x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
Delaware
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06-1522496
06-1493538
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(States of Incorporation)
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(I.R.S. Employer Identification Nos.)
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Five Greenwich Office Park,
Greenwich, Connecticut
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06831
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(Address of Principal Executive Offices)
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(Zip Code)
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Large Accelerated Filer
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x
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Accelerated Filer
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¨
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Non-Accelerated Filer
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¨
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Smaller Reporting Company
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¨
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Page
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PART I
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Item 1
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Item 2
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Item 3
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Item 4
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PART II
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Item 1
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Item 1A
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Item 2
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Item 6
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•
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we and/or RSC Holdings, Inc. (“RSC”) may be unable to obtain stockholder approvals required in connection with our proposed acquisition of RSC;
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•
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the length of time necessary to consummate the proposed acquisition of RSC may be longer than anticipated, and our business and/or RSC's business may suffer as a result of uncertainty surrounding the proposed transaction;
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•
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the possibility that RSC or other companies that we have acquired or may acquire could have undiscovered liabilities or involve other unexpected costs may strain our management capabilities or may be difficult to integrate;
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•
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our highly leveraged capital structure, which will increase as a result of the proposed acquisition of RSC, requires us to use a substantial portion of our cash flow for debt service and can constrain our flexibility in responding to unanticipated or adverse business conditions;
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•
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a change in the pace of the recovery in our end markets which began late in the first quarter of 2010. Our business is cyclical and highly sensitive to North American construction and industrial activities. Although we have recently experienced an upturn in rental activity, there is no certainty this trend will continue. If the pace of the recovery slows or construction activity declines, our revenues and, because many of our costs are fixed, our profitability, may be adversely affected;
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•
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inability to benefit from government spending associated with stimulus-related construction projects;
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•
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restrictive covenants in our debt instruments, which can limit our financial and operational flexibility;
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•
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noncompliance with financial or other covenants in our debt agreements, which could result in our lenders terminating our credit facilities and requiring us to repay outstanding borrowings;
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•
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inability to access the capital that our businesses or growth plans may require;
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•
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inability to manage credit risk adequately or to collect on contracts with a large number of customers;
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•
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the outcome or other potential consequences of regulatory matters and commercial litigation;
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•
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incurrence of additional expenses (including indemnification obligations) and other costs in connection with litigation, regulatory and investigatory matters;
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•
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increases in our maintenance and replacement costs if we age our fleet, and decreases in the residual value of our equipment;
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•
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inability to sell our new or used fleet in the amounts, or at the prices, we expect;
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•
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turnover in our management team and inability to attract and retain key personnel;
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•
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rates we can charge and time utilization we can achieve being less than anticipated;
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•
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costs we incur being more than anticipated, and the inability to realize expected savings in the amounts or time frames planned;
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•
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dependence on key suppliers to obtain equipment and other supplies for our business on acceptable terms;
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•
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competition from existing and new competitors;
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•
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disruptions in our information technology systems;
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•
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the costs of complying with environmental and safety regulations;
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•
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labor disputes, work stoppages or other labor difficulties, which may impact our productivity, and potential enactment of new legislation or other changes in law affecting our labor relations or operations generally;
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•
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shortfalls in our insurance coverage; and
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•
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adverse developments in our existing claims or significant increases in new claims.
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Item 1.
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Financial Statements
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March 31, 2012
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December 31, 2011
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||||
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(unaudited)
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|
|||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
26
|
|
|
$
|
36
|
|
Accounts receivable, net of allowance for doubtful accounts of $30 at March 31, 2012 and $33 at December 31, 2011
|
417
|
|
|
464
|
|
||
Inventory
|
85
|
|
|
44
|
|
||
Prepaid expenses and other assets
|
78
|
|
|
75
|
|
||
Deferred taxes
|
50
|
|
|
104
|
|
||
Total current assets
|
656
|
|
|
723
|
|
||
Restricted cash (note 5)
|
2,850
|
|
|
—
|
|
||
Rental equipment, net
|
2,865
|
|
|
2,617
|
|
||
Property and equipment, net
|
380
|
|
|
366
|
|
||
Goodwill and other intangible assets, net
|
414
|
|
|
372
|
|
||
Other long-term assets
|
132
|
|
|
65
|
|
||
Total assets
|
$
|
7,297
|
|
|
$
|
4,143
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Short-term debt and current maturities of long-term debt
|
$
|
371
|
|
|
$
|
395
|
|
Accounts payable
|
384
|
|
|
206
|
|
||
Accrued expenses and other liabilities
|
291
|
|
|
263
|
|
||
Total current liabilities
|
1,046
|
|
|
864
|
|
||
Long-term debt
|
5,590
|
|
|
2,592
|
|
||
Subordinated convertible debentures
|
55
|
|
|
55
|
|
||
Deferred taxes
|
419
|
|
|
470
|
|
||
Other long-term liabilities
|
60
|
|
|
59
|
|
||
Total liabilities
|
7,170
|
|
|
4,040
|
|
||
Temporary equity (note 5)
|
37
|
|
|
39
|
|
||
Common stock—$0.01 par value, 500,000,000 shares authorized, 63,771,860 and 62,877,530 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
490
|
|
|
487
|
|
||
Accumulated deficit
|
(486
|
)
|
|
(499
|
)
|
||
Accumulated other comprehensive income
|
85
|
|
|
75
|
|
||
Total stockholders’ equity
|
90
|
|
|
64
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,297
|
|
|
$
|
4,143
|
|
|
Three Months Ended
|
||||||
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March 31,
|
||||||
|
2012
|
|
2011
|
||||
Revenues:
|
|
|
|
||||
Equipment rentals
|
$
|
523
|
|
|
$
|
434
|
|
Sales of rental equipment
|
76
|
|
|
32
|
|
||
Sales of new equipment
|
18
|
|
|
15
|
|
||
Contractor supplies sales
|
18
|
|
|
21
|
|
||
Service and other revenues
|
21
|
|
|
21
|
|
||
Total revenues
|
656
|
|
|
523
|
|
||
Cost of revenues:
|
|
|
|
||||
Cost of equipment rentals, excluding depreciation
|
246
|
|
|
233
|
|
||
Depreciation of rental equipment
|
115
|
|
|
99
|
|
||
Cost of rental equipment sales
|
47
|
|
|
18
|
|
||
Cost of new equipment sales
|
15
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|
|
12
|
|
||
Cost of contractor supplies sales
|
12
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|
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14
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Cost of service and other revenues
|
8
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|
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9
|
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Total cost of revenues
|
443
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|
|
385
|
|
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Gross profit
|
213
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|
|
138
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Selling, general and administrative expenses
|
102
|
|
|
95
|
|
||
RSC merger related costs
|
10
|
|
|
—
|
|
||
Restructuring charge
|
—
|
|
|
1
|
|
||
Non-rental depreciation and amortization
|
14
|
|
|
12
|
|
||
Operating income
|
87
|
|
|
30
|
|
||
Interest expense, net
|
68
|
|
|
56
|
|
||
Interest expense—subordinated convertible debentures
|
1
|
|
|
2
|
|
||
Other income, net
|
(1
|
)
|
|
(1
|
)
|
||
Income (loss) before provision (benefit) for income taxes
|
19
|
|
|
(27
|
)
|
||
Provision (benefit) for income taxes
|
6
|
|
|
(7
|
)
|
||
Net income (loss)
|
$
|
13
|
|
|
$
|
(20
|
)
|
|
|
|
|
||||
Basic earnings (loss) per share
|
$
|
0.21
|
|
|
$
|
(0.34
|
)
|
Diluted earnings (loss) per share
|
$
|
0.17
|
|
|
$
|
(0.34
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2012
|
|
2011
|
||||
Net income (loss)
|
$
|
13
|
|
|
$
|
(20
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
9
|
|
|
11
|
|
||
Fixed price diesel swaps
|
1
|
|
|
1
|
|
||
Change in accumulated other comprehensive income
|
10
|
|
|
12
|
|
||
Comprehensive income (loss)
|
$
|
23
|
|
|
$
|
(8
|
)
|
|
Common Stock
|
|
Additional
|
|
|
|
Accumulated
Other
|
|||||||||||
|
Number of
Shares
|
|
Amount
|
|
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Comprehensive
Income
|
|||||||||
Balance at December 31, 2011
|
63
|
|
|
$
|
1
|
|
|
$
|
487
|
|
|
$
|
(499
|
)
|
|
$
|
75
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income
|
|
|
|
|
|
|
13
|
|
|
|
||||||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
9
|
|
||||||||
Fixed price diesel swaps
|
|
|
|
|
|
|
|
|
1
|
|
||||||||
Stock compensation expense, net
|
|
|
|
|
4
|
|
|
|
|
|
||||||||
Exercise of common stock options
|
1
|
|
|
|
|
5
|
|
|
|
|
|
|||||||
4 percent Convertible Senior Notes
|
|
|
|
|
2
|
|
|
|
|
|
||||||||
Shares repurchased and retired
|
|
|
|
|
(8
|
)
|
|
|
|
|
||||||||
Balance at March 31, 2012
|
64
|
|
|
$
|
1
|
|
|
$
|
490
|
|
|
$
|
(486
|
)
|
|
$
|
85
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2012
|
|
2011
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
13
|
|
|
$
|
(20
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
129
|
|
|
111
|
|
||
Amortization of deferred financing costs and original issue discounts
|
5
|
|
|
5
|
|
||
Gain on sales of rental equipment
|
(29
|
)
|
|
(14
|
)
|
||
Gain on sales of non-rental equipment
|
(1
|
)
|
|
—
|
|
||
Stock compensation expense, net
|
4
|
|
|
2
|
|
||
RSC merger related costs
|
10
|
|
|
—
|
|
||
Restructuring charge
|
—
|
|
|
1
|
|
||
Loss on retirement of subordinated convertible debentures
|
—
|
|
|
1
|
|
||
Increase in restricted cash—RSC merger related debt interest (note 5)
|
(25
|
)
|
|
—
|
|
||
Increase (decrease) in deferred taxes
|
1
|
|
|
(9
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Decrease in accounts receivable
|
50
|
|
|
36
|
|
||
Increase in inventory
|
(41
|
)
|
|
(24
|
)
|
||
Decrease (increase) in prepaid expenses and other assets
|
11
|
|
|
(6
|
)
|
||
Increase in accounts payable
|
172
|
|
|
90
|
|
||
Decrease in accrued expenses and other liabilities
|
(45
|
)
|
|
(19
|
)
|
||
Net cash provided by operating activities
|
254
|
|
|
154
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Purchases of rental equipment
|
(390
|
)
|
|
(115
|
)
|
||
Purchases of non-rental equipment
|
(36
|
)
|
|
(5
|
)
|
||
Proceeds from sales of rental equipment
|
76
|
|
|
32
|
|
||
Proceeds from sales of non-rental equipment
|
7
|
|
|
4
|
|
||
Purchases of other companies
|
(57
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(400
|
)
|
|
(84
|
)
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Proceeds from debt
|
3,351
|
|
|
571
|
|
||
Payments of debt, including subordinated convertible debentures
|
(385
|
)
|
|
(641
|
)
|
||
Increase in restricted cash—proceeds from RSC merger related debt (note 5)
|
(2,825
|
)
|
|
—
|
|
||
Proceeds from the exercise of common stock options
|
5
|
|
|
4
|
|
||
Shares repurchased and retired
|
(8
|
)
|
|
(7
|
)
|
||
Payments of financing costs
|
(3
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
135
|
|
|
(73
|
)
|
||
Effect of foreign exchange rates
|
1
|
|
|
5
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(10
|
)
|
|
2
|
|
||
Cash and cash equivalents at beginning of period
|
36
|
|
|
203
|
|
||
Cash and cash equivalents at end of period
|
$
|
26
|
|
|
$
|
205
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for income taxes, net
|
$
|
12
|
|
|
$
|
11
|
|
Cash paid for interest, including subordinated convertible debentures
|
40
|
|
|
34
|
|
|
General
rentals
|
|
Trench safety,
power and HVAC
|
|
Total
|
||||||
Three Months Ended March 31, 2012
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
475
|
|
|
$
|
48
|
|
|
$
|
523
|
|
Sales of rental equipment
|
74
|
|
|
2
|
|
|
76
|
|
|||
Sales of new equipment
|
17
|
|
|
1
|
|
|
18
|
|
|||
Contractor supplies sales
|
16
|
|
|
2
|
|
|
18
|
|
|||
Service and other revenues
|
20
|
|
|
1
|
|
|
21
|
|
|||
Total revenue
|
602
|
|
|
54
|
|
|
656
|
|
|||
Depreciation and amortization expense
|
119
|
|
|
10
|
|
|
129
|
|
|||
Segment operating income
|
89
|
|
|
8
|
|
|
97
|
|
|||
Capital expenditures
|
413
|
|
|
13
|
|
|
426
|
|
|||
Three Months Ended March 31, 2011
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
400
|
|
|
$
|
34
|
|
|
$
|
434
|
|
Sales of rental equipment
|
30
|
|
|
2
|
|
|
32
|
|
|||
Sales of new equipment
|
14
|
|
|
1
|
|
|
15
|
|
|||
Contractor supplies sales
|
20
|
|
|
1
|
|
|
21
|
|
|||
Service and other revenues
|
20
|
|
|
1
|
|
|
21
|
|
|||
Total revenue
|
484
|
|
|
39
|
|
|
523
|
|
|||
Depreciation and amortization expense
|
105
|
|
|
6
|
|
|
111
|
|
|||
Segment operating income
|
26
|
|
|
5
|
|
|
31
|
|
|||
Capital expenditures
|
109
|
|
|
11
|
|
|
120
|
|
|
March 31,
2012 |
|
December 31,
2011 |
||||
Total reportable segment assets
|
|
|
|
||||
General rentals
|
$
|
6,871
|
|
|
$
|
3,776
|
|
Trench safety, power and HVAC
|
426
|
|
|
367
|
|
||
Total assets
|
$
|
7,297
|
|
|
$
|
4,143
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2012
|
|
2011
|
||||
Total segment operating income
|
$
|
97
|
|
|
$
|
31
|
|
Unallocated RSC merger related costs
|
(10
|
)
|
|
—
|
|
||
Unallocated restructuring charge
|
—
|
|
|
(1
|
)
|
||
Operating income
|
$
|
87
|
|
|
$
|
30
|
|
|
|
|
Three Months Ended March 31, 2012
|
|
Three Months Ended March 31, 2011
|
||||||||||
|
Location of income
(expense)
recognized on
derivative/hedged item
|
|
Amount of income
(expense)
recognized
on derivative
|
|
Amount of income
(expense)
recognized
on hedged item
|
|
Amount of income
(expense)
recognized
on derivative
|
|
Amount of income
(expense)
recognized
on hedged item
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed price diesel swaps
|
Other income
(expense), net (1)
|
|
$ *
|
|
|
|
|
$ *
|
|
|
|
||||
|
Cost of equipment
rentals, excluding
depreciation (2),
(3)
|
|
*
|
|
|
$
|
(5
|
)
|
|
*
|
|
|
$
|
(3
|
)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency forward contracts
|
Other income
(expense), net
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(4
|
)
|
*
|
Amounts are insignificant (less than
$1
).
|
(1)
|
Represents the ineffective portion of the fixed price diesel swaps.
|
(2)
|
Amounts recognized on derivative represent the effective portion of the fixed price diesel swaps.
|
(3)
|
Amounts recognized on hedged item reflect the use of
1.2 million
and
0.9 million
gallons of diesel covered by the fixed price swaps during the three months ended
March 31, 2012
and
2011
, respectively.
|
a)
|
quoted prices for similar assets in active markets;
|
b)
|
quoted prices for identical or similar assets in inactive markets;
|
c)
|
inputs other than quoted prices that are observable for the asset;
|
d)
|
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
March 31, 2012
|
|
December 31, 2011
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Level 1:
|
|
|
|
|
|
|
|
||||||||
Subordinated convertible debentures
|
$
|
55
|
|
|
$
|
60
|
|
|
$
|
55
|
|
|
$
|
49
|
|
Senior and senior subordinated notes
|
4,558
|
|
|
4,790
|
|
|
1,732
|
|
|
1,795
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
||||||||
4 percent Convertible Senior Notes
|
131
|
|
|
145
|
|
|
129
|
|
|
138
|
|
||||
Level 3:
|
|
|
|
|
|
|
|
||||||||
Capital leases (1)
|
38
|
|
|
31
|
|
|
39
|
|
|
33
|
|
(1)
|
The fair value of capital leases is determined using the expected present value of the leases.
|
|
March 31, 2012
|
|
December 31, 2011
|
||||
URNA and subsidiaries debt:
|
|
|
|
||||
Accounts Receivable Securitization Facility (1)
|
$
|
230
|
|
|
$
|
255
|
|
$1.9 billion ABL Facility (2)
|
982
|
|
|
810
|
|
||
10
7
/
8
percent Senior Notes
|
490
|
|
|
489
|
|
||
9
1
/
4
percent Senior Notes
|
493
|
|
|
493
|
|
||
8
3
/
8
percent Senior Subordinated Notes
|
750
|
|
|
750
|
|
||
1
7
/
8
percent Convertible Senior Subordinated Notes (3)
|
22
|
|
|
22
|
|
||
Capital leases
|
38
|
|
|
39
|
|
||
Total URNA and subsidiaries debt
|
3,005
|
|
|
2,858
|
|
||
Merger financing notes (4):
|
|
|
|
||||
5
3
/
4
percent Senior Secured Notes
|
750
|
|
|
—
|
|
||
7
3
/
8
percent Senior Notes
|
750
|
|
|
—
|
|
||
7
5
/
8
percent Senior Notes
|
1,325
|
|
|
—
|
|
||
Total merger financing notes
|
2,825
|
|
|
—
|
|
||
Holdings:
|
|
|
|
||||
4 percent Convertible Senior Notes (5)
|
131
|
|
|
129
|
|
||
Total debt (6)
|
5,961
|
|
|
2,987
|
|
||
Less short-term portion (7)
|
(371
|
)
|
|
(395
|
)
|
||
Total long-term debt
|
$
|
5,590
|
|
|
$
|
2,592
|
|
(1)
|
At
March 31, 2012
,
$5
was available under our accounts receivable securitization facility. The interest rate applicable to
|
(2)
|
At
March 31, 2012
,
$868
was available under our ABL facility, net of
$50
of letters of credit. The interest rate applicable to the ABL facility was
2.4 percent
at
March 31, 2012
. During the
three
months ended
March 31, 2012
, the monthly average amount outstanding under the ABL facility was
$895
, and the weighted-average interest rate thereon was
2.4 percent
. The maximum month-end amount outstanding under the ABL facility during the
three
months ended
March 31, 2012
was
$982
. In March 2012, the size of the ABL facility was increased to
$1.9 billion
.
|
(3)
|
Based on the price of our common stock during the first quarter of 2012, holders of the 1
7
/
8
percent Convertible Senior Subordinated Notes may convert the notes during the second quarter of 2012 at a conversion price of
$21.83
per share of common stock. Between April 1, 2012 (the beginning of the second quarter) and April 13, 2012, none of the 1
7
/
8
percent Convertible Senior Subordinated Notes were converted.
|
(4)
|
In connection with the proposed merger with RSC, on
March 9, 2012
, Funding SPV issued the merger financing notes. The proceeds from the merger financing notes were deposited into segregated escrow accounts and will be released from escrow subject to the satisfaction of certain conditions, including the occurrence of the merger substantially in accordance with the terms and conditions of the merger agreement and the assumption by a newly formed wholly owned subsidiary of URI, into which URNA will be merged in connection with the RSC merger, of all of the obligations of Funding SPV under the indentures governing the notes and related documentation. The aggregate cash received from the merger financing notes, along with
$25
of interest payable on the notes, is separately classified in our condensed consolidated balance sheets as restricted cash. See below for additional detail regarding each of the merger financing notes.
|
(5)
|
The difference between the
March 31, 2012
carrying value of the
4 percent
Convertible Senior Notes and the
$168
principal amount reflects the
$37
unamortized portion of the original issue discount recognized upon issuance of the notes, which is being amortized through the maturity date of November 15, 2015. Because the
4 percent
Convertible Senior Notes were convertible at
March 31, 2012
, an amount equal to the
$37
unamortized portion of the original issue discount is separately classified in our condensed consolidated balance sheets and referred to as “temporary equity.” Based on the price of our common stock during the first quarter of 2012, holders of the
4 percent
Convertible Senior Notes have the right to redeem the notes during the second quarter of 2012 at a conversion price of
$11.11
per share of common stock. Between April 1, 2012 (the beginning of the second quarter) and April 13, 2012, none of the
4 percent
Convertible Senior Notes were redeemed.
|
(6)
|
In August 1998, a subsidiary trust of Holdings (the “Trust”) issued and sold
$300
of 6
1
/
2
percent Convertible Quarterly Income Preferred Securities (“QUIPS”) in a private offering. The Trust used the proceeds from the offering to purchase 6
1
/
2
percent subordinated convertible debentures due 2028 (the “Debentures”), which resulted in Holdings receiving all of the net proceeds of the offering. The QUIPS are non-voting securities, carry a liquidation value of
$50
(fifty dollars) per security and are convertible into Holdings’ common stock. Total debt at
March 31, 2012
and
December 31, 2011
excludes
$55
of these Debentures, which are separately classified in our condensed consolidated balance sheets and referred to as “subordinated convertible debentures.” The subordinated convertible debentures reflect the obligation to our subsidiary that has issued the QUIPS. This subsidiary is not consolidated in our financial statements because we are not the primary beneficiary of the Trust.
|
(7)
|
As of
March 31, 2012
, our short-term debt primarily reflects
$230
of borrowings under our accounts receivable securitization facility and
$131
of
4 percent
Convertible Senior Notes. The
4 percent
Convertible Senior Notes mature in 2015, but are reflected as short-term debt because they are convertible at
March 31, 2012
.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2012
|
|
2011
|
||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
13
|
|
|
$
|
(20
|
)
|
Convertible debt interest—1
7
/
8
percent notes
|
—
|
|
|
—
|
|
||
Net income (loss) available to common stockholders
|
$
|
13
|
|
|
$
|
(20
|
)
|
Denominator:
|
|
|
|
||||
Denominator for basic earnings (loss) per share—weighted-average common shares
|
63,131
|
|
|
60,850
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Employee stock options and warrants
|
709
|
|
|
—
|
|
||
Convertible subordinated notes—1
7
/
8
percent
|
1,015
|
|
|
—
|
|
||
Convertible subordinated notes—4 percent
|
10,794
|
|
|
—
|
|
||
Restricted stock units
|
617
|
|
|
—
|
|
||
Denominator for diluted earnings (loss) per share—adjusted weighted-average common shares
|
76,266
|
|
|
60,850
|
|
||
|
|
|
|
||||
Basic earnings (loss) per share
|
$
|
0.21
|
|
|
$
|
(0.34
|
)
|
Diluted earnings (loss) per share
|
$
|
0.17
|
|
|
$
|
(0.34
|
)
|
(1)
|
Includes debt issued by Funding SPV associated with the proposed merger with RSC, as discussed further in note 5 to our condensed consolidated financial statements.
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV (1)
|
|
||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
183
|
|
|
$
|
90
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
523
|
|
Sales of rental equipment
|
—
|
|
|
39
|
|
|
26
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
76
|
|
|||||||
Sales of new equipment
|
—
|
|
|
8
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
8
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||||
Service and other revenues
|
—
|
|
|
11
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||||
Total revenues
|
—
|
|
|
316
|
|
|
224
|
|
|
116
|
|
|
—
|
|
|
—
|
|
|
656
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
115
|
|
|
88
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
246
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
59
|
|
|
37
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
115
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
24
|
|
|
16
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
7
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
6
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||||
Total cost of revenues
|
—
|
|
|
215
|
|
|
151
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
443
|
|
|||||||
Gross profit
|
—
|
|
|
101
|
|
|
73
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
213
|
|
|||||||
Selling, general and administrative expenses
|
10
|
|
|
34
|
|
|
36
|
|
|
17
|
|
|
5
|
|
|
—
|
|
|
102
|
|
|||||||
RSC merger related costs
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||||
Restructuring charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Non-rental depreciation and amortization
|
4
|
|
|
4
|
|
|
4
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||||
Operating (loss) income
|
(14
|
)
|
|
53
|
|
|
33
|
|
|
20
|
|
|
(5
|
)
|
|
—
|
|
|
87
|
|
|||||||
Interest expense (income), net
|
3
|
|
|
51
|
|
|
1
|
|
|
1
|
|
|
13
|
|
|
(1
|
)
|
|
68
|
|
|||||||
Interest expense-subordinated convertible debentures
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Other (income) expense, net
|
(18
|
)
|
|
16
|
|
|
9
|
|
|
3
|
|
|
(11
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
(Loss) income before (benefit) provision for income taxes
|
—
|
|
|
(14
|
)
|
|
23
|
|
|
16
|
|
|
(7
|
)
|
|
1
|
|
|
19
|
|
|||||||
(Benefit) provision for income taxes
|
—
|
|
|
(22
|
)
|
|
28
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
6
|
|
|||||||
Income (loss) before equity in net earnings (loss) of subsidiaries
|
—
|
|
|
8
|
|
|
(5
|
)
|
|
13
|
|
|
(4
|
)
|
|
1
|
|
|
13
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
13
|
|
|
5
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
13
|
|
|
13
|
|
|
9
|
|
|
13
|
|
|
(4
|
)
|
|
(31
|
)
|
|
13
|
|
|||||||
Change in accumulated other comprehensive income
|
10
|
|
|
10
|
|
|
9
|
|
|
5
|
|
|
—
|
|
|
(24
|
)
|
|
10
|
|
|||||||
Comprehensive income (loss)
|
$
|
23
|
|
|
$
|
23
|
|
|
$
|
18
|
|
|
$
|
18
|
|
|
$
|
(4
|
)
|
|
$
|
(55
|
)
|
|
$
|
23
|
|
(1)
|
Includes interest expense on the debt issued by Funding SPV associated with the proposed merger with RSC, as discussed further in note 5 to our condensed consolidated financial statements.
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
Foreign
|
|
SPV
|
|
|||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
216
|
|
|
$
|
149
|
|
|
$
|
69
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
434
|
|
Sales of rental equipment
|
—
|
|
|
18
|
|
|
9
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||||
Sales of new equipment
|
—
|
|
|
6
|
|
|
4
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
9
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||||
Service and other revenues
|
—
|
|
|
12
|
|
|
5
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||||
Total revenues
|
—
|
|
|
261
|
|
|
173
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
523
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
117
|
|
|
81
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
233
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
53
|
|
|
33
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
10
|
|
|
5
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
6
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
6
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
6
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||||
Total cost of revenues
|
—
|
|
|
198
|
|
|
128
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
385
|
|
|||||||
Gross profit
|
—
|
|
|
63
|
|
|
45
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
138
|
|
|||||||
Selling, general and administrative expenses
|
5
|
|
|
39
|
|
|
31
|
|
|
15
|
|
|
5
|
|
|
—
|
|
|
95
|
|
|||||||
Restructuring charge
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Non-rental depreciation and amortization
|
3
|
|
|
4
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||||
Operating (loss) income
|
(8
|
)
|
|
20
|
|
|
9
|
|
|
14
|
|
|
(5
|
)
|
|
—
|
|
|
30
|
|
|||||||
Interest expense (income), net
|
3
|
|
|
51
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
56
|
|
|||||||
Interest expense-subordinated convertible debentures
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||
Other (income) expense, net
|
(15
|
)
|
|
14
|
|
|
6
|
|
|
3
|
|
|
(9
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
Income (loss) before (benefit) provision for income taxes
|
2
|
|
|
(45
|
)
|
|
1
|
|
|
11
|
|
|
3
|
|
|
1
|
|
|
(27
|
)
|
|||||||
(Benefit) provision for income taxes
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||||
Income (loss) before equity in net (loss) earnings of subsidiaries
|
2
|
|
|
(36
|
)
|
|
1
|
|
|
9
|
|
|
3
|
|
|
1
|
|
|
(20
|
)
|
|||||||
Equity in net (loss) earnings of subsidiaries
|
(22
|
)
|
|
14
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||||||
Net (loss) income
|
(20
|
)
|
|
(22
|
)
|
|
11
|
|
|
9
|
|
|
3
|
|
|
(1
|
)
|
|
(20
|
)
|
|||||||
Change in accumulated other comprehensive income
|
12
|
|
|
12
|
|
|
11
|
|
|
5
|
|
|
—
|
|
|
(28
|
)
|
|
12
|
|
|||||||
Comprehensive (loss) income
|
$
|
(8
|
)
|
|
$
|
(10
|
)
|
|
$
|
22
|
|
|
$
|
14
|
|
|
$
|
3
|
|
|
$
|
(29
|
)
|
|
$
|
(8
|
)
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Net cash provided by operating activities
|
$
|
3
|
|
|
$
|
85
|
|
|
$
|
109
|
|
|
$
|
28
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
254
|
|
Net cash used in investing activities
|
(4
|
)
|
|
(252
|
)
|
|
(110
|
)
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(400
|
)
|
|||||||
Net cash provided by (used in) financing activities
|
1
|
|
|
164
|
|
|
1
|
|
|
(2
|
)
|
|
(29
|
)
|
|
—
|
|
|
135
|
|
|||||||
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Net decrease in cash and cash equivalents
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
6
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
Foreign
|
|
SPV
|
|
|
|
|
||||||||||||||
Net cash provided by operating activities
|
$
|
7
|
|
|
$
|
87
|
|
|
$
|
21
|
|
|
$
|
18
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
154
|
|
Net cash used in investing activities
|
(4
|
)
|
|
(39
|
)
|
|
(22
|
)
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|||||||
Net cash (used in) provided by financing activities
|
(3
|
)
|
|
(50
|
)
|
|
1
|
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
(73
|
)
|
|||||||
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||||
Net (decrease) increase in cash and cash equivalents
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
4
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
—
|
|
|
203
|
|
|||||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
203
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
205
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share data, unless otherwise indicated)
|
|
Three Months Ended
|
|
||||||
|
March 31,
|
|
||||||
|
2012
|
|
2011
|
|
||||
Net income (loss)
|
$
|
13
|
|
|
$
|
(20
|
)
|
|
Diluted earnings (loss) per share
|
$
|
0.17
|
|
|
$
|
(0.34
|
)
|
|
|
Three Months Ended March 31,
|
|
||||||||||||||
|
2012
|
|
2011
|
|
||||||||||||
|
Contribution
to net income (after-tax)
|
|
Impact on
diluted earnings per share
|
|
Contribution
to net loss (after-tax)
|
|
Impact on diluted loss per share
|
|
||||||||
RSC merger related costs (1)
|
$
|
(6
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Restructuring charge (2)
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(0.01
|
)
|
|
||||
Loss on retirement of subordinated convertible debentures
|
—
|
|
|
—
|
|
|
*
|
|
|
(0.01
|
)
|
|
||||
RSC merger related interest expense (3)
|
(8
|
)
|
|
(0.10
|
)
|
|
—
|
|
|
—
|
|
|
*
|
Amount is less than $1.
|
(1)
|
This reflects transaction costs associated with the proposed acquisition of RSC discussed above.
|
(2)
|
As discussed below (see “Restructuring charge”), this primarily reflects branch closure charges due to continuing lease obligations at vacant facilities.
|
(3)
|
As discussed in note 5 to our condensed consolidated financial statements, in
March 2012
, we issued $
2,825
of new debt associated with the proposed merger with RSC. The RSC merger related interest expense reflects the interest expense recorded on this new debt. We expect the proposed merger to close on
April 30, 2012
.
|
|
Three Months Ended
|
|
||||||
|
March 31,
|
|
||||||
|
2012
|
|
2011
|
|
||||
Net income (loss)
|
$
|
13
|
|
|
$
|
(20
|
)
|
|
Provision (benefit) for income taxes
|
6
|
|
|
(7
|
)
|
|
||
Interest expense, net
|
68
|
|
|
56
|
|
|
||
Interest expense – subordinated convertible debentures
|
1
|
|
|
2
|
|
|
||
Depreciation of rental equipment
|
115
|
|
|
99
|
|
|
||
Non-rental depreciation and amortization
|
14
|
|
|
12
|
|
|
||
EBITDA
|
$
|
217
|
|
|
$
|
142
|
|
|
RSC merger related costs (1)
|
10
|
|
|
—
|
|
|
||
Restructuring charge (2)
|
—
|
|
|
1
|
|
|
||
Stock compensation expense, net (3)
|
4
|
|
|
2
|
|
|
||
Adjusted EBITDA
|
$
|
231
|
|
|
$
|
145
|
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2012
|
|
2011
|
||||
Net cash provided by operating activities
|
$
|
254
|
|
|
$
|
154
|
|
Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA:
|
|
|
|
||||
Amortization of deferred financing costs and original issue discounts
|
(5
|
)
|
|
(5
|
)
|
||
Gain on sales of rental equipment
|
29
|
|
|
14
|
|
||
Gain on sales of non-rental equipment
|
1
|
|
|
—
|
|
||
RSC merger related costs (1)
|
(10
|
)
|
|
—
|
|
||
Restructuring charge (2)
|
—
|
|
|
(1
|
)
|
||
Stock compensation expense, net (3)
|
(4
|
)
|
|
(2
|
)
|
||
Loss on retirement of subordinated convertible debentures
|
—
|
|
|
(1
|
)
|
||
Increase in restricted cash—RSC merger related debt interest (note 5)
|
25
|
|
|
—
|
|
||
Changes in assets and liabilities
|
(125
|
)
|
|
(62
|
)
|
||
Cash paid for interest, including subordinated convertible debentures
|
40
|
|
|
34
|
|
||
Cash paid for income taxes, net
|
12
|
|
|
11
|
|
||
EBITDA
|
$
|
217
|
|
|
$
|
142
|
|
Add back:
|
|
|
|
||||
RSC merger related costs (1)
|
10
|
|
|
—
|
|
||
Restructuring charge (2)
|
—
|
|
|
1
|
|
||
Stock compensation expense, net (3)
|
4
|
|
|
2
|
|
||
Adjusted EBITDA
|
$
|
231
|
|
|
$
|
145
|
|
(1)
|
This reflects transaction costs associated with the proposed acquisition of RSC discussed above.
|
(2)
|
As discussed below (see “Restructuring charge”), this primarily reflects branch closure charges due to continuing lease obligations at vacant facilities.
|
(3)
|
Represents non-cash, share-based payments associated with the granting of equity instruments.
|
|
General
rentals
|
|
Trench safety,
power and HVAC
|
|
Total
|
||||||
Three Months Ended March 31, 2012
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
475
|
|
|
$
|
48
|
|
|
$
|
523
|
|
Sales of rental equipment
|
74
|
|
|
2
|
|
|
76
|
|
|||
Sales of new equipment
|
17
|
|
|
1
|
|
|
18
|
|
|||
Contractor supplies sales
|
16
|
|
|
2
|
|
|
18
|
|
|||
Service and other revenues
|
20
|
|
|
1
|
|
|
21
|
|
|||
Total revenue
|
$
|
602
|
|
|
$
|
54
|
|
|
$
|
656
|
|
Three Months Ended March 31, 2011
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
400
|
|
|
$
|
34
|
|
|
$
|
434
|
|
Sales of rental equipment
|
30
|
|
|
2
|
|
|
32
|
|
|||
Sales of new equipment
|
14
|
|
|
1
|
|
|
15
|
|
|||
Contractor supplies sales
|
20
|
|
|
1
|
|
|
21
|
|
|||
Service and other revenues
|
20
|
|
|
1
|
|
|
21
|
|
|||
Total revenue
|
$
|
484
|
|
|
$
|
39
|
|
|
$
|
523
|
|
|
General
rentals
|
|
Trench safety,
power and HVAC
|
|
Total
|
||||||
Three Months Ended March 31, 2012
|
|
|
|
|
|
||||||
Operating Income
|
$
|
89
|
|
|
$
|
8
|
|
|
$
|
97
|
|
Operating Margin
|
14.8
|
%
|
|
14.8
|
%
|
|
14.8
|
%
|
|||
Three Months Ended March 31, 2011
|
|
|
|
|
|
||||||
Operating Income
|
$
|
26
|
|
|
$
|
5
|
|
|
$
|
31
|
|
Operating Margin
|
5.4
|
%
|
|
12.8
|
%
|
|
5.9
|
%
|
|
Three Months Ended March 31,
|
|
||||||
|
2012
|
|
2011
|
|
||||
Total reportable segment operating income
|
$
|
97
|
|
|
$
|
31
|
|
|
Unallocated RSC merger related costs
|
(10
|
)
|
|
—
|
|
|
||
Unallocated restructuring charge
|
—
|
|
|
(1
|
)
|
|
||
Operating income
|
$
|
87
|
|
|
$
|
30
|
|
|
|
Three Months Ended March 31,
|
|
||||
|
2012
|
|
2011
|
|
||
Total gross margin
|
32.5
|
%
|
|
26.4
|
%
|
|
Equipment rentals
|
31.0
|
%
|
|
23.5
|
%
|
|
Sales of rental equipment
|
38.2
|
%
|
|
43.8
|
%
|
|
Sales of new equipment
|
16.7
|
%
|
|
20.0
|
%
|
|
Contractor supplies sales
|
33.3
|
%
|
|
33.3
|
%
|
|
Service and other revenues
|
61.9
|
%
|
|
57.1
|
%
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2012
|
|
2011
|
|
||||
Total SG&A expenses
|
$
|
102
|
|
|
$
|
95
|
|
|
SG&A as a percentage of revenue
|
15.5
|
%
|
|
18.2
|
%
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2012
|
|
2011
|
|
||||
Interest expense, net
|
$
|
68
|
|
|
$
|
56
|
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2012
|
|
2011
|
|
||||
Income (loss) before provision (benefit) for income taxes
|
$
|
19
|
|
|
$
|
(27
|
)
|
|
Provision (benefit) for income taxes
|
6
|
|
|
(7
|
)
|
|
||
Effective tax rate
|
31.6
|
%
|
|
25.9
|
%
|
|
|
Corporate Rating
|
|
Outlook
|
Moody’s
|
B2
|
|
Stable
|
Standard & Poor’s
|
B
|
|
Positive
|
Fitch
|
B
|
|
Stable
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2012
|
|
2011
|
||||
Net cash provided by operating activities
|
$
|
254
|
|
|
$
|
154
|
|
Purchases of rental equipment
|
(390
|
)
|
|
(115
|
)
|
||
Purchases of non-rental equipment
|
(36
|
)
|
|
(5
|
)
|
||
Proceeds from sales of rental equipment
|
76
|
|
|
32
|
|
||
Proceeds from sales of non-rental equipment
|
7
|
|
|
4
|
|
||
Free cash (usage) flow
|
$
|
(89
|
)
|
|
$
|
70
|
|
|
2012
|
2013
|
2014
|
2015
|
2016
|
Thereafter
|
Total
|
||||||||||||||
Debt and capital leases (1)
|
$
|
238
|
|
$
|
7
|
|
$
|
7
|
|
$
|
174
|
|
$
|
1,484
|
|
$
|
4,106
|
|
$
|
6,016
|
|
Interest due on debt (2)
|
298
|
|
395
|
|
395
|
|
393
|
|
353
|
|
1,164
|
|
2,998
|
|
|||||||
Operating leases (1):
|
|
|
|
|
|
|
|
||||||||||||||
Real estate
|
57
|
|
67
|
|
56
|
|
45
|
|
34
|
|
78
|
|
337
|
|
|||||||
Non-rental equipment
|
20
|
|
20
|
|
15
|
|
13
|
|
9
|
|
15
|
|
92
|
|
|||||||
Service agreements (3)
|
11
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
|||||||
Purchase obligations (4)
|
604
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
604
|
|
|||||||
Subordinated convertible debentures (5)
|
3
|
|
4
|
|
4
|
|
4
|
|
4
|
|
95
|
|
114
|
|
|||||||
Total (6)
|
$
|
1,231
|
|
$
|
493
|
|
$
|
477
|
|
$
|
629
|
|
$
|
1,884
|
|
$
|
5,458
|
|
$
|
10,172
|
|
(1)
|
The payments due with respect to a period represent (i) in the case of debt and capital leases, the scheduled principal payments due in such period, and (ii) in the case of operating leases, the minimum lease payments due in such period under non-cancelable operating leases. Our 4 percent Convertible Senior Notes mature in 2015, but are reflected as short-term debt in our consolidated balance sheet because they are convertible at
March 31, 2012
. The 4 percent Convertible Senior Notes are reflected in the table above based on the contractual maturity date in 2015.
|
(2)
|
Estimated interest payments have been calculated based on the principal amount of debt and the applicable interest rates as of
March 31, 2012
. As discussed above, our 4 percent Convertible Senior Notes mature in 2015, but are reflected as short-term debt in our consolidated balance sheet because they are convertible at
March 31, 2012
. Interest on the 4 percent Convertible Senior Notes is reflected in the table above based on the contractual maturity date in 2015.
|
(3)
|
These represent service agreements with third parties to provide wireless and network services, refurbish our aerial equipment and operate the distribution centers associated with contractor supplies.
|
(4)
|
As of
March 31, 2012
, we had outstanding purchase orders, which were negotiated in the ordinary course of business, with our equipment and inventory suppliers. These purchase commitments can be cancelled by us, generally with 30 days notice and without cancellation penalties. The equipment and inventory receipts from the suppliers for these purchases and related payments to the suppliers are expected to be completed throughout 2012.
|
(5)
|
Represents principal and interest payments on the $
55
of 6
1
/
2
percent subordinated convertible debentures reflected in our consolidated balance sheets as of
March 31, 2012
.
|
(6)
|
This information excludes $
4
of unrecognized tax benefits. It is not possible to estimate the time period during which these unrecognized tax benefits may be paid to tax authorities.
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total Number of
Shares Purchased
|
|
Average Price
Paid Per Share
|
|||
January 1, 2012 to January 31, 2012
|
675
|
|
|
$
|
29.37
|
|
February 1, 2012 to February 29, 2012
|
35,994
|
|
|
$
|
41.25
|
|
March 1, 2012 to March 31, 2012
|
141,844
|
|
|
$
|
43.10
|
|
Total (1)
|
178,513
|
|
|
|
(1)
|
The shares were withheld by Holdings to satisfy tax withholding obligations upon the vesting of restricted stock unit awards. These shares were not acquired pursuant to any repurchase plan or program.
|
Item 6.
|
Exhibits
|
3(a)
|
|
Restated Certificate of Incorporation of United Rentals, Inc., dated March 16, 2009 (incorporated by reference to Exhibit 3.1 of the United Rentals, Inc. Report on Form 8-K filed on March 17, 2009)
|
|
|
|
3(b)
|
|
By-laws of United Rentals, Inc., amended as of December 20, 2010 (incorporated by reference to Exhibit 3.1 of the United Rentals, Inc. Report on Form 8-K filed on December 23, 2010)
|
|
|
|
4(a)
|
|
Indenture for the 2022 Senior Notes, dated as of March 9, 2012, between UR Financing Escrow Corporation, and Wells Fargo Bank, National Association, as Trustee (including the Form of Note) (incorporated by reference to Exhibit 4.1 of the United Rentals, Inc. Report on Form 8-K filed on March 12, 2012)
|
|
|
|
4(b)
|
|
Indenture for the 2020 Senior Notes, dated as of March 9, 2012, between UR Financing Escrow Corporation, and Wells Fargo Bank, National Association, as Trustee (including the Form of Note) (incorporated by reference to Exhibit 4.2 of the United Rentals, Inc. Report on Form 8-K filed on March 12, 2012)
|
|
|
|
4(c)
|
|
Indenture for the Senior Secured Notes, dated as of March 9, 2012, between UR Financing Escrow Corporation, and Wells Fargo Bank, National Association, as Trustee (including the Form of Note) (incorporated by reference to Exhibit 4.3 of the United Rentals, Inc. Report on Form 8-K filed on March 12, 2012)
|
|
|
|
10(a)
|
|
Incremental Assumption Agreement, dated as of March 5, 2012, between United Rentals, Inc., United Rentals (North America), Inc., United Rentals of Canada, Inc, United Rentals Financing Limited Partnership and certain other subsidiaries of United Rentals, Inc. and Bank of America, N.A., as agent and Deutsche Bank AG New York Branch (incorporated by reference to Exhibit 10.1 of the United Rentals, Inc. Report on Form 8-K filed on March 8, 2012)
|
|
|
|
10(b)
|
|
Registration Rights Agreement for the 2022 Senior Notes, dated as of March 9, 2012, among UR Financing Escrow Corporation and Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as representatives of the purchasers named therein (incorporated by reference to Exhibit 10.1 of the United Rentals, Inc. Report on Form 8-K filed on March 12, 2012)
|
|
|
|
10(c)
|
|
Registration Rights Agreement for the 2020 Senior Notes, dated as of March 9, 2012, among UR Financing Escrow Corporation and Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as representatives of the purchasers named therein (incorporated by reference to Exhibit 10.2 of the United Rentals, Inc. Report on Form 8-K filed on March 12, 2012)
|
|
|
|
10(d)
|
|
Registration Rights Agreement for the Senior Secured Notes, dated as of March 9, 2012, among UR Financing Escrow Corporation and Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as representatives of the purchasers named therein (incorporated by reference to Exhibit 10.3 of the United Rentals, Inc. Report on Form 8-K filed on March 12, 2012)
|
|
|
|
10(e)
|
|
Escrow Agreement for the Notes, dated as of March 9, 2012 among UR Financing Escrow Corporation, United Rentals (North America), Inc., Wells Fargo Bank, National Association as trustee under the indentures and Wells Fargo Bank, National Association as Escrow Agent (incorporated by reference to Exhibit 10.4 of the United Rentals, Inc. Report on Form 8-K filed on March 12, 2012)
|
|
|
|
10(f)
|
|
Intercreditor Agreement, dated as of March 9, 2012 among Bank of America, N.A. as credit agreement agent and Wells Fargo Bank, National Association as trustee under the indentures and Wells Fargo Bank, National Association as second lien collateral agent, acknowledged by UR Merger Sub Corporation, the Company and certain other grantors (incorporated by reference to Exhibit 10.5 of the United Rentals, Inc. Report on Form 8-K filed on March 12, 2012)
|
|
|
|
10(g)*
|
|
Fourth Amendment, dated as of March 28, 2012, to the Employment Agreement between United Rentals, Inc. and William B. Plummer
|
|
|
|
10(h)*
|
|
Third Amendment, dated as of March 28, 2012, to the Employment Agreement between United Rentals, Inc. and Jonathan M. Gottsegen
|
|
|
|
12*
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
|
|
31(a)*
|
|
Rule 13a-14(a) Certification by Chief Executive Officer
|
|
|
|
31(b)*
|
|
Rule 13a-14(a) Certification by Chief Financial Officer
|
|
|
|
32(a)**
|
|
Section 1350 Certification by Chief Executive Officer
|
|
|
|
32(b)**
|
|
Section 1350 Certification by Chief Financial Officer
|
|
|
|
101***
|
|
The following materials from the Quarterly Report on Form 10-Q for the Company and URNA, for the quarter ended March 31, 2012, filed on April 17, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statement of Stockholders’ Equity (Deficit), (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements.
|
*
|
Filed herewith.
|
**
|
Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act.
|
***
|
Submitted pursuant to Rule 406T of Regulation S-T.
|
|
|
UNITED RENTALS, INC.
|
||
|
|
|
|
|
Dated:
|
April 16, 2012
|
By:
|
|
/
S
/ J
OHN
J. F
AHEY
|
|
|
|
|
John J. Fahey
Vice President, Controller
|
|
|
|
|
and Principal Accounting Officer
|
|
|
|
||
|
|
UNITED RENTALS (NORTH AMERICA), INC.
|
||
|
|
|
|
|
Dated:
|
April 16, 2012
|
By:
|
|
/
S
/ J
OHN
J. F
AHEY
|
|
|
|
|
John J. Fahey
Vice President, Controller
|
|
|
|
|
and Principal Accounting Officer
|
1.
|
Pursuant to and in accordance with Section 7(l) of the Agreement, the first sentence of Section 4(d)(iii) of the Agreement is hereby amended and replaced in full with the following language:
|
2.
|
Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with its terms.
|
3.
|
Capitalized terms used herein but not defined herein shall have the respective meanings assigned to such terms in the Agreement.
|
4.
|
This Amendment may be amended only by a writing which makes express reference to this Amendment as the subject of such amendment and which is signed by Executive and, on behalf of the Company, by its duly authorized officer.
|
5.
|
This Amendment shall be governed by and construed (both as to validity and performance) and enforced in accordance with the internal laws of the State of Connecticut applicable to agreements made and to be performed wholly within such jurisdiction, without regard to the principles of conflicts of law or where the parties are located at the time a dispute arises.
|
UNITED RENTALS, INC.
By: /s/ Michael J. Kneeland
Name:Michael J. Kneeland
Title:President and Chief Executive
Officer
|
EXECUTIVE
/s/ William B. Plummer
William B. Plummer
|
1.
|
Pursuant to and in accordance with Section 7(l) of the Agreement, the first sentence of Section 4(d)(iv) of the Agreement is hereby amended and replaced in full with the following language:
|
2.
|
Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with its terms.
|
3.
|
Capitalized terms used herein but not defined herein shall have the respective meanings assigned to such terms in the Agreement.
|
4.
|
This Amendment may be amended only by a writing which makes express reference to this Amendment as the subject of such amendment and which is signed by Executive and, on behalf of the Company, by its duly authorized officer.
|
5.
|
This Amendment shall be governed by and construed (both as to validity and performance) and enforced in accordance with the internal laws of the State of Connecticut applicable to agreements made and to be performed wholly within such jurisdiction, without regard to the principles of conflicts of law or where the parties are located at the time a dispute arises.
|
UNITED RENTALS, INC.
By: /s/ Michael J. Kneeland
Name:Michael J. Kneeland
Title:President and Chief Executive
Officer
|
EXECUTIVE
/s/ Jonathan M. Gottsegen
Jonathan M. Gottsegen
|
|
Year Ended December 31,
|
Three Months Ended March 31,
|
||||||||||||||||
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|||||||
Earnings:
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations before provision (benefit) for income taxes
|
$
|
578
|
|
$
|
(813
|
)
|
$
|
(107
|
)
|
$
|
(63
|
)
|
$
|
164
|
|
$
|
19
|
|
Add:
|
|
|
|
|
|
|
||||||||||||
Fixed charges, net of capitalized interest
|
251
|
277
|
288
|
279
|
271
|
|
77
|
|
||||||||||
Total earnings available for fixed charges
|
829
|
|
(536
|
)
|
181
|
|
216
|
|
435
|
|
96
|
|
||||||
Fixed charges (1):
|
|
|
|
|
|
|
||||||||||||
Interest expense, net
|
187
|
174
|
226
|
255
|
228
|
|
68
|
|
||||||||||
Add back interest income, which is netted in interest expense
|
6
|
6
|
1
|
1
|
1
|
|
—
|
|
||||||||||
Add back gains (losses) on bond repurchases/retirement of subordinated convertible debentures, included in interest expense
|
—
|
|
41
|
20
|
(28
|
)
|
(5
|
)
|
—
|
|
||||||||
Interest expense—subordinated convertible debentures, net
|
9
|
9
|
(4
|
)
|
8
|
7
|
|
1
|
|
|||||||||
Capitalized interest
|
2
|
1
|
1
|
—
|
|
—
|
|
—
|
|
|||||||||
Interest component of rent expense
|
49
|
47
|
45
|
43
|
40
|
|
8
|
|
||||||||||
Fixed charges
|
$
|
253
|
|
$
|
278
|
|
$
|
289
|
|
$
|
279
|
|
$
|
271
|
|
$
|
77
|
|
Ratio of earnings to fixed charges
|
3.3x
|
|
—(2)(3)
|
|
— (2)
|
|
— (2)
|
|
1.6x
|
|
1.2x
|
|
(1)
|
Fixed charges consist of interest expense, which includes amortization of deferred finance charges, interest expense-subordinated debentures, capitalized interest and imputed interest on our lease obligations. The interest component of rent was determined based on an estimate of a reasonable interest factor at the inception of the leases.
|
(2)
|
Due to our losses for the years ended December 31, 2010, 2009 and 2008, the ratio coverage was less than 1:1 for these years. We would have had to have generated additional earnings of $63, $108 and $814 for the years ended December 31, 2010, 2009 and 2008 respectively, to have achieved coverage ratios of 1:1.
|
(3)
|
The loss for the year ended December 31, 2008 includes the effect of an $1,147 pretax non-cash goodwill impairment charge. The effect of this charge was to reduce the ratio of earnings to fixed charges. Had this charge been excluded from the calculation, the ratio of earnings to fixed charges would have been 2.2x for the year ended December 31, 2008.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of United Rentals, Inc. and United Rentals (North America), Inc. for the quarterly period ended
March 31, 2012
;
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
|
4.
|
The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and.
|
d)
|
disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrants' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and
|
5.
|
The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of the registrants' board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.
|
/
S
/ M
ICHAEL
J. K
NEELAND
|
Michael J. Kneeland
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of United Rentals, Inc. and United Rentals (North America), Inc. for the quarterly period ended
March 31, 2012
;
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
|
4.
|
The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and.
|
d)
|
disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrants' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and
|
5.
|
The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of the registrants' board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.
|
/
S
/ W
ILLIAM
B. P
LUMMER
|
William B. Plummer
|
Chief Financial Officer
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.
|
/
S
/ M
ICHAEL
J. K
NEELAND
|
Michael J. Kneeland
|
Chief Executive Officer
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.
|
/
S
/ W
ILLIAM
B. P
LUMMER
|
William B. Plummer
|
Chief Financial Officer
|