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The following is an excerpt from a 10-K405 SEC Filing, filed by ANTHONY CRANE RENTAL LP on 3/21/2001.
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ANTHONY CRANE RENTAL LP - 10-K405 - 20010321 - NOTES_TO_FINANCIAL_STATEMENT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)

1. Description of Business

Anthony Crane Rental, L.P. (the "Partnership" or the "Company") and subsidiaries, doing business as Maxim Crane Works ("Maxim"), are engaged in the rental of cranes and other heavy equipment primarily for industrial repair and maintenance activities and construction projects. Maxim serves a variety of companies in the petrochemical, paper, steel, utility, power generation, telecommunications, mining and multiple other industries. The Partnership provides twenty-four hour service, seven days a week to customers principally in the United States. The Partnership also sells new and used equipment to commercial construction, industrial and residential users.

2. Basis of Presentation

The consolidated financial statements include the accounts of the Partnership and all of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Prior to the Recapitalization of the Partnership on July 22, 1998 (refer to

Note 3), the partners of the Partnership consisted of Anthony Crane Rental,
Inc., as general partner; and ACR Acquisitions, Inc., Anthony Crane Rental of Georgia, Inc., Anthony Crane Rental of Texas, Inc. and Anthony Iron and Metal Company, as limited partners (collectively referred to hereafter as the "Predecessor Partners"). All of these entities were under common control of Ray G. Anthony (Mr. Anthony). Effective with the Recapitalization, the partners of the Partnership now include Anthony Crane Rental Holdings, L.P. ("Holdings"), which owns 99% (which in turn is owned 82% by the Equity Investors (as defined in Note 3) and the Predecessor Partners, which retained an 18% common interest in Holdings) and ACR Management L.L.C., the General Partner holding a 1% interest in the partnership. Holdings, a former subsidiary of the Partnership, has no current operations other than through the Partnership.

Partnership Agreement

The term of the Partnership, which was amended and restated July 22, 1998, expires December 31, 2080; however, dissolution will occur earlier in the event of the sale of substantially all of the Partnership's assets or a disabling event as described in the Partnership Agreement. Partners may not sell, assign, transfer or convey all or any portion of their interest in the Partnership without the consent of the general partner, or as specifically defined in the Partnership Agreement.

3. Recapitalization

On June 1, 1998, the Partnership entered into a recapitalization agreement with Bain/ACR, L.L.C. (Bain), pursuant to which Bain and certain members of senior management of the Partnership (collectively the "Equity Investors") indirectly acquired through Holdings an 82% ownership interest in the Partnership (the "Recapitalization"). Effective July 22, 1998, the Recapitalization was consummated and the Partnership incurred new debt obligations, repaid its outstanding Senior Notes and Credit Agreement obligations (refer to Note 6), restructured certain of its outstanding Partnership interests and distributed approximately $122.3 million in cash and property with a net book value of approximately $3.6 million to the Predecessor Partners. In connection with the repayment of its outstanding debt obligations, the Partnership incurred approximately $15.1 million in prepayment penalties and wrote-off deferred financing costs of approximately $0.8 million which have been reflected as an extraordinary item in the consolidated statement of operations for the year ended December 31, 1998.

The Recapitalization was funded by: (i) a notes offering by the Company with gross proceeds of $155 million, (ii) a discount debentures offering by Holdings with proceeds of $25 million, (iii) a $33.6 million contribution to Holdings by the Equity Investors, (iv) $125 million of borrowings by the Company under a

21

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

revolving credit facility of a new senior credit facility and (v) $50 million of borrowings by the Company under the term loan facility of a new senior credit facility. In addition, as part of the Recapitalization considerations, Holdings distributed $22.5 million of Class A Preferred Units to the Predecessor Partners.

The Recapitalization Agreement provided for an adjustment of the distribution made to the Predecessor Partners based on consolidated net worth (as defined in the Recapitalization Agreement), as of the closing date. Pursuant to this Agreement, on April 29, 1999, the Predecessor Partners were paid $1.3 million, representing an adjustment to the distribution amount paid in connection with the Recapitalization, and $3.8 million of proceeds escrowed in connection with the Recapitalization were released to the Predecessor Partners.

4. Summary of Significant Accounting Policies

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Partnership considers all highly liquid investments purchased with original maturities of 90 days or less to be cash equivalents.

Book Overdraft

Book overdraft represents outstanding checks in excess of related bank balances.

Investment Securities

Investment securities, included in other assets, are classified as available for sale and are recorded at the aggregate fair market value determined at the consolidated balance sheet dates. Gross unrealized investment gains/losses are included as a separate component of partners' capital (deficit) in accumulated other comprehensive income.

Rental Equipment and Property and Equipment

Rental equipment and property and equipment are stated at cost less accumulated depreciation.

Major renewals and improvements are charged to the property and equipment accounts, while replacements, maintenance and repairs which do not improve the asset or extend the useful lives of the respective assets are expensed. Upon disposition or retirement of property and equipment, the cost and the related accumulated depreciation are removed from the accounts and any gain or loss is recorded in results of operations. Depreciation of rental equipment and property and equipment is computed using the straight-line method based on the estimated useful lives of the assets and an estimated salvage value for certain rental equipment ranging from 15% to 35%.

The useful lives of rental equipment and property and equipment are as follows:

                                                                       Life
                                                                     in Years
                                                                     --------
Rental equipment:
  Cranes, lifts and other heavy equipment...........................  8-12.5
Property and equipment:
  Buildings and improvements........................................    5-30
  Motor vehicles and trailers.......................................     3-8
  Machinery and tools...............................................     3-8
  Furniture, fixtures and office equipment..........................    5-10

22

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

Intangible Assets

Intangible assets consist of noncompetition agreements, customer lists, trade names and unidentifiable goodwill related to various business acquisitions. These assets are being amortized using the straight-line method over periods ranging from 2 to 20 years.

Impairment of Long-Lived Assets

The Partnership periodically reviews the carrying value of long-lived assets which include rental equipment, property and equipment and intangible assets and will recognize impairments whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Revenue Recognition

The Partnership rents equipment to commercial, industrial and government customers by the day, month and longer terms. Revenue from equipment rentals is recognized over the corresponding rental period. In addition, the Partnership generates revenue from equipment sales. Revenue from the sale of equipment is recognized when title, ownership and risk of loss pass to the customer.

Income Taxes

The partners included in the accompanying consolidated financial statements have elected to be treated as either an S-corporation or a partnership for federal income tax purposes.

Similar elections are made, where possible, for state income tax purposes. Accordingly, all federal and certain state (except for Texas) corporate income tax liabilities are borne by the partners and, thus, are not reflected in the accompanying consolidated financial statements.

Deferred income tax assets and liabilities are provided for Texas corporate state income tax purposes for the temporary differences between the tax basis of assets and liabilities and the financial reporting basis using enacted tax rates in effect in the years in which these differences are expected to reverse. These differences principally relate to depreciation and the reporting for certain revenues and expenses. The Company has recorded a net deferred tax liability in other non-current liabilities of $1.7 million and $1.5 million at December 31, 2000 and 1999, respectively.

Concentration of Credit Risk

Financial instruments which potentially subject the Partnership to significant concentrations of credit risk consist primarily of cash, cash equivalents and trade accounts receivable. Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities comprising the Partnership's customer base and their geographic dispersion. The Partnership generally does not require collateral on trade accounts receivable. As of December 31, 2000 and 1999, the Partnership had no significant concentrations of credit risk.

The Partnership maintains cash and cash equivalents with a limited number of financial institutions located throughout the country in order to limit exposure. No collateral or other security is provided on these deposits, other than that provided by the Federal Deposit Insurance Corporation. The Partnership's periodic evaluations of the relative credit standing of these financial institutions are considered in the Partnership's business strategy.

23

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

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 the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 provides guidance on the recognition, presentation and disclosure of revenue in financial statements. SAB No. 101 outlines basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. The provisions of SAB No. 101 did not require the Company to change its revenue recognition policy. Therefore, the adoption of the provisions of SAB No. 101 had no impact on the Company's consolidated financial statements.

5. Property and Equipment

Property and equipment consist of the following as of December 31:

                                                            2000      1999
                                                          --------  --------
Land..................................................... $ 11,327  $ 10,048
Buildings and improvements...............................   19,880    19,897
Motor vehicles and trailers..............................   45,078    43,768
Machinery and tools......................................    2,546     4,694
Furniture, fixtures and office equipment.................    3,802     4,091
Spare equipment parts....................................   16,575    10,359
                                                          --------  --------
                                                            99,208    92,857
Less accumulated depreciation and amortization...........  (28,165)  (23,543)
                                                          --------  --------
                                                           $71,043  $ 69,314
                                                          ========  ========

Depreciation expense for rental equipment and property and equipment was approximately $53,115, $39,982, and $26,206 in 2000, 1999 and 1998, respectively.

6. Long-Term Debt

Long-term debt consists of the following as of December 31:

                                                             2000     1999
                                                           -------- --------
10 3/8% Company Senior Notes, due 2008 (A)................ $155,000 $155,000
Senior Credit Facility of the Company (B)
  Revolving Credit Facility...............................  280,500  221,000
  Term Loan...............................................   50,000   50,000
  First Priority Term Loan................................  246,250  249,375
                                                           -------- --------
                                                            731,750  675,375
Less current portion of long-term debt....................    2,500    2,500
                                                           -------- --------
                                                           $729,250 $672,875
                                                           ======== ========

(A) The Senior Notes of $155 million were issued in connection with the Recapitalization (refer to Note 3) and will mature on August 1, 2008. Interest on the Senior Notes accrues at the rate of 10 3/8% per annum from the issue date and is payable semi-annually.

24

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

The Senior Notes are not redeemable prior to August 1, 2003. Thereafter, the Senior Notes may be redeemed at any time at the option of the Company at premium percentages ranging between approximately 105% and 102% (based on the year of redemption) if redeemed after August 1, 2003, but before August 1, 2006. Subsequent to August 1, 2006, the Senior Notes may be redeemed at no premium to the Company. Notwithstanding the foregoing, at any time prior to August 1, 2001, the Company may on any one or more occasions redeem a total of up to 35% of the aggregate principal amount of the Senior Notes originally issued under the Senior Note Indenture at a redemption price of approximately 110 3/8% of the principal if that redemption is paid for with the proceeds of an equity offering.

The Senior Note Indenture contains certain restrictive covenants that limit, among other things, the ability of the Company to make distributions, incur additional indebtedness, consolidate or sell substantially all of its assets, and enter into transactions with related parties.

(B) The Senior Credit Facilities, as amended in conjunction with the Carlisle acquisition, consist of a $425.0 million six-year non-amortizing Revolving Credit Facility, a $50.0 million eight-year non-amortizing Term Loan and a $250.0 million seven-year First Priority Term Loan. The Revolving Credit Facility is available on a revolving basis subject to a borrowing base during the period commencing on the date of the recapitalization transaction (July 22, 1998) and ending on the date that is six years after the date of the Closing. At the Company's option, loans made under the Revolving Credit Facility bear interest at either
(i) the Base Rate (defined as the highest of the rate of interest announced publicly by Fleet National Bank from time to time as its prime rate or the Federal funds effective rate from time to time plus 0.50%) plus a margin of 1.50%, subject to adjustment based on a leverage test, or (ii) the reserve-adjusted London Interbank Offered Rate ("LIBOR") plus a margin of 2.5%, subject to adjustment based on a leverage test. The Term Loan bears interest, at the Company's option, at either (i) the Base Rate plus a margin of 1.75%, or (ii) the reserve-adjusted LIBOR plus a margin of 2.75%. The First Priority Term Loan bears interest, at the Company's option, at either (i) the Base Rate plus a margin of 2.25%, subject to adjustment based on a leverage test, or (ii) the reserve- adjusted LIBOR plus a margin of 3.25%, subject to adjustment based on a leverage test.

Revolving loans may be borrowed, repaid and reborrowed from time to time until six years after the closing of the Senior Credit Facilities. The Term Loan may be repaid at any time but is subject to certain call protections and must be repaid in full eight years after the closing of the Senior Credit Facilities. The First Priority Term Loans will be amortized in an annual amount equal to 1% of the aggregate principal amount thereof with the unpaid balance thereof payable in full on July 20, 2006.

The Revolving Credit Facility and First Priority Term Loans are secured by a first-priority perfected lien, and the Term Loan is secured by a second- priority perfected lien, on all partnership interests of the Company and all property and assets (tangible and intangible) of the Company and each of its material subsidiaries, including, without limitation, all intercompany indebtedness, and all capital stock (or similar equity interests owned by the Company) of each of the Company's direct and indirect material subsidiaries, whenever acquired and wherever located; provided, however, that no more than 65% of the capital stock or similar equity interests of non-U.S. subsidiaries, if any, will be required to be pledged as security in the event that a pledge of a greater percentage would result in increased tax or similar liabilities for the Company and its subsidiaries on a consolidated basis or would violate applicable law.

The Senior Credit Facilities provide for mandatory repayments, subject to certain exceptions, of the Revolving Credit Facility and the Term Loan based on certain net asset sales outside the ordinary course of business of the Company and its subsidiaries and the net proceeds of certain debt and equity issuances. Outstanding loans under the Revolving Credit Facility and the Term Loan ( subject to certain call provisions) are voluntarily pre- payable without penalty; provided, however, that LIBOR breakage costs, if

25

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

any, shall be borne by the Company. The Senior Credit Facilities contain certain restrictive covenants; the most restrictive of which include financial ratios.

The obligations of the Company under the Senior Notes and Senior Credit Facilities are guaranteed on a full, unconditional joint and several basis, by all material existing, direct and indirect domestic subsidiaries of the Company and will be guaranteed by all material future, direct and indirect domestic and foreign subsidiaries of the Company.

The aggregate principal maturities of long-term debt for the next five years are as follows:

2001................................................................ $  2,500
2002................................................................    2,500
2003................................................................    2,500
2004................................................................  283,000
2005................................................................  236,250
Thereafter..........................................................  205,000
                                                                     --------
                                                                     $731,750
                                                                     ========

7. Business Acquisitions

On December 15, 2000, the Company acquired substantially all of the assets of Carolina Cranes, Inc. ("CCI"). The aggregate purchase price was $12.6 million in cash, subject to certain post closing purchase price adjustments.

On November 7, 2000, the Company acquired substantially all of the assets of Linder Crane, Inc. ("Linder"). The aggregate purchase price was $3.6 million in cash, subject to certain post closing purchase price adjustments.

On June 30, 2000, the Company acquired substantially all of the assets and assumed certain liabilities of R.E. Coulter Crane, Inc. ("Coulter"). The aggregate purchase price at closing was approximately $9.4 million in cash plus assumed liabilities of $.1 million, subject to certain post-closing purchase price adjustments.

On March 15, 2000, the Company acquired substantially all of the assets of King's Crane Service, Inc. ("King Crane"). The aggregate purchase price was $4.6 million in cash, subject to certain post-closing purchase price adjustments.

On January 27, 2000, the Company acquired all of the outstanding common stock of Sacramento Valley Crane Service, Inc. ("Sacramento Valley Crane"). The aggregate purchase price for the acquisition at closing was approximately $6.6 million in cash plus assumed liabilities of approximately $5.4 million, subject to certain post-closing purchase price adjustments.

These acquisitions, which were principally financed through borrowings under the Company's Senior Credit Facilities, were accounted for under the purchase method of accounting and, accordingly, the purchase price has been allocated to the assets acquired, principally consisting of rental equipment based on their estimated fair values. Goodwill in the amounts of $2.5 million (CCI), $0.1 million (Linder), $3.1 million (Coulter), $1.0 million (King Crane), and $1.6 million (Sacramento Valley Crane), respectively, was recorded as a result of the acquisitions and is being amortized over a period of 15 years.

Certain required pro forma financial information related to the acquisitions have not been presented since the acquisitions were not material, either individually or in the aggregate, to the Company's consolidated financial position or its consolidated results of operations.

26

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

On July 1, 1999, the Company acquired substantially all of the assets and assumed substantially all of the liabilities and obligations relating to the operations of the businesses of Carlisle Construction Co., Inc., and its subsidiaries (Carlisle). The acquisition was accounted for as a purchase and, accordingly, Carlisle's results of operations are included in the consolidated financial statements since the date of acquisition. The purchase price at closing was approximately $177.5 million, consisting of (1) $20.0 million of Class B preferred units of Holdings; (2) the retirement of $71.6 million of Carlisle debt including prepayment penalties and certain other expenses of $3 million; and (3) $85.9 million in cash. The cash payment and the retirement of the Carlisle debt were funded through borrowings under the Company's Senior Credit Facilities. The purchase price has been allocated to Carlisle's assets and liabilities based upon their respective fair market values. The excess of the purchase price over the fair value of assets acquired approximated $76.7 million. The Company used an independent valuation of the intangible assets, which identified the Carlisle trade name and customer lists as the majority of identifiable goodwill resulting from the purchase. The intangible assets are being amortized over ten to twenty years.

On June 4, 1999, the Company acquired substantially all of the assets and assumed certain liabilities and obligations of Dunn Equipment, Inc., Texas Matt & Rigging, Inc., J. Dunn and J. Dunn, Inc., Houston Industrial Services, Inc., and D & D Leasing, Inc. (collectively the "Dunn Companies"). The purchase price at closing was approximately $30.6 million in cash, which was financed through borrowings under the Company's Senior Credit Facilities. The acquisition was accounted for under the purchase method of accounting and, accordingly the purchase price has been allocated to the assets acquired, principally consisting of rental equipment, based on their estimated fair values at the date of acquisition. Goodwill in the amount of $3.4 million was recorded as a result of the acquisition and is being amortized over ten years.

The unaudited pro forma combined historical results, as if Carlisle and the Dunn Companies had been acquired at the beginning of the years ended December 31, 1999 and 1998, respectively, are estimated to be:

                                                      Pro Forma Year Ended
                                                    -------------------------
                                                    December 31, December 31,
                                                        1999         1998
                                                    ------------ ------------
                                                     (Dollars in thousands)
Total revenues.....................................   $356,911     $319,618
Net loss...........................................   $(10,988)    $(10,207)

The unaudited pro forma consolidated results are not necessarily indicative of results that would have occurred had the acquisitions been in effect for the periods presented, nor are they necessarily indicative of future consolidated results.

On March 31, 1999, the Company acquired all of the outstanding common stock of Husky Crane, Inc. (Husky Crane) and certain assets of Paradise Equipment Company, a limited partnership in which the 100% stockholder of Husky Crane is the majority partner, as well as certain other assets owned personally by this stockholder. The purchase price for the acquisition at closing was approximately $8.5 million in cash with an additional payment of $.5 million payable to the seller contingent upon the satisfaction of certain defined criteria. Management believes that it is probable that the seller will satisfy the defined criteria and accordingly, the Company has included the $.5 million payable to the seller as part of the purchase price. The acquisition was accounted for under the purchase method of accounting and, accordingly, the purchase price has been allocated to the assets acquired, principally consisting of rental equipment, based on their estimated fair values at the date of acquisition. Goodwill in the amount of $1.3 million was recorded as a result of the acquisition and is being amortized over 5 years.

27

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

On December 1, 1999, the Company acquired substantially all of the assets and assumed substantially al of the liabilities and obligations relating to the operations of Capitol Crane Rental, Inc. ("Capitol"). The purchase price at closing was approximately $3.5 million in cash, which was financed through borrowings under the Company's Senior Credit Facilities. The acquisition was accounted for under the purchase method of accounting and accordingly, the purchase price has been allocated to the assets acquired, principally consisting of rental equipment, based on their fair values at the date of acquisition. Goodwill in the amount of $.4 million was recorded as a result of the acquisition and is being amortized over 15 years.

Certain required pro forma financial information related to the Husky Crane and Capitol acquisitions have not been presented since the acquisitions were not material, either individually or in the aggregate, to the Partnership's consolidated financial position or its consolidated results of operations.

8. Equity Investment in Joint Venture

On February 29, 2000, the Company entered into an agreement with Van Seumeren, USA, to form a joint venture, A.V.S. Services, L.L.C., ("AVS") to engage in heavy lift services. Under the terms of the agreement, each partner in the joint venture shares equally in the profit or loss of the joint venture.

During 2000, the Company contributed assets to AVS with a net book value of $13.8 million. Additionally, the Company recorded equity income of $0.3 million and received a dividend from AVS of $9.0 million. The Company's investment in AVS has been accounted for using the equity method.

The following table summarizes AVS's financial position and results of operations as of and for the year ended December 31, 2000:

Financial Position
------------------
  Total assets...................................................... $36,114
                                                                     =======
  Total liabilities................................................. $28,418
                                                                     =======
  Total partners' capital........................................... $ 7,696
                                                                     =======
Results of Operations
---------------------
  Revenue........................................................... $ 8,290
  Expenses..........................................................   7,594
                                                                     -------
  Net income........................................................ $   696
                                                                     =======

At December 31, 2000, the Company's investment exceeded its ownership in the underlying equity in the net assets of AVS by $1.3 million. This excess is the result of the carrying value of the assets contributed being greater than the values assigned to these assets by the partners of the joint venture. The Company has determined that the assets are not impaired. Accordingly, the excess is being amortized against equity income on a straight-line basis over 15 years, the expected useful lives of the contributed assets.

28

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

9. Lease Commitments

The Partnership leases various pieces of property and equipment under long- term operating lease agreements with third parties.

The approximate future minimum lease payments under these agreements are as follows:

Year ending December 31:
  2001................................................................ $5,396
  2002................................................................  5,396
  2003................................................................  4,718
  2004................................................................  1,157
  2005................................................................  1,148

Total rental expense for all leases exclusive of related party leases discussed in Note 10 approximated $4,868, $4,267, and $4,950 in 2000, 1999 and 1998, respectively.

In connection with the acquisition of Sacramento Valley Crane in 2000, (see Note 7), and the Carlisle acquisition completed in 1999, the Company assumed certain lease obligations.

The following is a schedule of future minimum lease payments under the capital lease agreements together with the present value of the net minimum lease payments as of December 31, 2000:

Year ending December 31:
  2001............................................................... $  949
  2002...............................................................    823
  2003...............................................................    785
  2004...............................................................    892
  2005...............................................................    240
  Thereafter.........................................................  1,125
                                                                      ------
Total minimum lease payments.........................................  4,814
Less amount representing interest....................................    918
                                                                      ------
Present value of minimum lease payments..............................  3,896
Less current portion.................................................    679
                                                                      ------
                                                                      $3,217
                                                                      ======

Included in rental equipment is cost and accumulated depreciation for these leased assets of approximately $4,266 and $455, respectively, at December 31, 2000 and $1,716 and $455, respectively, at December 31, 1999.

10. Related Party Transactions

The Partnership periodically rents and sells equipment to affiliated companies. Rental revenues from such transactions totaled $3,379, $293 and $498 in 2000, 1999 and 1998, respectively, and gross proceeds from equipment sales totaled $325 and $670 in 1999 and 1998, respectively. There were no such equipment sales in 2000. In addition, the Partnership rents equipment, utilizes personnel and purchases equipment from affiliated companies. Expenses from such transactions totaled $1,796, $91, and $351 in 2000, 1999, and 1998, respectively, and purchases of equipment totaled $79 in 1998. There were no such purchases of equipment in 2000 or 1999. In addition, the Partnership also reimbursed Mr. Anthony for the Partnership's use of his personal airplanes. Such

29

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

reimbursement totaled $282 and $234 in 1999 and 1998. There were no such reimbursements made to Mr. Anthony in 2000.

Amounts due from these affiliated companies totaled $1,114 and $615 at December 31, 2000 and 1999 and are included in trade accounts receivable.

In connection with the Carlisle acquisition in 1999 and the Amendment of the Company's Senior Credit Facilities to finance the acquisition, the Company paid Bain Capital transaction fees aggregating $4.2 million.

In connection with funding an executive's purchase of equity, the Company has recorded a liability due to Bain with a corresponding partners' receivable included in the partners' capital (deficit) section of the accompanying consolidated balance sheets.

In connection with a management service agreement entered into with Bain, which provides for an annual fee of $1.0 million plus expenses, the Partnership paid approximately $1,080, $1,083 and $463 in fees and expenses to Bain Capital in 2000, 1999 and 1998, respectively.

The Partnership leases certain property from a partner under long-term operating lease arrangements as presented below:

                                       Lease Expense
                                       -------------
Description            Location         2000   1999
-----------      --------------------- ------ ------
Regional office  Wilder, Kentucky      $  416 $  208
Branch office    Orlando, Florida          84     42
Branch office    Dayton, Ohio              60     30
Branch office    Indianapolis, Indiana     80     40
                                       ------ ------
                                         $640 $  320
                                       ====== ======

Future minimum lease payments under the above lease arrangements are as follows:

2001................................................................... $ 640
2002...................................................................   640
2003...................................................................   640
2004...................................................................   640
2005...................................................................   640
Thereafter............................................................. 2,880

At December 31, 1998, the Partnership had a receivable due from Mr. Anthony totaling $3,950. During 1999, the receivable was treated as a distribution to Mr. Anthony.

11. Employee Benefit Plans

The Partnership has a profit-sharing defined contribution pension plan covering all non-union employees for all affiliated companies except Carlisle. The contribution to the plan is an amount determined by the Partnership and was one percent of the eligible participant's compensation for 1999 and 1998. No contribution was made in 2000.

The plan also includes a 401(k) savings plan feature that enables employees to make voluntary salary reduction contributions up to 15% of eligible compensation to the plan. The Partnership matched fifty percent of the contributions, up to six percent of the participant's compensation. In September 2000, the Plan was amended to provide for a match of 100% of employee contributions, up to three percent of the participant's compensation, plus 50% of contributions up to five percent of the participant's compensation.

30

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

The Partnership also had a 401(k) plan for all eligible employees of Carlisle. The 401(k) savings plan feature enabled Carlisle employees to make voluntary salary reduction contributions. The Partnership matched 100% of employee contributions, up to three percent of the participant's compensation. The Partnership could also make discretionary contributions to the plan as determined by the Board of Directors. In September 2000, the plan was merged into the Partnership's profit-sharing defined contribution pension plan.

The Partnership's total expense for the profit-sharing and 401(k) savings plans was approximately $887, $816, and $680 in 2000, 1999 and 1998, respectively.

Union employees of the Partnership are covered by various union-sponsored, collectively bargained, benefit plans. The Partnership's contributions to these multi-employer plans are based on specified amounts per hours worked by the covered union employees. One such plan is underfunded and the unfunded amount is being funded through ongoing contributions by all sponsoring companies. Under certain circumstances, the Partnership may have to accelerate such funding. Union employees receive union-sponsored benefits, such as pension benefits, health and welfare benefits, annuity benefits, industry advancement and apprentice training. The total cost of these union benefits approximated $16,804, $11,547 and $6,877 in 2000, 1999 and 1998, respectively.

The Partnership also had a deferred compensation plan for certain eligible employees and members of the board of advisors. The participants were credited with one percent of after-tax income annually and vested in annual contributions if employed at year-end. The Partnership had purchased insurance contracts to satisfy all future liabilities relating to the Plan. The Partnership's expense for the deferred compensation plan for 1998 was approximately $631. This deferred compensation plan was terminated upon completion of the Recapitalization (refer to Note 3).

12. Contingencies

The Company was the defendant in a lawsuit resulting from negotiations in connection with a then proposed acquisition in which the potential seller was seeking contractual damages in excess of $11 million plus other consequential damages for breach of contract and the confidentiality provisions in a letter of intent executed between the parties. In December 2000, the Company settled the lawsuit through the completion of the proposed acquisition.

The Company is a party to a number of other lawsuits and claims arising out of the usual course of business.

While the Company cannot predict the outcome of these matters, in the opinion of management upon advice of counsel, any liability resulting thereunder will not have a material adverse effect on the Company's business or financial condition, after giving effect to provisions already recorded. There can be no assurance that an adverse outcome in one or more of these matters will not be material to results of operations in any one period. Additionally, certain of these matters are covered by the indemnity from the Predecessor Partners.

31

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

13. Disclosures about the Fair Value of Financial Instruments

The carrying values and fair values of the Company's financial instruments at December 31 consisted of:

                                                   2000             1999
                                             ---------------- -----------------
                                             Carrying  Fair   Carrying   Fair
                                              Value    Value   Value    Value
                                             -------- ------- -------- --------
Cash and cash equivalents................... $ 13,135 $13,135 $  8,980 $  8,980
Trade accounts receivable...................   72,317  72,317   56,910   56,910
Book overdraft..............................       --      --    4,250    4,250
Accounts payable-trade......................   23,304  23,304   17,344   17,344
Long-term debt, including current portion...  731,750 636,611  675,375  632,381
Capital lease obligations...................    3,896   3,896    1,583    1,583

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and cash equivalents: The carrying amounts approximate fair value because of the short maturity of these investments.

Trade accounts receivable, accounts payable-trade and book overdraft: The fair value of trade accounts receivable, accounts payable-trade and the book overdraft is based on anticipated cash flows and approximates carrying value.

Long-term debt and capital lease obligations: The fair value of long-term debt and capital lease obligations is based on interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities.

14. Subsidiary Guarantors

All of the Company's subsidiaries are wholly owned and all of the outstanding debt under the Company's Senior Notes and amended Senior Credit Facility are guaranteed on a full, unconditional and joint and several basis by all of these subsidiaries (the "Guarantor Subsidiaries"). The following summarized financial information presents the financial position, results of operations and cash flows for the Company and Guarantor Subsidiaries as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000. Separate financial statements of the Guarantor Subsidiaries have not been presented because management believes they are not material to investors.

Effective December 31, 2000, Carlisle Equipment Group, L.P., and Carlisle GP, L.L.C., (collectively referred to as "Carlisle"), a wholly-owned subsidiary of the Company, entered into a Deed of Distribution and Assumption of Liabilities, distributing all of its assets to the Company. Accordingly, Carlisle will no longer be a separate subsidiary of the Company.

32

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

The following table summarizes the financial position, results of operations and cash flows for the Company and its guarantor subsidiaries as of and for the year ended December 31, 2000:

                                              December 31, 2000
                          -----------------------------------------------------------
                                                  Other
                          Operating             Guarantor   Intercompany
                           Company   Carlisle  Subsidiaries Eliminations Consolidated
                          ---------  --------  ------------ ------------ ------------
BALANCE SHEET
Assets:
Total current assets....  $ 93,171   $     --    $ 4,843      $ (2,932)   $  95,082
Investment in
 subsidiaries...........    17,026         --         --       (17,026)          --
Rental equipment, net...   496,121         --     15,020            --      511,141
Property and equipment,
 net....................    70,049         --        994            --       71,043
Other assets............   113,153         --         23            --      113,176
                          --------   --------    -------      --------    ---------
  Total assets..........  $789,520   $     --    $20,880      $(19,958)   $ 790,442
                          ========   ========    =======      ========    =========
Liabilities and
 partners' capital
 (deficit):
Total current
 liabilities............  $ 56,465   $     --    $ 3,854      $ (2,932)   $  57,387
Long term debt, less
 current portion........   729,250         --         --            --      729,250
Other non-current
 liabilities............     8,009         --         --            --        8,009
                          --------   --------    -------      --------    ---------
  Total liabilities.....   793,724         --      3,854        (2,932)     794,646
Partners' capital
 (deficit)..............    (4,204)        --     17,026       (17,026)      (4,204)
                          --------   --------    -------      --------    ---------
  Total liabilities and
   partners' capital
   (deficit)............  $789,520   $     --    $20,880      $(19,958)   $ 790,442
                          ========   ========    =======      ========    =========
STATEMENT OF OPERATIONS
Total revenues..........  $278,869   $116,507    $16,350      $ (8,117)   $ 403,609
                          --------   --------    -------      --------    ---------
Total cost of revenues..   182,659     79,780      7,642        (8,117)     261,964
Selling, general and
 administrative.........    61,704     18,102      1,722            --       81,528
                          --------   --------    -------      --------    ---------
Income from operations..    34,506     18,625      6,986            --       60,117
Interest expense and
 other income net.......    50,596     23,119      2,316            --       76,031
                          --------   --------    -------      --------    ---------
Income (loss) before
 taxes..................   (16,090)    (4,494)     4,670            --      (15,914)
Provision for state
 taxes..................       200         --         --            --          200
                          --------   --------    -------      --------    ---------
Net income (loss).......  $(16,290)  $ (4,494)   $ 4,670      $     --    $ (16,114)
                          ========   ========    =======      ========    =========
STATEMENT OF CASH FLOWS
Net cash provided by
 operating activities...  $ 26,257   $ 24,206    $ 4,365      $     --    $  54,828
                          --------   --------    -------      --------    ---------
Net cash used in
 investing activities...  $(71,719)  $(27,063)   $(3,175)     $     --    $(101,957)
                          --------   --------    -------      --------    ---------
Net cash provided by
 financing activities...  $ 51,224   $     60    $    --      $     --    $  51,284
                          --------   --------    -------      --------    ---------

33

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

The following table summarizes the financial position, results of operations and cash flows for the Company and its guarantor subsidiaries for the year ended December 31, 1999:

                          Operating             Guarantor
                           Company   Carlisle  Subsidiaries Eliminations Consolidated
                          ---------  --------  ------------ ------------ ------------
BALANCE SHEETS
Assets:
Total current assets....  $  53,399  $ 20,000    $ 1,188     $  (4,558)   $  70,029
Investment in
 subsidiaries...........     34,776        --         --       (34,776)          --
Rental equipment, net...    386,898    94,993      9,533            --      491,424
Property and equipment,
 net....................     58,619     8,937      1,758            --       69,314
Other assets............    210,448    74,002         69      (173,276)     111,243
                          ---------  --------    -------     ---------    ---------
  Total assets..........  $ 744,140  $197,932    $12,548     $(212,610)   $ 742,010
                          =========  ========    =======     =========    =========
Liabilities and
 partners' capital:
Total current
 liabilities............  $  56,375  $  1,359    $   193     $  (4,558)   $  53,369
Long term debt, less
 current portion........    672,875   173,276         --      (173,276)     672,875
Other non-current
 liabilities............      3,190       876         --          (177)       3,889
                          ---------  --------    -------     ---------    ---------
  Total liabilities.....    732,440   175,511        193      (178,011)     730,133
Partners' capital
 (deficit)..............     11,700    22,421     12,355       (34,599)      11,877
                          ---------  --------    -------     ---------    ---------
  Total liabilities and
   partners' capital
   (deficit)............  $ 744,140  $197,932    $12,548     $(212,610)   $ 742,010
                          =========  ========    =======     =========    =========
STATEMENT OF OPERATIONS
Total revenues..........  $ 236,710  $ 54,823    $10,730     $  (3,149)   $ 299,114
                          ---------  --------    -------     ---------    ---------
Total cost of revenues..    164,239    35,611      5,038        (3,149)     201,739
Selling, general and
 administrative.........     48,347     8,875        949            --       58,171
                          ---------  --------    -------     ---------    ---------
Income from operations..     24,124    10,337      4,743            --       39,204
Interest expense and
 other income net.......     41,655     7,918      1,458            --       51,031
                          ---------  --------    -------     ---------    ---------
Income (loss) before
 taxes and extraordinary
 items..................    (17,531)    2,419      3,285            --      (11,827)
Provision for state
 taxes..................        301        --         --            --          301
                          ---------  --------    -------     ---------    ---------
Net income (loss).......  $ (17,832) $  2,419    $ 3,285     $      --    $ (12,128)
                          =========  ========    =======     =========    =========
STATEMENT OF CASH FLOWS
Net cash provided by
 operating activities...  $  16,693  $  8,885    $ 3,116     $  (1,579)   $  27,115
                          ---------  --------    -------     ---------    ---------
Net cash used in
 investing activities...  $(313,749) $ (7,896)   $(3,474)    $   1,579    $(323,540)
                          ---------  --------    -------     ---------    ---------
Net cash provided by
 financing activities...  $ 299,809  $    (37)   $    --     $      --    $ 299,772
                          ---------  --------    -------     ---------    ---------

34

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

The following table summarizes results of operations and cash flows for the Company and its guarantor subsidiaries for the year ended December 31, 1998:

                                            December 31, 1998
                             -------------------------------------------------
                             Operating   Guarantor   Intercompany
                              Company   Subsidiaries Eliminations Consolidated
                             ---------  ------------ ------------ ------------
STATEMENTS OF OPERATIONS
Total revenues.............. $195,713     $10,946       $   --      $206,659
                             --------     -------       ------      --------
Total cost of revenues......  124,853       4,696           --       129,549
Selling, general and
 administrative.............   38,632       1,902           --        40,534
                             --------     -------       ------      --------
Income from operations......   32,228       4,348           --        36,576
Interest expense and other
 (income) expense, net......   25,160         897           --        26,057
                             --------     -------       ------      --------
Income (loss) before taxes
 and extraordinary items....    7,068       3,451           --        10,519
Provision for state taxes...      220          --           --           220
                             --------     -------       ------      --------
Income (loss) before
 extraordinary items........    6,848       3,451           --        10,299
Extraordinary items.........   15,811          --           --        15,811
                             --------     -------       ------      --------
Net income (loss)........... $ (8,963)    $ 3,451       $   --      $ (5,512)
                             ========     =======       ======      ========
STATEMENT OF CASH FLOWS
Net cash provided by
 operating activities....... $ 29,672     $ 5,461       $   --      $ 35,133
                             --------     -------       ------      --------
Net cash used in investing
 activities................. $(79,367)    $(5,722)      $   --      $(85,089)
                             --------     -------       ------      --------
Net cash provided by
 finacing activities........ $ 51,214     $    --       $   --      $ 51,214
                             --------     -------       ------      --------

15. Operating Segment Information

The Company identifies and manages its business as two operating segments, equipment rentals and equipment sales.

The equipment rentals segment is engaged in the rental of cranes and other heavy equipment primarily for industrial maintenance and construction to a variety of companies in the petrochemical, power generation, telecommunications, paper, steel, utility, power generation, telecommunications, mining and multiple other industries, throughout the United States. The equipment sales segment sells new and used equipment to commercial construction, industrial and residential users.

The accounting policies of the segments are the same as those described in the "Summary of Significant Accounting Policies". The Company and the chief operating decision maker evaluates the performance of its segments and allocates resources to them based on earnings before interest, taxes, depreciation and amortization (EBITDA), as defined to exclude net gains on sales of used equipment.

The Company does not maintain information about assets for its reportable segments. Accordingly, the items specified in Paragraph 28 of SFAS No. 131 are not applicable. Additionally, the Company has not disclosed 1998 segment data on a comparative basis, because management found it impracticable to obtain the information for 1998.

35

ANTHONY CRANE RENTAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In Thousands)

The table below presents information about reported segments for the years ended December 31:

                                               Equipment Equipment
                                                Rentals    Sales    Total
                                               --------- --------- --------
2000:
  Revenues.................................... $365,959   $37,650  $403,609
  EBITDA...................................... $119,993   $ 1,108  $121,101
1999:
  Revenues.................................... $264,668   $34,446  $299,114
  EBITDA...................................... $ 80,174   $   760  $ 80,934

16. Cash Flow Statement

Supplemental cash flow information was as follows for the years ended December 31:

BROKERAGE PARTNERS