein with respect
to a specified period give effect to the acquisition of each of the Initial
Acquired Companies, the financing of each such acquisition, and all issuances
of Common Stock after the beginning of such period, as if all such
transactions had occurred at the beginning of the period (as more fully
described in Note 4 to the Pro Forma Consolidated Financial Statements). Such
pro forma financial statements, however, do not reflect (i) potential cost
savings, synergies and efficiencies that may be achieved through the
integration of the businesses and operations of the Initial Acquired
Companies, (ii) the expenses that the Company may incur as it seeks to
increase internal growth at the Initial Acquired Companies, including
expenditures required in order to expand and modernize rental equipment,
increase sales and marketing efforts, and expand and diversify the customer
segments served, and (iii) the compensation expense relating to the Company's
senior management which began accruing in September 1997. The results
reflected in such pro forma financial statements are not necessarily
indicative of the actual results of operations that would have occurred had
the acquisitions of the Initial Acquired Companies occurred at the beginning
of the respective periods presented or of future results.

Revenues. Total revenues were $51.9 million and $42.1 million for the year
ended December 31, 1996 and for the nine months ended September 30, 1997,
respectively. Equipment rental revenues were 68.8% and 66.4% of revenues for
the year ended December 31, 1996 and for the nine months ended September 30,
1997, respectively. The decrease in rental revenues as a percentage of total
revenues in 1997 compared with 1996 was primarily attributable to increased
sales of used rental equipment during 1997 at certain of the Initial Acquired
Companies.

Gross Profit. The gross profit margin from equipment rentals was 43.7% for
the year ended December 31, 1996 and 40.9% for the nine months ended September
30, 1997. The decrease in 1997 compared with 1996 primarily reflected the fact
that rental equipment utilization (measured by rental revenues as a percentage
of average original cost of rental equipment) was lower in 1997 than in 1996
(59.9% in 1997 compared with 63.7% in 1996). The gross profit margin from
sales of equipment and merchandise and other revenues was 23.2% in 1996 and
26.7% in 1997. The increase in 1997 compared with 1996 was primarily
attributable to a change in the mix of equipment and merchandise sold.

Selling, General and Administrative Expense. Selling, general and
administrative expense ("SG&A") was $10.9 million for the year ended December
31, 1996 and $8.6 million for the nine months ended September 30, 1997. SG&A
as a percentage of revenues was 20.9% for the year ended December 31, 1996 and
20.5% for the nine months ended September 30, 1997.

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<PAGE>

Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $1.3 million and $1.0 million for the year ended December 31,
1996 and for the nine months ended September 30, 1997, respectively. Non-
rental depreciation and amortization as a percentage of revenues was 2.6% for
the year ended December 31, 1996 and 2.5% for the nine months ended September
30, 1997.

Interest Expense. Interest expense was $1.6 million and $1.2 million for the
year ended December 31, 1996 and for the nine months ended September 30, 1997,
respectively. Interest expense for both periods relates to borrowings made
under the Company's Credit Facility in order to fund a portion of the purchase
price of the Initial Acquired Companies.

Income Taxes. Pro forma income taxes was computed for the year ended
December 31, 1996 and for the nine months ended September 30, 1997 using an
estimated rate of 40%.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its cash requirements to date from (i) the sale of
Common Stock and Warrants to the officers and directors of the Company for
aggregate consideration of $46.8 million, (ii) other sales of Common Stock for
aggregate consideration of $9.8 million, and (iii) borrowings under the
Company's Credit Facility.

The Company's Credit Facility with a group of financial institutions, for
which Bank of America National Trust and Savings Association acts as agent,
enables the Company to borrow up to $55 million on a revolving basis. The
facility terminates on October 8, 2000, at which time all outstanding
indebtedness is due. Up to $10 million of the Credit Facility is available in
the form of letters of credit. Borrowings under the Credit Facility accrue
interest, at the Company's option, at either (a) the Floating Rate (which is
equal to the greater of (i) the Federal Funds Rate plus 0.5% and (ii) Bank of
America's reference rate, in each case, plus a margin ranging from 0% to 0.25%
per annum) or (b) the Eurodollar Rate (which is equal to Bank of America's
reserve adjusted eurodollar rate plus a margin ranging from 1.5% to 2.5% per
annum). As of November 30, 1997, there was $31 million of outstanding
indebtedness under the Credit Facility. The Company plans to repay such
indebtedness from the net proceeds of the Offerings. The Company will be able
to reborrow the amounts so repaid.

The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a)
maintenance of minimum net worth, (b) the ratio of debt to net worth, (c)
interest coverage ratio, (d) the ratio of funded debt to cash flow, and (e)
the ratio of senior debt to tangible assets. The Credit Facility also contains
certain covenants that restrict the Company's ability to, among other things,
(i) incur additional indebtedness, (ii) permit liens to attach to its assets,
(iii) enter into operating leases requiring payments in excess of specified
amounts, (iv) declare or pay dividends or make other restricted payments with
respect to its equity securities (including the Common Stock) or subordinated
debt, (v) sell assets, (vi) make acquisitions unless certain financial
conditions are satisfied, and (vii) engage in any line of business other than
the equipment rental industry. The Credit Facility provides that the failure
by any two of Messrs. Jacobs, Milne, Nolan and Miner to continue to hold
executive positions with the Company for a period of 30 consecutive days
constitutes an event of default under the Credit Facility unless replacement
officers satisfactory to the lenders are appointed. The Credit Facility is
also subject to other customary events of default. The Credit Facility is
secured by substantially all of the assets of United Rentals, Inc. and by the
stock and assets of its subsidiaries.

The Company expects that following completion of the Offerings its principal
sources of cash will be borrowings under the Credit Facility, the portion of
the net proceeds of the Offerings (approximately $52.1 million) that will not
be used for repayment of outstanding indebtedness under the Credit Facility,
and cash generated from operations. The Company estimates that such sources
will be sufficient to fund the cash required for the Company's existing
operations (not including new acquisitions or start-up locations that are not
currently under development, which may require additional financing as
discussed below) for at least 12 months following completion of the Offerings.

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<PAGE>

The Company expects that following the Offerings its principal needs for
cash relating to its operations will be to fund (i) operating activities and
working capital, (ii) the purchase of equipment on an ongoing basis to
maintain the quality and competitiveness of its existing rental equipment,
(iii) the purchase of equipment required to expand and modernize the rental
equipment at certain locations, (iv) the purchase of equipment and other items
required to maintain sufficient inventory of the new equipment and related
merchandise and parts that the Company offers for sale, and (v) the
installation of an integrated information technology system.

The Company estimates that equipment expenditures for its existing locations
will be in the range of $10 million to $15 million over the next 12 months. In
addition, the Company expects that it will be required to make equipment
expenditures in connection with new acquisitions. The Company cannot quantify
at this time the amount of such equipment expenditures.

Principal elements of the Company's strategy include expansion through a
disciplined acquisition program and the opening of new rental locations. The
Company expects to pay for future acquisitions using cash, capital stock,
notes and/or assumption of indebtedness. The Company expects that cash
required for future acquisitions and start-up locations will be provided by a
combination of borrowings under the Credit Facility, the unused net proceeds
of the Offerings, cash generated from operations, and future debt or equity
financings. There can be no assurance that any such future debt or equity
financings will be available or, if available, will be on terms satisfactory
to the Company.

The Company is in the process of developing two start-up locations. See
"Business--Start-up Locations." The Company estimates that the aggregate costs
associated with such start-up locations will be in the range of $2 million to
$4 million. The Company believes that its existing sources of cash and
borrowings under the Credit Facility will be sufficient to fund these costs
without additional debt or equity financings.

The Company estimates that it will be required to make expenditures in the
range of $500,000 to $1 million (including the costs incurred to date, which
have not been material) in order to install the integrated information
technology systems required for its existing operations and to modify certain
information technology systems to accommodate the year 2000 and thereafter.
Furthermore, the Company expects that it will be required to upgrade and
expand its information technology systems on an ongoing basis as it expands
its operations and completes acquisitions. The Company cannot at this time
quantify the expenditures that will be required in connection with any such
future upgrades or expansions, but such expenditures may be substantial.

FLUCTUATIONS IN OPERATING RESULTS

The Company is continually involved in the investigation and evaluation of
potential acquisitions. In accordance with generally accepted accounting
principles, the Company capitalizes certain direct out-of-pocket expenditures
(such as legal and accounting fees) relating to potential or pending
acquisitions. Indirect acquisition costs, such as executive salaries, general
corporate overhead, public affairs and other corporate services, are expensed
as incurred. The Company's policy is to charge against earnings any
capitalized expenditures relating to any potential or pending acquisition that
the Company determines will not be consummated. There can be no assurance that
the Company in future periods will not be required to incur a charge against
earnings in accordance with such policy, which charge, depending upon the
magnitude thereof, could adversely affect the Company's results of operations.

The Company will be required to incur significant start-up expenses in
connection with establishing each start-up location. Such expenses may
include, among others, pre-opening expenses related to setting up the

19
<PAGE>

facility, training employees, installing information systems and marketing.
The Company expects that in general start-up locations will initially operate
at a loss or at less than normalized profit levels. Consequently, the opening
of a start-up location may negatively impact the Company's margins until the
location achieves normalized profitability.

There may be a lag between the time that the Company purchases new equipment
and begins to incur the related depreciation and interest expenses and the
time that the equipment begins to generate revenues at normalized rates. As a
result, the purchase of new equipment, particularly equipment purchased in
connection with expanding and diversifying the Company's rental equipment, may
periodically reduce margins.

GENERAL ECONOMIC CONDITIONS AND INFLATION

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

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<PAGE>

BUSINESS

United Rentals was formed in September 1997 for the purpose of creating a
large, geographically diversified equipment rental company and commenced
rental operations in October 1997 by acquiring six established equipment
rental companies. The Company rents a broad array of equipment to a diverse
customer base that includes construction industry participants, industrial
companies, homeowners and other individuals. The Company also engages in
related activities such as selling used rental equipment, acting as a
distributor for certain new equipment, and selling related merchandise and
parts. The Company had pro forma revenues of $51.9 million during 1996 and
$42.1 million during the first nine months of 1997. The Company's growth
strategy is to expand through a disciplined acquisition program, the opening
of new rental locations and internal growth and to further diversify its
equipment categories and customer markets. The Company believes that as it
expands it should gain competitive advantages relative to smaller operators,
including greater purchasing power, a lower cost of capital, the ability to
provide customers with a broader range of equipment and services and with
newer and better maintained equipment, and greater flexibility to transfer
equipment among locations in response to customer demand.

United Rentals currently operates 12 rental locations in five states:
California (6), Colorado (1), North Carolina (3), Texas (1), and Utah (1). The
Company's locations are managed by experienced professionals who have been
involved in the equipment rental industry an average of 24 years and have
substantial knowledge of the local markets served. These managers are former
owners/employees of the businesses acquired by the Company. The types of
rental equipment offered by the Company include a broad range of light to
heavy construction and industrial equipment (such as pumps, generators,
forklifts, backhoes, cranes, bulldozers, aerial lifts and compressors),
general tools and equipment (such as hand tools and garden and landscaping
equipment) and special event equipment (such as tents, tables and chairs). The
equipment mix varies at each of the Company's locations, with some locations
offering a general mix and some specializing in specific equipment categories.
As of November 30, 1997, the Company's rental equipment included approximately
11,800 units (excluding special event equipment), had an original purchase
price of approximately $65.7 million and had a weighted average age (based on
original purchase price) of approximately four years.

INDUSTRY OVERVIEW

Recognition of Advantages of Renting. There is increasing recognition of the
many advantages that equipment rental may offer compared with ownership,
including the ability to: (i) avoid the large capital investment required for
equipment purchases, (ii) reduce storage and maintenance costs, (iii)
supplement owned equipment thereby increasing the range and number of jobs
that can be worked on, (iv) access a broad selection of equipment and select
the equipment best suited for each particular job, (v) obtain equipment as
needed and minimize the costs associated with idle equipment, and (vi) access
the latest technology without investing in new equipment.

Increase in Contractor Rentals. There has been a fundamental shift in the
way contractors meet their equipment needs. While contractors have
historically used rental equipment on a temporary basis--to provide for peak
period capacity, meet specific job requirements or replace broken equipment--
many contractors are now also using rental equipment on an ongoing basis to
meet their long-term equipment requirements. A survey of contractors conducted
in September 1996 by Merrill Lynch & Co. found that, on average, the
percentage of contractor fleets that was rented increased from 7% in 1994 to
15% at the time of the survey.

Outsourcing Trend. The general trend toward the corporate outsourcing of
non-core competencies is leading large industrial companies increasingly to
rent, rather than purchase, equipment that they require for repairing,
maintaining and upgrading their facilities.

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<PAGE>

The equipment rental industry is highly fragmented, consisting of a small
number of multi-location regional or national operators and a large number of
relatively small, independent businesses serving discrete local markets. Based
upon rental revenues reported by the Rental Equipment Register: (i) there are
only five equipment rental companies that had 1996 equipment rental revenues
in excess of $100 million (with the largest company having 1996 equipment
rental revenues of approximately $400 million), (ii) the largest 100 equipment
rental companies combined have less than a 20% share of the market based on
1996 equipment rental revenues and the Company's estimate of the size of the
market (with the largest company having a market share of less than 3%), and
(iii) there are approximately 100 equipment rental companies that had 1996
equipment rental revenues between $5 million and $100 million. In addition,
the Company estimates that there are more than 20,000 companies with annual
equipment rental revenues of less than $5 million. The Company believes that
the fragmented nature of the industry presents substantial consolidation and
growth opportunities for companies with access to capital and the ability to
implement a disciplined acquisition program. The Company also believes that
the extensive experience of its management team in acquiring and effectively
integrating acquisition targets should enable the Company to capitalize on
these opportunities.

STRATEGY

The Company's objective is to expand its operations and build a large
geographically diversified equipment rental company in the United States and
Canada. The Company believes that as it expands it should gain competitive
advantages relative to smaller operators, including greater purchasing power,
a lower cost of capital, the ability to provide customers with a broader range
of equipment and services and with newer and better maintained equipment, and
greater flexibility to transfer equipment among locations in response to
customer demand. The Company's plan for achieving this objective includes the
following key elements:

Execute Disciplined Acquisition Program. The Company intends to expand
through a disciplined acquisition program. The Company will seek to acquire
companies of varying size, including relatively large companies to serve as
platforms for regional development and smaller companies to complement
existing or anticipated locations. In evaluating potential acquisition
targets, the Company considers a number of factors, including the quality of
the target's rental equipment and management, the opportunities to improve
operating margins and increase internal growth at the target, the economic
prospects of the region in which the target is located, the potential for
additional acquisitions in the region, and the competitive landscape in the
target's markets.

Improve Operating Margins. The Company plans to focus significant efforts on
improving operating margins at acquired companies through the efficient
integration of new and existing operations, the elimination of duplicative
costs, reduction in overhead, and centralization of functions such as
purchasing and information technology.

Increase Internal Growth. The Company believes that a lack of capital has
constrained expansion and modernization at many small and mid-sized equipment
rental companies and that as a result there is significant potential to
increase internal growth at many acquired companies through capital
investment. The Company will seek to increase internal growth by investing in
additional and more modern equipment, using advanced information technology
systems to improve asset utilization and tracking, increasing sales and
marketing efforts, expanding and diversifying the customer segments served,
expanding the geographic areas served, and opening complementary locations.

Open New Rental Locations. The Company also intends to grow by selectively
opening new rental locations in attractive markets where there are no suitable
acquisition targets available or where the cost of a start-up location would
be less than the cost of acquiring an existing business.

Diversify Locations, Equipment Categories and Customers. The Company plans
to diversify geographically and to focus on a broad range of equipment catego-
ries and customer markets within the equipment rental industry. The Company
believes that this will allow it to participate in the overall growth of the
equipment rental

22
<PAGE>

industry and reduce the Company's sensitivity to fluctuations in regional eco-
nomic conditions or changes that affect particular market segments. In order
to achieve this diversification, the Company will consider expansion opportu-
nities in the United States and Canada and will pursue acquisition candidates
with varying equipment mixes and customer specializations.

ACQUISITIONS

The Company believes that there will continue to be a large number of
attractive acquisition opportunities in the equipment rental industry due to
the highly fragmented nature of the industry, the inability of many small and
mid-sized equipment rental companies to expand and modernize due to capital
constraints, and the desire of many long-time owners for liquidity. The
Company has an experienced acquisition team, comprised of senior level
executives with extensive acquisition, operating and financial experience,
that is engaged in identifying and evaluating acquisition candidates and
executing the Company's acquisition program. The Company estimates that, since
the formation of the Company in September 1997, it has preliminarily reviewed
more than 50 potential acquisition candidates and has conducted preliminary
market studies or initiated due diligence on more than 20 of these candidates.

The table below provides certain information concerning the six acquisitions
completed by the Company to date:

<TABLE>
<CAPTION>
YEARS IN 1996
COMPANY RENTAL SITES BUSINESS REVENUES
- ------- ----------------------- -------- -------------
<S> <C> <C> <C>
Mercer Equipment Company Charlotte, NC (2 sites) 8 $14.5 million
Greensboro, NC
A&A Tool Rentals and Sales, Modesto, CA 34 $11.7 million
Inc. Stockton, CA
J&J Rental Services, Inc. Houston, TX 18 $ 9.0 million
Coran Enterprises, Inc. (dba A- Monterey, CA 32 $ 8.4 million
1 Rents) Salinas, CA
and Monterey Bay Equipment San Jose, CA (2 sites)
Rental, Inc.
Bronco Hi-Lift, Inc. Denver, CO 15 $ 5.5 million
Rent-It Center, Inc. Salt Lake City, UT 44 $ 2.8 million
</TABLE>

The aggregate consideration paid by the Company for the Initial Acquired
Companies was $57.7 million and consisted of approximately $53.6 million in
cash, the Stock Consideration (see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Consideration Paid for Initial
Acquired Companies") and a $300,000 convertible note. In addition, the Company
agreed to pay the former owners of one of the Initial Acquired Companies a
percentage of such company's future revenues until an aggregate of $2.8
million has been paid. The Company also repaid all of the outstanding
indebtedness of the Initial Acquired Companies in the aggregate amount of
$33.9 million.

The Company is continually investigating and evaluating potential
acquisitions. However, the Company at present is not party to any definitive
agreements relating to future acquisitions.

START-UP LOCATIONS

The Company is in the process of developing two start-up locations (one in
Austin, Texas and one in Houston, Texas). These projects were commenced by one
of the Initial Acquired Companies prior to being

23
<PAGE>

acquired by the Company and are being continued by the Company. The location
in Austin, Texas is scheduled to open in the first quarter of 1998. The
Company is in the process of performing preliminary market studies relating to
the location in Houston, Texas.

OPERATIONS

The Company currently operates 12 rental locations in five states:
California (6), Colorado (1), North Carolina (3), Texas (1), and Utah (1). The
Company offers for rent a broad array of equipment including light to heavy
construction and industrial equipment, general tools and equipment, and
special event equipment. The Company also engages in related activities such
as selling used rental equipment, acting as a distributor for certain new
equipment, and selling related merchandise and parts. The Company's customer
base is diverse and includes construction industry participants, industrial
companies, and homeowners and other individuals.

EQUIPMENT RENTAL

The Company offers for rent a broad array of equipment on a daily, weekly,
monthly and multi-month basis. The following are examples of the types of
equipment that the Company rents:

Construction and Industrial: aerial lifts, air compressors, backhoes,
boom lifts, bulldozers, cranes, ditching equipment, forklifts,
generators, high reach equipment, pumps, scissor lifts, tractors.

General Tools and Equipment: garden and landscaping equipment, hand
tools, high-pressure washers, paint sprayers, power tools, roto
tillers.

Special Event: barbecue grills, china and flatware, fountains,
lighting, staging and dance floors, tables and chairs, tents and
canopies.

As of November 30, 1997, the Company's rental equipment included
approximately 11,800 units (excluding special event equipment) and had an
original purchase price of approximately $65.7 million and a weighted average
age (based on original purchase price) of approximately four years. The
Company estimates that (based on original purchase price) construction and
industrial equipment represents approximately 95% of the Company's rental
equipment, general tools and equipment represents approximately 4%, and
special event equipment represents approximately 1%. The Company also
estimates that four categories of construction and industrial equipment
(aerial lifts, boom lifts, scissor lifts and high reach equipment) represent
approximately 18% of the Company's rental equipment.

The equipment mix varies at each of the Company's locations, with some
locations offering a general mix and some specializing in specific equipment
categories. The Company expects that as it integrates the Initial Acquired
Companies it will further expand and modernize its rental equipment and expand
and diversify the customer markets served by certain locations.

RELATED OPERATIONS

In addition to renting equipment, the Company is engaged in a variety of
related or complementary activities.

Sales of Used Equipment. The Company routinely sells used rental equipment
to adjust the size, age and composition of its rental fleet. The Company sells
such equipment through a variety of means including sales to the Company's
existing rental customers and local customer base, sales to used equipment
dealers, and sales through public auctions. The Company also participates in
trade-in programs in connection with purchasing new equipment.

Sales of New Equipment. The Company, at several locations, is a distributor
for various tool and equipment manufacturers, including American Honda Motor
Co. Inc. (generators and pumps), Edco

24
<PAGE>

Manufacturing (surfacing equipment), Genie Industries, Inc. (aerial lifts),
Grove Worldwide (aerial platforms), Multiquip, Inc. (compaction equipment and
compressors), Milwaukee Electric Tool Corporation (power tools), Trak
International (loaders and forklifts) and Stihl, Inc. (surface preparation
equipment).

Sales of Related Merchandise and Parts. The Company, at most locations,
sells a variety of merchandise that may be used in conjunction with rental
equipment (such as saw blades, fasteners, drill bits, hard hats, gloves and
other safety equipment) and also sells parts.

Other. The Company at certain locations offers equipment maintenance
services to customers for equipment that is owned by the customer. This
service is primarily provided with respect to equipment purchased from the
Company.

CUSTOMERS AND SALES AND MARKETING

The Company on a pro forma basis rented equipment to over 32,000 customers
in 1996 and over 31,000 customers in the first nine months of 1997. No single
customer accounted for more than 2% of the Company's revenues in 1996 or more
than 1% of its revenues in the first nine months of 1997, and the Company's
top 10 customers accounted for less than 8% of the Company's revenues in 1996
and less than 6% of its revenues in the first nine months of 1997.

The composition of the Company's customer base varies widely by location and
is determined by several factors, including the equipment mix and marketing
focus of the particular location and the business composition of the local
economy. The Company's customer base consists of the following general
categories: (i) construction industry participants (such as construction
companies, contractors and subcontractors), (ii) industrial companies (such as
manufacturers, chemical companies, paper mills and utilities), and (iii)
homeowners and other individuals. The Company estimates that (a) sales to
construction industry participants accounted for approximately 73% of the
Company's revenues in 1996 and the first nine months of 1997, (b) sales to
industrial companies accounted for approximately 22% of the Company's revenues
in 1996 and the first nine months of 1997, and (c) sales to homeowners and
others accounted for approximately 5% of the Company's revenues in 1996 and
the first nine months of 1997.

The Company markets its products and services through a sales force
consisting of approximately 36 store-based salespeople and 38 field-based
salespeople. The Company supplements the activities of its sales force through
participation in industry trade shows and conferences, direct mailings, and
advertising in local industry publications and the yellow pages in the markets
it serves.

PURCHASING

The Company is in the process of centralizing the purchasing of certain
equipment items, particularly large items with a significant cost and items
that are purchased in volume. The Company believes that such centralization
will give it greater purchasing power with its suppliers and enable it to
obtain discounts.

INFORMATION TECHNOLOGY SYSTEMS

The Company will require integrated information technology systems in order
to effectively integrate, manage and optimize its operations as it continues
to execute its growth strategy. The Company is in the process of selecting and
implementing the required systems and plans to complete the process following
completion of the Offerings. The Company expects that these systems will be
used for a variety of purposes, including controlling inventory, monitoring
equipment utilization, tracking customer patterns and preferences, and
managing receivables. Until these new systems are operational, each acquired
business will continue using the systems that it had in place at the time it
was acquired.

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<PAGE>

COMPETITION

The equipment rental industry is highly fragmented and competitive. The
Company's competitors include: public companies or divisions of public
companies (such as Hertz Equipment Rental Corporation, Prime Service, Inc.,
U.S. Rentals, Inc. and Rental Service Corporation); regional competitors which
operate in one or more states; small, independent businesses with one or two
rental locations; and equipment vendors and dealers who both sell and rent
equipment directly to customers. The Company believes that, in general, large
companies enjoy significant competitive advantages compared to smaller
operators, including greater purchasing power, a lower cost of capital, the
ability to provide customers with a broader range of equipment and services
and with newer and better maintained equipment, and greater flexibility to
transfer equipment among locations in response to customer demand. Certain of
the Company's competitors are larger and have greater financial resources than
the Company.

PROPERTIES

The Company currently operates 12 rental locations. These locations
generally include facilities for displaying equipment and, depending on the
location, may include separate equipment service areas and storage areas. The
Company leases the land and buildings comprising its rental locations under
leases that provide for initial terms expiring in 1999 through 2007 and for
renewal options of either five or ten years. These leases were entered into in
connection with the acquisitions of the Initial Acquired Companies and most of
the lessors are the former owners of these companies. The Company believes
that its leases reflect market terms.

The Company maintains a fleet of vehicles that is used for delivery,
maintenance and sales functions. A portion of this fleet is owned and a
portion leased and, as of November 30, 1997, this fleet included 177 vehicles.

The Company's corporate headquarters are located in Greenwich, Connecticut,
where it leases approximately 15,000 square feet under a lease that extends
until 2001 (subject to extension rights).

ENVIRONMENTAL REGULATION

EMPLOYEES

At November 30, 1997, the Company employed 380 persons, including 23
corporate and regional management employees, 283 operational employees and 74
sales people. Of these employees, 119 are salaried

26
<PAGE>

personnel and 261 are hourly personnel. None of the Company's workforce is
represented by a union or a collective bargaining agreement. The Company
considers its labor relations to be good.

LEGAL PROCEEDINGS

The Company and its subsidiaries are parties to various litigation matters,
in most cases involving ordinary and routine claims incidental to the business
of the Company. The ultimate legal and financial liability of the Company with
respect to such pending litigation cannot be estimated with certainty but the
Company believes, based on its examination of such matters, that such ultimate
liability will not have a material adverse effect on the business or financial
condition of the Company.

27
<PAGE>

MANAGEMENT

BACKGROUND

The Company was founded in September 1997 by the following officers of the
Company: Bradley Jacobs, John Milne, Michael Nolan, Robert Miner, Sandra
Welwood, Joseph Kondrup, Jr., Kai Nyby and Richard Volonino. Each of these
officers was formerly a senior executive of United Waste Systems, Inc.
("United Waste") or a senior member of United Waste's acquisition team. United
Waste, a solid waste management company, was formed in 1989 and sold in August
1997 to USA Waste Services, Inc. for stock consideration valued at over $2.2
billion. United Waste executed a growth strategy that combined a disciplined
acquisition program (including over 200 acquisitions completed from January
1995 through August 1997), the integration and optimization of acquired
facilities, and internal growth. At the time it was sold, United Waste was the
sixth largest provider of integrated, non-hazardous solid waste management
services in the United States, as measured by 1996 revenues.

OFFICERS, DIRECTORS AND KEY MANAGERS

The table below identifies, and provides certain information concerning, the
officers, directors and certain key managers of the Company. The Company
expects that an additional independent director will be appointed within 120
days following completion of the Offerings. The Company also expects that Mr.
Hicks, the Company's President and Chief Operating Officer, will be appointed
a director concurrently with the appointment of such additional independent
director.

<TABLE>
<CAPTION>
NAME AGE POSITIONS(1)(2)
---- --- ---------------
<S> <C> <C>
OFFICERS AND DIRECTORS
Bradley S. Jacobs....... 41 Chairman, Chief Executive Officer and Director
Wayland R. Hicks........ 54 President and Chief Operating Officer
John N. Milne........... 38 Vice Chairman, Chief Acquisition Officer, Secretary and Director
Michael J. Nolan........ 36 Chief Financial Officer
Robert P. Miner......... 48 Vice President, Finance
Sandra E. Welwood....... 42 Vice President, Corporate Controller
Kurtis T. Barker........ 37 Regional Vice President, Operations
Daniel E. Imig.......... 51 Regional Vice President, Operations
Joseph J. Kondrup,
Jr. ................... 39 Vice President, Acquisitions
Kai E. Nyby............. 44 Vice President, Acquisitions
Richard A. Volonino..... 54 Vice President, Acquisitions
Ronald M. DeFeo......... 45 Director
Richard J. Heckmann..... 53 Director
Gerald Tsai, Jr. ....... 68 Director
KEY MANAGERS
Joseph E. Bloodworth.... 45 Regional Manager
Joseph E. Doran......... 57 Regional Manager
William M. Rigsbee...... 41 Regional Manager
</TABLE>
- --------

(1) Each officer and director in the table has served in the position(s)
indicated since either September 1997 (in the case of the eight founders),
October 1997 (in the case of Messrs. Barker, Imig, DeFeo and Heckmann),
November 1997 (in the case of Mr. Hicks) or December 1997 (in the case of
Mr. Tsai). The Company's officers are elected by the Board of Directors
and, subject to the employment agreements described below, serve at the
discretion of the Board.
(2) For information concerning the term served by directors, see "--
Classification of Board of Directors."

28
<PAGE>

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

Wayland R. Hicks served in various senior executive positions at Xerox
Corporation where he worked for 28 years (1966-1994). His positions at Xerox
Corporation included Executive Vice President, Corporate Operations (1993-
1994), Executive Vice President, Corporate Marketing and Customer Support
Operations (1989-1993) and Executive Vice President, Engineering and
Manufacturing--Xerox Business Products and Systems Group (1987-1989). Mr.
Hicks served as Vice Chairman and Chief Executive Officer of Nextel
Communications Corp. (1994-1995) and as Chief Executive Officer and President
of Indigo N.V. (1996-1997). He is also a director of Maytag Corporation.

John N. Milne was Vice Chairman and Chief Acquisition Officer of United
Waste Systems, Inc. from 1993 until August 1997 and held other senior
executive positions at United Waste from 1990 until 1993. Mr. Milne had
primary responsibility for implementing United Waste's acquisition program.
From September 1987 to March 1990, Mr. Milne was employed in the Corporate
Finance Department of Drexel Burnham Lambert Incorporated.

Michael J. Nolan served as the Chief Financial Officer of United Waste
Systems, Inc. from February 1994 until August 1997. He served in other finance
positions at United Waste from November 1991 until February 1994, including
Vice President, Finance, from October 1992 to February 1994. From 1985 until
November 1991, Mr. Nolan held various positions at the accounting firm of
Ernst & Young, including senior audit manager, and is a Certified Public
Accountant.

Robert P. Miner was an executive officer of United Waste Systems, Inc. from
November 1994 until August 1997, serving first as Vice President, Finance and
then Vice President, Acquisitions. Prior to joining United Waste, he was a
research analyst with PaineWebber Incorporated (November 1988 to October 1994)
and Needham & Co. (January 1987 to October 1988) and held various managerial
positions at General Electric Environmental Services, Inc., Stauffer Chemical
Company, and OHM Corporation.

Sandra E. Welwood served as Vice President, Controller of United Waste
Systems, Inc. from March 1996 until August 1997. From October 1994 to February
1996, she was Assistant Controller of OSi Specialty, Inc., and from October
1993 to September 1994, was Director of Internal Audit of the Gartner Group,
Inc. Prior to this, Ms. Welwood was a senior audit manager at Ernst & Young
from September 1987 to September 1993, and held various positions (including
senior audit manager) at KPMG Peat Marwick from January 1980 to August 1987,
and is a Certified Public Accountant.

Kurtis T. Barker served as Vice President-Operations-Great Lakes Region of
United Waste Systems, Inc. from 1993 until August 1997. From 1991 to 1993, he
was a landfill operations manager at Chambers Development Company, Inc. From
1990 to 1991, Mr. Barker was a project engineer at South Dakota Disposal
Systems. From 1986 to 1990, he was a project engineer and then a general
manager at Silver King Mines, Inc.

Daniel E. Imig served as President-Mid-Central Region of Waste Management,
Inc. from 1996 to August 1997. From 1978 to 1996, Mr. Imig served in a number
of operating positions at Waste Management, Inc., including District Manager
and Division President.

Joseph J. Kondrup, Jr. was a senior member of United Waste's acquisition
team from March 1996 until August 1997, with responsibility for the company's
entry into and subsequent development of its Rocky Mountain Region. From July
1987 until March 1996, he was Division President of a subsidiary of Waste
Management, Inc.

29
<PAGE>

Kai E. Nyby was a senior member of United Waste's acquisition team from 1995
until August 1997, with responsibility for acquisitions and business
development in the company's Midwest Region. From 1981 to 1995, Mr. Nyby was
the Regional Manager, Midwest Group for Waste Management, Inc. From 1973 to
1980, Mr. Nyby was General Manager, Operations for a subsidiary of Waste
Management, Inc.

Richard A. Volonino was a senior executive officer of United Waste from
November 1991 until August 1997, serving as Chief Operating Officer from 1991
to 1992 and thereafter as Executive Vice President--Acquisitions. From May
1988 to October 1991, Mr. Volonino held various positions, including Vice
President, Operations, with Chambers Development Company, Inc., and from 1986
to December 1987, was District Manager at Laidlaw, Inc.

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

Richard J. Heckmann has served since 1990 as Chairman, President and Chief
Executive Officer of United States Filter Corporation, a leading global
provider of industrial and commercial water and wastewater treatment systems
and services. Mr. Heckmann is also a director of USA Waste Services, Inc. and
K2 Inc.

Gerald Tsai, Jr. served as Chairman, Chief Executive Officer and President
of Delta Life Corporation, an insurance company, from 1993 until the sale of
the company in October 1997. Mr. Tsai was Chairman of the Executive Committee
of the Board of Directors of Primerica Corporation, a diversified financial
services company, from December 1988 until April 1991, and served as Chief
Executive Officer of Primerica Corporation from April 1986 until December
1988. Mr. Tsai is currently a private investor and serves as a director of
Meditrust Corporation, Proffitt's, Inc., Rite Aid Corporation, Sequa
Corporation, Triarc Companies, Inc. and Zenith National Insurance Corp. He
also serves as a trustee of Boston University and New York University Medical
Center.

Joseph E. Bloodworth founded J&J Rental Services, Inc. (and its
predecessors) and served as Chief Executive Officer and President from 1975
until October 1997 when J&J Rental Services, Inc. was acquired by United
Rentals.

Joseph E. Doran served as President of A&A Tool Rentals and Sales, Inc. from
1972 until the acquisition of the company by United Rentals in October 1997.
Mr. Doran served on the Board of Directors of the California Rental
Association for 12 years and was its President from 1985 to 1986.

William M. Rigsbee served as President of Mercer Equipment Company from 1990
until the acquisition of the company by United Rentals in October 1997. He has
been employed in the equipment rental industry since 1978. Mr. Rigsbee is a
former President of both the Carolina Rental Association and the North
Carolina Associated Equipment Distributors.

CAPITAL CONTRIBUTIONS BY OFFICERS AND DIRECTORS

The officers and directors of the Company listed below have made capital
contributions to the Company in the aggregate amount of $46.8 million. Such
capital contributions were made in connection with the sale to such officers
and directors of an aggregate of 13,150,714 shares of Common Stock and
6,342,858 warrants ("Warrants"). Each such Warrant entitles the holder to
purchase one share of Common Stock at an exercise price of $10.00 per share at
any time prior to September 12, 2007. Such shares and Warrants were sold at a
price of $3.50 per unit consisting of one share of Common Stock and one-half
of a Warrant (except that Messrs. Barker and Tsai purchased only Common Stock
at a price of $3.50 per share and Messrs. Hicks, Imig and Heckmann

30
<PAGE>

purchased only Common Stock at a price of $10.00 per share). The table below
indicates (i) the number of shares of Common Stock and the number of Warrants
purchased by such officers and directors and (ii) the aggregate amount paid by
such officers and directors for such securities:

<TABLE>
<CAPTION>
SECURITIES PURCHASED(1)
-------------------------
COMMON
NAME STOCK WARRANTS PURCHASE PRICE
---- ------------ --------------------------
<S> <C> <C> <C>
Bradley S. Jacobs.................. 10,000,000 5,000,000 $35,000,000
Wayland R. Hicks................... 100,000 -- 1,000,000
John N. Milne...................... 1,428,571 714,286 5,000,000
Michael J. Nolan................... 571,429 285,715 2,000,000
Robert P. Miner.................... 285,714 142,857 1,000,000
Sandra E. Welwood.................. 100,000 50,000 350,000
Kurtis T. Barker................... 100,000 -- 350,000
Daniel E. Imig..................... 5,000 -- 50,000
Joseph J. Kondrup, Jr. ............ 100,000 50,000 350,000
Kai E. Nyby........................ 100,000 50,000 350,000
Richard A. Volonino................ 100,000 50,000 350,000
Richard J. Heckmann................ 20,000 -- 200,000
Gerald Tsai, Jr. .................. 240,000 -- 840,000
</TABLE>
- --------
(1) In certain cases includes securities owned by one or more entities
controlled by the named holder.

CLASSIFICATION OF BOARD OF DIRECTORS

The Board of Directors is divided into three classes. The term of office of
the first class (currently comprised of Mr. Tsai) will expire at the annual
meeting of stockholders following the date of this Prospectus, the term of
office of the second class (currently comprised of Mr. DeFeo and Mr. Heckmann)
will expire at the second annual meeting of stockholders following the date of
this Prospectus, and the term of office of the third class (currently
comprised of Mr. Jacobs and Mr. Milne) will expire at the third annual meeting
of stockholders following the date of this Prospectus. At each annual meeting
of stockholders, successors to directors of the class whose term expires at
such meeting will be elected to serve for three-year terms and until their
successors are elected and qualified. See "Certain Charter and By-Law
Provisions--Classified Board of Directors."

COMMITTEES OF THE BOARD

The Board of Directors will establish an Audit Committee and a Compensation
Committee prior to the completion of the Offerings. A majority of the members
of each committee will be directors who are not officers of the Company. The
responsibilities of the Audit Committee include selecting the firm of
independent accountants to be appointed to audit the Company's financial
statements and reviewing the scope and results of the audit with the
independent accountants. The responsibilities of the Compensation Committee
include considering the compensation to be paid to officers, directors and key
employees of the Company and administering the Company's Stock Option Plan.

COMPENSATION OF DIRECTORS

Directors do not currently receive any compensation for attendance at Board
of Directors' meetings. After completion of the Offerings, each director of
the Company will be paid up to $2,500 per day for each Board of Directors'
meeting such director attends, together with an expense reimbursement. Messrs.
DeFeo, Heckmann and Tsai have each been granted options to purchase an
aggregate of 20,000 shares of Common Stock at an exercise price of $15.00 per
share.

31
<PAGE>

COMPENSATION OF CERTAIN OFFICERS

The Company's executive officers are being compensated, and each has been
compensated since joining the Company, in accordance with the terms of the
Employment Agreements described below.

The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company and each of the other executive
officers of the Company during the period August 14, 1997 (inception) through
November 30, 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($) OPTIONS(#)
- --------------------------- --------- ------------
<S> <C> <C>
Bradley S. Jacobs...................................... $71,385 --
Chief Executive Officer
Wayland R. Hicks....................................... 12,307(1) 450,000
President and Chief Operating Officer
John N. Milne.......................................... 46,769 --
Chief Acquisition Officer
Michael J. Nolan....................................... 43,077 --
Chief Financial Officer
Robert P. Miner........................................ 36,923 --
Vice President, Finance
</TABLE>
- --------

(1)Mr. Hicks' employment with the Company commenced on November 14, 1997.

The following tables summarize the options granted to date in 1997 to Mr.
Hicks, the potential value of these options at the end of the option term
(assuming certain levels of appreciation of the Company's Common Stock), and
the total number of options held by such executive officer as of November 30,
1997. None of the other executive officers of the Company named in the Summary
Compensation Table above has been granted options.

OPTION GRANTS IN 1997

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED RATE OF STOCK
SECURITIES OPTIONS EXERCISE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO PRICE TERM(1)
OPTIONS EMPLOYEES PER EXPIRATION ---------------------------
NAME GRANTED IN 1997 SHARE DATE 5% 10%
- ---- ---------- ---------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wayland R. Hicks........ 350,000(2) 43.9% $10.00 11/13/07 $ 2,201,131 $ 5,578,099
50,000(2) 6.3% $15.00 11/13/07 64,447 546,871
50,000(2) 6.3% $20.00 11/13/07 -- 296,871
</TABLE>
- --------

(1) These amounts are based on calculations at hypothetical 5% and 10%
compounded annual appreciation rates prescribed by the Securities and
Exchange Commission and, therefore, are not intended to forecast possible
future appreciation, if any, of the Company's Common Stock price.

(2) These options are not currently vested. These options will vest one-third
in November 1998, one-third in November 1999 and one-third in November
2000. These options were granted pursuant to the Company's 1997 Stock
Option Plan.

32
<PAGE>

VALUE OF OPTIONS AT NOVEMBER 30, 1997

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT NOVEMBER 30, MONEY OPTIONS AT NOVEMBER 30,
NAME 1997 1997
- ---- ----------------------------------- ----------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------- ------------------- ------------- ------------------
<S> <C> <C> <C> <C>
Wayland R. Hicks........ -- 450,000 -- $ 1,050,000(1)
</TABLE>
- --------

(1) Solely for purposes of calculating the value of the indicated options as
of November 30, 1997, as required by the rules of the Securities and
Exchange Commission, the Company has assigned to the Common Stock a value
of $13.00 per share (the midpoint of the estimated price range).

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with each of the
executive officers of the Company. Certain information with regard to these
agreements is set forth below.

The agreements provide for base salary to be paid at a rate per annum as
follows: Mr. Jacobs ($290,000), Mr. Hicks ($400,000), Mr. Milne ($190,000),
Mr. Nolan ($175,000), and Mr. Miner ($150,000). The base salary payable to Mr.
Hicks is payable 50% in cash and 50% in Common Stock (valued at the average
closing sales price of the Common Stock during all trading days in the
calendar quarter preceding the quarter in which the payment is made). Shares
of Common Stock issued to Mr. Hicks are subject to certain restrictions on
transfer as described under "Principal Stockholders--Certain Agreements
Relating to Securities Held by Officers." The base salary payable to Messrs.
Jacobs and Milne is subject to possible upward annual adjustments based upon
changes in a designated cost of living index. The agreements do not provide
for mandatory bonuses. However, the agreements provide that in addition to the
compensation specifically provided for, the Company may pay such salary
increases, bonuses or incentive compensation as may be authorized by the Board
of Directors. The agreements with Messrs. Jacobs and Milne provide for each
such executive to receive an automobile allowance of at least $700 per month.
The agreement with Mr. Hicks provides for the Company to reimburse him for
certain relocation expenses up to a maximum of $100,000.

The employment agreements with the following executives provide that the
term shall automatically renew so that at all times the balance of the terms
will not be less than the period hereinafter specified with respect to such
executive: Mr. Jacobs (five years), Mr. Milne (five years), Mr. Nolan (three
years) and Mr. Miner (three years). The employment agreement with Mr. Hicks
provides for a term extending until November 2000. Under each of the
agreements, the Company or the employee may at any time terminate the
agreement, with or without cause, provided that if the Company terminates the
agreement, the Company is required to make severance payments to the extent
described in the following paragraph.

The employment agreements with Messrs. Jacobs and Milne provide that the
executive is entitled to severance benefits in the event that (i) his
employment agreement is terminated by the Company without Cause (as defined in
the employment agreement), (ii) the executive terminates his employment
agreement for Good Reason (as defined in the employment agreement) or because
of a breach by the Company of its obligations thereunder, (iii) his employment
is terminated as a result of death or (iv) the Company or the executive
terminates the employment agreement due to the disability of the executive.
The severance benefits include (i) a lump sum payment equal to five times the
sum of the executive's annual base salary at the time of termination plus the
highest annual bonus paid to the executive in the preceding three years and
(ii) the continuation of the executive's benefits for such specified period.
The employment agreement with Mr. Hicks provides that the executive is
entitled to a severance payment in the amount of $1 million in the event that
his employment agreement is terminated by the Company without Cause (as
defined in the employment agreement) or he terminates his employment for Good
Reason (as defined in the employment agreement). The employment agreements
with the other officers provide that the executive is entitled to severance
benefits of up to three months' base salary in the event that the executive's
employment agreement is terminated without Cause (as defined in the employment
agreement). The employment agreements with Messrs. Jacobs and Milne provide
that if any portion of the

33
<PAGE>

required severance payment to the executive constitutes an "excess parachute
payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")), the executive is entitled to receive a payment
sufficient on an after-tax basis to offset any excise tax payable by the
executive pursuant to Section 4999 of the Code. Any payment constituting an
"excess parachute payment" would not be deductible by the Company.

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

Pursuant to the employment agreement with Mr. Hicks, Mr. Hicks has been
granted options to purchase an aggregate of 450,000 shares of Common Stock.
For information concerning these options, see "--Compensation of Certain
Officers."

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

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

At the time the employment agreements with Messrs. Jacobs and Milne were
approved by the Board of Directors, the sole members of the Board were Messrs.
Jacobs and Milne. No compensation committee interlocks with other companies
have existed.

STOCK OPTION PLAN

The Board of Directors has adopted the Company's 1997 Stock Option Plan (the
"Stock Option Plan") which provides for the granting of options to purchase
not more than an aggregate of 5,000,000 shares of Common Stock. Some or all of
such options may be "incentive stock options" within the meaning of the Code.
All officers, directors and employees of the Company and other persons who
perform services on behalf of the Company are eligible to participate in the
Stock Option Plan. Each option granted pursuant to the Stock Option Plan must
provide for an exercise price per share that is at least equal to the fair
market value per share of Common Stock on the date of grant. No options may be
granted under the Stock Option Plan after August 31, 2007. The Company has
heretofore granted under the Stock Option Plan options to purchase an
aggregate of 797,500 shares of Common Stock (including the options granted to
Mr. Hicks as described under "--Employment Agreements"). These options have a
weighted average exercise price of $12.49 per share.

The Stock Option Plan provides that it is to be administered by the Board of
Directors (or by a committee appointed by the Board). The Board of Directors
(or any such committee) has full power and authority to interpret the
provisions, and supervise the administration, of the Stock Option Plan. The
Board of Directors (or any such committee) determines, subject to the
provisions of the Stock Option Plan, to whom options shall be granted, the
number of shares of Common Stock subject to an option, whether an option shall
be incentive or non-qualified, the exercise price of each option (which may
not be less than the fair market value on the date of grant), the period
during which each option may be exercised and the other terms and conditions
of each option.

34
<PAGE>

PRINCIPAL STOCKHOLDERS

GENERAL

The table below and the notes thereto set forth as of the date of this
Prospectus certain information concerning the beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934) of the Company's
Common Stock by (i) each director and executive officer of the Company and
(ii) all executive officers and directors of the Company as a group. Except as
indicated in the table, no stockholder is the beneficial owner of more than 5%
of the outstanding Common Stock of the Company. For purposes of the table,
each executive officer is deemed to be the beneficial owner of all shares of
Common Stock that may be acquired upon the exercise of the Warrants held by
such officer. The Warrants are currently exercisable at an exercise price of
$10.00 per share (representing an aggregate exercise price of $61.4 million,
assuming the exercise of all Warrants held by executive officers).
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF COMMON STOCK OWNED(2)
BENEFICIALLY --------------------------------
NAME OWNED(1)(2) BEFORE OFFERINGS AFTER OFFERINGS
- ---- ------------------- ---------------- ---------------
<S> <C> <C> <C>
Bradley S. Jacobs....... 15,000,000(3)(4) 70.2% 52.9%
Wayland R. Hicks........ 100,000 * *
John N. Milne........... 2,142,857(5) 12.5% 8.9%
Michael J. Nolan........ 857,144(6) 5.1% 3.6%
Robert P. Miner......... 428,571(7) 2.6% 1.8%
Ronald M. DeFeo......... 20,000(8) * *
Richard J. Heckmann..... 40,000(9) * *
Gerald Tsai, Jr......... 260,000(10) 1.6% 1.1%
All executive officers
and directors as a
group (8 persons)...... 18,848,572(11) 83.5% 63.7%
</TABLE>
- --------
*Less than 1%.
(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of any
shares as of a given date which such person has the right to acquire
within 60 days after such date. For purposes of computing the percentage
of outstanding shares held by each person or group of persons named above
on a given date, any security which such person or persons has the right
to acquire within 60 days after such date is deemed to be outstanding for
the purpose of computing the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.
(2) In certain cases, includes securities owned by one or more entities
controlled by the named holder.
(3) Consists of 10,000,000 outstanding shares and 5,000,000 shares issuable
upon the exercise of currently exercisable Warrants.
(4) Mr. Jacobs has certain rights relating to the disposition of the shares
and Warrants owned by each of the other officers of the Company (as
described below under "--Certain Agreements Relating to Securities Held by
Officers"). By virtue of such rights, Mr. Jacobs is deemed to share
beneficial ownership (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934) of the shares owned by the other officers
of the Company. The shares that the table indicates are owned by Mr.
Jacobs do not include the shares with respect to which Mr. Jacobs is
deemed to share beneficial ownership as aforesaid. Including such shares,
Mr. Jacobs is deemed the beneficial owner of an aggregate of 19,128,572
shares of Common Stock (comprised of 12,785,714 outstanding shares and
6,342,858 shares issuable upon the exercise of outstanding Warrants).
(5) Consists of 1,428,571 outstanding shares and 714,286 shares issuable upon
the exercise of currently exercisable Warrants.
(6) Consists of 571,429 outstanding shares and 285,715 shares issuable upon
the exercise of currently exercisable Warrants.
(7) Consists of 285,714 outstanding shares and 142,857 shares issuable upon
the exercise of currently exercisable Warrants.

35
<PAGE>

(8) Consists of shares issuable upon the exercise of currently exercisable
options.
(9) Consists of 20,000 outstanding shares and 20,000 shares issuable upon the
exercise of currently exercisable options.

(10) Consists of 240,000 outstanding shares and 20,000 shares issuable upon
exercise of outstanding options.

(11) Consists of 12,545,714 outstanding shares, 6,142,858 shares issuable upon
the exercise of currently exercisable Warrants (which Warrants provide
for an exercise price of $10.00 per share, representing an aggregate
exercise price of $61.4 million assuming exercise of all the Warrants
held by executive officers), and 60,000 shares issuable upon the exercise
of currently exercisable options.

CERTAIN AGREEMENTS RELATING TO SECURITIES HELD BY OFFICERS

Each officer of the Company who purchased securities of the Company prior to
the date hereof (other than Mr. Jacobs and Mr. Hicks) has entered into an
agreement with the Company and Mr. Jacobs that provides that (i) if Mr. Jacobs
sells any Common Stock or Warrants that he beneficially owns in a commercial,
non-charitable transaction, then Mr. Jacobs is required to use his best
efforts to sell (and has the right to sell subject to certain exceptions) on
behalf of such officer a pro rata portion of such officer's Common Stock or
Warrants at then prevailing prices, and (ii) except for sales that may be
required to be made as aforesaid, the officer shall not (without the prior
written consent of the Company) sell or otherwise dispose of the Common Stock
or Warrants currently owned by such officer (subject to certain exceptions for
charitable gifts). The foregoing provisions of the agreements terminate in
September or October 2002.

Each officer of the Company who purchased securities of the Company prior to
the date hereof (other than Mr. Jacobs and Mr. Hicks) has also agreed pursuant
to such agreements that the Company, in its sole discretion, may (i) prior to
September 1, 2005, repurchase the securities in the event that such officer
breaches any agreement with the Company or acts adversely to the interest of
the Company and (ii) repurchase such securities without any cause (provided
that such repurchase right without cause will lapse with respect to one-third
of the securities on the first, second and third anniversaries of the date of
such agreements). The amount to be paid by the Company in the event of a
repurchase will be equal to the amount originally paid by such officer for
such securities plus an amount representing a 10% annual return on such
amount. See "Management--Capital Contributions by Officers and Directors" for
information concerning the amounts paid by such officers of the Company for
the securities of the Company currently owned by them.

Mr. Hicks has agreed that (i) he will not transfer any shares of Common
Stock heretofore purchased by him until November 1998 and (ii) he will not
transfer any shares of Common Stock that are hereafter issued to him as
compensation pursuant to his employment agreement for a one-year period
following the date of issuance. See "Management--Employment Agreements."

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 75,000,000 shares of
Common Stock, par value $0.01 per share, and 5,000,000 shares of Preferred
Stock, par value $0.01 per share (the "Preferred Stock"). As of the date of
this Prospectus, there are 16,376,156 shares of Common Stock outstanding.
After giving effect to the Offerings, there will be 23,376,156 shares of
Common Stock outstanding (24,426,156 if the Underwriters' over-allotment
option is exercised in full). As of the date of this Prospectus, there are no
shares of Preferred Stock outstanding or reserved for issuance.

The following description of the Company's capital stock is a summary of the
material terms of such stock. The following does not purport to be complete
and is subject in all respects to applicable Delaware law and to the
provisions of the Company's Certificate of Incorporation and By-laws.

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote per share
held on all matters submitted to a vote at a meeting of stockholders. Each
stockholder may exercise such vote either in person or by proxy. Stockholders
are not entitled to cumulate their votes for the election of directors, which
means that, subject to such rights as may be granted to the holders of shares
of Preferred Stock, if any, the holders of more than 50% of the outstanding
shares of Common Stock are able to elect all of the directors to be elected by
holders of shares of Common Stock and the holders of the remaining shares of
Common Stock will not be able to elect any director. Subject to such
preferences to which holders of shares of Preferred Stock, if any, may be
entitled, the holders of outstanding shares of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared from time to time
by the Board of Directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the holders
of outstanding shares of Common Stock are entitled to share ratably in all
assets of the Company which are legally available for distribution to
stockholders, subject to the prior rights on liquidation of creditors and to
preferences, if any, to which holders of shares of Preferred Stock, if any,
may be entitled. The holders of outstanding shares of Common Stock do not have
any preemptive, subscription, redemption or sinking fund rights. The
outstanding shares of Common Stock are, and the shares issued in the Offerings
will upon issuance and sale as contemplated hereby be, duly authorized,
validly issued, fully paid and nonassessable.

PREFERRED STOCK

The Company is authorized by its Certificate of Incorporation to issue up to
5,000,000 shares of Preferred Stock, in one or more series and containing such
rights, privileges and limitations, including dividend rights, voting rights,
conversion privileges, redemption rights, liquidation rights and/or sinking
fund rights, as may from time to time be determined by the Board of Directors
of the Company. Preferred Stock may be issued in the future in connection with
acquisitions, financings or such other matters as the Board of Directors deems
to be appropriate. In the event that any such shares of Preferred Stock shall
be issued, a Certificate of Designation, setting forth the series of such
Preferred Stock and the relative rights, privileges and limitations with
respect thereto, is required to be filed with the Secretary of State of the
State of Delaware. The effect of having such Preferred Stock authorized is
that the Company's Board of Directors alone, within the bounds and subject to
the federal securities laws and the Delaware General Corporation Law (the
"Delaware law"), may be able to authorize the issuance of Preferred Stock,
which may adversely affect the voting and other rights of holders of Common
Stock. The issuance of Preferred Stock may also have the effect of delaying or
preventing a change in control of the Company.

WARRANTS, OPTIONS AND CONVERTIBLE NOTES

There are currently outstanding Warrants to purchase an aggregate of
6,344,058 shares of Common Stock. Each such Warrant provides for an exercise
price of $10.00 per share and may be exercised at any time until September 12,
2007.

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<PAGE>

There are currently outstanding options to purchase an aggregate of 797,500
shares of Common Stock. These options provide for exercise prices ranging from
$10.00 to $30.00 per share, with the weighted average exercise price being
$12.49 per share. Of these options, options to purchase an aggregate of 60,000
shares of Common Stock are currently exercisable and options to purchase
737,500 shares of Common Stock will become exercisable in installments over
specified periods.

A portion of the consideration paid by the Company for one of the Initial
Acquired Companies consisted of a $300,000 convertible note, which note is
convertible into Common Stock following completion of the Offerings at a
conversion price per share equal to 120% of the initial offering price per
share in the Offerings.

LISTING

The Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "URI", subject to official notice of issuance.

TRANSFER AGENT AND REGISTRAR

American Stock Transfer & Trust Company will serve as transfer agent and
registrar for the Common Stock.

CERTAIN CHARTER AND BY-LAW PROVISIONS

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

CLASSIFIED BOARD OF DIRECTORS

The Certificate provides that the Board shall be divided into three classes
and that the number of directors in each class shall be as nearly equal as is
possible based upon the number of directors constituting the entire Board. The
Certificate effectively provides that the term of office of the first class
will expire at the annual meeting of stockholders following the date of this
Prospectus, the term of office of the second class will expire at the second
annual meeting of stockholders following the date of this Prospectus, and the
term of office of the third class will expire at the third annual meeting of
stockholders following the date of this Prospectus. At each annual meeting of
stockholders, successors to directors of the class whose term expires at such
meeting will be elected to serve for three-year terms and until their
successors are elected and qualified.

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

NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES

The Certificate provides that, subject to any rights of holders of Preferred
Stock to elect additional directors under specified circumstances, the number
of directors comprising the entire Board will be fixed from time to time by
action of not less than a majority of the directors then in office. If the
number of directors is at any time fixed at three or greater, then thereafter
in no event shall such number be less than three or more than nine,

38
<PAGE>

unless approved by action of not less than two-thirds of the directors then in
office. In addition, the Certificate provides that, subject to any rights of
holders of Preferred Stock, newly created directorships resulting from an
increase in the authorized number of directors or vacancies on the Board
resulting from death, resignation, retirement, disqualification or removal of
directors or any other cause may be filled only by the Board (and not by the
stockholders unless there are no directors in office), provided that a quorum
is then in office and present, or by a majority of the directors then in
office, if less than a quorum is then in office, or by the sole remaining
director. Accordingly, the Board could prevent any stockholder from enlarging
the Board and filling the new directorships with such stockholder's own
nominees.

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

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

LIMITATION ON SPECIAL MEETINGS; NO STOCKHOLDER ACTION BY WRITTEN CONSENT

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

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER
PROPOSALS

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

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

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

39
<PAGE>

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

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

Although the By-laws do not give the Board any power to approve or
disapprove stockholder nominations for the election of directors or proposals
for action, the foregoing provisions may have the effect of precluding a
contest for the election of directors or the consideration of stockholder
proposals and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal, if the proper advance notice procedures are not followed,
without regard to whether consideration of such nominees or proposals might be
harmful or beneficial to the Company and its stockholders.

CERTAIN PROVISIONS RELATING TO POTENTIAL CHANGE OF CONTROL

The Certificate authorizes the Board and any committee of the Board to take
such action as it may determine to be reasonably necessary or desirable to
encourage any person or entity to enter into negotiations with the Board and
management regarding any transaction which may result in a change of control
of the Company, or to contest or oppose any such transaction which the Board
determines to be unfair, abusive or otherwise undesirable to the Company, its
business, assets, properties or stockholders. The Board or any such committee
is specifically authorized to adopt plans or to issue securities of the
Company including plans, rights, options, capital stock, notes, debentures or
other debt securities, which securities may be exchangeable or convertible
into cash or other securities on such terms and conditions as the Board or any
such committee determines. In addition, the Board or such committee of the
Board may provide that any holder or class of holders of such designated
securities will be treated differently than all other security holders in
respect of the terms, conditions, provisions and rights of such securities.

The existence of this authority or the actions which may be taken by the
Board pursuant thereto are intended to give the Board flexibility in order to
act in the best interests of stockholders in the event of a potential change
of control transaction. Such provisions may, however, deter potential
acquirors from proposing unsolicited transactions not approved by the Board
and might enable the Board to hinder or frustrate such a transaction if
proposed.

LIMITATION OF LIABILITY OF DIRECTORS

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

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<PAGE>

AMENDMENT OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS

The Certificate contains provisions requiring the affirmative vote of the
holders of at least 66 2/3% of the voting power of the Voting Stock to amend
certain provisions of the Certificate (including the provisions discussed
above relating to the size and classification of the Board, replacement and/or
removal of directors, action by written consent, special stockholder meetings,
the authorization for the Board to take steps to encourage or oppose, as the
case may be, transactions which may result in a change of control of the
Company, and limitation of the liability of directors) or to amend any
provision of the By-laws by action of stockholders following the Offerings.
These provisions make it more difficult for stockholders to make changes in
the Certificate and the By-laws, including changes designed to facilitate the
exercise of control over the Company.

SHARES ELIGIBLE FOR FUTURE SALE

No prediction can be made as to the effect, if any, that future sales of
Common Stock, or the availability of Common Stock for future sale, will have
on the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock (including shares issued upon exercise of
warrants or options), or the perception that such sales could occur, may
adversely affect prevailing market prices for the Common Stock. The number of
outstanding shares of Common Stock available for sale in the public market
will be limited by (i) agreements with the Underwriters pursuant to which the
Company, each of its officers and directors and the holders of the 318,712
shares issued as consideration for acquisitions have agreed not to sell or
otherwise dispose of any shares of Common Stock (including shares that may be
acquired upon the exercise of currently exercisable warrants) for a period of
180 days after the date of this Prospectus without the prior written consent
of Merrill Lynch & Co., on behalf of the Underwriters (except that the Company
may issue shares as consideration for acquisitions, provided that the Company
may not issue in excess of 500,000 shares for acquisitions unless the
recipients of any excess shares agree to be subject to the foregoing lock-up
agreement with respect to such excess shares); (ii) agreements with the
Company (the "Stockholder Lock-up Agreements") pursuant to which each other
holder of currently outstanding shares of Common Stock has agreed not to sell
or otherwise transfer such shares without the prior written consent of the
Company (such agreements to lapse with respect to one-third of such shares on
the first, second and third anniversaries of the closing of the Offerings,
respectively); and (iii) an agreement with the Underwriters pursuant to which
the Company has agreed not to waive any Stockholder Lock-up Agreement for a
period of 180 days after the date of this Prospectus without the prior written
consent of Merrill Lynch & Co., on behalf of the Underwriters. See
"Underwriting." Subject to the foregoing agreements, substantially all of the
Company's outstanding shares of Common Stock and all shares that may hereafter
be issued upon the exercise of outstanding warrants will be eligible for sale
pursuant to a shelf registration statement covering such shares that the
Company intends to file prior to completion of the Offerings. The Company
expects to have such shelf registration statement declared effective upon the
completion of the Offerings. This registration statement will (subject to the
above-mentioned agreements and restrictions) enable the holders of such shares
to publicly dispose of such shares from time to time.

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<PAGE>

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

PERSONAL HOLDING COMPANY TAX

If both (i) more than 50% of the Company's stock is owned directly,
indirectly or by application of certain attribution rules, by five or fewer
individuals (including certain tax-exempt corporations, certain trusts, and
residents and citizens of the United States or another country) at any time
during the last half of the Company's taxable year (the "PHC Ownership Test"),
and (ii) at least 60% of the Company's adjusted ordinary gross income for the
taxable year is "personal holding company income" (the "PHC Income Test"),
then the Company will be subject to United States personal holding company
tax, in addition to its regular income tax, at a current rate of 39.6% on its
"undistributed personal holding company income" for the taxable year.

Personal holding company income of a corporation is the portion of the
corporation's adjusted ordinary gross income that consists of certain types of
passive income, including certain dividends, interest, annuities, rents and
royalties (in some circumstances, this is true even if the rents and royalties
are derived from the active conduct of a trade or business). The undistributed
personal holding company income of a corporation is based on its net taxable
income (which excludes, for example, income exempt from regular federal income
tax), adjusted to reflect (among other things) deductions for federal income
taxes and dividends to shareholders paid by the Company.

The Company expects to satisfy the PHC Ownership Test for the taxable year
ending December 31, 1997 and, even after giving effect to the Offerings, may
satisfy such test for taxable years ending thereafter. The Company does not,
however, believe that it will satisfy the PHC Income Test for the taxable year
ending December 31, 1997 and intends to manage its affairs so that it will not
satisfy the PHC Income Test for any taxable year ending thereafter.

CERTAIN CONSIDERATIONS RELATING TO NON-U.S. HOLDERS

The following is a general discussion of certain United States federal
income and estate tax considerations with respect to the ownership and
disposition of Common Stock applicable to Non-U.S. Holders who hold the Common
Stock as a capital asset within the meaning of Section 1221 of the Code. In
general, a "Non-U.S. Holder" is any holder other than (i) a citizen or
resident of the United States, (ii) a corporation created or organized in the
United States or under the laws of the United States or of any state, (iii) an
estate, the income of which is includable in gross income for United States
federal income tax purposes regardless of its source, or (iv) a trust if (a) a
court within the United States is able to exercise primary supervision over
the administration of the trust and (b) one or more United States persons have
the authority to control all substantial decisions of the trust. This
discussion is based on current law, which is subject to change (possibly with
retroactive effect), and is for general information only. This discussion does
not address aspects of United States federal taxation other than income and
estate taxation and does not address all aspects of income and estate taxation
or any aspects of state, local or non-United States taxes, nor does it
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder. In addition, persons that hold the Common Stock through
"hybrid entities" may be subject to special rules and may not be entitled to
the benefits of a U.S. income tax treaty. ACCORDINGLY, PROSPECTIVE INVESTORS
ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES FEDERAL,
STATE, LOCAL AND NON-UNITED STATES INCOME AND OTHER TAX CONSIDERATIONS OF
HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.

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

Dividends

In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate of the gross amount (or a lower rate
prescribed by an applicable income tax treaty) unless the dividends are U.S.
trade or business income. Dividends that are U.S. trade or business income
generally will not be subject to

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<PAGE>

United States withholding tax if the Non-U.S. Holder files certain forms,
including Internal Revenue Service Form 4224, with the payor of the dividend,
and generally will be subject to United States federal income tax on a net
income basis, in the same manner as if the Non-U.S. Holder were a resident of
the United States. A Non-U.S. Holder that is a corporation may be subject to
an additional branch profits tax at a rate of 30% (or such lower rate as may
be specified by an applicable income tax treaty). To determine the
applicability of a tax treaty providing for a lower rate of withholding under
the currently effective United States Treasury Department regulations (the
"Current Regulations"), dividends paid to an address in a foreign country are
presumed to be paid to a resident of that country absent knowledge to the
contrary.

Under United States Treasury Department regulations issued on October 6,
1997 (the "Final Regulations") generally effective for payments made after
December 31, 1998, a Non-U.S. Holder (including in certain cases of Non-U.S.
Holders that are fiscally transparent entities, the owner or owners of such
entity) will be required to provide to the payor certain documentation that
such Non-U.S. Holder (or the owner or owners of such fiscally transparent
entities) is a foreign person in order to claim a reduced rate of withholding
pursuant to an applicable income tax treaty. In addition, if the Common Stock
ceases to be actively traded, then a Non-U.S. Holder claiming the benefits of
a treaty may also be required to provide a U.S. taxpayer identification
number, a certificate of residence in the foreign country (or other acceptable
proof of such residence). Under the Final Regulations, persons claiming that
dividends are U.S. trade or business income will generally be required to
provide a Form W-8, including a taxpayer identification number, certifying
that the income is U.S. trade or business income.

Gain on Sale or Other Disposition of Common Stock

In general, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the sale or other disposition of such
holder's shares of Common Stock unless (i) the gain is U.S. trade or business
income, if; (ii) the Non-U.S. Holder is an individual who holds shares of
Common Stock as a capital asset and is present in the United States for 183
days or more in the taxable year of disposition, and certain other tests are
met; (iii) the Non-U.S. Holder is subject to tax pursuant to the provisions of
the U.S. tax law applicable to former citizens and residents of the United
States; or (iv) the Company is or has been a United States real property
holding corporation (a "USRPHC") for United States federal income tax purposes
(which the Company does not believe that it is or is likely to become) at any
time within the shorter of the five year period preceding such disposition or
such Non-U.S. Holder's holding period. If the Company were or were to become a
USRPHC at any time during this period, gains realized upon a disposition of
Common Stock by a Non-U.S. Holder which did not directly or indirectly own
more than 5% of the Common Stock during this period generally would not be
subject to United States federal income tax, provided that the Common Stock is
regularly traded on an established securities market.

Estate Tax

Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as defined for United States federal estate tax purposes) of the
United States at the time of death will be includable in the individual's
gross estate for United States federal estate tax purposes unless an
applicable estate tax treaty provides otherwise, and therefore may be subject
to United States federal estate tax.

Backup Withholding, Information Reporting and Other Reporting Requirements

The Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply
regardless of whether withholding was reduced or eliminated by an applicable
tax treaty. Copies of this information also may be made available under the
provisions of a specific treaty or agreement with the tax authorities in the
country in which the Non-U.S. Holder resides or is established.

Under the Current Regulations, United States backup withholding tax (which
generally is imposed at the rate of 31% on certain payments to persons that
fail to furnish the information required under the United States information
reporting requirements) and information reporting requirements (other than
those discussed above under "--Dividends") generally will not apply to
dividends paid on Common Stock to a Non-U.S. Holder at an

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<PAGE>

address outside the United States. Backup withholding and information
reporting generally will apply, however, to dividends paid on shares of Common
Stock to a Non-U.S. Holder at an address in the United States, if such holder
fails to establish an exemption or to provide certain other information to the
payor.

Under the Current Regulations, the payment of proceeds from the disposition
of Common Stock to or through a United States office of a broker will be
subject to information reporting and backup withholding unless the beneficial
owner, under penalties of perjury, certifies, among other things, its status
as a Non-U.S. Holder or otherwise establishes an exemption. The payment of
proceeds from the disposition of Common Stock to or through a non-U.S. office
of a non-U.S. broker generally will not be subject to backup withholding and
information reporting except as noted below. In the case of proceeds from a
disposition of Common Stock paid to or through a non-U.S. office of a broker
that is (i) a United States person, (ii) a "controlled foreign corporation"
for United States federal income tax purposes, or (iii) a foreign person 50%
or more of whose gross income from certain periods is effectively connected
with a United States trade or business, information reporting (but not backup
withholding) will apply unless the broker has documentary evidence in its
files that the owner is a Non-U.S. Holder (and the broker has no actual
knowledge to the contrary).

Under the Final Regulations, the payment of dividends or the payment of
proceeds from the disposition of Common Stock to a Non-U.S. Holder may be
subject to information reporting and backup withholding unless such recipient
provides to the payor certain documentation as to its status as a Non-U.S.
Holder or otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded
or credited against the Non-U.S. Holder's United States federal income tax
liability, if any, provided that the required information is furnished to the
Internal Revenue Service in a timely manner.

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<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in a U.S. purchase agreement
(the "U.S. Purchase Agreement") among the Company and the underwriters named
below (the "U.S. Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Donaldson, Lufkin & Jenrette Securities
Corporation and Deutsche Morgan Grenfell Inc. are acting as representatives
(the "U.S. Representatives") and concurrently with the sale of 1,400,000
shares of Common Stock to the International Managers (as defined below), the
Company has agreed to sell to the U.S. Underwriters, and each of the U.S.
Underwriters severally has agreed to purchase from the Company, the number of
shares of Common Stock set forth opposite its name below.

<TABLE>
<CAPTION>
U.S. UNDERWRITER NUMBER OF SHARES
---------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Donaldson, Lufkin & Jenrette Securities Corporation.....
Deutsche Morgan Grenfell Inc. ..........................
---------
Total.............................................. 5,600,000
=========
</TABLE>

The Company has also entered into an international purchase agreement (the
"International Purchase Agreement") with certain underwriters outside the
United States and Canada (the "International Managers" and, together with the
U.S. Underwriters, the "Underwriters") for whom Merrill Lynch International,
Donaldson, Lufkin & Jenrette International and Morgan Grenfell & Co. Limited
are acting as lead managers (the "Lead Managers"). Subject to the terms and
conditions set forth in the International Purchase Agreement, and concurrently
with the sale of 5,600,000 shares of Common Stock to the U.S. Underwriters
pursuant to the U.S. Purchase Agreement, the Company has agreed to sell to the
International Managers, and the International Managers severally have agreed
to purchase from the Company, an aggregate of 1,400,000 shares of Common
Stock. The initial offering price per share and the total underwriting
discount per share of Common Stock are identical under the U.S. Purchase
Agreement and the International Purchase Agreement.

In the U.S. Purchase Agreement and the International Purchase Agreement, the
several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant
to such agreement are purchased. The closings with respect to the sale of
shares of Common Stock to be purchased by the U.S. Underwriters and the
International Managers are conditioned upon one another.

The U.S. Representatives have advised the Company that the U.S. Underwriters
propose initially to offer the shares of Common Stock to the public at the
initial public offering price set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of $ per
share of Common Stock. The U.S. Underwriters may allow, and such dealers may
reallow, a discount not in excess of $ per share of Common Stock on sales to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.

The Company has granted an option to the U.S. Underwriters exercisable for
30 days after the date of this Prospectus, to purchase up to an aggregate of
840,000 additional shares of Common Stock at the initial public offering price
set forth on the cover page of the Prospectus, less the underwriting discount.
The U.S. Underwriters may exercise this option only to cover over-allotments,
if any, made on the sale of the Common Stock offered hereby. To the extent
that the U.S. Underwriters exercise this option, each U.S. Underwriter will be
obligated, subject to certain conditions, to purchase a number of additional
shares of Common Stock

45
<PAGE>

proportionate to such U.S. Underwriter's initial amount reflected in the
foregoing table. The Company also has granted an option to the International
Managers, exercisable for 30 days after the date of this Prospectus to
purchase up to an aggregate of 210,000 additional shares of Common Stock to
cover over-allotments, if any, on terms similar to those granted to the U.S.
Underwriters.

The Company, all executive officers and directors of the Company and the
holders of the 318,712 shares of Common Stock issued as consideration for
acquisitions have agreed, subject to certain exceptions, not to directly or
indirectly (a) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of or otherwise dispose of or transfer
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or thereafter acquired by the
person executing the agreement or with respect to which the person executing
the agreement thereafter acquires the power of disposition, or file a
registration statement under the Securities Act with respect to the foregoing
or (b) enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of the Common Stock whether any
such swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, without the prior written consent of Merrill
Lynch & Co. on behalf of the Underwriters for a period of 180 days after the
date of this Prospectus. The foregoing agreement will not limit a
stockholder's ability to transfer shares in a private placement or to pledge
shares, provided that the transferee or pledgee agrees to be bound by such
agreement. The foregoing agreement also will not limit the Company's ability
to (i) grant stock options under the 1997 Stock Option Plan, (ii) issue shares
as consideration for acquisitions (provided that the Company may not issue in
excess of 500,000 shares for acquisitions unless the recipients of such excess
shares agree to be subject to the foregoing lock-up with respect to such
excess shares), (iii) file a shelf registration statement with respect to the
possible resale of outstanding shares of Common Stock or shares of Common
Stock that may be acquired upon exercise of outstanding warrants (provided
that no sales may be made under such registration statement during the 180-day
lock-up period), (iv) file a registration statement with respect to Common
Stock or other securities to be issued as consideration for an acquisition or
with respect to the potential resale of shares issued as consideration for an
acquisition (provided that no sales may be made pursuant to such registration
statement except to the extent permitted by clause (ii) above) or (v) file a
registration statement registering the shares that may be issued pursuant to
options granted or to be granted under the 1997 Stock Option Plan.

The Company has also agreed not to waive any lock-up agreement that was
agreed to by certain stockholders of the Company in connection with the
issuance to them of 3,033,873 shares of Common Stock, without the prior
written consent of Merrill Lynch & Co. on behalf of the Underwriters, for a
period of 180 days after the date of this Prospectus. This effectively
prohibits such stockholders from selling or otherwise disposing of any such
shares for a period of 180 days after the date of this Prospectus, without the
prior written consent of Merrill Lynch & Co., on behalf of the Underwriters.

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, the U.S. Underwriters and the International Managers are permitted
to sell shares of Common Stock to each other for purposes of resale at the
initial public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are non-U.S. or
non-Canadian persons or to persons they believe intend to resell to persons
who are non-U.S. or non-Canadian persons, and the International Managers and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to U.S. persons or to Canadian persons or to
persons they believe intend to resell to U.S. or Canadian persons, except in
the case of transactions pursuant to the Intersyndicate Agreement.

Prior to the Offerings, there has been no public market for the Common Stock
of the Company. The initial public offering price will be determined through
negotiations among the Company, the U.S. Representatives and the Lead
Managers. The factors to be considered in determining the initial public
offering price, in addition to prevailing market conditions, are the history
of and the prospects for the Company and the industry in which it competes, an
assessment of the Company's management, the past and present operations of the
Company and

46
<PAGE>

the Initial Acquired Companies and the trend of its pro forma revenues and
earnings, the prospects for future earnings of the Company, the prices of
similar securities of generally comparable companies and other relevant
factors. There can be no assurance that an active trading market will develop
for the Common Stock or that the Common Stock will trade in the public market
subsequent to the Offerings at or above the initial public offering price.

The Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "URI", subject to official notice of issuance. In
order to meet the requirements for listing of the Common Stock on that
exchange, the U.S. Underwriters and the International Managers have undertaken
to sell lots of 100 or more shares to a minimum of 2,000 beneficial owners.

The Underwriters have reserved for sale, at the initial public offering
price, up to 700,000 shares of Common Stock for certain employees, directors,
and business associates of, and certain other persons designated by, the
Company who have expressed an interest in purchasing such shares of Common
Stock. The number of shares available for sale to the general public in the
Offerings will be reduced to the extent such persons purchase such reserved
shares. Any reserved shares not so purchased will be offered to the general
public on the same basis as other shares offered hereby.

The Underwriters do not intend to confirm sales of the Common Stock offered
hereby to any accounts over which they exercise discretionary authority.

The Company has agreed to indemnify the U.S. Underwriters and the
International Managers against certain liabilities, including certain
liabilities under the Securities Act.

Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Common Stock. As an exception to these
rules, the U.S. Representatives are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions
consist of bids or purchases for the purposes of pegging, fixing or
maintaining the price of the Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the U.S.
Representatives may reduce that short position by purchasing Common Stock in
the open market. The U.S. Representatives may also elect to reduce any short
position by exercising all or part of the over-allotment option described
above.

The U.S. Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the U.S.
Representatives purchase shares of Common Stock in the open market to reduce
the Underwriters' short position or to stabilize the price of the Common
Stock, they may reclaim the amount of the selling concession from the
Underwriters and selling group members who sold those shares as part of the
Offerings.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the U.S. Representatives will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.

47
<PAGE>

LEGAL MATTERS

Certain legal matters in connection with the Offerings will be passed upon
for the Company by Weil, Gotshal & Manges LLP, New York, New York, and
Ehrenreich Eilenberg Krause & Zivian LLP, New York, New York. Certain legal
matters in connection with the Offerings will be passed upon for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.

EXPERTS

The financial statements of United Rentals, Inc. at September 30, 1997 and
for the period from August 14, 1997 (Inception) to September 30, 1997, and the
financial statements of J&J Rental Services, Inc. and Bronco Hi-Lift, Inc. at
December 31, 1995 and 1996 and for each of the three years in the period ended
December 31, 1996, appearing in this Prospectus and Registration Statement,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.

The consolidated financial statements of A&A Tool Rentals & Sales, Inc. and
subsidiary as of October 19, 1997, October 31, 1996, and 1995, and for the
period from November 1, 1996 to October 19, 1997 and for the years ended
October 31, 1996 and 1995, have been included herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.

The financial statements of MERCER Equipment Company appearing in this
Prospectus have been audited by Webster Duke & Co., independent auditors, as
set forth in their reports thereon included elsewhere herein and in the
Registration Statement of which this Prospectus is a part, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.

The combined financial statements of Coran Enterprises, Inc. (dba A-1 Rents)
and Monterey Bay Equipment Rental, Inc., appearing in this Prospectus and
Registration Statement, have been audited by Grant Thornton LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C. a Registration Statement on Form S-1
(together with all amendments thereto, the "Registration Statement"), under
the Securities Act with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules filed therewith, certain
portions of which have been omitted as permitted by the rules and regulations
of the Commission. For further information with respect to the Company and the
Common Stock offered hereby, reference is hereby made to the Registration
Statement and to the exhibits and schedules filed therewith. Statements
contained in this Prospectus regarding the contents of any contract or other
document referred to are not necessarily complete and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being deemed to be
qualified in its entirety by such reference. The Registration Statement,
including all exhibits and schedules thereto, may be inspected without charge
at the principal office of the Commission located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Midwest Regional Office of the Commission
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and at the Northeast Regional office of the Commission
located at Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material may be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Room 1204, Washington, D.C. 20549,
at prescribed rates.

48
<PAGE>

The Commission maintains an Internet web site that contains reports, proxy
and information statements and other information regarding issuers that file
electronically with the Commission. The address of that site is
http://www.sec.gov.

Prior to filing the Registration Statement of which this Prospectus is a
part, the Company was not subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Upon effectiveness of the Registration Statement, the Company will
become subject to the informational and periodic reporting requirements of the
Exchange Act, and in accordance therewith, will file periodic reports, proxy
statements, and other information with the Commission. Such periodic reports,
proxy statements, and other information will be available for inspection and
copying at the public reference facilities and other regional offices referred
to above. The Company intends to register the securities offered by the
Registration Statement under the Exchange Act simultaneously with the
effectiveness of the Registration Statement and to furnish its stockholders
with annual reports containing audited financial statements and such other
reports as may be required from time to time by law.

49
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
I. Pro Forma Consolidated Financial Statements of United Rentals, Inc.
Introduction........................................................ F-3
Pro Forma Consolidated Balance Sheets--September 30, 1997
(unaudited)........................................................ F-4
Pro Forma Consolidated Statements of Operations for the Nine Months
Ended September 30, 1997 (unaudited)............................... F-5
Pro Forma Consolidated Statements of Operations for the Year Ended
December 31, 1996 (unaudited)...................................... F-6
Notes to Pro Forma Consolidated Financial Statements................ F-7
II. Financial Statements of United Rentals, Inc.
Report of Independent Auditors...................................... F-9
Balance Sheet--September 30, 1997................................... F-10
Statement of Operations for the period from August 14, 1997
(Inception) to September 30, 1997.................................. F-11
Statement of Stockholders' Equity for the period from August 14,
1997 (Inception) to September 30, 1997............................. F-12
Statement of Cash Flows for the period from August 14, 1997
(Inception) to September 30, 1997.................................. F-13
Notes to Financial Statements....................................... F-14
III. Financial Statements of MERCER Equipment Company
Independent Auditor's Report........................................ F-18
Balance Sheets--December 31, 1995 and 1996 and September 30, 1997
(unaudited)........................................................ F-19
Statements of Income and Retained Earnings for the Years Ended
December 31, 1994, 1995 and 1996 and for the Nine Months Ended
September 30, 1996 and 1997 (unaudited)............................ F-20
Statements of Cash Flows for the Years Ended December 31, 1994, 1995
and 1996 and for the Nine Months Ended September 30, 1996 and 1997
(unaudited)........................................................ F-21
Notes to Financial Statements....................................... F-22
IV. Consolidated Financial Statements of A&A Tool Rentals & Sales, Inc.
and subsidiary
Independent Auditor's Report........................................ F-27
Consolidated Balance Sheets--October 31, 1995 and 1996 and October
19, 1997 and July 31, 1997 (unaudited)............................. F-28
Consolidated Statements of Operations for the Years Ended October
31, 1995 and 1996 and for the period from November 1, 1996 to
October 19, 1997 and for the Nine Months Ended July 31, 1996 and
1997 (unaudited)................................................... F-29
Consolidated Statements of Stockholders' Equity for the Years Ended
October 31, 1995 and 1996 and for the period from November 1, 1996
to October 19, 1997 ............................................... F-30
Consolidated Statements of Cash Flows for the Years Ended October
31, 1995 and 1996 and for the period from November 1, 1996 to
October 19, 1997 and for the Nine Months Ended July 31, 1996 and
1997 (unaudited)................................................... F-31
Notes to Consolidated Financial Statements.......................... F-32
V. Financial Statements of J&J Rental Services, Inc.
Report of Independent Auditors...................................... F-39
Balance Sheets--December 31, 1995 and 1996 and September 30, 1997
(unaudited) ....................................................... F-40
Statements of Income for the Years Ended December 31, 1994, 1995 and
1996, for the Six Months Ended June 30, 1996 and 1997 (unaudited)
and for the Three Months Ended September 30, 1997 (unaudited)...... F-41
Statements of Stockholders' Equity and Partners' Capital for the
Years Ended December 31, 1994, 1995 and 1996 and for the Nine
Months Ended September 30, 1997 (unaudited)........................ F-42
Statements of Cash Flows for the Years Ended December 31, 1994, 1995
and 1996, for the Six Months Ended June 30, 1996 and 1997
(unaudited) and for the Three Months Ended September 30, 1997
(unaudited)........................................................ F-43
Notes to Financial Statements....................................... F-44
</TABLE>

F-1
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
VI. Combined Financial Statements of Coran Enterprises, Inc. dba A-1
Rents and Monterey Bay Equipment Rental, Inc.
Report of Independent Auditors....................................... F-52
Combined Balance Sheets--December 31, 1995 and 1996 and September 30,
1997 (unaudited).................................................... F-53
Combined Statements of Earnings for the Three Years Ended December
31, 1996 and for the Nine Months Ended September 30, 1996 and 1997
(unaudited) ........................................................ F-54
Combined Statements of Stockholders' Equity for the Three Years Ended
December 31, 1996 and for the Nine Months Ended September 30, 1997
(unaudited) ........................................................ F-55
Combined Statements of Cash Flows for the Three Years Ended December
31, 1996 and for the Nine Months Ended September 30, 1996 and 1997
(unaudited) ........................................................ F-56
Notes to Combined Financial Statements............................... F-57
VII. Financial Statements of Bronco Hi-Lift, Inc.
Report of Independent Auditors....................................... F-59
Balance Sheets--December 31, 1995 and 1996 and September 30, 1997
(unaudited) ........................................................ F-60
Statements of Income for the Three Years Ended December 31, 1996 and
for the Nine Months Ended September 30, 1996 and 1997 (unaudited)... F-61
Statements of Stockholders' Equity for the Three Years Ended December
31, 1996 and for the Nine Months Ended September 30, 1997
(unaudited)......................................................... F-62
Statements of Cash Flows for the Three Years Ended December 31, 1996
and for the Nine Months Ended September 30, 1996 and 1997
(unaudited)......................................................... F-63
Notes to Financial Statements........................................ F-64
</TABLE>

F-2
<PAGE>

UNITED RENTALS, INC.

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The accompanying unaudited pro forma consolidated balance sheet of the
Company as of September 30, 1997 gives effect to the acquisition of each of
the Initial Acquired Companies, the financing of each such acquisition, and
all issuances of Common Stock after September 30, 1997, as if all such
transactions had occurred on such date.

The accompanying unaudited pro forma consolidated statements of operations
of the Company for the nine months ended September 30, 1997 and for the year
ended December 31, 1996 gives effect to the acquisition of each of the Initial
Acquired Companies, the financing of each such acquisition, and all issuances
of Common Stock after the beginning of the period, as if all such transactions
had occurred at the beginning of the period.

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

The pro forma consolidated financial statements should be read in
conjunction with the Company's historical Consolidated Financial Statements
and related Notes included elsewhere in this Prospectus.

F-3
<PAGE>

UNITED RENTALS, INC.

PRO FORMA CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
MERCER A&A TOOL J & J BRONCO
UNITED EQUIPMENT RENTALS AND RENTAL CORAN HI-LIFT, RENT-IT
RENTALS, INC. COMPANY SALES, INC. SERVICES, INC. ENTERPRISES, INC. INC. CENTER, INC.
------------- ----------- ----------- -------------- ----------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents........ $54,637,568 $ 151,961 $ 187,082 $ 1,757,218 $ 933,705 $ 296,669 $1,246,620
Accounts receiv-
able, net.......... 2,253,040 1,324,684 1,975,944 1,012,615 1,225,550 434,687
Inventory.......... 2,430,233 906,969 271,903
Rental equipment,
net................ 11,304,919 3,133,863 10,504,415 2,948,586 2,321,275 925,290
Property and equip-
ment, net.......... 99,706 594,621 306,415 492,603 65,137 335,374 205,673
Intangible assets,
net................ 84,479
Prepaid expenses
and other assets... 114,200 152,845 468,615 1,375 10,942 27,015 227,310
----------- ----------- ---------- ----------- ---------- ---------- ----------
Total Assets.... $54,851,474 $16,887,619 $6,327,628 $14,816,034 $4,970,985 $4,477,786 $3,039,580
=========== =========== ========== =========== ========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQ-
UITY
Accounts payable... $ 67,701 $ 3,218,334 $ 703,583 $ 588,548 $ 308,471 $ 323,489 $ 56,011
Debt............... 9,518,922 4,352,769 14,180,795 2,075,735 2,973,516
Accrued expenses
and other
liabilities........ 84,826 119,987 224,755 185,617 24,805
----------- ----------- ---------- ----------- ---------- ---------- ----------
Total liabili-
ties............ 152,527 12,857,243 5,281,107 14,954,960 2,384,206 3,297,005 80,816
----------- ----------- ---------- ----------- ---------- ---------- ----------
Stockholders' eq-
uity
Common stock...... 157,146 500,001 465,058 1,000 275,000 10,000 (30,713)
Additional paid-
in capital........ 54,815,258 37,920 298,000 42,000
Retained earnings
(deficit)......... (273,457) 3,530,375 581,463 (139,926) 2,273,859 872,781 2,947,477
----------- ----------- ---------- ----------- ---------- ---------- ----------
Total stockhold-
ers' equity..... 54,698,947 4,030,376 1,046,521 (138,926) 2,586,779 1,180,781 2,958,764
----------- ----------- ---------- ----------- ---------- ---------- ----------
Total
liabilities and
stock-holders'
equity.......... $54,851,474 $16,887,619 $6,327,628 $14,816,034 $4,970,985 $4,477,786 $3,039,580
=========== =========== ========== =========== ========== ========== ==========
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS CONSOLIDATED
---------------- -------------
<S> <C> <C>
ASSETS
Cash and cash
equivalents........ $(61,155,823)(a) $ 50,000
1,995,000 (b)
Accounts receiv-
able, net.......... 8,226,520
Inventory.......... 371,717 (c) 3,980,822
Rental equipment,
net................ 5,979,135 (d) 37,117,483
Property and equip-
ment, net.......... (263,244)(d) 1,836,285
Intangible assets,
net................ 40,809,439 (e) 40,893,918
Prepaid expenses
and other assets... 1,002,302
---------------- -------------
Total Assets.... $(12,263,776) $93,107,330
================ =============
LIABILITIES AND
STOCKHOLDERS' EQ-
UITY
Accounts payable... $ 5,266,137
Debt............... $(33,101,737)(f) 26,682,707
26,682,707 (g)
Accrued expenses
and other
liabilities........ 639,990
---------------- -------------
Total liabili-
ties............ (6,419,030) 32,588,834
---------------- -------------
Stockholders' eq-
uity
Common stock...... (1,220,346)(h) 163,762
3,187 (i)
3,429 (b)
Additional paid-
in capital........ (377,920)(h) 60,628,191
3,821,362 (i)
1,991,571 (b)
Retained earnings
(deficit)......... (10,066,029)(h) (273,457)
---------------- -------------
Total stockhold-
ers' equity..... (5,844,746) 60,518,496
---------------- -------------
Total
liabilities and
stock-holders'
equity.......... $(12,263,776) $93,107,330
================ =============
</TABLE>

F-4
<PAGE>

UNITED RENTALS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
MERCER A&A TOOL
UNITED EQUIPMENT RENTALS AND J & J RENTAL CORAN BRONCO RENT-IT
RENTALS, INC. COMPANY SALES, INC. SERVICES, INC. ENTERPRISES, INC. HI-LIFT, INC. CENTER, INC.
------------- ----------- ----------- -------------- ----------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Equipment rent-
als............... $ 6,141,024 $4,501,537 $5,998,073 $5,808,564 $3,774,997 $1,706,959
Sales of equip-
ment and merchan-
dise and other
revenue........... 7,423,559 4,101,586 636,398 899,829 984,496 117,838
----------- ---------- ---------- ---------- ---------- ----------
Total revenues.. 13,564,583 8,603,123 6,634,471 6,708,393 4,759,493 1,824,797
Cost of revenues
Cost of equipment
rentals,
excluding
depreciation...... 1,933,995 2,097,280 2,564,825 3,704,188 363,418 782,284
Rental equipment
depreciation...... 1,313,961 1,193,986 1,563,687 1,237,656 601,243 425,718
Cost of sales and
other operating
expenses.......... 5,857,100 3,346,797 378,545 224,762 634,240
----------- ---------- ---------- ---------- ---------- ----------
Total cost of
revenues........ 9,105,056 6,638,063 4,507,057 5,166,606 1,598,901 1,208,002
----------- ---------- ---------- ---------- ---------- ----------
Gross profit....... 4,459,527 1,965,060 2,127,414 1,541,787 3,160,592 616,795
Selling, general
and administrative
expenses........... $ 348,055 2,931,627 1,696,104 1,140,756 958,764 1,562,694 534,074
Non-rental depreci-
ation and
amortization....... 96,600 95,171 110,203 13,868 79,608 42,554
--------- ----------- ---------- ---------- ---------- ---------- ----------
Operating income... (348,055) 1,431,300 173,785 876,455 569,155 1,518,290 40,167
Interest expense... 677,364 410,345 422,178 139,970 210,025
Other (income) ex-
pense, net......... (74,598) (126,008) (140,367) (37,724) (67,555) (35,878)
--------- ----------- ---------- ---------- ---------- ---------- ----------
Income (loss)
before provision
for income taxes... (273,457) 879,944 (96,193) 492,001 429,185 1,375,820 76,045
Provision for in-
come taxes......... 6,000 98,000 5,583
--------- ----------- ---------- ---------- ---------- ---------- ----------
Net income (loss).. $(273,457) $ 879,944 $ (102,193) $ 394,001 $ 423,602 $1,375,820 $ 76,045
========= =========== ========== ========== ========== ========== ==========
Net loss per
share.............. $ (0.02)
=========
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS CONSOLIDATED
--------------- -------------
<S> <C> <C>
Revenues
Equipment rent-
als............... $27,931,154
Sales of equip-
ment and merchan-
dise and other
revenue........... 14,163,706
-------------
Total revenues.. 42,094,860
Cost of revenues
Cost of equipment
rentals,
excluding
depreciation...... 11,445,990
Rental equipment
depreciation...... $(1,277,912)(a) 5,058,339
Cost of sales and
other operating
expenses.......... (61,372)(b) 10,380,072
--------------- -------------
Total cost of
revenues........ (1,339,284) 26,884,401
--------------- -------------
Gross profit....... 1,339,284 15,210,459
Selling, general
and administrative
expenses........... (816,000)(c) 8,634,186
278,112 (d)
Non-rental depreci-
ation and
amortization....... 596,644 (e) 1,034,648
--------------- -------------
Operating income... 1,280,528 5,541,625
Interest expense... (1,859,882)(f) 1,230,631
1,230,631 (g)
Other (income) ex-
pense, net......... (482,130)
--------------- -------------
Income (loss)
before provision
for income taxes... 1,909,779 4,793,124
Provision for in-
come taxes......... 1,807,666 (h) 1,917,249
--------------- -------------
Net income (loss).. $ 102,113 $ 2,875,875
=============== =============
Net loss per
share.............. $ 0.16
=============
</TABLE>

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

F-5
<PAGE>

UNITED RENTALS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
MERCER A&A TOOL J & J
UNITED EQUIPMENT RENTALS AND RENTAL CORAN BRONCO RENT-IT
RENTALS, INC. COMPANY SALES, INC. SERVICES, INC. ENTERPRISES, INC. HI-LIFT, INC. CENTER, INC.
------------- ----------- ----------- -------------- ----------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Equipment
rentals.......... $ $ 7,380,137 $ 5,918,148 $7,769,716 $7,679,713 $4,313,855 $2,631,459
Sales of equipment
and mer-
chandise and
other revenue.... 7,073,763 5,787,986 1,243,297 738,330 1,216,459 136,395
----- ----------- ----------- ---------- ---------- ---------- ----------
Total revenues.. 14,453,900 11,706,134 9,013,013 8,418,043 5,530,314 2,767,854
Cost of revenues
Cost of equipment
rentals,
excluding
depreciation .... 2,097,805 2,542,965 3,544,040 4,254,243 699,455 1,046,785
Rental equipment
depreciation..... 1,492,131 1,382,048 2,389,929 1,304,847 736,525 746,859
Cost of sales and
other operating
expenses......... 5,820,926 4,959,839 452,522 373,258 893,222
----- ----------- ----------- ---------- ---------- ---------- ----------
Total cost of rev-
enues............ 9,410,862 8,884,852 6,386,491 5,932,348 2,329,202 1,793,644
----- ----------- ----------- ---------- ---------- ---------- ----------
Gross profit........ 5,043,038 2,821,282 2,626,522 2,485,695 3,201,112 974,210
Selling, general and
administrative
expenses........... 3,515,581 2,215,936 1,521,562 2,062,246 2,359,326 760,693
Non-rental
depreciation and
amortization....... 118,787 120,757 123,971 17,202 99,669 46,237
----- ----------- ----------- ---------- ---------- ---------- ----------
Operating income.... 1,408,670 484,589 980,989 406,247 742,117 167,280
Interest expense.... 813,339 401,204 478,341 96,464 334,035 0
Other (income)
expense, net....... (110,340) (171,532) (27,523) (46,175) (57,061)
----- ----------- ----------- ---------- ---------- ---------- ----------
Income before
provision for
income taxes....... 705,671 254,917 530,171 309,783 454,257 224,341
Provision for income
taxes.............. 0 7,619 49,685 8,221
----- ----------- ----------- ---------- ---------- ---------- ----------
Net income.......... $ -- $ 705,671 $ 247,298 $ 480,486 $ 301,562 $ 454,257 $ 224,341
===== =========== =========== ========== ========== ========== ==========
Earnings per share.. $ --
=====
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS CONSOLIDATED
--------------- -------------
<S> <C> <C>
Revenues
Equipment
rentals.......... $35,693,028
Sales of equipment
and mer-
chandise and
other revenue.... 16,196,230
--------------- -------------
Total revenues.. 51,889,258
Cost of revenues
Cost of equipment
rentals,
excluding
depreciation .... 14,185,293
Rental equipment
depreciation..... $(2,140,161)(a) 5,912,178
Cost of sales and
other operating
expenses......... (57,068)(b) 12,442,699
--------------- -------------
Total cost of rev-
enues............ (2,197,229) 32,540,170
--------------- -------------
Gross profit........ 2,197,229 19,349,088
Selling, general and
administrative
expenses........... (2,006,912)(c) 10,853,610
425,178 (d)
Non-rental
depreciation and
amortization....... 809,179 (e) 1,335,802
--------------- -------------
Operating income.... 2,969,784 7,159,676
Interest expense.... (2,123,383)(f) 1,640,841
1,640,841 (g)
Other (income)
expense, net....... (412,631)
--------------- -------------
Income before
provision for
income taxes....... 3,452,326 5,931,466
Provision for income
taxes.............. 2,307,061 (h) 2,372,586
--------------- -------------
Net income.......... $ 1,145,265 $ 3,558,880
=============== =============
Earnings per share.. $ 0.20
=============
</TABLE>

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

F-6
<PAGE>

UNITED RENTALS, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

1. BACKGROUND

United Rentals, Inc. was incorporated in August 1997, was initially
capitalized in September 1997, and commenced rental operations in October 1997
by acquiring the six Initial Acquired Companies. The Company rents a broad
array of equipment to a diverse customer base that includes construction
industry participants, industrial companies, homeowners and other individuals.
The Company also engages in related activities such as selling used rental
equipment, acting as a distributor for certain new equipment, and selling
related merchandise and parts.

2. HISTORICAL FINANCIAL STATEMENTS

The historical financial data presented in these pro forma consolidated
financial statements represent the financial position and results of
operations of the Company and each of the Initial Acquired Companies as of
September 30, 1997 and for the nine and twelve months ended September 30, 1997
and December 31, 1996, respectively (except that the financial data for A&A
Tool Rental and Sales, Inc. is as of July 31, 1997 and for the nine and twelve
months ended July 31, 1997 and October 31, 1996, respectively). Such data is
derived from the respective financial statements of such companies. All such
financial statements are included elsewhere in this Prospectus (except for the
financial statements of Rent-It Centers, Inc.).

3. ACQUISITION OF THE INITIAL ACQUIRED COMPANIES

During October 1997, the Company completed the acquisition of each of the
Initial Acquired Companies. Each of these acquisitions was accounted for using
the purchase method of accounting. For purposes of these pro forma
consolidated financial statements, the consideration paid by the Company for
the acquired companies (the "Acquisition Consideration") is assumed to be an
aggregate of $58.6 million which consisted of $54.4 million of cash plus the
Stock Consideration (see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Consideration Paid for Initial Acquired
Companies") and a convertible note in the amount of $300,000, which represents
the consideration that would have been paid based upon the indebtedness and
working capital of the Initial Acquired Companies as of September 30, 1997.
The actual consideration paid was $875,000 lower due to the change in the
indebtedness and working capital of the Initial Acquired Companies subsequent
to September 30, 1997. Additionally, the Company repaid all of the outstanding
indebtedness of the Initial Acquired Companies in the aggregate amount of
$33.9 million ($33.1 million as of September 30, 1997, which is the amount
assumed for purposes of these pro forma consolidated financial statements).

Based upon management's preliminary estimates, it is estimated that the
carrying value of the assets and liabilities of the Initial Acquired Companies
approximates fair value, with the exception of rental equipment and other
property and equipment and certain inventory,which required adjustments to
reflect fair market value. The following table presents the allocation of
purchase prices of each of the Initial Acquired Companies:

<TABLE>
<CAPTION>
MERCER A&A TOOL J&J
EQUIPMENT RENTALS AND RENTAL CORAN BRONCO RENT-IT COMBINED
COMPANY SALES, INC. SERVICES, INC. ENTERPRISES, INC. HIGH-LIFT, INC. CENTER, INC. TOTAL
----------- ----------- -------------- ----------------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchase price......... $15,000,603 $8,456,243 $ 4,029,577 $15,508,056 $9,239,062 $6,327,801 $58,561,342
Net assets acquired.... 4,030,376 1,046,521 (138,926) 2,586,779 1,180,781 2,958,764 11,664,295
Fair value adjustments:
Inventories........... 371,717 371,717
Rental equipment...... 21,872 2,278,088 (2,793,358) 4,729,104 663,183 1,080,246 5,979,135
Property and
equipment............ (103,870) (159,374) (263,244)
----------- ---------- ----------- ----------- ---------- ---------- -----------
Intangibles recog-
nized................. $10,576,638 $5,131,634 $ 7,065,731 $ 8,192,173 $7,395,098 $2,448,165 $40,809,439
=========== ========== =========== =========== ========== ========== ===========
</TABLE>

F-7
<PAGE>

4. PRO FORMA ADJUSTMENTS

Balance sheet adjustments:

a. Records the portion of the Acquisition Consideration and debt repayment
paid from available cash on hand.

b. Records the sale of all Common Stock subsequent to September 30, 1997.

c. Adjusts the carrying value of inventory to fair market value.

d. Adjusts the carrying value of rental equipment and other property and
equipment to fair market value.

e. Records the excess of the Acquisition Consideration over the estimated
fair value of net assets acquired.

f. Records the repayment of all outstanding indebtedness of the Initial
Acquired Companies.

g. Records the portion of the Acquisition Consideration and debt repayment
funded by borrowing under the Company's Credit Facility and through the
issuance of a $300,000 convertible note.

h. Records the elimination of the stockholders' equity of the Initial
Acquired Companies.

i. Records the portion of the Acquisition Consideration paid in the form of
Common Stock.

Statement of operations adjustments:

a. Adjusts the depreciation of rental equipment and other property and
equipment based upon adjusted carrying values utilizing the following
lives (subject to a 10% salvage value with regards to rental equipment):

<TABLE>
<S> <C>
Rental equipment.............................................. 4-6 years
Other property and equipment.................................. 3-15 years
</TABLE>

b. Adjusts the method of accounting for inventory at one of the Initial
Acquired Companies from the LIFO method to the FIFO method.
c. Adjusts the compensation to former owners and executives of the Initial
Acquired Companies to current levels of compensation.
d. Adjusts the lease expense for real estate utilized by the Initial
Acquired Companies to current lease agreements.
e. Records the amortization of the excess of cost over net assets acquired
attributable to the acquisitions of the Initial Acquired Companies using
an estimated life of 40 years.
f. Eliminates interest expense related to outstanding indebtedness of the
Initial Acquired Companies which was repaid by the Company.
g. Records interest expense relating to the portion of the Acquisition
Consideration funded through borrowing under the Company's Credit
Facility using a rate per annum of 7.5%.
h. Records a provision for income taxes at an estimated rate of 40%.

5. EARNINGS PER SHARE

Earnings per share is calculated by dividing the net income by the weighted
average outstanding during the period. The weighted average outstanding shares
during the period is calculated as follows:

<TABLE>
<S> <C>
Shares outstanding at September 30, 1997...................... 15,714,587
Shares sold subsequent to September 30, 1997.................. 342,857
Shares issued for acquisitions................................ 318,712
Common stock equivalents (based on an assumed initial public
offering
price of $13.00 per share)................................... 1,463,736
----------
17,839,892
==========
</TABLE>

F-8
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors
United Rentals, Inc.

We have audited the accompanying balance sheet of United Rentals, Inc. as of
September 30, 1997 and the related statements of operations, stockholders'
equity and cash flows from August 14, 1997 (Inception) to September 30, 1997.
These financial statements are the responsibility of the management of United
Rentals, Inc. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of United Rentals, Inc. at
September 30, 1997, and the results of its operations and its cash flows from
August 14, 1997 (Inception) to September 30, 1997, in conformity with
generally accepted accounting principles.

/s/ Ernst & Young LLP

MetroPark, New Jersey
October 8, 1997, except for
Note 7, as to which the
date is October 28, 1997

F-9
<PAGE>

UNITED RENTALS, INC.

BALANCE SHEET

SEPTEMBER 30, 1997

<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents......................................... $54,637,568
Prepaid expenses and other assets................................. 114,200
Property and equipment, net of accumulated depreciation of
$1,542........................................................... 99,706
-----------
$54,851,474
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable.................................................. $ 67,701
Accrued expenses and other liabilities............................ 84,826
-----------
Total liabilities............................................. 152,527
Commitments and contingencies
Stockholders' equity:
Preferred stock--$.01 par value, 5,000,000 shares authorized, no
shares issued and outstanding.................................. --
Common stock--$.01 par value, 75,000,000 shares authorized,
15,714,587 shares issued and outstanding....................... 157,146
Additional paid-in capital...................................... 54,815,258
Accumulated deficit............................................. (273,457)
-----------
Total stockholders' equity.................................... 54,698,947
-----------
$54,851,474
===========
</TABLE>

See accompanying notes.

F-10
<PAGE>

UNITED RENTALS, INC.

STATEMENT OF OPERATIONS

AUGUST 14, 1997 (INCEPTION) TO SEPTEMBER 30, 1997

<TABLE>
<S> <C>
General and administrative expenses................................. $ 348,055
---------
Loss from operations.............................................. (348,055)
Interest income..................................................... 74,598
---------
Loss before provision for income taxes............................ (273,457)
Provision for income taxes.......................................... --
---------
Net loss.......................................................... $(273,457)
=========
Net loss per share.................................................. $ (0.02)
=========
</TABLE>

See accompanying notes.

F-11
<PAGE>

UNITED RENTALS, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

AUGUST 14, 1997 (INCEPTION) TO SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL
NUMBER PAID-IN ACCUMULATED
OF SHARES AMOUNT CAPITAL DEFICIT
---------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, August 14, 1997 (Incep-
tion)............................. -- $ -- $ -- $ --
Issuance of common stock and war-
rants........................... 15,714,587 157,146 54,815,258
Net loss......................... (273,457)
---------- -------- ----------- ---------
Balance, September 30, 1997........ 15,714,587 $157,146 $54,815,258 $(273,457)
========== ======== =========== =========
</TABLE>

See accompanying notes.

F-12
<PAGE>

UNITED RENTALS, INC.

STATEMENT OF CASH FLOWS

AUGUST 14, 1997 (INCEPTION) TO SEPTEMBER 30, 1997

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss......................................................... $ (273,457)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation................................................... 1,542
Changes in operating assets and liabilities:
Prepaid expenses and other assets............................ (114,200)
Accounts payable and other liabilities....................... 152,527
-----------
Net cash used in operating activities...................... (233,588)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment.............................. (101,248)
-----------
Net cash used in investing activities...................... (101,248)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and warrants, net of
issuance costs.................................................. 54,972,404
-----------
Net cash provided by financing activities.................. 54,972,404
-----------
Net increase in cash and cash equivalents........................ 54,637,568
Cash and cash equivalents at beginning of period................. --
-----------
Cash and cash equivalents at end of period................. $54,637,568
===========
</TABLE>

See accompanying notes.

F-13
<PAGE>

UNITED RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 1997

1. ORGANIZATION AND BASIS OF PRESENTATION

United Rentals, Inc. (the "Company"), a Delaware corporation, was
incorporated in August 1997. Upon the completion of the acquisitions discussed
further in Note 7, the Company primarily will operate as an equipment rental
company. The Company will also engage in related activities such as selling
used rental equipment, acting as a distributor for certain new equipment and
selling related merchandise and parts. The nature of the Company's business
will be such that short-term obligations are typically met by cash flow
generated from long-term assets. Consequently, consistent with industry
practice, the accompanying balance sheet is presented on an unclassified
basis.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash Equivalents

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

Property and Equipment

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

Income Taxes

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

Use of Estimates

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

Concentrations of Credit Risk

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

F-14
<PAGE>

UNITED RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Impact of Recently Issued Accounting Standards

In February 1997, the Financial Accounting Standards Board issued Statement
128, Earnings Per Share ("SFAS 128"), which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating earnings per share, basic
earnings per share will exclude the dilutive effect of the Company's stock
options and warrants. Implementation of SFAS 128 is expected to result in no
change to the Company's net loss per share included herein.

Stock-Based Compensation

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

Computation of Net Loss Per Share

Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock and common stock equivalents outstanding
during the period. Common Stock issued for consideration below $13.00 per
share (the "Assumed IPO price per share"), the mid-point of the range of the
estimated offering price per share, and stock options and warrants granted
with exercise prices below the Assumed IPO price per share during the twelve
months preceding the date of the initial filing of the registration statement
are included in the calculation of common equivalent shares at the Assumed IPO
price per share. The number of shares used in calculating net loss per share
was 17,178,323 for the period from August 14, 1997 to September 30, 1997.

3. PROPERTY AND EQUIPMENT

A summary of property and equipment is as follows:

<TABLE>
<S> <C>
Furniture, fixtures and office equipment........................... $101,248
Less accumulated depreciation...................................... 1,542
--------
Property and equipment, net........................................ $ 99,706
========
</TABLE>

4. INCOME TAXES

A reconciliation of the provision for income taxes and the amount computed
by applying the statutory federal income tax rate of 34% to loss before
provision for income taxes is as follows:

<TABLE>
<S> <C>
Computed tax benefit at statutory tax rate........................ $ 92,976
Increase in tax benefit:
Tax-exempt interest income...................................... 9,409
Change in valuation allowance................................... (102,385)
---------
$ --
=========
</TABLE>

F-15
<PAGE>

UNITED RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The components of deferred income tax assets are as follows:

<TABLE>
<S> <C>
Net operating loss carryforward................................... $ 102,385
Valuation allowance............................................... (102,385)
---------
$ --
=========
</TABLE>

5. CAPITAL STOCK

During September, the Company issued an aggregate of 12,685,714 shares of
Common Stock and 6,342,858 warrants to certain officers of the Company for an
aggregate amount of $44.4 million. In addition, the Company, in a private
placement sold an aggregate of 3,028,873 shares of common stock for an
aggregate amount of $10.6 million.

At September 30, 1997 there are 6,342,858 shares of Common Stock reserved
for the exercise of warrants and 5,000,000 shares of Common Stock reserved for
the future issuance of options pursuant to the Company's 1997 Stock Option
Plan.

As of September 30, 1997 there are outstanding warrants to purchase an
aggregate of 6,342,858 shares of Common Stock. Each warrant provides for an
exercise price of $10.00 per share and may be exercised at any time until
September 12, 2007.

The Board of Directors has adopted the Company's 1997 Stock Option Plan (the
"Stock Option Plan") which provides for the granting of options to purchase
not more than an aggregate of 5,000,000 shares of Common Stock. All officers,
employees and others who render services to the Company are eligible to
participate in the Stock Option Plan. Each option granted pursuant to the
Stock Option Plan must provide for an exercise price per share that is at
least equal to the fair market value per share of Common Stock on the date of
grant. No options may be granted under the Stock Option Plan after August 21,
2007.

The exercise price of each option, the period during which each option may
be exercised and the other terms and conditions of each option are determined
by the Board of Directors (or by a committee appointed by the Board). No
options to purchase shares of the Company's Common Stock were granted during
the period from August 14, 1997 to September 30, 1997.

6. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases office space and certain office equipment under operating
leases. The office lease requires the Company to pay maintenance, insurance,
taxes and certain other expenses in addition to the stated rentals. Future
minimum lease payments, by year and in the aggregate, for noncancellable
operating leases with initial or remaining terms of one year or more are as
follows at September 30, 1997:

<TABLE>
<S> <C>
1997 (after September 30, 1997).................................. $ 100,032
1998............................................................. 400,128
1999............................................................. 400,128
2000............................................................. 400,128
2001............................................................. 329,634
----------
$1,630,050
==========
</TABLE>

F-16
<PAGE>

UNITED RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

7. SUBSEQUENT EVENTS

During October 1997, the Company entered into a credit agreement with Bank
of America ("Credit Facility"). The Credit Facility provides for a $55
million, three year collateralized revolving credit facility due October 2000.
Outstanding loans under the Credit Facility bear interest at a rate per annum
equal to the Eurodollar Rate (Reserve Adjusted) (as defined in the credit
agreement providing for the Credit Facility) applicable to each interest
period plus 1.5% to 2.5% per annum or the Alternate Reference Rate (as defined
in the credit agreement providing for the Credit Facility) from time to time
in effect plus 0% to .25% per annum. The Credit Facility also allows the
Company to obtain up to $10 million in letters of credit. The aggregate amount
the Company is permitted to borrow under the Credit Facility is reduced by the
aggregate face amount of all outstanding letters of credit issued thereunder.
On October 28, 1997, the outstanding balance was $35 million.

Subsequent to September 30, 1997, the Company completed the acquisition of
six equipment rental companies (the "Acquisitions") and the aggregate
consideration paid by the Company for the Acquisitions was $57.7 million and
consisted of approximately $53.6 million in cash, 318,712 shares of Common
Stock (which stock consideration is subject to an adjustment) and a $300,000
convertible note. In addition, the Company agreed to pay the former owners of
one of the Initial Acquired Companies a percentage of such company's future
revenues until an aggregate of $2.8 million has been paid. These acquisitions
were accounted for as purchases.

F-17
<PAGE>

INDEPENDENT AUDITOR'S REPORT

MERCER Equipment Company:

We have audited the accompanying balance sheets of MERCER Equipment Company
as of December 31, 1996 and 1995, and the related statements of income and
retained earnings and of cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly,
in all material respects, the financial position of MERCER Equipment Company
as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996
in conformity with generally accepted accounting principles.

/s/ Webster, Duke & Co. PA

Charlotte, North Carolina
January 31, 1997

F-18
<PAGE>

MERCER EQUIPMENT COMPANY

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
----------------------- -------------
1995 1996 1997
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................... $ 454,697 $ 276,639 $ 151,961
Accounts receivable (less allowance for
doubtful accounts: 1995-$150,000,
1996-$182,425, 1997-$303,128)......... 1,420,681 1,819,581 2,253,040
Inventory (Notes 2, 5 and 8)........... 2,092,086 2,417,425 2,430,233
Miscellaneous receivables.............. 12,539 16,604 18,661
----------- ----------- -----------
Total current assets................. 3,980,003 4,530,249 4,853,895
----------- ----------- -----------
RENTAL EQUIPMENT (Notes 2, 5, 8, 9, 10
and 15):
Rental equipment....................... 10,480,865 14,030,584 15,617,619
Less accumulated depreciation.......... 2,642,313 3,717,218 4,312,700
----------- ----------- -----------
Rental equipment, net................ 7,838,552 10,313,366 11,304,919
----------- ----------- -----------
OTHER PROPERTY (Notes 2, 8 and 11):
Other property......................... 686,504 1,003,079 1,084,329
Less accumulated depreciation.......... 292,279 395,658 489,708
----------- ----------- -----------
Other property, net.................. 394,225 607,421 594,621
----------- ----------- -----------
OTHER ASSETS (Note 13):
Other assets........................... 47,800 68,639 66,089
Notes receivable-officers.............. 45,872 69,980 68,095
Due from stockholders.................. 247,729
----------- ----------- -----------
Total other assets................... 341,401 138,619 134,184
----------- ----------- -----------
TOTAL................................ $12,554,181 $15,589,655 $16,887,619
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit (Note 4)................ -- -- --
Note payable-Bank (Note 4)............. $ 465,200 $ 494,245 $ 454,245
Short-term equipment notes (Note 5).... 387,729 189,528 --
Notes payable-individuals (Notes 6 and
13)................................... 638,500 609,000 631,000
Current portion of long-term debt...... 1,541,716 2,253,562 2,903,457
Current portion of capital leases...... 153,189 167,445 82,081
Accounts payable....................... 1,602,437 2,161,340 3,218,334
Accrued expenses....................... 116,032 140,361 119,987
----------- ----------- -----------
Total current liabilities............ 4,904,803 6,015,481 7,409,104
----------- ----------- -----------
LONG-TERM DEBT (Non-current Portion):
Revolving credit note (Note 7)......... 1,000,000 2,430,000 2,328,000
Notes payable to bank (Note 8)......... 2,230,000 1,513,000 735,250
Notes payable on rental equipment (Note
9).................................... 1,503,672 2,195,238 2,078,374
Capital leases on rental equipment
(Note 10)............................. 283,718 119,183 194,857
Notes payable for fixed assets (Note
11)................................... 86,116 138,543 111,658
----------- ----------- -----------
Total long-term debt................. 5,103,506 6,395,964 5,448,139
----------- ----------- -----------
STOCKHOLDERS' EQUITY:
Common stock (Notes 2 and 12).......... 500,001 500,001 500,001
Retained earnings (Note 8)............. 2,045,871 2,678,209 3,530,375
----------- ----------- -----------
Total stockholders' equity........... 2,545,872 3,178,210 4,030,376
----------- ----------- -----------
TOTAL................................ $12,554,181 $15,589,655 $16,887,619
=========== =========== ===========
</TABLE>

See notes to financial statements.

F-19
<PAGE>

MERCER EQUIPMENT COMPANY

STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- ----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE:
Sales of new
equipment............ $1,559,244 $2,479,358 $3,415,523 $2,488,974 $3,384,882
Sales of supplies and
parts................ 1,184,997 1,558,273 2,067,403 1,515,337 1,873,232
---------- ---------- ---------- ---------- ----------
Total goods sold.... 2,744,241 4,037,631 5,482,926 4,004,311 5,258,114
Sales of rental
equipment............ 662,029 872,621 1,102,621 853,921 1,718,513
Rental revenues....... 3,798,468 4,950,614 7,380,137 5,236,985 6,141,024
Service department
revenues............. 327,693 357,039 488,216 365,170 446,932
---------- ---------- ---------- ---------- ----------
Total revenues...... 7,532,431 10,217,905 14,453,900 10,460,387 13,564,583
---------- ---------- ---------- ---------- ----------
DIRECT COSTS OF REVENUE:
Cost of goods sold.... 2,290,853 3,171,168 4,469,790 3,261,212 4,227,967
Cost of rental
equipment sold, net.. 386,191 530,102 702,254 497,767 1,009,277
Rental department
expenses (including
depreciation of
$771,385; 1,035,352,
$1,492,131,
$1,129,746 and
$1,313,961).......... 1,591,109 2,226,420 3,589,936 2,610,640 3,247,956
Service department
expenses............. 417,370 460,382 648,882 453,499 619,856
---------- ---------- ---------- ---------- ----------
Total direct costs
of revenue......... 4,685,523 6,388,072 9,410,862 6,823,118 9,105,056
---------- ---------- ---------- ---------- ----------
GROSS MARGIN............ 2,846,908 3,829,833 5,043,038 3,637,269 4,459,527
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
Sales expenses........ 515,600 752,722 1,386,812 915,554 1,196,596
Administrative and
general expenses..... 1,284,011 1,930,124 2,247,556 1,541,180 1,831,631
---------- ---------- ---------- ---------- ----------
Total operating
expenses........... 1,799,611 2,682,846 3,634,368 2,456,734 3,028,227
---------- ---------- ---------- ---------- ----------
MARGIN FROM OPERATIONS.. 1,047,297 1,146,987 1,408,670 1,180,535 1,431,300
---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Miscellaneous income.. 66,707 78,258 110,340 82,256 126,008
Interest expense...... (261,659) (486,976) (813,339) (610,316) (677,364)
---------- ---------- ---------- ---------- ----------
Total other income
(expense).......... (194,952) (408,718) (702,999) (528,060) (551,356)
---------- ---------- ---------- ---------- ----------
NET INCOME.............. 852,345 738,269 705,671 652,475 879,944
BEGINNING RETAINED
EARNINGS............... 865,258 1,450,936 2,045,871 2,045,871 2,678,209
---------- ---------- ---------- ---------- ----------
Total............... 1,717,603 2,189,205 2,751,542 2,698,346 3,558,153
LESS DIVIDENDS PAID..... 266,667 143,334 73,333 73,333 27,778
---------- ---------- ---------- ---------- ----------
ENDING RETAINED
EARNINGS............... $1,450,936 $2,045,871 $2,678,209 $2,625,013 $3,530,375
========== ========== ========== ========== ==========
</TABLE>

See notes to financial statements.

F-20
<PAGE>

MERCER EQUIPMENT COMPANY

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- ----------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income........... $ 852,345 $ 738,269 $ 705,671 $ 652,475 $ 879,944
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization...... 845,938 1,117,783 1,610,918 1,207,471 1,410,561
Cost of rental
equipment sold,
net............... 386,191 530,102 702,254 497,767 1,009,277
Cost of other
property sold,
net............... 14,800
Changes in assets
and liabilities:
Accounts
receivable,
net............. (206,728) (418,132) (398,900) (788,482) (433,459)
Inventory........ (307,833) (900,532) (325,339) (353,624) (12,808)
Miscellaneous
receivables..... (1,563) (5,437) (4,065) 9,139 (2,057)
Other assets..... (16,000) (24,239) 8,000 --
Accounts
payable......... 511,659 651,668 558,903 191,904 1,056,994
Accrued
expenses........ 50,841 29,098 24,329 (30,996) (20,374)
----------- ----------- ----------- ---------- ----------
Net cash
provided by
operating
activities.... 2,130,850 1,726,819 2,864,332 1,393,654 3,888,078
----------- ----------- ----------- ---------- ----------
CASH FLOWS (TO)
INVESTING ACTIVITIES:
Purchase of rental
equipment........... (1,961,168) (2,466,039) (2,001,083) (1,319,580) (1,873,646)
Purchase of other
property............ (93,189) (131,695) (171,319) (128,347) (81,250)
Increase in other
asset............... (14,400) (1,650)
----------- ----------- ----------- ---------- ----------
Net cash (to)
investing
activities.... (2,068,757) (2,599,384) (2,172,402) (1,447,927) (1,954,896)
----------- ----------- ----------- ---------- ----------
CASH FLOWS FROM (TO)
FINANCING ACTIVITIES:
Repayments of notes
receivable--
officers............ 1,864 2,264 3,019 3,019 1,885
Repayments by
stockholders........ 220,602 187,881
Loans to
stockholders........ (247,729)
Repayments under line
of credit........... (115,867) (125,000) (40,000)
Borrowings under line
of credit........... 175,000 --
Repayments of short-
term equipment
notes............... (130,301) (618,854) (488,708) (189,528)
Repayments of notes
payable--
individuals......... (52,500) (31,500)
Repayments of long-
term debt........... (591,016) (1,051,070) (1,950,688) (971,523) (1,901,668)
Repayments of capital
leases.............. (22,009) (150,279) (45,595) (132,771)
Net borrowings under
note payable--bank.. 465,200 29,045 -- --
Borrowings under
revolving credit
note................ 1,000,000 1,700,000 1,200,000 210,000
Proceeds from bank
loans............... 800,000 1,120,588
Proceeds from notes
payable
individuals......... 53,000 305,000 23,000 22,000
Dividends paid....... (266,667) (143,334 ) (73,333) (73,333) (27,778)
----------- ----------- ----------- ---------- ----------
Net cash from
(to) financing
activities.... (118,686) 1,173,609 (869,988) (44,759) (2,057,860)
----------- ----------- ----------- ---------- ----------
NET INCREASE (DECREASE)
IN CASH............... (56,593) 301,044 (178,058) (99,032) (124,678)
BEGINNING CASH
BALANCE............... 210,246 153,653 454,697 454,697 276,639
----------- ----------- ----------- ---------- ----------
ENDING CASH BALANCE.... $ 153,653 $ 454,697 $ 276,639 $ 355,665 $ 151,961
=========== =========== =========== ========== ==========
</TABLE>

See notes to financial statements

F-21
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1994, 1995 AND 1996 (THE INFORMATION AS OF SEPTEMBER 30, 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

1. ORGANIZATION AND BUSINESS

Organization--MERCER Equipment Company (MERCER) is a North Carolina
corporation. For income tax purposes, it has elected treatment under
Subchapter S of the Internal Revenue Code of 1986.

Business--MERCER sells, rents, and repairs construction equipment, primarily
to contractors, industry, utilities, and municipalities. MERCER operates two
branches in the Charlotte, North Carolina area and one branch in Greensboro,
North Carolina.

2. ACCOUNTING PRINCIPLES

Basis of Accounting--MERCER prepares its financial statements on the accrual
basis of accounting.

Interim Financial Statements--The accompanying balance sheet at September
30, 1997 and the statements of income and retained earnings and cash flows for
the nine-month periods ended September 30, 1996 and 1997 are unaudited and
have been prepared on the same basis as the audited financial statements
included herein. In the opinion of management, such unaudited financial
statements include all adjustments necessary to present fairly the information
set forth therein, which consist solely of normal recurring adjustments. The
results of operations for such interim periods are not necessarily indicative
of results for the full year.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported period. Actual results could differ from those estimates.

Inventory--Inventory consists of new equipment and merchandise for resale
and of parts for resale or repair of equipment.

MERCER records inventory using the last-in, first-out (LIFO) cost
assumptions. MERCER maintains separate LIFO pools for new equipment,
merchandise, and parts; and uses government indices to determine the cost of
LIFO layers.

At December 31, 1995, 1996 and September 30, 1997, the difference between
LIFO and first-in, first-out cost was $253,278, $310,346 and $371,717
respectively.

Rental Equipment--MERCER records rental equipment at cost and depreciates
that cost using the straight-line method over 60 months (50 months for rental
equipment purchased after December 31, 1995). MERCER estimates the salvage
value on rental equipment to be 28% (50% for rental equipment purchased after
December 31, 1995). (See Note 15).

Other Property--MERCER records other property at cost and depreciates that
cost using the straight-line method over lives of 5 or 7 years.

Notes Receivable--Officers--At December 31, 1996, the notes receivable from
officers are due in monthly payments of $600, including principal and
interest, for 15 years. At December 31, 1995, the notes receivable from
officers were due in quarterly installments of $1,264, including principal and
interest, for 14 years.

Common Stock--MERCER has two classes of common stock: Class A common stock
which has voting rights and Class B common stock which has no voting rights.
The preferences, limitations, and relative rights of classes are the same
except the nonvoting stock has no voting rights other than in those cases in
which nonvoting stock is expressly granted voting rights under North Carolina
law.

F-22
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

At December 31, 1995, 1996 and September 30, 1997, the number of shares
authorized and outstanding of each class of stock was as follows:

<TABLE>
<CAPTION>
AUTHORIZED OUTSTANDING
---------- -----------
<S> <C> <C>
Class A, voting....................................... 25,000 16,667
Class B, nonvoting.................................... 175,000 150,000
</TABLE>

Rental Revenue--MERCER generally rents equipment under short-term agreements
of one month or less and accounts for these agreements as operating leases.

Lease Expense--MERCER leases its facilities and certain delivery vehicles
under leases classified as operating leases. MERCER leases certain rental
equipment and new equipment inventory under leases classified as capital
leases.

Income Taxes--MERCER has elected taxation under Subchapter S of the Internal
Revenue Code of 1986 and its stockholders report the taxable income or loss of
the company on their individual income tax returns. For income tax purposes,
MERCER generally uses accelerated depreciation methods (without salvage value)
and deducts bad debts as they are written off.

Statement of Cash Flows--MERCER considers all instruments with a maturity of
three months or less to be cash equivalents. MERCER paid interest expense and
purchase various assets through incurrence of notes payable as follows:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31 ENDED SEPTEMBER 30
1994 1995 1996 1996 1997
-------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest paid............ $254,843 $ 464,090 $ 807,169 $ 610,316 $ 677,364
Debt incurred to
purchase:
Inventory.............. 357,306 88,509
Rental equipment....... 853,820 2,300,291 2,530,234 2,121,875 1,441,145
Fixed assets........... 142,174 163,756 110,468
</TABLE>

3. PURCHASE OF BUSINESS

On September 29, 1995, MERCER acquired the branch retail operations of
Builders Equipment & Tool Co., Inc. (BETCO) in a transaction accounted for as
a purchase. The accompanying financial statements include the results of the
Greensboro operation from that date. MERCER purchased substantially all of the
resale and rental inventory and the fixed assets at the branch. The purchase
price was $600,000 (see Note 9). There were no intangible assets purchased nor
are there any contingent payments or commitments.

4. NOTE PAYABLE--BANK

At December 31, 1995, MERCER had a note payable to a bank that was due May
31, 1996. The note provided for monthly payment of interest at the bank's
prime rate plus 1/2%. The original amount of the note was $500,000.

At December 31, 1996, MERCER had a note payable to a bank that is due May
31, 1997. The note provides for monthly payment of interest at the bank's
prime rate plus 1/2%. The original amount of the note was $500,000.

At September 30, 1997, MERCER had a note payable to a bank that is due
October 15, 1997. The note provides for monthly payments of interest at the
bank's prime rate plus 1/2%. The original amount of the note was $500,000.

5. SHORT-TERM EQUIPMENT NOTES

MERCER has purchased rental equipment and inventory with short-term (less
than 12 months) notes payable with a nominal interest charge. At December 31,
1996, rental equipment and inventory with a cost of $434,972 and $135,522,
respectively, is pledged as collateral. At September 30, 1997, rental
equipment with a cost of $47,873 is pledged as collateral.

F-23
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. NOTES PAYABLE--INDIVIDUALS

Notes payable--individuals provide for quarterly interest payments at the
Wall Street prime rate plus one percent and allows MERCER to delay payment of
principal for up to one year and a day after request. At December 31, 1995,
1996 and September 30, 1997, $181,500, $178,000 and $190,000, respectively, of
this amount was due stockholders.

7. REVOLVING CREDIT NOTES

MERCER has a $3,000,000 revolving credit note with a bank. At December 31,
1996 MERCER had termed the revolver's outstanding balance and will repay the
principal over 36 months beginning in June 1997. The repayment provides for
monthly payment of $45,000 principal plus interest at the bank's prime rate
plus 1/4%. The annual amount of principal payment due are 1997--$315,000;
1998--$540,000; and 1999--$1,845,000. At December 31, 1995 and during 1996,
only interest payments were due on the note (see Note 9 for collateral).

8. NOTES PAYABLE TO BANK

MERCER's note payable to bank consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Bank note--8.25%, principal of $49,750
plus interest paid monthly thru November
1998; balance of $635,750 due December
1998.................................... $2,377,000 $1,780,000 $1,332,250
Bank note--interest at prime plus 1/2%,
principal of $10,000 plus interest paid
monthly thru August 1998; $250,000 due
September 30, 1998...................... 570,000 450,000 360,000
---------- ---------- ----------
Total.................................... 2,947,000 2,230,000 1,692,250
Less current portion..................... 717,000 717,000 957,000
---------- ---------- ----------
Noncurrent portion....................... $2,230,000 $1,513,000 $ 735,250
========== ========== ==========
</TABLE>

All accounts receivable and inventory and rental equipment, unless otherwise
encumbered, are given as security for the notes payable to bank. The annual
amounts of principal due as of December 31, 1996, for the next five years are
as follows: 1997--$717,000 and 1998--$1,513,000.

The loan agreement with the bank provides for maintenance of certain
absolute and ratio amounts relating to working capital, net worth, cash flow
coverage, and debt/equity and limits amounts that can be paid in dividends. At
December 31, 1996, MERCER had obtained a waiver on the cash flow coverage
ratio.

9. NOTES PAYABLE ON RENTAL EQUIPMENT

MERCER finances purchases of rental equipment and inventory through various
arrangements with vendors, their related finance entities, and other lenders.
These notes provide for monthly payments of either a fixed principal plus
interest or a level payment of principal and interest.

These note have terms of 36 to 60 months and generally provide for
accelerated repayment if the underlying equipment is sold. At December 31,
1995, 1996 and September 30, 1997, the weighted interest rates were 10.1%,
8.6% and 8.6%, respectively.

At December 31, 1996, $480,801 of floor plan notes, which have not yet begun
to require payments of principal or interest, are included in notes payable on
rental equipment. The financial statements assume their conversion upon
expiration of the floor plan period.

At December 31, 1996, rental equipment and inventory of $4,637,033 and
$88,509, respectively, were collateral for all of the above notes. At
September 30, 1997 rental equipment of $5,629,278 was collateral for all of
the above notes.

F-24
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The annual amounts of principal due as of December 31, 1996 for the next
five years are as follows: 1997--$1,188,144; 1998--$968,559; 1999--$621,294;
2000--$432,223; and 2001--$143,162.

10. CAPITAL LEASES

MERCER leases certain rental equipment and inventory under leases accounted
for as capital leases. The following is an analysis of the leased property:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Inventory.................................... $221,783 -- $ 41,000
======== ======== ========
Rental equipment............................. $233,116 $408,081 $408,081
Less accumulated amortization................ 24,425 78,561 152,016
-------- -------- --------
Net........................................ $208,691 $329,520 $256,065
======== ======== ========
</TABLE>
The following is a schedule by years of future lease payments under capital
leases together with the present value of the net minimum lease payments as of
December 31, 1996:
<TABLE>
<S> <C>
Year ended December 31, 1997....................................... $185,580
1998............................................................. 59,517
1999............................................................. 56,291
2000............................................................. 26,717
--------
Net minimum lease payments......................................... 328,105
Less amount representing interest.................................. 41,477
--------
Present value of net minimus lease payments........................ 286,628
Less current portion............................................... 167,445
--------
Long-term portion.................................................. $119,183
========
</TABLE>

11. NOTES PAYABLE ON FIXED ASSETS

The notes payable on fixed assets provide for monthly payment of principal
and interest at rates from 9.0% to 10.8%. At December 31, 1996 and September
30, 1997, related assets with a cost of $287,430 are collateral for the notes.

The annual amounts of principal due for the next five years is as follows:
1997--$78,418; 1998--$67,163; 1999--$45,715; 2000--$19,826 and 2001--$5,840.

12. COMMITMENTS AND CONTINGENCIES

As of December 31, 1996 and September 30, 1997, MERCER's cash balance had
$100,000 of FDIC insurance and is at one bank.

As of December 31, 1996, MERCER leased all of its facilities from a limited
liability company (LLC) whose members own 72% of MERCER's outstanding stock.
The leases provide for initial terms of five to seven years; two of the leases
provide for annual cost of living increases and have renewal options of five
years. MERCER is also responsible for the property taxes, insurance, and
repairs (see Note 13). Minimum rentals due are as follows: 1997--$336,000;
1998--$336,000; 1999--$325,000; 2000--$204,000; and 2001-- $132,000. MERCER
has also guaranteed debt of $2,260,316 and $2,324,667 at December 31, 1996 and
September 30, 1997, respectively, that the LLC has borrowed against the
buildings.

F-25
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

MERCER has a stock repurchase agreement with two stockholders, each owning
30,000 shares of the outstanding Class B common stock. Among other provisions,
the stock repurchase agreement allows MERCER first refusal on a sale of such
shares at no less than the book value per share of the stock. At December 31,
1996 and September 30, 1997, the minimum purchase price under this plan was
$1,121,950 and $1,450,935, respectively.

MERCER has a salary continuation agreement with the same two stockholders.
MERCER has agreed to pay these stockholders' beneficiaries an amount equal to
twice the prior year's wages. This amount is payable over 24 months, and at
December 31, 1996 and September 30, 1997, the potential obligation under the
salary continuation plan was $672,672.

13. RELATED PARTIES

At December 31, 1995, 1996 and September 30, 1997, other assets includes
rental deposits of $16,000, $42,889 and $42,889, respectively, with the LLC
described in Note 12. For the years ended December 31, 1994, 1995 and 1996 and
for the nine months ended September 30, 1996 and 1997, MERCER paid building
rentals to the LLC of $96,000, $149,500, $278,000, $191,000 and $252,000,
respectively.

For the years ended December 31, 1994, 1995 and 1996 and for the nine months
ended September 30, 1996 and 1997, MERCER paid interest of $12,409, $17,808,
$15,672, $11,754 and $12,000, respectively to stockholders on the notes
payable--individuals.

At December 31, 1995, the due from stockholders represented amounts paid to
enable the stockholders to make estimated income tax payments. The amount in
excess of the actual tax liability was repaid to MERCER.

14. PROFIT-SHARING PLAN

MERCER has adopted a profit-sharing plan that covers substantially all
employees and provides for discretionary employer and voluntary employee
contributions. In 1994, 1995, and 1996, no profit-sharing contribution was
made. In 1994, 1995, and 1996, MERCER made matching payments of $17,558,
$21,969, and $14,777, respectively under Section 401(k) of the Internal
Revenue Code of 1986. There were no matching contributions made in either the
nine month period ended September 30, 1996 or 1997.

15. CHANGE IN ACCOUNTING ESTIMATE

In 1996 MERCER changed the depreciable life and estimated salvage value of
its rental equipment purchased after December 31, 1995 from 60 months to 50
months and from 28% to 50%. The effect of these changes in estimated life and
salvage value was to decrease depreciation on rental equipment by $58,859.

F-26
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
A&A Tool Rentals & Sales, Inc.:

We have audited the accompanying consolidated balance sheets of A&A Tool
Rentals & Sales, Inc. and subsidiary as of October 31, 1995 and 1996 and
October 19, 1997 and the related consolidated statements of operations,
stockholders' equity, and cash flows for the years ended October 31, 1995 and
1996, and the period from November 1, 1996 to October 19, 1997. 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.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of A&A Tool
Rentals & Sales, Inc. and subsidiary as of October 31, 1995 and 1996 and
October 19, 1997 and the results of their operations and their cash flows for
the years ended October 31, 1995 and 1996, and the period from November 1,
1996 to October 19, 1997, in conformity with generally accepted accounting
principles.

/s/ KPMG Peat Marwick LLP

Sacramento, California

November 20, 1997

F-27
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
OCTOBER 31,
--------------------- OCTOBER 19, JULY 31,
1995 1996 1997 1997
---------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Cash............................ $ 336,304 $ 308,331 $ 108,327 $ 187,082
Trade accounts receivable, less
allowance for doubtful accounts
of $85,000 at October 31, 1995,
$80,000 at October 31, 1996 and
at October 19, 1997, and
$94,608 at July 31, 1997
(notes 2 and 3)................ 1,360,476 1,416,142 1,415,775 1,324,684
Merchandise inventory........... 750,556 847,035 862,200 906,969
Rental equipment, primarily
machinery, at cost, net of
accumulated depreciation and
amortization of $5,388,046 at
October 31, 1995, $5,909,751 at
October 31, 1996, $6,822,441 at
October 19, 1997, and
$6,727,264 at July 31, 1997
(notes 2 and 3)................ 2,136,948 3,190,093 2,780,854 3,133,863
Operating property and
equipment, net of accumulated
depreciation and amortization
of $967,822 at October 31,
1995, $912,230 at October 31,
1996, $955,007 at October 19,
1997, and $975,498 at July 31,
1997 (notes 2 and 3)........... 356,336 384,759 281,593 306,415
Due from related party (note
5)............................. 229,485 228,737 332,613 316,364
Prepaid expenses and other
assets......................... 183,681 234,976 303,553 152,251
---------- ---------- ---------- ----------
Total assets................ $5,353,786 $6,610,073 $6,084,915 $6,327,628
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Short-term debt (note 2)........ $1,679,244 $ 90,400 $ 449,670 $ 484,700
Accounts payable................ 705,460 766,465 1,040,494 703,583
Accrued liabilities............. 235,258 244,938 203,709 221,763
Income tax payable.............. -- 6,019 12,262 2,992
Long-term debt and capital lease
obligations (note 3)........... 1,723,384 4,351,394 3,463,807 3,868,069
---------- ---------- ---------- ----------
Total liabilities........... 4,343,346 5,459,216 5,169,942 5,281,107
---------- ---------- ---------- ----------
Commitments (notes 6 and 9).....
Stockholders' equity:
Common stock, Class A--voting
par value $.10. Authorized
2,000,000 shares; issued and
outstanding 720,000 shares... 72,000 72,000 72,000 72,000
Common stock, Class B--
nonvoting. Authorized
5,000,000 shares; issued and
outstanding 335,586 shares at
October 31, 1995, 277,172
shares at October 31, 1996,
272,491 shares at October 19,
1997, and 275,242 shares at
July 31, 1997................ 457,813 395,201 378,714 393,058
Retained earnings............... 480,627 683,656 464,259 581,463
---------- ---------- ---------- ----------
Total stockholders' equity.. 1,010,440 1,150,857 914,973 1,046,521
---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity....... $5,353,786 $6,610,073 $6,084,915 $6,327,628
========== ========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-28
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 1, NINE MONTHS
YEAR ENDED OCTOBER 31, 1996 TO ENDED JULY 31,
------------------------ OCTOBER 19, ----------------------
1995 1996 1997 1996 1997
----------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals..... $ 4,800,767 $ 5,918,148 $6,022,196 $4,165,881 $4,501,537
New equipment sales... 4,283,294 4,463,117 4,355,965 3,310,409 3,228,472
Sales of parts,
supplies and
rental equipment..... 848,193 1,027,943 778,141 824,910 657,572
Other................. 237,205 296,926 290,140 198,144 215,542
----------- ----------- ---------- ---------- ----------
Total revenues.......... 10,169,459 11,706,134 11,446,442 8,499,344 8,603,123
----------- ----------- ---------- ---------- ----------
Costs of Revenues:
Cost of equipment
rentals, excluding
equipment rental
depreciation and
amortization......... 2,049,172 2,542,965 2,583,884 1,976,183 2,097,280
Depreciation and
amortization,
equipment rentals.... 1,040,233 1,382,048 1,465,586 902,347 1,193,986
Cost of new equipment
sales................ 4,054,467 4,304,301 4,148,874 3,234,457 3,016,957
Cost of sales of
parts, supplies, and
equipment............ 598,545 622,956 595,424 330,714 296,725
Other................. 38,358 32,582 31,339 24,337 33,115
----------- ----------- ---------- ---------- ----------
Total costs of
revenues............... 7,780,775 8,884,852 8,825,107 6,468,038 6,638,063
----------- ----------- ---------- ---------- ----------
Gross Profit............ 2,388,684 2,821,282 2,621,335 2,031,306 1,965,060
Selling, general and
administration....... 2,063,730 2,215,936 2,178,383 1,614,263 1,696,104
Non-rental
depreciation and
amortization......... 107,390 120,757 124,648 88,896 95,171
----------- ----------- ---------- ---------- ----------
Operating income
(loss)................. 217,564 484,589 318,304 328,147 173,785
Other income
(expense)............ 50,090 116,539 80,080 61,119 105,777
----------- ----------- ---------- ---------- ----------
Income before interest
and taxes.............. 267,654 601,128 398,384 389,266 279,562
----------- ----------- ---------- ---------- ----------
Interest income....... 56,053 54,993 39,967 51,898 34,590
Interest expense...... (324,957) (401,204) (642,478) (264,613) (410,345)
----------- ----------- ---------- ---------- ----------
Net interest
expense............ (268,904) (346,211) (602,511) (212,715) (375,755)
----------- ----------- ---------- ---------- ----------
Income (loss) before
income taxes........... (1,250) 254,917 (204,127) 176,551 (96,193)
Income tax expense
(note 4)............. (1,600) (7,619) (15,270) (1,600) (6,000)
----------- ----------- ---------- ---------- ----------
Income (loss) from
continuing operations.. (2,850) 247,298 (219,397) 174,951 (102,193)
Loss from operation of
discontinued
subsidiary (note 1).. (55,929) -- -- -- --
Loss from disposal of
discontinued
subsidiary (note 1).. -- (44,269) -- (16,318) --
----------- ----------- ---------- ---------- ----------
Net income (loss)....... $ (58,779) $ 203,029 $ (219,397) $ 158,633 $ (102,193)
=========== =========== ========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-29
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON COMMON
STOCK STOCK
CLASS A CLASS B
--------------- ----------------- RETAINED
SHARES AMOUNT SHARES AMOUNT EARNINGS TOTAL
------- ------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balances at October 31,
1994................... 720,000 $72,000 363,433 $487,609 $539,406 $1,099,015
Purchase Class B common
stock from ESOP........ -- -- (27,847) (29,796) -- (29,796)
Net loss................ -- -- -- -- (58,779) (58,779)
------- ------- ------- -------- -------- ----------
Balances at October 31,
1995................... 720,000 72,000 335,586 457,813 480,627 1,010,440
Purchase Class B common
stock from ESOP........ -- -- (58,414) (62,612) -- (62,612)
Net income.............. -- -- -- -- 203,029 203,029
------- ------- ------- -------- -------- ----------
Balances at October 31,
1996................... 720,000 72,000 277,172 395,201 683,656 1,150,857
Purchase Class B common
stock from ESOP........ -- -- (4,681) (16,487) -- (16,487)
Net loss................ -- -- -- -- (219,397) (219,397)
------- ------- ------- -------- -------- ----------
Balances at October 19,
1997................... 720,000 $72,000 272,491 $378,714 $464,259 $ 914,973
======= ======= ======= ======== ======== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-30
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED OCTOBER 31, NOVEMBER 1, 1996 NINE MONTHS ENDED JULY 31,
------------------------ TO OCTOBER 19, ----------------------------
1995 1996 1997 1996 1997
----------- ----------- ---------------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss)...... $ (58,779) $ 203,029 $ (219,397) $ 158,633 $ (102,193)
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation and
amortization.......... 1,147,623 1,502,805 1,590,234 991,243 1,289,157
Provision for bad
debts................. 71,600 96,216 73,894 52,515 59,985
Provision for write-
down of inventory..... 31,709 -- 35,403 -- 35,403
Gain on sale of
equipment............. (213,049) (364,504) (220,017) (196,325) (167,944)
Changes in operating
assets:
(Increase) decrease
in trade accounts
receivable........... (282,115) (151,882) (73,527) (190,069) 31,473
(Increase) decrease
in related party
receivables.......... (54,741) 748 (103,876) (30,385) (87,627)
(Increase) decrease
in merchandise
inventory............ 38,955 (96,479) (50,568) (348,187) (95,337)
(Increase) decrease
in prepaid expenses
and other assets..... (29,102) 10,934 (174,821) (42,445) (50,309)
Increase (decrease)
in accounts payable,
trade................ 18,196 61,005 274,029 114,982 (62,882)
Increase (decrease)
in accrued
liabilities.......... 52,801 9,680 (41,229) (39,228) (23,175)
Decrease in deferred
revenue.............. (4,440) -- -- -- --
Increase (decrease)
in income tax
payable.............. -- 6,019 6,243 -- (3,027)
----------- ----------- ---------- ----------- ----------
Net cash provided by
operating
activities.......... 718,658 1,277,571 1,096,368 470,734 823,524
----------- ----------- ---------- ----------- ----------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Proceeds from the sale
of rental equipment
and operating property
and equipment......... 277,390 469,489 348,374 245,232 213,013
Purchases of rental
equipment and
operating property
and equipment......... (1,620,011) (2,689,358) (1,206,186) (2,042,083) (1,199,652)
Proceeds from sale of
marketable
securities............ 4,954 2,514 -- 2,514 --
----------- ----------- ---------- ----------- ----------
Net cash used in
investing
activities.......... (1,337,667) (2,217,355) (857,812) (1,794,337) (986,639)
----------- ----------- ---------- ----------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Borrowings on long-term
debt.................. 788,967 3,062,482 855,435 3,224,342 828,345
Payments on long-term
debt.................. (574,595) (1,121,435) (1,743,022) (572,655) (1,311,670)
Net borrowings
(payments) on short-
term debt............. 513,771 (901,881) 359,270 (1,553,999) 394,300
Premiums paid for
officers' life
insurance............. (60,042) (64,743) (93,756) (50,799) (66,966)
Drawings on cash
surrender value of
officers' life
insurance............. -- -- 200,000 -- 200,000
Purchase of Class B
common stock.......... (29,796) (62,612) (16,487) (59,590) (2,143)
----------- ----------- ---------- ----------- ----------
Net cash provided by
(used in) financing
activities.......... 638,305 911,811 (438,560) 987,299 41,866
----------- ----------- ---------- ----------- ----------
Net increase
(decrease) in cash.. 19,296 (27,973) (200,004) (336,304) (121,249)
Cash at beginning of
period................. 317,008 336,304 308,331 336,304 308,331
----------- ----------- ---------- ----------- ----------
Cash at end of period... $ 336,304 $ 308,331 $ 108,327 $ -- $ 187,082
=========== =========== ========== =========== ==========
SUPPLEMENTAL SCHEDULE OF
CASH FLOW INFORMATION:
Cash paid during the
period for:
Interest............... $ 324,957 $ 401,204 $ 516,307 $ 264,613 $ 410,345
=========== =========== ========== =========== ==========
Income taxes........... $ 1,600 $ 1,600 $ 4,606 $ 1,600 $ 10,627
=========== =========== ========== =========== ==========
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Sale of property and
equipment for
promissory note....... $ 10,000 $ -- $ -- $ -- $ --
=========== =========== ========== =========== ==========
Conversion of short-
term debt to long-term
debt.................. $ -- $ 686,963 $ -- $ -- $ --
=========== =========== ========== =========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-31
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 1995 AND 1996 AND PERIOD FROM NOVEMBER 1, 1996 TO OCTOBER 19, 1997

(THE INFORMATION AS OF JULY 31, 1997 AND FOR THE NINE MONTHS ENDED JULY 31,
1997 AND 1996 IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Organization and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary Operations Management Systems,
Inc. (OMS). The Company rents and sells construction and industrial supplies
and power equipment in Northern California. OMS marketed and sold computer
hardware and software to construction related businesses. All significant
intercompany accounts and transactions were eliminated in consolidation. The
nature of the Company's business is such that short-term obligations are
typically met by cash flow generated from long-term assets. Consequently,
consistent with industry practice, the accompanying consolidated balance
sheets are presented on an unclassified basis.

As of October 31, 1995, the Company decided to discontinue the operations of
its subsidiary, OMS. Certain assets of OMS were sold as of October 31, 1995.
The Company disposed of the remaining assets and liabilities of OMS, which
included cash, accounts receivable, inventory, property and equipment,
accounts payable and accrued liabilities, during fiscal year 1996. The Company
recognized a loss on disposal of the remaining assets. The loss from the
disposal of OMS assets was $44,269 for the year ended October 31, 1996 and
$16,318 for the nine months ended July 31, 1996. The loss from the operations
of OMS was $55,929 for the year ending October 31, 1995.

(b) Interim Financial Statements

The accompanying consolidated balance sheet at July 31, 1997 and the
consolidated statements of operations, stockholders' equity and cash flows for
the nine month periods ended July 31, 1996 and 1997 are unaudited and have
been prepared on the same basis as the audited consolidated financial
statements included herein. In the opinion of management, such unaudited
consolidated financial statements include all adjustments necessary to present
fairly the information set forth therein, which consist solely of normal
recurring adjustments. The results of operations for such interim periods are
not necessarily indicative of results for the full year.

Merchandise inventory is stated at the lower of cost or market. Cost is
determined using the weighted-average method.

(d) Revenue Recognition

Revenue related to the sale of construction and industrial supplies and
power equipment is recognized at the point of sale. Revenue related to the
rental of construction and industrial power equipment is recognized at the
time of return for rentals of twenty-eight days or less, and ratably over the
contract term for rentals in excess of twenty-eight days.

(e) Property and Equipment

Property and equipment are stated at cost and consist of rental equipment
and operating property and equipment. Property and equipment under capital
leases are stated at the present value of minimum lease payments.

Depreciation on property and equipment is calculated using an accelerated
method.

F-32
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Depreciation for property and equipment is taken over the asset's useful
life of 5 years, except for leasehold improvements which are amortized over 10
to 20 years.

(f) Other Assets

Other assets consist primarily of the cash surrender value of officers' life
insurance net of loans against the cash surrender value of the policies and
unbilled rental revenue. The loans outstanding were $410,000 at October 31,
1995 and 1996, and $610,000 at October 19, 1997 and July 31, 1997. The Company
is named beneficiary under the life insurance policy. Unbilled rental revenue
represents the revenue recognized on contracts over twenty-eight days, but not
billed. At October 19, 1997 unbilled rental revenue was $180,178.

(g) Income Taxes

The Company accounts for income taxes using the asset and liability method
under which deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. 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. Under the asset
and liability method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

(h) Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(i) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
on November 1, 1996. This Statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell. Adoption of this statement did not have a material
impact on the Company's financial position, results of operations, or
liquidity.

(j) Reclassifications

Certain amounts in the 1995 and 1996 consolidated financial statements have
been reclassified to conform to the 1997 consolidated financial statement
presentation.

F-33
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(2) SHORT-TERM DEBT

As of October 31, 1995 and 1996, the Company had borrowed $255,525 and
$90,400, respectively, on a credit facility that allows the Company to borrow
up to $500,000 at the bank's prime rate (9.25% and 8.25% at October 31, 1995
and 1996, respectively) plus 2%. Borrowings under this facility are
collateralized by trade accounts receivable. As of October 31, 1995, the
Company had also borrowed $1,303,719 on three additional credit facilities
that allowed borrowing up to $1,800,000 bearing interest at the bank's prime
rate (9.25% at October 31, 1995) plus 2%. Borrowings under these facilities
were collateralized by equipment. In addition, as of October 31, 1995, the
Company had borrowed $120,000 on an additional credit facility that allowed
borrowings of up to $200,000 bearing interest at the bank's prime rate (9.25%
at October 31, 1995) plus 2%. Borrowings under this facility were unsecured.

In 1997, the Company had borrowed on a credit facility that allows the
Company to borrow up to $500,000 at the bank's prime rate (8.5% at October 19,
1997 and July 31, 1997) plus 2%. At October 19, 1997 and July 31, 1997, the
amounts outstanding were $449,670 and $484,700, respectively.

(3) LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations consist of the following:

<TABLE>
<CAPTION>
OCTOBER 31,
--------------------- OCTOBER 19, JULY 31,
1995 1996 1997 1997
---------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT PAYOR AND TERMS
Union Safe Deposit Bank--
Various notes with combined
monthly payments of $54,592
including interest at prime
plus 2%, due from 1996
through 1999. Collateralized
by equipment and accounts
receivable.................. $ 62,547 $1,382,482 $851,741 $989,334
American Equipment Leasing--
Various leases with combined
monthly payments of $24,149
including interest ranging
from 11.5% to 12%, due from
1997 through 1998.
Collateralized by
equipment................... 351,766 510,567 377,619 381,122
Atlas Copco, Inc.--Various
notes with a combined
monthly payment of $22,212
including interest ranging
from 8.5% to 12.36%, due
from 1996 through 1998.
Collateralized by
equipment................... 190,310 352,446 257,875 323,727
Clark Equipment Credit Co.--
Various notes with a
combined monthly payment of
$3,546 including interest
ranging from 8.7% to 12.39%,
due from 1996 through 1999.
Collateralized by
equipment................... 236,363 105,889 39,083 45,433
Ingersoll-Rand--One note with
a monthly payment of $3,254
including interest at 9.75%,
due in 1999. Collateralized
by equipment................ -- 91,121 52,069 61,832
Prospect Leasing--Two leases
with a combined monthly
payment of $1,798 including
interest at 10%, due in
1998. Collateralized by
equipment................... -- 36,364 18,712 24,106
</TABLE>

F-34
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
OCTOBER 31,
--------------------- OCTOBER 19, JULY 31,
1995 1996 1997 1997
---------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT PAYOR AND TERMS--
(CONTINUED)
Miller Electric Finance--Two
notes with a combined monthly
payment of $3,964 including
interest ranging from 10.25%
to 11.3%, due in 1999.
Collateralized by equipment.. -- 72,746 89,813 101,704
The Associates--Various notes
and leases with a combined
monthly payment of $35,365
including interest ranging
from 9% to 13.5%, due from
1996 through 2000.
Collateralized by equipment.. 609,507 924,064 1,002,327 1,175,627
JI Case Credit Corporation--
Three notes with combined
monthly payments of $14,428
including interest ranging
from 6.9% to 8.2%, due from
1997 through 2000.
Collateralized by equipment.. 268,365 515,184 349,235 346,540
Orix Credit--One note with a
monthly payment of $1,835
including interest at 9.5%,
due in 1996. Collateralized
by equipment................. 14,681 -- -- --
John Deere--One note with a
monthly payment of $885
including interest at 8.75%,
due in 1998. Collateralized
by equipment................. 24,779 14,159 3,540 6,195
Caterpillar Financial
Services--Various notes with
a combined monthly payment of
$12,279 including interest
ranging from 9.4% to 11.3%,
due from 1998 through 2001.
Collateralized by equipment.. 65,842 546,420 458,438 493,833
Colonial Pacific Leasing--One
note with a monthly payment
of $1,323 including interest
at 10%, due in 1997.
Collateralized by equipment.. 21,171 5,293 -- --
Newcourt Financial--Two notes
with a combined monthly
payment of $4,207 including
interest ranging from 10% to
11%, due in 1998 and 2001.
Collateralized by equipment.. 50,638 196,194 148,508 158,329
Other......................... 30,730 80,773 62,181 105,030
---------- ---------- ---------- ----------
Total long-term debt.......... 1,926,699 4,833,702 3,711,141 4,212,812
Less amounts representing
interest..................... 203,315 482,308 247,334 344,743
---------- ---------- ---------- ----------
Long-term debt, net of
interest..................... $1,723,384 $4,351,394 $3,463,807 $3,868,069
========== ========== ========== ==========
</TABLE>

Subsequent to October 19, 1997, all amounts outstanding under the long-term
debt agreements and capital lease agreements were paid except for $18,546
which is scheduled for payment in fiscal year 1998.

F-35
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(4) INCOME TAXES

Income tax expense consists of the following:

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED NOVEMBER 1, NINE MONTHS
OCTOBER 31, 1996 TO ENDED JULY 31,
------------- OCTOBER 19, ---------------
1995 1996 1997 1996 1997
------ ------ ----------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current............................ $1,600 $7,619 $15,270 $ 1,600 $ 6,000
Deferred........................... -- -- -- -- --
------ ------ ------- ------- -------
$1,600 $7,619 $15,270 $ 1,600 $ 6,000
====== ====== ======= ======= =======
</TABLE>

Deferred tax assets and deferred tax liabilities are comprised of the
following:

<TABLE>
<CAPTION>
OCTOBER 31,
-------------------- OCTOBER 19, JULY 31,
1995 1996 1997 1997
--------- --------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current deferred tax assets:
Allowance for bad debts.... $ 36,800 $ 34,600 $ 34,600 $ 41,000
Inventory reserve.......... 13,800 -- 6,600 --
Noncurrent deferred tax as-
sets:
Depreciation and
amortization expense...... 12,700 12,000 14,000 11,300
Net operating loss......... 285,400 188,300 236,800 198,800
Alternative minimum taxes.. 12,300 25,500 39,000 29,900
--------- --------- --------- ---------
Total deferred tax assets.. 361,000 260,400 331,000 281,000
Less: Valuation allowance.. (361,000) (260,400) (331,000) (281,000)
--------- --------- --------- ---------
Total deferred tax assets.. -- -- -- --
Total deferred tax
liabilities............... -- -- -- --
--------- --------- --------- ---------
Net deferred tax
asset/liability......... $ -- $ -- $ -- $ --
========= ========= ========= =========
</TABLE>

The effective rate for income tax expense differs from the statutory tax
rate of 34% when applied to income (loss) from continuing operations before
income taxes as a result of the following:

<TABLE>
<CAPTION>
OCTOBER 31,
------------ OCTOBER 19, JULY 31,
1995 1996 1997 1997
----- ----- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Expected U.S. Federal income tax..... (34%) 34% (34%) (34%)
State franchise tax, net............. 128% 1% -- 2%
Net operating loss carryforward...... -- (34%) -- --
Effect of valuation allowance........ 34% -- 34% 34%
Alternative minimum tax.............. -- 2% 7% 4%
----- ----- --- ----
Total............................ 128% 3% 7% 6%
===== ===== === ====
</TABLE>

F-36
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The net change in the total valuation allowance for the year ended October
31, 1995 and 1996 and the period from November 1, 1996 to October 19, 1997 was
an increase of $8,000, a decrease of $100,600 and an increase of $70,600,
respectively.

(5) RELATED PARTY TRANSACTIONS

Building

The Company leased its Stockton, California premises from officers and
stockholders of the Company. The Company executed a new five year lease on
June 1, 1993 with monthly rent of $21,500. On October 20, 1997, this lease was
amended for an additional five years with monthly rent of $17,000. In
addition, the Company as lessee is to pay all taxes and insurance relating to
the property. At October 19, 1997, the remaining commitment under this lease,
as amended, is $1,020,000 plus property taxes and insurance.

Due From Related Party

Due from related party comprise the following:

<TABLE>
<CAPTION>
OCTOBER 31,
----------------- OCTOBER 19, JULY 31,
DUE FROM 1995 1996 1997 1997
-------- -------- -------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
President and shareholder......... $206,296 $228,737 $317,613 $316,364
Vice president and shareholder.... 23,189 -- 15,000 --
-------- -------- -------- --------
$229,485 $228,737 $332,613 $316,364
======== ======== ======== ========
</TABLE>

The amounts due from related parties were paid subsequent to October 19,
1997.

(6) OPERATING LEASES

The Company leases vehicles from various unrelated companies through 1999.
The vehicle leases, as well as the lease for the Company's business premises,
are classified as operating leases. At October 19, 1997, future minimum lease
payments under the operating leases including amounts amended as discussed in
note (5) are:

<TABLE>
<CAPTION>
YEAR ENDING OCTOBER 31
----------------------
<S> <C>
1998............................................................ $ 442,636
1999............................................................ 305,036
2000............................................................ 204,000
2001............................................................ 204,000
2002............................................................ 204,000
----------
$1,359,672
==========
</TABLE>

Operating lease expense aggregated $520,210, $533,619 and $501,473 in 1995,
1996 and for the period from November 1, 1996 to October 19, 1997,
respectively, and $167,032 and $359,378 for the nine months ended July 31,
1996 and 1997, respectively.

(7) EMPLOYEE STOCK OWNERSHIP PLAN

Effective October 31, 1972, the Company established an Employee Stock
Ownership Plan (ESOP) for the benefit of its eligible employees. The ESOP is
designed to invest primarily in the stock of the Company. Contributions to the
ESOP are determined annually by the Board of Directors, however, in no case
may the

F-37
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

contribution exceed the lesser of (a) fifteen percent (15%) of the
compensation of eligible employees, or (b) $30,000 for each participant. No
contributions were made in the years ended October 31, 1995 and 1996 or the
period from November 1, 1996 to October 19, 1997.

The ESOP measures compensation for Plan purposes as the Company's
contribution to the Plan. No compensation cost was recognized by the Plan for
the years ended October 31, 1995 and 1996, or the period from November 1, 1996
to October 19, 1997.

The ESOP held 335,586, 277,172, 272,491 and 275,242 allocated shares at
October 31, 1995 and 1996, October 19, 1997, and July 31, 1997, respectively.
No committed-to-be-released or suspense shares were held by the ESOP at
October 31, 1995 and 1996, October 19, 1997, or at July 31, 1997.

Following termination of employment, participants receive a distribution of
their vested ESOP account balance in the form of cash or Company shares in
accordance with the provisions of the ESOP. If shares are distributed to the
participant, the participant has the right to sell the shares back to the
Company, for a limited period of time, at the fair market value of the shares.

(8) PROFIT SHARING PLAN

In August 1995, the Company established a Profit Sharing/401(k) Savings Plan
(Plan) under Section 401 and 501 of the Internal Revenue Code. Substantially
all employees are eligible for the Plan. Yearly employer contributions to the
Plan are discretionary. Employees may also elect to contribute to the Plan.
For the years ended October 31, 1995 and 1996, and the period from November 1,
1996 to October 19, 1997, the Company contributed $8,245, $27,422, and
$27,064, respectively to the Plan and $19,780 and $19,779 for the nine months
ended July 31, 1996 and 1997.

(9) COMMITMENTS

Litigation, contingent liabilities, and claims, all arising in the ordinary
course of business, are not expected to involve any amounts that could be
material to the Company's financial position or results of operations.

(10) SUBSEQUENT EVENT

On October 17, 1997, the Company entered into a stock purchase agreement
with United Rentals, Inc. (United). The transaction closed on October 20, 1997
and under the terms of the stock purchase agreement, United purchased all of
the issued and outstanding common stock of the Company.

F-38
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
J & J Rental Services, Inc.

We have audited the balance sheets of the predecessor companies to J & J
Rental Services, Inc. (see Note 1) as of December 31, 1995 and 1996 and the
related statements of income, stockholders' equity and partners' capital and
cash flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the predecessor companies
to J & J Rental Services, Inc. at December 31, 1995 and 1996, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted
accounting principles.

/s/ Ernst & Young llp

MetroPark, New Jersey
October 29, 1997

F-39
<PAGE>

J & J RENTAL SERVICES, INC.

BALANCE SHEETS
(NOTE 1)

<TABLE>
<CAPTION>
PREDECESSORS COMPANY
--------------------- -----------------
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash.................................. $ 561,443 $ 666,153 $ 1,757,218
Accounts receivable, net of allowance
for doubtful accounts of $433,444,
$428,270, and $69,573 for 1995, 1996
and 1997, respectively............... 1,486,515 1,502,119 1,975,944
Trade notes receivable, net of
allowance for doubtful accounts of
$145,844 and $93,337 for 1995 and
1996, respectively................... 24,493 37,081
Rental equipment, net................. 6,284,122 6,669,365 10,504,415
Property and equipment, net........... 463,603 467,460 492,603
Investments in marketable equity
securities........................... 52,750 81,175
Due from Predecessor Stockholder...... 120,000 120,000
Prepaid expenses and other assets..... 41,303 126,221 1,375
Organization costs, net............... 36,979
Covenant not to compete, net.......... 47,500
---------- ---------- -----------
Total assets.................... $9,034,229 $9,669,574 $14,816,034
========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
AND PARTNERS' CAPITAL
Liabilities:
Accounts payable.................... $ 669,304 $ 628,252 $ 588,548
Accrued expenses.................... 334,965 336,884 185,617
Income tax payable.................. 7,613 24,814
Deferred tax liability.............. 418,000 430,000
Debt................................ 5,424,992 5,766,651 14,180,795
Due to Predecessor Stockholder...... 410,222 336,498
---------- ---------- -----------
Total liabilities............... 7,265,096 7,523,099 14,954,960
Commitments and contingencies
Stockholders' equity and partners'
capital:
Stockholder's equity--J & J
Equipment, Inc.
Common stock, $1.00 par value,
50,000 shares authorized, issued
and outstanding.................. 50,000 50,000
Unrealized gain on marketable
equity securities................ 2,750 1,165
Retained earnings................. 871,858 981,955
---------- ----------
924,608 1,033,120
Stockholders' equity--J & J Rental
Services, Inc.
Common stock, no par value,
1,000,000 shares authorized,
77,500 shares issued and
outstanding...................... 1,000
Accumulated deficit............... (139,926)
-----------
(138,926)
Partners' capital--Tri-Star Rentals,
Ltd................................ 844,525 1,113,355
---------- ----------
Total stockholders' equity and
partners' capital................ 1,769,133 2,146,475
---------- ---------- -----------
Total liabilities and
stockholders' equity and
partners' capital................ $9,034,229 $9,669,574 $14,816,034
========== ========== ===========
</TABLE>

See accompanying notes.

F-40
<PAGE>

J & J RENTAL SERVICES, INC.

STATEMENTS OF INCOME
(NOTE 1)

<TABLE>
<CAPTION>
PREDECESSORS COMPANY
---------------------------------------------------------- -------------
SIX MONTHS ENDED THREE MONTHS
YEAR ENDED DECEMBER 31, JUNE 30, ENDED
---------------------------------- ---------------------- SEPTEMBER 30,
1994 1995 1996 1996 1997 1997
---------- ---------- ---------- ---------- ---------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals................................... $6,419,892 $7,573,784 $7,769,716 $4,053,397 $3,823,790 $2,174,283
Sales of equipment and parts........................ 1,797,142 1,810,400 1,243,297 624,375 573,450 62,948
---------- ---------- ---------- ---------- ---------- ----------
Total revenues.................................... 8,217,034 9,384,184 9,013,013 4,677,772 4,397,240 2,237,231
Cost of revenues:
Cost of revenues, excluding equipment rental
depreciation....................................... 3,173,760 3,906,336 3,544,040 1,860,016 1,629,299 935,526
Depreciation, equipment rentals..................... 1,708,936 2,048,619 2,389,929 1,101,571 1,171,685 392,002
Cost of revenues of equipment and parts............. 835,327 898,190 452,522 307,328 326,847 51,698
---------- ---------- ---------- ---------- ---------- ----------
Total cost of revenues............................ 5,718,023 6,853,145 6,386,491 3,268,915 3,127,831 1,379,226
---------- ---------- ---------- ---------- ---------- ----------
Gross profit.......................................... 2,499,011 2,531,039 2,626,522 1,408,857 1,269,409 858,005
Selling, general and administrative expenses.......... 1,561,951 1,840,973 1,521,562 749,625 713,488 427,268
Non-rental depreciation............................... 101,606 125,004 123,971 83,848 78,643 31,560
---------- ---------- ---------- ---------- ---------- ----------
Operating income.................................. 835,454 565,062 980,989 575,384 477,278 399,177
Interest expense...................................... 262,253 411,731 478,341 251,708 180,769 241,409
Other (income), net................................... (3,375) (45,103) (27,523) (29,609) (11,418) (26,306)
---------- ---------- ---------- ---------- ---------- ----------
Income before provision for income taxes.......... 576,576 198,434 530,171 353,285 307,927 184,074
Provision for income taxes............................ 112,601 35,678 49,685 56,000 98,000 --
---------- ---------- ---------- ---------- ---------- ----------
Net income........................................ $ 463,975 $ 162,756 $ 480,486 $ 297,285 $ 209,927 $ 184,074
- --------------------------------------------------
========== ========== ========== ========== ========== ==========
</TABLE>

See accompanying notes.

F-41
<PAGE>

J & J RENTAL SERVICES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
(NOTE 1)

<TABLE>
<CAPTION>
UNREALIZED
(LOSS) GAIN ON
COMMON STOCK MARKETABLE RETAINED PARTNERS'
SHARES AMOUNT SECURITIES EARNINGS CAPITAL
------ ------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Predecessors:
Balance at January 1,
1994................... 50,000 $50,000 $606,799 $827,938
Net income.............. 189,297 274,678
Distributions paid to
partners............... (175,344)
Unrealized loss on
marketable securities.. $(6,500)
------ ------- ------- ---------- ---------
Balance at December 31,
1994................... 50,000 50,000 (6,500) 796,096 927,272
Net income.............. 75,762 86,994
Distributions paid to
partners............... (169,741)
Unrealized gain on
marketable securities.. 9,250
------ ------- ------- ---------- ---------
Balance at December 31,
1995................... 50,000 50,000 2,750 871,858 844,525
Net income.............. 110,097 370,389
Distributions paid to
partners............... (101,559)
Unrealized loss on
marketable securities.. (1,585)
------ ------- ------- ---------- ---------
Balance at December 31,
1996................... 50,000 50,000 1,165 981,955 1,113,355
Net income (loss) from
January 1, 1997 to June
30, 1997 (unaudited)... 311,262 (101,335)
Distributions paid to
partners (unaudited)... (50,500)
------ ------- ------- ---------- ---------
Balance at June 30, 1997
(unaudited)............ 50,000 $50,000 $ 1,165 $1,293,217 $ 961,520
====== ======= ======= ========== =========
Company:
Issuance of common stock
(unaudited)............ 77,500 $ 1,000
Net income from July 1,
1997 to September 30,
1997 (unaudited)....... $ 184,074
Basis adjustment
(unaudited)............ (324,000)
------ ------- ------- ---------- ---------
Balance at September 30,
1997 (unaudited)....... 77,500 $ 1,000 $ (139,926)
====== ======= ======= ========== =========
</TABLE>

See accompanying notes.

F-42
<PAGE>

J & J RENTAL SERVICES, INC.

STATEMENTS OF CASH FLOWS
(NOTE 1)

<TABLE>
<CAPTION>
PREDECESSORS COMPANY
------------------------------------------------------------- -------------
SIX MONTHS ENDED THREE MONTHS
YEAR ENDED DECEMBER 31, JUNE 30, ENDED
------------------------------------- ---------------------- SEPTEMBER 30,
1994 1995 1996 1996 1997 1997
----------- ----------- ----------- ---------- ---------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................... $ 463,975 $ 162,756 $ 480,486 $ 297,285 $ 209,927 $ 184,074
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation................................. 1,810,542 2,173,623 2,513,900 1,185,419 1,250,328 428,009
Bad debt expense (recovery).................. 121,196 128,092 (57,621) (8,793) 7,214 69,573
Gain on sale of rental equipment............. (574,043) (396,704) (369,379) (293,981) (210,390) (11,250)
Gain on sale of property and equipment....... (5,110) (2,809) (6,591) -- -- --
Deferred taxes............................... 109,703 23,000 12,000 -- -- --
Changes in assets and liabilities:
Increase in accounts receivable............. (529,657) (64,895) (10,430) (120,785) (512,942) (2,045,517)
(Increase) decrease in trade notes
receivable................................. 80,639 (170,337) 39,859 (194,354) 37,081 --
(Increase) decrease in prepaid expenses and
other assets............................... 23,694 (31,561) (84,918) 143,283 (26,028) (1,375)
Increase (decrease) in accounts payable..... 233,814 46,476 (41,052) (10,000) 372,230 588,548
Increase in accrued expenses................ 98,864 53,632 1,919 17,153 123,765 185,617
Increase in income tax payable.............. -- 7,613 17,201 48,387 73,186 --
Increase in other assets.................... -- -- -- -- -- (86,719)
----------- ----------- ----------- ---------- ---------- ------------
Cash provided by (used in) operating
activities................................ 1,833,617 1,928,886 2,495,374 1,063,614 1,324,371 (689,040)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment........ (174,473) (270,369) (195,823) (146,148) (614,414) (11,797,486)
Proceeds from sale of rental equipment....... 1,014,501 930,860 755,122 624,372 1,227,501 62,948
Proceeds from sale of property and
equipment................................... 39,119 24,634 74,585 -- -- --
Unrealized gain/(loss) on marketable
securities.................................. (6,500) 9,250 (1,585) -- -- --
Purchase of marketable securities............ (43,500) (9,250) (28,425) -- -- --
Payments on loans to Predecessor
Stockholder................................. (110,033) (21,573) (73,724) (94,857) (79,254) --
Proceeds received on Predecessor Stockholder
loans....................................... -- 94,857 -- 49,358 6,884 --
Loan to Predecessor Stockholder.............. -- (120,000) -- -- -- --
----------- ----------- ----------- ---------- ---------- ------------
Cash provided by (used in) investing
activities................................ 719,114 638,409 530,150 432,725 540,717 (11,734,538)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under credit facilities............ 600,664 871,496 351,958 -- -- 14,511,343
Principal payments on debt................... (2,882,889) (3,117,926) (3,171,213) (1,451,558) (1,920,472) (330,547)
Distributions paid........................... (175,344) (169,741) (101,559) (48,559) (50,500) --
----------- ----------- ----------- ---------- ---------- ------------
Cash provided by (used in) financing
activities................................ (2,457,569) (2,416,171) (2,920,814) (1,500,117) (1,970,972) 14,180,796
----------- ----------- ----------- ---------- ---------- ------------
Increase (decrease) in cash .................. 95,162 151,124 104,710 (3,778) (105,884) 1,757,218
Cash at beginning of year..................... 315,157 410,319 561,443 561,443 666,153 --
----------- ----------- ----------- ---------- ---------- ------------
Cash at end of year........................ $ 410,319 $ 561,443 $ 666,153 $ 557,665 $ 560,269 $ 1,757,218
- --------------------------------------------------
=========== =========== =========== ========== ========== ============
</TABLE>

See accompanying notes.

F-43
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1994, 1995 AND 1996
(THE INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE
30, 1996 AND 1997 AND FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 IS
UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

J & J Rental Services, Inc. (the "Company") was formed in May 1997, and
pursuant to the terms of an Asset Purchase Agreement (the "Agreement"), on
June 30, 1997 acquired all of the rental equipment and property and equipment
from J & J Equipment, Inc. ("J & J"), and Tri-Star Rentals, Ltd. ("Tri-Star")
(collectively, the "Predecessors") and assumed all operations of the
Predecessors (the "Acquisition"). The purchase price of $10,700,000 consisted
of cash of $7,200,000 and a promissory note payable for $3,500,000. The sole
stockholder and partner of J & J and Tri-Star, respectively, (the "Predecessor
Stockholder") has, on a fully-diluted basis, a 9% ownership interest in the
outstanding common stock of the Company, and has continued in a management
role as chief operating officer.

The accompanying financial statements as of December 31, 1995 and 1996 and
for the years ended December 31, 1994, 1995 and 1996, and for the six month
periods ended June 30, 1996 and 1997 present the accounts and results of
operations of the Predecessors on a combined, historical cost basis. Although
the financial statements of the Predecessors have been combined, the balance
sheets and statements of income and cash flows do not represent those of a
single legal entity. All significant intercompany accounts and transactions
have been eliminated in combination.

The financial statements as of September 30, 1997 and for the three month
period ended September 30, 1997 present the accounts and results of operations
of the Company since the Acquisition.

The Acquisition has been accounted for as a purchase effective July 1, 1997
and, accordingly, at such date the Company recorded the assets acquired at
their estimated fair values, adjusted for the impact of the Predecessor
Stockholder's continuing residual interest as described below. The assets
acquired have been reduced by $324,000 representing the Predecessor
Stockholder's continuing residual interest in the Company with a corresponding
charge against the Company's retained earnings.

The adjusted purchase price and the preliminary allocation of the adjusted
purchase price to the historical assets of the Company as of July 1, 1997 are
as follows:

<TABLE>
<S> <C>
Purchase price................................................. $10,700,000
Adjustment necessary to value Predecessor Stockholder's
continuing residual interest at Predecessor's basis........... 324,000
-----------
Adjusted purchase price........................................ $10,376,000
===========
Allocation of adjusted purchase price:
Net assets acquired, at fair values.......................... $10,326,000
Covenant not to compete...................................... 50,000
-----------
Total adjusted purchase price allocation................... $10,376,000
===========
</TABLE>

Business Activity

The Company rents and sells light weight and heavy off-road construction
equipment for use by construction and maintenance companies, and has ancillary
sales of parts and supplies. The rentals are on a daily, weekly or monthly
basis. The Company has two locations in Houston, Texas and its principal
market area is the

F-44
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
state of Texas. The nature of the Company's business is such that short-term
obligations are typically met by cash flow generated from long-term assets.
Consequently, consistent with industry practice, the balance sheets are
presented on an unclassified basis.

Interim Financial Statements

The accompanying balance sheet at September 30, 1997 and the statements of
income, stockholders' equity and cash flows for the six-month periods ended
June 30, 1996 and 1997 and three-month period ended September 30, 1997, are
unaudited and have been prepared on the same basis as the audited financial
statements included herein. In the opinion of management, such unaudited
financial statements include all adjustments necessary to present fairly the
information set forth therein, which consist solely of normal recurring
adjustments. The results of operations for such interim periods are not
necessarily indicative of results for the full year.

Rental Equipment

Rental equipment is recorded at cost. Depreciation for rental equipment is
computed using the straight-line method over estimated useful lives of three
to five years with no salvage value. Rental equipment costing less than $500
is immediately expensed at the date of purchase. Equipment rental revenue is
recorded as earned under the operating method. Equipment rental revenue in the
statements of operations includes revenues earned on equipment rentals, and
related fuel sales and rental equipment delivery fees. Proceeds from the
disposal and the related net book value of the equipment are recognized in the
period of disposal and reported as revenue from rental equipment sales in the
statements of operations. Ordinary maintenance and repair costs are charged to
operations as incurred.

Property and Equipment

Property and equipment is stated at cost. Depreciation of property and
equipment is computed on the straight-line method over estimated useful lives
of 5 to 10 years.

The cost of assets sold, retired, or otherwise disposed of, and the related
accumulated depreciation is eliminated from the accounts and any resulting
gain or loss is included in operations. Ordinary maintenance and repair costs
are charged to operations as incurred.

Advertising Costs

The Company advertises primarily through trade journals, phone directories
and the distribution of promotional items. All advertising costs are expensed
as incurred. Advertising expenses amounted to approximately $44,333, $40,095,
and $52,483 in the years ended December 31, 1994, 1995 and 1996, respectively,
$13,251 and $1,297 in the six months ended June 30, 1996 and 1997,
respectively, and $9,433 in the three months ended September 30, 1997.

Income Taxes

J & J applied an asset and liability approach to accounting for income
taxes. Deferred income tax assets and liabilities arise from differences
between the tax basis of an asset or liability and its reported amount in the
financial statements. Deferred tax balances are determined by using tax rates
expected to be in effect when the taxes will actually be paid or refunds
received. Under federal and state income tax law, Tri-Star, a partnership, is
not a taxable entity and, therefore, incurs no income tax liability. Any
profits and losses of Tri-Star flow through to the individual partners.

F-45
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Investments

The Company's investments consist of marketable equity securities and are
classified as available for sale. Any unrealized gains or losses are excluded
from income and are presented as a component of stockholders' equity.

Covenant Not to Compete

The covenant not to compete reflects an agreement made regarding
confidentiality and restricting competitive activity and is being amortized by
the straight-line method over the period of the agreement, which is 5 years.
Amortization expense was $2,500 for the three month period ended September 30,
1997.

Accounting Estimates

2. CONCENTRATIONS OF CREDIT RISK

The Company maintains cash balances with a quality financial institution
and, accordingly, management believes this mitigates the amount of credit
risk. Concentrations of credit risk with respect to customer receivables are
limited due to the large number of customers comprising the Company's customer
base and its credit policy.

3. RENTAL EQUIPMENT

Rental equipment and related accumulated depreciation consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- SEPTEMBER 30,
1995 1996 1997
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Rental equipment....................... $12,003,618 $12,520,482 $10,896,417
Less accumulated depreciation.......... 5,719,496 5,851,117 392,002
----------- ----------- -----------
Rental equipment, net.................. $ 6,284,122 $ 6,669,365 $10,504,415
=========== =========== ===========
</TABLE>

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1995 1996 1997
--------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Transportation equipment............... $ 776,494 $ 763,402 $419,159
Furniture, fixtures and office equip-
ment.................................. 80,851 92,082 59,760
Shop equipment......................... 39,356 39,356
Leasehold improvements................. 38,386
Construction in progress............... 45,244
--------- --------- --------
896,701 933,226 524,163
Less accumulated depreciation.......... (433,098) (465,766) (31,560)
--------- --------- --------
Total.................................. $ 463,603 $ 467,460 $492,603
========= ========= ========
</TABLE>

F-46
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. DEBT

Debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31
---------------------- SEPTEMBER 30,
1995 1996 1997
---------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
CIT Group--Various notes dated from
September 21, 1995 through August 5,
1997, with annual interest rates ranging
from 8% to 9.4% due in monthly payments
ranging from $867 to $43,987. .......... $1,694,640 $ 1,246,231 $648,955
The Associates--Note dated April 1, 1996,
with annual interest of 8.8% due in
monthly payments of $3,609. ............ 110,450
Case Power & Equipment--Various notes
dated from January 1, 1992 through
December 30, 1996, with annual interest
rates ranging from 5.5% to 7.9% due in
monthly payments ranging from $408 to
$7,747. ................................ 493,789 795,344
Sterling Bank--Various notes dated from
January 26, 1994 through December 20,
1996, with annual interest rates ranging
from 8% to 11% due in monthly payments
ranging from $582 to $2,084. ........... 108,230 306,708
KDC Financial--Various notes dated from
June 14, 1993 through December 31, 1996,
with annual interest rates ranging from
4.5% to 9.5% due in monthly payments
ranging from $840 to $4,691. ........... 1,280,585 1,443,971
John Deere Financial--Notes dated
December 31, 1995 and September 10,
1996, with annual interest rates of 7.9%
and 6.9% due in monthly payments of $807
and $1,083. ............................ 33,130 69,247
Frost National Bank--Various notes dated
from January 25, 1995 through August 15,
1995, with annual interest rates ranging
from 8.75% to 9.5% due in monthly
principal payments ranging from $582 to
$8,492. ................................ 190,868 101,771
Citicorp--Note dated June 15, 1993, with
an annual interest rate of 5.9% due in
monthly payments of $921. .............. 15,831 5,433
First Prosperity Bank--Various notes
dated from September 8, 1994 through
December 13, 1996, with annual interest
ranging from 7.25% through 9.9% due in
monthly payments ranging from $354 to
$1,039. ................................ 89,031 55,139
CAT Financial--Notes dated June 2, 1995
and December 31, 1994, with annual
interest rates of 9.69% and 9.5% due in
monthly payments of $4,227 and
$3,036. ................................ 221,132 152,293
CAT Financial--Notes dated October 11,
1996 and November 25, 1996, non-interest
bearing, with monthly payments of $1,205
and $3,522. ............................ 161,102
</TABLE>

F-47
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31
--------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Chase/Clark Credit--Various notes dated
from March 17, 1994 through September 28,
1994, with annual interest rates ranging
from 9.75% to 12.765% due in monthly
installments ranging from $194 to
$1,430. ................................. 47,010 30,232
First Prosperity--Various notes dated from
August 16, 1993 through December 13,
1996, with annual interest rates ranging
from 6.4% to 11% due in monthly
installments ranging from $423 to
$4,205................................... 64,270 171,518
Associates Commercial Credit Corp.--
Various notes dated from May 16, 1994
through July 8, 1996, with annual
interest rates ranging from 7.75% to
11.25% due in monthly installments
ranging from $912 to $6,656.............. 283,555 246,570
Ingersoll-Rand Company--Various notes
dated from June 30, 1992 through
September 8, 1996 with annual interest
rates ranging from 7% to 9.5% due in
monthly installments ranging from $301 to
$7,794................................... 50,417 316,003
Wacker Corporation--Various notes dated
from January 7, 1994 through May 25,
1996, with annual interest rates ranging
from 6.25% to 10.25% due in monthly
installments ranging from $854 to
$2,889................................... 71,171 99,666
AEL Leasing Co., Inc.--Various notes dated
from April 21, 1994 through May 20, 1996,
with annual interest rates ranging from
8.72% to 12.93% due in monthly
installments ranging from $371 to
$4,883................................... 349,554 261,043
AEL Leasing Co., Inc.--Various non-
interest bearing notes dated from April
21, 1994 through February 26, 1996, due
in 12 principal installments ranging from
$8,022 to $18,249........................ 36,498
Shandee--Note dated August 31, 1995, with
an annual interest rate of 11.25% due in
monthly installments of $2,803........... 50,909 21,510
Sterling Bank--Note dated January 2, 1996,
with an annual interest rate of 9.5% due
in 24 principal installments of $4,118... 53,538
Miller Financing--Various notes dated from
February 15, 1996 through June 1, 1996,
with annual interest rates ranging from
9.25 % to 10.25% due in monthly
installments ranging from $375 to
$2,922................................... 82,384
Toyota Motor Credit Corp.--Notes dated May
8 and August 8, 1997, with annual
interest rates of 5.4% and 10.3%,
respectively, due in monthly installments
of $543 and $ 561, respectively.......... 48,005
</TABLE>

F-48
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31
--------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Case Credit--Various notes dated June 30,
1997 with an annual interest rate of 7.9%
due in monthly installments ranging from
$1,685 to $2,254.......................... 294,444
Case Credit--Term note dated June 30, 1997,
with interest due monthly at prime plus
.75% (9.25% at September 30, 1997).
Principal is due June 30, 2002. This note
is secured by all of the Company's rental
assets and property, plant and equipment,
and is personally guaranteed by the
majority owners of the Company............ 7,689,391
J & J and Tri-Star--Promissory note dated
June 30, 1997 with an annual interest rate
of 7.5%. Principal payments of $175,000
are due quarterly beginning October 1,
2000...................................... 3,500,000
Equus II Incorporated--Senior subordinated
note dated June 30, 1997, with interest to
be paid monthly on the unpaid principal
balance at a variable rate not to exceed
10% (10% at September 30, 1997). Principal
is to be paid in four annual installments
of $500,000 beginning June 30, 2001....... 2,000,000
Various notes fully repaid during 1996..... 380,870
---------- ---------- -----------
$5,424,992 $5,766,651 $14,180,795
========== ========== ===========
</TABLE>

Substantially all rental equipment collateralize the above notes.

The aggregate annual maturities of debt as of December 31, 1996 are as
follows:

6. INCOME TAXES

The provision for income taxes relates to the operating results of J & J
before July 1, 1997 and consists of the following:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------ ---------------
1994 1995 1996 1996 1997
-------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal.............................. $ -- $ 7,216 $32,054 $49,500 $86,500
State................................ 2,898 5,462 5,631 6,500 11,500
-------- ------- ------- ------- -------
2,898 12,678 37,685 56,000 98,000
Deferred:
Federal.............................. 96,878 20,300 10,600 -- --
State................................ 12,825 2,700 1,400 -- --
-------- ------- ------- ------- -------
109,703 23,000 12,000 -- --
-------- ------- ------- ------- -------
Total.............................. $112,601 $35,678 $49,685 $56,000 $98,000
======== ======= ======= ======= =======
</TABLE>

F-49
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Tri-Star is a pass-through entity and, therefore incurs no tax liability.
Significant components of J & J's deferred tax liability at December 31, 1995
and 1996 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
-------- --------
<S> <C> <C>
Difference in basis of accounting..................... $216,000 $221,000
Cumulative tax depreciation in excess of book......... 202,000 209,000
-------- --------
Deferred tax liability $418,000 $430,000
======== ========
</TABLE>

Effective July 1, 1997, the Company and its shareholders have elected to be
taxed under the provisions of Subchapter S of the Internal Revenue Code for
federal tax purposes. Under those provisions the Company does not pay federal
income taxes; instead, the shareholders are liable for individual income taxes
on the Company's profit. Therefore, no provision for federal income taxes is
included in the Company's financial statements for the three months ended
September 30, 1997.

7. COMMITMENTS

The Company has an employment agreement with an officer for minimum annual
compensation of $60,000 for the six month period ended December 31, 1997, and
approximately $540,000 to be paid over the remaining term of the contract
which expires in June 2002.

8. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1994, 1995 and 1996; the six months ended
June 30, 1996 and 1997; and the three months ended September 30, 1997, total
interest paid was $277,811, $411,731 and $478,341; $251,708 and $180,769; and
$126,430, respectively.

For the years ended December 31, 1994, 1995 and 1996; the six months ended
June 30, 1996 and 1997; and the three months ended September 30, 1997, total
income taxes paid was $ --, $ -- and $ --; $11,233 and $24,814; and $ --,
respectively.

During the years ended December 31, 1994, 1995 and 1996, and the six months
ended June 30, 1996 and 1997, the Company purchased $3,659,811, $3,738,807,
and $3,160,914; and $1,311,652 and $1,172,917, respectively, of equipment
which was financed.

9. EMPLOYEE BENEFIT PLAN

The Predecessor sponsored a defined contribution 401(k) retirement plan,
which was implemented during 1995 and covers substantially all full time
employees. The Predecessor matched a portion of the participants'
contributions. Predecessor contributions to the plan were $9,272, $6,395, $--,
and $-- for the years ended December 31, 1995, and 1996 and for the six month
periods ended June 30, 1996 and 1997, respectively.

10. RELATED PARTY TRANSACTIONS

On November 27, 1995, Tri-Star loaned $120,000 to the Predecessor
Stockholder. This non-interest bearing note is unsecured, and is due on
demand. The outstanding balance on this note receivable at December 31, 1995
and 1996 was $120,000.

On November 30, 1995, Tri-Star issued a $100,000 note payable to the
Predecessor Stockholder, which bears interest at 11.4% per annum, requires
monthly principal and interest payments of $6,097, and is unsecured. The
outstanding balance on this note at December 31, 1995 and 1996 was $94,857 and
$79,254, respectively.

F-50
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

J & J has a note payable outstanding to the Predecessor Stockholder, which
required interest to be paid quarterly at 6.5% per annum, and is due on
January 1, 1998. The outstanding balance on this note payable at December 31,
1995 and 1996 was $315,365 and $257,244, respectively.

The Company leases its operating facilities from the Predecessor
Stockholder, and pays monthly rent of $8,600. These leases are month-to-month
and can be canceled by either party.

11. SUBSEQUENT EVENT

On October 23, 1997, the Company entered into a stock purchase agreement
with United Rentals, Inc. ("United"). Under the terms of the stock purchase
agreement, United purchased all of the issued and outstanding capital stock of
the Company.

F-51
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Coran Enterprises, Inc.
and
Monterey Bay Equipment Rental, Inc.

We have audited the accompanying combined balance sheets of Coran
Enterprises, Inc. dba A-1 Rents, and Monterey Bay Equipment Rental, Inc. as of
December 31, 1995 and 1996, and the related combined statements of earnings,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Coran
Enterprises, Inc. dba A-1 Rents, and Monterey Bay Equipment Rental, Inc. as of
December 31, 1995 and 1996, and the combined results of their operations and
their combined cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting
principles.

/s/ Grant Thornton LLP

San Jose, California
October 24, 1997
(except for Note F as to which the date is October 28, 1997)

F-52
<PAGE>

CORAN ENTERPRISE, INC.
DBA A-1 RENTS AND
MONTEREY BAY EQUIPMENT RENTAL, INC.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Assets
Cash..................................... $ 965,187 $ 140,146 $ 933,705
Accounts receivable, net of allowance for
doubtful accounts of $160,000 in 1995,
$135,000 in 1996 and $90,000 in 1997.... 1,147,524 1,087,278 1,012,615
Rental equipment, principally machinery
and equipment, at cost, net of
accumulated depreciation of $11,375,263
in 1995, $12,362,378 in 1996 and
$12,690,816 in 1997..................... 1,290,084 3,961,297 2,948,586
Operating property and equipment, at
cost, net of accumulated depreciation of
$232,919 in 1995, $250,122 in 1996 and
$263,990 in 1997........................ 51,963 34,760 65,137
Other assets............................. 74,402 77,510 10,942
---------- ---------- ----------
Total assets........................... $3,529,160 $5,300,991 $4,970,985
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities... $ 142,581 $ 174,936 $ 308,471
Equipment loans............................ 241,750 1,179,677 1,045,551
Notes payable--stockholders................ 158,960 1,408,947 1,030,184
---------- ---------- ----------
Total liabilities...................... 543,291 2,763,560 2,384,206
Stockholders' equity:
Common stock--authorized 100,000 shares
of no par value and 75,000 share of $1
par value; issued and outstanding,
10,000 shares of no par value and 75,000
shares of $1 par value.................. 275,000 275,000 275,000
Capital in excess of par value........... 37,920 37,920 37,920
Retained earnings........................ 2,672,949 2,224,511 2,273,859
---------- ---------- ----------
Total stockholders' equity............. 2,985,869 2,537,431 2,586,779
---------- ---------- ----------
Total liabilities and stockholders'
equity................................ $3,529,160 $5,300,991 $4,970,985
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-53
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS AND
MONTEREY BAY EQUIPMENT RENTAL, INC.

COMBINED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- -----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals..... $6,068,553 $6,962,130 $7,679,713 $5,435,958 $5,808,564
Sales of parts, sup-
plies and rental
equipment............ 663,293 565,586 738,330 593,383 899,829
---------- ---------- ---------- ---------- ----------
Total revenues...... 6,731,846 7,527,716 8,418,043 6,029,341 6,708,393
Costs
Cost of equipment
rentals.............. 3,861,538 3,835,982 4,254,243 3,520,941 3,704,188
Rental equipment de-
preciation........... 531,320 611,577 1,304,847 897,776 1,237,656
Cost of sales of sup-
plies................ 199,684 200,746 257,500 204,319 186,327
Other................. 45,325 49,523 115,758 61,482 38,435
---------- ---------- ---------- ---------- ----------
Total costs......... 4,637,867 4,697,828 5,932,348 4,684,518 5,166,606
---------- ---------- ---------- ---------- ----------
Gross margin........ 2,093,979 2,829,888 2,485,695 1,344,823 1,541,787
Selling, general and ad-
ministrative........... 1,997,056 1,786,650 2,062,246 752,484 958,764
Non-rental deprecia-
tion................... 22,682 28,435 17,202 12,944 13,868
---------- ---------- ---------- ---------- ----------
Operating Income.... 74,241 1,014,803 406,247 579,395 569,155
Interest expense........ 13,408 21,120 96,464 50,137 139,970
---------- ---------- ---------- ---------- ----------
Earnings before in-
come taxes......... 60,833 993,683 309,783 529,258 429,185
Provision for income
taxes.................. 4,015 12,275 8,221 -- 5,583
---------- ---------- ---------- ---------- ----------
Net earnings.......... $ 56,818 $ 981,408 $ 301,562 $ 529,258 $ 423,602
========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-54
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS AND
MONTEREY BAY EQUIPMENT RENTAL, INC.

COMBINED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
SHARES ISSUED ADDITIONAL
------------- COMMON PAID-IN RETAINED
CEI MBERI STOCK CAPITAL EARNINGS TOTAL
------ ------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1994................... 75,000 10,000 $275,000 $37,920 $1,634,723 $1,947,643
Net earnings.......... -- -- -- -- 56,818 56,818
------ ------ -------- ------- ---------- ----------
Balance at January 1,
1995................... 75,000 10,000 275,000 37,920 1,691,541 2,004,461
Net earnings.......... -- -- -- -- 981,408 981,408
------ ------ -------- ------- ---------- ----------
Balance at December 31,
1995................... 75,000 10,000 275,000 37,920 2,672,949 2,985,869
Net earnings.......... -- -- -- -- 301,562 301,562
Dividends paid to
stockholders......... -- -- -- -- (750,000) (750,000)
------ ------ -------- ------- ---------- ----------
Balance at December 31,
1996................... 75,000 10,000 275,000 37,920 2,224,511 2,537,431
Net earnings (unau-
dited)............... -- -- -- -- 423,602 423,602
Dividends paid to
stockholders (unau-
dited)............... -- -- -- -- (374,254) (374,254)
------ ------ -------- ------- ---------- ----------
Balance at September 30,
1997 (unaudited)....... 75,000 10,000 $275,000 $37,920 $2,273,859 $2,586,779
====== ====== ======== ======= ========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-55
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS AND MONTEREY BAY EQUIPMENT RENTAL, INC.

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------- ------------------------
1994 1995 1996 1996 1997
--------- --------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operat-
ing activities:
Net earnings........... $ 56,818 $ 981,408 $ 301,562 $ 529,258 $ 423,602
Adjustments to recon-
cile net earnings to
net cash provided by
operating activities:
Depreciation and amor-
tization.............. 554,002 640,012 1,322,049 910,720 1,251,524
Gain on sale of equip-
ment.................. (215,699) (85,747) (163,753) (152,324) (443,124)
Change in assets and
liabilities:
Accounts receivable... 154 (210,091) 60,246 (42,349) 74,663
Other assets.......... 5,630 5,220 (3,108) (18,817) 66,568
Accounts payable and
accrued liabili-
ties................. (20,567) 36,638 32,355 219,519 133,535
--------- --------- ----------- ----------- ----------
Net cash provided by
operating activi-
ties................ 380,338 1,367,440 1,549,351 1,446,007 1,506,768
Cash flows from invest-
ing activities:
Purchases of rental
equipment............. (896,851) (633,519) (4,017,946) (2,609,849) (271,098)
Purchases of operating
equipment............. (75,630) -- -- -- (44,246)
Proceeds from sale of
equipment............. 258,025 110,273 205,639 -- 489,278
--------- --------- ----------- ----------- ----------
Net cash provided by
(used in) investing
activities.......... (714,456) (523,246) (3,812,307) (2,609,849) 173,934
Cash flows from financ-
ing activities:
Change in bank over-
draft................. 15,760 (15,760) -- -- --
Borrowings on equipment
loans................. 65,309 244,235 1,096,820 892,710 99,352
Payments on equipment
loans................. (20,943) (46,853) (158,893) -- (233,478)
Payment on dividends... -- -- (750,000) (750,000) (374,254)
Borrowings on notes
payable--stockhold-
ers................... 300,000 -- 1,249,988 259,999 --
Payments on notes pay-
able--stockholders.... (95,151) (95,888) -- -- (378,763)
--------- --------- ----------- ----------- ----------
Net cash provided by
(used in) financing
activities.......... 264,975 85, 734 1,437,915 402,709 (887,143)
--------- --------- ----------- ----------- ----------
NET (DECREASE)
INCREASE IN CASH AND
CASH EQUIVALENTS.... (69,143) 929,928 (825,041) (761,133) 793,559
Cash and cash equiva-
lents--beginning of pe-
riod................... 104,402 35,259 965,187 965,187 140,146
--------- --------- ----------- ----------- ----------
Cash and cash equiva-
lents--end of period... $ 35,259 $ 965,187 $ 140,146 $ 204,054 $ 933,705
========= ========= =========== =========== ==========
Supplementary disclo-
sures of cash flow in-
formation:
Cash paid during the
period for:
Interest............... $ 13,408 $ 21,120 $ 95,958 $ 50,137 $ 140,496
========= ========= =========== =========== ==========
Income taxes........... $ 4,815 $ 1,600 $ 23,047 $ 10,627 $ 5,583
========= ========= =========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-56
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS ANDMONTEREY BAY EQUIPMENT RENTAL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND 1996
(THE INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

NOTE A--SUMMARY OF ACCOUNTING POLICIES

1. Nature of Business and Basis of Presentation

The combined financial statements include the accounts of Coran Enterprises,
Inc. and Monterey Bay Equipment Rental, Inc. (collectively the "Company").
Coran Enterprises, Inc. ("CEI") and Monterey Bay Equipment Rental, Inc.
("MBERI") are combined due to common ownership and operations which are
complimentary. All significant intercompany balances and transactions have
been eliminated in combination.

The Company leases equipment for home and contractors' use under short-term
rental agreements principally in the Northern California area. The nature of
the Company's business is such that short-term obligations are typically met
by cash flow generated from long-term assets. Consequently, consistent with
industry practice, the accompanying balance sheets are presented on an
unclassified basis.

2. Interim Financial Statements

The accompanying combined balance sheet at September 30, 1997 and the
combined statements of earnings, stockholders' equity and cash flows for the
nine month periods ended September 30, 1996 and 1997 are unaudited and have
been prepared on the same basis as the audited combined financial statements
included herein. In the opinion of management, such unaudited combined
financial statements include all adjustments, which consist solely of normal
recurring adjustments, necessary to present fairly the information set forth
therein. The results of operations for such interim period are not necessarily
indicative of results for the full year.

3. Property and Equipment

The Company provides for depreciation in amounts sufficient to relate the
costs of depreciable assets to operations over their estimated service lives
using the double-declining balance method. Leasehold improvements are
amortized on a straight-line basis over the lives of the improvements or the
term of the lease, whichever is shorter. Maintenance and repairs costs are
expensed as incurred. Supplies and replacement parts are expensed when
purchased.

4. Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.

5. Use of estimates

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as revenues and expenses during the reporting period.
Actual results could differ from those estimates.

NOTE B--COMMITMENTS

CEI leases facilities from its stockholders on a month-to-month basis. Total
rent expense on the facilities was $663,067, $662,880 and $667,638 for the
years ended December 31, 1994, 1995 and 1996, respectively. Total rent expense
for the nine months ended September 30, 1996 and 1997 was $463,500 for each
period.

F-57
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS AND
MONTEREY BAY EQUIPMENT RENTAL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995 AND 1996
(THE INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

NOTE C--INCOME TAXES

The stockholders of Coran Enterprises, Inc. and Monterey Bay Equipment
Rental, Inc, have elected "S" Corporation status for income tax purposes.
Therefore, income or loss for federal and California state income tax purposes
is reported on the shareholders' individual income tax return. Although the
"S" Corporation tax treatment is recognized by the State of California, the
net corporate income is subject to a 1.5% corporate surtax.

NOTE D -- EQUIPMENT LOANS

Equipment loans consist of notes payable, collateralized by equipment, due
in monthly installments ranging from $1,095 to $5,375 with interest rates from
5.75% to 8.75%.

Maturities of equipment loans as of December 31, 1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1997............................................................ $ 276,911
1998............................................................ 276,605
1999............................................................ 279,527
2000............................................................ 240,309
2001............................................................ 106,325
----------
$1,179,677
==========
</TABLE>

NOTE E--NOTES PAYABLE--STOCKHOLDERS

Notes payable to stockholders are uncollateralized and bear interest at
rates from 8% to 9%. These notes are due in 1997. Interest expense on the
notes was $11,254, $17,755 and $44,064 for the years ended December 31, 1994,
1995, and 1996, respectively. Interest expense on the notes was $33,048 and
$60,098 for the nine months ended September 30, 1996 and 1997, respectively.

NOTE F--SUBSEQUENT EVENT

Effective October 28, 1997, the stockholders of CEI and MBERI sold 100% of
the outstanding shares of each company to United Rentals, Inc.

F-58
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Bronco Hi-Lift, Inc.

We have audited the balance sheets of Bronco Hi-Lift, Inc. as of December
31, 1995 and 1996 and the related statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bronco Hi-Lift, Inc. at
December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

MetroPark, New Jersey
October 21, 1997, except for
Note 10, as to which the
date is October 24, 1997

F-59
<PAGE>

BRONCO HI-LIFT, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
---------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash..................................... $ 228,772 $ 305,506 $ 296,669
Accounts receivable, net................. 591,194 826,849 1,087,790
Unbilled receivables..................... 68,354 40,722 137,760
Inventory................................ 157,470 67,825 271,903
Rental equipment, net.................... 1,782,926 1,972,910 2,321,275
Property and equipment, net.............. 244,817 234,914 335,374
Due from related party................... 412,113 -- --
Prepaid expenses and other assets........ 33,701 13,530 27,015
---------- ---------- ----------
Total assets......................... $3,519,347 $3,462,256 $4,477,786
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Liabilities:
Accounts payable, accrued expenses and
other liabilities..................... $ 104,961 $ 90,584 $ 323,489
Debt................................... 3,748,682 3,051,711 2,973,516
---------- ---------- ----------
Total liabilities.................... 3,853,643 3,142,295 3,297,005
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $.01 par value and $1.00
stated value, 100,000 shares
authorized, 10,000 issued and
outstanding at December 31, 1995 and
1996, and September 30, 1997.......... 10,000 10,000 10,000
Additional paid-in capital............. 598,000 598,000 598,000
Notes receivable from stockholders..... (500,000) (300,000) (300,000)
Retained earnings (deficit)............ (442,296) 11,961 872,781
---------- ---------- ----------
Total stockholders' equity
(deficit)........................... (334,296) 319,961 1,180,781
---------- ---------- ----------
Total liabilities and stockholders'
equity (deficit).................... $3,519,347 $3,462,256 $4,477,786
========== ========== ==========
</TABLE>

See accompanying notes.

F-60
<PAGE>

BRONCO HI-LIFT, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
---------------------------------- ----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals..... $3,199,643 $3,427,596 $4,313,855 $2,923,030 $3,774,997
New equipment sales... 499,392 266,308 611,033 317,956 526,570
Sales of parts,
supplies and rental
equipment............ 659,628 155,331 410,957 367,560 311,556
Other................. 193,321 147,214 194,469 136,761 146,370
---------- ---------- ---------- ---------- ----------
Total revenues...... 4,551,984 3,996,449 5,530,314 3,745,307 4,759,493
Cost of revenues:
Cost of equipment
rentals, excluding
equipment rental
depreciation......... 363,876 335,028 699,455 558,088 363,418
Depreciation,
equipment rentals.... 656,848 637,766 736,525 483,369 601,243
Cost of new equipment
sales................ 415,168 206,268 479,920 236,297 407,988
Cost of sales of
parts, supplies and
equipment............ 376,667 107,989 293,987 176,803 132,474
Other................. 82,295 32,418 119,315 83,411 93,778
---------- ---------- ---------- ---------- ----------
Total cost of
revenues........... 1,894,854 1,319,469 2,329,202 1,537,968 1,598,901
---------- ---------- ---------- ---------- ----------
Gross profit............ 2,657,130 2,676,980 3,201,112 2,207,339 3,160,592
Selling, general and
administrative
expenses............... 1,674,216 2,540,699 2,359,326 1,334,593 1,562,694
Non-rental
depreciation........... 61,897 84,463 99,669 72,928 79,608
---------- ---------- ---------- ---------- ----------
Operating income.... 921,017 51,818 742,117 799,818 1,518,290
Interest expense........ 143,471 171,305 334,035 261,106 210,025
Other (income), net..... (32,641) (26,575) (46,175) (22,024) (67,555)
---------- ---------- ---------- ---------- ----------
Net income (loss)... $ 810,187 $ (92,912) $ 454,257 $ 560,736 $1,375,820
========== ========== ========== ========== ==========
</TABLE>

See accompanying notes.

F-61
<PAGE>

BRONCO HI-LIFT, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK NOTES RECEIVABLE RETAINED
----------------- PAID-IN FROM EARNINGS
SHARES AMOUNT CAPITAL STOCKHOLDERS (DEFICIT)
------- -------- --------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Balance at January 1,
1994................... 20,000 $ 20,000 $ 345,020 $ -- $ 638,409
Net income............ 810,187
Dividends paid........ (755,000)
------- -------- --------- --------- -----------
Balance at December 31,
1994................... 20,000 20,000 345,020 -- 693,596
Purchase and
retirement of common
stock................ (12,000) (12,000) (345,020) (1,042,980)
Issuance of common
stock................ 2,000 2,000 598,000 (500,000)
Net loss.............. (92,912)
------- -------- --------- --------- -----------
Balance at December 31,
1995................... 10,000 10,000 598,000 (500,000) (442,296)
Payment on notes
receivable from
stockholders......... 200,000
Net income............ 454,257
------- -------- --------- --------- -----------
Balance at December 31,
1996................... 10,000 10,000 598,000 (300,000) 11,961
Net income
(unaudited).......... 1,375,820
Dividends paid
(unaudited).......... (515,000)
------- -------- --------- --------- -----------
Balance at September 30,
1997 (unaudited)....... 10,000 $ 10,000 $ 598,000 $(300,000) $ 872,781
======= ======== ========= ========= ===========
</TABLE>

See accompanying notes.

F-62
<PAGE>

BRONCO HI-LIFT, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
----------------------------------- ------------------------
1994 1995 1996 1996 1997
----------- --------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss)...... $ 810,187 $ (92,912) $ 454,257 $ 560,736 $ 1,375,820
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation........... 718,745 722,229 836,194 556,297 680,851
Gain on equipment
sales................. (379,644) (317,871) (302,777) (276,330) (559,384)
Interest expense not
requiring cash........ 17,500
Changes in assets and
liabilities:
Decrease (increase)
in accounts
receivable........... 57,832 (132,976) (235,655) (150,715) (260,941)
(Decrease) increase
in unbilled
receivables.......... 46,303 5,646 27,632 (97,038)
(Increase) decrease
in inventory......... (8,878) (102,542) 89,645 76,465 (204,078)
(Decrease) increase
in prepaid expenses
and other assets..... (32,965) 30,774 20,171 16,676 (13,485)
(Decrease) increase
in accounts payable,
accrued expenses and
other liabilities.... (367,989) (60,113) (14,377) 129,262 232,905
----------- --------- ----------- ----------- -----------
Total adjustments.... 33,404 145,147 438,333 351,655 (221,170)
----------- --------- ----------- ----------- -----------
Cash provided by
operating
activities.......... 843,591 52,235 892,590 912,391 1,154,650
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of rental
equipment............. (200,201) (92,727) (1,368,253) (1,113,613) (1,522,041)
Proceeds from sale of
rental equipment...... 825,203 350,739 745,687 528,176 1,131,142
Purchases of property
and equipment, net.... (43,865) (101,985) (90,932) (83,965) (209,392)
----------- --------- ----------- ----------- -----------
Cash provided by
(used in) investing
activities.......... 581,137 156,027 (713,498) (669,402) (600,291)
CASH FLOWS FROM
FINANCING ACTIVITIES
Cash dividends paid.... (755,000) (485,000)
Issuance of stock...... 100,000
Re-payments on notes
due from
stockholders.......... 200,000
Principal payments on
debt.................. (645,935) (742,891) (802,358) (796,351) (278,196)
Principal payments on
capital lease
obligations........... (9,008) (32,711)
Advances to related
party................. (412,113)
Borrowings under credit
facility.............. 900,000 500,000 500,000 200,000
----------- --------- ----------- ----------- -----------
Cash used in
financing
activities.......... (1,409,943) (187,715) (102,358) (296,351) (563,196)
----------- --------- ----------- ----------- -----------
Increase (decrease) in
cash.................. 14,785 20,547 76,734 (53,362) (8,837)
Cash balance at
beginning of year... 193,440 208,225 228,772 228,772 305,506
----------- --------- ----------- ----------- -----------
Cash balance at end
of year............. $ 208,225 $ 228,772 $ 305,506 $ 175,410 $ 296,669
=========== ========= =========== =========== ===========
</TABLE>

See accompanying notes.

F-63
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1994, 1995 AND 1996
(THE INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activity

Bronco Hi-Lift, Inc. (the "Company") rents, sells and repairs aerial lift
equipment for use by construction companies and maintenance and media crews.
The rentals are on a daily, weekly or monthly basis. The Company is located in
Denver, Colorado and its principal market area is the state of Colorado. The
nature of the Company's business is such that short-term obligations are
typically met by cash flow generated from long-term assets. Consequently,
consistent with industry practice, the balance sheets are presented on an
unclassified basis.

Interim Financial Statements

The accompanying balance sheet at September 30, 1997 and the statements of
income, stockholders' equity and cash flows for the nine-month periods ended
September 30, 1996 and 1997 are unaudited and have been prepared on the same
basis as the audited financial statements included herein. In the opinion of
management, such unaudited financial statements include all adjustments
necessary to present fairly the information set forth therein, which consist
solely of normal recurring adjustments. The results of operations for such
interim period are not necessarily indicative of results for the full year.

Inventory

Inventories consists primarily of general replacement parts and fuel for the
equipment and are stated at the lower of cost, determined under the first-in,
first-out method, or market.

Rental Equipment

Rental equipment is recorded at cost. Depreciation for rental equipment is
computed using the straight-line method over an estimated five-year useful
life with no salvage value.

Ordinary maintenance and repair costs are charged to operations as incurred.
Proceeds from the disposal and the related net book value of the equipment are
recognized in the period of disposal and reported as revenue from sales of
equipment and cost of sales of equipment, respectively, in the statements of
operations.

Property and Equipment

Property and equipment is stated at cost. Depreciation of property and
equipment is computed on the straight-line method over estimated useful lives
of 5 to 10 years.

Ordinary maintenance and repair costs are charged to operations as incurred.
The cost of assets sold, retired, or otherwise disposed of, and the related
accumulated depreciation is eliminated from the accounts and any resulting
gain or loss is included in operations.

Rental Revenue

Rental revenue is recorded as earned under the operating method.

Advertising Costs

The Company advertises primarily through trade journals, trade associations
and phone directories. All advertising costs are expensed as incurred.
Advertising expenses amounted to approximately $51,500, $74,400

F-64
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

and $43,000 in the years ended December 31, 1994, 1995 and 1996, respectively,
and $30,435 and $43,237 in the nine months ended September 30, 1996 and 1997,
respectively.

Income Taxes

The Company has elected, by unanimous consent of its shareholders, to be
taxed under the provisions of Subchapter S of the Internal Revenue Code for
both federal and state purposes. Under those provisions the Company does not
pay federal or state income taxes; instead, the shareholders are liable for
individual income taxes on the Company's profits. Therefore, no provision for
federal or state income taxes is included in the accompanying financial
statements.

Accounting Estimates

2. CONCENTRATIONS OF CREDIT RISK

3. RENTAL EQUIPMENT

Rental equipment and related accumulated depreciation consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31
--------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Rental equipment......................... $4,614,801 $5,176,658 $5,564,163
Less accumulated depreciation............ 2,831,875 3,203,748 3,242,888
---------- ---------- ----------
Rental equipment, net.................... $1,782,926 $1,972,910 $2,321,275
========== ========== ==========
</TABLE>

F-65
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31
----------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and fixtures....................... $ 59,078 $ 59,572 $163,562
Transportation equipment..................... 463,640 520,356 579,456
Shop equipment............................... 34,855 37,591 37,591
-------- -------- --------
557,573 617,519 780,609
Less accumulated depreciation................ 312,756 382,605 445,235
-------- -------- --------
Total...................................... $244,817 $234,914 $335,374
======== ======== ========
</TABLE>

5. DEBT

Debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31
--------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Citicorp Dealer Finance Agreement...... $2,250,299 $1,585,000 $1,635,000
GMAC note dated October 27, 1994 with
an annual interest rate of 11.52% due
in monthly payments of $588 through
November 1999......................... 22,396 17,564
Kenworth/Trial-EZE dated July 11, 1994
with annual interest of 10.6% due in
monthly payments of $2,788 through
July 1998............................. 75,987 49,147
Notes payable to a former shareholder
for $900,000 and $500,000 at an annual
interest rate of 9%. The $900,000 note
requires monthly interest payments
through January 31, 1998 at which time
the note is due in full. The $500,000
note requires monthly interest
payments through January 31, 1997.
Beginning February 1, 1997, the note
is payable in 60 monthly installments
of principal and interest of $10,379
through December 31, 2001. The above
$500,000 note is subordinated to the
Citicorp Dealer Finance Agreement..... $1,400,000 $1,400,000 $1,338,516
---------- ---------- ----------
$3,748,682 $3,051,711 $2,973,516
========== ========== ==========
</TABLE>

The Citicorp Dealer Finance Agreement (the "Agreement") was entered into on
February 5, 1990. Under the terms of the original Agreement the Company would
be allowed to borrow funds to purchase equipment based on certain financial
formulas. Each draw down under the Agreement would be specifically
collateralized by the equipment purchased. On January 24, 1996, the Agreement
was amended to provide the Company with available financing of up to
$3,500,000 for the purchase of equipment. During 1997, the available financing
increased to $3,900,000. Under the amended Agreement the Company's borrowings
and repayments of debt are

F-66
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

determined by a formula based upon eligible accounts receivable and eligible
rental equipment value. The Agreement was again amended December 27, 1996
principally to extend the renewal date to January 1, 1998. The related note
has an adjustable interest rate of 1.75% per annum above the base rate as
determined and publicly announced by Citibank, N.A. (8.00% and 8.25% at
December 31, 1996 and September 30, 1997, respectively). Interest is payable
monthly. Under the original and amended agreement, collateral consists of all
new and used (rental equipment) inventory now owned or hereafter acquired by
the Company including industrial lift trucks, industrial tractors, loaders,
aerial lifts, boom lifts and commercial or industrial equipment and other
goods or products, all chattel paper, leases, contract rights, accounts and
general intangibles and all cash and insurance proceeds. All stockholders have
guaranteed the balance due under this agreement.

The aggregate annual maturities of debt as of December 31, 1996 are as
follows:

<TABLE>
<S> <C>
1997............................................. $ 950,000
1998............................................. 1,761,314
1999............................................. 104,595
2000............................................. 107,699
2001............................................. 128,103
Thereafter....................................... --
----------
$3,051,711
==========
</TABLE>

6. OPERATING LEASES

During 1994, the Company leased 7,000 square feet of office and shop space
on a twelve month lease, renewable annually. For the period from January 1,
1995 to April 30, 1995, the Company leased approximately 7,000 square feet of
office and shop space under a new month to month lease. Effective May 1, 1995,
the Company moved to a new location and entered into a lease agreement with a
related party, Coyote Investments, LLC ("Coyote") (see Note 9). The facility
consists of 17,000 square feet of office and shop area located on 1.8 acres.
The 15 year lease expires April 30, 2010. The Company is responsible for all
operating expenses of the facility including property taxes, assessments,
insurance, repairs and maintenance.

Rent expense under these leases totaled $37,232, $52,000 and $78,000 for the
years ended December 31, 1994, 1995 and 1996 and $58,500 and $58,500 for the
nine months ended September 30, 1996 and 1997, respectively. Under the lease
agreement with Coyote, rent is payable in monthly installments of $6,500 for
the first two years of the lease. Thereafter the rent shall be increased
annually to reflect the then current fair market rent for the premises,
provided that each annual increase shall not exceed 10% of the previous year's
rental rate. Future minimum rent commitments are $78,000 each for years ended
December 31, 1997 to December 31, 2009 and $26,000 for January 1, 2010 to
April 30, 2010, provided there is no increase in fair market rent for the
premises.

7. COMMITMENTS

The Company has employment agreements, which expire in 1998, with three
officers which grant certain severance pay rights to these officers provided
that certain conditions of employment are met. Under terms of the employment
agreements, the officers received approximately $253,000, $703,000, $527,000
and $486,000 for the years ended December 31, 1995 and 1996 and for the nine
months ended September 30, 1996 and 1997, respectively. Additional
compensation to be paid to the officers, until the agreements expire, amounts
to approximately $135,000 for the three months ended December 31, 1997 and
$270,000 during 1998.

The Company guarantees Coyote's debt on the building leased by the Company
(see Note 9).

F-67
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

8. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1994, 1995 and 1996 and the nine months
ended September 30, 1996 and 1997, total interest paid was $150,077, $171,305
and $335,686 and $262,774 and $224,016, respectively.

During 1994 and 1995, the Company purchased $609,780 and $726,355,
respectively, of equipment which was financed. There were no purchases in
1996.

On December 20, 1995, the Company purchased and retired 12,000 shares of its
stock for two notes totaling $1,400,000. On December 21, 1995, the Company
issued 2,000 shares of its stock to two officers of the Company in exchange
for $100,000 cash and $500,000 of notes receivable from these officers. During
1996, the officers repaid $200,000 in accordance with the note agreements. In
October of 1997, the notes were repaid in full.

During 1997, the Company paid dividends of $515,000, of which $30,000
represented a non-cash transfer of a fixed asset.

9. RELATED PARTY TRANSACTIONS

Coyote is owned by the shareholders of the Company. The Company leases its
office and shop facility from Coyote (see Note 6). All stockholders and the
Company have guaranteed Coyote's debt on the facility. The amount of debt
principal on the facility was $555,080 at December 31, 1996 and $540,600 at
September 30, 1997.

Advances to Coyote were $412,113 at December 31, 1995. Coyote paid $3,434 of
interest to the Company during 1996. As part of the Citicorp Amendment No. 1
Refinancing Agreement, the Company owed Coyote $152,187, which it paid with
interest of $7,990 during August 1996. These obligations were fulfilled with a
non-cash transaction in connection with the above mentioned amended agreement.

On December 21, 1995 the Company issued 2,000 shares to two officers of the
Company in exchange for $100,000 cash and two notes for $250,000 each. The
notes bear interest at 9% per annum and are payable bi-annually. Principal on
each note is payable $100,000 in 1996, $100,000 in 1997 and $50,000 in 1998.
Interest paid to the Company during 1996 by these stockholders was $42,400. In
October of 1997, the notes were repaid in full.

10. SUBSEQUENT EVENT

On October 24, 1997, the Company entered into a stock purchase agreement
with United Rentals, Inc. ("United"). Under the terms of the stock purchase
agreement, United purchased all of the issued and outstanding capital stock of
the Company.

F-68
<PAGE>

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

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERINGS COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK
IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Summary Historical and Pro Forma Consolidated Financial Information...... 6
Risk Factors............................................................. 7
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 13
Dilution................................................................. 13
Capitalization........................................................... 14
Selected Historical and Pro Forma Consolidated Financial Information..... 15
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 16
Business................................................................. 21
Management............................................................... 28
Principal Stockholders................................................... 35
Description of Capital Stock............................................. 37
Certain Charter and By-Law Provisions.................................... 38
Shares Eligible for Future Sale.......................................... 41
Certain United States Federal Tax Considerations......................... 42
Underwriting............................................................. 45
Legal Matters............................................................ 48
Experts.................................................................. 48
Available Information.................................................... 48
</TABLE>

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

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

7,000,000 SHARES

[LOGO] UNITED RENTALS

COMMON STOCK

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

PROSPECTUS

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

MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEUTSCHE MORGAN GRENFELL

, 1997

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

SUBJECT TO COMPLETION

[LOGO] UNITED RENTALS

COMMON STOCK

----------

All of the shares of Common Stock, $.01 par value (the "Common Stock"),
offered hereby are being offered by United Rentals, Inc., a Delaware
corporation (the "Company").

Of the Common Stock offered hereby, 1,400,000 shares are being offered
initially outside the United States and Canada by the International Managers
(the "International Offering"), and 5,600,000 shares are being offered
initially in a concurrent offering in the United States and Canada by the U.S.
Underwriters (the "U.S. Offering", and together with the International
Offering, the "Offerings"). The initial public offering price and the
underwriting discount per share are identical for each of the Offerings. See
"Underwriting."

Prior to the Offerings, there has been no public market for the Common Stock.
It is currently estimated that the initial public offering price will be
between $12.00 and $14.00 per share. For information relating to factors to be
considered in determining the initial public offering price, see
"Underwriting." Shares of Common Stock are being offered for sale to certain
employees, directors and business associates, of, and certain other persons
designated by, the Company at the initial public offering price. Such
employees, directors and other persons are expected to purchase, in the
aggregate, not more than 10% of the Common Stock offered in the Offerings.

The Common Stock has been approved for listing on the New York Stock Exchange
under the symbol "URI", subject to official notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

----------

(2) Before deducting expenses of the Offerings payable by the Company estimated
at $1,500,000.
(3) The Company has granted the International Managers and the U.S.
Underwriters options to purchase up to an additional 210,000 shares and
840,000 shares of Common Stock, respectively, in each case exercisable
within 30 days of the date hereof, solely to cover over-allotments, if any.
If such options are exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to the Company will be $ , $ and
$ , respectively. See "Underwriting."

----------

----------
MERRILL LYNCH INTERNATIONAL

DONALDSON, LUFKIN & JENRETTE INTERNATIONAL

DEUTSCHE MORGAN GRENFELL

----------

The date of this Prospectus is , 1997.
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in an international purchase
agreement (the "International Purchase Agreement") among the Company and the
International Managers named below (the "International Managers") for whom
Merrill Lynch International, Donaldson, Lufkin & Jenrette International and
Morgan Grenfell & Co. Limited are acting as representatives (the "Lead
Managers") and concurrently with the sale of 5,600,000 shares of Common Stock
to the U.S. Underwriters (as defined below), the Company has agreed to sell to
the International Managers, and each of the International Managers severally
has agreed to purchase from the Company, the number of shares of Common Stock
set forth opposite its name below.

<TABLE>
<CAPTION>
INTERNATIONAL MANAGER NUMBER OF SHARES
--------------------- ----------------
<S> <C>
Merrill Lynch International.............................
Donaldson, Lufkin & Jenrette International..............
Morgan Grenfell & Co. Limited...........................
---------
Total.............................................. 1,400,000
=========
</TABLE>

The Company has also entered into a U.S. purchase agreement (the "U.S.
Purchase Agreement") with certain underwriters in the United States and Canada
(the "U.S. Underwriters" and, together with the International Managers, the
"Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith ("Merrill
Lynch"), Donaldson, Lufkin & Jenrette Securities Corporation and Deutsche
Morgan Grenfell Inc. are acting as representatives (the "U.S.
Representatives"). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, and concurrently with the sale of 1,400,000 shares of
Common Stock to the International Managers pursuant to the International
Purchase Agreement, the Company has agreed to sell to the U.S. Underwriters,
and the U.S. Underwriters severally have agreed to purchase from the Company,
an aggregate of 5,600,000 shares of Common Stock. The initial offering price
per share and the total underwriting discount per share of Common Stock are
identical under the U.S. Purchase Agreement and the International Purchase
Agreement.

The Lead Managers have advised the Company that the International Managers
propose initially to offer the shares of Common Stock to the public at the
initial public offering price set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of $ per
share of Common Stock. The International Managers may allow, and such dealers
may reallow, a discount not in excess of $ per share of Common Stock on sales
to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.

The Company has granted an option to the International Managers exercisable
for 30 days after the date of this Prospectus, to purchase up to an aggregate
of 210,000 additional shares of Common Stock at the initial public offering
price set forth on the cover page of the Prospectus, less the underwriting
discount. The International Managers may exercise this option only to cover
over-allotments, if any, made on the sale of the Common Stock offered hereby.
To the extent that the International Managers exercise this option, each
International Manager will be obligated, subject to certain conditions, to
purchase a number of additional shares of Common Stock proportionate to such
International Manager's initial amount reflected in the foregoing table.

45
<PAGE>

The Company also has granted an option to the U.S. Underwriters, exercisable
for 30 days after the date of this Prospectus to purchase up to an aggregate
of 840,000 additional shares of Common Stock to cover over-allotments, if any,
on terms similar to those granted to the International Manager.

The Company, all executive officers and directors of the Company and the
holders of the 318,712 shares of Common Stock issued as consideration for
acquisitions have agreed, subject to certain exceptions, not to directly or
indirectly (a) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of or otherwise dispose of or transfer
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or thereafter acquired by the
person executing the agreement or with respect to which the person executing
the agreement thereafter acquires the power of disposition, or file a
registration statement under the Securities Act with respect to the foregoing
or (b) enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of the Common Stock whether any
such swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, without the prior written consent of Merrill
Lynch & Co. on behalf of the Underwriters for a period of 180 days after the
date of this Prospectus. The foregoing agreement will not limit a
stockholder's ability to transfer shares in a private placement or to pledge
shares, provided that the transferee or pledgee agrees to be bound by such
agreement. The foregoing agreement also will not limit the Company's ability
to (i) grant stock options under the 1997 Stock Option Plan, (ii) issue shares
as consideration for acquisitions (provided that the Company may not issue in
excess of 500,000 shares for acquisitions unless the recipients of such excess
shares agree to be subject to the foregoing lock-up with respect to such
excess shares), (iii) file a shelf registration statement with respect to the
possible resale of outstanding shares of Common Stock or shares of Common
Stock that may be acquired upon exercise of outstanding warrants (provided
that no sales may be made under such registration statement during the 180-day
lockup period), (iv) file a registration statement with respect to Common
Stock or other securities to be issued as consideration for an acquisition or
with respect to the potential resale of shares issued as consideration for an
acquisition (provided that no sales may be made pursuant to such registration
statement except to the extent permitted by clause (ii) above) or (v) file a
registration statement registering the shares that may be issued pursuant to
options granted or to be granted under the 1997 Stock Option Plan.

46
<PAGE>

competes, an assessment of the Company's management, the past and present
operations of the Company and the Initial Acquired Companies and the trend of
its pro forma revenues and earnings, the prospects for future earnings of the
Company, the prices of similar securities of generally comparable companies
and other relevant factors. There can be no assurance that an active trading
market will develop for the Common Stock or that the Common Stock will trade
in the public market subsequent to the Offerings at or above the initial
public offering price.

The Underwriters do not intend to confirm sales of the Common Stock offered
hereby to any accounts over which they exercise discretionary authority.

The Company has agreed to indemnify the U.S. Underwriters and the
International Managers against certain liabilities, including certain
liabilities under the Securities Act.

Each International Manager has agreed that (i) it has not offered or sold
and, prior to the expiration of the period of six months from the Closing
Date, will not offer or sell any shares of Common Stock to persons in the
United Kingdom, except to persons whose ordinary activities involve them in
acquiring, holding, managing or

47
<PAGE>

disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which do not constitute an offer to
the public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom; and it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of Common Stock to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document
may otherwise lawfully be issued or passed on.

No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of this Prospectus or
any other material relating to the Company or shares of Common Stock in any
jurisdiction where acting for that purpose is required. Accordingly, the
shares of Common Stock may not be offered or sold, directly or indirectly, and
neither this Prospectus nor any other offering material or advertisements in
connection with the shares of Common Stock may be distributed or published, in
or from any country or jurisdiction except in compliance with any applicable
rules and regulations of any such country or jurisdiction.

Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

LEGAL MATTERS

EXPERTS

48
<PAGE>

AVAILABLE INFORMATION

49
<PAGE>

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

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CON-
NECTION WITH THE OFFERINGS COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.

IN THE PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE TO UNITED STATES
DOLLARS.

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

TABLE OF CONTENTS

---------------
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

7,000,000 SHARES

LOGO

COMMON STOCK

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

PROSPECTUS

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

MERRILL LYNCH INTERNATIONAL

DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL

DEUTSCHE MORGAN GRENFELL

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 34,152
Listing Fee*.................................................. $ 172,000
NASD Filing Fee............................................... $ 11,770
Accounting Fees and Expenses*................................. $ 400,000
Printing and Engraving Expenses*.............................. $ 200,000
Legal Fees and Expenses (other than blue sky)*................ $ 400,000
Blue Sky Fees and Expenses*................................... $ 5,000
Transfer Agent and Registrar Fees*............................ $ 5,000
Miscellaneous Expenses*....................................... $ 262,000
----------
Total*........................................................ $1,489,922
==========
</TABLE>
- --------
* Estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

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

The Registrant, as a Delaware corporation, is empowered by Section 145 of
the Delaware Law, subject to the procedures and limitation stated therein, to
indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with any threatened, pending or completed action, suit or
proceeding in which such person is made a party by reason of his being or
having been a director, officer, employee or agent of the Registrant. The
statute provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors,
or otherwise. The Company has entered into indemnification agreements with
each of its directors and officers. In general, these agreements require the
Company to indemnify each of such persons against expenses, judgments, fines,
settlements and other liabilities incurred in connection with any proceeding
(including a derivative action) to which such person may be made a party by
reason of the fact that such person is or was a director, officer or employee
of the Company or guaranteed any obligations of the Company, provided that the
right of an indemnitee to receive indemnification is subject to the following
limitations: (i) an indemnitee is not entitled to indemnification unless he
acted in good faith and in a manner that he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such conduct
was unlawful and (ii) in the case of a derivative action, an indemnitee is not
entitled to indemnification in the event that he is judged in a final non-
appealable decision of a court of competent jurisdiction to be liable to the
Company due to willful misconduct in the performance of his duties to the
Company (unless and only to the extent that the court determines that the
indemnitee is fairly and reasonably entitled to indemnification).

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

II-1
<PAGE>

The Registrant has entered into indemnification agreements with certain
members of its management in the form filed as an exhibit to this registration
statement.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Set forth below is a listing of all sales by the Company of unregistered
securities since the Company was incorporated on August 14, 1997. All such
sales were exempt from registration under the Securities Act of 1933, as
amended (the "Act"), pursuant to Section 4(2) of the Act (and, in the case of
the private placement described in paragraph 3 below, Regulation D
thereunder), as they were transactions not involving a public offering. The
Company believes that each of the issuances made pursuant to Section 4(2) was
made to a sophisticated investor, who had the financial resources to bear the
risk of the investment and who had the means and opportunity to obtain
information concerning the Company. The consideration paid to the Company in
respect of each issuance was cash, unless otherwise indicated. All sales
described below were made by the Company without the assistance of any
underwriters.

1. In September, October, November and December 1997, the Company issued
an aggregate of 12,910,714 shares of Common Stock and 6,342,858 warrants to
certain officers of the Company (including, in certain cases, one or more
entities controlled by the officer) for an aggregate amount of $46.01
million (not including 240,000 shares that were issued in the private
placement described in paragraph 3 below to a person who subsequently
became a director). See "Management--Capital Contributions by Officers and
Directors" in the prospectus which is a part of this Registration
Statement.

2. In October 1997, the Company sold an aggregate of 112,857 shares of
Common Stock to four employees of the company and one consultant at a price
of $3.50 per share.

3. In September 1997, the Company in a private placement sold an
aggregate of 3,028,873 shares of Common Stock, at a price of $3.50 per
share, to 51 accredited investors. Such sale was made in accordance with
Regulation D promulgated under the Act.

4. In October 1997, the Company issued 318,712 shares of Common Stock as
part of the consideration for the acquisition by the Company of one of the
Initial Acquired Companies. The number of such shares is subject to
adjustment as described under "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Consideration for Initial
Acquired Companies."

5. In October 1997, the Company issued a convertible note in the
principal amount of $300,000 as part of the consideration for the
acquisition of one of the Initial Acquired Companies.

6. In October and November 1997, options with respect to 797,500 shares
of Common Stock were granted to employees of the Company. Such options have
exercise prices ranging from $10.00 per share to $30.00 per share and a
weighted average exercise price of $12.49 per share.

7. In November 1997, the Company issued 5,000 shares and a warrant to
purchase 1,200 shares (at a $10.00 per share exercise price) as
compensation for services.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
1(a)* Form of United States Purchase Agreement
1(b)* Form of International Purchase Agreement
3(a)** Amended and Restated Certificate of Incorporation of the Company, in
effect as of the date hereof
3(b)** By-laws of the Company, in effect as of the date hereof
4*** Form of Common Stock Certificate
5*** Opinion of Ehrenreich Eilenberg Krause & Zivian LLP
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
-------- -----------------------
<C> <S>
10(a)** $55 Million Revolving Credit Facility, dated as of October 8, 1997,
between the Company, various financial institutions, and Bank of
America National Trust and Savings Association, as agent, together
with the First Amendment thereto dated October 17, 1997 and the
Second Amendment thereto dated October 24, 1997
10(b)** 1997 Stock Option Plan
10(c)** Form of Warrant Agreement(1)
10(d)** Form of Private Placement Purchase Agreement entered into by certain
officers of the Company in connection with purchasing shares and
warrants from the Company(2)
10(e)** Form of Subscription Agreement for September 1997 Private
Placement(3)
10(f)** Form of Indemnification Agreement for Officers and Directors of the
Company
10(g)** Employment Agreement between the Company and Bradley S. Jacobs, dated
as of September 19, 1997
10(h)** Employment Agreement between the Company and John N. Milne, dated as
of September 19, 1997
10(i)** Employment Agreement between the Company and Michael J. Nolan, dated
as of October 14, 1997
10(j)** Employment Agreement between the Company and Robert P. Miner, dated
as of October 10, 1997
10(k)** Stock Purchase Agreement, dated as of October 24, 1997, among the
Company and the shareholders of Mercer Equipment Company+
10(l)** Stock Purchase Agreement, dated as of October 24, 1997, among the
Company and the shareholders of Bronco Hi-Lift Inc.+
10(m)** Stock Purchase Agreement, dated as of October 24, 1997, among the
Company and Coran Enterprises, Inc., Monterey Bay Equipment Rentals,
Inc., James M. Shade, Carol A. Shade, James M. Shade and Carol Anne
Shade, Trustees under the James M. Shade and Carol A. Shade Trust
Agreement dated September 14, 1982, Randall Shade and Corey Shade.+
10(n)** Stock Purchase Agreement, dated as of October 24, 1997, among the
Company and the shareholders of Rent-It Center, Inc.+
10(o)** Stock Purchase Agreement, dated as of October 20, 1997, among the
Company and A&A Tool Rentals & Sales, Inc., Joseph E. Doran, Patrick
J. Doran, and A&A Tool Rentals & Sales, Inc. Employee Stock Ownership
Plan.+
10(p)** Agreement and Plan of Merger, dated as of October 23, 1997, among the
Company, UR Acquisition Subsidiary, Inc. and J&J Rental Services,
Inc.+
10(q)** Convertible Note dated October 24, 1997
10(r)** Subscription Agreement dated November 14, 1997, between Wayland R.
Hicks and the Company
10(s)** Agreement dated November 14, 1997, between the Company and Wayland R.
Hicks
11** Statement re: Computation of per share earnings
21** Subsidiaries of the Registrant
23(a)*** Consent of Ehrenreich Eilenberg Krause & Zivian LLP (included in
opinion filed as Exhibit 5)
23(b)*** Consent of Weil, Gotshal & Manges LLP
23(c)*** Consent of Ernst & Young LLP
23(d)*** Consent of Ernst & Young LLP
23(e)*** Consent of Ernst & Young LLP
23(f)*** Consent of KPMG Peat Marwick
23(g)*** Consent of Webster Duke & Co. PA
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
-------- -----------------------
<C> <S>
23(h)*** Consent of Grant Thornton LLP
23(i)*** Consent of Wayland R. Hicks
24** Power of Attorney (included in Part II of the original Registration
Statement under the caption "Signatures")
27** Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
*** Filed herewith.
+ Filed without exhibits and schedules (to be provided supplementally upon
request of the Commission).
(1) The Company issued a warrant in this form to the following officers of the
Company (or in certain cases to an entity controlled by such officer) for
the number of shares indicated: Bradley S. Jacobs (5,000,000); John N.
Milne (714,286); Michael J. Nolan (285,715); Robert P. Miner (142,857);
Sandra E. Welwood (50,000); Joseph J. Kondrup, Jr. (50,000); Kai E. Nyby
(50,000); and Richard A. Volonino (50,000).

(2) Each officer of the Company who purchased securities prior to the date
hereof, other than Messrs. Jacobs and Hicks, entered into a Private
Placement Purchase Agreement in this form (modified, in the case of
Messrs. Barker and Imig, to reflect the fact that such officers did not
purchase Warrants) with respect to the shares of Common Stock and Warrants
purchased by such officer from the Company as described under
"Management--Capital Contributions by Officers and Directors."
(3) Each purchaser of shares in the Company's September 1997 private placement
of 3,028,873 shares of Common Stock entered into a Subscription Agreement
in this form with respect to the shares purchased.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant undertakes to provide to the Underwriter at the
closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

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

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

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 2 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW
YORK, STATE OF NEW YORK, ON DECEMBER 2, 1997.

United Rentals, Inc.

/s/ Michael J. Nolan
By: __________________________________
MICHAEL J. NOLAN
CHIEF FINANCIAL OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THEIR RESPECTIVE
CAPACITIES AND ON THE RESPECTIVE DATES SET FORTH OPPOSITE THEIR NAMES.

SIGNATURE TITLE DATE

/s/ * Chairman, Chief
- ------------------------------------ Executive Officer December 2,
BRADLEY S. JACOBS and Director 1997
(Principal
Executive Officer)

/s/ * Director
- ------------------------------------ December 2,
JOHN N. MILNE 1997

Director
- ------------------------------------ December ,
RONALD M. DEFEO 1997

/s/ * Director
- ------------------------------------ December 2,
RICHARD J. HECKMANN 1997

- ------------------------------------ Director December ,
GERALD TSAI, JR. 1997

/s/ Michael J. Nolan Chief Financial
- ------------------------------------ Officer (Principal December 2,
MICHAEL J. NOLAN Financial Officer) 1997

/s/ Sandra E. Welwood Vice President,
____________________________________ Corporate December 2,
SANDRA E. WELWOOD Controller 1997
(Principal
Accounting
Officer)

Michael J. Nolan
*By: _______________________________
MICHAEL J. NOLAN ATTORNEY-IN-FACT

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBITS NUMBER
------- ----------------------- ------
<C> <S> <C>
1(a)* Form of U.S. Purchase Agreement
1(b)* Form of International Purchase Agreement
3(a)** Amended and Restated Certificate of Incorporation of the
Company, in effect as of the date hereof
3(b)** By-laws of the Company, in effect as of the date hereof
4*** Form of Common Stock Certificate
5*** Opinion of Ehrenreich Eilenberg Krause and Zivian LLP
10(a)** $55 Million Revolving Credit Facility, dated as of October 8,
1997, between the Company, various financial institutions,
and Bank of America National Trust and Savings Association,
as agent, together with the First Amendment thereto dated
October 17, 1997 and the Second Amendment thereto dated
October 24, 1997
10(b)** 1997 Stock Option Plan
10(c)** Form of Warrant Agreement(1)
10(d)** Form of Private Placement Purchase Agreement entered into by
certain officers of the Company in connection with purchasing
shares and warrants from the Company(2)
10(e)** Form of Subscription Agreement for September 1997 Private
Placement(3)
10(f)** Form of Indemnification Agreement for Officers and Directors
of the Company
10(g)** Employment Agreement between the Company and Bradley S.
Jacobs, dated as of September 14, 1997
10(h)** Employment Agreement between the Company and John N. Milne,
dated as of September 14, 1997
10(i)** Employment Agreement between the Company and Michael J.
Nolan, dated as of October 14, 1997
10(j)** Employment Agreement between the Company and Robert P. Miner,
dated as of October 10, 1997
10(k)** Stock Purchase Agreement, dated as of October 24, 1997, among
the Company and the shareholders of Mercer Equipment Company+
10(l)** Stock Purchase Agreement, dated as of October 24, 1997, among
the Company and the shareholders of Bronco Hi-Lift Inc.+
10(m)** Stock Purchase Agreement, dated as of October 24, 1997, among
the Company and Coran Enterprises, Inc., Monterey Bay
Equipment Rentals, Inc., James M. Shade, Carol A. Shade,
James M. Shade and Carol Anne Shade, Trustees under the James
M. Shade and Carol A. Shade Trust Agreement dated September
14, 1982, Randall Shade and Corey Shade.+
10(n)** Stock Purchase Agreement, dated as of October 24, 1997, among
the Company and the shareholders of Rent-It Center, Inc.+
10(o)** Stock Purchase Agreement, dated as of October 20, 1997, among
the Company and A&A Tool Rentals & Sales, Inc., Joseph E.
Doran, Patrick J. Doran, and A&A Tool Rentals & Sales, Inc.
Employee Stock Ownership Plan.+
10(p)** Agreement and Plan of Merger, dated as of October 23, 1997,
among the Company, UR Acquisition Subsidiary, Inc. and J&J
Rental Services, Inc.+
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBITS NUMBER
-------- ----------------------- ------
<C> <S> <C>
10(q)** Convertible Note dated October 24, 1997
10(r)** Subscription Agreement dated November 14, 1997, between
Wayland R. Hicks and the Company
10(s)** Agreement dated November 14, 1997, between the Company and
Wayland R. HIcks
11** Statement re: Computation of per share earnings
21** Subsidiaries of the Company
23(a)*** Consent of Ehrenreich Eilenberg Krause & Zivian LLP
(included in opinion filed as Exhibit 5)
23(b)*** Consent of Weil, Gotshal & Manges LLP
23(c)*** Consent of Ernst & Young LLP
23(d)*** Consent of Ernst & Young LLP
23(e)*** Consent of Ernst & Young LLP
23(f)*** Consent of KPMG Peat Marwick
23(g)*** Consent of Webster Duke & Co. PA
23(h)*** Consent of Grant Thornton LLP
23(i)*** Consent of Wayland R. Hicks
24** Power of Attorney (included in Part II of the original
Registration Statement under the caption "Signatures")
27** Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment.
** Previously filed
*** Filed herewith
+ Filed without exhibits and schedules (to be provided supplementally upon
request of the Commission).
(1) The Company issued a warrant in this form to the following officers of the
Company (or in certain cases to an entity controlled by such officer) for
the number of shares indicated: Bradley S. Jacobs (5,000,000); John N.
Milne (714,286); Michael J. Nolan (285,715); Robert P. Miner (142,857);
Sandra E. Welwood (50,000); Joseph J. Kondrup, Jr. (50,000); Kai E. Nyby
(50,000); and Richard A. Volonino (50,000).

<PAGE>

United Rentals Exhibit 4

FORM OF COMMON STOCK CERTIFICATE

[Front]
Number Shares
*** ***

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

UNITED RENTALS, INC

SHARES OF COMMON STOCK PAR VALUE $.01

This Certifies that ********* is the owner of ********* fully paid and
non-assessable
SHARES OF THE COMMON STOCK OF UNITED RENTALS, INC. transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized attorney upon the surrender of this Certificate properly endorsed.
This Certificate and the shares represented hereby are issued and shall be held
subject to all the provisions of the Certificate of Incorporation and all
amendments thereto, copies of which are on file at the office of the Transfer
Agent, and the holder hereof, by acceptance of this Certificate, consents to and
agrees to be bound by all of said provisions. This Certificate is not valid
until countersigned by the Transfer Agent and registered by the Registrar.

IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation, this *** day of ***** A.D. **.

/s/ John N. Milne [Corporate Seal] /s/ Wayland R. Hicks
- ----------------- --------------------
Secretary President

<PAGE>

[Back]

For Value Received,________hereby sell, assign and transfer unto_______
__________Shares of the capital stock represented by the within Certificate, and
do hereby irrevocably constitute and appopint__________Attorney to transfer the
said Shares on the books of the within named Corporation with full power of
subtitution in the premises.

Dated__________
In the presence of
- ---------------------------------------------------
THIS SPACE IS NOT TO BE COVERED IN ANY WAY

<PAGE>
EXHIBIT 5

[LETTERHEAD OF EHRENREICH EILENBERG KRAUSE & ZIVIAN, LLP]

11 EAST 44TH STREET
NEW YORK, NEW YORK 10017

-------

TELEPHONE: (212) 986-9700
FACSIMILE: (212) 986-2399

December 2, 1997

United Rentals, Inc.
Four Greenwich Office Park
Greenwich, Connecticut 06830

Re: Registration Statement on Form S-1 (No. 333-39117)

Gentlemen:

You have requested our opinion with respect to certain matters in
connection with the above-referenced registration statement, as amended (the
"Registration Statement"). Such Registration Statement relates to 8,050,000
shares of Common Stock (including 1,050,000 shares subject to an underwriter's
over-allotment option) that the Registration Statement contemplates will be sold
in an underwritten public offering (the foregoing shares being referred to as
the "Offered Shares").

We have reviewed copies of the Amended and Restated Certificate of
Incorporation of the Company, the By-laws of the Company, the Registration
Statement and exhibits thereto and have examined such corporate documents and
records and other certificates, and have made such investigations of law, as we
have deemed necessary in order to render the opinion hereinafter set forth. As
to certain questions of fact material to our opinion, we have relied upon the
certificate of an officer of the Company and upon certificates of public
officials.

Based upon and subject to the foregoing, we are of the opinion that the
Offered Shares will, when sold and paid for as contemplated by the Registration
Statement and the Purchase Agreements filed as an exhibit thereto, be duly
authorized, validly issued, fully paid and non-assessable.

We hereby consent to the reference to us under the caption "Legal Matters"
in the Registration Statement and to the use of this opinion as an exhibit to
the Registration Statement. In giving this consent, we do not hereby admit that
we come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.

Very truly yours,

Ehrenreich Eilenberg Krause & Zivian, LLP

<PAGE>

EXHIBIT 23(B)

WEIL, GOTSHAL & MANGES LLP

A LIMITED LIABILITY PARTNERSHIP INCLUDING

PROFESSIONAL CORPORATIONS

767 FIFTH AVENUE

NEW YORK, NEW YORK 10153

TELEPHONE: (212) 310-8000

TELECOPY: (212) 310-8007

December 3, 1997

United Rentals, Inc.

Four Greenwich Office Park

Greenwich, Connecticut 06830

Ladies and Gentlemen:

We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement on
Form S-1 (Registration No. 333-39117; the "Registration Statement") filed by
United Rentals, Inc., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), without admitting that we are "experts" under
the Securities Act or the rules and regulations promulgated thereunder with
respect to any part of the Registration Statement or that we are otherwise
within the class of persons whose consent is required pursuant to Section 7 of
the Securities Act.

Very truly yours,

WEIL, GOTSHAL & MANGES LLP

<PAGE>

EXHIBIT 23(c)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated October 8, 1997, except for Note 7 as to which the
date is October 28, 1997, with respect to the financial statements of United
Rentals, Inc. in Amendment No. 2 to the Registration Statement (Form S-1 No.
333-39117) and the related Prospectus of United Rentals, Inc. for the
registration of 7,000,000 shares of its common stock filed with the Securities
and Exchange Commission on December 3, 1997.

/s/ Ernst & Young LLP

MetroPark, New Jersey

December 2, 1997

<PAGE>

EXHIBIT 23(d)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated October 29, 1997, with respect to the financial
statements of J&J Rental Services, Inc. in Amendment No. 2 to the Registration
Statement (Form S-1 No. 333-39117) and the related Prospectus of United
Rentals, Inc. for the registration of 7,000,000 shares of its common stock
filed with the Securities and Exchange Commission on December 3, 1997.

/s/ Ernst & Young LLP

MetroPark, New Jersey

December 2, 1997

<PAGE>

EXHIBIT 23(e)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated October 21, 1997, except for Note 10 as to which
the date is October 24, 1997, with respect to the financial statements of
Bronco Hi-Lift, Inc., in Amendment No. 2 to the Registration Statement (Form S-
1 No. 333-39117) and the related Prospectus of United Rentals, Inc. for the
registration of 7,000,000 shares of its common stock filed with the Securities
and Exchange Commission on December 3, 1997.

/s/ Ernst & Young LLP

MetroPark, New Jersey

December 2, 1997

<PAGE>

EXHIBIT 23(f)

The Board of Directors
A&A Tool Rentals & Sales, Inc.:

We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

KPMG Peat Marwick LLP

Sacramento, California

December 2, 1997

<PAGE>

EXHIBIT 23(g)

CONSENT OF INDEPENDENT AUDITORS

We have included our report dated January 31, 1997, accompanying the
financial statements of MERCER Equipment Company contained in the Registration
Statement and Prospectus. We consent to the use of the aforementioned report
in the Registration Statement and Prospectus, and to the use of our name as it
appears under the caption "Experts."

/s/ Webster, Duke & Co. PA

Charlotte, North Carolina

December 2, 1997

<PAGE>

EXHIBIT 23(h)

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated October 24, 1997, except for note F as to
which the date is October 28, 1997, accompanying the combined financial
statements of Coran Enterprises, Inc., dba A-1 Rents, and Monterey Bay
Equipment Rental, Inc. contained in the Registration Statement and Prospectus.
We consent to the use of the aforementioned report in the Registration
Statement and Prospectus, on Form S-1 (File No. 333-39117), and to the use of
our name as it appears under the caption "Experts."

/s/ Grant Thornton LLP

San Jose, California

December 2, 1997

<PAGE>

EXHIBIT 23(i)

CONSENT OF PERSON CHOSEN TO BECOME A DIRECTOR

Reference is made to the Registration statement on Form S-1 being filed by
United Rentals, Inc., a Delaware corporation (the "Company"). The undersigned
consents to be named in the Registration Statement and any amendments thereto
as a person who will become a director of the Company upon completion of the
offering contemplated thereby.

/s/ Wayland R. Hicks
-------------------------------------

Wayland R. Hicks

Dated: As of December 1, 1997