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SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

(MARK ONE)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

For the quarterly period ended March 31, 2003

OR

[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

For the transition period from                 to                .

Commission file number 001-14299

NATIONSRENT, INC.

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

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No x

      The number of shares of Common Stock, par value $0.01 per share, outstanding on April 30, 2003 was 57,364,437.

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NATIONSRENT, INC.

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2003

PART I

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

NATIONSRENT, INC.

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these

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NATIONSRENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these

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NATIONSRENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these

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NATIONSRENT, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Description of the Business

      NationsRent, Inc. together with its subsidiaries (the “Company” or the “Debtors”) was incorporated in the state of Delaware on August 14, 1997 for the purpose of creating a nationally branded network of equipment rental locations offering a broad selection of equipment primarily to the construction, industrial and homeowner segments of the equipment rental industry in the United States. The Company also sells used and new equipment, parts, merchandise and supplies, and provides maintenance and repair services.

Note 2 — Proceedings Under Chapter 11 of the Bankruptcy Code

      On December 17, 2001 (the “Petition Date”), the Debtors filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The chapter 11 cases pending for the Debtors (the “Chapter 11 Cases”) are being jointly administered for procedural purposes.

      In conjunction with the commencement of the Chapter 11 Cases, the Debtors sought and obtained several orders from the Bankruptcy Court which were intended to enable the Debtors to continue to operate in the normal course of business during the Chapter 11 Cases, including orders to (i) permit the Debtors to operate their consolidated cash management system during the Chapter 11 Cases in substantially the same manner as it was operated prior to the commencement of the Chapter 11 Cases, (ii) authorize payment of prepetition employee salaries, wages, and benefits and reimbursement of prepetition employee business expenses, (iii) authorize payment of prepetition sales, payroll, and use taxes owed by the Debtors, (iv) authorize payment of certain prepetition obligations to customers, (v) continue workers’ compensation insurance programs and certain prepetition claims, premiums and related expenses, (vi) authorize payment of certain mechanics’ liens and freight charges, (vii) determine adequate assurance of payment for future utility services, (viii) authorize payment of installments under insurance premium finance agreements, (ix) authorize maintenance and continuation of insurance programs and related relief, and (x) authorize payment of certain other prepetition claims.

      The Bankruptcy Code provides that the Debtors have the exclusive right for certain specified periods during which only they may file and solicit acceptances of a plan of reorganization. If the Debtors fail to file a plan of reorganization during this exclusive period or any extensions thereof or, after such plan has been filed, if the Debtors fail to obtain acceptance of such plan from the requisite impaired classes of creditors and equity holders during the exclusive solicitation period, any party in interest, including a creditor, an equity holder, a committee of creditors or equity holders, or an indenture trustee, may file their own plan of reorganization for the Debtors. The initial exclusive period of the Debtors to file a plan of reorganization was set to expire on April 15, 2002 and the initial exclusive period of the Debtors to solicit acceptance of a plan of reorganization was set to expire on June 15, 2002. The Debtors have filed successive motions to extend such exclusive periods. The exclusive period of the Debtors to file a plan of reorganization is now set to expire on the earlier of June 30, 2003 or 30 days after the entry of an order denying confirmation of the Debtors’ proposed plan of reorganization described below, and the exclusive period of the Debtors to solicit acceptance of a plan of reorganization is now set to expire 60 days after expiration of the exclusive period to file a plan of reorganization.

      In June 2002, the Debtors filed their proposed Joint Plan of Reorganization and related disclosure statement with the Bankruptcy Court. In December 2002, after negotiating with several parties in interest, the Debtors filed their First Amended Joint Plan of Reorganization (as modified, the “Proposed Plan”) and related disclosure statement (the “Disclosure Statement”). The Proposed Plan was jointly proposed by the Debtors, the official committee of unsecured creditors and the holders of a majority of the bank debt under the Debtors’ prepetition senior secured credit facility. In April 2003, the Debtors filed a modification (the “Plan Modification”) to the First Amended Joint Plan of Reorganization which provides for up to $80 million of additional junior capital in order to consummate the plan of reorganization. Under the terms of the Proposed Plan, on the effective date (i) the holders of allowed claims under the Debtors’ prepetition senior secured credit facility shall receive 63.3% of the new common stock, new preferred stock and new subordinated notes of the reorganized company, (ii) a creditor trust for the benefit of the holders of allowed general unsecured claims shall receive 3.3% of the new securities and $300,000 in cash and (iii) a new investor group shall purchase 33.3% of the new common stock, new preferred stock and new subordinated notes of the reorganized company for $80 million. The Proposed Plan does not provide for any value or distribution to existing equity holders of the Company.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The confirmation of a plan of reorganization is one of the Company’s primary objectives. In February 2003, the Bankruptcy Court approved the Disclosure Statement which together with the Proposed Plan has been sent to all creditors for approval. The deadline to vote to accept or reject the Proposed Plan was March 21, 2003. The Proposed Plan was overwhelmingly approved by the Debtor’s creditors who voted on such plan. In April 2003, the Bankruptcy Court found that the Plan Modifications do not adversely change the treatment of the claim of any creditor or the interest of any equity security holder of the Debtors who has not accepted such Plan Modification and therefore, the Proposed Plan as modified by the Plan Modification, is deemed accepted by all creditors who have previously accepted the Proposed Plan. The hearing to consider confirmation of the Proposed Plan is presently scheduled for May 13, 2003 at 10:00 A.M. in the Bankruptcy Court. In order to confirm a plan of reorganization, the Bankruptcy Court, among other things, is required to find that (i) with respect to each impaired class of creditors and equity holders, each holder in such class has accepted the plan or will, pursuant to the plan, receive at least as much as such holder would receive in a liquidation, (ii) each impaired class of creditors and equity holders has accepted the plan by the requisite vote (except as described in the following sentence), and (iii) confirmation of the plan is not likely to be followed by a liquidation or a need for further financial reorganization of the Debtors or any successors to the Debtors unless the plan proposes such liquidation or reorganization. If any impaired class of creditors or equity holders does not accept the plan and, assuming that all of the other requirements of the Bankruptcy Code are met, the proponents of the plan may invoke the “cram down” provisions of the Bankruptcy Code. Under these provisions, the Bankruptcy Court may confirm a plan notwithstanding the non-acceptance of the plan by an impaired class of creditors or equity holders if certain requirements of the Bankruptcy Code are met. These requirements may, among other things, necessitate payment in full for senior classes of creditors before payment to a junior class can be made.

      Under bankruptcy law, actions by creditors to collect prepetition indebtedness owed by the Debtors at the filing date, as well as most litigation pending against the Company, are stayed and other prepetition contractual obligations may not be enforced against the Debtors. In addition, the Debtors have the right, subject to Bankruptcy Court approval and other conditions, to assume or reject any prepetition executory contracts and unexpired leases. Parties affected by these rejections may file prepetition damage claims with the Bankruptcy Court. The Company has prepared and submitted the schedules setting forth the Debtors’ assets and liabilities as of the date of the petition as reflected in the Company’s accounting records. The amounts of claims filed by creditors could be significantly different from their recorded amounts. Due to material uncertainties, it is not possible to predict the length of time the Company will operate under chapter 11 protection, the outcome of the proceedings in general, whether the Company will continue to operate under the current organizational structure, or the effect of the proceedings on the Company’s business or the recovery by creditors and equity holders.

Note 3 — Accounting Policies

Basis of Presentation

      The accompanying unaudited interim consolidated financial statements have been prepared by the Company on a going concern basis, which contemplates continuity of operations, realization of assets, and payment of liabilities in the ordinary course of business, and do not reflect adjustments that might result if the Debtors are unable to continue as a going concern. The Debtors’ history of significant losses, their stockholders’ deficit and their Chapter 11 Cases raise substantial doubt about the Debtors’ ability to continue as a going concern. Continuing as a going concern is dependent upon, among other things, the Debtors’ formulation of a plan or plans of reorganization acceptable to the Bankruptcy Court and creditors, the success of future business operations, and the generation of sufficient cash from operations and financing sources to meet the Company’s obligations. The consolidated financial statements do not reflect: (i) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities; (ii) aggregate prepetition liability amounts that may be allowed for unrecorded claims or contingencies, or their status or priority; (iii) the effect of any changes to the Debtors’ capital structure or in the Debtors’ business operations as the result of an approved plan or plans of reorganization; or (iv) adjustments to the carrying value of assets or liability amounts that may be necessary as a result of actions by the Bankruptcy Court. Adjustments necessitated by a plan of reorganization could materially change the amounts reported in the accompanying unaudited interim consolidated financial statements.

      These statements have been prepared in accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”) 90-7, “Financial Reporting by Entities in

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reorganization under the Bankruptcy Code.” Pursuant to SOP 90-7, revenues and expenses, realized gains and losses and provisions for losses resulting from the reorganization of the business are to be reported in the unaudited interim consolidated statements of operations separately as reorganization items. Professional fees are expensed as incurred. Interest expense is reported only to the extent that it will be paid during the Chapter 11 Cases or that it is probable that it will be an allowed claim. Reorganization items are disclosed in the notes to unaudited consolidated financial statements. See “— Note 6 — Reorganization Items, Net.”

      The unaudited consolidated financial statements reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary for a fair presentation of financial results for the three months ended March 31, 2003 and 2002, in accordance with generally accepted accounting principles for interim financial reporting and pursuant to Article 10 of Regulation S-X. 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. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2002 appearing in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 2003 are not necessarily indicative of the results which may be reported for the year ending December 31, 2003.

      The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. The comprehensive loss of the Company was equal to net loss for all periods presented.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 4 —Debt Not Subject to Compromise

      Debt not subject to compromise consists of the debtor in possession financing facility (the “DIP Financing Facility”) and certain postpetition secured purchase money notes as follows:

     DIP Financing Facility

      In December 2002, the Company amended and restated the DIP Financing Facility to increase availability up to $75,000,000 (including up to $30,000,000 of letters of credit) and to extend its term until June 30, 2003. Under the terms of the DIP Financing Facility, availability is subject to a borrowing base based upon eligible rental equipment and trade accounts receivable. Amounts borrowed under the DIP Financing Facility bear interest per annum equal to the agent’s capital index rate plus 2.00%. In addition to a $500,000 commitment fee and a $750,000 syndication fee, there is an unused commitment fee of 0.50%, a letter of credit fee of 3.25%, and a letter of credit fronting fee of up to 0.25%. The DIP Financing Facility is secured by super-priority claims and liens on the real and personal assets of the Company that also secure the prepetition senior credit facility. The DIP Financing Facility contains financial covenants requiring a minimum operating cash flow, as well as other covenants that limit, among other things, indebtedness, liens, sales of assets, capital expenditures, investments, and prohibit dividend payments. In connection with the DIP Financing Facility, the Company’s prepetition senior credit facility was amended to provide for subordination of the liens (to the liens under the DIP Financing Facility) and use of cash collateral.

      As of March 31, 2003 the Company had $24,860,000 in cash borrowings and had $19,999,000 in letters of credit outstanding under the DIP Financing Facility. As of May 8, 2003 the Company had $36,860,000 in cash borrowings and had $19,999,000 in letters of credit outstanding under the DIP Financing Facility.

     Postpetition Secured Purchase Money Notes Payable

      The Company is in the process of renegotiating certain equipment leases as part of the Chapter 11 Cases. The Company has entered into settlement agreements with respect to certain equipment leases. As part of such settlements, the Company acquired the equipment underlying such leases and issued notes payable as summarized above to the lessors secured by the acquired equipment.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 5 — Liabilities Subject to Compromise

      The principal categories of claims classified as liabilities subject to compromise under the Chapter 11 Cases are identified below. All amounts may be subject to adjustment depending on Bankruptcy Court action, further developments with respect to disputed claims, or other events, including the reconciliation of claims filed with the Bankruptcy Court to amounts included in the Company’s records. Additional prepetition claims may arise from a rejection of additional executory contracts or unexpired leases by the Debtors. Under a confirmed plan or plans of reorganization, all prepetition claims may be paid and discharged at amounts substantially less than their allowed amounts.

      As a result of the Chapter 11 Cases, no principal or interest payments may be made on unsecured prepetition debt without Bankruptcy Court approval or until a plan or plans of reorganization providing for the repayment terms has been confirmed by the Bankruptcy Court and becomes effective. Therefore, interest on prepetition unsecured obligations, as well as amortization of deferred financing costs related to such debt, has not been accrued or recorded after the Petition Date. In addition, in September 2002, in connection with the amendment to the DIP Financing Facility, the Company’s prepetition senior secured lenders agreed to suspend the Company’s obligation to continue to pay interest on the prepetition senior secured credit facility until such lenders and the lenders under the DIP Financing Facility determine that the Company has sufficient cash to make such payments. Therefore, interest on the prepetition senior secured credit facility has not been accrued or recorded after September 2002. Contractual interest expense not accrued or recorded on such prepetition debt totaled approximately $22,286,000 and $7,491,000 for the three months ended March 31, 2003 and 2002, respectively.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Liabilities subject to compromise consists of the following:

      Debt subject to compromise consists of the following:

      The Company is currently in default on substantially all of its debt subject to compromise. Despite the Company’s restructuring efforts in late 2000 and early 2001 described below, in December 2001, the Company failed to make a principal payment due on the term loan portion of its senior credit facility, an interest payment due on its 10.375% Senior Subordinated Notes due 2008 (the “Subordinated Notes”), principal and interest payments on certain subordinated notes issued in connection with acquisitions (the “Acquisition Notes”) and certain other scheduled payments.

      Under the terms of the Company’s senior credit facility, upon an event of default, including the failure to make a required interest payment, the senior lenders had several rights and remedies available to them, including declaring all amounts outstanding, together with accrued interest, to be immediately due and

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

payable. The senior lenders had the right to proceed against the collateral securing the facility, which includes substantially all of the Company’s assets. Similarly, as a result of the Company’s failure to make interest and/or principal payments under the Acquisition Notes and the Subordinated Notes, subject to the subordination and cure provisions of such instruments, the trustee or holders of those notes may have been able to declare those notes and accrued interest immediately due and payable. The Company’s other debt and lease arrangements also contain cross-default provisions, which gave the parties thereto various remedies, including acceleration of all amounts outstanding, foreclosure on collateral securing such obligations and termination rights. As a result of filing the Chapter 11 Cases, the Company’s lenders and parties to various contracts and agreements were prohibited from exercising the remedies that may have been available to them upon the Company’s default.

Note 6 — Reorganization Items, Net

      Expenses and income directly incurred as a result of the Chapter 11 Cases have been segregated from normal operations and are disclosed separately. The major components are as follows:

      Gains on settlement of operating leases and debt represent the settlement of certain equipment operating leases and debt for amounts less than the Company’s recorded obligations. Professional fees consist of costs for financial advisors, legal counsel, consulting and other costs related to professional services incurred. Employee expenses primarily consist of a severance and retention program approved by the Bankruptcy Court to ensure the retention of certain key employees. Facility closure costs relate to miscellaneous charges related to the closing of the stores identified for closure in the reorganization. Interest income consists of interest earned on excess cash balances. Reorganization items excluding the gains on settlement of operating leases and on settlement of debt for the three months ended March 31, 2003 and 2002 were cash charges.

Note 7 — Stock Based Compensation

       The Company accounts for stock compensation arrangements in accordance with Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related interpretations and accordingly, recognizes no compensation expense for the stock compensation arrangements with employees or directors since the stock options are granted at exercise prices at or greater than the fair market value of the shares at the date of grant and follows the new disclosure requirements of SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.”

      Pro forma information regarding net loss and loss per share is required by SFAS No. 123, “Accounting for Stock Based Compensation,” as amended by SFAS No. 148, as if the Company had accounted for its granted employee stock options under the fair value method of SFAS No. 123. The Company granted no options for the three months ended March 31, 2003 and 2002. Had compensation cost for all options granted been determined based on the fair value at the grant date consistent with SFAS No. 123, the Company’s net loss and loss per share would have been as follows:

      Pursuant to the Proposed Plan, no value or other distribution will be made on account of the Company’s equity securities, including stock options.

Note 8 — 2000 Restructuring Plan

      During the fourth quarter of 2000, the Company recorded a pre-tax restructuring charge of approximately $72,005,000 and during 2001, the Company recorded an additional net pre-tax restructuring charge of approximately $9,653,000.

      The restructuring plan was comprised of the following major components:

	•	the sale of excess rental equipment, which primarily relates to a portion of the Company’s heavy earthmoving equipment that has the highest unit cost, requires the most expensive support infrastructure and has the lowest return on investment;
	•	the abandonment of certain information system projects that were under development;
	•	the elimination of jobs company-wide and the consolidation of various departments within the organization; and
	•	the closure of certain rental and office locations.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The remaining components of these charges, along with the activity for 2003 related to these charges, are presented in the following table (in thousands).

      The remaining reserve balance at March 31, 2003 for employee termination severance costs relates to the remaining severance payments due to employees terminated under the 2000 restructuring plan.

      The remaining reserve balance at March 31, 2003 for facility closures relates to certain office equipment leases that the Company has not yet received Bankruptcy Court approval to reject.

      The timing and the amount of any distribution related to the remaining reserve balances will be determined by the resolution of the Chapter 11 Cases.

Note 9 — Seasonality

      The Company’s revenue and results of operations are dependent upon activity in the construction industry in the markets it serves. Construction activity is dependent upon weather and other seasonal factors affecting construction in the geographic areas where the Company operates. Because of this variability in demand, the Company’s quarterly revenue and results of operations may fluctuate. Accordingly, quarterly or other interim results should not be considered indicative of results to be expected for any other quarter or for a full year.

Note 10 — Loss Per Share

      The following table sets forth the computation of basic and diluted loss per share (in thousands, except per share data):

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Options and warrants to purchase 5,243,940 and 9,153,792 shares of common stock were outstanding at March 31, 2003 and 2002, respectively, but were not included in the computation of diluted loss per share because the exercise prices of such options and warrants were greater than the average fair value of the common shares and, therefore, the effect would be antidilutive.

      Weighted average shares of preferred stock convertible into 36,507,937 shares of common stock were outstanding at March 31, 2003 and 2002 but were not included in the computation of diluted loss per share since their effect would be antidilutive.

      Weighted average shares of subordinated debt convertible into 10,841,961 and 10,948,231 shares of common stock, respectively, were outstanding at March 31, 2003 and 2002 but were not included in the computation of diluted loss per share since their effect would be antidilutive.

Note 11 — Income Taxes

      The Company did not record a tax benefit for the three months ended March 31, 2003, due to the uncertainty of the realizability of the Company’s deferred tax assets.

Note 12 — Related Party Transactions

      In December 2002, the Company entered into a Term Sheet Regarding Equipment Settlement Program (the “Term Sheet”) with Boston Rental Partners, LLC, a Delaware limited liability company (“Boston Rental”), to facilitate obtaining new and used rental equipment to replace (or acquire) equipment currently leased by the Company from certain third party lessors, where the Company has determined that the remaining lease obligations exceed the fair market value of the underlying equipment. In January 2003, the Term Sheet was approved by the Bankruptcy Court. Pursuant to the Term Sheet, Boston Rental may purchase equipment underlying the Company’s leases at fair market value or obtain similar equipment from third party sources and then rent such equipment to the Company at substantially less than the Company’s existing lease obligations. As part of Boston Rental’s acquisition of equipment from an equipment lessor, the equipment lessor will be required to terminate the operating lease and settle all claims against the Company. In the event an equipment lessor is not willing to settle its leases at fair market value, the Company may reject the lease under the Bankruptcy Code and may rent similar equipment from Boston Rental to replace the equipment underlying the rejected lease. From and after the effective date of the Proposed Plan, the Company has the option to acquire all of the stock or assets of Boston Rental for an amount in cash equal to the equity capital contributed to Boston Rental, plus assumption of indebtedness, plus certain costs and expenses as described in the Term Sheet. During the three months ended March 31, 2003, the Company recorded $260,000 of rental expense related to equipment rented from Boston Rental.

      Boston Rental was formed exclusively for the purpose described above and is wholly owned by Phoenix Rental Partners, LLC (“Phoenix”) and Baupost Capital LLC (“Baupost”). The principal owners of Phoenix are Bryan T. Rich and Douglas M. Suliman. Pursuant to a merger agreement, dated October 22, 1998, the Company acquired Logan Equipment Corp. (“Logan”), an entity owned by Messrs. Rich and Suliman in exchange for cash, approximately $8.4 million of unsecured convertible promissory notes and 3.3 million shares of the Company’s common stock. Following the acquisition of Logan, Mr. Rich was employed by NationsRent as the Senior Vice President—Northeast Region through December 2000. Since the Petition Date, Baupost and Phoenix have acquired a majority of the Company’s prepetition senior secured bank debt. Messrs. Suliman and Rich also hold certain other prepetition unsecured claims against the Debtors resulting from the acquisition of Logan. TREC LLC, an entity affiliated with Mr. Rich, leases three pieces of real property to the Company. Baupost also owns $2 million in face amount of the Company’s prepetition 10-3/8% senior subordinated notes due 2008.

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      The following discussion and analysis of our consolidated results of operations and financial condition should be read in conjunction with the unaudited interim consolidated financial statements and the related notes included herein and the consolidated financial statements for the year ended December 31, 2002 appearing in our Annual Report on Form 10-K filed with the Securities and Exchange Commission.

General

      NationsRent, Inc. and all of its subsidiaries (“NationsRent,” the “Company,” the “Debtors,” “we” or “us”) is a leading provider of rental equipment in the United States. We offer a comprehensive line of equipment for rent primarily to a broad range of construction, industrial and homeowner customers including general contractors, subcontractors, highway contractors, manufacturing plants, distribution centers and other commercial businesses. We also sell used and new equipment, merchandise, spare parts and supplies. As of April 30, 2003, we operated 249 equipment rental locations in 26 states. We have become a leading provider of rental equipment as a result of a combination of having acquired platform companies in target markets, opened or acquired additional locations concentrated around those businesses and expanded the selection and availability of our rental fleet.

Proceedings Under Chapter 11 of the Bankruptcy Code

      On December 17, 2001 (the “Petition Date”), the Debtors filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The chapter 11 cases pending for the Debtors (the “Chapter 11 Cases”) are being jointly administered for procedural purposes.

      In conjunction with the commencement of the Chapter 11 Cases, the Debtors sought and obtained several orders from the Bankruptcy Court which were intended to enable the Debtors to continue to operate in the normal course of business during the Chapter 11 Cases, including orders to (i) permit the Debtors to operate their consolidated cash management system during the Chapter 11 Cases in substantially the same manner as it was operated prior to the commencement of the Chapter 11 Cases, (ii) authorize payment of prepetition employee salaries, wages, and benefits and reimbursement of prepetition employee business expenses, (iii) authorize payment of prepetition sales, payroll, and use taxes owed by the Debtors, (iv) authorize payment of certain prepetition obligations to customers, (v) continue workers’ compensation insurance programs and certain prepetition claims, premiums and related expenses, (vi) authorize payment of certain mechanics’ liens and freight charges, (vii) determine adequate assurance of payment for future utility services, (viii) authorize payment of installments under insurance premium finance agreements, (ix) authorize maintenance and continuation of insurance programs and related relief, and (x) authorize payment of certain other prepetition claims.

      The Bankruptcy Code provides that the Debtors have the exclusive right for certain specified periods during which only they may file and solicit acceptances of a plan of reorganization. If the Debtors fail to file a plan of reorganization during this exclusive period or any extensions thereof or, after such plan has been filed, if the Debtors fail to obtain acceptance of such plan from the requisite impaired classes of creditors and equity holders during the exclusive solicitation period, any party in interest, including a creditor, an equity holder, a committee of creditors or equity holders, or an indenture trustee, may file their own plan of reorganization for the Debtors. The initial exclusive period of the Debtors to file a plan of reorganization was set to expire on April 15, 2002 and the initial exclusive period of the Debtors to solicit acceptance of a plan of reorganization was set to expire on June 15, 2002. The Debtors have filed successive motions to extend such exclusive periods. The exclusive period of the Debtors to file a plan of reorganization is now set to expire on the earlier of June 30, 2003 or 30 days after the entry of an order denying confirmation of the Debtors’ proposed plan of reorganization described below, and the exclusive period of the Debtors to solicit acceptance of a plan of reorganization is now set to expire 60 days after expiration of the exclusive period to file a plan of reorganization.

      In June 2002, the Debtors filed their proposed Joint Plan of Reorganization and related disclosure statement with the Bankruptcy Court. In December 2002, after negotiating with several parties in interest, the Debtors filed their First Amended Joint Plan of Reorganization (as modified, the “Proposed Plan”) and related disclosure statement (the “Disclosure Statement”). The Proposed Plan was jointly proposed by the Debtors, the official committee of unsecured creditors and the holders of a majority of the bank debt under the Debtors’ prepetition senior secured credit facility. In April 2003, the Debtors filed a modification (the “Plan Modification”) to the First Amended Joint Plan of Reorganization which provides for up to $80 million of additional junior capital in order to consummate the plan of reorganization. Under the terms of the Proposed Plan, on the effective date (i) the holders of allowed claims under the Debtors’ prepetition senior secured credit facility shall receive 63.3% of the new common stock, new preferred stock and new subordinated notes of the reorganized company, (ii) a creditor trust for the benefit of the holders of allowed general unsecured claims shall receive 3.3% of the new securities and $300,000 in cash and (iii) a new investor group shall purchase 33.3% of the new common stock, new preferred stock and new subordinated notes of the reorganized company for $80 million. The Proposed Plan does not provide for any value or distribution to existing equity holders of the Company.

      The confirmation of a plan of reorganization is one of the Company’s primary objectives. In February 2003, the Bankruptcy Court approved the Disclosure Statement which together with the Proposed Plan has been sent to all creditors for approval. The deadline to vote to accept or reject the Proposed Plan was March 21, 2003. The Proposed Plan was overwhelmingly approved by the Debtor’s creditors who voted on such plan. In April 2003, the Bankruptcy Court found that the Plan Modifications do not adversely change the treatment of the claim of any creditor or the interest of any equity security holder of the Debtors who has not accepted such Plan Modification and therefore, the Proposed Plan as modified by the Plan Modification, is deemed accepted by all creditors who have previously accepted the Proposed Plan. The hearing to consider confirmation of the Proposed Plan is presently scheduled for May 13, 2003 at 10:00 A.M. in the Bankruptcy Court. In order to confirm a plan of reorganization, the Bankruptcy Court, among other things, is required to find that (i) with respect to each impaired class of creditors and equity holders, each holder in such class has accepted the plan or will, pursuant to the plan, receive at least as much as such holder would receive in a liquidation, (ii) each impaired class of creditors and equity holders has accepted the plan by the requisite vote (except as described in the following sentence), and (iii) confirmation of the plan is not likely to be followed by a liquidation or a need for further financial reorganization of the Debtors or any successors to the Debtors unless the plan proposes such liquidation or reorganization. If any impaired class of creditors or equity holders does not accept the plan and, assuming that all of the other requirements of the Bankruptcy Code are met, the proponents of the plan may invoke the “cram down” provisions of the Bankruptcy Code. Under these provisions, the Bankruptcy Court may confirm a plan notwithstanding the non-acceptance of the plan by an impaired class of creditors or equity holders if certain requirements of the Bankruptcy Code are met. These requirements may, among other things, necessitate payment in full for senior classes of creditors before payment to a junior class can be made.

      Under bankruptcy law, actions by creditors to collect prepetition indebtedness owed by the Debtors at the filing date, as well as most litigation pending against us, are stayed and other prepetition contractual obligations may not be enforced against the Debtors. In addition, the Debtors have the right, subject to Bankruptcy Court approval and other conditions, to assume or reject any prepetition executory contracts and unexpired leases. Parties affected by these rejections may file prepetition damage claims with the Bankruptcy Court. The Company has prepared and submitted the schedules setting forth the Debtors’ assets and liabilities as of the date of the petition as reflected in the Company’s accounting records. The amounts of claims filed by creditors could be significantly different from their recorded amounts. Due to material uncertainties, it is not possible to predict the length of time the Company will operate under chapter 11 protection, the outcome of the proceedings in general, whether the Company will continue to operate under the current organizational structure, or the effect of the proceedings on the Company’s business or the recovery by creditors and equity holders.

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Basis of Presentation

      The accompanying unaudited interim consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets, and payment of liabilities in the ordinary course of business, and do not reflect adjustments that might result if the Debtors are unable to continue as a going concern. The Debtors’ history of significant losses, their stockholders’ deficit and their Chapter 11 Cases raise substantial doubt regarding the Company’s ability to continue as a going concern. Continuing as a going concern is dependent upon, among other things, the Debtors’ formulation of a plan or plans of reorganization acceptable to the Bankruptcy Court and creditors, the success of future business operations, and the generation of sufficient cash from operations and financing sources to meet the Company’s obligations. The unaudited consolidated financial statements do not reflect: (i) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities; (ii) aggregate prepetition liability amounts that may be allowed for unrecorded claims or contingencies, or their status or priority; (iii) the effect of any changes to the Debtors’ capital structure or in the Debtors’ business operations as the result of an approved plan or plans of reorganization; or (iv) adjustments to the carrying value of assets or liability amounts that may be necessary as a result of actions by the Bankruptcy Court. Adjustments necessitated by a plan of reorganization could materially change the amounts reported in the consolidated financial statements included elsewhere herein.

Liquidity and Capital Resources

     Prepetition Capital Resources

      Historically, we funded our cash requirements with borrowings under our senior credit facility, proceeds from the issuance of debt and equity securities and cash from operations. As of the Petition Date, our senior credit facility consisted of a $395.4 million term loan and a revolving credit facility with an outstanding balance of $355.9 million. The senior credit facility is secured by substantially all of our assets.

      As a result of our reliance on debt-based financing facilities, we became highly leveraged. Our ability to meet our financial obligations under these financing arrangements was dependent on, among other things, our results of operations and our ability to maintain compliance with our debt covenants. Beginning in 2000, we experienced increased financial stress and liquidity issues, as well as significant losses from operations. At December 31, 2001, our accumulated deficit reached approximately $970.5 million.

      Despite our restructuring efforts described below, in December 2001, we failed to make a principal payment due on the term loan portion of our senior credit facility, an interest payment due on our 10.375% Senior Subordinated Notes due 2008 (the “Subordinated Notes”), principal and interest payments on certain subordinated notes issued in connection with acquisitions (the “Acquisition Notes”) and certain other scheduled payments.

      Under the terms of our senior credit facility, upon an event of default, including the failure to make a required interest payment, the senior lenders had several rights and remedies available to them, including declaring all amounts outstanding, together with accrued interest, to be immediately due and payable. The senior lenders had the right to proceed against the collateral securing the facility, which includes substantially all of our assets. Similarly, as a result of our failure to make interest and/or principal payments under the Acquisition Notes and the Subordinated Notes, subject to the subordination provisions of such instruments, the trustee or holders of those notes may have been able to declare those notes and accrued interest immediately due and payable. Our other debt and lease arrangements also contain cross-default provisions, which gave the parties thereto various remedies, including acceleration of all amounts outstanding, foreclosure on collateral securing such obligations and termination rights.

      Our deteriorating financial condition, combined with continuing economic weakness, heightened competition in the construction and rental equipment industries contributed to significant strain on our liquidity and compounded our substantial earnings and cash flow pressures. Under these circumstances, we determined that it was in the best interests of our stakeholders to file Chapter 11 Cases to allow us the opportunity to restructure our financial obligations, focus on our operations and develop and implement a new business plan.

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      As a result of filing the Chapter 11 Cases, our lenders and parties to various contracts and agreements were prohibited from exercising the remedies that would have been available to them upon our default.

      Pursuant to the Bankruptcy Code, our prepetition obligations, including obligations under debt instruments, generally may not be enforced against the Debtors, and any actions to collect prepetition indebtedness are automatically stayed, unless the stay is lifted by order of the Bankruptcy Court. In addition, as debtors-in-possession, the Debtors have the right, subject to Bankruptcy Court approval and certain other limitations, to assume or reject executory contracts and unexpired leases. In this context, “assumption” means that the Debtors agree to perform their obligations and cure all existing defaults under the contract or lease, and “rejection” means that the Debtors are relieved from their obligations to perform further under the contract or lease, but are subject to a prepetition claim for damages for the breach thereof. Any damages resulting from rejection of executory contracts and unexpired leases will be treated as general unsecured claims in the Chapter 11 Cases unless such claims had been secured on a prepetition basis prior to the Petition Date. To date, the Debtors have rejected certain executory contracts and unexpired leases of nonresidential real property and the Debtors continue to review their remaining executory contracts and unexpired leases to determine which, if any, they will reject in the future.

     Adequacy of Capital Resources

      The Debtors are now operating their businesses as debtors-in-possession under chapter 11 of the Bankruptcy Code. In addition to the cash requirements necessary to fund ongoing operations, the Company has incurred, and anticipates that it will continue to incur significant professional fees and other restructuring costs in connection with the Chapter 11 Cases and the restructuring of its business operations. As a result of the uncertainty surrounding NationsRent’s current circumstances, it is difficult to predict the Company’s actual liquidity needs or sources at this time. However, based on current and anticipated levels of operations, and efforts to reduce accounts receivable, the Company anticipates that its cash flow from operations, together with amounts available under the DIP Financing Facility, will be adequate to meet its anticipated cash requirements through the end of June 2003. In the event that cash flows and available borrowings under the DIP Financing Facility are not sufficient to meet future cash requirements, the Company may be required to reduce planned capital expenditures or seek additional financing. The Company can provide no assurances that reductions in planned capital expenditures would be sufficient to cover shortfalls in available cash or that additional financing would be available or, if available, offered on acceptable terms. As a result of the Chapter 11 Cases and the circumstances leading to the filing thereof, NationsRent’s access to additional financing is, and for the foreseeable future will likely continue to be, very limited. The Company’s long-term liquidity requirements and the adequacy of the Company’s capital resources are difficult to predict at this time, and ultimately cannot be determined until a plan of reorganization has been confirmed by the Bankruptcy Court in connection with the Chapter 11 Cases.

     DIP Financing Facility

      In March 2002, the Bankruptcy Court entered the DIP Financing Order authorizing the Debtors to enter into the DIP Financing Facility and to grant first priority primary liens, mortgages, security interests, liens (including priming liens) and superiority claims on substantially all of the assets of the Debtors to secure the DIP Financing Facility. The original DIP Financing Facility provided the Debtors with a revolving credit facility of up to $55.0 million and was scheduled to expire in December 2002. In December 2002, the Debtors amended and restated the DIP Financing Facility to increase availability up to $75.0 million (including up to $30.0 million for letters of credit) and to extend its term until June 30, 2003. Under the terms of the amended and restated DIP Financing Facility, availability is subject to a borrowing base based upon eligible rental equipment and trade accounts receivable. Amounts borrowed under the DIP Financing Facility bear interest per annum equal to the agent’s capital index rate plus 2.00%. In addition to a $500,000 commitment fee and a $750,000 syndication fee, there is an unused commitment fee of 0.50%, a letter of credit fee of 3.25%, and a letter of credit fronting fee of up to 0.25%. The DIP Financing Facility is secured by super-priority claims and liens on the real and personal assets of the Company that also secure the prepetition senior credit facility. The DIP Financing Facility contains financial covenants requiring a minimum operating cash flow, as well as other covenants that limit, among other things, indebtedness, liens, sales of assets, capital expenditures, investments, and prohibit dividend payments.

      In connection with the DIP Financing Facility, our prepetition senior credit facility was amended to provide for subordination of the liens (to the liens under the DIP Financing Facility) and use of cash collateral.

      As of May 8, 2003, the Company had $36.9 million of cash borrowings and had $20.0 million in letters of credit outstanding under the DIP Financing Facility.

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     Liquidity Requirements

      Our net cash provided by operations was $6.3 million and $26.3 million for the three months ended March 31, 2003 and 2002, respectively. The decrease in cash provided by operations was due primarily to the payment of postpetition accounts payable and of obligations arising under unexpired leases for the three months ended March 31, 2003, whereas for the three months ended March 31, 2002, there was a stay of pre-petition liabilities subject to compromise and of obligations arising under unexpired leases of nonresidential property during the 60 day period following the Petition Date. Net cash used in investing activities was $8.3 million for the three months ended March 31, 2003, primarily reflecting $7.9 million for purchases of rental equipment, $2.2 million for purchases of and improvements to property and equipment and $1.8 million of proceeds from the sale of rental equipment. Cash provided by financing activities was $8.7 million for the three months ended March 31, 2003 and was primarily a result of net borrowings under our DIP Financing Facility and repayments of debt.

      Our short-term cash requirements for our existing operations consist primarily of expenditures to repair and maintain our rental equipment fleet, working capital requirements and purchase of merchandise inventory and other operating activities. In addition, a substantial portion of our cash generated will be used to meet postpetition operating lease and postpetition secured purchase money note obligations.

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      We estimate that equipment expenditures over the next 12 months for our existing locations and for new store openings will be in the range of $12.0 million to $15.0 million and proceeds from sales from used equipment will be in the range of $3.0 million to $10.0 million, without giving consideration to the Proposed Plan.

      During the three months ended March 31, 2003, we opened 8 NationsRent stores within Lowe’s stores. As of March 31, 2003, we had opened a total of 78 such stores within Lowe’s stores, and expect to open 22 additional stores in 2003. We estimate that the average capital costs associated with opening a Lowe’s location to be in the range of $0.3 million to $0.5 million. See “—New Stores” for more information about our Lowe’s alliance.

      We believe cash generated from operations and borrowings under our DIP Financing Facility will be sufficient to fund our cash requirements for existing operations, equipment capital expenditures and new store openings through June 2003. In connection with the Proposed Plan, we are currently negotiating exit financing to refinance the DIP Financing Facility and provide for liquidity upon emergence from the Chapter 11 Cases. Our ability to fund existing operations, equipment capital expenditures and new store openings in 2003 and beyond will depend on our ability to obtain exit financing and the outcome of the approval process of our Proposed Plan.

2000 Restructuring Plan

      During the fourth quarter of 2000, we recorded a pre-tax restructuring charge of approximately $72.0 million and during 2001, we recorded an additional pre-tax restructuring charge of approximately $9.7 million. The restructuring plan was comprised of the following major components:

	•	the sale of excess rental equipment, which primarily relates to a portion of our heavy earthmoving equipment that has the highest unit cost, requires the most expensive support infrastructure and has the lowest return on investment;
	•	the abandonment of certain information system projects that were under development;
	•	the elimination of jobs company-wide and the consolidation of various departments within our organization; and
	•	the closure of certain rental and office locations.

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      The remaining components of these charges, along with the activity for 2003 related to these charges, are presented in the following table (in thousands):

      The remaining reserve balance at March 31, 2003 for employee termination severance costs relates to the remaining severance payments due to employees terminated under the 2000 restructuring plan.

      The remaining reserve balance at March 31, 2003 for office closures relates to certain office equipment leases that we have not yet received Bankruptcy Court approval to reject.

      The timing and the amount of any distribution related to the remaining reserve balances will be determined by the resolution of the Chapter 11 Cases.

New Stores

      In October 2000, we entered into an exclusive multi-year strategic alliance with Lowe’s Companies, Inc., the world’s second largest home improvement retailer (“Lowe’s”), to operate NationsRent rental centers within select Lowe’s home improvement stores. Operating as a store within a store adjacent to the entrance of a Lowe’s store, the NationsRent stores will rent our full line of construction tools and equipment to Lowe’s customers. We will lease these rental centers from Lowe’s for terms initially expiring in 2008 with two five-year renewal options. The Lowe’s strategic alliance has and will require us to accelerate investments in systems, training, brand support and other store start-up costs. As of March 31, 2003, we operated 78 NationsRent rental centers at Lowe’s locations. In April 2002, the Debtors obtained approval from the Bankruptcy Court to continue the scheduled opening of NationsRent rental centers within select Lowe’s home improvement stores. Given our recent financial performance and the uncertainties associated with our Chapter 11 Cases, there can be no assurance that our relationship with Lowe’s will not be impaired.

Historical Results of Operations

     Three Months Ended March 31, 2003 and March 31, 2002

     Revenue. Total revenue decreased $6.1 million, or 6.2% for the three months ended March 31, 2003 when compared to the same period in 2002. Rental revenue decreased $6.3 million, or 6.9% for the three months ended March 31, 2003 when compared to the same period in 2002. Rental revenue was negatively impacted in 2003 by: (i) the weak economy in general and particularly the continuing weakness in non-residential construction activity which has negatively impacted rental rates and deployment, (ii) severe winter weather in certain of our regions in 2003 and (iii) a reduction in average rental fleet size for the three months ended March 31, 2003 when compared to the same period in 2002.

     Sales of equipment, merchandise, service, parts and supplies increased $0.2 million, or 3.2% for the three months ended March 31, 2003 when compared to the same period in 2002.

     Gross Profit. Gross profit decreased $12.9 million, or 140.4% for the three months ended March 31, 2003 when compared to the same period in 2002. Gross profit as a percentage of total revenue was (4.0)% for the three months ended March 31, 2003, compared to 9.3% for the same period in 2002. Gross profit for the three months ended March 31, 2003 was negatively impacted when compared to the same period in 2002 by: (i) the decrease in rental revenue discussed above, (ii) an increase in repairs and maintenance expense over the prior period as a result of an increase in the average age of our fleet, (iii) an increase in fuel expense as a result of increased fuel prices, (iv) an increase in labor costs due primarily to NationsRent rental centers at Lowe’s openings throughout 2002 and (v) increased insurance costs.

     Operating Expenses. Selling, general and administrative expenses decreased $0.2 million for the three months ended March 31, 2003 when compared to the same period in 2002. The decrease in selling, general and administrative expenses was primarily due to a decrease in salary and wage expense for the three months ended March 31, 2003 when compared to the same period in 2002. Selling, general and administrative expenses as a percentage of total revenue were 22.6% and 21.4% for the three months ended March 31, 2003 and 2002, respectively. The 1.2% increase in selling, general and administrative expenses as a percentage of total revenue for the three months ended March 31, 2003 when compared to the same period in 2002 was primarily due to the decrease in total revenue mentioned above.

     Non-rental equipment depreciation and amortization increased $0.3 million for the three months ended March 31, 2003 when compared to the same period in 2002. This increase is primarily related to an increase in depreciation expense for property and non-rental equipment as a result of new NationsRent rental centers at Lowe’s openings in 2002.

     Operating Loss. Operating loss was $28.3 million for the three months ended March 31, 2003, as a result of the factors discussed above.

     Other Income and Expense. Interest expense decreased $11.1 million for the three months ended March 31, 2003 when compared to the same period in 2002. The decrease was due primarily to the fact that in accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”) 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code,” interest expense is reported only to the extent that it will be paid during the Chapter 11 Cases or that it is probable that it will be an allowed claim. Interest expense reported during the three months ended March 31, 2002 is primarily attributable to pre-petition borrowings under our senior credit facility. Interest expense reported during the three months ended March 31, 2003 does not include interest attributable to our pre-petition senior credit facility as these interest payments were discontinued in 2002. The decrease in interest expense for the three months ended March 31, 2003 was partially offset by the recording of $0.8 million of interest expense related to the settlement of certain operating leases that have now been recorded as debt. Contractual interest expense and amortization of deferred financing costs not accrued or recorded on certain pre-petition debt totaled $22.3 million and $7.5 million for the three months ended March 31, 2003 and 2002, respectively.

     Reorganization Items, net. Net (income)/expenses resulting from the reorganization of our business as a result of our chapter 11 filing were $(7.3) million and $3.2 million for the three months ended March 31, 2003 and 2002, respectively. The amounts recorded for the three months ended March 31, 2003 include a gain of $7.5 million related to the settlement of operating leases and a gain of $3.2 million related to the settlement of debt. See item 1. - “Financial Statements - Note 6 - Reorganization Items, Net.”

     Income Taxes. We did not record a tax benefit for the three months ended March 31, 2003, due to the uncertainty of the realizability of our deferred tax assets.

     Net Loss. Net loss was $22.5 for the three months ended March 31, 2003, as a result of the factors discussed above.

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Seasonality and Fluctuations in Operating Results

      Our revenue and income are dependent upon activity in the construction industry in the markets we serve. Construction activity is dependent upon weather and other seasonal factors affecting construction in the geographic areas where we have operations. Because of this variability in demand, our quarterly revenue and income may fluctuate. Accordingly, quarterly or other interim results should not be considered indicative of results to be expected for any other quarter or for a full year.

      Operating results may fluctuate due to other factors including, but not limited to:

	•	the impact of the Chapter 11 Cases;
	•	changes in general economic conditions including changes in national, regional or local construction or industrial activities;
	•	the timing of opening new rental centers at Lowe’s locations;
	•	the timing of expenditures for new rental equipment and the disposition of used equipment;
	•	competitive pricing pressures; and
	•	changes in interest rates.

      We will incur significant expenses in opening new locations, such as employee training, marketing and facility set-up costs. Initially, new locations may generate lower operating margins than established locations and may operate at a loss for a period of time. Our new locations have, on average, achieved profitability within approximately three to six months of their opening. In addition, when we purchase new rental equipment, the depreciation related to such equipment may contribute to near-term margin decline, because such equipment may not initially generate revenue at a rate that is sufficient to match such increased depreciation expense. As such, the opening of new rental locations and the purchase of new equipment to expand our current rental equipment inventory may reduce our operating margins during a start-up period.

Inflation

      We do not believe that inflation has been a significant factor to the cost of our operations.

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Factors That May Affect Future Results

      Certain statements and information in this Quarterly Report on Form 10-Q may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including in particular the statements about our plans, strategies and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are based on our current plans and expectations and involve risks and uncertainties that could cause actual future activities and results to be materially different from those set forth in these forward-looking statements. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth below and elsewhere in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the Securities and Exchange Commission. Such factors include, among others:

	•	There are significant uncertainties relating to our Chapter 11 Cases
	•	We face uncertainty with respect to treatment of our liabilities in connection with our Chapter 11 Cases
	•	Our status as a debtor-in-possession under chapter 11 of the Bankruptcy Code raises “going concern” questions
	•	We have substantial debt and are highly leveraged
	•	We have experienced losses which are likely to continue and may increase in future periods

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	•	Our capital resources and access to additional financing are limited
	•	We are subject to restrictions on the conduct of our business imposed by our financing facilities and the Chapter 11 Cases
	•	Our equity holders will not receive any value or distribution for their interests under our plan of reorganization
	•	Our rental fleet is subject to residual value risk upon disposition
	•	Our reorganization will require substantial effort by management
	•	Our business is subject to changes in construction and industrial activities
	•	We may not be able to execute our business strategy
	•	We may not be able to recover the start-up costs of our strategic alliance with Lowe’s
	•	The equipment rental industry is highly competitive and some of our competitors are financially stronger than we are
	•	Our revenue and operating results are likely to continue to fluctuate
	•	We must comply with various safety and environmental regulations that may increase our expenses and liabilities
	•	Some of our liabilities may not be covered by insurance
	•	Our operations are dependent on information systems

      We make no commitment to disclose any revisions to forward-looking statements, or any fact, events or circumstances after the date hereof that may bear upon forward-looking statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

      Our exposure to market risk is limited primarily to the fluctuating interest rates associated with our variable rate indebtedness. Our variable interest rates are subject to interest rate changes in the United States and the Eurodollar market. At March 31, 2003, we had $798.6 million of variable rate contractual indebtedness representing approximately 69.9% of our total contractual debt outstanding, at an average interest rate of 6.67%. At March 31, 2003, we had $27.1 million of variable rate indebtedness not subject to compromise representing approximately 35.2% of our total debt not subject to compromise outstanding at an average rate of 6.08%. We do not hold or issue derivative financial instruments for trading or speculative purposes. As of April 2002, all of our interest rate swap agreements had terminated or expired.

Item 4.  Controls and Procedures

      NationsRent, Inc. management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 within 90 days prior to the filing of this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation.

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PART II — OTHER INFORMATION

Item 1.  Legal Proceedings

      On December 17, 2001, NationsRent and all of its subsidiaries filed the Chapter 11 Cases. The cases were consolidated for procedural purposes and designated as Case No. 01-11628 (PJW). On May 20, 2002, the Bankruptcy Court approved the Debtors’ motion to establish a bar date for filing proofs of claim. As a result, the Debtors selected August 5, 2002 as the bar date (the “Bar Date”). In connection with the Chapter 11 Cases, proofs of claim have been filed against the Debtors with the Bankruptcy Court or with the Debtors’ claims and noticing agent, Logan & Company, Inc. The Debtors currently are reconciling filed claims that differ in nature, classification or amount from the Debtors’ books and records through negotiations with the applicable claimants and the filing and prosecution of objections to such claims.

     In December 2002, the Debtors filed the Proposed Plan. In February 2003, the Bankruptcy Court approved the Disclosure Statement which, together with the Proposed Plan, was sent to all of the Debtor’s creditors for approval. Under the terms of the Proposed Plan, request for payment of administrative claims must be filed no later than 60 days following the effective date of the Proposed Plan, or in the cases of an administrative claim that arises in connection with an executory contract or unexpired lease, within 60 days after such contract or lease is assumed or rejected. Holders of administrative claims that are based on liabilities incurred by the Debtors in the ordinary course of business after the Petition Date are not required to file any request for payment of such claims. On the effective date of the Proposed Plan, a creditors’ trust for the benefit of general unsecured claims will be formed to receive distributions in respect of general unsecured claims. Pursuant to the Proposed Plan, the Debtors will assign to the creditors’ trust their right to object to all general unsecured claims and to pursue all preference actions and other claims or causes of action under sections 544 through 550 of the Bankruptcy Code that have not been resolved or released pursuant to the Proposed Plan. For a more detailed description of the treatment of claims under the Proposed Plan, reference is made to the Proposed Plan, which is incorporated herein by reference and filed as an exhibit hereto. Copies of the Proposed Plan and Disclosure Statement are available on the Company’s website at www.nationsrent.com.

      The Debtors were party to various legal proceedings arising in the ordinary course of their business prior to the filing of the Chapter 11 Cases, none of which were material to the Debtors’ financial condition or results of operations. All such proceedings have been stayed as of the Petition Date, unless the stay has been or will be lifted by the Bankruptcy Court, and any liabilities related to such claims are subject to compromise pursuant to a plan of reorganization in the Chapter 11 Cases.

      We have also become party to legal proceedings arising in the ordinary course of business after the Petition Date, none of which are material to our financial condition or results of operations.

Item 3.  Defaults Upon Senior Securities

      (a) For a detailed discussion of defaults on senior securities, see Part I — Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

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Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

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(1)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1998.
(2)	Incorporated by reference to the Company’s Registration Statement on Form S-4, Commission File No. 333-69691.
(3)	Incorporated by reference to the Company’s Registration Statement on Form S-3, Commission File No. 333-88603.
(4)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1999.
(5)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2000.
(6)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
(7)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2001.
(8)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on August 31, 2001.
(9)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
(10)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ending March 31, 2002.
(11)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2002.
(12)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.
(13)	Filed herewith.

(b) Reports on Form 8-K

      The Company did not file any Current Reports on Form 8-K during the quarter ending March 31, 2003.

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SIGNATURES

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

	NATIONSRENT, INC.

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NATIONSRENT, INC.

CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, D. Clark Ogle, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of NationsRent, Inc.;

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

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

4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
	c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.  The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 8, 2003

/s/ D. CLARK OGLE

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CERTIFICATION

I, Ezra Shashoua, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of NationsRent, Inc.;

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

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

4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
	c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.  The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 8, 2003

/s/ EZRA SHASHOUA