EVANSTON, Ill. — Although total revenues rose from $555.3 million to $621.3 million, and rental revenue jumped from $465.1 to $513.5 million year over year, National Equipment Services' financial situation has grown increasingly precarious according to documents filed last month with the Securities and Exchange Commission.

Revenues increased during 2002 largely because of NES' acquisition of Brambles, finalized on the final day of 2001. However, net loss has increased from $30.1 million in 2001 to $193.6 million last year. In response, management initiated several actions to reduce expenses, including personnel reductions, consolidations of branch and support operations, and asset sales to reduce debt, including the sale of its trench-shoring business. Although these actions resulted in reduced debt levels of about $105.7 million, the company's liquidity is strained and a significant portion of its debt matures in 2003.

In January, NES notified senior lenders that it was in default under its credit facility. The lenders agreed to a forbearance period, scheduled to end in mid-May, during which time NES is attempting to complete a financial restructuring, including negotiations with lenders about extension of debt maturities and repayment schedules, debt forgiveness, conversion of debt to equity and further asset sales. With the next scheduled interest payment on senior subordinated notes due May 31, and then an additional 30 days to pay after that, NES would have to reach an agreement with its lenders on acceptable terms and conditions or be forced to seek Chapter 11 bankruptcy protection.

NES is No. 5 on the RER 100, with 181 U.S. locations.