United Rentals, Inc. (NYSE: URI) today announced financial
results for the fourth quarter and full year 2009. For the fourth
quarter, total revenue was $557 million and rental revenue was $450
million, compared with $791 million and $606 million, respectively,
for the fourth quarter 2008. For the full year, total revenue was
$2.4 billion and rental revenue was $1.8 billion, compared with
$3.3 billion and $2.5 billion, respectively, for the full year
2008.
2009 Highlights
- Free cash flow increased to $367
million for the full year 2009, compared with $335 million for
2008.
- Total debt at year-end 2009
decreased by $270 million compared with year-end 2008, and net
debt, which includes the impact of cash and cash equivalents,
decreased by $362 million. The company has no significant debt
maturities until 2013.
- SG&A expense decreased by
$20 million for the fourth quarter year-over-year, and decreased by
$101 million for the full year 2009 compared with 2008.
- The company sold $653 million of
fleet on an original equipment cost basis in 2009, with an average
age of 78 months.
- Cost of equipment rentals,
excluding depreciation, decreased by $51 million for the fourth
quarter and by $227 million for the full year 2009, compared with
2008.
- Time utilization was 61.8% for
the fourth quarter and 60.7% for the full year 2009, representing
decreases of 2.4 percentage points and 2.9 percentage points,
respectively, from 2008. Rental rates declined 9.6% for the quarter
and 11.8% for the year. Dollar utilization, which reflects the
impact of both rental rates and time utilization, was 46.0% for the
fourth quarter and 45.5% for full year 2009, representing decreases
of 9.3 percentage points and 11.4 percentage points, respectively,
from 2008.
2010 Outlook
The company provided the following financial targets for
2010:
- SG&A expense reduction of
$25 million to $35 million for full year 2010, compared with
2009;
- Cost of equipment rentals,
excluding depreciation, reduction of $70 million to $90 million for
the full year 2010, compared with 2009; and
- Free cash flow of between $175
million and $200 million, including net rental capital expenditures
(defined as purchases of rental equipment less the proceeds from
sales of rental equipment) of between $100 million to $120 million.
The company expects its fleet size at the end of 2010 to be about
$3.6 billion on an original equipment cost basis.
CEO Comments
Michael Kneeland, chief executive officer of United Rentals,
said, "We can point to a number of significant contrasts between
the strategic progress we made as a company in 2009 and our
operating environment . Externally, the economic turmoil took a
toll on our end markets, with the expected constraint on our
revenues and margins. We responded with disciplined cost cutting
and capital management, improving our free cash flow and SG&A
reduction beyond projections.”
Kneeland continued, "At this time we are still seeing an
environment that is very similar to the last half of 2009. Despite
the challenges of a lingering downturn, we believe that the
transformation of our customer service and sales operations, and
our strong capital structure, put us in a unique position to gain
share that will be accretive to earnings over time. We are becoming
increasingly adept at balancing local market development with the
pursuit of national accounts, industrial accounts and government
business – the segments most closely aligned with our strategy for
long-term profitable growth.”
2009 Financial Results
For the fourth quarter 2009, on a GAAP continuing operations
basis, the company reported a loss of $24 million, or a loss of
$0.39 per diluted share, compared with a loss of $853 million, or a
loss of $14.25 per diluted share, for the fourth quarter 2008.
Adjusted EPS, which excludes the impact of restructuring and
impairment charges and other special items, was a loss of $0.21 per
diluted share for the quarter, compared with earnings of $0.74 per
diluted share for the prior year. Adjusted EBITDA margin, which
also excludes the impact of restructuring and impairment charges
and other special items, was 26.8% for the quarter, compared with
31.6% for the prior year.
For the full year 2009, on a GAAP continuing operations basis,
the company reported a loss of $60 million, or a loss of $0.98 per
diluted share, compared with a loss of $704 million, or a loss of
$12.62 per diluted share, for 2008. Adjusted EPS, which excludes
the impact of restructuring and impairment charges and other
special items, was a loss of $0.76 per diluted share for 2009,
compared with earnings of $2.96 per diluted share for the prior
year. Adjusted EBITDA margin, which also excludes the impact of
restructuring and impairment charges and other special items, was
26.6% for 2009, compared with 32.8% for the prior year.
The change in profitability for the fourth quarter and full year
2009, compared with 2008, primarily reflects the continued decline
in non-residential construction activity and its negative impact on
pricing, partially offset by the savings realized from the
company’s ongoing cost-cutting initiatives.
Free Cash Flow and Fleet Size
For full year 2009, free cash flow, a non-GAAP measure, was $367
million after total rental and non-rental capital expenditures of
$311 million, compared with free cash flow of $335 million after
total rental and non-rental capital expenditures of $704 million
for full year 2008. The year-over-year increase in free cash flow
was largely the result of a reduction in capital expenditures,
partially offset by lower cash generated from operating
activities.
The size of the rental fleet, as measured by the original
equipment cost (“OEC”), was $3.8 billion at December 31, 2009,
compared with $4.1 billion at December 31, 2008. The age of the
rental fleet was 42.4 months on a unit-weighted basis at December
31, 2009, compared with 39.2 months at December 31, 2008.
Return on Invested Capital (ROIC)
Return on invested capital was 1.8% for the year ended December
31, 2009, a decrease of 5.8 percentage points compared with 2008.
The company’s ROIC metric uses after-tax operating income for the
trailing 12 months divided by the averages of stockholders’ equity
(deficit), debt and deferred taxes, net of average cash.
Conference Call
United Rentals will hold a conference call tomorrow, Thursday,
February 4, 2010, at 11:00 a.m. Eastern Time. The conference call
will be available live by audio webcast at unitedrentals.com, where it will be
archived, and by calling 866-261-2650.
Non-GAAP Measures
Free cash flow, earnings before interest, taxes, depreciation
and amortization (EBITDA), adjusted EBITDA, and adjusted earnings
per share (adjusted EPS) are non-GAAP financial measures as defined
under the rules of the SEC. Free cash flow represents net cash
provided by operating activities, less purchases of rental and
non-rental equipment plus proceeds from sales of rental and
non-rental equipment and excess tax benefits from share-based
payment arrangements. EBITDA represents the sum of net income
(loss), loss from discontinued operations, net of taxes, benefit
for income taxes, interest expense, net, interest
expense-subordinated convertible debentures, net,
depreciation-rental equipment and non-rental depreciation and
amortization. Adjusted EBITDA represents EBITDA plus the sum of the
restructuring charge, the charge related to the settlement of the
SEC inquiry, the goodwill impairment charge and stock compensation
expense, net. Adjusted EPS represents EPS plus (i) the sum of the
restructuring and asset impairment charges, the losses on the
repurchase/retirement of debt securities and subordinated
convertible debentures, the charge related to the settlement of the
SEC inquiry, the preferred stock redemption charge and the foreign
tax credit valuation allowance and other less (ii) the gains on the
repurchase/retirement of debt securities. The company believes
that: (i) free cash flow provides useful additional information
concerning cash flow available to meet future debt service
obligations and working capital requirements; (ii) EBITDA and
adjusted EBITDA provide useful information about operating
performance and period-over-period growth; and (iii) adjusted EPS
provides useful information concerning future profitability.
However, none of these measures should be considered as
alternatives to net income, cash flows from operating activities or
earnings per share under GAAP as indicators of operating
performance or liquidity. Information reconciling forward-looking
free cash flow to a GAAP financial measure is unavailable to the
company without unreasonable effort.
About United Rentals
United Rentals, Inc. is the largest equipment rental company in
the world, with an integrated network of 569 rental locations in 48
states, 10 Canadian provinces and Mexico. The company’s
approximately 8,000 employees serve construction and industrial
customers, utilities, municipalities, homeowners and others. The
company offers for rent approximately 3,000 classes of equipment
with a total original cost of $3.8 billion. United Rentals is a
member of the Standard & Poor’s MidCap 400 Index and the
Russell 2000 Index® and is headquartered in Greenwich, Conn.
Additional information about United Rentals is available at
unitedrentals.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements can be identified by
the use of forward-looking terminology such as “believe,” “expect,”
“may,” “will,” “should,” “seek,” “on-track,” “plan,” “project,”
“forecast,” “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. Factors that could cause actual
results to differ materially from those projected include, but are
not limited to, the following: (1) on-going decreases in North
American construction and industrial activities, which have
significantly affected revenues and, because many of our costs are
fixed, our profitability, and which may further reduce demand and
prices for our products and services; (2) our highly leveraged
capital structure, which requires us to use a substantial portion
of our cash flow for debt service and can constrain our flexibility
in responding to unanticipated or adverse business conditions; (3)
noncompliance with financial or other covenants in our debt
agreements, which could result in our lenders terminating our
credit facilities and requiring us to repay outstanding borrowings;
(4) inability to access the capital that our businesses or growth
plans may require; (5) increases in our maintenance and replacement
costs as we age our fleet, and decreases in the residual value of
our equipment; (6) inability to sell our new or used fleet in the
amounts, or at the prices, we expect; (7) rates we can charge and
time utilization we can achieve being less than anticipated; and
(8) costs we incur being more than anticipated, and the inability
to realize expected savings in the amounts or time frames planned.
For a fuller description of these and other possible uncertainties,
please refer to our Annual Report on Form 10-K for the year ended
December 31, 2009, as well as to our subsequent filings with the
SEC. Our forward-looking statements contained herein speak only as
of the date hereof, and 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.
UNITED RENTALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In millions, except per share amounts)
Three
Months Ended Twelve Months Ended December 31,
December 31, 2009
2008 % Change
2009 2008 %
Change Revenues: Equipment rentals $ 450 $ 606
(25.7 %) $ 1,830 $ 2,496 (26.7 %) Sales of rental equipment 37 74
(50.0 %) 229 264 (13.3 %) New equipment sales 23 42 (45.2 %) 86 179
(52.0 %) Contractor supplies sales 26 43 (39.5 %) 121 212 (42.9 %)
Service and other revenues 21 26 (19.2
%) 92 116 (20.7 %)
Total
revenues 557 791
(29.6 %)
2,358 3,267
(27.8 %) Cost of revenues:
Cost of equipment rentals,
excluding depreciation
231 282 (18.1 %) 910 1,137 (20.0 %) Depreciation of rental
equipment 101 121 (16.5 %) 417 455 (8.4 %) Cost of rental equipment
sales 33 63 (47.6 %) 222 198 12.1 % Cost of new equipment sales 20
37 (45.9 %) 73 151 (51.7 %) Cost of contractor supplies sales 19 32
(40.6 %) 89 162 (45.1 %) Cost of service and other revenues
8 9 (11.1 %) 37 46
(19.6 %)
Total cost of revenues 412
544 (24.3 %)
1,748
2,149 (18.7 %)
Gross profit 145
247 (41.3 %)
610 1,118 (45.4 %)
Selling, general and administrative expenses 100 120 (16.7 %) 408
509 (19.8 %) Restructuring charge 6 14 (57.1 %) 31 20 55.0 % Charge
related to settlement of SEC inquiry - - - 14 Goodwill impairment
charge - 1,147 - 1,147 Non-rental depreciation and amortization
15 14 7.1 % 57 58
(1.7 %)
Operating income (loss) 24
(1,048 ) 102.3 %
114 (630 )
118.1 % Interest expense, net 72 15 380.0 % 226 174 29.9 %
Interest expense - subordinated
convertible debentures, net
2 2 (4 ) 9 Other (income) expense, net (1 ) -
(1 ) -
Loss from continuing
operations before benefit for income taxes (49
) (1,065 ) (107 ) (813
) Benefit for income taxes (25 ) (212 )
(47 ) (109 )
Loss from continuing operations
(24 ) (853 ) (60 )
(704 )
Loss from discontinued operation,
net of taxes
(2 ) - (2 ) -
Net
loss $ (26 ) $ (853 )
$ (62 ) $ (704 )
Preferred stock redemption charge - - - (239 )
Net loss
available to common stockholders $ (26 )
$ (853 ) $ (62 ) $
(943 ) Basic and diluted loss per
share:
Loss per share from continuing
operations (inclusive of preferred stock redemption charge)
$ (0.39 ) $ (14.25 ) $ (0.98 ) $ (12.62 ) Loss from discontinued
operation (0.04 ) - (0.04 ) -
Net loss $ (0.43 ) $
(14.25 ) $ (1.02 ) $
(12.62 ) UNITED RENTALS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In millions)
December 31, 2009 2008
ASSETS Cash and cash equivalents $ 169 $ 77 Accounts
receivable, net 337 454 Inventory 44 59 Prepaid expenses and other
assets 89 37 Deferred taxes 66 76 Total
current assets 705 703 Rental equipment, net 2,414 2,746
Property and equipment, net 434 447 Goodwill and other intangible
assets, net 231 229 Other long-term assets 75
66
Total assets $ 3,859
$ 4,191 LIABILITIES AND
STOCKHOLDERS' DEFICIT Current maturities of long-term debt $
125 $ 13 Accounts payable 128 157 Accrued expenses and other
liabilities 208 257 Total current
liabilities 461 427 Long-term debt 2,826 3,186 Subordinated
convertible debentures 124 146 Deferred taxes 424 414 Other
long-term liabilities 43 47
Total
liabilities 3,878 4,220
Common stock 1 1 Additional paid-in capital 487 466
Accumulated deficit (574 ) (512 ) Accumulated other comprehensive
income 67 16
Total stockholders'
deficit (19 ) (29 )
Total liabilities and stockholders' deficit $
3,859 $ 4,191 UNITED RENTALS,
INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions) Three
Months Ended Twelve Months Ended December 31,
December 31, 2009
2008 2009
2008 Cash Flows From Operating
Activities: Loss from continuing operations $ (24 ) $ (853 ) $
(60 ) $ (704 ) Adjustments to reconcile loss from continuing
operations to net cash provided by operating activities:
Depreciation and amortization 116 135 474 513 Amortization and
write-off of deferred financing and related costs 4 5 17 16 Gain on
sales of rental equipment (4 ) (11 ) (7 ) (66 ) (Gain) loss on
sales of non-rental equipment - (1 ) 1 (3 ) Goodwill impairment
charge - 1,147 - 1,147 Foreign currency transaction loss - 1 - 1
Non-cash adjustments to equipment (1 ) (1 ) 3 - Stock compensation
expense, net 2 2 8 6 Restructuring charge 6 14 31 20 Loss (gain) on
repurchase of debt securities 9 (45 ) (7 ) (41 ) Gain on retirement
of subordinated convertible debentures - - (13 ) - Increase
(decrease) in deferred taxes 8 (216 ) 4 (129 ) Changes in operating
assets and liabilities: Decrease in accounts receivable 34 43 128
51 Decrease in inventory 9 19 16 31 (Increase) decrease in prepaid
expenses and other assets (48 ) 14 (39 ) 30 Decrease in accounts
payable (15 ) (52 ) (32 ) (34 ) Decrease in accrued expenses and
other liabilities (11 ) (8 ) (86 ) (74
) Net cash provided by operating activities 85 193 438 764
Cash Flows From Investing Activities: Purchases of rental
equipment (62 ) (34 ) (260 ) (624 ) Purchases of non-rental
equipment (17 ) (39 ) (51 ) (80 ) Proceeds from sales of rental
equipment 37 74 229 264 Proceeds from sales of non-rental equipment
2 4 13 11 Purchases of other companies 1 -
(25 ) (17 ) Net cash (used in) provided by
investing activities (39 ) 5 (94 ) (446 )
Cash Flows From
Financing Activities: Proceeds from debt 1,449 426 3,452 2,004
Payments of debt (1,431 ) (606 ) (3,658 ) (1,725 ) Payments of
financing costs (19 ) (1 ) (33 ) (32 ) Proceeds from exercise of
common stock options - 3 - 3 Repurchase of common stock, including
fees - - - (603 ) Shares repurchased and retired (1 ) (2 ) (1 ) (2
) Excess tax benefits from share-based payment arrangements - - (2
) - Cash paid in connection with convertible note hedge
transactions (26 ) - (26 ) -
Cash paid in connection with
preferred stock redemption, including fees
- - - (257 ) Other - (1 ) -
- Net cash used in financing activities (28 )
(181 ) (268 ) (612 ) Effect of foreign exchange rates 2
(6 ) 16 (10 ) Net increase
(decrease) in cash and cash equivalents 20 11 92 (304 ) Cash and
cash equivalents at beginning of period 149 66
77 381 Cash and cash equivalents
at end of period $ 169 $ 77 $ 169 $ 77
UNITED RENTALS, INC. SEGMENT PERFORMANCE ($ in
millions)
Three Months Ended Twelve Months Ended
December 31, December 31, 2009
2008 % Change 2009
2008 % Change General
Rentals Reportable segment revenue $ 520 $ 745 (30.2%) $ 2,202
$ 3,065 (28.2%) Reportable segment operating income (1) 26 103
(74.8%) 123 500 (75.4%) Reportable segment operating margin (1)
5.0% 13.8%
(8.8 pts)
5.6% 16.3% (10.7 pts)
Trench Safety, Pump and Power
Reportable segment revenue $ 37 $ 46 (19.6%) $ 156 $ 202 (22.8%)
Reportable segment operating income 4 10 (60.0%) 22 51 (56.9%)
Reportable segment operating margin 10.8% 21.7% (10.9 pts) 14.1%
25.2% (11.1 pts)
Total United Rentals Total revenue $
557 $ 791 (29.6%) $ 2,358 $ 3,267 (27.8%) Total operating income
(1) 30 113 (73.5%) 145 551 (73.7%) Total operating margin (1) 5.4%
14.3% (8.9 pts) 6.1% 16.9% (10.8 pts)
(1) Excludes the goodwill
impairment charge, restructuring charge and charge related to
settlement of the SEC inquiry
DILUTED LOSS PER SHARE CALCULATION (In millions, except
per share data)
Three Months Ended Twelve Months Ended December
31, December 31, 2009
2008 2009
2008 Loss from continuing operations $
(24 ) $ (853 ) $ (60 ) $ (704 ) Preferred stock redemption charge
(1) - - - (239 )
Loss from continuing operations
available to common stockholders
(24 ) (853 ) (60 ) (943 ) Loss from discontinued operation, net of
taxes (2 ) - (2 ) - Net
loss available to common stockholders $ (26 ) $ (853 ) $ (62 ) $
(943 ) Weighted-average diluted shares 60.2 59.9 60.1 74.7
Diluted loss per share:
Loss from continuing operations
(inclusive of preferred stock redemption charge)
$ (0.39 ) $ (14.25 ) $ (0.98 ) $ (12.62 ) Loss from discontinued
operation (0.04 ) - (0.04 ) -
Net loss $ (0.43 ) $ (14.25 ) $ (1.02 ) $ (12.62 )
(1) Relates to the June 2008 repurchase of all of our
outstanding Series C and Series D preferred stock.
UNITED RENTALS, INC.
ADJUSTED EARNINGS (LOSS) PER
SHARE RECONCILIATION
We define “earnings (loss) per share – adjusted” as the sum of
(i) loss per share from continuing operations – GAAP, as reported,
plus the after-tax impact of (ii) restructuring charge, (iii)
goodwill impairment charge, (iv) loss (gain) on repurchase of debt
securities and retirement of subordinated convertible debentures,
(v) asset impairment charge, (vi) charge related to the settlement
of the SEC inquiry, (vii) preferred stock redemption charge, and
(viii) foreign tax credit valuation allowance and other. Management
believes adjusted earnings (loss) per share provides useful
information concerning future profitability. However, adjusted
earnings (loss) per share is not a measure of financial performance
under GAAP. Accordingly, adjusted earnings (loss) per share should
not be considered an alternative to GAAP loss per share. The table
below provides a reconciliation between loss per share – GAAP, as
reported, and earnings (loss) per share – adjusted.
Three Months Ended Twelve Months
Ended December 31, December 31,
2009 2008
2009 2008
Loss per share from continuing operations- GAAP,
as reported $ (0.39 ) $
(14.25 ) $ (0.98 ) $
(12.62 ) After-tax impact of:
Restructuring charge (1) 0.07 0.14 0.29 0.17 Goodwill impairment
charge (2) - 15.21 - 12.19
Loss (gain) on repurchase of debt
securities and retirement of subordinated convertible
debentures
0.08 (0.44 ) (0.19 ) (0.32 ) Asset impairment charge (3) 0.03 0.08
0.12 0.06 Charge related to settlement of SEC inquiry - - - 0.19
Preferred stock redemption charge (4) - - - 3.19 Foreign tax credit
valuation allowance and other (5) - -
- 0.10
Earnings (loss) per share -
adjusted
$ (0.21 ) $ 0.74 $
(0.76 ) $ 2.96 (1)
Relates to branch closure charges and severance costs (2)
Represents a non-cash goodwill impairment charge related to certain
reporting units within our general rental segment. The charge
reflected the challenges of the construction cycle, as well as the
broader economic and credit environment. Substantially all of the
impairment charge relates to goodwill arising out of acquisitions
made between 1997 and 2000. (3) Primarily relates to the impact of
impairing certain rental equipment and leasehold improvement
write-offs. (4) Relates to the June 2008 repurchase of our Series C
and Series D preferred stock and reduces income available to common
stockholders for earnings per share purposes, but does not affect
net income (loss). (5) Primarily relates to the establishment of a
valuation allowance related to certain foreign tax credits that, as
a result of the preferred stock redemption, were no longer expected
to be realized.
UNITED RENTALS, INC.
EBITDA AND ADJUSTED EBITDA GAAP
RECONCILIATION
(In millions)
“EBITDA” represents the sum of net loss, loss from discontinued
operation, net of taxes, benefit for income taxes, interest
expense, net, interest expense-subordinated convertible debentures,
net, depreciation-rental equipment, and non-rental depreciation and
amortization. Adjusted EBITDA represents EBITDA plus (i) the sum of
the restructuring charge, the charge related to the settlement of
the SEC inquiry, the goodwill impairment charge, and stock
compensation expense, net. These items are excluded from adjusted
EBITDA internally when evaluating our operating performance and
allow investors to make a more meaningful comparison between our
core business operating results over different periods of time, as
well as those of other companies. Management believes that EBITDA
and adjusted EBITDA, when viewed with the Company’s GAAP results
and the accompanying reconciliation, provide useful information
about operating performance and period-over-period growth, and
provide additional information that is useful for evaluating the
operating performance of our core business without regard to
potential distortions. Additionally, management believes that
EBITDA and adjusted EBITDA permit investors to gain an
understanding of the factors and trends affecting our ongoing cash
earnings, from which capital investments are made and debt is
serviced. However, EBITDA and adjusted EBITDA are not measures of
financial performance or liquidity under GAAP and, accordingly,
should not be considered as alternatives to net loss or cash flow
from operating activities as indicators of operating performance or
liquidity. The table below provides a reconciliation between net
loss and EBITDA and adjusted EBITDA.
Three Months Ended Twelve
Months Ended December 31, December 31,
2009 2008
2009 2008 Net loss $
(26 ) $ (853 ) $ (62 ) $ (704 ) Loss from discontinued operation,
net of taxes 2 - 2 - Benefit for income taxes (25 ) (212 ) (47 )
(109 ) Interest expense, net 72 15 226 174 Interest expense -
subordinated convertible debentures, net 2 2 (4 ) 9 Depreciation -
rental equipment 101 121 417 455 Non-rental depreciation and
amortization 15 14 57
58
EBITDA (A) 141 (913 )
589 (117 ) Restructuring charge (1) 6 14 31 20
Charge related to settlement of SEC inquiry - - - 14 Goodwill
impairment charge (2) - 1,147 - 1,147 Stock compensation expense,
net (3) 2 2 8 6
Adjusted EBITDA (B) $ 149
$ 250 $ 628 $
1,070 (A) Our EBITDA margin was 25.3% and
(115.4%) for the three months ended December 31, 2009 and 2008,
respectively, and 25.0% and (3.6%) for the twelve months ended
December 31, 2009 and 2008, respectively. (B) Our adjusted EBITDA
margin was 26.8% and 31.6% for the three months ended December 31,
2009 and 2008, respectively, and 26.6% and 32.8% for the twelve
months ended December 31, 2009 and 2008, respectively. (1)
Relates to branch closure charges and severance costs. (2)
Represents a non-cash goodwill impairment charge related to certain
reporting units within our general rental segment. The charge
reflected the challenges of the construction cycle, as well as the
broader economic and credit environment. Substantially all of the
impairment charge relates to goodwill arising out of acquisitions
made between 1997 and 2000. (3) Represents non-cash, share-based
payments associated with the granting of equity instruments.
UNITED RENTALS, INC.
FREE CASH FLOW GAAP
RECONCILIATION
(In millions)
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 (loss) or cash flow from operating
activities as an indicator of operating performance or liquidity.
The table below provides a reconciliation between net cash provided
by operating activities and free cash flow.
Three Months Ended
Twelve Months Ended December 31, December 31,
2009 2008
2009 2008 Net cash
provided by operating activities $ 85 $ 193 $ 438 $ 764 Purchases
of rental equipment (62 ) (34 ) (260 ) (624 ) Purchases of
non-rental equipment (17 ) (39 ) (51 ) (80 ) Proceeds from sales of
rental equipment 37 74 229 264 Proceeds from sales of non-rental
equipment 2 4 13 11
Excess tax benefits from
share-based payment arrangements
- - (2 ) -
Free
cash flow $ 45 $ 198
$ 367 $ 335
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