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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o
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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
86-0933835
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(States of Incorporation)
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(I.R.S. Employer Identification Nos.)
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100 First Stamford Place, Suite 700
Stamford, Connecticut |
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06902
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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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o
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Non-Accelerated Filer
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o
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Smaller Reporting Company
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o
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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 5
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Item 6
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•
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the possibility that RSC Holdings Inc. ("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 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. 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, including spending associated with infrastructure 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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incurrence of impairment charges;
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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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increases in our loss reserves to address business operations or other claims and any claims that exceed our established levels of reserves;
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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 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 charge and time utilization we 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; and
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•
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shortfalls in our insurance coverage.
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Item 1.
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Financial Statements
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June 30, 2013
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December 31, 2012
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||||
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(unaudited)
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|
|||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
133
|
|
|
$
|
106
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Accounts receivable, net of allowance for doubtful accounts of $55 at June 30, 2013 and $64 at December 31, 2012
|
751
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793
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Inventory
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111
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|
|
68
|
|
||
Prepaid expenses and other assets
|
113
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|
|
111
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||
Deferred taxes
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255
|
|
|
265
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|
||
Total current assets
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1,363
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|
1,343
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||
Rental equipment, net
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5,380
|
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4,966
|
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||
Property and equipment, net
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417
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|
|
428
|
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Goodwill, net
|
2,954
|
|
|
2,970
|
|
||
Other intangible assets, net
|
1,103
|
|
|
1,200
|
|
||
Other long-term assets
|
109
|
|
|
119
|
|
||
Total assets
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$
|
11,326
|
|
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$
|
11,026
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
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|
||||
Short-term debt and current maturities of long-term debt
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$
|
624
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|
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$
|
630
|
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Accounts payable
|
606
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|
|
286
|
|
||
Accrued expenses and other liabilities
|
362
|
|
|
435
|
|
||
Total current liabilities
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1,592
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|
1,351
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||
Long-term debt
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6,732
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|
6,679
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|
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Subordinated convertible debentures
|
—
|
|
|
55
|
|
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Deferred taxes
|
1,328
|
|
|
1,302
|
|
||
Other long-term liabilities
|
65
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|
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65
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|
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Total liabilities
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9,717
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9,452
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Temporary equity (note 6)
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26
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|
|
31
|
|
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Common stock—$0.01 par value, 500,000,000 shares authorized, 97,713,029 and 93,454,763 shares issued and outstanding, respectively, at June 30, 2013 and 95,891,809 and 92,984,016 shares issued and outstanding, respectively, at December 31, 2012
|
1
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|
|
1
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|
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Additional paid-in capital
|
2,055
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1,997
|
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Accumulated deficit
|
(320
|
)
|
|
(424
|
)
|
||
Treasury stock at cost—4,258,266 and 2,907,793 shares at June 30, 2013 and December 31, 2012, respectively
|
(185
|
)
|
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(115
|
)
|
||
Accumulated other comprehensive income
|
32
|
|
|
84
|
|
||
Total stockholders’ equity
|
1,583
|
|
|
1,543
|
|
||
Total liabilities and stockholders’ equity
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$
|
11,326
|
|
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$
|
11,026
|
|
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Three Months Ended
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Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
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2013
|
|
2012
|
||||||||
Revenues:
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Equipment rentals
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$
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1,009
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$
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845
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$
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1,925
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$
|
1,368
|
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Sales of rental equipment
|
131
|
|
|
81
|
|
|
254
|
|
|
157
|
|
||||
Sales of new equipment
|
24
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|
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22
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|
|
45
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|
|
40
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|
||||
Contractor supplies sales
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23
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|
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23
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43
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|
41
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|
||||
Service and other revenues
|
19
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|
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22
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|
|
39
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|
|
43
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|
||||
Total revenues
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1,206
|
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|
993
|
|
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2,306
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|
1,649
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|
||||
Cost of revenues:
|
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||||||||
Cost of equipment rentals, excluding depreciation
|
399
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|
|
350
|
|
|
792
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|
|
596
|
|
||||
Depreciation of rental equipment
|
208
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|
|
172
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|
|
410
|
|
|
287
|
|
||||
Cost of rental equipment sales
|
87
|
|
|
56
|
|
|
170
|
|
|
103
|
|
||||
Cost of new equipment sales
|
19
|
|
|
17
|
|
|
36
|
|
|
32
|
|
||||
Cost of contractor supplies sales
|
16
|
|
|
16
|
|
|
29
|
|
|
28
|
|
||||
Cost of service and other revenues
|
6
|
|
|
8
|
|
|
13
|
|
|
16
|
|
||||
Total cost of revenues
|
735
|
|
|
619
|
|
|
1,450
|
|
|
1,062
|
|
||||
Gross profit
|
471
|
|
|
374
|
|
|
856
|
|
|
587
|
|
||||
Selling, general and administrative expenses
|
152
|
|
|
146
|
|
|
312
|
|
|
248
|
|
||||
RSC merger related costs
|
2
|
|
|
80
|
|
|
8
|
|
|
90
|
|
||||
Restructuring charge
|
5
|
|
|
53
|
|
|
11
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|
|
53
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|
||||
Non-rental depreciation and amortization
|
62
|
|
|
49
|
|
|
126
|
|
|
63
|
|
||||
Operating income
|
250
|
|
|
46
|
|
|
399
|
|
|
133
|
|
||||
Interest expense, net
|
118
|
|
|
121
|
|
|
236
|
|
|
189
|
|
||||
Interest expense—subordinated convertible debentures
|
1
|
|
|
1
|
|
|
3
|
|
|
2
|
|
||||
Other income, net
|
—
|
|
|
(12
|
)
|
|
(1
|
)
|
|
(13
|
)
|
||||
Income (loss) before provision (benefit) for income taxes
|
131
|
|
|
(64
|
)
|
|
161
|
|
|
(45
|
)
|
||||
Provision (benefit) for income taxes
|
48
|
|
|
(12
|
)
|
|
57
|
|
|
(6
|
)
|
||||
Net income (loss)
|
$
|
83
|
|
|
$
|
(52
|
)
|
|
$
|
104
|
|
|
$
|
(39
|
)
|
Basic earnings (loss) per share
|
$
|
0.89
|
|
|
$
|
(0.63
|
)
|
|
$
|
1.12
|
|
|
$
|
(0.53
|
)
|
Diluted earnings (loss) per share
|
$
|
0.78
|
|
|
$
|
(0.63
|
)
|
|
$
|
0.98
|
|
|
$
|
(0.53
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income (loss)
|
$
|
83
|
|
|
$
|
(52
|
)
|
|
$
|
104
|
|
|
$
|
(39
|
)
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(32
|
)
|
|
(10
|
)
|
|
(52
|
)
|
|
(1
|
)
|
||||
Fixed price diesel swaps
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Other comprehensive loss
|
(32
|
)
|
|
(12
|
)
|
|
(52
|
)
|
|
(2
|
)
|
||||
Comprehensive income (loss)
|
$
|
51
|
|
|
$
|
(64
|
)
|
|
$
|
52
|
|
|
$
|
(41
|
)
|
|
Common Stock
|
|
Additional
|
|
|
|
Treasury Stock
|
|
Accumulated
Other
|
||||||||||||||||
|
Number of
Shares (1)
|
|
Amount
|
|
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Number of
Shares
|
|
Amount
|
|
Comprehensive
Income
|
||||||||||||
Balance at December 31, 2012
|
93
|
|
|
$
|
1
|
|
|
$
|
1,997
|
|
|
$
|
(424
|
)
|
|
3
|
|
|
$
|
(115
|
)
|
|
$
|
84
|
|
Net income
|
|
|
|
|
|
|
104
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
(52
|
)
|
|||||||||||
Stock compensation expense, net
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|||||||||||
Exercise of common stock options
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|||||||||||
Conversion of subordinated convertible debentures
|
1
|
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
||||||||||
4 percent Convertible Senior Notes
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shares repurchased and retired
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|||||||||||
Repurchase of common stock
|
(1
|
)
|
|
|
|
|
|
|
|
1
|
|
|
(70
|
)
|
|
|
|||||||||
Balance at June 30, 2013
|
93
|
|
|
$
|
1
|
|
|
$
|
2,055
|
|
|
$
|
(320
|
)
|
|
4
|
|
|
$
|
(185
|
)
|
|
$
|
32
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2013
|
|
2012
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
104
|
|
|
$
|
(39
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
536
|
|
|
350
|
|
||
Amortization of deferred financing costs and original issue discounts
|
11
|
|
|
12
|
|
||
Gain on sales of rental equipment
|
(84
|
)
|
|
(54
|
)
|
||
Gain on sales of non-rental equipment
|
(2
|
)
|
|
(2
|
)
|
||
Gain on sale of software subsidiary
|
1
|
|
|
(10
|
)
|
||
Stock compensation expense, net
|
19
|
|
|
13
|
|
||
RSC merger related costs
|
8
|
|
|
90
|
|
||
Restructuring charge
|
11
|
|
|
53
|
|
||
Loss on retirement of subordinated convertible debentures
|
2
|
|
|
—
|
|
||
Increase (decrease) in deferred taxes
|
39
|
|
|
(14
|
)
|
||
Changes in operating assets and liabilities, net of amounts acquired:
|
|
|
|
||||
Decrease in accounts receivable
|
34
|
|
|
3
|
|
||
Increase in inventory
|
(43
|
)
|
|
(39
|
)
|
||
Decrease (increase) in prepaid expenses and other assets
|
6
|
|
|
(16
|
)
|
||
Increase in accounts payable
|
323
|
|
|
96
|
|
||
Decrease in accrued expenses and other liabilities
|
(87
|
)
|
|
(101
|
)
|
||
Net cash provided by operating activities
|
878
|
|
|
342
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Purchases of rental equipment
|
(1,025
|
)
|
|
(836
|
)
|
||
Purchases of non-rental equipment
|
(41
|
)
|
|
(62
|
)
|
||
Proceeds from sales of rental equipment
|
254
|
|
|
157
|
|
||
Proceeds from sales of non-rental equipment
|
11
|
|
|
12
|
|
||
Purchases of other companies, net of cash acquired
|
—
|
|
|
(1,175
|
)
|
||
Proceeds from sale of software subsidiary
|
—
|
|
|
10
|
|
||
Net cash used in investing activities
|
(801
|
)
|
|
(1,894
|
)
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Proceeds from debt
|
1,639
|
|
|
4,193
|
|
||
Payments of debt, including subordinated convertible debentures
|
(1,607
|
)
|
|
(2,464
|
)
|
||
Proceeds from the exercise of common stock options
|
5
|
|
|
11
|
|
||
Common stock repurchased
|
(84
|
)
|
|
(115
|
)
|
||
Payments of financing costs
|
—
|
|
|
(67
|
)
|
||
Cash received in connection with the 4 percent Convertible Senior Notes and related hedge, net
|
4
|
|
|
—
|
|
||
Excess tax benefits from share-based payment arrangements, net
|
—
|
|
|
(1
|
)
|
||
Net cash (used in) provided by financing activities
|
(43
|
)
|
|
1,557
|
|
||
Effect of foreign exchange rates
|
(7
|
)
|
|
—
|
|
||
Net increase in cash and cash equivalents
|
27
|
|
|
5
|
|
||
Cash and cash equivalents at beginning of period
|
106
|
|
|
36
|
|
||
Cash and cash equivalents at end of period
|
$
|
133
|
|
|
$
|
41
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for income taxes, net
|
$
|
31
|
|
|
$
|
24
|
|
Cash paid for interest, including subordinated convertible debentures
|
229
|
|
|
134
|
|
|
General
rentals
|
|
Trench safety,
power and HVAC
|
|
Total
|
||||||
Three Months Ended June 30, 2013
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
932
|
|
|
$
|
77
|
|
|
$
|
1,009
|
|
Sales of rental equipment
|
126
|
|
|
5
|
|
|
131
|
|
|||
Sales of new equipment
|
22
|
|
|
2
|
|
|
24
|
|
|||
Contractor supplies sales
|
21
|
|
|
2
|
|
|
23
|
|
|||
Service and other revenues
|
17
|
|
|
2
|
|
|
19
|
|
|||
Total revenue
|
1,118
|
|
|
88
|
|
|
1,206
|
|
|||
Depreciation and amortization expense
|
258
|
|
|
12
|
|
|
270
|
|
|||
Equipment rentals gross profit
|
366
|
|
|
36
|
|
|
402
|
|
|||
Three Months Ended June 30, 2012
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
781
|
|
|
$
|
64
|
|
|
$
|
845
|
|
Sales of rental equipment
|
78
|
|
|
3
|
|
|
81
|
|
|||
Sales of new equipment
|
20
|
|
|
2
|
|
|
22
|
|
|||
Contractor supplies sales
|
21
|
|
|
2
|
|
|
23
|
|
|||
Service and other revenues
|
21
|
|
|
1
|
|
|
22
|
|
|||
Total revenue
|
921
|
|
|
72
|
|
|
993
|
|
|||
Depreciation and amortization expense
|
209
|
|
|
12
|
|
|
221
|
|
|||
Equipment rentals gross profit
|
293
|
|
|
30
|
|
|
323
|
|
|||
Six Months Ended June 30, 2013
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
1,786
|
|
|
$
|
139
|
|
|
$
|
1,925
|
|
Sales of rental equipment
|
245
|
|
|
9
|
|
|
254
|
|
|||
Sales of new equipment
|
42
|
|
|
3
|
|
|
45
|
|
|||
Contractor supplies sales
|
39
|
|
|
4
|
|
|
43
|
|
|||
Service and other revenues
|
36
|
|
|
3
|
|
|
39
|
|
|||
Total revenue
|
2,148
|
|
|
158
|
|
|
2,306
|
|
|||
Depreciation and amortization expense
|
510
|
|
|
26
|
|
|
536
|
|
|||
Equipment rentals gross profit
|
661
|
|
|
62
|
|
|
723
|
|
|||
Capital expenditures
|
1,003
|
|
|
63
|
|
|
1,066
|
|
|||
Six Months Ended June 30, 2012
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
1,256
|
|
|
$
|
112
|
|
|
$
|
1,368
|
|
Sales of rental equipment
|
152
|
|
|
5
|
|
|
157
|
|
|||
Sales of new equipment
|
37
|
|
|
3
|
|
|
40
|
|
|||
Contractor supplies sales
|
37
|
|
|
4
|
|
|
41
|
|
|||
Service and other revenues
|
41
|
|
|
2
|
|
|
43
|
|
|||
Total revenue
|
1,523
|
|
|
126
|
|
|
1,649
|
|
|||
Depreciation and amortization expense
|
328
|
|
|
22
|
|
|
350
|
|
|||
Equipment rentals gross profit
|
437
|
|
|
48
|
|
|
485
|
|
|||
Capital expenditures
|
853
|
|
|
45
|
|
|
898
|
|
|
June 30,
2013 |
|
December 31,
2012 |
||||
Total reportable segment assets
|
|
|
|
||||
General rentals
|
$
|
10,811
|
|
|
$
|
10,545
|
|
Trench safety, power and HVAC
|
515
|
|
|
481
|
|
||
Total assets
|
$
|
11,326
|
|
|
$
|
11,026
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Total equipment rentals gross profit
|
$
|
402
|
|
|
$
|
323
|
|
|
$
|
723
|
|
|
$
|
485
|
|
Gross profit from other lines of business
|
69
|
|
|
51
|
|
|
133
|
|
|
102
|
|
||||
Selling, general and administrative expenses
|
(152
|
)
|
|
(146
|
)
|
|
(312
|
)
|
|
(248
|
)
|
||||
RSC merger related costs
|
(2
|
)
|
|
(80
|
)
|
|
(8
|
)
|
|
(90
|
)
|
||||
Restructuring charge
|
(5
|
)
|
|
(53
|
)
|
|
(11
|
)
|
|
(53
|
)
|
||||
Non-rental depreciation and amortization
|
(62
|
)
|
|
(49
|
)
|
|
(126
|
)
|
|
(63
|
)
|
||||
Interest expense, net
|
(118
|
)
|
|
(121
|
)
|
|
(236
|
)
|
|
(189
|
)
|
||||
Interest expense- subordinated convertible debentures
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
||||
Other income, net
|
—
|
|
|
12
|
|
|
1
|
|
|
13
|
|
||||
Income (loss) before provision (benefit) for income taxes
|
$
|
131
|
|
|
$
|
(64
|
)
|
|
$
|
161
|
|
|
$
|
(45
|
)
|
|
|
Reserve Balance at
|
|
Charged to
Costs and Expenses(1) |
|
Payments
and Other |
|
Reserve Balance at
|
||||||||
Description
|
|
December 31, 2012
|
|
|
|
June 30, 2013
|
||||||||||
Closed Restructuring Program
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
19
|
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
$
|
15
|
|
Severance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
19
|
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
$
|
15
|
|
RSC Merger Related Restructuring Program
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
33
|
|
|
$
|
7
|
|
|
$
|
(12
|
)
|
|
$
|
28
|
|
Severance costs
|
|
9
|
|
|
2
|
|
|
(6
|
)
|
|
5
|
|
||||
Total
|
|
$
|
42
|
|
|
$
|
9
|
|
|
$
|
(18
|
)
|
|
$
|
33
|
|
Total
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
52
|
|
|
$
|
9
|
|
|
$
|
(18
|
)
|
|
$
|
43
|
|
Severance costs
|
|
9
|
|
|
2
|
|
|
(6
|
)
|
|
5
|
|
||||
Total
|
|
$
|
61
|
|
|
$
|
11
|
|
|
$
|
(24
|
)
|
|
$
|
48
|
|
(1)
|
Reflected in our condensed consolidated statements of income as “Restructuring charge.” These charges are not allocated to our reportable segments.
|
|
|
|
Three Months Ended June 30, 2013
|
|
Three Months Ended June 30, 2012
|
||||||||||
|
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)
|
|
*
|
|
|
$
|
(8
|
)
|
|
*
|
|
|
$
|
(6
|
)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency forward contracts (4)
|
Other income
(expense), net
|
|
(2
|
)
|
|
2
|
|
|
(1
|
)
|
|
1
|
|
||
|
|
|
Six Months Ended June 30, 2013
|
|
Six Months Ended June 30, 2012
|
||||||||||
|
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)
|
|
*
|
|
|
$
|
(17
|
)
|
|
*
|
|
|
$
|
(11
|
)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency forward contracts (4)
|
Other income
(expense), net
|
|
(4
|
)
|
|
4
|
|
|
(1
|
)
|
|
1
|
|
*
|
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
2.1 million
and
1.5 million
gallons of diesel covered by the fixed price swaps during the three months ended
June 30, 2013
and
2012
, respectively, and the use of
4.3 million
and
2.7 million
gallons of diesel covered by the fixed price swaps during the
six
months ended
June 30, 2013
and
2012
, respectively. These amounts are reflected, net of cash received from the counterparties to the fixed price swaps, in operating cash flows in our condensed consolidated statement of cash flows.
|
(4)
|
Insignificant amounts were reflected in our condensed consolidated statement of cash flows associated with the forward contracts to purchase Canadian dollars, as the cash impact of the losses recognized on the derivatives were offset by the gains recognized on the hedged items.
|
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.
|
|
June 30, 2013
|
|
December 31, 2012
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Level 1:
|
|
|
|
|
|
|
|
||||||||
Subordinated convertible debentures
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
55
|
|
|
$
|
63
|
|
Senior and senior subordinated notes
|
5,385
|
|
|
5,681
|
|
|
5,387
|
|
|
5,881
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
||||||||
4 percent Convertible Senior Notes (1)
|
142
|
|
|
155
|
|
|
137
|
|
|
155
|
|
(1)
|
The fair value of the
4 percent
Convertible Senior Notes is based on the market value of comparable notes. Consistent with the carrying amount, the fair value excludes the equity component of the notes. To exclude the equity component and calculate the fair value, we used an effective interest rate of
7.5
percent.
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
URNA and subsidiaries debt:
|
|
|
|
||||
Accounts Receivable Securitization Facility (1)
|
$
|
448
|
|
|
$
|
453
|
|
$1.9 billion ABL Facility (2)
|
1,250
|
|
|
1,184
|
|
||
5
3
/
4
percent Senior Secured Notes
|
750
|
|
|
750
|
|
||
10
1
/
4
percent Senior Notes
|
222
|
|
|
223
|
|
||
9
1
/
4
percent Senior Notes
|
494
|
|
|
494
|
|
||
7
3
/
8
percent Senior Notes
|
750
|
|
|
750
|
|
||
8
3
/
8
percent Senior Subordinated Notes
|
750
|
|
|
750
|
|
||
8
1
/
4
percent Senior Notes
|
694
|
|
|
695
|
|
||
7
5
/
8
percent Senior Notes
|
1,325
|
|
|
1,325
|
|
||
6
1
/
8
percent Senior Notes
|
400
|
|
|
400
|
|
||
Capital leases
|
131
|
|
|
148
|
|
||
Total URNA and subsidiaries debt
|
7,214
|
|
|
7,172
|
|
||
Holdings:
|
|
|
|
||||
4 percent Convertible Senior Notes (3)
|
142
|
|
|
137
|
|
||
Total debt (4)
|
7,356
|
|
|
7,309
|
|
||
Less short-term portion (5)
|
(624
|
)
|
|
(630
|
)
|
||
Total long-term debt
|
$
|
6,732
|
|
|
$
|
6,679
|
|
(1)
|
In
February 2013
, we amended our accounts receivable securitization facility to increase the facility size from $
475
to $
550
. An additional purchaser was also added to the facility, and the facility was not otherwise amended. At
June 30, 2013
,
$12
was available under our accounts receivable securitization facility. The interest rate applicable to the accounts receivable securitization facility was
0.8 percent
at
June 30, 2013
. During the
six
months ended
June 30, 2013
, the monthly average amount outstanding under the accounts receivable securitization facility, including the former facility and the amended facility, was
$428
, and the weighted-average interest rate thereon was
0.8 percent
. The maximum month-end amount outstanding under the accounts receivable securitization facility, including the former facility and the amended facility, during the
six
months ended
June 30, 2013
was
$451
. Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves, exceeds the outstanding loans. As of
June 30, 2013
, there were $
460
of receivables, net of applicable reserves, in the collateral pool.
|
(2)
|
In
June 2013
, our ABL facility was amended to reduce the minimum borrowing period and to increase the number of available loan tranches. At
June 30, 2013
,
$591
was available under our ABL facility, net of
$59
of letters of credit. The interest rate applicable to the ABL facility was
2.3 percent
at
June 30, 2013
. During the
six
months ended
June 30, 2013
, the monthly average amount outstanding under the ABL facility was
$1,055
, and the weighted-average interest rate thereon was
2.3 percent
. The maximum month-end amount outstanding under the ABL facility during the
six
months ended
June 30, 2013
was
$1,250
.
|
(3)
|
The difference between the
June 30, 2013
carrying value of the
4 percent
Convertible Senior Notes and the
$168
principal amount reflects the
$26
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 redeemable at
June 30, 2013
, an amount equal to the
$26
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
second
quarter of 2013, holders of the
4 percent
Convertible Senior Notes have the right to redeem the notes during the
third
quarter of 2013 at a conversion price of
$11.11
per share of common stock. Since
July 1, 2013
(the beginning of the
third
quarter), none of the
4 percent
Convertible Senior Notes were redeemed, however we have received redemption notices for $
12
of the 4 percent Convertible Senior Notes which we expect to be redeemed in
July 2013
.
|
(4)
|
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
|
(5)
|
As of
June 30, 2013
, our short-term debt primarily reflects
$448
of borrowings under our accounts receivable securitization facility and
$142
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 redeemable at
June 30, 2013
.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) available to common stockholders
|
$
|
83
|
|
|
$
|
(52
|
)
|
|
104
|
|
|
(39
|
)
|
||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings (loss) per share—weighted-average common shares
|
93,895
|
|
|
83,231
|
|
|
93,604
|
|
|
73,181
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Employee stock options and warrants
|
498
|
|
|
—
|
|
|
557
|
|
|
—
|
|
||||
Convertible subordinated notes—4 percent
|
11,946
|
|
|
—
|
|
|
11,908
|
|
|
—
|
|
||||
Restricted stock units
|
376
|
|
|
—
|
|
|
488
|
|
|
—
|
|
||||
Denominator for diluted earnings (loss) per share—adjusted weighted-average common shares
|
106,715
|
|
|
83,231
|
|
|
106,557
|
|
|
73,181
|
|
||||
Basic earnings (loss) per share
|
$
|
0.89
|
|
|
$
|
(0.63
|
)
|
|
$
|
1.12
|
|
|
$
|
(0.53
|
)
|
Diluted earnings (loss) per share
|
$
|
0.78
|
|
|
$
|
(0.63
|
)
|
|
$
|
0.98
|
|
|
$
|
(0.53
|
)
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
870
|
|
|
$
|
—
|
|
|
$
|
139
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,009
|
|
Sales of rental equipment
|
—
|
|
|
116
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
131
|
|
|||||||
Sales of new equipment
|
—
|
|
|
18
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
18
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|||||||
Service and other revenues
|
—
|
|
|
16
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||||
Total revenues
|
—
|
|
|
1,038
|
|
|
—
|
|
|
168
|
|
|
—
|
|
|
—
|
|
|
1,206
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
336
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
399
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
184
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
208
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
78
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
14
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
13
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
4
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||||
Total cost of revenues
|
—
|
|
|
629
|
|
|
—
|
|
|
106
|
|
|
—
|
|
|
—
|
|
|
735
|
|
|||||||
Gross profit
|
—
|
|
|
409
|
|
|
—
|
|
|
62
|
|
|
—
|
|
|
—
|
|
|
471
|
|
|||||||
Selling, general and administrative expenses
|
(10
|
)
|
|
138
|
|
|
—
|
|
|
23
|
|
|
1
|
|
|
—
|
|
|
152
|
|
|||||||
RSC merger related costs
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||
Restructuring charge
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||||
Non-rental depreciation and amortization
|
4
|
|
|
53
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|||||||
Operating income (loss)
|
6
|
|
|
211
|
|
|
—
|
|
|
34
|
|
|
(1
|
)
|
|
—
|
|
|
250
|
|
|||||||
Interest expense (income), net
|
4
|
|
|
112
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
118
|
|
|||||||
Interest expense-subordinated convertible debentures
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Other (income) expense, net
|
(35
|
)
|
|
48
|
|
|
—
|
|
|
6
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|||||||
Income (loss) before provision for income taxes
|
36
|
|
|
51
|
|
|
(2
|
)
|
|
28
|
|
|
17
|
|
|
1
|
|
|
131
|
|
|||||||
Provision for income taxes
|
8
|
|
|
27
|
|
|
—
|
|
|
7
|
|
|
6
|
|
|
—
|
|
|
48
|
|
|||||||
Income (loss) before equity in net earnings (loss) of subsidiaries
|
28
|
|
|
24
|
|
|
(2
|
)
|
|
21
|
|
|
11
|
|
|
1
|
|
|
83
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
55
|
|
|
31
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
83
|
|
|
55
|
|
|
19
|
|
|
21
|
|
|
11
|
|
|
(106
|
)
|
|
83
|
|
|||||||
Other comprehensive (loss) income
|
(32
|
)
|
|
(32
|
)
|
|
(32
|
)
|
|
(25
|
)
|
|
—
|
|
|
89
|
|
|
(32
|
)
|
|||||||
Comprehensive income (loss)
|
$
|
51
|
|
|
$
|
23
|
|
|
$
|
(13
|
)
|
|
$
|
(4
|
)
|
|
$
|
11
|
|
|
$
|
(17
|
)
|
|
$
|
51
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
Foreign
|
|
SPV (1)
|
|
|||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
665
|
|
|
$
|
66
|
|
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
845
|
|
Sales of rental equipment
|
—
|
|
|
66
|
|
|
6
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
81
|
|
|||||||
Sales of new equipment
|
—
|
|
|
13
|
|
|
2
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
16
|
|
|
2
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|||||||
Service and other revenues
|
—
|
|
|
14
|
|
|
3
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|||||||
Total revenues
|
—
|
|
|
774
|
|
|
79
|
|
|
140
|
|
|
—
|
|
|
—
|
|
|
993
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
272
|
|
|
29
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
350
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
136
|
|
|
13
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
172
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
47
|
|
|
4
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
10
|
|
|
2
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
12
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
4
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||||
Total cost of revenues
|
—
|
|
|
481
|
|
|
50
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
619
|
|
|||||||
Gross profit
|
—
|
|
|
293
|
|
|
29
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
374
|
|
|||||||
Selling, general and administrative expenses
|
9
|
|
|
104
|
|
|
11
|
|
|
17
|
|
|
5
|
|
|
—
|
|
|
146
|
|
|||||||
RSC merger related costs
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|||||||
Restructuring charge
|
—
|
|
|
52
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|||||||
Non-rental depreciation and amortization
|
3
|
|
|
41
|
|
|
1
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|||||||
Operating (loss) income
|
(12
|
)
|
|
16
|
|
|
17
|
|
|
30
|
|
|
(5
|
)
|
|
—
|
|
|
46
|
|
|||||||
Interest expense (income), net
|
3
|
|
|
68
|
|
|
32
|
|
|
1
|
|
|
18
|
|
|
(1
|
)
|
|
121
|
|
|||||||
Interest expense-subordinated convertible debentures
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Other (income) expense, net
|
(20
|
)
|
|
14
|
|
|
—
|
|
|
4
|
|
|
(10
|
)
|
|
—
|
|
|
(12
|
)
|
|||||||
Income (loss) before provision (benefit) for income taxes
|
4
|
|
|
(66
|
)
|
|
(15
|
)
|
|
25
|
|
|
(13
|
)
|
|
1
|
|
|
(64
|
)
|
|||||||
Provision (benefit) for income taxes
|
1
|
|
|
(3
|
)
|
|
(11
|
)
|
|
6
|
|
|
(5
|
)
|
|
—
|
|
|
(12
|
)
|
|||||||
Income (loss) before equity in net (loss) earnings of subsidiaries
|
3
|
|
|
(63
|
)
|
|
(4
|
)
|
|
19
|
|
|
(8
|
)
|
|
1
|
|
|
(52
|
)
|
|||||||
Equity in net (loss) earnings of subsidiaries
|
(55
|
)
|
|
8
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|||||||
Net (loss) income
|
(52
|
)
|
|
(55
|
)
|
|
15
|
|
|
19
|
|
|
(8
|
)
|
|
29
|
|
|
(52
|
)
|
|||||||
Other comprehensive (loss) income
|
(12
|
)
|
|
(12
|
)
|
|
(10
|
)
|
|
(6
|
)
|
|
—
|
|
|
28
|
|
|
(12
|
)
|
|||||||
Comprehensive (loss) income
|
$
|
(64
|
)
|
|
$
|
(67
|
)
|
|
$
|
5
|
|
|
$
|
13
|
|
|
$
|
(8
|
)
|
|
$
|
57
|
|
|
$
|
(64
|
)
|
(1)
|
Includes interest expense prior to the
April 30, 2012
RSC acquisition date on debt issued in connection with the RSC acquisition discussed in note
1
to our condensed consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
1,651
|
|
|
$
|
—
|
|
|
$
|
274
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,925
|
|
Sales of rental equipment
|
—
|
|
|
228
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
254
|
|
|||||||
Sales of new equipment
|
—
|
|
|
34
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
34
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|||||||
Service and other revenues
|
—
|
|
|
31
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|||||||
Total revenues
|
—
|
|
|
1,978
|
|
|
—
|
|
|
328
|
|
|
—
|
|
|
—
|
|
|
2,306
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
669
|
|
|
—
|
|
|
123
|
|
|
—
|
|
|
—
|
|
|
792
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
362
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
410
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
154
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
27
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
23
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
10
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||||
Total cost of revenues
|
—
|
|
|
1,245
|
|
|
—
|
|
|
205
|
|
|
—
|
|
|
—
|
|
|
1,450
|
|
|||||||
Gross profit
|
—
|
|
|
733
|
|
|
—
|
|
|
123
|
|
|
—
|
|
|
—
|
|
|
856
|
|
|||||||
Selling, general and administrative expenses
|
9
|
|
|
256
|
|
|
—
|
|
|
45
|
|
|
2
|
|
|
—
|
|
|
312
|
|
|||||||
RSC merger related costs
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||||
Restructuring charge
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||||
Non-rental depreciation and amortization
|
8
|
|
|
108
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
126
|
|
|||||||
Operating (loss) income
|
(17
|
)
|
|
350
|
|
|
—
|
|
|
68
|
|
|
(2
|
)
|
|
—
|
|
|
399
|
|
|||||||
Interest expense (income), net
|
6
|
|
|
226
|
|
|
3
|
|
|
1
|
|
|
2
|
|
|
(2
|
)
|
|
236
|
|
|||||||
Interest expense-subordinated convertible debentures
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||||
Other (income) expense, net
|
(65
|
)
|
|
93
|
|
|
—
|
|
|
9
|
|
|
(38
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
Income (loss) before provision for income taxes
|
39
|
|
|
31
|
|
|
(3
|
)
|
|
58
|
|
|
34
|
|
|
2
|
|
|
161
|
|
|||||||
Provision for income taxes
|
9
|
|
|
19
|
|
|
—
|
|
|
16
|
|
|
13
|
|
|
—
|
|
|
57
|
|
|||||||
Income (loss) before equity in net earnings (loss) of subsidiaries
|
30
|
|
|
12
|
|
|
(3
|
)
|
|
42
|
|
|
21
|
|
|
2
|
|
|
104
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
74
|
|
|
62
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
(178
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
104
|
|
|
74
|
|
|
39
|
|
|
42
|
|
|
21
|
|
|
(176
|
)
|
|
104
|
|
|||||||
Other comprehensive income (loss)
|
(52
|
)
|
|
(52
|
)
|
|
(52
|
)
|
|
(40
|
)
|
|
—
|
|
|
144
|
|
|
(52
|
)
|
|||||||
Comprehensive income (loss)
|
$
|
52
|
|
|
$
|
22
|
|
|
$
|
(13
|
)
|
|
$
|
2
|
|
|
$
|
21
|
|
|
$
|
(32
|
)
|
|
$
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
Foreign
|
|
SPV (1)
|
|
|||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
915
|
|
|
$
|
249
|
|
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,368
|
|
Sales of rental equipment
|
—
|
|
|
105
|
|
|
32
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
157
|
|
|||||||
Sales of new equipment
|
—
|
|
|
21
|
|
|
7
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
24
|
|
|
7
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||||
Service and other revenues
|
—
|
|
|
25
|
|
|
8
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|||||||
Total revenues
|
—
|
|
|
1,090
|
|
|
303
|
|
|
256
|
|
|
—
|
|
|
—
|
|
|
1,649
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
387
|
|
|
117
|
|
|
92
|
|
|
—
|
|
|
—
|
|
|
596
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
195
|
|
|
50
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
287
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
71
|
|
|
20
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
103
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
17
|
|
|
6
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
16
|
|
|
5
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
10
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||||
Total cost of revenues
|
—
|
|
|
696
|
|
|
201
|
|
|
165
|
|
|
—
|
|
|
—
|
|
|
1,062
|
|
|||||||
Gross profit
|
—
|
|
|
394
|
|
|
102
|
|
|
91
|
|
|
—
|
|
|
—
|
|
|
587
|
|
|||||||
Selling, general and administrative expenses
|
19
|
|
|
138
|
|
|
47
|
|
|
34
|
|
|
10
|
|
|
—
|
|
|
248
|
|
|||||||
RSC merger related costs
|
—
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90
|
|
|||||||
Restructuring charge
|
—
|
|
|
52
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|||||||
Non-rental depreciation and amortization
|
7
|
|
|
45
|
|
|
5
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|||||||
Operating (loss) income
|
(26
|
)
|
|
69
|
|
|
50
|
|
|
50
|
|
|
(10
|
)
|
|
—
|
|
|
133
|
|
|||||||
Interest expense (income), net
|
6
|
|
|
119
|
|
|
33
|
|
|
2
|
|
|
31
|
|
|
(2
|
)
|
|
189
|
|
|||||||
Interest expense-subordinated convertible debentures
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||
Other (income) expense, net
|
(38
|
)
|
|
30
|
|
|
9
|
|
|
7
|
|
|
(21
|
)
|
|
—
|
|
|
(13
|
)
|
|||||||
Income (loss) before provision (benefit) for income taxes
|
4
|
|
|
(80
|
)
|
|
8
|
|
|
41
|
|
|
(20
|
)
|
|
2
|
|
|
(45
|
)
|
|||||||
Provision (benefit) for income taxes
|
1
|
|
|
(25
|
)
|
|
17
|
|
|
9
|
|
|
(8
|
)
|
|
—
|
|
|
(6
|
)
|
|||||||
Income (loss) before equity in net (loss) earnings of subsidiaries
|
3
|
|
|
(55
|
)
|
|
(9
|
)
|
|
32
|
|
|
(12
|
)
|
|
2
|
|
|
(39
|
)
|
|||||||
Equity in net (loss) earnings of subsidiaries
|
(42
|
)
|
|
13
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||||||
Net (loss) income
|
(39
|
)
|
|
(42
|
)
|
|
24
|
|
|
32
|
|
|
(12
|
)
|
|
(2
|
)
|
|
(39
|
)
|
|||||||
Other comprehensive (loss) income
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
4
|
|
|
(2
|
)
|
|||||||
Comprehensive (loss) income
|
$
|
(41
|
)
|
|
$
|
(44
|
)
|
|
$
|
23
|
|
|
$
|
31
|
|
|
$
|
(12
|
)
|
|
$
|
2
|
|
|
$
|
(41
|
)
|
(1)
|
Includes interest expense prior to the
April 30, 2012
RSC acquisition date on debt issued in connection with the RSC acquisition discussed in note
1
to our condensed consolidated financial statements.
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
17
|
|
|
$
|
719
|
|
|
$
|
(2
|
)
|
|
$
|
122
|
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
878
|
|
Net cash used in investing activities
|
(17
|
)
|
|
(710
|
)
|
|
—
|
|
|
(74
|
)
|
|
—
|
|
|
—
|
|
|
(801
|
)
|
|||||||
Net cash (used in) provided by financing activities
|
—
|
|
|
(22
|
)
|
|
2
|
|
|
(1
|
)
|
|
(22
|
)
|
|
—
|
|
|
(43
|
)
|
|||||||
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||||
Net (decrease) increase in cash and cash equivalents
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
20
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
106
|
|
|||||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
126
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
133
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
|
|
|
Foreign
|
|
SPV
|
|
|
|||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
7
|
|
|
$
|
359
|
|
|
$
|
150
|
|
|
$
|
62
|
|
|
$
|
(236
|
)
|
|
$
|
—
|
|
|
$
|
342
|
|
Net cash used in investing activities
|
(7
|
)
|
|
(1,675
|
)
|
|
(152
|
)
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|
(1,894
|
)
|
|||||||
Net cash provided by (used in) financing activities
|
—
|
|
|
1,324
|
|
|
2
|
|
|
(5
|
)
|
|
236
|
|
|
—
|
|
|
1,557
|
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
—
|
|
|
8
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
6
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41
|
|
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
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income (loss)
|
$
|
83
|
|
|
$
|
(52
|
)
|
|
$
|
104
|
|
|
$
|
(39
|
)
|
Diluted earnings (loss) per share
|
$
|
0.78
|
|
|
$
|
(0.63
|
)
|
|
$
|
0.98
|
|
|
$
|
(0.53
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||||||||||||||
|
Contribution
to net income (after-tax)
|
|
Impact on
diluted earnings per share
|
|
Contribution
to net loss (after-tax)
|
|
Impact on
diluted loss per share
|
|
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)
|
$
|
(1
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(49
|
)
|
|
$
|
(0.60
|
)
|
|
$
|
(5
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(55
|
)
|
|
$
|
(0.76
|
)
|
RSC merger related intangible asset amortization (2)
|
(25
|
)
|
|
(0.24
|
)
|
|
(18
|
)
|
|
(0.21
|
)
|
|
(51
|
)
|
|
(0.49
|
)
|
|
(18
|
)
|
|
(0.24
|
)
|
||||||||
Impact on depreciation related to acquired RSC fleet and property and equipment (3)
|
2
|
|
|
0.01
|
|
|
2
|
|
|
0.02
|
|
|
3
|
|
|
0.03
|
|
|
2
|
|
|
0.02
|
|
||||||||
Impact of the fair value mark-up of acquired RSC fleet (4)
|
(8
|
)
|
|
(0.07
|
)
|
|
(4
|
)
|
|
(0.05
|
)
|
|
(16
|
)
|
|
(0.15
|
)
|
|
(4
|
)
|
|
(0.05
|
)
|
||||||||
Pre-close RSC merger related interest expense (5)
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(0.12
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(0.25
|
)
|
||||||||
Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (6)
|
1
|
|
|
0.01
|
|
|
1
|
|
|
0.01
|
|
|
2
|
|
|
0.02
|
|
|
1
|
|
|
0.01
|
|
||||||||
Restructuring charge (7)
|
(2
|
)
|
|
(0.03
|
)
|
|
(33
|
)
|
|
(0.39
|
)
|
|
(6
|
)
|
|
(0.06
|
)
|
|
(33
|
)
|
|
(0.44
|
)
|
||||||||
Asset impairment charge (8)
|
(1
|
)
|
|
(0.01
|
)
|
|
(2
|
)
|
|
(0.02
|
)
|
|
(2
|
)
|
|
(0.02
|
)
|
|
(2
|
)
|
|
(0.02
|
)
|
||||||||
Loss on repurchase/redemption of debt securities and retirement of subordinated convertible debentures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
||||||||
Gain on sale of software subsidiary (9)
|
—
|
|
|
—
|
|
|
6
|
|
|
0.07
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
0.08
|
|
(1)
|
This reflects transaction costs associated with the acquisition of RSC.
|
(2)
|
This reflects the amortization of the intangible assets acquired in the RSC acquisition.
|
(3)
|
This reflects the impact of extending the useful lives of equipment acquired in the RSC acquisition, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.
|
(4)
|
This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold.
|
(5)
|
In
March 2012
, we issued $
2,825
of debt in connection with the RSC acquisition. The pre-close RSC merger related interest expense reflects the interest expense recorded on this debt prior to the acquisition date.
|
(6)
|
This reflects a reduction of interest expense associated with the fair value mark-up of debt acquired in the RSC acquisition.
|
(7)
|
As discussed below (see “Restructuring charges”), this primarily reflects severance costs and branch closure charges associated with the RSC acquisition.
|
(8)
|
This charge primarily reflects write-offs of leasehold improvements and other fixed assets in connection with the RSC acquisition.
|
(9)
|
This reflects a gain recognized upon the sale of a former subsidiary that developed and marketed software.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income (loss)
|
$
|
83
|
|
|
$
|
(52
|
)
|
|
$
|
104
|
|
|
$
|
(39
|
)
|
Provision (benefit) for income taxes
|
48
|
|
|
(12
|
)
|
|
57
|
|
|
(6
|
)
|
||||
Interest expense, net
|
118
|
|
|
121
|
|
|
236
|
|
|
189
|
|
||||
Interest expense – subordinated convertible debentures
|
1
|
|
|
1
|
|
|
3
|
|
|
2
|
|
||||
Depreciation of rental equipment
|
208
|
|
|
172
|
|
|
410
|
|
|
287
|
|
||||
Non-rental depreciation and amortization
|
62
|
|
|
49
|
|
|
126
|
|
|
63
|
|
||||
EBITDA
|
$
|
520
|
|
|
$
|
279
|
|
|
$
|
936
|
|
|
$
|
496
|
|
RSC merger related costs (1)
|
2
|
|
|
80
|
|
|
8
|
|
|
90
|
|
||||
Restructuring charge (2)
|
5
|
|
|
53
|
|
|
11
|
|
|
53
|
|
||||
Stock compensation expense, net (3)
|
10
|
|
|
9
|
|
|
19
|
|
|
13
|
|
||||
Impact of the fair value mark-up of acquired RSC fleet (4)
|
11
|
|
|
7
|
|
|
25
|
|
|
7
|
|
||||
Gain on sale of software subsidiary (5)
|
1
|
|
|
(10
|
)
|
|
1
|
|
|
(10
|
)
|
||||
Adjusted EBITDA
|
$
|
549
|
|
|
$
|
418
|
|
|
$
|
1,000
|
|
|
$
|
649
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2013
|
|
2012
|
||||
Net cash provided by operating activities
|
$
|
878
|
|
|
$
|
342
|
|
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
|
(11
|
)
|
|
(12
|
)
|
||
Gain on sales of rental equipment
|
84
|
|
|
54
|
|
||
Gain on sales of non-rental equipment
|
2
|
|
|
2
|
|
||
Gain on sale of software subsidiary (5)
|
(1
|
)
|
|
10
|
|
||
RSC merger related costs (1)
|
(8
|
)
|
|
(90
|
)
|
||
Restructuring charge (2)
|
(11
|
)
|
|
(53
|
)
|
||
Stock compensation expense, net (3)
|
(19
|
)
|
|
(13
|
)
|
||
Loss on retirement of subordinated convertible debentures
|
(2
|
)
|
|
—
|
|
||
Changes in assets and liabilities
|
(236
|
)
|
|
98
|
|
||
Cash paid for interest, including subordinated convertible debentures
|
229
|
|
|
134
|
|
||
Cash paid for income taxes, net
|
31
|
|
|
24
|
|
||
EBITDA
|
$
|
936
|
|
|
$
|
496
|
|
Add back:
|
|
|
|
||||
RSC merger related costs (1)
|
8
|
|
|
90
|
|
||
Restructuring charge (2)
|
11
|
|
|
53
|
|
||
Stock compensation expense, net (3)
|
19
|
|
|
13
|
|
||
Impact of the fair value mark-up of acquired RSC fleet (4)
|
25
|
|
|
7
|
|
||
Gain on sale of software subsidiary (5)
|
1
|
|
|
(10
|
)
|
||
Adjusted EBITDA
|
$
|
1,000
|
|
|
$
|
649
|
|
(1)
|
This reflects transaction costs associated with the RSC acquisition discussed above.
|
(2)
|
As discussed below (see “Restructuring charges”), this primarily reflects severance costs and branch closure charges associated with the RSC acquisition.
|
(3)
|
Represents non-cash, share-based payments associated with the granting of equity instruments.
|
(4)
|
This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold.
|
(5)
|
This reflects a gain recognized upon the sale of a former subsidiary that developed and marketed software.
|
|
General
rentals
|
|
Trench safety,
power and HVAC
|
|
Total
|
||||||
Three Months Ended June 30, 2013
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
932
|
|
|
$
|
77
|
|
|
$
|
1,009
|
|
Sales of rental equipment
|
126
|
|
|
5
|
|
|
131
|
|
|||
Sales of new equipment
|
22
|
|
|
2
|
|
|
24
|
|
|||
Contractor supplies sales
|
21
|
|
|
2
|
|
|
23
|
|
|||
Service and other revenues
|
17
|
|
|
2
|
|
|
19
|
|
|||
Total revenue
|
$
|
1,118
|
|
|
$
|
88
|
|
|
$
|
1,206
|
|
Three Months Ended June 30, 2012
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
781
|
|
|
$
|
64
|
|
|
$
|
845
|
|
Sales of rental equipment
|
78
|
|
|
3
|
|
|
81
|
|
|||
Sales of new equipment
|
20
|
|
|
2
|
|
|
22
|
|
|||
Contractor supplies sales
|
21
|
|
|
2
|
|
|
23
|
|
|||
Service and other revenues
|
21
|
|
|
1
|
|
|
22
|
|
|||
Total revenue
|
$
|
921
|
|
|
$
|
72
|
|
|
$
|
993
|
|
Six Months Ended June 30, 2013
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
1,786
|
|
|
$
|
139
|
|
|
$
|
1,925
|
|
Sales of rental equipment
|
245
|
|
|
9
|
|
|
254
|
|
|||
Sales of new equipment
|
42
|
|
|
3
|
|
|
45
|
|
|||
Contractor supplies sales
|
39
|
|
|
4
|
|
|
43
|
|
|||
Service and other revenues
|
36
|
|
|
3
|
|
|
39
|
|
|||
Total revenue
|
$
|
2,148
|
|
|
$
|
158
|
|
|
$
|
2,306
|
|
Six Months Ended June 30, 2012
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
1,256
|
|
|
$
|
112
|
|
|
$
|
1,368
|
|
Sales of rental equipment
|
152
|
|
|
5
|
|
|
157
|
|
|||
Sales of new equipment
|
37
|
|
|
3
|
|
|
40
|
|
|||
Contractor supplies sales
|
37
|
|
|
4
|
|
|
41
|
|
|||
Service and other revenues
|
41
|
|
|
2
|
|
|
43
|
|
|||
Total revenue
|
$
|
1,523
|
|
|
$
|
126
|
|
|
$
|
1,649
|
|
|
General
rentals
|
|
Trench safety,
power and HVAC
|
|
Total
|
||||||
Three Months Ended June 30, 2013
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
366
|
|
|
$
|
36
|
|
|
$
|
402
|
|
Equipment Rentals Gross Margin
|
39.3
|
%
|
|
46.8
|
%
|
|
39.8
|
%
|
|||
Three Months Ended June 30, 2012
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
293
|
|
|
$
|
30
|
|
|
$
|
323
|
|
Equipment Rentals Gross Margin
|
37.5
|
%
|
|
46.9
|
%
|
|
38.2
|
%
|
|||
Six Months Ended June 30, 2013
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
661
|
|
|
$
|
62
|
|
|
$
|
723
|
|
Equipment Rentals Gross Margin
|
37.0
|
%
|
|
44.6
|
%
|
|
37.6
|
%
|
|||
Six Months Ended June 30, 2012
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
437
|
|
|
$
|
48
|
|
|
$
|
485
|
|
Equipment Rentals Gross Margin
|
34.8
|
%
|
|
42.9
|
%
|
|
35.5
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Total gross margin
|
39.1
|
%
|
|
37.7
|
%
|
|
37.1
|
%
|
|
35.6
|
%
|
Equipment rentals
|
39.8
|
%
|
|
38.2
|
%
|
|
37.6
|
%
|
|
35.5
|
%
|
Sales of rental equipment
|
33.6
|
%
|
|
30.9
|
%
|
|
33.1
|
%
|
|
34.4
|
%
|
Sales of new equipment
|
20.8
|
%
|
|
22.7
|
%
|
|
20.0
|
%
|
|
20.0
|
%
|
Contractor supplies sales
|
30.4
|
%
|
|
30.4
|
%
|
|
32.6
|
%
|
|
31.7
|
%
|
Service and other revenues
|
68.4
|
%
|
|
63.6
|
%
|
|
66.7
|
%
|
|
62.8
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Total SG&A expenses
|
$
|
152
|
|
|
$
|
146
|
|
|
$
|
312
|
|
|
$
|
248
|
|
SG&A as a percentage of revenue
|
12.6
|
%
|
|
14.7
|
%
|
|
13.5
|
%
|
|
15.0
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
RSC merger related costs
|
$
|
2
|
|
|
$
|
80
|
|
|
$
|
8
|
|
|
$
|
90
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Restructuring charge
|
$
|
5
|
|
|
$
|
53
|
|
|
$
|
11
|
|
|
$
|
53
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Non-rental depreciation and amortization
|
$
|
62
|
|
|
$
|
49
|
|
|
$
|
126
|
|
|
$
|
63
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Interest expense, net
|
$
|
118
|
|
|
$
|
121
|
|
|
$
|
236
|
|
|
$
|
189
|
|
|
Corporate Rating
|
|
Outlook
|
Moody’s
|
B2
|
|
Positive
|
Standard & Poor’s
|
B+
|
|
Positive
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2013
|
|
2012
|
||||
Net cash provided by operating activities
|
$
|
878
|
|
|
$
|
342
|
|
Purchases of rental equipment
|
(1,025
|
)
|
|
(836
|
)
|
||
Purchases of non-rental equipment
|
(41
|
)
|
|
(62
|
)
|
||
Proceeds from sales of rental equipment
|
254
|
|
|
157
|
|
||
Proceeds from sales of non-rental equipment
|
11
|
|
|
12
|
|
||
Excess tax benefits from share-based payment arrangements, net
|
—
|
|
|
(1
|
)
|
||
Free cash flow (usage)
|
$
|
77
|
|
|
$
|
(388
|
)
|
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
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
|
|
Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Program (2)
|
||||||
April 1, 2013 to April 30, 2013
|
410,630
|
|
(1)
|
$
|
51.41
|
|
|
408,100
|
|
|
—
|
|
|
May 1, 2013 to May 31, 2013
|
249,904
|
|
(1)
|
$
|
54.04
|
|
|
226,700
|
|
|
—
|
|
|
June 1, 2013 to June 30, 2013
|
370,245
|
|
(1)
|
$
|
50.86
|
|
|
369,073
|
|
|
—
|
|
|
Total
|
1,030,779
|
|
|
$
|
51.85
|
|
|
1,003,873
|
|
|
$
|
15,173,565
|
|
(1)
|
In
April 2013
,
May 2013
and
June 2013
,
2,530
,
23,204
and
1,172
shares, respectively, 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.
|
(2)
|
In December 2011, in connection with the RSC acquisition, our Board announced its intention to authorize a stock buyback of up to $200 million of Holdings' common stock, which we intend to complete within 18 months after the April 30, 2012 closing of the RSC acquisition. Our Board announced its authorization of the stock buyback in April 2012.
|
Item 5.
|
Other Information
|
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)
|
|
|
3(c)*
|
Restated Certificate of Incorporation of United Rentals (North America), Inc., dated April 30, 2012
|
|
|
3(d)*
|
By-laws of United Rentals (North America), Inc. dated May 8, 2013
|
|
|
10(a)*
|
Amendment No. 2 to Amended and Restated Credit Agreement, dated as of June 28, 2013, to that certain Amended and Restated Credit Agreement, dated as of October 14, 2011, by and among United Rentals, Inc., United Rentals (North America), Inc., certain subsidiaries of United Rentals, Inc. and United Rentals (North America), Inc., United Rentals of Canada, Inc., United Rentals Financing Limited Partnership, the financial institutions party thereto from time to time (the “Lenders”), Bank of America N.A., as agent for the Lenders, and the other parties thereto
|
|
|
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 June 30, 2013, filed on July 16, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Cond
ensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statement of Stockholders' Equity, (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.
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||
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Dated:
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July 15, 2013
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By:
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/
S
/ J
OHN
J. F
AHEY
|
|
|
|
|
John J. Fahey
Vice President, Controller
|
|
|
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|
and Principal Accounting Officer
|
|
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||
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UNITED RENTALS (NORTH AMERICA), INC.
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||
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Dated:
|
July 15, 2013
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By:
|
|
/
S
/ J
OHN
J. F
AHEY
|
|
|
|
|
John J. Fahey
Vice President, Controller
|
|
|
|
|
and Principal Accounting Officer
|
By:
|
/s/ Irene Moshouris
|
By:
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/s/ Irene Moshouris
|
By:
|
/s/ Irene Moshouris
|
By:
|
/s/ Irene Moshouris
|
By:
|
/s/ Irene Moshouris
|
By:
|
/s/ Irene Moshouris
|
By:
|
/s/ Irene Moshouris
|
By:
|
/s/ Irene Moshouris
|
By:
|
/s/ Irene Moshouris
|
By:
|
/s/ Irene Moshouris
|
By:
|
/s/ Cynthia G. Stannard
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By:
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/s/ Medina Sales de Andrade
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By:
|
/s/ Raymond Eghobamien
|
By:
|
/s/ Peter Aziz
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By:
|
/s/ Justin McMahan
|
By:
|
/s/ Brian Janiak
|
By:
|
/s/ Brian Janiak
|
By:
|
/s/ Christopher R. Lee
|
By:
|
/s/ Marcus M. Tarkington
|
By:
|
/s/ Michael Getz
|
By:
|
/s/ Kevin Buddhdew
|
By:
|
/s/ Alex Verdone
|
By:
|
/s/ David Mahmood
|
By:
|
/s/ Corey Billups
|
By:
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/s/ Glen Andrianov
|
By:
|
/s/ Randolph E. Cates
|
By:
|
/s/ Felix Mednikov
|
By:
|
/s/ Robert Kizell
|
By:
|
/s/ James H. Herzog, Jr.
|
By:
|
/s/ Lynn Trapanese
|
By:
|
/s/ Steven A. Narsutis
|
By:
|
/s/ Anne Collins
|
By:
|
/s/ Donald G. Cassidy, Jr.
|
By:
|
/s/ Renee M. Singer
|
By:
|
/s/ Ron Walker
|
By:
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/s/ Brent Phillips
|
By:
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/s/ Patrick Lingrosso
|
By:
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/s/ Cynthia J. Tonucci
|
By:
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/s/ Sharon Prusakowski
|
By:
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/s/ John Finone
|
By:
|
/s/ Humberto Campos
|
|
Year Ended December 31,
|
|
Six Months Ended June 30,
|
||||||||||||||||
|
2008
|
2009
|
2010
|
2011
|
2012
|
|
2013
|
||||||||||||
Earnings:
|
|
|
|
|
|
|
|
||||||||||||
(Loss) income from continuing operations before (benefit) provision for income taxes
|
$
|
(813
|
)
|
$
|
(107
|
)
|
$
|
(63
|
)
|
$
|
164
|
|
$
|
88
|
|
|
$
|
161
|
|
Add:
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges, net of capitalized interest
|
277
|
|
288
|
|
279
|
|
271
|
|
504
|
|
|
260
|
|
||||||
Total earnings available for fixed charges
|
(536
|
)
|
181
|
|
216
|
|
435
|
|
592
|
|
|
421
|
|
||||||
Fixed charges (1):
|
|
|
|
|
|
|
|
||||||||||||
Interest expense, net
|
174
|
|
226
|
|
255
|
|
228
|
|
512
|
|
|
236
|
|
||||||
Add back interest income, which is netted in interest expense
|
6
|
|
1
|
|
1
|
|
1
|
|
2
|
|
|
—
|
|
||||||
Add back gains (losses) on bond repurchases/retirement of subordinated convertible debentures, included in interest expense
|
41
|
|
20
|
|
(28
|
)
|
(5
|
)
|
(72
|
)
|
|
(2
|
)
|
||||||
Interest expense—subordinated convertible debentures, net
|
9
|
|
(4
|
)
|
8
|
|
7
|
|
4
|
|
|
3
|
|
||||||
Capitalized interest
|
1
|
|
1
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Interest component of rent expense
|
47
|
|
45
|
|
43
|
|
40
|
|
58
|
|
|
23
|
|
||||||
Fixed charges
|
$
|
278
|
|
$
|
289
|
|
$
|
279
|
|
$
|
271
|
|
$
|
504
|
|
|
$
|
260
|
|
Ratio of earnings to fixed charges
|
—(2)(3)
|
|
— (2)
|
|
— (2)
|
|
1.6x
|
|
1.2x
|
|
|
1.6x
|
|
(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
June 30, 2013
;
|
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
June 30, 2013
;
|
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
|