UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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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For the quarterly period ended September 30, 2008
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission File Number 1-14387
United Rentals, Inc.
Commission File Number 1-13663
United Rentals (North America), Inc.
(Exact Names of Registrants as Specified in Their Charters)
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Delaware
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06-1522496
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Delaware
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06-1493538
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(State of Incorporation)
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(I.R.S. Employer Identification Nos.)
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Five Greenwich Office Park,
Greenwich, Connecticut
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06831
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(Address of Principal Executive Offices)
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(Zip code)
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(203) 622-3131
Registrants telephone number, including area code:
Indicate by check mark whether
the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
x
Yes
¨
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer
x
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Accelerated filer
¨
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Non-Accelerated Filer
¨
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Smaller Reporting Company
¨
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
¨
Yes
x
No
As of October 24, 2008, there were 59,892,976 shares of United Rentals, Inc. Common Stock, $.01 par value, outstanding. There is no market for the common stock of United Rentals (North America), Inc., all
outstanding shares of which are owned by United Rentals, Inc.
This combined Form 10-Q is separately filed by (i) United Rentals, Inc.
and (ii) United Rentals (North America), Inc. (which is a wholly owned subsidiary of United Rentals, Inc.). United Rentals (North America), Inc. meets the conditions set forth in General Instruction (H) (1) (a) and (b) of
Form 10-Q and is therefore filing this report with the reduced disclosure format permitted by such instruction.
UNITED RENTALS, INC.
UNITED RENTALS (NORTH AMERICA), INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
INDEX
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Page
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PART I
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FINANCIAL INFORMATION
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Item 1
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Unaudited Condensed Consolidated Financial Statements
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4
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United Rentals, Inc. Condensed Consolidated Balance Sheets as of September 30, 2008, September 30, 2007 and December 31,
2007 (unaudited)
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4
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United Rentals, Inc. Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2008 and
2007 (unaudited)
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5
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United Rentals, Inc. Condensed Consolidated Statement of Stockholders Equity for the Nine Months Ended September 30,
2008 (unaudited)
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6
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United Rentals, Inc. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007
(unaudited)
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7
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Notes to Unaudited Condensed Consolidated Financial Statements
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8
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Item 2
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Managements Discussion and Analysis of Financial Condition and Results of Operations
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27
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Item 3
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Quantitative and Qualitative Disclosures About Market Risk
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37
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Item 4
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Controls and Procedures
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37
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PART II
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OTHER INFORMATION
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Item 1
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Legal Proceedings
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38
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Item 1A
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Risk Factors
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38
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Item 2
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Unregistered Sales of Equity Securities and Use of Proceeds
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38
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Item 6
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Exhibits
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39
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Signatures
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41
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2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this report are forward-looking in nature. Such statements can be identified by the use of forward-looking terminology
such as believe, expect, may, will, should, seek, on-track, plan, intend or anticipate, or the negative thereof or comparable
terminology, or by discussions of strategy or outlook. You are cautioned that our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ
materially from those projected by any forward-looking statements. Certain of such risks and uncertainties are referred to below under Item 1ARisk Factors, by reference to such risks and uncertainties as described in our Annual Report on
Form 10-K for the year ended December 31, 2007. Our forward-looking statements contained herein speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. We make no commitment
to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.
3
PART I. FINANCIAL INFORMATION
I
tem 1.
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Financial Statements
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UNITED RENTALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except per share data)
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September 30,
2008
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September 30,
2007
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December 31,
2007
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ASSETS
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Cash and cash equivalents
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$
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66
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$
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112
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$
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381
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Accounts receivable, net of allowance for doubtful accounts of $24, $24 and $26 at September 30, 2008, September 30, 2007 and
December 31, 2007, respectively
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507
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582
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519
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Inventory
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78
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123
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91
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Prepaid expenses and other assets
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50
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51
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57
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Deferred taxes
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80
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51
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72
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Total current assets
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781
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919
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1,120
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Rental equipment, net
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2,927
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2,918
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2,826
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Property and equipment, net
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440
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415
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440
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Goodwill and other intangible assets, net
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1,393
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1,407
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1,404
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Other long-term assets
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71
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58
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52
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Total assets
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$
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5,612
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$
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5,717
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$
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5,842
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LIABILITIES AND STOCKHOLDERS EQUITY
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Current maturities of long-term debt
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$
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11
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$
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78
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$
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15
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Accounts payable
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211
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248
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195
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Accrued expenses and other liabilities
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246
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273
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310
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Total current liabilities
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468
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599
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520
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Long-term debt
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3,433
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2,535
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2,555
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Subordinated convertible debentures
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146
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146
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146
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Deferred taxes
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631
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472
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539
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Other long-term liabilities
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59
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100
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64
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Total liabilities
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4,737
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3,852
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3,824
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Preferred stock
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Common stock$0.01 par value, 500,000,000 shares authorized, 59,900,234, 85,801,507 and 86,329,773 shares issued and outstanding at
September 30, 2008, September 30, 2007 and December 31, 2007, respectively
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1
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1
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1
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Additional paid-in capital
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465
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1,479
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1,494
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Retained earnings
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341
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278
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431
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Accumulated other comprehensive income
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68
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107
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92
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Total stockholders equity
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875
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1,865
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2,018
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$
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5,612
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$
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5,717
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$
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5,842
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See accompanying notes.
4
UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share amounts)
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2008
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2007
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2008
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2007
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Revenues:
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Equipment rentals
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$
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677
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$
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718
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$
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1,869
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$
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1,944
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Sales of rental equipment
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56
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78
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190
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243
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New equipment sales
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49
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56
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137
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177
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Contractor supplies sales
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54
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96
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169
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301
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Service and other revenues
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37
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42
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|
|
111
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125
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Total revenues
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873
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990
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2,476
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2,790
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Cost of revenues:
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Cost of equipment rentals, excluding depreciation
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287
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302
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851
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880
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Depreciation of rental equipment
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115
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|
|
111
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334
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|
|
321
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Cost of rental equipment sales
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|
38
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|
|
|
56
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|
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|
135
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174
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Cost of new equipment sales
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|
41
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|
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|
47
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|
|
|
114
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|
|
|
147
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|
Cost of contractor supplies sales
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|
41
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|
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|
78
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|
|
|
130
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|
|
|
245
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|
Cost of service and other revenues
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16
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|
|
|
17
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|
|
46
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|
|
|
52
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total cost of revenues
|
|
|
538
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|
|
|
611
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|
|
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1,610
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|
|
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1,819
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|
|
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|
|
|
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Gross profit
|
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335
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|
|
|
379
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866
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971
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|
Selling, general and administrative expenses
|
|
|
133
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|
|
|
150
|
|
|
|
390
|
|
|
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446
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|
Charge related to settlement of SEC inquiry
|
|
|
|
|
|
|
|
|
|
|
14
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|
|
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|
|
Non-rental depreciation and amortization
|
|
|
14
|
|
|
|
13
|
|
|
|
44
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
188
|
|
|
|
216
|
|
|
|
418
|
|
|
|
487
|
|
Interest expense, net
|
|
|
70
|
|
|
|
44
|
|
|
|
159
|
|
|
|
146
|
|
Interest expensesubordinated convertible debentures
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|
|
2
|
|
|
|
2
|
|
|
|
7
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|
|
|
7
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|
Other (income) expense, net
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|
|
(1
|
)
|
|
|
(2
|
)
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|
|
|
|
|
|
(4
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)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income from continuing operations before provision for income taxes
|
|
|
117
|
|
|
|
172
|
|
|
|
252
|
|
|
|
338
|
|
Provision for income taxes
|
|
|
43
|
|
|
|
61
|
|
|
|
103
|
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Income from continuing operations
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|
|
74
|
|
|
|
111
|
|
|
|
149
|
|
|
|
210
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|
Income (loss) from discontinued operation, net of taxes
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
74
|
|
|
$
|
112
|
|
|
$
|
149
|
|
|
$
|
209
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock redemption charge
|
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|
|
|
|
|
|
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(239
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)
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Net income (loss) available to common stockholders
|
|
$
|
76
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|
|
$
|
113
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|
|
$
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(90
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)
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|
$
|
214
|
|
Basic earnings (loss) available to common stockholders:
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
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Income (loss) from continuing operations (inclusive of preferred stock redemption charge)
|
|
$
|
1.11
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|
|
$
|
1.09
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|
|
$
|
(1.12
|
)
|
|
$
|
2.10
|
|
Income from discontinued operation
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1.11
|
|
|
$
|
1.10
|
|
|
$
|
(1.12
|
)
|
|
$
|
2.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Diluted earnings (loss) available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations (inclusive of preferred stock redemption charge)
|
|
$
|
0.98
|
|
|
$
|
0.97
|
|
|
$
|
(1.12
|
)
|
|
$
|
1.87
|
|
Income (loss) from discontinued operation
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
0.98
|
|
|
$
|
0.98
|
|
|
$
|
(1.12
|
)
|
|
$
|
1.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
5
UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (UNAUDITED)
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series C
Perpetual
Convertible
Preferred
Stock
|
|
Series D
Perpetual
Convertible
Preferred
Stock
|
|
Number of
Shares
|
|
|
Amount
|
|
Additional
Paid-in
Capital
|
|
|
Retained
Earnings
|
|
|
Comprehensive
Income
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
Balance, December 31, 2007
|
|
$
|
|
|
$
|
|
|
86
|
|
|
$
|
1
|
|
$
|
1,494
|
|
|
$
|
431
|
|
|
|
|
|
$
|
92
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149
|
|
|
149
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24
|
)
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock redemption
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
$
|
(431
|
)
|
|
$
|
(239
|
)
|
|
|
|
|
|
|
|
Repurchase of common shares
|
|
|
|
|
|
|
|
(27
|
)
|
|
|
|
|
|
(603
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of common stock options
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeiture of stock compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2008
|
|
$
|
|
|
$
|
|
|
60
|
|
|
$
|
1
|
|
$
|
465
|
|
|
$
|
341
|
|
|
|
|
|
$
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
6
UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
149
|
|
|
$
|
210
|
|
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
378
|
|
|
|
359
|
|
Amortization of deferred financing costs
|
|
|
11
|
|
|
|
7
|
|
Gain on sales of rental equipment
|
|
|
(55
|
)
|
|
|
(69
|
)
|
Gain on sales of non-rental equipment
|
|
|
(2
|
)
|
|
|
(5
|
)
|
Non-cash adjustments to equipment
|
|
|
5
|
|
|
|
(1
|
)
|
Write-off of deferred financing costs and discount in connection with repurchase of 14% HoldCo Notes
|
|
|
4
|
|
|
|
|
|
Stock compensation expense, net
|
|
|
4
|
|
|
|
12
|
|
Increase in deferred taxes
|
|
|
87
|
|
|
|
41
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable
|
|
|
8
|
|
|
|
(79
|
)
|
Decrease in inventory
|
|
|
12
|
|
|
|
16
|
|
Decrease in prepaid expenses and other assets
|
|
|
12
|
|
|
|
1
|
|
Increase in accounts payable
|
|
|
18
|
|
|
|
30
|
|
Decrease in accrued expenses and other liabilities
|
|
|
(60
|
)
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activitiescontinuing operations
|
|
|
571
|
|
|
|
484
|
|
Net cash provided by operating activitiesdiscontinued operation
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
571
|
|
|
|
493
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
Purchases of rental equipment
|
|
|
(590
|
)
|
|
|
(785
|
)
|
Purchases of non-rental equipment
|
|
|
(41
|
)
|
|
|
(81
|
)
|
Proceeds from sales of rental equipment
|
|
|
190
|
|
|
|
243
|
|
Proceeds from sales of non-rental equipment
|
|
|
7
|
|
|
|
20
|
|
Purchases of other companies
|
|
|
(17
|
)
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activitiescontinuing operations
|
|
|
(451
|
)
|
|
|
(626
|
)
|
Net cash provided by investing activitiesdiscontinued operation
|
|
|
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(451
|
)
|
|
|
(559
|
)
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from debt
|
|
|
3,083
|
|
|
|
421
|
|
Payments on debt
|
|
|
(2,624
|
)
|
|
|
(420
|
)
|
Cash paid in connection with preferred stock redemption, including fees
|
|
|
(257
|
)
|
|
|
|
|
Payments of financing costs
|
|
|
(31
|
)
|
|
|
|
|
Proceeds from the exercise of common stock options
|
|
|
3
|
|
|
|
22
|
|
Repurchase of common stock, including fees
|
|
|
(603
|
)
|
|
|
|
|
Excess tax benefits from share-based payment arrangements
|
|
|
|
|
|
|
28
|
|
Shares repurchased and retired
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(431
|
)
|
|
|
47
|
|
Effect of foreign exchange rates
|
|
|
(4
|
)
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(315
|
)
|
|
|
(7
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
381
|
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
66
|
|
|
$
|
112
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
7
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in
millions, except per share data unless otherwise indicated)
1. Organization, Description of Business and Basis of Presentation
General
United Rentals, Inc. (Holdings,
United Rentals or the Company) is principally a holding company and conducts its operations primarily through its wholly owned subsidiary, United Rentals (North America), Inc. (URNA), and subsidiaries of URNA.
Holdings primary asset is its sole ownership of all issued and outstanding shares of common stock of URNA. URNAs various credit agreements and debt instruments place restrictions on its ability to transfer funds to its shareholder.
We rent equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities,
municipalities, homeowners and others in the United States, Canada and Mexico. In addition to renting equipment, we sell new and used rental equipment, as well as related contractor supplies, parts and service.
In June 2008, we commenced a modified Dutch auction tender offer in which we offered to purchase up to 27.16 million shares of our
common stock at a price not less than $22.00 nor greater than $25.00 per share. The tender offer expired in July 2008 and, in accordance with the terms of the offer, we accepted for payment an aggregate of 27.16 million shares of our common
stock at a price of $22.00 per share, for a total cost of $603 (including fees and expenses). The number of shares of common stock purchased in the tender offer represented approximately 31 percent of the total common stock outstanding on the last
full trading day prior to the commencement of the offer.
Also in June 2008, and in connection with our announcement of the tender offer,
we repurchased all of our outstanding Series C and Series D preferred stock, a substantial majority of which was held by Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. Prior to this preferred stock repurchase, a majority of
the preferred holders had the right to consent to certain transactions by us, including the aforementioned tender offer. Under the definitive repurchase agreement, the total purchase price for the preferred stock was approximately $679, a portion of
which was settled through the issuance by Holdings of new 14% Senior Notes due 2014 (14% HoldCo Notes). In addition, and as a result of the repurchase of the preferred stock, Leon Black and Michael Gross, the two company directors
elected by the former preferred holders in accordance with the terms of the Series C preferred stock, resigned from our board. Also in June 2008, we, URNA, and certain of our subsidiaries entered into a credit agreement which provides for a new
$1.250 billion senior secured asset-based revolving credit facility, in connection with which URNA repaid the amounts outstanding under its former revolving credit facility and term loan. See notes 6 and 7 to our condensed consolidated financial
statements for additional information concerning the new asset-based revolving credit facility, which has recently been upsized to $1.285 billion, and the repurchase of the preferred stock, respectively.
We have prepared the accompanying unaudited condensed consolidated interim financial statements in accordance with the accounting policies described in
our Annual Report on Form 10-K for the year ended December 31, 2007 (the 2007 Form 10-K) and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in financial
statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the 2007 Form 10-K. Certain
reclassifications have been made to prior year financial information to conform to the current year presentation.
In our opinion, all
adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented have been made. Interim results of operations are not
necessarily indicative of the results of the full year.
8
New Accounting Pronouncements
In September 2006, the FASB issued Statement 157,
Fair Value Measurement
(Statement 157). Statement 157 defines fair value, establishes a framework for measuring fair value in GAAP and
establishes a hierarchy that categorizes and prioritizes the sources to be used to estimate fair value. Statement 157 also expands financial statement disclosures about fair value measurements. On February 12, 2008, the FASB issued FASB
Staff Position (FSP) 157-2 which delays the effective date of Statement 157 for one year for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). Statement 157 and FSP 157-2 are effective for financial statements issued for fiscal years beginning after November 15, 2007. We have elected a partial deferral of Statement 157
under the provisions of FSP 157-2 related to the measurement of fair value used when evaluating goodwill, other intangible assets and other long-lived assets for impairment and valuing asset retirement obligations and liabilities for exit or
disposal activities. The partial adoption of Statement 157 on January 1, 2008 did not have a material impact on our condensed consolidated financial statements.
2. Segment Information
Our reportable segments are general rentals and trench safety, pump and
power. The general rentals segment includes the rental of construction, aerial, industrial and homeowner equipment and related services and activities. The general rentals segments customers include construction and industrial companies,
manufacturers, utilities, municipalities and homeowners. The general rentals segment operates throughout the United States and Canada and has one location in Mexico. The trench safety, pump and power segment includes the rental of specialty
construction products and related services. The trench safety, pump and power segments customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This segment operates in the United
States and has one location in Canada. These segments align our external segment reporting with how management evaluates and allocates resources. We evaluate segment performance based on segment operating results.
Operating segment revenues and profitability for the three and nine months ended September 30, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
Total reportable segment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
General rentals
|
|
$
|
812
|
|
$
|
928
|
|
$
|
2,320
|
|
$
|
2,621
|
Trench safety, pump and power
|
|
|
61
|
|
|
62
|
|
|
156
|
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
873
|
|
$
|
990
|
|
$
|
2,476
|
|
$
|
2,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reportable segment depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
General rentals
|
|
$
|
122
|
|
$
|
119
|
|
$
|
359
|
|
$
|
342
|
Trench safety, pump and power
|
|
|
7
|
|
|
5
|
|
|
19
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortization expense
|
|
$
|
129
|
|
$
|
124
|
|
$
|
378
|
|
$
|
359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
General rentals
|
|
$
|
167
|
|
$
|
197
|
|
$
|
375
|
|
$
|
443
|
Trench safety, pump and power
|
|
|
21
|
|
|
19
|
|
|
43
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating income
|
|
$
|
188
|
|
$
|
216
|
|
$
|
418
|
|
$
|
487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reportable segment capital expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
General rentals
|
|
|
|
|
|
|
|
$
|
618
|
|
$
|
836
|
Trench safety, pump and power
|
|
|
|
|
|
|
|
|
13
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures
|
|
|
|
|
|
|
|
$
|
631
|
|
$
|
866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2008
|
|
September 30,
2007
|
|
December 31,
2007
|
Total reportable segment assets
|
|
|
|
|
|
|
|
|
|
General rentals
|
|
$
|
5,458
|
|
$
|
5,553
|
|
$
|
5,688
|
Trench safety, pump and power
|
|
|
154
|
|
|
164
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,612
|
|
$
|
5,717
|
|
$
|
5,842
|
|
|
|
|
|
|
|
|
|
|
3. Income Taxes
We adopted the provisions of FIN 48 on January 1, 2007. We did not record any unrecognized income tax benefits as a result of the implementation of FIN 48. As of December 31, 2007, we had $7 of unrecognized
tax benefits, all of which would impact our effective tax rate if recognized. For the three and nine months ended September 30, 2008, there were additions to our unrecognized tax benefits of less than $1, resulting from anticipated audit
settlements. We include interest accrued on the underpayment of income taxes in interest expense and penalties, if any, related to unrecognized tax benefits in selling, general and administrative expense. For the three and nine months ended
September 30, 2008, interest expense of less than $2 related to income tax was reflected in our condensed consolidated statements of income.
We file income tax returns in the U.S. and in several foreign jurisdictions. With few exceptions, we have completed our domestic and international income tax examinations, or the statute of limitations has expired in the respective
jurisdictions, for years prior to 2004. The Internal Revenue Service has completed audits for periods prior to 2006; Canadian authorities have concluded income tax audits for periods prior to 2006, and the Company has agreed to the findings,
however, 2003 through 2005 remain open to transfer pricing audit adjustments. The Company anticipates a cash settlement relating to the 2003 through 2005 Canadian transfer pricing adjustments which would reduce the previously recorded uncertain
tax positions by $4. The remaining unrecognized tax benefits at September 30, 2008 could significantly change during the next twelve months. However, based on the status of the ongoing audit examinations and alternative options available
to the Company for certain of these tax positions, which could include legal proceedings, it is not possible to estimate the amount of the change, if any, to the previously recorded uncertain tax positions.
4. Acquisitions
In September 2008, we acquired
U-Rent-It, Inc. (U-Rent-It). U-Rent-It had three general rental equipment branches in Texas and annual revenues of approximately $11. The aggregate purchase price for this acquisition was approximately $17. Pro forma combined results of
operations giving effect to this acquisition would not vary materially from our historical results.
5. Goodwill and Other Intangible Assets
The carrying amount of the Companys goodwill was $1,354, $1,359 and $1,358 at September 30, 2008, September 30, 2007
and December 31, 2007, respectively. We are required to review our goodwill for impairment annually as of a scheduled review date. However, if events or circumstances suggest that goodwill could be impaired, we may be required to conduct an
earlier review. The scheduled review date is October 1 of each year.
10
Other intangible assets consist of customer relationships and non-compete agreements and are amortized
over periods ranging from one to 12 years. Amortization expense for other intangible assets was $2 for the three months ended September 30, 2008 and 2007, and $6 and $5 for the nine months ended September 30, 2008 and 2007, respectively.
The cost of other intangible assets and the related accumulated amortization as of September 30, 2008 was as follows:
|
|
|
|
|
|
|
September 30,
2008
|
|
Gross carrying amount
|
|
$
|
82
|
|
Accumulated amortization
|
|
|
(43
|
)
|
|
|
|
|
|
Net amount
|
|
$
|
39
|
|
|
|
|
|
|
6. Debt
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2008
|
|
|
September 30,
2007
|
|
|
December 31,
2007
|
|
URNA and subsidiaries debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving Credit Facility
|
|
$
|
|
|
|
$
|
160
|
|
|
$
|
140
|
|
Term Loan
|
|
|
|
|
|
|
329
|
|
|
|
327
|
|
$1.285 billion ABL Facility (1)
|
|
|
769
|
|
|
|
|
|
|
|
|
|
7
3
/
4
percent Senior
Subordinated Notes
|
|
|
525
|
|
|
|
525
|
|
|
|
525
|
|
7 percent Senior Subordinated Notes
|
|
|
375
|
|
|
|
375
|
|
|
|
375
|
|
6
1
/
2
percent Senior
Notes
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
1,000
|
|
1
7
/
8
percent
Convertible Senior Subordinated Notes
|
|
|
144
|
|
|
|
144
|
|
|
|
144
|
|
Accounts Receivable Securitization Facility (1)
|
|
|
286
|
|
|
|
45
|
|
|
|
|
|
Other debt, including capital leases
|
|
|
54
|
|
|
|
35
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total URNA and subsidiaries debt
|
|
|
3,153
|
|
|
|
2,613
|
|
|
|
2,570
|
|
Less current portion:
|
|
|
(12
|
)
|
|
|
(78
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term URNA and subsidiaries debt
|
|
|
3,141
|
|
|
|
2,535
|
|
|
|
2,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
URI debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
14% HoldCo Notes due 2014
|
|
|
291
|
|
|
|
|
|
|
|
|
|
Less current portion:
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt (2)
|
|
$
|
3,433
|
|
|
$
|
2,535
|
|
|
$
|
2,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
$375 and $14 were available under the ABL and accounts receivable facilities, respectively, at September 30, 2008.
|
(2)
|
In August 1998, a subsidiary trust (the Trust) of Holdings issued and sold $300 of 6
1
/
2
percent Convertible Quarterly Income Preferred Securities (QUIPS) in a private offering. The Trust used the proceeds
from the offering to purchase 6
1
/
2
percent Convertible Subordinated Debentures due 2028 (the Debentures), which
resulted in Holdings receiving all of the net proceeds of the offering. The QUIPS are non-voting securities, carry a liquidation value of $50 (fifty dollars) per security and are convertible into the Companys common stock. Total long-term debt
at September 30, 2008, September 30, 2007 and December 31, 2007 excludes $146 of these Debentures which are separately classified in our condensed consolidated balance sheets and referred to as subordinated convertible
debentures. The subordinated convertible debentures reflect the obligation to our subsidiary that has issued the QUIPS. This subsidiary is not consolidated in our financial statements because we are not the primary beneficiary of the trust.
|
11
In June 2008, we, URNA, and certain of our subsidiaries entered into a credit agreement which provides
for a five-year $1.250 billion senior secured asset-based revolving credit facility (the ABL Facility), a portion of which is available for borrowing in Canadian dollars. In October 2008, the ABL Facility was upsized to $1.285 billion,
further increasing our liquidity. The ABL Facility is subject, among other things, to the terms of a borrowing base derived from the value of eligible rental equipment and eligible inventory. The borrowing base is subject to certain reserves and
caps customary for financings of this type. All amounts borrowed under the credit agreement must be repaid on or before June 2013. In connection with entering into the credit agreement, URNA repaid the $136 and $326 outstanding, respectively, under
its former revolving credit facility and term loan, which were terminated. Loans under the credit agreement bear interest, at URNAs option: (i) in the case of loans in U.S. Dollars, at a rate equal to the London interbank offered rate or
an alternate base rate, in each case plus a spread, or (ii) in the case of loans in Canadian dollars, at a rate equal to the Canadian prime rate or an alternate rate (Bankers Acceptance Rate), in each case plus a spread. The interest rates
under the credit agreement are subject to change based on a total consolidated leverage ratio (a measurement of URNAs total debt to adjusted EBITDA). A commitment fee accrues on any unused portion of the commitments under the credit agreement
at a rate per annum based on usage. Ongoing extensions of credit under the credit agreement are subject to customary conditions, including sufficient availability under the borrowing base. The credit agreement also contains covenants that, unless
certain financial and other conditions are satisfied, require URNA to satisfy various financial tests and to maintain certain financial ratios. In addition, the credit agreement contains customary negative covenants applicable to us, URNA and our
subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness or engage in certain other types of financing transactions, (ii) allow certain liens to attach
to assets, (iii) repurchase or pay dividends or make certain other restricted payments on capital stock and certain other securities, or prepay certain indebtedness, and (iv) make acquisitions and investments. The U.S. Dollar
borrowings under the credit agreement are secured by substantially all of our assets and substantially all of the assets of certain of our U.S. subsidiaries (other than real property and certain accounts receivable). The U.S. Dollar borrowings
under the credit agreement are guaranteed by us and by URNA and, subject to certain exceptions, our domestic subsidiaries. Borrowings under the credit agreement by URNAs Canadian subsidiaries are also secured by substantially all the assets of
URNAs Canadian subsidiaries and supported by guarantees from the Canadian subsidiaries and from us and URNA, and, subject to certain exceptions, our domestic subsidiaries.
The credit agreement also includes other covenants, representations, warranties, indemnities and events of default, that are customary for facilities of
this type, including events of default relating to a change of control
.
As previously discussed, in June 2008 we
repurchased all of our outstanding Series C and Series D preferred stock for approximately $679. Pursuant to the purchase agreement with the preferred holders, Holdings issued to the former preferred holders $425 aggregate principal amount of 14%
HoldCo Notes in partial payment of the repurchase price of the preferred stock. In September 2008, we prepaid $125 of the principal amount of these notes and recorded a pre-tax non-cash charge of $4. The difference between the September 30,
2008 carrying value of the 14% HoldCo Notes and the remaining $300 principal amount of the notes relates to a $9 original issue discount initially recognized in conjunction with the issuance of these notes.
The 14% HoldCo Notes were issued under a new indenture between the Company and The Bank of New York, as trustee, and are callable at par by the Company
at any time. The indenture contains covenants that are substantially similar to (and no more restrictive than) the covenants contained in the indentures governing URNAs high yield debt securities, including, among other things, limitations on
our and our subsidiaries ability to incur indebtedness, make certain restricted payments, issue preferred stock, enter into transactions with affiliates, create or incur liens, dispose of the proceeds of asset sales and restrict the ability to
pay dividends and enter into sale/leaseback transactions. These covenants include exceptions that would allow us to engage in these activities under certain conditions. The indenture also requires that, in the event of a change in control (as
defined in the indenture), we must make an offer to purchase all of the then outstanding 14% HoldCo Notes tendered at a purchase price in cash equal to 100 percent of the principal amount thereof plus accrued and unpaid interest, if any, thereon.
12
7. Preferred Stock
As previously discussed, in June 2008 we repurchased all of outstanding Series C Preferred and Series D preferred stock for approximately $679. In conjunction with the repurchase of the preferred stock, and in
accordance with EITF Topic D-42, we recorded a preferred stock redemption charge of $239 in the second quarter as a reduction of net income available to common stockholders. This charge, which is also reflected as a reduction of retained earnings in
our accompanying condensed consolidated statements of stockholders equity, primarily represents the difference between the fair value of the cash and note consideration issued to the preferred holders and the $431 carrying value of the
preferred stock.
As a result of the preferred stock repurchase, our stockholders equity balance was reduced by $670 in the second
quarter of 2008. The tender offer, which was completed in July 2008, resulted in an additional stockholders equity reduction of $603 in the third quarter of 2008.
8. Legal and Regulatory Matters
SEC Non-Public Fact Finding Inquiry and Special Committee Review
In August 2004, we received a letter from the SEC in which the SEC referred to an inquiry of the Company. The letter transmitted a subpoena requesting
certain of our documents. The letter and the subpoena referred to an SEC investigation entitled
In the Matter of United Rentals, Inc.
The notice from the SEC stated that the inquiry did not mean that the SEC had concluded that the Company or
anyone else had broken the law or that the SEC had a negative opinion of any person, entity or security. The inquiry appeared to relate to a broad range of our accounting practices and was not confined to a specific period.
In March 2005, our board of directors formed a Special Committee of independent directors to review matters related to the SEC inquiry. The Special
Committee retained independent counsel. The board of directors received and acted upon findings of the Special Committee in January 2006. The actions that we took with respect to the Special Committees findings and actions that we took with
respect to certain other accounting matters, including the restatement of previously issued consolidated financial statements for 2003 and 2002, are discussed in our Annual Report on Form 10-K for the year ended December 31, 2004 (the
2004 Form 10-K). We provided documents in response to SEC subpoenas and informal requests as well as to the Special Committee, which, in turn, provided documents to the SEC.
As previously reported, the Special Committees findings included, among others, that there were irregularities with respect to certain minor
sale-leaseback transactions and trade packages to which the Company was a party between 2000 and 2002. The Company restated its results for the years ended December 31, 2002 and December 31, 2003, and its originally reported retained
earnings at December 31, 2001, to correct the accounting for the minor sale-leaseback transactions and provided supplemental disclosure in the 2004 10-K regarding the trade packages (with respect to which documentation sufficient to permit a
restatement did not exist). The Special Committee concluded that, based on the evidence it reviewed, the practices regarding these minor sale-leaseback transactions and trade packages appeared to have been directed by the Companys two former
chief financial officers. In December 2007, one of the former chief financial officers, who left the Company in late 2002, pled guilty to making a false filing with the SEC in connection with the Companys annual report on Form 10-K for the
year ended December 31, 2000 and settled a separate civil enforcement action brought against him by the SEC alleging various violations of the securities laws. In April 2008, the other former chief financial officer, who was terminated in
August 2005 after he failed to cooperate with the Special Committees inquiry, was indicted and pled not guilty to conspiracy, securities fraud, insider trading and making false filings with the SEC in connection with the Companys annual
reports on Form 10-K for the years ended December 31, 2001, December 31, 2002 and December 31, 2003. The SEC has also brought a separate civil enforcement action against him alleging various violations of the securities laws.
13
On September 8, 2008, we announced that we had reached a final settlement with the SEC of its
inquiry. The settlement covers the issues identified in the Special Committees findings and other accounting matters discussed in the 2004 Form 10-K. Under the terms of the settlement, we consented, without admitting or denying the allegations
in the SECs complaint, to the entry of a judgment requiring us to pay a civil penalty of $14 and disgorgement of one dollar and enjoining us from violations of certain provisions of the federal securities laws in the future. As reported
earlier, we recognized a charge of $14 relating to the anticipated settlement of this matter in the second quarter of 2008. Accordingly, the settlement had no effect on our third quarter operating results.
The U.S. Attorneys Office for the District of Connecticut has also requested information from the Company informally and by subpoena about matters
related to the SEC inquiry. We continue to cooperate fully with this office.
Shareholder Class Action Lawsuits and Derivative Litigation
Following our public announcement of the SEC inquiry, three purported class action lawsuits were filed against the Company in the
United States District Court for the District of Connecticut. The plaintiff in each of the lawsuits initially sought to sue on behalf of a purported class comprised of purchasers of our securities from October 23, 2003 to August 30, 2004.
The lawsuits initially named as the defendants the Company, our former chairman, our vice chairman and then chief executive officer, our former president and chief financial officer, and our former corporate controller. These initial complaints
alleged, among other things, that certain of our SEC filings and other public statements contained false and misleading statements which resulted in damages to the plaintiffs and the members of the purported class when they purchased our securities.
On the basis of those allegations, plaintiffs in each action asserted claims (a) against all defendants under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and (b) against one or more of the individual defendants under
Section 20(a) of the Exchange Act. The complaints sought unspecified compensatory damages, costs and expenses. On February 1, 2005, the Court entered an order consolidating the three actions. On November 8, 2005, the Court appointed
City of Pontiac Policemans and Firemans Retirement System as lead plaintiff for the purported class. The consolidated action is now entitled
In re United Rentals, Inc. Securities Litigation
.
On June 5, 2006, pursuant to a schedule agreed to by the parties and approved by the Court, lead plaintiff filed a consolidated amended complaint,
which (a) added allegations relating to, among other things, the conclusions of the Special Committee and other matters disclosed in the 2004 Form 10-K, (b) amended the purported class period to include purchasers of our securities from
February 28, 2001 to August 30, 2004 and (c) named as an additional defendant our first chief financial officer. In September 2006, we and certain of the individual defendants moved to dismiss the consolidated amended complaint in
this action. Briefing with respect to these motions is now complete.
On March 10, 2008, we announced that we had entered into a
memorandum of understanding with lead plaintiffs counsel to settle this action. The memorandum of understanding provides that the claims of the purported plaintiff class will be settled for a cash payment of $27.5. The contemplated settlement
is subject to the prior satisfaction of a number of conditions, including definitive settlement documentation and court approval. In addition, the settlement is contingent upon the Company and its insurance carriers finalizing agreements on the
portion of the settlement to be funded by the carriers, as well as the amounts that the carriers will reimburse the Company for defense costs concerning the shareholder actions and related inquiries and matters that have previously been expensed by
the Company. We cannot predict whether these conditions will be satisfied. The Company currently expects, taking into account anticipated settlement funding and defense cost reimbursements from its insurance carriers, that the contemplated
settlement will not have a material effect on its results of operations or cash flows for any period.
In January 2005, an alleged
shareholder filed an action in Connecticut State Superior Court, Judicial District of Norwalk/Stamford at Stamford, purportedly suing derivatively on the Companys behalf. The action, entitled
Gregory Riegel v. John N. Milne, et al.
,
named as defendants certain of our current and/or former directors and/
14
or officers, and named the Company as a nominal defendant. The complaint asserted, among other things, that the defendants breached their fiduciary duties to
the Company by causing or allowing the Company to disseminate misleading and inaccurate information to shareholders and the market and by failing to establish and maintain adequate accounting controls, thus exposing the Company to damages. The
complaint seeks unspecified compensatory damages, costs and expenses against the defendants. The parties to the
Riegel
action have agreed that the proceedings in this action will be stayed pending the resolution of the motions to dismiss in
the purported shareholder class actions.
In November 2004, we received a letter from counsel for an alleged shareholder, raising
allegations similar to the ones set forth in the derivative complaint described above and demanding that the Company take action in response to those allegations against certain of our current and/or former directors and/or officers. Following
receipt of the letter, our board of directors formed a special committee to consider the letter. In August 2005, this alleged shareholder commenced an action in Connecticut State Superior Court, Judicial District of Norwalk/Stamford at Stamford,
purporting to sue derivatively on the Companys behalf. The action, entitled
Nathan Brundridge v. Leon D. Black, et al.
, initially named as defendants certain of our current and/or former directors and/or officers, and named the Company
as a nominal defendant. The initial complaint in this action asserted, among other things, that all of the defendants breached fiduciary obligations to the Company by causing or allowing the Company to disseminate misleading and inaccurate
information to shareholders and the market, and by failing to establish and maintain adequate accounting controls, thus exposing the Company to damages. The initial complaint in this action also asserted a claim for unjust enrichment against our
former chairman and our vice chairman and then chief executive officer. The initial complaint sought unspecified compensatory damages, equitable relief, costs and expenses against all of the defendants. The initial complaint also sought an order, in
connection with plaintiffs unjust enrichment claim, directing the defendants against whom that claim was asserted to disgorge certain compensation they received from us with respect to fiscal years 2001, 2002 and 2003.
On June 5, 2006, pursuant to a schedule agreed to by the parties, plaintiff in the
Brundridge
action filed an amended complaint that
(a) added allegations relating to, among other things, the conclusions of the Special Committee and other matters disclosed in the 2005 Form 10-K, and (b) named as an additional defendant our former president and chief financial officer
and asserted the same claims against him as it previously asserted and continued to assert against our former chairman and our vice chairman and then chief executive officer. In September 2006, we and certain of the individual defendants moved to
dismiss the amended complaint in this action. In December 2006, plaintiff in this action filed its opposition to these motions to dismiss. Subsequently, the parties agreed that the proceedings in this action will be stayed pending resolution of the
motions to dismiss in the purported shareholder class actions. The parties agreement provides that any party may terminate the stay at any time on 30 days written notice to the Court and all other parties, and defendants will have an
opportunity to submit reply papers in further support of their motions to dismiss this action after the termination of the stay.
On
May 29, 2008, we received a letter from counsel for an alleged shareholder asserting, among other things, that our board of directors and certain of our former officers engaged in gross mismanagement from 1998 to the date of the letter, and
that our board has refused to take action against those former officers allegedly responsible for our agreement to pay all or some portion of the $27.5 referred to in the memorandum of understanding between the Company and lead plaintiffs
counsel in
In re United Rentals, Inc. Securities Litigation
. The letter demanded that we commence legal proceedings against any current or former director or officer who allegedly breached fiduciary duties to the Company and who violated the
Sarbanes-Oxley Act and Section 14(a) of the Exchange Act, and against a former officer of one of our equipment suppliers who allegedly facilitated certain transactions identified by the Special Committee as involving irregularities. The letter
also demanded that we commence an independent investigation into the Boards agreement to enter into the memorandum of understanding. The Board formed a new committee of independent directors, which retained independent counsel, to consider the
letter. Upon recommendation of that committee, the Board has determined that it would not be in the best interests of the Company to take any further action at this time with respect to the matters demanded in the letter.
Following our July 23, 2007 announcement of the merger agreement with affiliates of Cerberus, two lawsuits against the proposed acquisition were
filed. First, a putative class action complaint, entitled
Donald
15
Lefari v. United Rentals, Inc. et al.
, was filed in Connecticut State Superior Court, Judicial District of Stamford-Norwalk, on July 23, 2007
(the
Lefari
action). This lawsuit purports to be brought on behalf of all common stockholders of the Company, names the Company and all of our directors and Cerberus as defendants, and sought to enjoin the proposed acquisition of
the Company by affiliates of Cerberus. On September 19, 2007, the parties to the
Lefari
action entered into a memorandum of understanding to settle the action and a settlement agreement was expected to be negotiated by the parties. On
September 28, 2007, the second lawsuit,
Nathan Brundridge vs. Wayland R. Hicks et al.
, was also filed in Connecticut State Superior Court, Judicial District of Stamford-Norwalk (the
Brundridge II
action). This lawsuit
named our current directors as defendants. On December 23, 2007, the Company terminated the merger agreement with affiliates of Cerberus. As a result, a condition precedent of the proposed settlement of the
Lefari
action, the
consummation of the proposed acquisition, was not fulfilled. The
Brundridge II
action was voluntarily withdrawn as to all defendants on January 30, 2008. On February 7, 2008, the parties to the
Lefari
action filed a joint
motion to withdraw with prejudice the
Lefari
action. By order dated July 31, 2008, the Court granted the motion and dismissed the
Lefari
action with prejudice.
Subsequent to our November 14, 2007 announcement that affiliates of Cerberus had notified us that they were not prepared to proceed with the
purchase of the Company on the terms set forth in the merger agreement, three putative class action lawsuits were filed against the Company in the United States District Court for the District of Connecticut. The plaintiff in each of the lawsuits
sought to sue on behalf of a purported class of persons who purchased or otherwise acquired our securities between August 29, 2007 and November 14, 2007. The lawsuits named as defendants the Company, our directors and certain of our
officers and alleged, among other things, that the named plaintiff and members of the purported class suffered damages when they purchased or otherwise acquired securities issued by the Company, as a result of false and misleading statements and/or
material omissions relating to the contemplated merger with affiliates of Cerberus, contained in (a) proxy materials that the Company disseminated and/or filed with the SEC in anticipation of the October 19, 2007 special meeting of
stockholders; and/or (b) certain of the Companys filings with the SEC and other public statements. On the basis of those allegations, plaintiff in each action asserted claims under Sections 10(b) and 14(a) of the Exchange Act and Rules
10b-5 and 14a-9 thereunder; and against the individual defendants under Section 20(a) of the Exchange Act. The complaints in these actions sought unspecified compensatory damages, costs, expenses and fees. The Court subsequently entered an
order consolidating the three actions and appointing the Institutional Investor Group, consisting of First New York Securities, L.L.C. and Omni Partners LLP, as lead plaintiffs for the purported class. The actions are now consolidated under the
caption
Vincent DeCicco v. United Rentals, Inc., et al.
On March 24, 2008, pursuant to a schedule approved by the Court, lead
plaintiffs filed a consolidated amended complaint, which, among other things, (a) amended the purported class period to include purchasers of our publicly traded securities from July 23, 2007 to November 14, 2007, (b) dropped as
defendants one of our officers and all but one of our directors, (c) named as additional defendants Cerberus, certain of its affiliates, its chief executive officer and one of its managing directors, and (d) withdrew the previously
asserted claim under Section 14(a) of the Exchange Act and Rule 14a-9 thereunder. On May 16, 2008, all defendants filed motions to dismiss the consolidated amended complaint in this action. Briefing with respect to those motions is
complete. We intend to defend against this action vigorously.
We are also subject to a number of claims and proceedings that generally
arise in the ordinary conduct of our business. These matters include, but are not limited to, general liability claims (including personal injury, product liability, and property and auto claims), indemnification and guarantee obligations, employee
injuries and employment-related claims, self-insurance obligations and contract and real estate matters. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals for
matters where we have established them, we currently believe that any liabilities ultimately resulting from these ordinary course claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated
financial position, results of operations or cash flows.
16
9. Earnings Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and, if dilutive, the Series C and Series D
preferred shares as if converted to common shares since such shares are participating securities. (As discussed in note 7 to our condensed consolidated financial statements, in June 2008 we repurchased all of our outstanding Series C and Series D
preferred stock and recorded a preferred stock redemption charge of $239.) Diluted earnings per share include the impact of other diluted securities. The following table sets forth the computation of basic and diluted earnings per share (shares in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
|
2007
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
74
|
|
$
|
111
|
|
$
|
149
|
|
|
$
|
210
|
|
Convertible debt interest
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Subordinated convertible debt interest
|
|
|
2
|
|
|
1
|
|
|
|
|
|
|
4
|
|
Preferred stock redemption charge
|
|
|
|
|
|
|
|
|
(239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations available to common stockholders
|
|
|
76
|
|
|
112
|
|
|
(90
|
)
|
|
|
215
|
|
Income (loss) from discontinued operation, net of taxes
|
|
|
|
|
|
1
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
$
|
76
|
|
$
|
113
|
|
$
|
(90
|
)
|
|
$
|
214
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
|
|
|
66,672
|
|
|
84,142
|
|
|
79,735
|
|
|
|
82,537
|
|
Series C preferred
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
12,000
|
|
Series D preferred
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings per shareweighted-average
|
|
|
66,672
|
|
|
101,142
|
|
|
79,735
|
|
|
|
99,537
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock options and warrants
|
|
|
264
|
|
|
3,701
|
|
|
|
|
|
|
4,775
|
|
Convertible shares
|
|
|
6,563
|
|
|
6,461
|
|
|
|
|
|
|
6,461
|
|
Subordinated convertible debentures
|
|
|
3,515
|
|
|
3,342
|
|
|
|
|
|
|
3,342
|
|
Restricted stock units and other
|
|
|
340
|
|
|
443
|
|
|
|
|
|
|
491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for dilutive earnings per shareadjusted weighted-average shares
|
|
|
77,354
|
|
|
115,089
|
|
|
79,735
|
|
|
|
114,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations (inclusive of preferred stock redemption charge)
|
|
$
|
1.11
|
|
$
|
1.09
|
|
$
|
(1.12
|
)
|
|
$
|
2.10
|
|
Income from discontinued operation
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1.11
|
|
$
|
1.10
|
|
$
|
(1.12
|
)
|
|
$
|
2.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations (inclusive of preferred stock redemption charge)
|
|
$
|
0.98
|
|
$
|
0.97
|
|
$
|
(1.12
|
)
|
|
$
|
1.87
|
|
Income from discontinued operation
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
0.98
|
|
$
|
0.98
|
|
$
|
(1.12
|
)
|
|
$
|
1.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
10. Condensed Consolidating Financial Information of Guarantor Subsidiaries
URNA is 100 percent owned by Holdings (the Parent) and has outstanding (i) certain indebtedness that is guaranteed by the Parent and
(ii) certain indebtedness that is guaranteed by both Parent and substantially all of URNAs United States subsidiaries (the guarantor subsidiaries). However, this indebtedness is not guaranteed by URNAs foreign
subsidiaries and certain of its United States subsidiaries (the non-guarantor subsidiaries). The guarantor subsidiaries are all 100 percent-owned and the guarantees are made on a joint and several basis and are full and unconditional
(subject to subordination provisions and subject to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under
fraudulent conveyance laws). Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes that such information would not be material to investors; however, condensed consolidating
financial information is presented. The condensed consolidating financial information of the Company and its subsidiaries is as follows:
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
URNA
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
|
$
|
8
|
|
|
$
|
11
|
|
|
$
|
47
|
|
|
$
|
|
|
|
$
|
66
|
Accounts receivable, net
|
|
|
|
|
|
|
(9
|
)
|
|
|
15
|
|
|
|
501
|
|
|
|
|
|
|
|
507
|
Intercompany receivable (payable)
|
|
|
|
|
|
|
2
|
|
|
|
124
|
|
|
|
(126
|
)
|
|
|
|
|
|
|
|
Inventory
|
|
|
|
|
|
|
32
|
|
|
|
34
|
|
|
|
12
|
|
|
|
|
|
|
|
78
|
Prepaid expenses and other assets
|
|
|
|
|
|
|
14
|
|
|
|
34
|
|
|
|
2
|
|
|
|
|
|
|
|
50
|
Deferred taxes
|
|
|
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
127
|
|
|
|
218
|
|
|
|
436
|
|
|
|
|
|
|
|
781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental equipment, net
|
|
|
|
|
|
|
1,539
|
|
|
|
1,065
|
|
|
|
323
|
|
|
|
|
|
|
|
2,927
|
Property and equipment, net
|
|
|
49
|
|
|
|
209
|
|
|
|
153
|
|
|
|
29
|
|
|
|
|
|
|
|
440
|
Investments in subsidiaries
|
|
|
1,257
|
|
|
|
2,750
|
|
|
|
|
|
|
|
|
|
|
|
(4,007
|
)
|
|
|
|
Goodwill and other intangible assets, net
|
|
|
|
|
|
|
181
|
|
|
|
1,069
|
|
|
|
143
|
|
|
|
|
|
|
|
1,393
|
Other non-current assets
|
|
|
6
|
|
|
|
60
|
|
|
|
4
|
|
|
|
1
|
|
|
|
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,312
|
|
|
$
|
4,866
|
|
|
$
|
2,509
|
|
|
$
|
932
|
|
|
$
|
(4,007
|
)
|
|
$
|
5,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
(1
|
)
|
|
$
|
12
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
11
|
Accounts payable
|
|
|
|
|
|
|
70
|
|
|
|
116
|
|
|
|
25
|
|
|
|
|
|
|
|
211
|
Accrued expenses and other liabilities
|
|
|
|
|
|
|
257
|
|
|
|
32
|
|
|
|
17
|
|
|
|
(60
|
)
|
|
|
246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
(1
|
)
|
|
|
339
|
|
|
|
148
|
|
|
|
42
|
|
|
|
(60
|
)
|
|
|
468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
292
|
|
|
|
2,724
|
|
|
|
|
|
|
|
417
|
|
|
|
|
|
|
|
3,433
|
Subordinated convertible debentures
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146
|
Deferred taxes
|
|
|
|
|
|
|
606
|
|
|
|
(9
|
)
|
|
|
34
|
|
|
|
|
|
|
|
631
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
437
|
|
|
|
3,669
|
|
|
|
198
|
|
|
|
493
|
|
|
|
(60
|
)
|
|
|
4,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
875
|
|
|
|
1,197
|
|
|
|
2,311
|
|
|
|
439
|
|
|
|
(3,947
|
)
|
|
|
875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,312
|
|
|
$
|
4,866
|
|
|
$
|
2,509
|
|
|
$
|
932
|
|
|
$
|
(4,007
|
)
|
|
$
|
5,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
$
|
18
|
|
$
|
8
|
|
|
$
|
86
|
|
|
$
|
|
|
|
$
|
112
|
Accounts receivable, net
|
|
|
|
|
|
26
|
|
|
(18
|
)
|
|
|
574
|
|
|
|
|
|
|
|
582
|
Intercompany receivable (payable)
|
|
|
|
|
|
479
|
|
|
114
|
|
|
|
(593
|
)
|
|
|
|
|
|
|
|
Inventory
|
|
|
|
|
|
56
|
|
|
51
|
|
|
|
16
|
|
|
|
|
|
|
|
123
|
Prepaid expenses and other assets
|
|
|
|
|
|
12
|
|
|
34
|
|
|
|
5
|
|
|
|
|
|
|
|
51
|
Deferred taxes
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
642
|
|
|
189
|
|
|
|
88
|
|
|
|
|
|
|
|
919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental equipment, net
|
|
|
|
|
|
1,492
|
|
|
1,092
|
|
|
|
334
|
|
|
|
|
|
|
|
2,918
|
Property and equipment, net
|
|
|
42
|
|
|
196
|
|
|
148
|
|
|
|
29
|
|
|
|
|
|
|
|
415
|
Investments in subsidiaries
|
|
|
1,962
|
|
|
2,541
|
|
|
|
|
|
|
|
|
|
|
(4,503
|
)
|
|
|
|
Goodwill and other intangible assets, net
|
|
|
|
|
|
185
|
|
|
1,067
|
|
|
|
155
|
|
|
|
|
|
|
|
1,407
|
Other non-current assets
|
|
|
7
|
|
|
43
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,011
|
|
$
|
5,099
|
|
$
|
2,504
|
|
|
$
|
606
|
|
|
$
|
(4,503
|
)
|
|
$
|
5,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
|
|
$
|
78
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
78
|
Accounts payable
|
|
|
|
|
|
80
|
|
|
139
|
|
|
|
29
|
|
|
|
|
|
|
|
248
|
Accrued expenses and other liabilities
|
|
|
|
|
|
248
|
|
|
103
|
|
|
|
8
|
|
|
|
(86
|
)
|
|
|
273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
406
|
|
|
242
|
|
|
|
37
|
|
|
|
(86
|
)
|
|
|
599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
2,330
|
|
|
|
|
|
|
205
|
|
|
|
|
|
|
|
2,535
|
Subordinated convertible debentures
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146
|
Deferred taxes
|
|
|
|
|
|
445
|
|
|
(9
|
)
|
|
|
36
|
|
|
|
|
|
|
|
472
|
Other liabilities
|
|
|
|
|
|
42
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
146
|
|
|
3,223
|
|
|
291
|
|
|
|
278
|
|
|
|
(86
|
)
|
|
|
3,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
1,865
|
|
|
1,876
|
|
|
2,213
|
|
|
|
328
|
|
|
|
(4,417
|
)
|
|
|
1,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
2,011
|
|
$
|
5,099
|
|
$
|
2,504
|
|
|
$
|
606
|
|
|
$
|
(4,503
|
)
|
|
$
|
5,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
URNA
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
$
|
325
|
|
|
$
|
|
|
|
$
|
56
|
|
|
$
|
|
|
|
$
|
381
|
Accounts receivable, net
|
|
|
|
|
|
(9
|
)
|
|
|
6
|
|
|
|
522
|
|
|
|
|
|
|
|
519
|
Intercompany receivable (payable)
|
|
|
|
|
|
83
|
|
|
|
103
|
|
|
|
(186
|
)
|
|
|
|
|
|
|
|
Inventory
|
|
|
|
|
|
36
|
|
|
|
43
|
|
|
|
12
|
|
|
|
|
|
|
|
91
|
Prepaid expenses and other assets
|
|
|
|
|
|
15
|
|
|
|
38
|
|
|
|
4
|
|
|
|
|
|
|
|
57
|
Deferred taxes
|
|
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
522
|
|
|
|
190
|
|
|
|
408
|
|
|
|
|
|
|
|
1,120
|
Rental equipment, net
|
|
|
|
|
|
1,465
|
|
|
|
1,045
|
|
|
|
316
|
|
|
|
|
|
|
|
2,826
|
Property and equipment, net
|
|
|
46
|
|
|
209
|
|
|
|
154
|
|
|
|
31
|
|
|
|
|
|
|
|
440
|
Investments in subsidiaries
|
|
|
2,112
|
|
|
2,915
|
|
|
|
|
|
|
|
|
|
|
|
(5,027
|
)
|
|
|
|
Goodwill and other intangible assets, net
|
|
|
|
|
|
184
|
|
|
|
1,066
|
|
|
|
154
|
|
|
|
|
|
|
|
1,404
|
Other long-term assets
|
|
|
6
|
|
|
41
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,164
|
|
$
|
5,336
|
|
|
$
|
2,460
|
|
|
$
|
909
|
|
|
$
|
(5,027
|
)
|
|
$
|
5,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
|
|
$
|
15
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
15
|
Accounts payable
|
|
|
|
|
|
59
|
|
|
|
110
|
|
|
|
26
|
|
|
|
|
|
|
|
195
|
Accrued expenses and other liabilities
|
|
|
|
|
|
307
|
|
|
|
58
|
|
|
|
31
|
|
|
|
(86
|
)
|
|
|
310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
381
|
|
|
|
168
|
|
|
|
57
|
|
|
|
(86
|
)
|
|
|
520
|
Long-term debt
|
|
|
|
|
|
2,415
|
|
|
|
|
|
|
|
140
|
|
|
|
|
|
|
|
2,555
|
Subordinated convertible debentures
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146
|
Deferred taxes
|
|
|
|
|
|
514
|
|
|
|
(9
|
)
|
|
|
34
|
|
|
|
|
|
|
|
539
|
Other long-term liabilities
|
|
|
|
|
|
|
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
146
|
|
|
3,310
|
|
|
|
223
|
|
|
|
231
|
|
|
|
(86
|
)
|
|
|
3,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,018
|
|
|
2,026
|
|
|
|
2,237
|
|
|
|
678
|
|
|
|
(4,941
|
)
|
|
|
2,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
2,164
|
|
$
|
5,336
|
|
|
$
|
2,460
|
|
|
$
|
909
|
|
|
$
|
(5,027
|
)
|
|
$
|
5,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
|
Total
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
|
$
|
|
|
|
$
|
318
|
|
$
|
272
|
|
$
|
87
|
|
|
$
|
|
|
|
$
|
677
|
|
Sales of rental equipment
|
|
|
|
|
|
|
27
|
|
|
23
|
|
|
6
|
|
|
|
|
|
|
|
56
|
|
New equipment sales
|
|
|
|
|
|
|
22
|
|
|
16
|
|
|
11
|
|
|
|
|
|
|
|
49
|
|
Contractor supplies sales
|
|
|
|
|
|
|
20
|
|
|
25
|
|
|
9
|
|
|
|
|
|
|
|
54
|
|
Service and other revenues
|
|
|
|
|
|
|
20
|
|
|
13
|
|
|
4
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
|
407
|
|
|
349
|
|
|
117
|
|
|
|
|
|
|
|
873
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of equipment rentals, excluding depreciation
|
|
|
|
|
|
|
133
|
|
|
120
|
|
|
34
|
|
|
|
|
|
|
|
287
|
|
Depreciation of rental equipment
|
|
|
|
|
|
|
61
|
|
|
41
|
|
|
13
|
|
|
|
|
|
|
|
115
|
|
Cost of rental equipment sales
|
|
|
|
|
|
|
17
|
|
|
17
|
|
|
4
|
|
|
|
|
|
|
|
38
|
|
Cost of new equipment sales
|
|
|
|
|
|
|
18
|
|
|
14
|
|
|
9
|
|
|
|
|
|
|
|
41
|
|
Cost of contractor supplies sales
|
|
|
|
|
|
|
15
|
|
|
19
|
|
|
7
|
|
|
|
|
|
|
|
41
|
|
Cost of service and other revenues
|
|
|
|
|
|
|
8
|
|
|
6
|
|
|
2
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
|
|
|
|
252
|
|
|
217
|
|
|
69
|
|
|
|
|
|
|
|
538
|
|
Gross profit
|
|
|
|
|
|
|
155
|
|
|
132
|
|
|
48
|
|
|
|
|
|
|
|
335
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
61
|
|
|
54
|
|
|
18
|
|
|
|
|
|
|
|
133
|
|
Charge related to settlement of SEC inquiry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-rental depreciation and amortization
|
|
|
4
|
|
|
|
5
|
|
|
4
|
|
|
1
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(4
|
)
|
|
|
89
|
|
|
74
|
|
|
29
|
|
|
|
|
|
|
|
188
|
|
Interest expense, net
|
|
|
19
|
|
|
|
45
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
70
|
|
Interest expense-subordinated convertible debentures
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Other (income) expense, net
|
|
|
(29
|
)
|
|
|
20
|
|
|
18
|
|
|
(10
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before provision for income taxes
|
|
|
4
|
|
|
|
24
|
|
|
56
|
|
|
33
|
|
|
|
|
|
|
|
117
|
|
Provision for income taxes
|
|
|
1
|
|
|
|
9
|
|
|
23
|
|
|
10
|
|
|
|
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before equity in net earnings of subsidiaries
|
|
|
3
|
|
|
|
15
|
|
|
33
|
|
|
23
|
|
|
|
|
|
|
|
74
|
|
Equity in net earnings of subsidiaries
|
|
|
71
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
(127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
74
|
|
|
$
|
71
|
|
$
|
33
|
|
$
|
23
|
|
|
$
|
(127
|
)
|
|
$
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
|
Total
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
|
$
|
|
|
|
$
|
345
|
|
$
|
288
|
|
$
|
85
|
|
|
$
|
|
|
|
$
|
718
|
|
Sales of rental equipment
|
|
|
|
|
|
|
42
|
|
|
27
|
|
|
9
|
|
|
|
|
|
|
|
78
|
|
New equipment sales
|
|
|
|
|
|
|
27
|
|
|
19
|
|
|
10
|
|
|
|
|
|
|
|
56
|
|
Contractor supplies sales
|
|
|
|
|
|
|
39
|
|
|
44
|
|
|
13
|
|
|
|
|
|
|
|
96
|
|
Service and other revenues
|
|
|
|
|
|
|
21
|
|
|
16
|
|
|
5
|
|
|
|
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
|
474
|
|
|
394
|
|
|
122
|
|
|
|
|
|
|
|
990
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of equipment rentals, excluding depreciation
|
|
|
|
|
|
|
144
|
|
|
123
|
|
|
35
|
|
|
|
|
|
|
|
302
|
|
Depreciation of rental equipment
|
|
|
|
|
|
|
55
|
|
|
43
|
|
|
13
|
|
|
|
|
|
|
|
111
|
|
Cost of rental equipment sales
|
|
|
|
|
|
|
32
|
|
|
18
|
|
|
6
|
|
|
|
|
|
|
|
56
|
|
Cost of new equipment sales
|
|
|
|
|
|
|
22
|
|
|
17
|
|
|
8
|
|
|
|
|
|
|
|
47
|
|
Cost of contractor supplies sales
|
|
|
|
|
|
|
34
|
|
|
33
|
|
|
11
|
|
|
|
|
|
|
|
78
|
|
Cost of service and other revenues
|
|
|
|
|
|
|
8
|
|
|
6
|
|
|
3
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
|
|
|
|
295
|
|
|
240
|
|
|
76
|
|
|
|
|
|
|
|
611
|
|
Gross Profit
|
|
|
|
|
|
|
179
|
|
|
154
|
|
|
46
|
|
|
|
|
|
|
|
379
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
67
|
|
|
63
|
|
|
20
|
|
|
|
|
|
|
|
150
|
|
Non-rental depreciation and amortization
|
|
|
3
|
|
|
|
5
|
|
|
4
|
|
|
1
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(3
|
)
|
|
|
107
|
|
|
87
|
|
|
25
|
|
|
|
|
|
|
|
216
|
|
Interest expense, net
|
|
|
|
|
|
|
40
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
44
|
|
Interest expense- subordinated convertible debentures
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Other expense (income), net
|
|
|
|
|
|
|
4
|
|
|
11
|
|
|
(17
|
)
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before provision for income taxes
|
|
|
(5
|
)
|
|
|
63
|
|
|
76
|
|
|
38
|
|
|
|
|
|
|
|
172
|
|
(Benefit) provision for income taxes
|
|
|
(1
|
)
|
|
|
21
|
|
|
27
|
|
|
14
|
|
|
|
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(4
|
)
|
|
|
42
|
|
|
49
|
|
|
24
|
|
|
|
|
|
|
|
111
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income) before equity in net earnings of subsidiaries
|
|
|
(4
|
)
|
|
|
42
|
|
|
50
|
|
|
24
|
|
|
|
|
|
|
|
112
|
|
Equity in net earnings of subsidiaries
|
|
|
116
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
(190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
112
|
|
|
$
|
116
|
|
$
|
50
|
|
$
|
24
|
|
|
$
|
(190
|
)
|
|
$
|
112
|
|
22
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
|
$
|
|
|
|
$
|
894
|
|
$
|
740
|
|
$
|
235
|
|
|
$
|
|
|
|
$
|
1,869
|
Sales of rental equipment
|
|
|
|
|
|
|
99
|
|
|
71
|
|
|
20
|
|
|
|
|
|
|
|
190
|
New equipment sales
|
|
|
|
|
|
|
62
|
|
|
44
|
|
|
31
|
|
|
|
|
|
|
|
137
|
Contractor supplies sales
|
|
|
|
|
|
|
62
|
|
|
78
|
|
|
29
|
|
|
|
|
|
|
|
169
|
Service and other revenues
|
|
|
|
|
|
|
59
|
|
|
38
|
|
|
14
|
|
|
|
|
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
|
1,176
|
|
|
971
|
|
|
329
|
|
|
|
|
|
|
|
2,476
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of equipment rentals, excluding depreciation
|
|
|
|
|
|
|
387
|
|
|
357
|
|
|
107
|
|
|
|
|
|
|
|
851
|
Depreciation of rental equipment
|
|
|
|
|
|
|
172
|
|
|
123
|
|
|
39
|
|
|
|
|
|
|
|
334
|
Cost of rental equipment sales
|
|
|
|
|
|
|
72
|
|
|
50
|
|
|
13
|
|
|
|
|
|
|
|
135
|
Cost of new equipment sales
|
|
|
|
|
|
|
52
|
|
|
37
|
|
|
25
|
|
|
|
|
|
|
|
114
|
Cost of contractor supplies sales
|
|
|
|
|
|
|
47
|
|
|
60
|
|
|
23
|
|
|
|
|
|
|
|
130
|
Cost of service and other revenues
|
|
|
|
|
|
|
24
|
|
|
16
|
|
|
6
|
|
|
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
|
|
|
|
754
|
|
|
643
|
|
|
213
|
|
|
|
|
|
|
|
1,610
|
Gross profit
|
|
|
|
|
|
|
422
|
|
|
328
|
|
|
116
|
|
|
|
|
|
|
|
866
|
Selling, general and administrative expenses
|
|
|
1
|
|
|
|
173
|
|
|
148
|
|
|
68
|
|
|
|
|
|
|
|
390
|
Charge related to settlement of SEC inquiry
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
Non-rental depreciation and amortization
|
|
|
11
|
|
|
|
15
|
|
|
15
|
|
|
3
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(26
|
)
|
|
|
234
|
|
|
165
|
|
|
45
|
|
|
|
|
|
|
|
418
|
Interest expense, net
|
|
|
23
|
|
|
|
127
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
159
|
Interest expense-subordinated convertible debentures
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
Other (income) expense, net
|
|
|
(61
|
)
|
|
|
51
|
|
|
42
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before provision for income taxes
|
|
|
5
|
|
|
|
56
|
|
|
123
|
|
|
68
|
|
|
|
|
|
|
|
252
|
Provision for income taxes
|
|
|
7
|
|
|
|
22
|
|
|
50
|
|
|
24
|
|
|
|
|
|
|
|
103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before equity in net earnings of subsidiaries
|
|
|
(2
|
)
|
|
|
34
|
|
|
73
|
|
|
44
|
|
|
|
|
|
|
|
149
|
Equity in net earnings of subsidiaries
|
|
|
151
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
(268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
149
|
|
|
$
|
151
|
|
$
|
73
|
|
$
|
44
|
|
|
$
|
(268
|
)
|
|
$
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
|
Total
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
|
$
|
|
|
|
$
|
953
|
|
$
|
777
|
|
|
$
|
214
|
|
|
$
|
|
|
|
$
|
1,944
|
|
Sales of rental equipment
|
|
|
|
|
|
|
126
|
|
|
89
|
|
|
|
28
|
|
|
|
|
|
|
|
243
|
|
New equipment sales
|
|
|
|
|
|
|
86
|
|
|
63
|
|
|
|
28
|
|
|
|
|
|
|
|
177
|
|
Contractor supplies sales
|
|
|
|
|
|
|
124
|
|
|
139
|
|
|
|
38
|
|
|
|
|
|
|
|
301
|
|
Service and other revenues
|
|
|
|
|
|
|
64
|
|
|
47
|
|
|
|
14
|
|
|
|
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
|
1,353
|
|
|
1,115
|
|
|
|
322
|
|
|
|
|
|
|
|
2,790
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of equipment rentals, excluding depreciation
|
|
|
|
|
|
|
423
|
|
|
356
|
|
|
|
101
|
|
|
|
|
|
|
|
880
|
|
Depreciation of rental equipment
|
|
|
|
|
|
|
162
|
|
|
123
|
|
|
|
36
|
|
|
|
|
|
|
|
321
|
|
Cost of rental equipment sales
|
|
|
|
|
|
|
94
|
|
|
61
|
|
|
|
19
|
|
|
|
|
|
|
|
174
|
|
Cost of new equipment sales
|
|
|
|
|
|
|
69
|
|
|
55
|
|
|
|
23
|
|
|
|
|
|
|
|
147
|
|
Cost of contractor supplies sales
|
|
|
|
|
|
|
107
|
|
|
105
|
|
|
|
33
|
|
|
|
|
|
|
|
245
|
|
Cost of service and other revenues
|
|
|
|
|
|
|
28
|
|
|
17
|
|
|
|
7
|
|
|
|
|
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
|
|
|
|
883
|
|
|
717
|
|
|
|
219
|
|
|
|
|
|
|
|
1,819
|
|
Gross Profit
|
|
|
|
|
|
|
470
|
|
|
398
|
|
|
|
103
|
|
|
|
|
|
|
|
971
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
179
|
|
|
207
|
|
|
|
60
|
|
|
|
|
|
|
|
446
|
|
Non-rental depreciation and amortization
|
|
|
7
|
|
|
|
15
|
|
|
13
|
|
|
|
3
|
|
|
|
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(7
|
)
|
|
|
276
|
|
|
178
|
|
|
|
40
|
|
|
|
|
|
|
|
487
|
|
Interest expense, net
|
|
|
|
|
|
|
138
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
146
|
|
Interest expense-subordinated convertible debentures
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
Other expense (income), net
|
|
|
|
|
|
|
24
|
|
|
20
|
|
|
|
(48
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before provision for income taxes
|
|
|
(14
|
)
|
|
|
114
|
|
|
158
|
|
|
|
80
|
|
|
|
|
|
|
|
338
|
|
(Benefit) provision for income taxes
|
|
|
(5
|
)
|
|
|
43
|
|
|
59
|
|
|
|
31
|
|
|
|
|
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(9
|
)
|
|
|
71
|
|
|
99
|
|
|
|
49
|
|
|
|
|
|
|
|
210
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
|
|
|
2
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before equity in net earnings of subsidiaries
|
|
|
(9
|
)
|
|
|
73
|
|
|
96
|
|
|
|
49
|
|
|
|
|
|
|
|
209
|
|
Equity in net earnings of subsidiaries
|
|
|
218
|
|
|
|
145
|
|
|
|
|
|
|
|
|
|
|
(363
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
209
|
|
|
$
|
218
|
|
$
|
96
|
|
|
$
|
49
|
|
|
$
|
(363
|
)
|
|
$
|
209
|
|
24
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Nine Months Ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
URNA
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
Total
|
|
Net cash (used in) provided by operating activities
|
|
$
|
(3
|
)
|
|
$
|
372
|
|
|
$
|
167
|
|
|
$
|
35
|
|
|
$
|
|
|
$
|
571
|
|
Net cash used in investing activities
|
|
|
(7
|
)
|
|
|
(217
|
)
|
|
|
(157
|
)
|
|
|
(70
|
)
|
|
|
|
|
|
(451
|
)
|
Net cash provided by (used in) financing activities
|
|
|
10
|
|
|
|
(472
|
)
|
|
|
1
|
|
|
|
30
|
|
|
|
|
|
|
(431
|
)
|
Effect of foreign exchange rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
|
|
|
|
(317
|
)
|
|
|
11
|
|
|
|
(9
|
)
|
|
|
|
|
|
(315
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
|
325
|
|
|
|
|
|
|
|
56
|
|
|
|
|
|
|
381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
|
|
|
$
|
8
|
|
|
$
|
11
|
|
|
$
|
47
|
|
|
$
|
|
|
$
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Nine Months Ended September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
URNA
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Other and
Eliminations
|
|
Total
|
|
Net cash provided by operating activitiescontinuing operations
|
|
$
|
4
|
|
|
$
|
191
|
|
|
$
|
231
|
|
|
$
|
58
|
|
|
$
|
|
|
$
|
484
|
|
Net cash provided by operating activitiesdiscontinued operation
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
4
|
|
|
|
191
|
|
|
|
240
|
|
|
|
58
|
|
|
|
|
|
|
493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activitiescontinuing operations
|
|
|
(11
|
)
|
|
|
(306
|
)
|
|
|
(236
|
)
|
|
|
(73
|
)
|
|
|
|
|
|
(626
|
)
|
Net cash provided by investing activitiesdiscontinued operation
|
|
|
|
|
|
|
66
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(11
|
)
|
|
|
(240
|
)
|
|
|
(235
|
)
|
|
|
(73
|
)
|
|
|
|
|
|
(559
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
7
|
|
|
|
27
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
|
|
|
(22
|
)
|
|
|
5
|
|
|
|
10
|
|
|
|
|
|
|
(7
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
|
40
|
|
|
|
3
|
|
|
|
76
|
|
|
|
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
|
|
|
$
|
18
|
|
|
$
|
8
|
|
|
$
|
86
|
|
|
$
|
|
|
$
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Item 2.
|
Managements Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except per share data and unless otherwise indicated)
|
Executive Overview
We are the largest equipment rental company in the world with an integrated network of 669 rental locations in the United States, Canada and Mexico. Although the equipment rental industry is highly fragmented and diverse, we believe we are
well positioned to take advantage of this environment because as a larger company we have more resources and certain competitive advantages over smaller competitors. These advantages include greater purchasing power, the ability to provide customers
with a broader range of equipment and services as well as with newer and better maintained equipment, and greater flexibility to transfer equipment among branches.
We offer for rent over 2,900 classes of rental equipment, including construction equipment, industrial and heavy machinery, aerial work platforms, trench safety equipment and homeowner items. Our revenues are derived
from the following sources: equipment rentals, sales of used rental equipment, sales of new equipment, contractor supplies sales and service and other. In 2007, rental equipment revenues represented 71 percent of our total revenues. This percentage
increased to 75 percent for the nine months ended September 30, 2008 as we have continued to reposition our contractor supplies business.
In the second half of 2007, we began to implement a change in strategy aimed at growing our earnings at higher margins, while also continuing to generate significant cash flow. The three key elements of this strategy are: refocusing our
employees and sales representatives on our core rental business; optimizing the management of our rental fleet; and reducing our operating costs. We believe this strategy, coupled with our broad geographic footprint, extensive rental fleet, advanced
information technology systems, disciplined purchasing power, industry experience and ability to deliver extraordinary customer service, will enable us to strengthen our leadership position in the equipment rental industry and improve our returns to
shareholders.
In June 2008, we commenced a modified Dutch auction tender offer in which we offered to purchase up to
27.16 million shares of our common stock at a price not less than $22.00 nor greater than $25.00 per share. The tender offer expired in July 2008 and, in accordance with the terms of the offer, we accepted for payment an aggregate of
27.16 million shares of our common stock at a price of $22.00 per share, for a total cost of $603 (including fees and expenses). The number of shares of common stock purchased in the tender offer represented approximately 31 percent of the
total common stock outstanding on the last full trading day prior to the commencement of the offer.
Also in June 2008, and in connection
with our announcement of the tender offer, we repurchased all of our outstanding Series C and Series D preferred stock, a substantial majority of which was held by Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. Prior to this
preferred stock repurchase, a majority of the preferred holders had the right to consent to certain transactions by us, including the aforementioned tender offer. Under the definitive repurchase agreement, the total purchase price for the preferred
stock was approximately $679, a portion of which was settled through the issuance by Holdings of new 14% HoldCo Notes. In addition, and as a result of the repurchase of the preferred stock, Leon Black and Michael Gross, the two company directors
elected by the former preferred holders in accordance with the terms of the Series C preferred stock, resigned from our board. Also in June 2008, we, URNA, and certain of our subsidiaries entered into a credit agreement which provides for a new
$1.250 billion senior secured asset-based revolving credit facility, in connection with which URNA repaid the amounts outstanding under its former revolving credit facility and term loan. See notes 6 and 7 to our condensed consolidated financial
statements for additional information concerning the new asset-based revolving credit facility, which has recently been upsized to $1.285 billion, and the repurchase of the preferred stock, respectively.
As discussed in note 8 to our condensed consolidated financial statements and elsewhere in this report, the Company is subject to certain ongoing class
action and derivative suits, and recently settled an SEC inquiry. The
27
U.S. Attorneys office has also requested information from the Company about matters related to the SEC inquiry. As previously discussed, in the third
quarter of 2008 we settled, without admitting or denying the allegations in the SECs complaint, to the entry of a judgment requiring us to pay a civil penalty of $14 and disgorgement of one dollar and enjoining us from violations of certain
provisions of the federal securities laws in the future. We recognized a charge of $14 relating to the settlement of this matter in the second quarter of 2008 and, accordingly, the settlement had no effect on our third quarter operating results. We
cannot predict the outcome of these other matters as to the Company and have not accrued any amounts related to their ultimate disposition. Any liabilities resulting from an adverse judgment or settlement of these matters may be material to our
results of operations and cash flows during the period incurred. Other costs associated with the U.S. Attorneys office inquiry and the class action and derivative suits, including reimbursement of attorneys fees incurred by indemnified
current and former officers and directors, are expensed as incurred and may be material during the period incurred.
Financial Overview
Income from continuing operations
. Income from continuing operations and diluted earnings (loss) per share from continuing operations
available to common stockholders for the three and nine months ended September 30, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2008
|
|
2007
|
|
2008
|
|
|
2007
|
Income from continuing operations
|
|
$
|
74
|
|
$
|
111
|
|
$
|
149
|
|
|
$
|
210
|
Diluted earnings (loss) per share from continuing operations (inclusive of preferred stock redemption charge)
|
|
$
|
0.98
|
|
$
|
0.97
|
|
$
|
(1.12
|
)
|
|
$
|
1.87
|
For the three and nine months ended September 30, 2008, income from continuing operations of
$74 and $149 decreased by $37 and $61, respectively, from the same periods in 2007. The decline in profitability primarily reflects lower equipment rental gross profit due to the softening construction environment. We expect this softening to
continue through 2009. Additionally, the decline reflects reduced sales of contractor supplies, consistent with our strategy to focus on the higher margin core rental business, as well as lower new and used equipment sales. Income from continuing
operations for the nine months ended September 30, 2008 also includes a charge of $14 after-tax relating to the SEC settlement. We were able to partially offset the impact of these factors with savings realized from our ongoing initiatives to
reduce operating costs. As discussed further below, our selling, general and administrative expenses declined by $17, or 11 percent, and $56, or 13 percent, respectively, for the three and nine months ended September 30, 2008.
Third quarter 2008 continuing operations earnings per share of $0.98, based on a diluted share count of 77.4 million shares, includes a non-cash
charge of $2 after-tax, or $0.03 per share, related to the retirement of $125 of HoldCo Notes in September. Third quarter 2007 continuing operations earnings per share of $0.97 was based on a diluted share count of 115.1 million shares.
Diluted loss per share from continuing operations of $1.12 for the nine months ended September 30, 2008, includes the following
items: (i) a $2.99 per share preferred stock redemption charge associated with the June 2008 repurchase of our Series C and Series D preferred stock, (ii) a $0.18 per share charge associated with the SEC settlement, (iii) a $0.10 per
share charge primarily related to the establishment of a valuation allowance related to certain foreign tax credits, and (iv) a $0.03 per share charge associated with the $125 retirement of the 14% HoldCo Notes. In the fourth quarter 2008, we
expect to record a charge of approximately $11 after-tax, or $0.15 per share, principally related to the closing of about 30 branches.
28
EBITDA GAAP Reconciliation
.
EBITDA represents the sum of income from continuing
operations before provision for income taxes, interest expense, net, interest expense-subordinated convertible debentures, depreciation-rental equipment and non-rental depreciation and amortization. Management believes EBITDA provides useful
information about operating performance and period-over-period growth. However, EBITDA is not a measure of financial performance or liquidity under GAAP and accordingly should not be considered an alternative to net income or cash flow from
operating activities as indicators of operating performance or liquidity. The table below provides a reconciliation between income from continuing operations before provision for income taxes and EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
Income from continuing operations before provision for income taxes
|
|
$
|
117
|
|
$
|
172
|
|
$
|
252
|
|
$
|
338
|
Interest expense, net
|
|
|
70
|
|
|
44
|
|
|
159
|
|
|
146
|
Interest expensesubordinated convertible debentures
|
|
|
2
|
|
|
2
|
|
|
7
|
|
|
7
|
Depreciationrental equipment
|
|
|
115
|
|
|
111
|
|
|
334
|
|
|
321
|
Non-rental depreciation and amortization
|
|
|
14
|
|
|
13
|
|
|
44
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
318
|
|
$
|
342
|
|
$
|
796
|
|
$
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three and nine months ended September 30, 2008, EBITDA decreased $24, or 7 percent,
and $54, or 6 percent, respectively, primarily reflecting lower equipment rental gross profit due to the softening construction environment. The EBITDA declines also reflect reduced sales of contractor supplies, consistent with our strategy to focus
on the higher margin core rental business, as well as lower new and used equipment sales. In addition, EBITDA for the nine months ended September 30, 2008 includes a charge of $14 relating to the settlement of the SEC inquiry. We were able to
partially offset the impact of these factors with savings realized from our ongoing initiatives to reduce operating costs.
Results of Operations
As discussed in note 2 to our unaudited condensed consolidated financial statements, our reportable segments are general rentals and trench
safety, pump and power. The general rentals segment includes the rental of construction, aerial, industrial and homeowner equipment and related services and activities. The general rentals segments customers include construction and industrial
companies, manufacturers, utilities, municipalities and homeowners. The general rentals segment operates throughout the United States and Canada and has one location in Mexico. The trench safety, pump and power segment includes the rental of
specialty construction products and related services. The trench safety, pump and power segments customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This segment operates in
the United States and has one location in Canada.
29
These segments align our external segment reporting with how management evaluates and allocates
resources. We evaluate segment performance based on segment operating results. Our revenues and operating results fluctuate from quarter to quarter reflecting the seasonal rental patterns of our customers, with rental activity tending to be lower in
the winter. Revenues by segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
General
rentals
|
|
Trench safety,
pump and power
|
|
Total
|
Three months ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
|
$
|
625
|
|
$
|
52
|
|
$
|
677
|
Sales of rental equipment
|
|
|
53
|
|
|
3
|
|
|
56
|
Sales of new equipment
|
|
|
48
|
|
|
1
|
|
|
49
|
Contractor supplies sales
|
|
|
51
|
|
|
3
|
|
|
54
|
Service and other revenues
|
|
|
35
|
|
|
2
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
812
|
|
$
|
61
|
|
$
|
873
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2007
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
|
$
|
669
|
|
$
|
49
|
|
$
|
718
|
Sales of rental equipment
|
|
|
73
|
|
|
5
|
|
|
78
|
Sales of new equipment
|
|
|
53
|
|
|
3
|
|
|
56
|
Contractor supplies sales
|
|
|
92
|
|
|
4
|
|
|
96
|
Service and other revenues
|
|
|
41
|
|
|
1
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
928
|
|
$
|
62
|
|
$
|
990
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
|
$
|
1,740
|
|
$
|
129
|
|
$
|
1,869
|
Sales of rental equipment
|
|
|
180
|
|
|
10
|
|
|
190
|
Sales of new equipment
|
|
|
132
|
|
|
5
|
|
|
137
|
Contractor supplies sales
|
|
|
161
|
|
|
8
|
|
|
169
|
Service and other revenues
|
|
|
107
|
|
|
4
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
2,320
|
|
$
|
156
|
|
$
|
2,476
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2007
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
|
$
|
1,812
|
|
$
|
132
|
|
$
|
1,944
|
Sales of rental equipment
|
|
|
231
|
|
|
12
|
|
|
243
|
Sales of new equipment
|
|
|
167
|
|
|
10
|
|
|
177
|
Contractor supplies sales
|
|
|
289
|
|
|
12
|
|
|
301
|
Service and other revenues
|
|
|
122
|
|
|
3
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
2,621
|
|
$
|
169
|
|
$
|
2,790
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2008 and 2007
. 2008 equipment rentals of $677
decreased $41, or 6 percent, reflecting a 3.4 percent decrease in rental rates, a greater proportion of monthly rentals, and a change in mix. Equipment rentals represented 78 percent of total revenues for the three months ended September 30,
2008. On a segment basis, equipment rentals represented approximately 77 percent and 85 percent of total revenues for general rentals and trench safety, pump and power, respectively. General rentals equipment rentals decreased $44, or 7 percent,
reflecting a 6.1 percent decrease in same-store rental revenues. Trench safety, pump and power equipment rentals increased $3, or 6 percent, reflecting a 7.7 percent increase in same-store rental revenues.
Nine months ended September 30, 2008 and 2007
. 2008 equipment rentals of $1,869 decreased $75, or 4 percent, reflecting a 1.9 percent decline
in rental rates, a greater proportion of monthly rentals, and a change in mix. Equipment rentals represented 75 percent of total revenues for the nine months ended September 30, 2008. On a segment basis, equipment rentals represented
approximately 75 percent and 83 percent of total revenues for general rentals and trench safety, pump and power, respectively. General rentals equipment rentals decreased $72, or 4 percent, reflecting a 3.8 percent decrease in same-store rental
revenues. Trench safety, pump and power equipment rentals decreased $3, or 2 percent, reflecting a 0.8 percent decrease in same-store rental revenues.
30
Sales of rental equipment
. For the three and nine months ended September 30, 2008, sales of
rental equipment represented approximately 6 and 8 percent, respectively, of our total revenues and our general rentals segment accounted for approximately 95 percent of these sales. Sales of rental equipment for trench safety, pump and power were
insignificant. For the three and nine months ended September 30, 2008, sales of rental equipment decreased 28 and 22 percent, respectively, primarily reflecting a decline in the volume of equipment sold as we focus on selling older assets, in
line with our life-cycle management strategy.
Sales of new equipment.
For the three and nine months ended September 30, 2008,
sales of new equipment represented approximately 6 percent of our total revenues and our general rentals segment accounted for approximately 98 percent of these sales. Sales of new equipment for trench safety, pump and power were insignificant. For
the three and nine months ended September 30, 2008, sales of new equipment decreased 13 and 23 percent, respectively, primarily reflecting lower volume.
Sales of contractor supplies.
Sales of contractor supplies represent our revenues associated with selling a variety of supplies including construction consumables, tools, small equipment and safety supplies.
Consistent with sales of rental and new equipment, general rentals accounts for substantially all of our contractor supplies sales. For the three and nine months ended September 30, 2008, sales of contractor supplies decreased 44 percent
compared to the same periods in 2007. Consistent with our strategy of repositioning our contractor supplies business, the decline reflects a reduction in the volume of supplies sold, partially offset by improved pricing. The decline in volume is
consistent with the reduction in our product offering (fewer SKUs are offered in our catalogue).
Service and other revenues
.
Service and other revenues primarily represent our revenues earned from providing repair and maintenance services (including parts sales). Consistent with sales of rental and new equipment as well as sales of contractor supplies, general rentals
accounts for substantially all of our service and other revenue. For the three and nine months ended September 30, 2008, service and other revenue decreased approximately 12 percent, primarily reflecting reduced revenues from service labor and
parts sales.
Segment Operating Income
Segment operating income and operating margin were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
rentals
|
|
|
Trench safety,
pump and power
|
|
|
Total
|
|
Three months ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
167
|
|
|
$
|
21
|
|
|
$
|
188
|
|
Operating Margin
|
|
|
20.6
|
%
|
|
|
34.4
|
%
|
|
|
21.5
|
%
|
Three months ended September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
197
|
|
|
$
|
19
|
|
|
$
|
216
|
|
Operating Margin
|
|
|
21.2
|
%
|
|
|
30.6
|
%
|
|
|
21.8
|
%
|
Nine months ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
375
|
|
|
$
|
43
|
|
|
$
|
418
|
|
Operating Margin
|
|
|
16.2
|
%
|
|
|
27.6
|
%
|
|
|
16.9
|
%
|
Nine months ended September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
443
|
|
|
$
|
44
|
|
|
$
|
487
|
|
Operating Margin
|
|
|
16.9
|
%
|
|
|
26.0
|
%
|
|
|
17.5
|
%
|
General rentals
. For the three and nine months ended September 30, 2008,
operating income decreased $30 and $68, respectively, and operating margin decreased 0.6 and 0.7 percentage points, respectively, primarily reflecting reduced gross margin from equipment rentals. Excluding the impact of the SEC charge, operating
margin decreased 0.1 percentage points for the nine months ended September 30, 2008.
31
Trench safety, pump and power
. For the three and nine months ended September 30, 2008,
operating income increased by $2 and decreased by $1, respectively, and operating margin increased by 3.8 and 1.6 percentage points, respectively, reflecting improved selling, general and administrative leverage.
Gross Margin
. Gross margins by revenue classification were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Total gross margin
|
|
38.4
|
%
|
|
38.3
|
%
|
|
35.0
|
%
|
|
34.8
|
%
|
Equipment rentals
|
|
40.6
|
%
|
|
42.5
|
%
|
|
36.6
|
%
|
|
38.2
|
%
|
Sales of rental equipment
|
|
32.1
|
%
|
|
28.2
|
%
|
|
28.9
|
%
|
|
28.4
|
%
|
Sales of new equipment
|
|
16.3
|
%
|
|
16.1
|
%
|
|
16.8
|
%
|
|
16.9
|
%
|
Contractor supplies sales
|
|
24.1
|
%
|
|
18.8
|
%
|
|
23.1
|
%
|
|
18.6
|
%
|
Service and other revenues
|
|
56.8
|
%
|
|
59.5
|
%
|
|
58.6
|
%
|
|
58.4
|
%
|
For the three and nine months ended September 30, 2008, total gross margin increased 0.1 and
0.2 percentage points, respectively, primarily reflecting improved gross margins on contractor supplies sales, partially offset by reduced gross margins from equipment rentals. The improvement in gross margins on contractor supplies sales primarily
reflects improvements in pricing and product mix. Equipment rentals gross margin performance reflects revenue declines in excess of savings realized from cost savings initiatives.
Selling, general and administrative expenses (SG&A)
. SG&A expense information for the three and nine months ended
September 30, 2008 and 2007 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Total SG&A expenses
|
|
$
|
133
|
|
|
$
|
150
|
|
|
$
|
390
|
|
|
$
|
446
|
|
SG&A as a percentage of revenue
|
|
|
15.2
|
%
|
|
|
15.2
|
%
|
|
|
15.8
|
%
|
|
|
16.0
|
%
|
SG&A expense primarily includes sales force compensation, bad debt expense, information
technology costs, advertising and marketing expenses, professional fees, management salaries and clerical and administrative overhead. For the three months ended September 30, 2008, SG&A expense of $133 decreased $17 as compared to 2007.
This improvement reflects the benefits we are realizing from our cost saving initiatives, including reduced compensation costs and travel expenses, partially offset by normal inflationary increases.
For the nine months ended September 30, 2008, SG&A expense of $390 decreased $56 as compared to 2007. This improvement reflects the benefits we
are realizing from our cost-saving initiatives, including reduced compensation costs and travel expenses, partially offset by normal inflationary increases.
Charge related to settlement of SEC inquiry.
Our results for the nine months ended September 30, 2008 include a $14 charge which was recognized in the second quarter and represented our best
estimate for the liability associated with this matter. As previously announced, and as further discussed in note 8 to our unaudited condensed consolidated financial statements, in September 2008 we announced that we had reached a final settlement
with the SEC and we paid a civil penalty of $14. Because the charge was recognized in the second quarter 2008, the settlement of this matter had no impact on our third quarter 2008 operating results.
32
Interest expense, net
for the three and nine months ended September 30, 2008 and 2007
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
Interest expense, net
|
|
$
|
70
|
|
$
|
44
|
|
$
|
159
|
|
$
|
146
|
Interest expense for the three and nine months ended September 30, 2008 increased by $26 and
$13, respectively, primarily relating to increased debt following the preferred stock repurchase and recently completed tender offer. Additionally, interest expense for the three and nine months ended September 30, 2008 includes a non-cash
charge of $4 relating to our retirement of $125 of the principal amount of the 14% HoldCo Notes.
Income taxes
. The following
table summarizes our continuing operations provision for income taxes and the related effective tax rate for the three and nine months ended September 30, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Income from continuing operations
|
|
$
|
117
|
|
|
$
|
172
|
|
|
$
|
252
|
|
|
$
|
338
|
|
Provision for income taxes
|
|
|
43
|
|
|
|
61
|
|
|
|
103
|
|
|
|
128
|
|
Effective tax rate
|
|
|
36.8
|
%
|
|
|
35.5
|
%
|
|
|
40.9
|
%
|
|
|
37.9
|
%
|
The difference between the consolidated effective tax rates and the U.S. federal statutory income
tax rate of 35 percent for the three month periods ended September 30, 2008 and 2007 primarily relates to state taxes and certain non-deductible charges. In addition, during the third quarter of 2008, we recorded a benefit of $2 related to
prior year foreign, federal and state tax return to provision adjustments and favorable impacts from state rate and apportionment changes. During the third quarter of 2007, we recorded a benefit of $2 within the income tax provision as a result
of the reversal of a valuation allowance related to certain state tax net operating loss carry forwards.
The difference between the
consolidated effective tax rates and the U.S. federal statutory income tax rate of 35 percent for the nine month periods ended September 30, 2008 and 2007 primarily relates to state taxes as well as certain non-deductible charges. In
addition, for the nine month period ended September 30, 2008, the provision was impacted by the establishment of a valuation allowance of $6 related to foreign tax credits that, as a result of the preferred stock redemption, are no longer
expected to be realized and the non-deductibility of the $14 charge relating to the settlement of the SEC inquiry partially offset by prior year foreign, federal and state return to provision adjustments and impacts from favorable state rate and
apportionment changes. During the nine month period ended September 30, 2007, we recorded a charge of $3 within the income tax provision related to the restricted stock grant referred to in the following paragraph.
Between June 2001 and March 31, 2007, we had been recognizing a tax benefit on compensation expense associated with a restricted stock award made to
Mr. Hicks in June 2001. Because this award vested for tax purposes in 2002 and because Section 162(m) of the Internal Revenue Code limits the deductibility of a portion of his compensation, no tax benefit should have been recognized.
Accordingly, our results for the nine months ended September 30, 2007 include a charge of $3 within the income tax provision, representing the reversal of the cumulative income tax benefit recognized in prior periods. The effective tax
rate for the nine months ended September 30, 2007 also reflects a non-deductible charge of $5 within SG&A for the remaining amortization of this award.
Our effective tax rate is based on recurring factors including the geographical mix of income before taxes and the related tax rates in those jurisdictions. In addition, our effective tax rate will change based on
discrete or other nonrecurring events (such as audit settlements) that may not be predictable.
33
Liquidity and Capital Resources
Liquidity
. We manage our liquidity using internal cash management practices, which are subject to (i) the policies and cooperation of the financial institutions we utilize to maintain and provide cash
management services, (ii) the terms and other requirements of the agreements to which we are a party and (iii) the statutes, regulations and practices of each of the local jurisdictions in which we operate.
As previously discussed, in June 2008 we commenced a modified Dutch auction tender offer in which we offered to purchase up to
27.16 million shares of our common stock. The tender offer expired in July 2008 and, in accordance with the terms of the offer, we accepted for payment an aggregate of 27.16 shares of our common stock at a price of $22.00 per share, for a total
cost of $603 (including fees and expenses). Also in June 2008, and in connection with our announcement of the tender offer, we repurchased all of outstanding Series C and Series D preferred stock for approximately $679. Pursuant to the purchase
agreement with the preferred holders, Holdings issued to the former preferred holders $425 aggregate principal amount of the 14% HoldCo Notes, in partial payment of the repurchase price of the preferred stock. In September 2008, we prepaid $125
of the principal amount of these notes.
In anticipation of the share repurchases, in June 2008 we, URNA, and certain of our subsidiaries,
entered into a new $1.250 billion senior secured asset-based revolving credit facility (the ABL Facility), a portion of which is available in Canadian dollars, and repaid the $462 outstanding under our former revolving credit facility
and term loan. The balance of the amounts necessary for the share repurchases, the repayment of our former credit facility and term loan, as well as related fees and expenses, was funded with existing cash on hand and through borrowings under the
ABL Facility and our accounts receivable securitization facility. For additional information concerning the ABL Facility, which has recently been upsized to $1.285 billion, and the 14% HoldCo Notes, see note 6 to our condensed consolidated financial
statements
.
Our principal existing sources of cash are cash generated from operations, including from the sale of rental
equipment, and borrowings available under our new asset-based loan facility and receivables securitization facility. As of September 30, 2008, which represents the seasonally high point of our working capital usage, we had (i) $375 of
borrowing capacity available under our ABL Facility, (ii) $14 of borrowing capacity available under our receivables securitization facility and (iii) cash and cash equivalents of $66. Cash equivalents at September 30, 2008 consist of
high quality, low risk investments and do not include any auction rate securities. We believe that our existing sources of cash, including the $240 of free cash flow we expect to generate in the 2008 fourth quarter, will be sufficient to support our
existing operations over the next twelve months.
We expect that our principal needs for cash relating to our existing operations over the
next twelve months will be to fund (i) working capital, (ii) the purchase of rental equipment and inventory items offered for sale, (iii) payments due under operating leases and (iv) debt service. We plan to fund such cash
requirements from borrowings under our ABL Facility, our accounts receivable securitization facility and existing sources of cash.
Loan Covenants and Compliance
. As of September 30, 2008, we were in compliance with the covenants and other provisions of our ABL Facility, the senior notes, the subordinated convertible debentures and our
accounts receivables securitization facility. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.
Sources and Uses of CashContinuing Operations
.
During the nine months ended September 30, 2008, we (i) generated
cash from operating activities of $571, (ii) generated cash from the sale of rental equipment of $190 and (iii) received proceeds, net of payments, on debt of $459. We used cash during this period principally
34
to (i) purchase rental equipment of $590, (ii) purchase other property and equipment of $41, (iii) repurchase common stock of $603, and
(iv) redeem our preferred stock of $257. During the nine months ended September 30, 2007, we (i) generated cash from operating activities of $484, (ii) generated cash from the sale of rental equipment of $243 and
(iii) received proceeds from the exercise of common stock options of $22. We used cash during this period principally to (i) purchase rental and non-rental equipment of $866 and (ii) purchase other companies for $23.
Free Cash Flow GAAP Reconciliation
.
We define free cash flow as (i) net cash provided by operating activities less
(ii) purchases of rental and non-rental equipment plus (iii) proceeds from sales of rental and non-rental equipment and excess tax benefits from share-based payment arrangements. Management believes free cash flow provides useful
additional information concerning cash flow available to meet future debt service obligations and working capital requirements. However, free cash flow is not a measure of financial performance or liquidity under GAAP. Accordingly, free cash flow
should not be considered an alternative to net income or cash flow from operating activities as indicators of operating performance or liquidity. The table below provides a reconciliation between net cash provided by operating activities and free
cash flow.
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Net cash provided by operating activitiescontinuing operations
|
|
$
|
571
|
|
|
$
|
484
|
|
Purchases of rental equipment
|
|
|
(590
|
)
|
|
|
(785
|
)
|
Purchases of non-rental equipment
|
|
|
(41
|
)
|
|
|
(81
|
)
|
Proceeds from sales of rental equipment
|
|
|
190
|
|
|
|
243
|
|
Proceeds from sales of non-rental equipment
|
|
|
7
|
|
|
|
20
|
|
Excess tax benefits from share-based payment arrangements
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
$
|
137
|
|
|
$
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
Free cash flow generation for the nine months ended September 30, 2008 was $137, an increase
of $228 as compared to free cash flow usage of $91 in the nine months ended September 30, 2007. The year-over-year increase in free cash flow primarily reflects reduced capital expenditures, in line with our expectation at the beginning of 2008
that the construction environment would be challenging this year.
Our credit ratings as of October 20, 2008 were as follows:
|
|
|
|
|
|
|
Corporate Rating
|
|
Outlook
|
Moodys
|
|
B1
|
|
Negative
|
S&P
|
|
BB-
|
|
Credit Watch/Negative
|
Fitch
|
|
B+
|
|
Stable
|
Both our ability to obtain financing and the related cost of borrowing are affected by our credit
ratings, which are periodically reviewed by these rating agencies. Our current credit ratings are below investment grade and we expect our access to the public debt markets to be limited to the non-investment grade segment.
35
Certain Information Concerning Contractual Obligations
. The table below provides certain
information concerning the payments coming due under certain categories of our existing contractual obligations as of September 30, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013 and
Thereafter
|
|
Total
|
Debt and capital leases (1)
|
|
$
|
5
|
|
$
|
13
|
|
$
|
10
|
|
$
|
292
|
|
$
|
1,001
|
|
$
|
2,123
|
|
$
|
3,444
|
Interest due on debt (2)
|
|
|
57
|
|
|
229
|
|
|
229
|
|
|
229
|
|
|
163
|
|
|
177
|
|
|
1,084
|
Operating leases (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
|
21
|
|
|
76
|
|
|
65
|
|
|
57
|
|
|
48
|
|
|
168
|
|
|
435
|
Non-rental equipment
|
|
|
13
|
|
|
42
|
|
|
27
|
|
|
18
|
|
|
12
|
|
|
7
|
|
|
119
|
Purchase obligations (3)
|
|
|
46
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53
|
Subordinated convertible debentures (4)
|
|
|
2
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
296
|
|
|
334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (5)
|
|
$
|
144
|
|
$
|
376
|
|
$
|
340
|
|
$
|
605
|
|
$
|
1,233
|
|
$
|
2,771
|
|
$
|
5,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 plus the maximum potential guarantee amounts associated with some of our non-rental equipment operating leases for which we guarantee that the
value of the equipment at the end of the lease term will not be less than a specified projected residual value.
|
(2)
|
Estimated interest payments have been calculated based on the principal amount of debt and the weighted-average effective interest rates as of September 30, 2008.
|
(3)
|
As of September 30, 2008, we had outstanding purchase orders with our equipment and inventory suppliers. These purchase orders, which were negotiated in the ordinary
course of business, aggregate approximately $53. 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 2008 and 2009.
|
(4)
|
Includes interest payments.
|
(5)
|
This information excludes $7 of unrecognized tax benefits which are discussed further in note 3 to our condensed consolidated financial statements. It is not possible to estimate
the time period during which these amounts may be paid to tax authorities.
|
Certain Information Concerning Off-Balance
Sheet Arrangements
.
We lease real estate, rental equipment and non-rental equipment under operating leases as a regular business activity. As part of some of our non-rental equipment operating leases, we guarantee that the value of
the equipment at the end of the term will not be less than a specified projected residual value. If the actual residual value for all equipment subject to such guarantees were to be zero, then our maximum potential liability under these guarantees
would be approximately $11. Under current circumstances we do not anticipate paying significant amounts under these guarantees; however, we cannot be certain that changes in market conditions or other factors will not cause the actual residual
values to be lower than those currently anticipated. In accordance with Financial Accounting Standards Board Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, this potential liability was not reflected on our balance sheet as of September 30, 2008, September 30, 2007 or December 31, 2007 or any prior date as we believe that proceeds from the sale of the
equipment under these operating leases would approximate the payment obligation.
Relationship between Holdings and URNA.
Holdings is principally a holding company and primarily conducts its operations through its wholly owned subsidiary, URNA, and subsidiaries of URNA. Holdings provides certain services to URNA in connection with its operations. These services
principally include: (i) senior management services, (ii) finance and tax related services and support, (iii) information technology
36
systems and support, (iv) acquisition related services, (v) legal services and (vi) human resource support. In addition, Holdings leases
certain equipment and real property that are made available for use by URNA and its subsidiaries.
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Our exposure to market risk primarily consists of (1) interest rate risk associated with our variable rate debt and (2) foreign currency exchange rate risk primarily associated with our Canadian operations.
Interest Rate Risk
. During 2007 and earlier periods, we utilized interest rate swap agreements and interest rate cap agreements to manage
our interest costs and exposure to changes in interest rates. As of December 31, 2007, we had swap agreements with an aggregate notional amount of $1.2 billion. The effect of the swap agreements were, at December 31, 2007, to convert $1.2
billion of our fixed rate notes to floating rate instruments. In January 2008, we terminated all of our interest rate swap agreements and made a payment of $4.
As of September 30, 2008, we had an aggregate of $1,055 of indebtedness that bears interest at variable rates. As of September 30, 2008, the variable rate debt included $769 of borrowings under our ABL
Facility and $286 of borrowings under our accounts receivable securitization facility. The weighted average interest rates applicable to our variable rate debt for the quarter ended September 30, 2008 were (i) 5.5 percent for the ABL
Facility, and (ii) 3.4 percent for the accounts receivable securitization facility. As of September 30, 2008, based upon the amount of our variable rate debt outstanding, our annual after-tax earnings would decrease by approximately $7 for
each one percentage point increase in the interest rates applicable to our variable rate debt.
The amount of our variable rate
indebtedness may fluctuate significantly as a result of changes in the amount of indebtedness outstanding under our ABL Facility and accounts receivables securitization facility.
Currency Exchange Risk
.
The functional currency for our Canadian operations is the Canadian dollar. As a result, our future earnings
could be affected by fluctuations in the exchange rate between the U.S. and Canadian dollars. Based upon the level of our Canadian operations during 2007 relative to the Company as a whole, a 10 percent change in this exchange rate would not have a
material impact on our earnings. We had no outstanding foreign exchange contracts as of September 30, 2008. We do not engage in purchasing forward exchange contracts for speculative purposes.
Item 4.
|
Controls and Procedures
|
Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the
Companys reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to management, including the
Companys Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
The Companys management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined
in Rules 13a15(e) and 15d15(e) of the Exchange Act, as of September 30, 2008. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and
procedures were effective as of September 30, 2008.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2008 that materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
37
PART II. OTHER INFORMATION
Item 1.
|
Legal Proceedings
|
The information set forth under
note 8 to our unaudited condensed consolidated financial statements of this report is incorporated by reference in answer to this item.
Our results of operations and
financial condition are subject to numerous risks and uncertainties described in our 2007 Form 10-K, which risk factors are incorporated herein by reference. You should carefully consider these risk factors in conjunction with the other information
contained in this report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted.
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(c)
Issuer Purchases of Equity Securities
The following table provides information about purchases of the Companys common stock by the Company during the third quarter of 2008:
|
|
|
|
|
|
|
|
|
Period
|
|
(a)
Total number
of Shares (or
Units)
Purchased
|
|
(b)
Average
Price Paid
per Share
(or Unit)
|
|
(c)
Total Number
of Shares (or
Units) Purchased
as Part
of
Publicly
Announced
Plans or
Programs
|
|
(d)
Maximum
Number (or
Approximate
Dollar Value)
of Shares (or
Units) that May
Yet Be Purchased
Under
the Plans or
Programs
|
July 1, 2008 to July 31, 2008:
|
|
|
|
|
|
|
|
|
Tender Offer(1)
|
|
27,160,000
|
|
$22.00
|
|
27,160,000
|
|
|
Other Transactions(2)
|
|
1,981
|
|
$19.01
|
|
|
|
|
August 1, 2008 to
August 31, 2008:
|
|
|
|
|
|
|
|
|
Other Transactions(2)
|
|
1,089,501
|
|
$16.57
|
|
|
|
|
September 1, 2008
to September 30, 2008:
|
|
|
|
|
|
|
|
|
Other Transactions(2)
|
|
629
|
|
$14.91
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
Tender Offer(1)
|
|
27,160,000
|
|
$22.00
|
|
27,160,000
|
|
|
Other Transactions(2)
|
|
1,092,111
|
|
$16.57
|
|
|
|
|
(1)
|
Beginning on June 17, 2008 and expiring on July 16, 2008, the Company conducted a modified Dutch auction tender offer to repurchase up to 27,160,000 shares of its
outstanding common stock at a purchase price of not greater than $25.00 nor less than $22.00 per share. The Company accepted for purchase 27,160,000 shares of the Companys common stock in the tender offer, at a price of $22.00 per share, for a
total cost of approximately $598 million (excluding fees and expenses relating to the tender offer). Based on the depositarys final count, a total of 71,979,730 shares of the Companys common stock were validly tendered and not withdrawn
in the offer at a price of $22.00 per share. Accordingly, the final proration factor for the offer was 37.66%. The 27,160,000 shares of the Companys common stock purchased in the tender offer represented 31.4% of the shares outstanding on July
16, 2008. Payment for the shares accepted for purchase, and return of all other shares tendered and not purchased, was made promptly by the depositary. All payments were made in July 2008.
|
(2)
|
The shares were withheld by the Company either to satisfy tax withholding obligations upon the vesting of restricted stock or restricted stock unit awards or to pay the exercise
price upon the exercise of stock option or warrant grants. These shares were not acquired pursuant to any repurchase plan or program.
|
38
|
|
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
2(a)
|
|
Agreement and Plan of Merger, dated as of July 22, 2007, among United Rentals, Inc., RAM Holdings, Inc. and RAM Acquisition Corp (incorporated by reference to Exhibit 4.1 of the United
Rentals, Inc. Current Report on Form 8-K filed on July 24, 2007)
|
|
|
3(a)
|
|
Amended and Restated Certificate of Incorporation of United Rentals, Inc. (incorporated by reference to Exhibit 3.1 of United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998)
|
|
|
3(b)
|
|
Certificate of Amendment, dated September 29, 1998, to the United Rentals, Inc. Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 4.2 to the United
Rentals, Inc. Registration Statement on Form S-3, No. 333-70151, filed on January 6, 1999)
|
|
|
3(c)
|
|
Certificate of Amendment, dated June 7, 2007, to the United Rentals, Inc. Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the United Rentals,
Inc. Current Report on Form 8-K filed on June 8, 2007)
|
|
|
3(d)
|
|
By-laws of United Rentals, Inc. (amended as of April 4, 2007) (incorporated by reference to Exhibit 3.1 of the United Rentals, Inc. Current Report on Form 8-K filed on April 4,
2007)
|
|
|
3(e)
|
|
Form of Certificate of Designation for Series C Perpetual Convertible Preferred Stock (incorporated by reference to Exhibit 3(f) of the United Rentals, Inc. Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001)
|
|
|
3(f)
|
|
Form of Certificate of Designation for Series D Perpetual Convertible Preferred Stock (incorporated by reference to Exhibit 3(g) of the United Rentals, Inc. Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001)
|
|
|
3(g)
|
|
Form of Certificate of Designation for Series E Junior Participating Preferred Stock (incorporated by reference to Exhibit A of Exhibit 4 of the United Rentals, Inc. Current Report on Form
8-K filed on October 5, 2001)
|
|
|
3(h)
|
|
Rights Agreement, dated September 28, 2001, between United Rentals, Inc. and American Stock Transfer & Trust Co., as Rights Agent (incorporated by reference to Exhibit 4 of the United
Rentals, Inc. Current Report on Form 8-K filed on October 5, 2001)
|
|
|
3(i)
|
|
Amended and Restated Certificate of Incorporation of United Rentals (North America), Inc., (incorporated by reference to Exhibit 3.3 of the United Rentals (North America), Inc. Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998)
|
|
|
3(j)
|
|
By-laws of United Rentals (North America), Inc. (incorporated by reference to Exhibit 3.4 of the United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998)
|
|
|
3(k)
|
|
First Amendment to the Rights Agreement, dated as of July 22, 2007, between United Rentals, Inc. and American Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.2 of
the United Rentals, Inc. Current Report on Form 8-K filed on July 24, 2007)
|
|
|
3(l)
|
|
Second Amendment to the Rights Agreement dated as of October 16, 2008, between United Rentals, Inc. and American Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1
of the United Rentals, Inc. Current Report on Form 8-K filed on October 16, 2008)
|
|
|
10(a)
|
|
Employment Agreement dated August 22, 2008, between United Rentals, Inc. and Michael J. Kneeland (incorporated by reference to Exhibit 10.1 to the United Rentals, Inc. Current Report on Form
8-K filed on August 25, 2008)
|
39
|
|
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
10(b)
|
|
Form of 2001 Comprehensive Stock Plan Restricted Stock Unit Agreement with Michael J. Kneeland (incorporated by reference to Exhibit 10.2 of the United Rentals, Inc. Current Report on Form
8-K filed on August 25, 2008)
|
|
|
10(c)*
|
|
Compensation Arrangement for Non-Executive Chairman of United Rentals, Inc.
|
|
|
10(d)
|
|
Consent of United Rentals, Inc. (with form of Final Judgment attached) (incorporated by reference to Exhibit 10.1 of the United Rentals, Inc. Current Report on Form 8-K filed on September 9,
2008)
|
|
|
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
|
40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
|
|
|
|
|
|
UNITED RENTALS, INC.
|
|
|
|
Dated: October 28, 2008
|
|
By:
|
|
/
S
/ J
OHN
J.
F
AHEY
|
|
|
|
|
John J. Fahey
|
|
|
|
|
Vice President, Controller
and Principal Accounting Officer
|
|
|
|
|
UNITED RENTALS (NORTH AMERICA), INC.
|
|
|
|
Dated: October 28, 2008
|
|
By:
|
|
/
S
/ J
OHN
J.
F
AHEY
|
|
|
|
|
John J. Fahey
|
|
|
|
|
Vice President, Controller
and Principal Accounting Officer
|
41
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