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 6
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•
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the possibility that RSC Holdings Inc. ("RSC"), National Pump
1
or other companies that we have acquired or may acquire, in our specialty business or otherwise, 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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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 as well as the energy sector, in general; although we have 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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our significant indebtedness (which totaled $
8.1 billion
at
March 31, 2015
) 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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inability to refinance our indebtedness at terms that are favorable to us, or at all;
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•
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incurrence of additional debt, which could exacerbate the risks associated with our current level of indebtedness;
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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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restrictive covenants and amount of borrowings permitted in our debt instruments, which can limit our financial and operational flexibility;
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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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fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame and/or on the terms anticipated;
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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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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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inability to access the capital that our businesses or growth plans may require;
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•
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incurrence of impairment charges;
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•
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the fact that our holding company structure requires us to depend in part on distributions from subsidiaries and such distributions could be limited by contractual or legal restrictions;
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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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the outcome or other potential consequences of regulatory matters and commercial litigation;
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•
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shortfalls in our insurance coverage;
|
•
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our charter provisions as well as provisions of certain debt agreements and our significant indebtedness may have the effect of making more difficult or otherwise discouraging, delaying or deterring a takeover or other change of control of us;
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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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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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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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competition from existing and new competitors;
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1.
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In April 2014, we acquired assets of the following four entities: National Pump & Compressor, Ltd., Canadian Pump and Compressor Ltd., GulfCo Industrial Equipment, LP and LD Services, LLC (collectively “National Pump”).
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•
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risks related to security breaches, cybersecurity attacks and other significant disruptions in our information technology systems;
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•
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the costs of complying with environmental, safety and foreign law and 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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increases in our maintenance and replacement costs and/or decreases in the residual value of our equipment.
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Item 1.
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Financial Statements
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March 31, 2015
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December 31, 2014
|
||||
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(unaudited)
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|
|||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
257
|
|
|
$
|
158
|
|
Accounts receivable, net of allowance for doubtful accounts of $45 at March 31, 2015 and $43 at December 31, 2014
|
848
|
|
|
940
|
|
||
Inventory
|
81
|
|
|
78
|
|
||
Prepaid expenses and other assets
|
51
|
|
|
122
|
|
||
Deferred taxes
|
215
|
|
|
248
|
|
||
Total current assets
|
1,452
|
|
|
1,546
|
|
||
Rental equipment, net
|
5,988
|
|
|
6,008
|
|
||
Property and equipment, net
|
428
|
|
|
438
|
|
||
Goodwill
|
3,249
|
|
|
3,272
|
|
||
Other intangible assets, net
|
1,047
|
|
|
1,106
|
|
||
Other long-term assets
|
118
|
|
|
97
|
|
||
Total assets
|
$
|
12,282
|
|
|
$
|
12,467
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
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|
||||
Short-term debt and current maturities of long-term debt
|
$
|
593
|
|
|
$
|
618
|
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Accounts payable
|
465
|
|
|
285
|
|
||
Accrued expenses and other liabilities
|
497
|
|
|
575
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|
||
Total current liabilities
|
1,555
|
|
|
1,478
|
|
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Long-term debt
|
7,482
|
|
|
7,434
|
|
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Deferred taxes
|
1,690
|
|
|
1,692
|
|
||
Other long-term liabilities
|
60
|
|
|
65
|
|
||
Total liabilities
|
10,787
|
|
|
10,669
|
|
||
Temporary equity (note 7)
|
1
|
|
|
2
|
|
||
Common stock—$0.01 par value, 500,000,000 shares authorized, 110,822,519 and 96,928,055 shares issued and outstanding, respectively, at March 31, 2015 and 108,233,686 and 97,877,580 shares issued and outstanding, respectively, at December 31, 2014
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
2,156
|
|
|
2,168
|
|
||
Retained earnings
|
618
|
|
|
503
|
|
||
Treasury stock at cost—13,894,464 and 10,356,106 shares at March 31, 2015 and December 31, 2014, respectively
|
(1,118
|
)
|
|
(802
|
)
|
||
Accumulated other comprehensive loss
|
(163
|
)
|
|
(74
|
)
|
||
Total stockholders’ equity
|
1,494
|
|
|
1,796
|
|
||
Total liabilities and stockholders’ equity
|
$
|
12,282
|
|
|
$
|
12,467
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Revenues:
|
|
|
|
||||
Equipment rentals
|
$
|
1,125
|
|
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$
|
1,005
|
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Sales of rental equipment
|
116
|
|
|
110
|
|
||
Sales of new equipment
|
33
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|
|
26
|
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Contractor supplies sales
|
18
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19
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|
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Service and other revenues
|
23
|
|
|
18
|
|
||
Total revenues
|
1,315
|
|
|
1,178
|
|
||
Cost of revenues:
|
|
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|
||||
Cost of equipment rentals, excluding depreciation
|
444
|
|
|
409
|
|
||
Depreciation of rental equipment
|
235
|
|
|
217
|
|
||
Cost of rental equipment sales
|
64
|
|
|
65
|
|
||
Cost of new equipment sales
|
27
|
|
|
20
|
|
||
Cost of contractor supplies sales
|
12
|
|
|
13
|
|
||
Cost of service and other revenues
|
9
|
|
|
6
|
|
||
Total cost of revenues
|
791
|
|
|
730
|
|
||
Gross profit
|
524
|
|
|
448
|
|
||
Selling, general and administrative expenses
|
181
|
|
|
168
|
|
||
Merger related costs
|
(27
|
)
|
|
1
|
|
||
Restructuring charge
|
1
|
|
|
1
|
|
||
Non-rental depreciation and amortization
|
69
|
|
|
60
|
|
||
Operating income
|
300
|
|
|
218
|
|
||
Interest expense, net
|
121
|
|
|
125
|
|
||
Other income, net
|
(3
|
)
|
|
(1
|
)
|
||
Income before provision for income taxes
|
182
|
|
|
94
|
|
||
Provision for income taxes
|
67
|
|
|
34
|
|
||
Net income
|
$
|
115
|
|
|
$
|
60
|
|
Basic earnings per share
|
$
|
1.19
|
|
|
$
|
0.63
|
|
Diluted earnings per share
|
$
|
1.16
|
|
|
$
|
0.56
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net income
|
$
|
115
|
|
|
$
|
60
|
|
Other comprehensive loss, net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
(89
|
)
|
|
(38
|
)
|
||
Fixed price diesel swaps
|
—
|
|
|
(1
|
)
|
||
Other comprehensive loss
|
(89
|
)
|
|
(39
|
)
|
||
Comprehensive income (1)
|
$
|
26
|
|
|
$
|
21
|
|
|
Common Stock
|
|
|
|
|
|
Treasury Stock
|
|
|
|||||||||||||||||
|
Number of
Shares (1)
|
|
Amount
|
|
Additional Paid-in
Capital
|
|
Retained Earnings
|
|
Number of
Shares
|
|
Amount
|
|
Accumulated Other Comprehensive
Loss (3)
|
|||||||||||||
Balance at December 31, 2014
|
98
|
|
|
$
|
1
|
|
|
$
|
2,168
|
|
|
$
|
503
|
|
|
10
|
|
|
$
|
(802
|
)
|
|
$
|
(74
|
)
|
|
Net income
|
|
|
|
|
|
|
115
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
(89
|
)
|
||||||||||||
Stock compensation expense, net
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
||||||||||||
4 percent Convertible Senior Notes (2)
|
3
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shares repurchased and retired
|
|
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Repurchase of common stock
|
(4
|
)
|
|
|
|
|
|
|
|
4
|
|
|
(316
|
)
|
|
|
||||||||||
Balance at March 31, 2015
|
97
|
|
|
$
|
1
|
|
|
$
|
2,156
|
|
|
$
|
618
|
|
|
$
|
14
|
|
|
$
|
(1,118
|
)
|
|
$
|
(163
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income
|
$
|
115
|
|
|
$
|
60
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
304
|
|
|
277
|
|
||
Amortization of deferred financing costs and original issue discounts
|
3
|
|
|
5
|
|
||
Gain on sales of rental equipment
|
(52
|
)
|
|
(45
|
)
|
||
Gain on sales of non-rental equipment
|
(2
|
)
|
|
(1
|
)
|
||
Stock compensation expense, net
|
14
|
|
|
12
|
|
||
Merger related costs
|
(27
|
)
|
|
1
|
|
||
Restructuring charge
|
1
|
|
|
1
|
|
||
Loss on repurchase/redemption of debt securities and amendment of ABL facility
|
2
|
|
|
11
|
|
||
Increase in deferred taxes
|
39
|
|
|
22
|
|
||
Changes in operating assets and liabilities, net of amounts acquired:
|
|
|
|
||||
Decrease in accounts receivable
|
81
|
|
|
47
|
|
||
Increase in inventory
|
(4
|
)
|
|
(32
|
)
|
||
Decrease (increase) in prepaid expenses and other assets
|
18
|
|
|
(4
|
)
|
||
Increase in accounts payable
|
184
|
|
|
163
|
|
||
Decrease in accrued expenses and other liabilities
|
(1
|
)
|
|
(9
|
)
|
||
Net cash provided by operating activities
|
675
|
|
|
508
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Purchases of rental equipment
|
(323
|
)
|
|
(333
|
)
|
||
Purchases of non-rental equipment
|
(22
|
)
|
|
(18
|
)
|
||
Proceeds from sales of rental equipment
|
116
|
|
|
110
|
|
||
Proceeds from sales of non-rental equipment
|
4
|
|
|
11
|
|
||
Purchases of other companies, net of cash acquired
|
—
|
|
|
(1
|
)
|
||
Net cash used in investing activities
|
(225
|
)
|
|
(231
|
)
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Proceeds from debt
|
2,736
|
|
|
2,398
|
|
||
Payments of debt
|
(2,704
|
)
|
|
(2,543
|
)
|
||
Proceeds from the exercise of common stock options
|
—
|
|
|
1
|
|
||
Common stock repurchased
|
(343
|
)
|
|
(61
|
)
|
||
Payments of financing costs
|
(24
|
)
|
|
(20
|
)
|
||
Cash received in connection with the 4 percent Convertible Senior Notes and related hedge, net
|
—
|
|
|
7
|
|
||
Net cash used in financing activities
|
(335
|
)
|
|
(218
|
)
|
||
Effect of foreign exchange rates
|
(16
|
)
|
|
(7
|
)
|
||
Net increase in cash and cash equivalents
|
99
|
|
|
52
|
|
||
Cash and cash equivalents at beginning of period
|
158
|
|
|
175
|
|
||
Cash and cash equivalents at end of period
|
$
|
257
|
|
|
$
|
227
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash (received) paid for income taxes, net
|
$
|
(35
|
)
|
|
$
|
9
|
|
Cash paid for interest
|
91
|
|
|
84
|
|
Cash consideration (1)
|
$
|
773
|
|
Contingent consideration (2)
|
76
|
|
|
Total purchase consideration (3)
|
$
|
849
|
|
Accounts receivable, net of allowance for doubtful accounts (1)
|
$
|
44
|
|
Inventory
|
19
|
|
|
Deferred taxes
|
6
|
|
|
Rental equipment
|
172
|
|
|
Property and equipment
|
10
|
|
|
Intangibles (2)
|
289
|
|
|
Other assets
|
1
|
|
|
Total identifiable assets acquired
|
541
|
|
|
Current liabilities
|
(25
|
)
|
|
Total liabilities assumed
|
(25
|
)
|
|
Net identifiable assets acquired
|
516
|
|
|
Goodwill (3)
|
333
|
|
|
Net assets acquired
|
$
|
849
|
|
|
Fair value
|
Life (years)
|
||
Customer relationships
|
$
|
274
|
|
10
|
Non-compete agreements
|
15
|
|
6
|
|
Total
|
$
|
289
|
|
|
|
Three Months Ended
|
||
|
March 31,
|
||
|
2014
|
|
|
United Rentals historic revenues
|
$
|
1,178
|
|
National Pump historic revenues
|
62
|
|
|
Pro forma revenues
|
1,240
|
|
|
United Rentals historic pretax income
|
94
|
|
|
National Pump historic pretax income
|
20
|
|
|
Combined pretax income
|
114
|
|
|
Pro forma adjustments to combined pretax income:
|
|
||
Impact of fair value mark-ups/useful life changes on depreciation (1)
|
(1
|
)
|
|
Intangible asset amortization (2)
|
(12
|
)
|
|
Interest expense (3)
|
(6
|
)
|
|
Elimination of merger costs (4)
|
1
|
|
|
Pro forma pretax income
|
$
|
96
|
|
|
General
rentals
|
|
Trench, power and pump
|
|
Total
|
||||||
Three Months Ended March 31, 2015
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
976
|
|
|
$
|
149
|
|
|
$
|
1,125
|
|
Sales of rental equipment
|
108
|
|
|
8
|
|
|
116
|
|
|||
Sales of new equipment
|
26
|
|
|
7
|
|
|
33
|
|
|||
Contractor supplies sales
|
15
|
|
|
3
|
|
|
18
|
|
|||
Service and other revenues
|
19
|
|
|
4
|
|
|
23
|
|
|||
Total revenue
|
1,144
|
|
|
171
|
|
|
1,315
|
|
|||
Depreciation and amortization expense
|
262
|
|
|
42
|
|
|
304
|
|
|||
Equipment rentals gross profit
|
383
|
|
|
63
|
|
|
446
|
|
|||
Capital expenditures
|
311
|
|
|
34
|
|
|
345
|
|
|||
Three Months Ended March 31, 2014
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
924
|
|
|
$
|
81
|
|
|
$
|
1,005
|
|
Sales of rental equipment
|
106
|
|
|
4
|
|
|
110
|
|
|||
Sales of new equipment
|
24
|
|
|
2
|
|
|
26
|
|
|||
Contractor supplies sales
|
17
|
|
|
2
|
|
|
19
|
|
|||
Service and other revenues
|
17
|
|
|
1
|
|
|
18
|
|
|||
Total revenue
|
1,088
|
|
|
90
|
|
|
1,178
|
|
|||
Depreciation and amortization expense
|
259
|
|
|
18
|
|
|
277
|
|
|||
Equipment rentals gross profit
|
344
|
|
|
35
|
|
|
379
|
|
|||
Capital expenditures
|
331
|
|
|
20
|
|
|
351
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Total reportable segment assets
|
|
|
|
||||
General rentals
|
$
|
10,788
|
|
|
$
|
10,935
|
|
Trench, power and pump
|
1,494
|
|
|
1,532
|
|
||
Total assets
|
$
|
12,282
|
|
|
$
|
12,467
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Total equipment rentals gross profit
|
$
|
446
|
|
|
$
|
379
|
|
Gross profit from other lines of business
|
78
|
|
|
69
|
|
||
Selling, general and administrative expenses
|
(181
|
)
|
|
(168
|
)
|
||
Merger related costs
|
27
|
|
|
(1
|
)
|
||
Restructuring charge
|
(1
|
)
|
|
(1
|
)
|
||
Non-rental depreciation and amortization
|
(69
|
)
|
|
(60
|
)
|
||
Interest expense, net
|
(121
|
)
|
|
(125
|
)
|
||
Other income, net
|
3
|
|
|
1
|
|
||
Income before provision for income taxes
|
$
|
182
|
|
|
$
|
94
|
|
|
|
Reserve Balance at
|
|
Charged to
Costs and Expenses (1) |
|
Payments
and Other |
|
Reserve Balance at
|
||||||||
Description
|
|
December 31, 2014
|
|
|
|
March 31, 2015
|
||||||||||
Closed Restructuring Program
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
8
|
|
Severance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
8
|
|
RSC Merger Related Restructuring Program
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
9
|
|
Severance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
9
|
|
Total
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
20
|
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
17
|
|
Severance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
20
|
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
17
|
|
(1)
|
Reflected in our condensed consolidated statements of income as “Restructuring charge.” These charges are not allocated to our reportable segments.
|
|
|
|
Three Months Ended March 31, 2015
|
|
Three Months Ended March 31, 2014
|
|||||||||
|
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)
|
|
(2
|
)
|
|
$
|
(7
|
)
|
|
*
|
|
$
|
(10
|
)
|
*
|
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
2.6 million
gallons of diesel covered by the fixed price swaps during the
three
months ended
March 31, 2015
and
2014
. These amounts are reflected, net of cash received from, or paid to, the counterparties to the fixed price swaps, in operating cash flows in our condensed consolidated statement of cash flows.
|
a)
|
quoted prices for similar assets or liabilities in active markets;
|
b)
|
quoted prices for identical or similar assets or liabilities in inactive markets;
|
c)
|
inputs other than quoted prices that are observable for the asset or liability;
|
d)
|
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Level 1:
|
|
|
|
|
|
|
|
||||||||
Senior and senior subordinated notes
|
$
|
7,861
|
|
|
$
|
8,233
|
|
|
$
|
6,063
|
|
|
$
|
6,390
|
|
Level 2:
|
|
|
|
|
|
|
|
||||||||
4 percent Convertible Senior Notes (1)
|
7
|
|
|
7
|
|
|
32
|
|
|
33
|
|
(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
6.9
percent. As discussed below (see Item 3- Quantitative and Qualitative Disclosures about Market Risk), the total cost to settle the notes based on the closing price of our common stock on
March 31, 2015
would be
$62
.
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
URNA and subsidiaries debt:
|
|
|
|
||||
Accounts Receivable Securitization Facility (1)
|
$
|
—
|
|
|
$
|
548
|
|
$2.5 billion ABL Facility (2)
|
109
|
|
|
1,304
|
|
||
5
3
/
4
percent Senior Secured Notes (3)
|
750
|
|
|
750
|
|
||
7
3
/
8
percent Senior Notes
|
750
|
|
|
750
|
|
||
8
3
/
8
percent Senior Subordinated Notes (3)
|
750
|
|
|
750
|
|
||
8
1
/
4
percent Senior Notes (4)
|
686
|
|
|
687
|
|
||
7
5
/
8
percent Senior Notes
|
1,325
|
|
|
1,325
|
|
||
6
1
/
8
percent Senior Notes
|
950
|
|
|
951
|
|
||
4
5
/
8
percent Senior Secured Notes (5)
|
1,000
|
|
|
—
|
|
||
5
3
/
4
percent Senior Notes
|
850
|
|
|
850
|
|
||
5
1
/
2
percent Senior Notes (6)
|
800
|
|
|
—
|
|
||
Capital leases
|
98
|
|
|
105
|
|
||
Total URNA and subsidiaries debt
|
8,068
|
|
|
8,020
|
|
||
Holdings:
|
|
|
|
||||
4 percent Convertible Senior Notes (7)
|
7
|
|
|
32
|
|
||
Total debt
|
8,075
|
|
|
8,052
|
|
||
Less short-term portion (8)
|
(593
|
)
|
|
(618
|
)
|
||
Total long-term debt
|
$
|
7,482
|
|
|
$
|
7,434
|
|
(1)
|
At
March 31, 2015
,
$550
was available under our accounts receivable securitization facility. During the
three
months ended
March 31, 2015
, the monthly average amount outstanding under the accounts receivable securitization facility was
$362
, and the weighted-average interest rate thereon was
0.8 percent
. The maximum month-end amount outstanding under the accounts receivable securitization facility during the
three
months ended
March 31, 2015
was
$544
. 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
March 31, 2015
, there were $
589
of receivables, net of applicable reserves, in the collateral pool. In March 2015, we repaid all of the outstanding borrowings under the accounts receivable securitization facility using a portion of the net proceeds from the debt issuances described below. In April 2015, we used borrowings under the accounts receivable securitization facility to partially fund the debt redemptions described below.
|
(2)
|
At
March 31, 2015
,
$2.3 billion
was available under our ABL facility, net of
$50
of letters of credit. The interest rate applicable to the ABL facility was
2.5 percent
at
March 31, 2015
. During the
three
months ended
March 31, 2015
, the monthly average amount outstanding under the ABL facility was
$818
, and the weighted-average interest rate thereon was
2.3 percent
. The maximum month-end amount outstanding under the ABL facility during the
three
months ended
March 31, 2015
was
$1.3 billion
. In March 2015, the ABL facility was amended, primarily to increase the facility size and to extend the maturity date. The size of the facility was increased to
$2.5 billion
. All amounts borrowed under the ABL facility must be repaid on or before March 2020. In March 2015, we repaid a portion of the outstanding borrowings under the ABL facility using a portion of the net proceeds from the debt issuances described below. In April 2015, we used, or expect to use, borrowings under the ABL facility to partially fund the debt redemptions described below.
|
(3)
|
In March 2015, we issued redemption notices for all of our 5
3
/
4
percent Senior Secured Notes and 8
3
/
8
percent Senior Subordinated Notes. The notes were redeemed in April 2015 using borrowings under our accounts receivable securitization and ABL facilities. Upon redemption, we recognized an aggregate loss of $
106
in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the notes.
|
(4)
|
In March 2015, we issued redemption notices for $
350
principal amount of our 8
1
/
4
percent Senior Notes. We expect to redeem the notes in April 2015 using borrowings under our ABL facility. Upon redemption, we expect to recognize a loss of approximately $
15
in interest expense, net. The loss represents the difference between the net carrying amount and the total purchase price of the notes.
|
(5)
|
In March 2015, URNA issued $
1.0 billion
aggregate principal amount of 4
5
/
8
percent Senior Secured Notes (the “4
5
/
8
percent Notes”) which are due July 15, 2023. The net proceeds from issuance were approximately $
990
(after deducting
|
(6)
|
In March 2015, URNA issued $
800
aggregate principal amount of 5
1
/
2
percent Senior Notes (the “5
1
/
2
percent Notes”) which are due July 15, 2025. The net proceeds from the issuance were approximately $
792
(after deducting offering expenses). The 5
1
/
2
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5
1
/
2
percent Notes may be redeemed on or after
July 15, 2020
, at specified redemption prices that range from
102.75
percent in
2020
, to
100
percent in
2023
and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 5
1
/
2
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then outstanding 5
1
/
2
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.
|
(7)
|
The difference between the
March 31, 2015
carrying value of the
4 percent
Convertible Senior Notes and the
$8
principal amount reflects the
$1
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
March 31, 2015
, an amount equal to the
$1
unamortized portion of the original issue discount is separately classified in our condensed consolidated balance sheets and referred to as “temporary equity.” During the
three
months ended
March 31, 2015
, $
26
of our 4 percent Convertible Notes were redeemed. We recognized a loss of approximately $
1
in interest expense, net upon redemption. The loss represented the difference between the net carrying amount and the fair value of the debt component of the notes. Based on the price of our common stock during the
first
quarter of
2015
, holders of the
4 percent
Convertible Senior Notes have the right to redeem the notes during the
second
quarter of
2015
at a conversion price of
$11.11
per share of common stock. Since
April 1, 2015
(the beginning of the
second
quarter), none of the
4 percent
Convertible Senior Notes have been redeemed.
|
(8)
|
As of
March 31, 2015
, our short-term debt primarily reflects the current portion of the debt discussed above that was redeemed in April 2015 using availability under our accounts receivable securitization facility.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Numerator:
|
|
|
|
||||
Net income available to common stockholders
|
$
|
115
|
|
|
$
|
60
|
|
Denominator:
|
|
|
|
||||
Denominator for basic earnings per share—weighted-average common shares
|
97,007
|
|
|
95,225
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Employee stock options and warrants
|
336
|
|
|
435
|
|
||
Convertible subordinated notes—4 percent
|
1,185
|
|
|
10,224
|
|
||
Restricted stock units
|
537
|
|
|
540
|
|
||
Denominator for diluted earnings per share—adjusted weighted-average common shares
|
99,065
|
|
|
106,424
|
|
||
Basic earnings per share
|
$
|
1.19
|
|
|
$
|
0.63
|
|
Diluted earnings per share
|
$
|
1.16
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
998
|
|
|
$
|
—
|
|
|
$
|
127
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,125
|
|
Sales of rental equipment
|
—
|
|
|
106
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
116
|
|
|||||||
Sales of new equipment
|
—
|
|
|
29
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
16
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||||
Service and other revenues
|
—
|
|
|
19
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|||||||
Total revenues
|
—
|
|
|
1,168
|
|
|
—
|
|
|
147
|
|
|
—
|
|
|
—
|
|
|
1,315
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
384
|
|
|
—
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
444
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
211
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
235
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
59
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
24
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
11
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
6
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||||
Total cost of revenues
|
—
|
|
|
695
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
—
|
|
|
791
|
|
|||||||
Gross profit
|
—
|
|
|
473
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
524
|
|
|||||||
Selling, general and administrative expenses
|
3
|
|
|
151
|
|
|
—
|
|
|
20
|
|
|
7
|
|
|
—
|
|
|
181
|
|
|||||||
Merger related costs
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|||||||
Restructuring charge
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Non-rental depreciation and amortization
|
4
|
|
|
59
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||||
Operating (loss) income
|
(7
|
)
|
|
289
|
|
|
—
|
|
|
25
|
|
|
(7
|
)
|
|
—
|
|
|
300
|
|
|||||||
Interest (income) expense, net
|
(1
|
)
|
|
119
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
121
|
|
|||||||
Other (income) expense, net
|
(35
|
)
|
|
52
|
|
|
1
|
|
|
1
|
|
|
(22
|
)
|
|
—
|
|
|
(3
|
)
|
|||||||
Income (loss) before provision (benefit) for income taxes
|
29
|
|
|
118
|
|
|
(3
|
)
|
|
23
|
|
|
14
|
|
|
1
|
|
|
182
|
|
|||||||
Provision (benefit) for income taxes
|
13
|
|
|
43
|
|
|
(2
|
)
|
|
7
|
|
|
6
|
|
|
—
|
|
|
67
|
|
|||||||
Income (loss) before equity in net earnings (loss) of subsidiaries
|
16
|
|
|
75
|
|
|
(1
|
)
|
|
16
|
|
|
8
|
|
|
1
|
|
|
115
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
99
|
|
|
24
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
(139
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
115
|
|
|
99
|
|
|
15
|
|
|
16
|
|
|
8
|
|
|
(138
|
)
|
|
115
|
|
|||||||
Other comprehensive (loss) income
|
(89
|
)
|
|
(89
|
)
|
|
(90
|
)
|
|
(71
|
)
|
|
—
|
|
|
250
|
|
|
(89
|
)
|
|||||||
Comprehensive income (loss)
|
$
|
26
|
|
|
$
|
10
|
|
|
$
|
(75
|
)
|
|
$
|
(55
|
)
|
|
$
|
8
|
|
|
$
|
112
|
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
Foreign
|
|
SPV
|
|
|||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
872
|
|
|
$
|
—
|
|
|
$
|
133
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,005
|
|
Sales of rental equipment
|
—
|
|
|
100
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|||||||
Sales of new equipment
|
—
|
|
|
21
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
15
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||||
Service and other revenues
|
—
|
|
|
15
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||||
Total revenues
|
—
|
|
|
1,023
|
|
|
—
|
|
|
155
|
|
|
—
|
|
|
—
|
|
|
1,178
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
354
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
409
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
193
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
217
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
60
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
16
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
10
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
5
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||||
Total cost of revenues
|
—
|
|
|
638
|
|
|
—
|
|
|
92
|
|
|
—
|
|
|
—
|
|
|
730
|
|
|||||||
Gross profit
|
—
|
|
|
385
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
448
|
|
|||||||
Selling, general and administrative expenses
|
25
|
|
|
123
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
168
|
|
|||||||
Merger related costs
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Restructuring charge
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Non-rental depreciation and amortization
|
4
|
|
|
51
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|||||||
Operating (loss) income
|
(29
|
)
|
|
209
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
218
|
|
|||||||
Interest expense (income), net
|
6
|
|
|
118
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
(2
|
)
|
|
125
|
|
|||||||
Other (income) expense, net
|
(32
|
)
|
|
46
|
|
|
2
|
|
|
3
|
|
|
(20
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
(Loss) income before provision for income taxes
|
(3
|
)
|
|
45
|
|
|
(3
|
)
|
|
34
|
|
|
19
|
|
|
2
|
|
|
94
|
|
|||||||
Provision for income taxes
|
—
|
|
|
18
|
|
|
—
|
|
|
9
|
|
|
7
|
|
|
—
|
|
|
34
|
|
|||||||
(Loss) income before equity in net earnings (loss) of subsidiaries
|
(3
|
)
|
|
27
|
|
|
(3
|
)
|
|
25
|
|
|
12
|
|
|
2
|
|
|
60
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
63
|
|
|
36
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
60
|
|
|
63
|
|
|
22
|
|
|
25
|
|
|
12
|
|
|
(122
|
)
|
|
60
|
|
|||||||
Other comprehensive (loss) income
|
(39
|
)
|
|
(39
|
)
|
|
(38
|
)
|
|
(30
|
)
|
|
—
|
|
|
107
|
|
|
(39
|
)
|
|||||||
Comprehensive income (loss)
|
$
|
21
|
|
|
$
|
24
|
|
|
$
|
(16
|
)
|
|
$
|
(5
|
)
|
|
$
|
12
|
|
|
$
|
(15
|
)
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Net cash provided by operating activities
|
$
|
3
|
|
|
$
|
507
|
|
|
$
|
1
|
|
|
$
|
95
|
|
|
$
|
69
|
|
|
$
|
—
|
|
|
$
|
675
|
|
Net cash used in investing activities
|
(3
|
)
|
|
(193
|
)
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(225
|
)
|
|||||||
Net cash used in financing activities
|
—
|
|
|
(264
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(69
|
)
|
|
—
|
|
|
(335
|
)
|
|||||||
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||||||
Net increase in cash and cash equivalents
|
—
|
|
|
50
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|||||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
8
|
|
|
—
|
|
|
150
|
|
|
—
|
|
|
—
|
|
|
158
|
|
|||||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
199
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
257
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
|
|
|
Foreign
|
|
SPV
|
|
|
|||||||||||||||||||
Net cash provided by operating activities
|
$
|
3
|
|
|
$
|
390
|
|
|
$
|
1
|
|
|
$
|
62
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
508
|
|
Net cash used in investing activities
|
(3
|
)
|
|
(219
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(231
|
)
|
|||||||
Net cash used in financing activities
|
—
|
|
|
(165
|
)
|
|
(1
|
)
|
|
—
|
|
|
(52
|
)
|
|
—
|
|
|
(218
|
)
|
|||||||
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||||
Net increase in cash and cash equivalents
|
—
|
|
|
6
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|||||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
17
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
—
|
|
|
175
|
|
|||||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
227
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share data, unless otherwise indicated)
|
•
|
A consistently superior standard of service to customers
, often provided through a single point of contact;
|
•
|
The further optimization of our customer mix and fleet mix,
with a dual objective: to enhance our performance in serving our current customer base, and to focus on the accounts and customer types that are best suited to our strategy for profitable growth. We believe these efforts will lead to even better service of our target accounts, primarily large construction and industrial customers, as well as select local contractors. Our fleet team's analyses are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;
|
•
|
The implementation of “Lean” management techniques, including kaizen processes focused on continuous improvement, through a program we call Operation United 2
. We have trained over 2,500 employees, approximately 100 percent of our district managers and approximately 60 percent of our branch managers on the Lean kaizen process. We continue to implement this program across our branch network, with the objectives of: reducing the cycle time associated with renting our equipment to customers; improving invoice accuracy and service quality; reducing the elapsed time for equipment pickup and delivery; and improving the effectiveness and efficiency of our repair and maintenance operations; and
|
•
|
The continued expansion of our trench, power and pump footprint, as well as our tools offering, and the cross-selling of these services throughout our network
. We believe that the expansion of our trench, power and pump business, as well as our tools offering, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings.
|
•
|
Issued redemption notices for all of our 5
3
/
4
percent Senior Secured Notes and 8
3
/
8
percent Senior Subordinated Notes. The notes were redeemed in April 2015;
|
•
|
Issued redemption notices for $
350
principal amount of our 8
1
/
4
percent Senior Notes. We expect to redeem the notes in April 2015;
|
•
|
Issued $1 billion principal amount of 4
5
/
8
percent Senior Secured Notes;
|
•
|
Issued $800 principal amount of 5
1
/
2
percent Senior Notes; and
|
•
|
Amended and extended our ABL facility. The size of the facility was increased to
$2.5 billion
.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net income
|
$
|
115
|
|
|
$
|
60
|
|
Diluted earnings per share
|
$
|
1.16
|
|
|
$
|
0.56
|
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2015
|
|
2014
|
||||||||||||
|
Contribution
to net income (after-tax)
|
|
Impact on
diluted earnings per share
|
|
Contribution
to net income (after-tax)
|
|
Impact on
diluted earnings per share
|
||||||||
Merger related costs (1)
|
$
|
17
|
|
|
$
|
0.17
|
|
|
$
|
(1
|
)
|
|
$
|
(0.01
|
)
|
Merger related intangible asset amortization (2)
|
(30
|
)
|
|
(0.32
|
)
|
|
(24
|
)
|
|
(0.22
|
)
|
||||
Impact on depreciation related to acquired RSC fleet and property and equipment (3)
|
1
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
||||
Impact of the fair value mark-up of acquired RSC fleet (4)
|
(4
|
)
|
|
(0.04
|
)
|
|
(5
|
)
|
|
(0.05
|
)
|
||||
Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (5)
|
1
|
|
|
0.01
|
|
|
1
|
|
|
0.01
|
|
||||
Restructuring charge (6)
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(0.01
|
)
|
||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility
|
(1
|
)
|
|
(0.01
|
)
|
|
(6
|
)
|
|
(0.06
|
)
|
(1)
|
This reflects transaction costs associated with the 2012 acquisition of RSC Holdings Inc. ("RSC") and the April 2014 acquisition of National Pump discussed in note
2
to the condensed consolidated financial statements. The income for the
three
months ended
March 31, 2015
reflects a decline in the fair value of the contingent cash consideration component of the National Pump purchase price as discussed in note
6
to our condensed consolidated financial statements.
|
(2)
|
This reflects the amortization of the intangible assets acquired in the RSC and National Pump acquisitions.
|
(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)
|
This reflects a reduction of interest expense associated with the fair value mark-up of debt acquired in the RSC acquisition.
|
(6)
|
As discussed below (see “Restructuring charges”), this primarily reflects branch closure charges associated with the RSC acquisition and our closed restructuring program.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net income
|
$
|
115
|
|
|
$
|
60
|
|
Provision for income taxes
|
67
|
|
|
34
|
|
||
Interest expense, net
|
121
|
|
|
125
|
|
||
Depreciation of rental equipment
|
235
|
|
|
217
|
|
||
Non-rental depreciation and amortization
|
69
|
|
|
60
|
|
||
EBITDA
|
$
|
607
|
|
|
$
|
496
|
|
Merger related costs (1)
|
(27
|
)
|
|
1
|
|
||
Restructuring charge (2)
|
1
|
|
|
1
|
|
||
Stock compensation expense, net (3)
|
14
|
|
|
12
|
|
||
Impact of the fair value mark-up of acquired RSC fleet (4)
|
7
|
|
|
9
|
|
||
Adjusted EBITDA
|
$
|
602
|
|
|
$
|
519
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net cash provided by operating activities
|
$
|
675
|
|
|
$
|
508
|
|
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
|
(3
|
)
|
|
(5
|
)
|
||
Gain on sales of rental equipment
|
52
|
|
|
45
|
|
||
Gain on sales of non-rental equipment
|
2
|
|
|
1
|
|
||
Merger related costs (1)
|
27
|
|
|
(1
|
)
|
||
Restructuring charge (2)
|
(1
|
)
|
|
(1
|
)
|
||
Stock compensation expense, net (3)
|
(14
|
)
|
|
(12
|
)
|
||
Loss on repurchase/redemption of debt securities and amendment of ABL facility
|
(2
|
)
|
|
(11
|
)
|
||
Changes in assets and liabilities
|
(185
|
)
|
|
(121
|
)
|
||
Cash paid for interest
|
91
|
|
|
84
|
|
||
Cash (received) paid for income taxes, net
|
(35
|
)
|
|
9
|
|
||
EBITDA
|
$
|
607
|
|
|
$
|
496
|
|
Add back:
|
|
|
|
||||
Merger related costs (1)
|
(27
|
)
|
|
1
|
|
||
Restructuring charge (2)
|
1
|
|
|
1
|
|
||
Stock compensation expense, net (3)
|
14
|
|
|
12
|
|
||
Impact of the fair value mark-up of acquired RSC fleet (4)
|
7
|
|
|
9
|
|
||
Adjusted EBITDA
|
$
|
602
|
|
|
$
|
519
|
|
(1)
|
This reflects transaction costs associated with the 2012 RSC acquisition and the April 2014 acquisition of National Pump discussed in note
2
to the condensed consolidated financial statements. The income for the
three
months ended
March 31, 2015
reflects a decline in the fair value of the contingent cash consideration component of the National Pump purchase price as discussed in note
6
to our condensed consolidated financial statements.
|
(2)
|
As discussed below (see “Restructuring charges”), this primarily reflects branch closure charges associated with the RSC acquisition and our closed restructuring program.
|
(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.
|
|
General
rentals
|
|
Trench, power and pump
|
|
Total
|
||||||
Three Months Ended March 31, 2015
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
976
|
|
|
$
|
149
|
|
|
$
|
1,125
|
|
Sales of rental equipment
|
108
|
|
|
8
|
|
|
116
|
|
|||
Sales of new equipment
|
26
|
|
|
7
|
|
|
33
|
|
|||
Contractor supplies sales
|
15
|
|
|
3
|
|
|
18
|
|
|||
Service and other revenues
|
19
|
|
|
4
|
|
|
23
|
|
|||
Total revenue
|
$
|
1,144
|
|
|
$
|
171
|
|
|
$
|
1,315
|
|
Three Months Ended March 31, 2014
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
924
|
|
|
$
|
81
|
|
|
$
|
1,005
|
|
Sales of rental equipment
|
106
|
|
|
4
|
|
|
110
|
|
|||
Sales of new equipment
|
24
|
|
|
2
|
|
|
26
|
|
|||
Contractor supplies sales
|
17
|
|
|
2
|
|
|
19
|
|
|||
Service and other revenues
|
17
|
|
|
1
|
|
|
18
|
|
|||
Total revenue
|
$
|
1,088
|
|
|
$
|
90
|
|
|
$
|
1,178
|
|
|
General
rentals
|
|
Trench, power and pump
|
|
Total
|
||||||
Three Months Ended March 31, 2015
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
383
|
|
|
$
|
63
|
|
|
$
|
446
|
|
Equipment Rentals Gross Margin
|
39.2
|
%
|
|
42.3
|
%
|
|
39.6
|
%
|
|||
Three Months Ended March 31, 2014
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
344
|
|
|
$
|
35
|
|
|
$
|
379
|
|
Equipment Rentals Gross Margin
|
37.2
|
%
|
|
43.2
|
%
|
|
37.7
|
%
|
|
Three Months Ended March 31,
|
||||
|
2015
|
|
2014
|
||
Total gross margin
|
39.8
|
%
|
|
38.0
|
%
|
Equipment rentals
|
39.6
|
%
|
|
37.7
|
%
|
Sales of rental equipment
|
44.8
|
%
|
|
40.9
|
%
|
Sales of new equipment
|
18.2
|
%
|
|
23.1
|
%
|
Contractor supplies sales
|
33.3
|
%
|
|
31.6
|
%
|
Service and other revenues
|
60.9
|
%
|
|
66.7
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Total SG&A expenses
|
$
|
181
|
|
|
$
|
168
|
|
SG&A as a percentage of revenue
|
13.8
|
%
|
|
14.3
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Merger related costs
|
$
|
(27
|
)
|
|
$
|
1
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Restructuring charge
|
$
|
1
|
|
|
$
|
1
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Non-rental depreciation and amortization
|
$
|
69
|
|
|
$
|
60
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Interest expense, net
|
$
|
121
|
|
|
$
|
125
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Income before provision for income taxes
|
$
|
182
|
|
|
$
|
94
|
|
Provision for income taxes
|
67
|
|
|
34
|
|
||
Effective tax rate
|
36.8
|
%
|
|
36.2
|
%
|
•
|
Issued redemption notices for all of our 5
3
/
4
percent Senior Secured Notes and 8
3
/
8
percent Senior Subordinated Notes. The notes were redeemed in April 2015;
|
•
|
Issued redemption notices for $
350
principal amount of our 8
1
/
4
percent Senior Notes. We expect to redeem the notes in April 2015;
|
•
|
Issued $1 billion principal amount of 4
5
/
8
percent Senior Secured Notes;
|
•
|
Issued $800 principal amount of 5
1
/
2
percent Senior Notes; and
|
•
|
Amended and extended our ABL facility. The size of the facility was increased to
$2.5 billion
.
|
|
Corporate Rating
|
|
Outlook
|
Moody’s
|
Ba3
|
|
Stable
|
Standard & Poor’s
|
BB-
|
|
Stable
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net cash provided by operating activities
|
$
|
675
|
|
|
$
|
508
|
|
Purchases of rental equipment
|
(323
|
)
|
|
(333
|
)
|
||
Purchases of non-rental equipment
|
(22
|
)
|
|
(18
|
)
|
||
Proceeds from sales of rental equipment
|
116
|
|
|
110
|
|
||
Proceeds from sales of non-rental equipment
|
4
|
|
|
11
|
|
||
Free cash flow
|
$
|
450
|
|
|
$
|
278
|
|
|
2015
|
2016
|
2017
|
2018
|
2019
|
Thereafter
|
Total
|
||||||||||||||
Debt and capital leases (1)
|
$
|
587
|
|
$
|
32
|
|
$
|
19
|
|
$
|
10
|
|
$
|
4
|
|
$
|
7,362
|
|
$
|
8,014
|
|
Interest due on debt (2)
|
305
|
|
404
|
|
402
|
|
402
|
|
401
|
|
1,129
|
|
3,043
|
|
|||||||
Operating leases (1):
|
|
|
|
|
|
|
|
||||||||||||||
Real estate
|
76
|
|
90
|
|
71
|
|
52
|
|
34
|
|
54
|
|
377
|
|
|||||||
Non-rental equipment
|
26
|
|
31
|
|
30
|
|
28
|
|
19
|
|
19
|
|
153
|
|
|||||||
Service agreements (3)
|
9
|
|
6
|
|
5
|
|
—
|
|
—
|
|
—
|
|
20
|
|
|||||||
Purchase obligations (4)
|
990
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
990
|
|
|||||||
Total (5)
|
$
|
1,993
|
|
$
|
563
|
|
$
|
527
|
|
$
|
492
|
|
$
|
458
|
|
$
|
8,564
|
|
$
|
12,597
|
|
(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. As discussed above, in April 2015, we used, or expect to use, borrowings available under the accounts receivable securitization and ABL facilities to fund the redemptions of certain of our debt instruments. The April 2015 debt redemptions are reflected in the table above using the maturity dates of the accounts receivable securitization and ABL facilities.
|
(2)
|
Estimated interest payments have been calculated based on the principal amount of debt and the applicable interest rates as of
March 31, 2015
. As discussed above, in April 2015, we used, or expect to use, borrowings available under the accounts receivable securitization and ABL facilities to fund the redemptions of certain of our debt instruments. Interest on the April 2015 debt redemptions is reflected in the table above using the interest rates and maturity dates of the accounts receivable securitization and ABL facilities.
|
(3)
|
These primarily represent service agreements with third parties to provide wireless and network services.
|
(4)
|
As of
March 31, 2015
, 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 2015.
|
(5)
|
This information excludes $
5
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
|
|
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)
|
||||||
January 1, 2015 to January 31, 2015
|
3,166,745
|
|
(1)
|
$
|
89.83
|
|
|
2,992,628
|
|
|
—
|
|
|
February 1, 2015 to February 28, 2015
|
569,561
|
|
(1)
|
$
|
85.18
|
|
|
545,130
|
|
|
—
|
|
|
March 1, 2015 to March 31, 2015
|
104,951
|
|
(1)
|
$
|
89.45
|
|
|
600
|
|
|
—
|
|
|
Total
|
3,841,257
|
|
|
$
|
89.13
|
|
|
3,538,358
|
|
|
$
|
332,035,378
|
|
(1)
|
In
January 2015
,
February 2015
and
March 2015
,
174,117
,
24,431
and
104,351
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)
|
On December 1, 2014, our Board approved a share repurchase program authorizing up to $750 million in repurchases of Holdings' common stock, which we intend to complete within 18 months after the December 2014 announcement.
|
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. and United Rentals (North America), Inc. Current 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. and United Rentals (North America), Inc. Current 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 (incorporated by reference to Exhibit 3(c) of the United Rentals, Inc. and United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2013)
|
|
|
3(d)
|
By-laws of United Rentals (North America), Inc. dated May 8, 2013 (incorporated by reference to Exhibit 3(d) of the United Rentals, Inc. and United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2013)
|
|
|
4(a)
|
Indenture for the 4
5
/
8
percent Notes, dated as of March 26, 2015, among United Rentals (North America), Inc. (the “Company”), United Rentals, Inc., the Company’s subsidiaries named therein and Wells Fargo Bank, National Association, as Trustee and Notes Collateral Agent (including the Form of 2023 Note) (incorporated by reference to Exhibit 4.1 of the United Rentals, Inc. Report on Form 8-K filed on March 26, 2015)
|
|
|
4(b)
|
Indenture for the 5
1
/
2
percent Notes, dated as of March 26, 2015, among United Rentals (North America), Inc. (the “Company”), United Rentals, Inc., the Company’s subsidiaries named therein and Wells Fargo Bank, National Association, as Trustee (including the Form of 2025 Note) (incorporated by reference to Exhibit 4.2 of the United Rentals, Inc. Report on Form 8-K filed on March 26, 2015)
|
|
|
10(a)
|
Amended and Restated Security Agreement, dated as of March 26, 2015, by and among United Rentals, Inc., United Rentals (North America), Inc., certain subsidiaries of United Rentals, Inc. and United Rentals (North America), Inc. and Wells Fargo Bank, N.A., as Note Trustee and Collateral Agent (incorporated by reference to Exhibit 10.1 of the United Rentals, Inc. Report on Form 8-K filed on March 26, 2015)
|
|
|
10(b)
|
Second Amended and Restated Credit Agreement, dated as of March 31, 2015, among United Rentals, Inc., United Rentals (North America), Inc., certain subsidiaries of United Rentals, Inc. and United Rentals (North America), Inc. referred to therein, United Rentals of Canada, Inc., United Rentals Financing Limited Partnership, Bank of America, N.A., and the other financial institutions referred to therein (incorporated by reference to Exhibit 10.1 of the United Rentals, Inc. Report on Form 8-K filed on April 1, 2015)
|
|
|
10(c)
|
Second Amended and Restated U.S. Security Agreement, dated as of March 31, 2015, among United Rentals, Inc., United Rentals (North America), Inc., certain subsidiaries of United Rentals, Inc. and United Rentals (North America), Inc. referred to therein and Bank of America, N.A., as agent (incorporated by reference to Exhibit 10.2 of the United Rentals, Inc. Report on Form 8-K filed on April 1, 2015)
|
|
|
10(d)
|
Second Amended and Restated U.S. Guarantee Agreement, dated as of March 31, 2015, among United Rentals, Inc., United Rentals (North America), Inc., and certain subsidiaries of United Rentals, Inc. and United Rentals (North America), Inc. referred to therein in favor of Bank of America, N.A., as agent (incorporated by reference to Exhibit 10.3 of the United Rentals, Inc. Report on Form 8-K filed on April 1, 2015)
|
|
|
10(e)
|
Second Amended and Restated Canadian Security Agreement, dated as of March 31, 2015, among United Rentals of Canada, Inc., certain subsidiaries of United Rentals, Inc. and United Rentals (North America), Inc. referred to therein and Bank of America, N.A., as agent (incorporated by reference to Exhibit 10.4 of the United Rentals, Inc. Report on Form 8-K filed on April 1, 2015)
|
|
|
10(f)
|
Second Amended and Restated Canadian URFLP Guarantee Agreement, dated as of March 31, 2015, by United Rentals of Nova Scotia (No. 1), ULC and United Rentals of Nova Scotia (No. 2), ULC in favor of the U.S. secured parties referred to therein (incorporated by reference to Exhibit 10.5 of the United Rentals, Inc. Report on Form 8-K filed on April 1, 2015)
|
|
|
10(g)
|
Second Amended and Restated Canadian Guarantee Agreement, dated as of March 31, 2015, by United Rentals of Canada, Inc. and certain subsidiaries of United Rentals, Inc. and United Rentals (North America), Inc. referred to therein in favor of the Canadian secured parties referred to therein (incorporated by reference to Exhibit 10.6 of the United Rentals, Inc. Report on Form 8-K filed on April 1, 2015)
|
|
|
10(h)*
|
Form of United Rentals, Inc. Restricted Stock Unit Agreement for Senior Management, effective for grants of awards beginning in 2015‡
|
|
|
10(i)*
|
Form of United Rentals, Inc. 2015 Performance-Based Restricted Stock Unit Agreement for Senior Management‡
|
|
|
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 United Rentals, Inc. and United Rentals (North America), Inc., for the quarter ended March 31, 2015, filed on April 21, 2015, 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, (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.
|
|
|
UNITED RENTALS, INC.
|
||
|
|
|
|
|
Dated:
|
April 20, 2015
|
By:
|
|
/
S
/ J
ESSICA
T. G
RAZIANO
|
|
|
|
|
Jessica T. Graziano
Vice President, Controller and Principal Accounting Officer
|
|
|
|
||
|
|
UNITED RENTALS (NORTH AMERICA), INC.
|
||
|
|
|
|
|
Dated:
|
April 20, 2015
|
By:
|
|
/
S
/ J
ESSICA
T. G
RAZIANO
|
|
|
|
|
Jessica T. Graziano
Vice President, Controller and Principal Accounting Officer |
|
|
|
|
|
(i)
|
Vesting.
Provided you have remained continuously employed by the Company or an affiliate of the Company through the relevant date of vesting, the Units shall vest on the following schedule:
|
(ii)
|
Forfeiture.
Except as set forth in Section 7 and 8, if you cease to be employed by the Company or an affiliate of the Company for any reason whatsoever, including, but not limited to, a termination by the Company or an affiliate of the Company with or without “Cause” (as hereinafter defined) or a resignation by you with or without “Good Reason” (as hereinafter defined), all unvested Units shall be canceled and forfeited as of the date of such termination.
|
(i)
|
General
. Except as provided in Section 8, vested Units shall be settled in shares of the common stock, $.01 par value, of the Company (“
Shares
”), on a one-for-one basis, as soon as practicable (but not more than 30 days) following each date on which one or more Units vest, provided in each case that Awardee has satisfied their tax withholding obligations with respect to such vesting as described in this Agreement. Shares, in a number equal to the number of Units that have so vested, will be issued by the Company in the name of Awardee by electronic book-entry transfer or credit of such shares to an account of
|
(ii)
|
Section 409A
. It is the Company’s intent that payments under this Agreement shall comply with Section 409A of the Internal Revenue Code of 1986, as amended (“
Section 409A
”) to the extent applicable, and this Agreement shall be interpreted, administered and construed consistent with such intent. If, and only to the extent that, (1) the Units constitute “deferred compensation” within the meaning of Section 409A and (2) the Awardee is deemed to be a “specified employee” (as such term is defined in Section 409A and as determined by the Company), the payment of vested Units on account of the Awardee’s termination of employment shall not be made until the first business day of the seventh month after the Awardee’s “separation from service” (as such term is defined and used in Section 409A) with the Company, or if earlier, the date of the Awardee’s death. Each payment or delivery under this Agreement will be treated as a separate payment or delivery for purposes of Section 409A.
|
(i)
|
the Units shall terminate and be forfeited as of the date of such determination; and
|
(ii)
|
Awardee shall (a) transfer back to the Company, for consideration of $.01 per Share, all Shares that are held, as of the date of such determination, by Awardee and that were acquired upon settlement of the Units on or after the date which is 180 days prior to the date the Injurious Conduct occurred(Shares so acquired, the “
Acquired Shares
”) and (b) to the extent such Acquired Shares have previously been sold or otherwise disposed of by Awardee, repay to the Company the aggregate Fair Market Value (as defined in the Plan) of such Acquired Shares on the date of such sale or disposition, less the number of such Acquired Shares times $.01.
|
(i)
|
In the event of either (A) a Change in Control (as defined below) that results in none of the common stock of the Company or any direct or indirect parent entity being publicly traded or (B) a termination of Awardee’s employment by the Company or an affiliate of the Company without Cause, or by Awardee for Good Reason, within 12 months after any Change in Control, then all Units that have not previously become vested or been forfeited shall become immediately vested and nonforfeitable upon the occurrence of such event.
|
(ii)
|
In the event of a termination of Awardee’s employment as a result of Awardee’s death or permanent disability (as defined under the Company’s long-term disability policies), a pro rata portion of the Units shall vest on the date of such termination equal to one third of the RSUs granted to you multiplied by a fraction (the denominator of which is 365 and the numerator of which is the number of days since the preceding Vesting Date until the date of termination). All Units that are unvested and do not become vested on the date of such termination (including as a result thereof) shall be forfeited on the date of such termination.
|
(iii)
|
For purposes of this Agreement, “
Change in Control
” means (A) any person or business entity becomes a “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by then outstanding voting securities of the Company or (B) the consummation of a merger of the Company, the sale or disposition by the Company of all or substantially all of its assets within a 12-month period, or any other business combination of the Company with any other corporation or business entity, but not
|
(iv)
|
For purposes of this Agreement, “
Cause
” means (A) Awardee’s continued failure to substantially perform his or her duties (other than as a result of total or partial incapacity due to physical or mental illness), (B) Awardee’s commission of a crime constituting (x) a felony under the laws of the United States or any state thereof or (y) a misdemeanor involving moral turpitude, (C) Awardee’s fraud, misappropriation, misconduct or dishonesty in connection with his or her duties, (D) any act or omission which is, or is reasonably likely to be, materially adverse or injurious (financially, reputationally or otherwise) to the Company or any of its affiliates, (E) Awardee’s breach of any material obligations contained in Awardee’s employment agreement or offer letter with the Company, including, but not limited to, any restrictive covenants or obligations of confidentiality contained therein (F) Awardee’s breach of the Company’s Code of Conduct or (G) Awardee’s material breach of any Company policies and procedures applicable to Awardee.
|
(v)
|
For purposes of this Agreement, “
Good Reason
” shall exist if Awardee resigns his or her employment following the Company’s (A) material reduction of Awardee’s base salary, or (B) requirement that Awardee relocate more than 50 miles from Awardee’s current principal location of employment; “Good Reason” shall exist only if Awardee has given written notice to the Company within 30 days after the initial occurrence of the event, with a reference to this Agreement, and the Company has not cured such event by the 15th day after the date of such notice.
|
(vi)
|
For purposes of this Agreement, in the event Awardee has an employment agreement with the Company or an affiliate of the Company that provides definitions for the terms “Cause” and/or “Good Reason,” then, during the time in which Awardee’s employment agreement is in effect, the definitions provided within Awardee’s employment agreement shall be used instead of the definitions provided above.
|
(a)
|
During his or her employment by the Company and for a period of 12 months immediately following the termination of his or her employment for any reason whatsoever, whether or not for Cause or by resignation (whether or not for Good Reason), Awardee will not, directly or indirectly (whether through affiliates, relatives or otherwise):
|
(i)
|
in any Restricted Area (as hereinafter defined), be employed or retained by any person or entity who or which then competes with the Company in the Restricted Area to any extent, nor will Awardee directly or indirectly own any interest in any such person or entity or render to it any consulting, brokerage, contracting, financial or other services or any advice, assistance or other accommodation. Awardee shall be deemed to be employed or retained in the Restricted Area if Awardee has an office in the Restricted Area or if Awardee performs any duties or renders any advice with respect to any competitive facility, business activities or customers in the Restricted Area. A “
Restricted Area
” means any geographic area in which or in relation to which Awardee shall have performed any duties, or in/for which Awardee had management, financial, sales, corporate or other responsibilities, for the Company during the one-year period preceding the termination of his or her employment.
|
(b)
|
During his or her employment by the Company and for a period of 12 months immediately following the termination of his or her employment for any reason whatsoever, whether or not for Cause or by resignation (whether or not for Good Reason), Awardee will not anywhere directly or indirectly (whether as an owner, partner, employee, consultant, broker, contractor or otherwise, and whether personally or through other persons):
|
(i)
|
solicit or accept the business of, or call upon, any customer or potential customer of the Company with whom Awardee dealt, on behalf of the Company, at any time during the one year period immediately preceding the termination of his or her employment with the Company, for the purpose of providing any product or service reasonably deemed competitive with any product or service then offered by the Company;
|
(ii)
|
solicit or accept the business of, or call upon, any person or entity, or affiliate of any such person or entity, who or which is or was a customer, supplier, manufacturer, finder, broker, or other person who had a business relationship with the Company or who was a prospect for a business relationship with the Company at any time during the period of Awardee’s employment, for the purpose of providing or obtaining any product or service reasonably deemed competitive with any product or service then offered by the Company;
|
(iii)
|
approve, solicit or retain, or discuss the employment or retention (whether as an employee, consultant or otherwise) of any person who was an employee of the Company at any time during the one-year period preceding the termination of Awardee’s employment by the Company. (Nothing in this section restricts employees from engaging in protected activities with other employees concerning their wages, hours, and working conditions as set forth in Section 7 of the National Labor Relations Act);
|
(iv)
|
solicit or encourage any person to leave the employ of the Company; or
|
(v)
|
call upon or assist in the acquisition of any company which was, during the term of this Agreement, either called upon by an employee of the Company or by a broker or other third party, for possible acquisition by the Company or for which an employee of the Company or other person made an acquisition analysis for the Company; or own any interest in or be employed by or provide any services to any person or entity which engages in any conduct which is prohibited to Awardee under this
Section 17(b).
|
(c)
|
All time periods under Section 17 of this Agreement shall be computed by excluding from such computation any time during which Awardee is in violation of any provision of Section 17 of this Agreement and any time during which there is pending in any court of competent jurisdiction any action (including any appeal from any final judgment) brought by any person, whether or not a party to this Agreement, in which action the Company seeks to enforce the agreements and covenants in this Agreement or in which any person contests the validity of such agreements and covenants or their enforceability or seeks to avoid their performance or enforcement.
|
(d)
|
Before taking any position with any person or entity during the 12 month period following the termination of his or her employment for any reason, with or without Cause or by resignation, Awardee will give prior written notice to the Company of the name of such person or entity. Irrespective of whether such notice is given, the Company shall be entitled to advise each such person or entity of the provisions of this Agreement, and to correspond and otherwise deal with each such person or entity to ensure that the provisions of this Agreement are enforced and
|
(e)
|
Awardee understands that the provisions of this Agreement have been carefully designed to restrict his or her activities to the minimum extent which is consistent with law and the Company's requirements. Awardee has carefully considered these restrictions, and Awardee confirms that they will not unduly restrict Awardee’s ability to obtain a livelihood. Awardee has heretofore engaged in businesses other than the business in which he will be engaged on behalf of the Company. Before signing this Agreement, Awardee has had the opportunity to discuss this Agreement and all of its terms with his or her attorney.
|
(f)
|
Since monetary damages will be inadequate and the Company will be irreparably damaged if the provisions of Section 17 of this Agreement are not specifically enforced, the Company shall be entitled, among other remedies (i) to an injunction (without any bond or other security being required) restraining any violation of Section 17 of this Agreement by Awardee and by any person or entity to whom Awardee provides or proposes to provide any services in violation of this Agreement, (ii) to require Awardee to hold in a constructive trust, account for and pay over to the Company all compensation and other benefits which Awardee shall derive in whole or in part as a result of any action or omission which is a violation of any provision of this Agreement and (iii) to require Awardee to account for and pay over to the Company any net profit earned by the Awardee from the exercise, from and after the 12-month period prior to the termination of his or her employment, of any stock options issued to him/her by the Company.
|
(g)
|
The courts enforcing Section 17 of this Agreement shall be entitled to modify the duration, scope or other provision of any restriction contained herein to the extent such restriction would otherwise be unenforceable, and such restriction as modified shall be enforced.
|
(a)
|
References herein to determinations or other decisions or actions to be taken or made by the Company shall be made by the Administrator (as defined in the Plan) or such other person or persons to whom the Administrator may from time to time delegate authority or otherwise designate, and any such determinations, decisions or actions shall be final, conclusive and binding on the Awardee and all persons claiming under or through the Awardee.
|
(b)
|
This Agreement may not be changed or terminated except by a written agreement expressly referencing this Agreement and signed by the President or Chief Executive Officer of the Company and Awardee.
|
(c)
|
This Agreement, together with the Plan, constitutes the entire understanding of the parties, and supersedes and cancels all prior agreements, with respect to the subject matter hereof; provided that, this Agreement shall not supersede, replace, or otherwise affect in any manner, the restrictive covenant provisions or other post-employment obligations, including, without limitation, the non-competition provisions, contained in any agreement between Awardee and the Company or an affiliate of the Company (collectively, for purposes of this Section, the “Employment Agreement”). Nothing contained herein shall adversely affect or impair the Company or its affiliate’s right to enforce any of the restrictive covenants or other post-employment obligations contained in the Employment Agreement. Awardee agrees that Awardee’s post-employment obligations under the Employment Agreement shall remain in
|
(d)
|
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same Agreement. The counterparts of this Agreement may be executed and delivered by facsimile or other digital or electronic means by any of the parties to any other party and the receiving party may rely on the receipt of such document so executed and delivered by facsimile or other digital or electronic means as if the original had been received.
|
(e)
|
This Agreement will be governed by and construed in accordance with the laws of the State of Connecticut, without regard to principles of conflicts of laws. The interpretation and enforcement of the provisions of this Agreement shall be resolved and determined exclusively by the state court sitting in Fairfield County, Connecticut or the federal courts in the District of Connecticut and Awardee hereby consents that such courts be granted exclusive jurisdiction for such purpose. As additional consideration for the benefits Awardee is receiving under this Agreement, Awardee promises not to move to dismiss or transfer any litigation brought by the Company in Connecticut to enforce this Agreement based on personal jurisdiction, venue, or “convenience.” If any section, provision or clause of this Agreement, or any portion thereof, is held void or unenforceable, the remainder of such section, provision or clause, and all other sections, provisions or clauses of this Agreement, shall remain in full force and effect as if the section, provision or clause determined to be void or unenforceable had not been contained herein.
|
(i)
|
Company Performance Measures.
Provided you have remained continuously employed by the Company or an affiliate of the Company through the last day of a Performance Period (each such day, a “
Vesting Date
”), one-third of the Target Number of Restricted Stock Units granted hereunder may be earned for each Performance Period based on the achievement of annual goals related to EBITDA and Economic Profit Improvement (each as adjusted for restructuring charges and stock compensation) set forth in Schedule I (the “
Company Performance Measures
”). The Compensation Committee of the Board of Directors of the Company (the “
Compensation Committee
”) shall approve the Company Performance Measures and the formula to determine the number of Units earned based upon the level of achievement of the Company Performance Measures for each Performance Period no later than 90 days after the commencement of the Performance Period to which the Company Performance Measures relate. The Company shall notify you of the Company Performance Measures and formula as soon as practicable thereafter.
|
(ii)
|
Certification.
The Compensation Committee shall certify the achievement of the Company Performance Measures in accordance with Section 2.8.2(c) of the Plan and the percentage of Units earned for a Performance Period as soon as administratively practicable after the end of the Performance Period but no later than 45 days after the end of the calendar year in which the Performance Period ends (the “
Certification Date
”). The percentage of Units earned for a Performance Period will be determined as follows:
|
Performance
|
Percentage of Units earned
for a Performance Period
*
|
Performance less than Threshold
|
0%
|
Performance at Threshold
|
50%
|
Performance at Target
|
100%
|
Performance at or above Maximum
|
200%
|
(iii)
|
Company ROIC Measure.
For each Performance Period, provided you have remained continuously employed by the Company through the last day of the Performance Period, your Units relating to such Performance Period will be eligible for enhancement by application of the ROIC Multiplier (as defined below) if and to the extent determined by the Committee no later than no later than 90 days after the commencement of the applicable Performance Period (the “Establishment Date”). The “ROIC Multiplier” is a factor, ranging from 1 to 1.5, which is determined by the Company’s achievement of annual goals related to Return on Invested Capital (adjusted to exclude goodwill) set forth in Schedule I (the “Company ROIC Measure”). The Compensation Committee shall approve the Company ROIC Measure and the formula to determine the ROIC Multiplier earned based upon the level of achievement of the Company ROIC Measure for a Performance Period, if any, no later than 90 days after the Establishment Date. The Company shall notify you of the Company ROIC Measure and formula as soon as practicable thereafter. On the Certification Date, the Compensation Committee shall certify the achievement of the Company ROIC Measure in accordance with Section 2.8.2(c) of the Plan and the ROIC Multiplier earned for a Performance Period. For the avoidance of doubt, the Compensation Committee may determine that there will be no ROIC Multiplier for any or all Performance Periods.
|
(iv)
|
Change in Control
. Except as set forth in Section 7, following a Change in Control (as defined below), notwithstanding the provisions of Sections 2(i) and 2(ii), the Units will convert to time-based Units and will be deemed earned at the target level with respect to any then open Performance Period, and any applicable ROIC Multiplier will be deemed to be 1, on the anniversary of the Date of Grant following the end of the applicable Performance Period, provided that Awardee has remained continuously employed by the Company through the applicable Vesting Date.
|
(i)
|
Forfeiture.
Except as set forth in Section 7 and 8, if you cease to be employed by the Company or an affiliate of the Company for any reason whatsoever, including, but not limited to, a termination by the Company or an affiliate of the Company with or without “Cause” (as hereinafter defined) or a resignation by you with or without “Good Reason” (as hereinafter defined), prior to the Vesting Date for any Performance Period, all Units that could have been earned for such Performance Period and for any remaining Performance Period shall be canceled and forfeited as of the date of such termination.
|
(i)
|
General
. Earned Units shall be settled in shares of the common stock, $.01 par value, of the Company (“
Shares
”), on a one-for-one basis, (1) as soon as practicable following the applicable Certification Date (but in no event later than March 1st in the calendar year after the calendar year in which the Performance Period ends) or (2) following a Change in Control, as soon as practicable following the anniversary of the Date of Grant Units are deemed earned in accordance with Section 2(iv), provided in each case that Awardee has satisfied their tax withholding obligations with respect to the earned Units as described in this Agreement. Shares, in a number equal to the number of Units that have been earned, will be issued by the Company in the name of Awardee by electronic book-entry transfer or credit of such shares to an account of Awardee maintained with such brokerage firm or other custodian as the Company determines. Alternatively, in the Company’s sole discretion, such issuance may be effected in such other manner (including through physical certificates) as the Company may determine and/or by transfer or credit to such other account of Awardee as the Company or Awardee may specify.
|
(ii)
|
Section 409A
. It is the Company’s intent that payments under this Agreement shall comply with Section 409A of the Internal Revenue Code of 1986, as amended (“
Section 409A
”) to the extent applicable, and this Agreement shall be interpreted, administered and construed consistent with such intent. If, and only to the extent that, (1) the Units constitute “deferred compensation” within the meaning of Section 409A and (2) the Awardee is deemed to be a “specified employee” (as such term is defined in Section 409A and as determined by the Company), the payment of vested Units on account of the Awardee’s termination of employment shall not be made until the first business day of the seventh month after the Awardee’s “separation from service” (as such term is defined and used in Section 409A) with the Company, or if earlier, the date of the Awardee’s death. Each payment or delivery under this Agreement will be treated as a separate payment or delivery for purposes of Section 409A.
|
(i)
|
the Units shall terminate and be forfeited as of the date of such determination; and
|
(ii)
|
Awardee shall (a) transfer back to the Company, for consideration of $.01 per Share, all Shares that are held, as of the date of such determination, by Awardee and that were acquired upon settlement of the Units on or after the date which is 180 days prior to the date the Injurious Conduct occurred(Shares so acquired, the “
Acquired Shares
”) and (b) to the extent such Acquired Shares have previously been sold or otherwise disposed of by Awardee, repay to the Company the aggregate Fair Market Value (as defined in the Plan) of such Acquired Shares on the date of such sale or disposition, less the number of such Acquired Shares times $.01.
|
(i)
|
In the event of either (A) a Change in Control (as defined below) that results in none of the common stock of the Company or any direct or indirect parent entity being publicly traded or (B) a termination of Awardee’s employment by the Company or an affiliate of the Company without Cause, or by Awardee for Good Reason, within 12 months after any Change in Control, then all Units that have not previously become vested or been forfeited shall be deemed earned at the target level with respect to each remaining open Performance Period [and any applicable ROIC Multiplier will be deemed to be 1] and nonforfeitable upon the occurrence of such event.
|
(ii)
|
In the event of a termination of Awardee’s employment as a result of Awardee’s death or permanent disability (as defined under the Company’s long-term disability policies), a pro rata portion of the Units that could have been earned for the Performance Period in which such termination occurs shall be deemed earned on the date of such termination equal to one third of the units granted multiplied by a fraction (the denominator of which is 365 and the numerator of which is the number of days since the first day of the current Performance Period until the date of termination). All Units that are not earned as of the date of such termination (including as a result thereof) shall be forfeited on the date of such termination.
|
(iii)
|
For purposes of this Agreement, “
Change in Control
” means (A) any person or business entity becomes a “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by then outstanding voting securities of the Company or (B) the consummation of a merger of the Company, the sale or disposition by the Company of all or substantially all of its assets within a 12-month period, or any other business combination of the Company with any other corporation or business entity, but not including any merger or business combination of the Company which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or business combination.
|
(iv)
|
For purposes of this Agreement, “
Cause
” means (A) Awardee’s continued failure to substantially perform his or her duties (other than as a result of total or partial incapacity due to physical or mental illness), (B) Awardee’s commission of a crime constituting (x) a felony under the laws of the United States or any state thereof or (y) a misdemeanor involving moral turpitude, (C) Awardee’s fraud, misappropriation, misconduct or dishonesty in connection with his or her duties, (D) any act or omission which is, or is reasonably likely to be, materially adverse or injurious (financially, reputationally or otherwise) to the Company or any of its affiliates, (E) Awardee’s breach of any material obligations contained in Awardee’s employment agreement or offer letter with the Company, including, but not limited to, any restrictive covenants or obligations of confidentiality contained therein (F) Awardee’s breach of the Company’s Code of Conduct or (G) Awardee’s material breach of any Company policies and procedures applicable to Awardee.
|
(v)
|
For purposes of this Agreement, “
Good Reason
” shall exist if Awardee resigns his or her employment following the Company’s (A) material reduction of Awardee’s base salary, or (B) requirement that Awardee relocate more than 50 miles from Awardee’s current principal location of employment; “Good Reason” shall exist only if Awardee has given written notice to the Company within 30 days after the initial occurrence of the event, with a reference to this Agreement, and the Company has not cured such event by the 15th day after the date of such notice, and Awardee’s employment terminates within 60 days of Awardee’s giving of such notice to the Company.
|
(vi)
|
For purposes of this Agreement, in the event Awardee has an employment agreement with the Company or an affiliate of the Company that provides definitions for the terms “Cause” and/or “Good Reason,” then, during the time in which Awardee’s employment agreement is in effect, the definitions provided within Awardee’s employment agreement shall be used instead of the definitions provided above.
|
(a)
|
During his or her employment by the Company and for a period of 12 months immediately following the termination of his or her employment for any reason whatsoever, whether or not for Cause or by resignation (whether or not for Good Reason), Awardee will not, directly or indirectly (whether through affiliates, relatives or otherwise):
|
(i)
|
in any Restricted Area (as hereinafter defined), be employed or retained by any person or entity who or which then competes with the Company in the Restricted Area to any extent, nor will Awardee directly or indirectly own any interest in any such person or entity or render to it any consulting, brokerage, contracting, financial or other services or any advice, assistance or other accommodation. Awardee shall be deemed to be employed or retained in the Restricted Area if Awardee has an office in the Restricted Area or if Awardee performs any duties or renders any advice with respect to any competitive facility, business activities or customers in the Restricted Area. A “
Restricted Area
” means any geographic area in which or in relation to which Awardee shall have performed any duties, or in/for which Awardee had management, financial, sales, corporate or other responsibilities, for the Company during the one-year period preceding the termination of his or her employment.
|
(b)
|
During his or her employment by the Company and for a period of 12 months immediately following the termination of his or her employment for any reason whatsoever, whether or not for Cause or by resignation (whether or not for Good Reason), Awardee will not anywhere directly or indirectly (whether as an owner, partner, employee, consultant, broker, contractor or otherwise, and whether personally or through other persons):
|
(i)
|
solicit or accept the business of, or call upon, any customer or potential customer of the Company with whom Awardee dealt, on behalf of the Company, at any time during the one year period immediately preceding the termination of his or her employment with the Company, for the purpose of providing any product or service reasonably deemed competitive with any product or service then offered by the Company;
|
(ii)
|
solicit or accept the business of, or call upon, any person or entity, or affiliate of any such person or entity, who or which is or was a customer, supplier, manufacturer, finder, broker, or other person who had a business relationship with the Company or who was a prospect for a business relationship with the Company at any time during the period of Awardee’s employment, for the purpose of providing or obtaining any product or service reasonably deemed competitive with any product or service then offered by the Company;
|
(iii)
|
approve, solicit or retain, or discuss the employment or retention (whether as an employee, consultant or otherwise) of any person who was an employee of the
|
(iv)
|
solicit or encourage any person to leave the employ of the Company; or
|
(v)
|
call upon or assist in the acquisition of any company which was, during the term of this Agreement, either called upon by an employee of the Company or by a broker or other third party, for possible acquisition by the Company or for which an employee of the Company or other person made an acquisition analysis for the Company; or own any interest in or be employed by or provide any services to any person or entity which engages in any conduct which is prohibited to Awardee under this
Section 17(b).
|
(c)
|
All time periods under Section 17 of this Agreement shall be computed by excluding from such computation any time during which Awardee is in violation of any provision of Section 17 of this Agreement and any time during which there is pending in any court of competent jurisdiction any action (including any appeal from any final judgment) brought by any person, whether or not a party to this Agreement, in which action the Company seeks to enforce the agreements and covenants in this Agreement or in which any person contests the validity of such agreements and covenants or their enforceability or seeks to avoid their performance or enforcement.
|
(d)
|
Before taking any position with any person or entity during the 12 month period following the termination of his or her employment for any reason, with or without Cause or by resignation, Awardee will give prior written notice to the Company of the name of such person or entity. Irrespective of whether such notice is given, the Company shall be entitled to advise each such person or entity of the provisions of this Agreement, and to correspond and otherwise deal with each such person or entity to ensure that the provisions of this Agreement are enforced and duly discharged. Awardee understands and expressly agrees that the obligation to provide written notice under this Section 17(d) is a material term of this Agreement, and that the failure to provide such notice shall be a material breach of this Agreement, and shall constitute a presumption that any employment about which he or she failed to give notice violates Section 17(a) of this Agreement.
|
(e)
|
Awardee understands that the provisions of this Agreement have been carefully designed to restrict his or her activities to the minimum extent which is consistent with law and the Company's requirements. Awardee has carefully considered these restrictions, and Awardee confirms that they will not unduly restrict Awardee’s ability to obtain a livelihood. Awardee has heretofore engaged in businesses other than the business in which he will be engaged on behalf of the Company. Before signing this Agreement, Awardee has had the opportunity to discuss this Agreement and all of its terms with his or her attorney.
|
(f)
|
Since monetary damages will be inadequate and the Company will be irreparably damaged if the provisions of Section 17 of this Agreement are not specifically enforced, the Company shall be entitled, among other remedies (i) to an injunction (without any bond or other security being required) restraining any violation of Section 17 of this Agreement by Awardee and by any person or entity to whom Awardee provides or proposes to provide any services in violation of this Agreement, (ii) to require Awardee to hold in a constructive trust, account for and pay over to the Company all compensation and other benefits which Awardee shall derive in whole or in part as a result of any action or omission which is a violation of any provision of this Agreement and (iii) to require Awardee to account for and pay over to the Company any
|
(g)
|
The courts enforcing Section 17 of this Agreement shall be entitled to modify the duration, scope or other provision of any restriction contained herein to the extent such restriction would otherwise be unenforceable, and such restriction as modified shall be enforced.
|
(a)
|
References herein to determinations or other decisions or actions to be taken or made by the Company shall be made by the Compensation Committee or such other person or persons to whom the Compensation may from time to time delegate authority or otherwise designate, and any such determinations, decisions or actions shall be final, conclusive and binding on Awardee and all persons claiming under or through Awardee.
|
(b)
|
This Agreement may not be changed or terminated except by a written agreement expressly referencing this Agreement and signed by the President or Chief Executive Officer of the Company and Awardee.
|
(c)
|
This Agreement, together with the Plan, constitutes the entire understanding of the parties, and supersedes and cancels all prior agreements, with respect to the subject matter hereof; provided that, this Agreement shall not supersede, replace, or otherwise affect in any manner, the restrictive covenant provisions or other post-employment obligations, including, without limitation, the non-competition provisions, contained in any agreement between Awardee and the Company or an affiliate of the Company (collectively, for purposes of this Section, the “Employment Agreement”). Nothing contained herein shall adversely affect or impair the Company or its affiliate’s right to enforce any of the restrictive covenants or other post-employment obligations contained in the Employment Agreement. Awardee agrees that Awardee’s post-employment obligations under the Employment Agreement shall remain in effect and enforceable in accordance with the terms of the Employment Agreement and Awardee hereby reaffirms those obligations. Awardee agrees that his/her obligations under Section 17 above supplement and are in addition to, and shall not supersede, modify or otherwise affect, his/her obligations under the Employment Agreement. The Company and its affiliates reserve the right to enforce any restrictive covenant imposed under any Employment Agreement and/or this Agreement, individually or collectively, at its option.
|
(d)
|
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same Agreement. The counterparts of this Agreement may be executed and delivered by facsimile or other digital or electronic means by any of the parties to any other party and the receiving party may rely on the receipt of such document so executed and delivered by facsimile or other digital or electronic means as if the original had been received.
|
(e)
|
This Agreement will be governed by and construed in accordance with the laws of the State of Connecticut, without regard to principles of conflicts of laws. The interpretation and enforcement of the provisions of this Agreement shall be resolved and determined exclusively by the state court sitting in Fairfield County, Connecticut or the federal courts in the District of Connecticut and Awardee hereby consents that such courts be granted exclusive jurisdiction for such purpose. As additional consideration for the benefits Awardee is receiving under this Agreement, Awardee promises not to move to dismiss or transfer any litigation brought by the Company in Connecticut to enforce this Agreement based on personal jurisdiction, venue, or “convenience.” If any section, provision or clause of this Agreement, or any portion thereof, is
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||||||
|
2010
|
2011
|
2012
|
2013
|
2014
|
|
2015
|
||||||||||||
Earnings:
|
|
|
|
|
|
|
|
||||||||||||
(Loss) income from continuing operations before (benefit) provision for income taxes
|
$
|
(63
|
)
|
$
|
164
|
|
$
|
88
|
|
$
|
605
|
|
$
|
850
|
|
|
$
|
182
|
|
Add:
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges, net of capitalized interest
|
279
|
|
271
|
|
504
|
|
521
|
|
520
|
|
|
131
|
|
||||||
Total earnings available for fixed charges
|
216
|
|
435
|
|
592
|
|
1,126
|
|
1,370
|
|
|
313
|
|
||||||
Fixed charges (1):
|
|
|
|
|
|
|
|
||||||||||||
Interest expense, net
|
255
|
|
228
|
|
512
|
|
475
|
|
555
|
|
|
121
|
|
||||||
Add back interest income, which is netted in interest expense
|
1
|
|
1
|
|
2
|
|
1
|
|
2
|
|
|
—
|
|
||||||
Add back gains (losses) on bond repurchases/retirement of subordinated convertible debentures, included in interest expense
|
(28
|
)
|
(5
|
)
|
(72
|
)
|
(3
|
)
|
(80
|
)
|
|
(2
|
)
|
||||||
Interest expense—subordinated convertible debentures, net
|
8
|
|
7
|
|
4
|
|
3
|
|
—
|
|
|
—
|
|
||||||
Capitalized interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Interest component of rent expense
|
43
|
|
40
|
|
58
|
|
45
|
|
43
|
|
|
12
|
|
||||||
Fixed charges
|
$
|
279
|
|
$
|
271
|
|
$
|
504
|
|
$
|
521
|
|
$
|
520
|
|
|
$
|
131
|
|
Ratio of earnings to fixed charges
|
— (2)
|
|
1.6x
|
|
1.2x
|
|
2.2x
|
|
2.6x
|
|
|
2.4x
|
|
(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)
|
The ratio coverage was less than 1:1 for the year ended December 31, 2010 due to our loss for the year. We would have had to have generated additional earnings of $63 for the year ended December 31, 2010 to have achieved a coverage ratio of 1:1.
|
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, 2015
;
|
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, 2015
;
|
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
|