NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data and unless otherwise indicated)
1
. Organization, Description of Business and Consolidation
United Rentals, Inc. ("Holdings") 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. URNA’s various credit agreements and debt instruments place restrictions on its ability to transfer funds to its stockholder. As used in this report, the terms the “Company,” “United Rentals,” “we,” “us,” and “our” refer to United Rentals, Inc. and its subsidiaries, unless otherwise indicated.
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 Europe. As discussed in note
4
to the consolidated financial statements, with the recently completed acquisition of BakerCorp International Holdings, Inc. (“BakerCorp”), which added
11
European locations in France, Germany, the United Kingdom and the Netherlands to our branch network, we entered into select European markets. In addition to renting equipment, we sell new and used rental equipment, as well as related contractor supplies, parts and service.
The accompanying consolidated financial statements include our accounts and those of our controlled subsidiary companies. All significant intercompany accounts and transactions have been eliminated. We consolidate variable interest entities if we are deemed the primary beneficiary of the entity.
2
. Summary of Significant Accounting Policies
Cash Equivalents
We consider all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents. Our cash equivalents at
December 31, 2018
and
2017
consist of direct obligations of financial institutions rated
A or better
.
Allowance for Doubtful Accounts
We maintain allowances for doubtful accounts. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience. Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowances. Trade receivables that have contractual maturities of one year or less are written-off when they are determined to be uncollectible based on the criteria necessary to qualify as a deduction for federal tax purposes. Write-offs of such receivables require management approval based on specified dollar thresholds. See note
3
to our consolidated financial statements for further detail.
Inventory
Inventory consists of new equipment, contractor supplies, tools, parts, fuel and related supply items. Inventory is stated at the lower of cost or market. Cost is determined, depending on the type of inventory, using either a specific identification, weighted-average or first-in, first-out method.
Rental Equipment
Rental equipment, which includes service and delivery vehicles, is recorded at cost and depreciated over the estimated useful life of the equipment using the straight-line method. The range of estimated useful lives for rental equipment is
two
to
20
years. Rental equipment is depreciated to a salvage value of
zero
to
10 percent
of cost. Rental equipment is depreciated whether or not it is out on rent. Costs we incur in connection with refurbishment programs that extend the life of our equipment are capitalized and amortized over the remaining useful life of the equipment. The costs incurred under these refurbishment programs were
$14
,
$10
and
$18
for the years ended
December 31, 2018
,
2017
and
2016
, respectively, and are included in purchases of rental equipment in our consolidated statements of cash flows. Ordinary repair and maintenance costs are charged to operations as incurred. Repair and maintenance costs are included in cost of revenues on our consolidated statements of income. Repair and maintenance expense (including both labor and parts) for our rental equipment was
$864
,
$714
and
$629
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
Property and Equipment
Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. The range of estimated useful lives for property and equipment is
two
to
39
years. Ordinary repair and maintenance costs are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining life of the lease, whichever is shorter.
Acquisition Accounting
We have made a number of acquisitions in the past and may continue to make acquisitions in the future. The assets acquired and liabilities assumed are recorded based on their respective fair values at the date of acquisition. Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of our acquisitions. Rental equipment is valued utilizing either a cost, market or income approach, or a combination of certain of these methods, depending on the asset being valued and the availability of market or income data. The intangible assets that we have acquired are non-compete agreements, customer relationships and trade names and associated trademarks. The estimated fair values of these intangible assets reflect various assumptions about discount rates, revenue growth rates, operating margins, terminal values, useful lives and other prospective financial information. Goodwill is calculated as the excess of the cost of the acquired entity over the net of the fair value of the assets acquired and the liabilities assumed. Non-compete agreements, customer relationships and trade names and associated trademarks are valued based on an excess earnings or income approach based on projected cash flows.
Determining the fair value of the assets and liabilities acquired is judgmental in nature and can involve the use of significant estimates and assumptions. The judgments made in determining the estimated fair value assigned to the assets acquired, as well as the estimated life of the assets, can materially impact net income in periods subsequent to the acquisition through depreciation and amortization, and in certain instances through impairment charges, if the asset becomes impaired in the future. As discussed below, we regularly review for impairments.
When we make an acquisition, we also acquire other assets and assume liabilities. These other assets and liabilities typically include, but are not limited to, parts inventory, accounts receivable, accounts payable and other working capital items. Because of their short-term nature, the fair values of these other assets and liabilities generally approximate the book values on the acquired entities' balance sheets.
Evaluation of Goodwill Impairment
Goodwill is tested for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. Application of the goodwill impairment test requires judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; assignment of goodwill to reporting units; determination of the fair value of each reporting unit; and an assumption as to the form of the transaction in which the reporting unit would be acquired by a market participant (either a taxable or nontaxable transaction).
We estimate the fair value of our reporting units (which are our regions) using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market price data of shares of our Company and other corporations engaged in similar businesses as well as acquisition multiples paid in recent transactions within our industry (including our own acquisitions). We believe this approach, which utilizes multiple valuation techniques, yields the most appropriate evidence of fair value. We review goodwill for impairment utilizing a two-step process. The first step of the impairment test requires a comparison of the fair value of each of our reporting units' net assets to the respective carrying value of net assets. If the carrying value of a reporting unit's net assets is less than its fair value, no indication of impairment exists and a second step is not performed. If the carrying amount of a reporting unit's net assets is higher than its fair value, there is an indication that an impairment may exist and a second step must be performed. In the second step, the impairment is calculated by comparing the implied fair value of the reporting unit's goodwill (as if purchase accounting were performed on the testing date) with the carrying amount of the goodwill. If the carrying amount of the reporting unit's goodwill is greater than the implied fair value of its goodwill, an impairment loss must be recognized for the excess and charged to operations.
Financial Accounting Standards Board ("FASB") guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. As discussed below (see "New Accounting Pronouncements-Simplifying the Test for Goodwill Impairment"), we are currently assessing whether we will early adopt accounting guidance that eliminates the second step from the goodwill impairment test when it becomes effective (for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019).
In connection with our goodwill impairment test that was conducted as of October 1, 2017, we bypassed the qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test. Our goodwi
ll impairment testing as of this date indicated that all of our reporting units had estimated fair values which exceeded their respective carrying amounts by at least
45
percent.
In connection with our goodwill impairment test that was conducted as of October 1, 2018, we bypassed the qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test. Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Fluid Solutions Europe reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least
52
percent. As discussed in note
4
to the consolidated financial statements, in July 2018, we completed the acquisition of BakerCorp, which added
11
European locations to our branch network. The European locations are in our Fluid Solutions Europe reporting unit. All of the assets in the Fluid Solutions Europe reporting unit were acquired in the BakerCorp acquisition. The estimated fair value of our Fluid Solutions Europe reporting unit exceeded its carrying amount by
7
percent. As all of the assets in the Fluid Solutions Europe reporting unit were recorded at fair value as of the July 2018 acquisition date, we expected the percentage by which the Fluid Solutions Europe reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units.
Restructuring Charges
Costs associated with exit or disposal activities, including lease termination costs and certain employee severance costs associated with restructuring, branch closings or other activities, are recognized at fair value when they are incurred.
Other Intangible Assets
Other intangible assets consist of non-compete agreements, customer relationships and trade names and associated trademarks. The non-compete agreements are being amortized on a straight-line basis over initial periods of approximately
5
years. The customer relationships are being amortized either using the sum of the years' digits method or on a straight-line basis over initial periods ranging from
5
to
15
years. The trade names and associated trademarks are being amortized using the sum of the years' digits method over initial periods of approximately
5
years. We believe that the amortization methods used reflect the estimated pattern in which the economic benefits will be consumed.
Long-Lived Assets
Long-lived assets are recorded at the lower of amortized cost or fair value. As part of an ongoing review of the valuation of long-lived assets, we assess the carrying value of such assets if facts and circumstances suggest they may be impaired. If this review indicates the carrying value of such an asset may not be recoverable, as determined by an undiscounted cash flow analysis over the remaining useful life, the carrying value would be reduced to its estimated fair value.
Translation of Foreign Currency
Assets and liabilities of our foreign subsidiaries that have a functional currency other than U.S. dollars are translated into U.S. dollars using exchange rates at the balance sheet date. Revenues and expenses are translated at average exchange rates effective during the year. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive (loss) income within stockholders’ equity.
Revenue Recognition
As discussed in note
3
to our consolidated financial statements, in 2018, we adopted updated FASB revenue recognition guidance ("Topic 606"). Topic 606 replaced Topic 605, which was the revenue recognition accounting standard in effect for the years ended December 31, 2017 and 2016. For each of the three years in the period ended
December 31, 2018
, we additionally recognized revenue in accordance with Topic 840, which is the lease accounting standard. The discussion below addresses our primary revenue types based on the accounting standard used to determine the accounting.
Lease revenues (Topic 840)
The accounting for the significant types of revenue that are accounted for under Topic 840 is discussed below. As discussed below (see "New Accounting Pronouncements-Leases"), we will adopt Topic 842, which replaces Topic 840, on January 1, 2019. We have concluded that no significant changes are expected to our revenue accounting upon adoption of Topic 842.
Owned equipment rentals:
Owned equipment rentals represent revenues from renting equipment that we own. We account for such rentals as operating leases.
Re-rent revenue:
Re-rent revenue reflects revenues from equipment that we rent from vendors and then rent to our customers. We account for such rentals as subleases. The accounting for re-rent revenue is the same as the accounting for owned equipment rentals described above.
Revenues from contracts with customers (Topic 606)
The accounting for the significant types of revenue that are accounted for under Topic 606 is discussed below.
Delivery and pick-up:
Delivery and pick-up revenue associated with renting equipment is recognized when the service is performed.
Sales of rental equipment, new equipment and contractor supplies
are recognized at the time of delivery to, or pick-up by, the customer and when collectibility is reasonably assured.
Service and other revenues
primarily represent revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). Service revenue is recognized as the services are performed.
See note
3
to our consolidated financial statements for further discussion of our revenue accounting.
Delivery Expense
Equipment rentals include our revenues from fees we charge for equipment delivery. Delivery costs are charged to operations as incurred, and are included in cost of revenues on our consolidated statements of income.
Advertising Expense
We promote our business through local and national advertising in various media, including television, trade publications, branded sponsorships, yellow pages, the internet, radio and direct mail. Advertising costs are generally expensed as incurred. These costs may include the development costs for branded content and advertising campaigns. Advertising expense, net of the qualified advertising reimbursements discussed below, was immaterial for the years ended
December 31, 2018
,
2017
and
2016
.
We receive reimbursements for advertising that promotes a vendor’s products or services. Such reimbursements that meet the applicable criteria under U.S. generally accepted accounting principles (“GAAP”) are offset against advertising costs in the period in which we recognize the incremental advertising cost. The amounts of qualified advertising reimbursements that reduced advertising expense were $
41
, $
35
and $
19
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
Insurance
We are insured for general liability, workers’ compensation and automobile liability, subject to deductibles or self-insured retentions per occurrence. Losses within the deductible amounts are accrued based upon the aggregate liability for reported claims incurred, as well as an estimated liability for claims incurred but not yet reported. These liabilities are not discounted. The Company is also self-insured for group medical claims but purchases “stop loss” insurance to protect itself from any one significant loss.
Income Taxes
We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities and are measured using the tax rates and laws that are expected to be in effect when the differences are expected to reverse. Recognition of deferred tax assets is limited to amounts considered by management to be more likely than not to be realized in future periods. The most significant positive evidence that we consider in the recognition of deferred tax assets is the expected reversal of cumulative deferred tax liabilities resulting from book versus tax depreciation of our rental equipment fleet that is well in excess of the deferred tax assets.
We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return regarding uncertainties in income tax positions. The first step is recognition: we determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority with full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than
50 percent
likely of being realized upon ultimate settlement. Differences between tax
positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset or an increase in a deferred tax liability.
The Tax Cuts and Jobs Act (the "Tax Act"), which was enacted in December 2017, had a substantial impact on our income tax benefit for the year ended December 31, 2017. The Tax Act reduced the U.S. federal statutory tax rate from 35 percent to 21 percent and the year ended
December 31, 2018
reflects the decreased tax rate. See note
13
to the consolidated financial statements for further detail.
We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes have been provided on such earnings. We continue to evaluate our plans for reinvestment or repatriation of unremitted foreign earnings and have not changed our previous indefinite reinvestment determination following the enactment of the Tax Act. We have not repatriated funds to the U.S. to satisfy domestic liquidity needs, nor do we anticipate the need to do so. The Tax Act requires a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments. As of
December 31, 2018
, we have computed a transition tax amount payable of $
62
, of which $
14
was included in other long-term liabilities on our consolidated balance sheet (we expect to settle the remaining payable amount by applying an overpayment of federal taxes).
We regularly review our cash positions and our determination of permanent reinvestment of foreign earnings. If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes, beyond the Tax Act's one-time transition tax.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates impact the calculation of the allowance for doubtful accounts, depreciation and amortization, income taxes, reserves for claims, loss contingencies (including legal contingencies) and the fair values of financial instruments. Actual results could materially differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain cash and cash equivalents with high quality financial institutions. Concentration of credit risk with respect to receivables is limited because a large number of geographically diverse customers makes up our customer base (see note
3
to our consolidated financial statements for further detail). We manage credit risk through credit approvals, credit limits and other monitoring procedures.
Stock-Based Compensation
We measure stock-based compensation at the grant date based on the fair value of the award and recognize stock-based compensation expense over the requisite service period. Determining the fair value of stock option awards requires judgment, including estimating stock price volatility, forfeiture rates and expected option life. Restricted stock awards are valued based on the fair value of the stock on the grant date and the related compensation expense is recognized over the service period. Similarly, for time-based restricted stock awards subject to graded vesting, we recognize compensation cost on a straight-line basis over the requisite service period. For performance-based restricted stock units ("RSUs"), compensation expense is recognized if satisfaction of the performance condition is considered probable. We recognize forfeitures of stock-based compensation as they occur. We adopted accounting guidance in 2017 that changed the cash flow presentation of excess tax benefits from share-based payment arrangements. For 2017 and 2018, the excess tax benefits from share-based payment arrangements are presented as a component of net cash provided by operating activities, while they are presented as a separate line item for 2016.
New Accounting Pronouncements
Leases
. In March 2016, the FASB issued guidance ("Topic 842") to increase transparency and comparability among organizations by requiring (1) recognition of lease assets and lease liabilities on the balance sheet and (2) disclosure of key information about leasing arrangements. Some changes to the lessor accounting guidance were made to align both of the following: (1) the lessor accounting guidance with certain changes made to the lessee accounting guidance and (2) key aspects of the lessor accounting model with revenue recognition guidance. Topic 842 is effective for fiscal years and interim periods beginning after December 15, 2018. A modified retrospective approach is required for adoption for all leases that exist at or commence after the date of initial application with an option to use certain practical expedients. We expect to use the package of practical expedients that allows us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2)
lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We additionally expect to use the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. We will adopt this guidance at the adoption date of January 1, 2019, using the transition method that allows us to initially apply Topic 842 as of January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We do not expect to recognize a material adjustment to retained earnings upon adoption. We are additionally assessing the impact of Topic 842 on our internal controls over financial reporting.
As discussed in note
3
to the consolidated financial statements, most of our equipment rental revenues, which accounted for
86
percent of total revenues for the year ended
December 31, 2018
, were accounted for under the current lease accounting standard ("Topic 840") through
December 31, 2018
and will be accounted for under Topic 842 upon adoption. We have concluded that no significant changes are expected to our revenue accounting upon adoption of Topic 842. See note
3
to the consolidated financial statements for a discussion of our revenue accounting (such discussion addresses our lease revenues).
We determine if an arrangement is a lease at inception. We lease real estate and equipment under operating leases. We lease a significant portion of our branch locations, and also lease other premises used for purposes such as district and regional offices and service centers. Our current capital lease obligations consist primarily of vehicle and building leases. The capital leases addressed in note
14
to the consolidated financial statements are expected to be accounted for as finance leases upon adoption of Topic 842, and we do not expect any significant changes to the accounting for such leases upon adoption. Under Topic 842, operating leases result in the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Under Topic 842, operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, upon adoption of Topic 842, we will use our estimated incremental borrowing rate at the commencement date to determine the present value of lease payments. The operating lease ROU assets will also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease that we are reasonably certain to exercise. Lease expense under Topic 842 will be recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, and we expect to account for the lease and non-lease components as a single lease component under Topic 842.
The adoption of Topic 842 will have a material impact on our consolidated balance sheet due to the recognition of the ROU assets and lease liabilities. The adoption of Topic 842 is not expected to have a material impact on our consolidated income statement (as noted above, although a significant portion of our revenue will be accounted for under Topic 842 upon adoption, no significant changes to our revenue accounting are expected upon adoption) or our consolidated cash flow statement. Because of the transition method we will use to adopt Topic 842, Topic 842 will not be applied to periods prior to adoption and the adoption of Topic 842 will have no impact on our previously reported results. The future minimum lease payments for our operating leases as of
December 31, 2018
are discussed in note
14
to the consolidated financial statements. The undiscounted total of such payments was
$707
. Upon adoption of Topic 842, we expect to recognize operating lease ROU assets and lease liabilities that reflect the present value of these future payments. After the adoption of Topic 842, we will first report the operating lease ROU assets and lease liabilities as of March 31, 2019 based on our lease portfolio as of that date.
The components of our historic lease expense and the future lease payments are discussed in note
14
to the consolidated financial statements. The capital leases addressed in note
14
are expected to be accounted for as finance leases upon adoption of Topic 842, and we do not expect any significant changes to the accounting for such leases upon adoption.
Measurement of Credit Losses on Financial Instruments.
In June 2016, the FASB issued guidance that will require companies to present assets held at amortized cost and available for sale debt securities net of the amount expected to be collected. The guidance requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectibility. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2019 and early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Different components of the guidance require modified retrospective or prospective adoption. This guidance does not apply to receivables arising from operating leases. As discussed in note
3
to our consolidated financial statements, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented
79
percent of our total revenues for the year ended
December 31, 2018
). We are currently assessing whether we will early adopt this guidance, and the impact on our financial statements, while limited to our non-operating lease receivables, is not currently estimable, as it will depend on market conditions and our forecast expectations upon, and following, adoption.
Simplifying the Test for Goodwill Impairment
. In January 2017, the FASB issued guidance intended to simplify the subsequent accounting for goodwill acquired in a business combination. Prior guidance required utilizing a two-step process to review goodwill for impairment. A second step was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of the reporting unit's goodwill
(as if purchase accounting were performed on the testing date) with the carrying amount of the goodwill. The new guidance eliminates the second step from the goodwill impairment test. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss should not exceed the total amount of goodwill allocated to the reporting unit). The guidance requires prospective adoption and will be effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption of this guidance is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently assessing whether we will early adopt. The guidance is not expected to have a significant impact on our financial statements.
Derivatives and Hedging
. In August 2017, the FASB issued guidance with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The guidance is additionally intended to simplify hedge accounting, and no longer requires separate measurement and reporting of hedge ineffectiveness. For cash flow and net investment hedges existing at the date of adoption, entities must apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings. The amended presentation and disclosure guidance is required prospectively. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2018, and we expect to adopt this guidance when effective. Given our currently limited use of derivative instruments, the guidance is not expected to have a significant impact on our financial statements.
Guidance Adopted in 2018
Revenue from Contracts with Customers
. See note
3
to our consolidated financial statements for a discussion of our revenue recognition accounting following our adoption in 2018 of FASB guidance addressing the principles for recognizing revenue.
Statement of Cash Flows.
In 2018, we retrospectively adopted guidance that was issued to reduce the diversity in the presentation of certain cash receipts and cash payments presented and classified in the statement of cash flows. The guidance addresses the following specific cash flow issues: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (6) distributions received from equity method investees, (7) beneficial interests in securitization transitions and (8) separately identifiable cash flows and application of predominance principle. The adoption of this guidance did not have a significant impact on our financial statements.
Intra-Entity Transfers of Assets Other Than Inventory.
In 2018, we adopted guidance that requires companies to recognize the income tax effects of intra-entity sales and transfers of assets other than inventory in the period in which the transfer occurs. The adoption of this guidance did not have a significant impact on our financial statements.
Clarifying the Definition of a Business
. In 2018, we adopted guidance that was issued to clarify the definition of a business with the objective of assisting entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is intended to make determining when a set of assets and activities is a business more consistent and cost-efficient. The future impact of this guidance will depend on the nature of our future activities, and fewer transactions may be treated as acquisitions (or disposals) of businesses after adoption.
Stock Compensation: Scope of Modification Accounting
. In 2018, we prospectively adopted guidance that was issued to provide clarity and reduce both the (1) diversity in practice and (2) cost and complexity when changing the terms or conditions of share-based payment awards. Under the updated guidance, a modification is defined as a change in the terms or conditions of a share-based payment award, and an entity should account for the effects of a modification unless all of the following are met:
1.
The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation techniques that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.
2.
The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified.
3.
The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.
The majority of our modifications relate to the acceleration of vesting conditions. The accounting for such modifications did not change under the adopted guidance, which did not have a significant impact on our financial statements.
3
. Revenue Recognition
Adoption of Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”
In May 2014, and in subsequent updates, the FASB issued guidance ("Topic 606") to clarify the principles for recognizing revenue. Topic 606 replaced Topic 605, which was the revenue recognition standard in effect through December 31, 2017. Topic 606 includes the required steps to achieve the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted Topic 606 on January 1, 2018, using the modified retrospective method. The adoption of Topic 606 did not result in any significant changes to our historic revenue accounting under Topic 605. Results for 2018 are presented under Topic 606, while results for 2017 and 2016 continue to reflect our historic accounting under Topic 605. No cumulative change to retained earnings was required upon adoption of Topic 606.
We applied the Topic 606 practical expedient that allows entities to not restate contracts that begin and are completed within the same annual reporting period. No other practical expedients associated with the adoption of Topic 606 were applied.
As discussed below, following the adoption of Topic 606, we recognized revenue in accordance with two different accounting standards: 1) Topic 606 and 2) Topic 840 (which addresses lease accounting. As discussed below, we will adopt an update to this standard on January 1, 2019). Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services.
As reflected below, most of our revenue is accounted for under Topic 840. Our contracts with customers generally do not include multiple performance obligations.
Nature of goods and services
In the following table, revenue is summarized by type and by the applicable accounting standard.
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Year Ended December 31,
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2018
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2017
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2016
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Topic 840
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Topic 606
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Total
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Topic 840
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Topic 605
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Total
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Topic 840
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Topic 605
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Total
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Revenues:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned equipment rentals
|
$
|
5,946
|
|
|
$
|
—
|
|
|
$
|
5,946
|
|
|
$
|
4,928
|
|
|
$
|
—
|
|
|
$
|
4,928
|
|
|
$
|
4,273
|
|
|
$
|
—
|
|
|
$
|
4,273
|
|
Re-rent revenue
|
138
|
|
|
—
|
|
|
138
|
|
|
106
|
|
|
—
|
|
|
106
|
|
|
93
|
|
|
—
|
|
|
93
|
|
Ancillary and other rental revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivery and pick-up
|
—
|
|
|
477
|
|
|
477
|
|
|
—
|
|
|
389
|
|
|
389
|
|
|
—
|
|
|
340
|
|
|
340
|
|
Other
|
287
|
|
|
92
|
|
|
379
|
|
|
228
|
|
|
64
|
|
|
292
|
|
|
186
|
|
|
49
|
|
|
235
|
|
Total ancillary and other rental revenues
|
287
|
|
|
569
|
|
|
856
|
|
|
228
|
|
|
453
|
|
|
681
|
|
|
186
|
|
|
389
|
|
|
575
|
|
Total equipment rentals
|
6,371
|
|
|
569
|
|
|
6,940
|
|
|
5,262
|
|
|
453
|
|
|
5,715
|
|
|
4,552
|
|
|
389
|
|
|
4,941
|
|
Sales of rental equipment
|
—
|
|
|
664
|
|
|
664
|
|
|
—
|
|
|
550
|
|
|
550
|
|
|
—
|
|
|
496
|
|
|
496
|
|
Sales of new equipment
|
—
|
|
|
208
|
|
|
208
|
|
|
—
|
|
|
178
|
|
|
178
|
|
|
—
|
|
|
144
|
|
|
144
|
|
Contractor supplies sales
|
—
|
|
|
91
|
|
|
91
|
|
|
—
|
|
|
80
|
|
|
80
|
|
|
—
|
|
|
79
|
|
|
79
|
|
Service and other revenues
|
—
|
|
|
144
|
|
|
144
|
|
|
—
|
|
|
118
|
|
|
118
|
|
|
—
|
|
|
102
|
|
|
102
|
|
Total revenues
|
$
|
6,371
|
|
|
$
|
1,676
|
|
|
$
|
8,047
|
|
|
$
|
5,262
|
|
|
$
|
1,379
|
|
|
$
|
6,641
|
|
|
$
|
4,552
|
|
|
$
|
1,210
|
|
|
$
|
5,762
|
|
Revenues by reportable segment and geographical market are presented in note
5
of the consolidated financial statements using the revenue captions reflected in our consolidated statements of operations. The majority of our revenue is recognized in
our general rentals segment and in the U.S. (for the year ended
December 31, 2018
,
81
percent and
92
percent of total revenues, respectively). We believe that the disaggregation of our revenue from contracts to customers as reflected above, coupled with the further discussion below and the reportable segment and geographical market disclosures in note
5
, depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
Lease revenues (Topic 840)
The accounting for the types of revenue that are accounted for under Topic 840 is discussed below. As discussed in note
2
to the consolidated financial statements, we will adopt Topic 842, which will replace Topic 840, on January 1, 2019. We have concluded that no significant changes are expected to our revenue accounting upon adoption of Topic 842.
Owned equipment rentals represent our most significant revenue type (they accounted for
74
percent of total revenues for the year ended
December 31, 2018
) and are governed by our standard rental contract. We account for such rentals as operating leases. The lease terms are included in our contracts, and the determination of whether our contracts contain leases generally does not require significant assumptions or judgments. Our lease revenues do not include material amounts of variable payments.
Owned equipment rentals:
Owned equipment rentals represent revenues from renting equipment that we own. We do not generally provide an option for the lessee to purchase the rented equipment at the end of the lease, and do not generate material revenue from sales of equipment under such options.
We recognize revenues from renting equipment on a straight-line basis. Our rental contract periods are hourly, daily, weekly or monthly. By way of example, if a customer were to rent a piece of equipment and the daily, weekly and monthly rental rates for that particular piece were (in actual dollars) $
100
, $
300
and $
900
, respectively, we would recognize revenue of $
32.14
per day. The daily rate for recognition purposes is calculated by dividing the monthly rate of $
900
by the monthly term of
28
days. This daily rate assumes that the equipment will be on rent for the full
28
days, as we are unsure of when the customer will return the equipment and therefore unsure of which rental contract period will apply.
As part of this straight-line methodology, when the equipment is returned, we recognize as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the equipment was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, we will have customers return equipment and be contractually required to pay us more than the cumulative amount of revenue recognized to date under the straight-line methodology. For instance, continuing the above example, if the customer rented the above piece of equipment on December 29 and returned it at the close of business on January 1, we would recognize incremental revenue on January 1 of $
171.44
(in actual dollars, representing the difference between the amount the customer is contractually required to pay, or $
300
at the weekly rate, and the cumulative amount recognized to date on a straight-line basis, or $
128.56
, which represents
four
days at $
32.14
per day).
We record amounts billed to customers in excess of recognizable revenue as deferred revenue on our balance sheet. We had deferred revenue (associated with both Topic 840 and Topic 606/605) of
$56
and
$46
as of
December 31, 2018
and
2017
, respectively.
As noted above, we are unsure of when the customer will return rented equipment. As such, we do not know how much the customer will owe us upon return of the equipment and cannot provide a maturity analysis of future lease payments. Our equipment is generally rented for short periods of time (significantly less than a year). Lessees do not provide residual value guarantees on rented equipment.
We expect to derive significant future benefits from our equipment following the end of the rental term. Our rentals are generally short-term in nature, and our equipment is typically rented for the majority of the time that we own it. We manage our rental fleet utilizing a life-cycle approach that focuses on satisfying customer demand and optimizing utilization levels. We use this approach to manage residual value risk upon disposition of our rental equipment. As part of this life-cycle approach, we closely monitor repair and maintenance expense and can anticipate, based on our extensive experience with a large and diverse fleet, the optimum time to dispose of an asset. We generally expect to recognize significant future equipment rental revenue from our equipment following the end of the rental term. Additionally, we recognize revenue from sales of rental equipment when we dispose of the equipment.
Re-rent revenue:
Re-rent revenue reflects revenues from equipment that we rent from vendors and then rent to our customers. We account for such rentals as subleases. The accounting for re-rent revenue is the same as the accounting for owned equipment rentals described above.
“Other”
equipment rental revenue is primarily comprised of 1) Rental Protection Plan (or "RPP") revenue associated with the damage waiver customers can purchase when they rent our equipment to protect against potential loss or damage, 2) environmental charges associated with the rental of equipment, and 3) charges for rented equipment that is damaged by our customers.
Revenues from contracts with customers (Topic 606)
The accounting for the types of revenue that are accounted for under Topic 606 is discussed below. Substantially all of our revenues under Topic 606 are recognized at a point-in-time rather than over time.
Delivery and pick-up:
Delivery and pick-up revenue associated with renting equipment is recognized when the service is performed.
“Other”
equipment rental revenue is primarily comprised of revenues associated with the consumption of fuel by our customers which are recognized when the equipment is returned by the customer (and consumption, if any, can be measured).
Sales of rental equipment, new equipment and contractor supplies
are recognized at the time of delivery to, or pick-up by, the customer and when collectibility is reasonably assured.
Service and other revenues
primarily represent revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). Service revenue is recognized as the services are performed.
Receivables and contract assets and liabilities
As reflected above, most of our equipment rental revenue is accounted for under Topic 840 (such revenue represented
79
percent of our total revenues for the year ended
December 31, 2018
). The customers that are responsible for the remaining revenue that is accounted for under Topic 606 are generally the same customers that rent our equipment. We manage credit risk associated with our accounts receivables at the customer level. Because the same customers generate the revenues that are accounted for under both Topic 606 and Topic 840, the discussions below on credit risk and our allowances for doubtful accounts address our total revenues from Topic 606 (Topic 605 for 2017 and 2016) and Topic 840.
Concentration of credit risk with respect to our receivables is limited because a large number of geographically diverse customers makes up our customer base. Our largest customer accounted for less than
one percent
of total revenues in each of
2018
,
2017
, and
2016
. Our customer with the largest receivable balance represented approximately
one percent
of total receivables at
December 31, 2018
and
2017
. We manage credit risk through credit approvals, credit limits and other monitoring procedures.
Our allowances for doubtful accounts reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience. Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowances. Trade receivables that have contractual maturities of one year or less are written-off when they are determined to be uncollectible based on the criteria necessary to qualify as a deduction for federal tax purposes. Write-offs of such receivables require management approval based on specified dollar thresholds. During the years ended
December 31, 2018
,
2017
and
2016
, we recognized expenses of
$45
,
$40
and
$24
, respectively, primarily within selling, general and administrative expenses in our consolidated statements of income, associated with our allowances for doubtful accounts.
We do not have material contract assets, or impairment losses associated therewith, or material contract liabilities, associated with contracts with customers. Our contracts with customers do not generally result in material amounts billed to customers in excess of recognizable revenue. We did not recognize material revenue during the year ended
December 31, 2018
that was included in the contract liability balance as of the beginning of such period.
Performance obligations
Most of our Topic 606 revenue is recognized at a point-in-time, rather than over time. Accordingly, in any particular period, we do not generally recognize a significant amount of revenue from performance obligations satisfied (or partially satisfied) in previous periods, and the amount of such revenue recognized during the year ended
December 31, 2018
was not material. We also do not expect to recognize material revenue in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of
December 31, 2018
.
Payment terms
Our Topic 606 revenues do not include material amounts of variable consideration. Our payment terms vary by the type and location of our customer and the products or services offered. The time between invoicing and when payment is due is not significant. Our contracts do not generally include a significant financing component. For certain products or services and customer types, we require payment before the products or services are delivered to the customer. Our contracts with customers do not generally result in significant obligations associated with returns, refunds or warranties. See above for a discussion of how we manage credit risk.
Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities.
Contract costs
We do not recognize any assets associated with the incremental costs of obtaining a contract with a customer (for example, a sales commission) that we expect to recover. Most of our revenue is recognized at a point-in-time or over a period of one year or less, and we use the practical expedient that allows us to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less.
Contract estimates and judgments
Our revenues accounted for under Topic 606 generally do not require significant estimates or judgments, primarily for the following reasons:
|
|
•
|
The transaction price is generally fixed and stated on our contracts;
|
|
|
•
|
As noted above, our contracts generally do not include multiple performance obligations, and accordingly do not generally require estimates of the standalone selling price for each performance obligation;
|
|
|
•
|
Our revenues do not include material amounts of variable consideration, or result in significant obligations associated with returns, refunds or warranties; and
|
|
|
•
|
Most of our revenue is recognized as of a point-in-time and the timing of the satisfaction of the applicable performance obligations is readily determinable. As noted above, our Topic 606 revenue is generally recognized at the time of delivery to, or pick-up by, the customer.
|
We monitor and review our estimated standalone selling prices on a regular basis.
4
. Acquisitions
NES Acquisition
In April 2017, we completed the acquisition of NES Rentals Holdings II, Inc. (“NES”). NES was a provider of rental equipment with
73
branches located throughout the eastern half of the U.S., and had approximately
1,100
employees and approximately $
900
of rental assets at original equipment cost as of December 31, 2016. NES had annual revenues of approximately $
369
. The acquisition:
•
Increased our density in strategically important markets, including the East Coast, Gulf States and the Midwest;
•
Strengthened our relationships with local and strategic accounts in the construction and industrial sectors, which we expect will enhance cross-selling opportunities and drive revenue synergies; and
•
Created meaningful opportunities for cost synergies in areas such as corporate overhead, operational efficiencies and purchasing.
The aggregate consideration paid to holders of NES common stock and options was approximately $
960
. The acquisition and related fees and expenses were funded through drawings on our senior secured asset-based revolving credit facility (“ABL facility”) and new debt issuances.
The following table summarizes the fair values of the assets acquired and liabilities assumed.
|
|
|
|
|
Accounts receivable, net of allowance for doubtful accounts (1)
|
$
|
49
|
|
Inventory
|
4
|
|
Rental equipment
|
571
|
|
Property and equipment
|
48
|
|
Intangibles (2)
|
139
|
|
Other assets
|
7
|
|
Total identifiable assets acquired
|
818
|
|
Short-term debt and current maturities of long-term debt (3)
|
(3
|
)
|
Current liabilities
|
(33
|
)
|
Deferred taxes
|
(15
|
)
|
Long-term debt (3)
|
(11
|
)
|
Other long-term liabilities
|
(5
|
)
|
Total liabilities assumed
|
(67
|
)
|
Net identifiable assets acquired
|
751
|
|
Goodwill (4)
|
209
|
|
Net assets acquired
|
$
|
960
|
|
(1)
The fair value of accounts receivables acquired was $
49
, and the gross contractual amount was $
53
. We estimated that $
4
would be uncollectible.
(2)
The following table reflects the estimated fair values and useful lives of the acquired intangible assets identified based on our purchase accounting assessments:
|
|
|
|
|
|
|
Fair value
|
Life (years)
|
Customer relationships
|
$
|
138
|
|
10
|
Non-compete agreements
|
1
|
|
1
|
Total
|
$
|
139
|
|
|
(3)
The acquired debt reflects capital lease obligations.
(4)
All of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of NES's going-concern value, the value of NES's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $
1
of goodwill is expected to be deductible for income tax purposes.
The years ended
December 31, 2018
and 2017 include NES acquisition-related costs which are included in “Merger related costs” in our consolidated statements of income. The merger related costs are comprised of financial and legal advisory fees. In addition to the acquisition-related costs reflected in our consolidated statements of income, the debt issuance costs and the original issue premiums associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets.
Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired NES locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of NES since the acquisition date. The impact of the NES acquisition on our equipment rentals revenue is primarily reflected in the increase in the volume of OEC on rent of
18.8
percent for the year ended
December 31, 2018
(such increase also includes the impact of the acquisitions of Neff Corporation ("Neff"), BakerCorp and Vander Holding Corporation and its subsidiaries (“BlueLine”) discussed below).
Neff Acquisition
In October 2017, we completed the acquisition of Neff. Neff was a provider of earthmoving, material handling, aerial and other equipment, and had
69
branches located in
14
states, with a concentration in southern geographies. Neff had approximately
1,100
employees and approximately $
860
of rental assets at original equipment cost as of September 30, 2017. Neff had annual revenues of approximately $
413
. The acquisition augmented our earthmoving capabilities and efficiencies of scale in key market areas, particularly fast-growing southern geographies, and created opportunities for revenue synergies through the cross-selling of our broader fleet.
The aggregate consideration paid to holders of Neff common stock and options was approximately
$1.316 billion
(including $
7
of stock consideration associated with Neff stock options and restricted stock units which were converted into United Rentals stock options). The acquisition and related fees and expenses were primarily funded through new debt issuances.
The following table summarizes the fair values of the assets acquired and liabilities assumed.
|
|
|
|
|
Accounts receivable, net of allowance for doubtful accounts (1)
|
$
|
72
|
|
Inventory
|
5
|
|
Rental equipment
|
550
|
|
Property and equipment
|
45
|
|
Intangibles (customer relationships) (2)
|
153
|
|
Other assets
|
5
|
|
Total identifiable assets acquired
|
830
|
|
Current liabilities
|
(62
|
)
|
Deferred taxes
|
(36
|
)
|
Other long-term liabilities
|
(3
|
)
|
Total liabilities assumed
|
(101
|
)
|
Net identifiable assets acquired
|
729
|
|
Goodwill (3)
|
587
|
|
Net assets acquired
|
$
|
1,316
|
|
(1)
The fair value of accounts receivables acquired was $
72
, and the gross contractual amount was $
74
. We estimated that $
2
would be uncollectible.
(2)
The customer relationships are being amortized over a
10
year life.
(3)
All of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of Neff's going-concern value, the value of Neff's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $
320
of goodwill is expected to be deductible for income tax purposes.
The years ended
December 31, 2018
and 2017 include Neff acquisition-related costs which are included in “Merger related costs” in our consolidated statements of income. The merger related costs are primarily comprised of financial and legal advisory fees, and also include a termination fee we paid associated with a merger agreement Neff entered into with a prior bidder. In addition to the acquisition-related costs reflected in our consolidated statements of income, the debt issuance costs and the original issue premiums associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets.
Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired Neff locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of Neff since the acquisition date. The impact of the Neff acquisition on our equipment rentals revenue is primarily reflected in the increase in the volume of OEC on rent of
18.8
percent for the year ended
December 31, 2018
(such increase also includes the impact of the acquisition of NES discussed above and the acquisitions of BakerCorp and BlueLine discussed below).
BakerCorp Acquisition
In July 2018, we completed the acquisition of BakerCorp. BakerCorp was a leading multinational provider of tank, pump, filtration and trench shoring rental solutions for a broad range of industrial and construction applications. BakerCorp had approximately
950
employees, and its operations were primarily concentrated in the United States and Canada, where it had
46
locations. BakerCorp also had
11
locations in France, Germany, the United Kingdom and the Netherlands. BakerCorp had annual revenues of approximately $
295
. The acquisition is expected to:
•
Augment our bundled solutions for fluid storage, transfer and treatment;
•
Expand our strategic account base; and
•
Provide a significant opportunity to increase revenue and enhance customer service by cross-selling to our broader customer base.
The aggregate consideration paid was approximately $
720
. The acquisition and related fees and expenses were funded through drawings on our ABL facility.
The following table summarizes the fair values of the assets acquired and liabilities assumed. The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period.
|
|
|
|
|
Accounts receivable, net of allowance for doubtful accounts (1)
|
$
|
74
|
|
Inventory
|
5
|
|
Rental equipment
|
268
|
|
Property and equipment
|
25
|
|
Intangibles (2)
|
171
|
|
Other assets
|
4
|
|
Total identifiable assets acquired
|
547
|
|
Current liabilities
|
(61
|
)
|
Deferred taxes
|
(13
|
)
|
Total liabilities assumed
|
(74
|
)
|
Net identifiable assets acquired
|
473
|
|
Goodwill (3)
|
247
|
|
Net assets acquired
|
$
|
720
|
|
(1)
The fair value of accounts receivables acquired was $
74
, and the gross contractual amount was $
80
. We estimated that $
6
would be uncollectible.
(2)
The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our purchase accounting assessments:
|
|
|
|
|
|
|
Fair value
|
Life (years)
|
Customer relationships
|
$
|
166
|
|
8
|
Trade names and associated trademarks
|
5
|
|
5
|
Total
|
$
|
171
|
|
|
(3)
All of the goodwill was assigned to our trench, power and fluid solutions segment. The level of goodwill that resulted from the acquisition is primarily reflective of BakerCorp's going-concern value, the value of BakerCorp's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $
6
of goodwill is expected to be deductible for income tax purposes.
The year ended
December 31, 2018
includes BakerCorp acquisition-related costs which are included in “Merger related costs” in our condensed consolidated statements of income. The merger related costs are comprised of financial and legal advisory fees.
Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired BakerCorp locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of BakerCorp since the acquisition date. The impact of the BakerCorp acquisition on our equipment rentals revenue is primarily reflected in the increase in the volume of OEC on rent of
18.8
percent for the year ended
December 31, 2018
(such increase also includes the impact of the acquisition of NES and Neff discussed above and the acquisition of BlueLine discussed below).
BlueLine Acquisition
In October 2018, we completed the acquisition of BlueLine. BlueLine was one of the
ten
largest equipment rental companies in North America and served customers in the construction and industrial sectors with a focus on mid-sized and local accounts. BlueLine had
114
locations and over
1,700
employees based in
25
U.S. states, Canada and Puerto Rico. BlueLine had annual revenues of approximately $
786
. The acquisition is expected to:
•
Expand our equipment rental capacity in many of the largest metropolitan areas in North America, including both U.S. coasts, the Gulf South and Ontario;
•
Provide a well-diversified customer base with a balanced mix of commercial construction and industrial accounts;
•
Add more mid-sized and local accounts to our customer base; and
•
Provide a significant opportunity to increase revenue and enhance customer service by cross-selling to our
broader customer base.
The aggregate consideration paid was approximately $
2.068 billion
. The acquisition and related fees and expenses were funded through borrowings under a new
$1 billion
senior secured term loan credit facility (the “term loan facility”) and the issuance of
$1.1 billion
principal amount of 6
1
/
2
percent Senior Notes due 2026.
The following table summarizes the fair values of the assets acquired and liabilities assumed. The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period.
|
|
|
|
|
Accounts receivable, net of allowance for doubtful accounts (1)
|
$
|
117
|
|
Inventory
|
8
|
|
Rental equipment
|
1,081
|
|
Property and equipment
|
72
|
|
Intangibles (customer relationships) (2)
|
230
|
|
Other assets
|
39
|
|
Total identifiable assets acquired
|
1,547
|
|
Short-term debt and current maturities of long-term debt (3)
|
(12
|
)
|
Current liabilities
|
(124
|
)
|
Deferred taxes
|
(4
|
)
|
Long-term debt (3)
|
(25
|
)
|
Other long-term liabilities
|
(4
|
)
|
Total liabilities assumed
|
(169
|
)
|
Net identifiable assets acquired
|
1,378
|
|
Goodwill (4)
|
690
|
|
Net assets acquired
|
$
|
2,068
|
|
(1)
The fair value of accounts receivables acquired was $
117
, and the gross contractual amount was $
125
. We estimated that $
8
would be uncollectible.
(2)
The customer relationships are being amortized over a
5
year life.
(3)
The acquired debt reflects capital lease obligations.
(4)
All of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of BlueLine's going-concern value, the value of BlueLine's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $
17
of goodwill is expected to be deductible for income tax purposes.
The year ended
December 31, 2018
includes BlueLine acquisition-related costs which are included in “Merger related costs” in our condensed consolidated statements of income. The merger related costs are comprised of financial and legal advisory fees. In addition to the acquisition-related costs reflected in our consolidated statements of income, the debt issuance costs associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets.
Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired BlueLine locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of BlueLine since the acquisition date. The impact of the BlueLine acquisition on our equipment rentals revenue is primarily reflected in the increase in the volume of OEC on rent of
18.8
percent for the year ended
December 31, 2018
(such increase also includes the impact of the acquisitions of NES, Neff and BakerCorp discussed above).
Pro forma financial information
The pro forma information below gives effect to the NES, Neff, BakerCorp and BlueLine acquisitions as if they had been completed on January 1, 2017 (“the pro forma acquisition date”). The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, and also does not reflect additional revenue opportunities following the acquisitions. The pro forma information includes adjustments to record the assets and liabilities of NES, Neff, BakerCorp and BlueLine at their respective fair values based on available information and to give effect to the financing for the acquisitions and related transactions. The pro forma
adjustments reflected in the table below are subject to change as additional analysis is performed. The acquisition measurement periods for NES and Neff have ended and the values assigned to the NES and Neff assets acquired and liabilities assumed are final. The opening balance sheet values assigned to the BakerCorp and BlueLine assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement periods. Increases or decreases in the estimated fair values of the net assets acquired may impact our statements of income in future periods. The table below presents unaudited pro forma consolidated income statement information as if NES, Neff, BakerCorp and BlueLine had been included in our consolidated results for the entire periods reflected. NES and Neff are excluded from the 2018 presentation because they were included in our results for the entire year ended
December 31, 2018
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
|
United Rentals
|
|
BakerCorp
|
|
BlueLine
|
|
Total
|
|
United Rentals
|
|
NES
|
|
Neff
|
|
BakerCorp
|
|
BlueLine
|
|
Total
|
|
Historic/pro forma revenues
|
$
|
8,047
|
|
|
$
|
184
|
|
|
$
|
665
|
|
|
$
|
8,896
|
|
|
$
|
6,641
|
|
|
$
|
81
|
|
|
$
|
312
|
|
|
$
|
276
|
|
|
$
|
727
|
|
|
$
|
8,037
|
|
|
Historic/combined pretax income (loss)
|
1,476
|
|
|
(84
|
)
|
|
(169
|
)
|
|
1,223
|
|
|
1,048
|
|
|
(12
|
)
|
|
38
|
|
|
(69
|
)
|
|
(132
|
)
|
|
873
|
|
|
Pro forma adjustments to pretax income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of fair value mark-ups/useful life changes on depreciation (1)
|
|
|
(8
|
)
|
|
(60
|
)
|
|
(68
|
)
|
|
|
|
(9
|
)
|
|
(8
|
)
|
|
(13
|
)
|
|
(72
|
)
|
|
(102
|
)
|
|
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(25
|
)
|
|
(27
|
)
|
|
Intangible asset amortization (3)
|
|
|
(18
|
)
|
|
(49
|
)
|
|
(67
|
)
|
|
|
|
(6
|
)
|
|
(21
|
)
|
|
(41
|
)
|
|
(77
|
)
|
|
(145
|
)
|
|
Goodwill impairment (4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
|
Interest expense (5)
|
|
|
(14
|
)
|
|
(92
|
)
|
|
(106
|
)
|
|
|
|
(9
|
)
|
|
(51
|
)
|
|
(19
|
)
|
|
(103
|
)
|
|
(182
|
)
|
|
Elimination of historic interest (6)
|
|
|
30
|
|
|
106
|
|
|
136
|
|
|
|
|
12
|
|
|
34
|
|
|
41
|
|
|
154
|
|
|
241
|
|
|
Elimination of merger related costs (7)
|
|
|
67
|
|
|
166
|
|
|
233
|
|
|
|
|
17
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
Restructuring charges (8)
|
|
|
9
|
|
|
13
|
|
|
22
|
|
|
|
|
(3
|
)
|
|
(6
|
)
|
|
(9
|
)
|
|
(13
|
)
|
|
(31
|
)
|
|
Pro forma pretax income
|
|
|
|
|
|
|
$
|
1,354
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
709
|
|
|
(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of the equipment acquired in the NES, Neff, BakerCorp and BlueLine acquisitions.
(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the NES, Neff and BlueLine acquisitions. BakerCorp did not historically recognize a material amount of rental equipment sales, and accordingly no adjustment was required for BakerCorp.
(3) The intangible assets acquired in the NES, Neff, BakerCorp and BlueLine acquisitions were amortized.
(4) The goodwill impairment charge that BakerCorp recognized during the year ended December 31, 2017 was eliminated. If the acquisition had occurred as of the pro forma acquisition date, this impairment charge would not have been recognized (instead, we would have tested for goodwill impairment based on the post-acquisition reporting unit structure).
(5) As discussed above, we issued debt to partially fund the NES, Neff, BakerCorp and BlueLine acquisitions. Interest expense was adjusted to reflect these changes in our debt portfolio.
(6) Historic interest, including losses on repurchase/redemption of debt securities, on debt that is not part of the combined entity was eliminated.
(7) Merger related costs primarily comprised of financial and legal advisory fees associated with the NES, Neff, BakerCorp and BlueLine were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date. The merger related costs also include a termination fee we paid associated with a merger agreement Neff entered into with a prior bidder. The adjustment for BakerCorp for the year ended
December 31, 2018
includes $
57
of merger related costs recognized by BakerCorp prior to the acquisition. The adjustment for BlueLine for the year ended
December 31, 2018
includes $
142
of merger related costs recognized by BlueLine prior to the acquisition.
(8) We expect to recognize restructuring charges primarily comprised of severance costs and branch closure charges associated with the acquisitions over a period of approximately one year following the acquisition dates, which, for the pro forma presentation, was January 1, 2017. The adjustments above reflect the timing of the actual restructuring charges following the acquisitions (the pro forma restructuring charges above for the year ended
December 31, 2017
reflect the actual restructuring charges recognized during year following the acquisitions). The restructuring charges reflected in our consolidated statements of income also include non acquisition-related restructuring charges, as discussed in note
6
to the consolidated financial statements. We do not expect to recognize significant additional restructuring charges associated with the NES and Neff acquisitions. We expect to recognize additional restructuring charges associated with the BakerCorp and BlueLine acquisition, however the total costs expected to be incurred are not currently estimable, as we are still identifying the actions that will be undertaken.
5
. Segment Information
Our
two
reportable segments are i) general rentals and ii) trench, power and fluid solutions. The general rentals segment includes the rental of i) general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earthmoving equipment and material handling equipment, ii) aerial work platforms, such as boom lifts and scissor lifts and iii) general tools and light equipment, such as pressure washers, water pumps and power tools. The general rentals segment reflects the aggregation of
11
geographic regions—Carolinas, Gulf South, Industrial (which serves the geographic Gulf region and has a strong industrial presence), Mid-Atlantic, Mid Central, Midwest, Northeast, Pacific West, South, Southeast and Western Canada—and operates throughout the United States and Canada. We periodically review the size and geographic scope of our regions, and have occasionally reorganized the regions to create a more balanced and effective structure.
The trench, power and fluid solutions segment includes the rental of specialty construction products such as i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment and iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment. The trench, power and fluid solutions segment is comprised of the following regions, each of which primarily rents the corresponding equipment type described above: i) the Trench Safety region, ii) the Power and HVAC region, iii) the Fluid Solutions region and iv) the Fluid Solutions Europe region. The trench, power and fluid solutions segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This segment operates throughout the United States and in Canada and Europe.
The following table presents the percentage of equipment rental revenue by equipment type for the years ended
December 31, 2018
,
2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
Primarily rented by our general rentals segment:
|
|
|
|
|
|
General construction and industrial equipment
|
44
|
%
|
|
43
|
%
|
|
43
|
%
|
Aerial work platforms
|
28
|
%
|
|
32
|
%
|
|
32
|
%
|
General tools and light equipment
|
8
|
%
|
|
7
|
%
|
|
8
|
%
|
Primarily rented by our trench, power and fluid solutions segment:
|
|
|
|
|
|
Power and HVAC equipment
|
8
|
%
|
|
7
|
%
|
|
7
|
%
|
Trench safety equipment
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
Fluid solutions equipment
|
6
|
%
|
|
5
|
%
|
|
4
|
%
|
These segments align our external segment reporting with how management evaluates business performance and allocates resources. We evaluate segment performance based on segment equipment rentals gross profit.
The accounting policies for our segments are the same as those described in the summary of significant accounting policies in note
2
. Certain corporate costs, including those related to selling, finance, legal, risk management, human resources, corporate management and information technology systems, are deemed to be of an operating nature and are allocated to our segments based primarily on rental fleet size.
The following table sets forth financial information by segment as of and for the years ended
December 31, 2018
,
2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
rentals
|
|
Trench,
power and fluid solutions
|
|
Total
|
2018
|
|
|
|
|
|
Equipment rentals
|
$
|
5,550
|
|
|
$
|
1,390
|
|
|
$
|
6,940
|
|
Sales of rental equipment
|
619
|
|
|
45
|
|
|
664
|
|
Sales of new equipment
|
186
|
|
|
22
|
|
|
208
|
|
Contractor supplies sales
|
68
|
|
|
23
|
|
|
91
|
|
Service and other revenues
|
127
|
|
|
17
|
|
|
144
|
|
Total revenue
|
6,550
|
|
|
1,497
|
|
|
8,047
|
|
Depreciation and amortization expense
|
1,410
|
|
|
261
|
|
|
1,671
|
|
Equipment rentals gross profit
|
2,293
|
|
|
670
|
|
|
2,963
|
|
Capital expenditures
|
1,980
|
|
|
311
|
|
|
2,291
|
|
Total assets
|
$
|
15,597
|
|
|
$
|
2,536
|
|
|
$
|
18,133
|
|
2017
|
|
|
|
|
|
Equipment rentals
|
$
|
4,727
|
|
|
$
|
988
|
|
|
$
|
5,715
|
|
Sales of rental equipment
|
509
|
|
|
41
|
|
|
550
|
|
Sales of new equipment
|
159
|
|
|
19
|
|
|
178
|
|
Contractor supplies sales
|
65
|
|
|
15
|
|
|
80
|
|
Service and other revenues
|
105
|
|
|
13
|
|
|
118
|
|
Total revenue
|
5,565
|
|
|
1,076
|
|
|
6,641
|
|
Depreciation and amortization expense
|
1,188
|
|
|
195
|
|
|
1,383
|
|
Equipment rentals gross profit
|
1,950
|
|
|
490
|
|
|
2,440
|
|
Capital expenditures
|
1,675
|
|
|
214
|
|
|
1,889
|
|
Total assets
|
$
|
13,351
|
|
|
$
|
1,679
|
|
|
$
|
15,030
|
|
2016
|
|
|
|
|
|
Equipment rentals
|
$
|
4,166
|
|
|
$
|
775
|
|
|
$
|
4,941
|
|
Sales of rental equipment
|
459
|
|
|
37
|
|
|
496
|
|
Sales of new equipment
|
128
|
|
|
16
|
|
|
144
|
|
Contractor supplies sales
|
64
|
|
|
15
|
|
|
79
|
|
Service and other revenues
|
91
|
|
|
11
|
|
|
102
|
|
Total revenue
|
4,908
|
|
|
854
|
|
|
5,762
|
|
Depreciation and amortization expense
|
1,066
|
|
|
179
|
|
|
1,245
|
|
Equipment rentals gross profit
|
1,725
|
|
|
364
|
|
|
2,089
|
|
Capital expenditures
|
1,189
|
|
|
150
|
|
|
1,339
|
|
Total assets
|
$
|
10,496
|
|
|
$
|
1,492
|
|
|
$
|
11,988
|
|
Equipment rentals gross profit is the primary measure management reviews to make operating decisions and assess segment performance. The following is a reconciliation of equipment rentals gross profit to income before provision (benefit) for income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
Total equipment rentals gross profit
|
$
|
2,963
|
|
|
$
|
2,440
|
|
|
$
|
2,089
|
|
Gross profit from other lines of business
|
401
|
|
|
329
|
|
|
314
|
|
Selling, general and administrative expenses
|
(1,038
|
)
|
|
(903
|
)
|
|
(719
|
)
|
Merger related costs
|
(36
|
)
|
|
(50
|
)
|
|
—
|
|
Restructuring charge
|
(31
|
)
|
|
(50
|
)
|
|
(14
|
)
|
Non-rental depreciation and amortization
|
(308
|
)
|
|
(259
|
)
|
|
(255
|
)
|
Interest expense, net
|
(481
|
)
|
|
(464
|
)
|
|
(511
|
)
|
Other income, net
|
6
|
|
|
5
|
|
|
5
|
|
Income before provision (benefit) for income taxes
|
$
|
1,476
|
|
|
$
|
1,048
|
|
|
$
|
909
|
|
We operate in the United States, Canada and Europe. As discussed in note
4
to the consolidated financial statements, in July 2018, we completed the acquisition of BakerCorp, which allowed for our entry into select European markets. Our presence in Europe is limited, and the foreign information in the table below primarily reflects Canada. The following table presents geographic area information for the years ended
December 31, 2018
,
2017
and
2016
, except for balance sheet information, which is presented as of
December 31, 2018
and
2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
Foreign
|
|
Total
|
2018
|
|
|
|
|
|
Equipment rentals
|
$
|
6,388
|
|
|
$
|
552
|
|
|
$
|
6,940
|
|
Sales of rental equipment
|
609
|
|
|
55
|
|
|
664
|
|
Sales of new equipment
|
184
|
|
|
24
|
|
|
208
|
|
Contractor supplies sales
|
80
|
|
|
11
|
|
|
91
|
|
Service and other revenues
|
126
|
|
|
18
|
|
|
144
|
|
Total revenue
|
7,387
|
|
|
660
|
|
|
8,047
|
|
Rental equipment, net
|
8,910
|
|
|
690
|
|
|
9,600
|
|
Property and equipment, net
|
559
|
|
|
55
|
|
|
614
|
|
Goodwill and other intangibles, net
|
$
|
5,665
|
|
|
$
|
477
|
|
|
$
|
6,142
|
|
2017
|
|
|
|
|
|
Equipment rentals
|
$
|
5,253
|
|
|
$
|
462
|
|
|
$
|
5,715
|
|
Sales of rental equipment
|
494
|
|
|
56
|
|
|
550
|
|
Sales of new equipment
|
157
|
|
|
21
|
|
|
178
|
|
Contractor supplies sales
|
70
|
|
|
10
|
|
|
80
|
|
Service and other revenues
|
102
|
|
|
16
|
|
|
118
|
|
Total revenue
|
6,076
|
|
|
565
|
|
|
6,641
|
|
Rental equipment, net
|
7,264
|
|
|
560
|
|
|
7,824
|
|
Property and equipment, net
|
425
|
|
|
42
|
|
|
467
|
|
Goodwill and other intangibles, net
|
$
|
4,642
|
|
|
$
|
315
|
|
|
$
|
4,957
|
|
2016
|
|
|
|
|
|
Equipment rentals
|
$
|
4,524
|
|
|
$
|
417
|
|
|
$
|
4,941
|
|
Sales of rental equipment
|
444
|
|
|
52
|
|
|
496
|
|
Sales of new equipment
|
129
|
|
|
15
|
|
|
144
|
|
Contractor supplies sales
|
68
|
|
|
11
|
|
|
79
|
|
Service and other revenues
|
87
|
|
|
15
|
|
|
102
|
|
Total revenue
|
$
|
5,252
|
|
|
$
|
510
|
|
|
$
|
5,762
|
|
6
. Restructuring Charges
Restructuring charges primarily include severance costs associated with headcount reductions, as well as branch closure charges which principally relate to continuing lease obligations at vacant facilities. We incur severance costs and branch closure charges in the ordinary course of our business. We only include such costs that are part of a restructuring program as restructuring charges. Since the first such restructuring program was initiated in 2008, we have completed
three
programs and have incurred total restructuring charges of
$315
.
Closed Restructuring Programs
We have
three
closed restructuring programs. The first was initiated in 2008 in recognition of a challenging economic environment and was completed in 2011. The second was initiated following the April 30, 2012 acquisition of RSC Holdings Inc. ("RSC"), and was completed in 2013. The third was initiated in the fourth quarter of 2015 in response to challenges in our operating environment. In particular, during 2015, we experienced volume and pricing pressure in our general rental business and our Fluid Solutions region associated with upstream oil and gas customers. Additionally, our Lean initiatives did not fully generate the anticipated cost savings due to lower than expected growth. In 2016, we achieved the anticipated run rate savings from the Lean initiatives, and this restructuring program was completed in 2016.
The table below provides certain information concerning our restructuring charges under the closed restructuring programs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Beginning
Reserve Balance
|
|
Charged to
Costs and
Expenses (1)
|
|
Payments
and Other
|
|
Ending
Reserve Balance
|
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
Branch closure charges
|
|
$
|
13
|
|
|
$
|
10
|
|
|
$
|
(7
|
)
|
|
$
|
16
|
|
Severance costs
|
|
3
|
|
|
4
|
|
|
(6
|
)
|
|
1
|
|
Total
|
|
$
|
16
|
|
|
$
|
14
|
|
|
$
|
(13
|
)
|
|
$
|
17
|
|
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
Branch closure charges
|
|
$
|
16
|
|
|
$
|
2
|
|
|
$
|
(5
|
)
|
|
$
|
13
|
|
Severance costs
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
Total
|
|
$
|
17
|
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
$
|
13
|
|
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
Branch closure charges
|
|
$
|
13
|
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
|
$
|
8
|
|
Severance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
13
|
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
|
$
|
8
|
|
_________________
|
|
(1)
|
Reflected in our consolidated statements of income as “Restructuring charge.” The restructuring charges are not allocated to our segments.
|
As of
December 31, 2018
, we have incurred total restructuring charges under the closed restructuring programs of
$237
, comprised of
$163
of branch closure charges and
$74
of severance costs.
NES/Neff/Project XL Restructuring Program
In the second quarter of 2017, we initiated a restructuring program following the closing of the NES acquisition discussed in note
4
to the consolidated financial statements. The restructuring program also includes actions undertaken associated with Project XL, which is a set of
eight
specific work streams focused on driving profitable growth through revenue opportunities and generating incremental profitability through cost savings across our business, and the Neff acquisition that is discussed in note
4
to the consolidated financial statements. We completed this restructuring program in 2018.
The table below provides certain information concerning our restructuring charges under the NES/Neff/Project XL restructuring program:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Beginning
Reserve Balance
|
|
Charged to
Costs and
Expenses (1)
|
|
Payments
and Other
|
|
Ending
Reserve Balance
|
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
Branch closure charges
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
(1
|
)
|
|
$
|
8
|
|
Severance costs
|
|
—
|
|
|
39
|
|
|
(27
|
)
|
|
12
|
|
Total
|
|
$
|
—
|
|
|
$
|
48
|
|
|
$
|
(28
|
)
|
|
$
|
20
|
|
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
Branch closure charges
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
4
|
|
Severance and other
|
|
12
|
|
|
8
|
|
|
(13
|
)
|
|
7
|
|
Total
|
|
$
|
20
|
|
|
$
|
8
|
|
|
$
|
(17
|
)
|
|
$
|
11
|
|
_________________
|
|
(1)
|
Reflected in our consolidated statements of income as “Restructuring charge.” The restructuring charges are not allocated to our segments.
|
As of
December 31, 2018
, we have incurred total restructuring charges under the NES/Neff/Project XL restructuring program of
$56
, comprised of
$9
of branch closure charges and
$47
of severance and other costs.
BakerCorp/BlueLine Restructuring Program
In the third quarter of 2018, we initiated a restructuring program following the closing of the BakerCorp acquisition discussed in note
4
to the consolidated financial statements. The restructuring program also includes actions undertaken associated with the BlueLine acquisition discussed in note
4
to the consolidated financial statements. We expect to complete the restructuring program in 2019. The total costs expected to be incurred in connection with the program are not currently estimable, as we are still identifying the actions that will be undertaken.
The table below provides certain information concerning our restructuring charges under the BakerCorp/BlueLine restructuring program:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Beginning
Reserve Balance
|
|
Charged to
Costs and
Expenses (1)
|
|
Payments
and Other
|
|
Ending
Reserve Balance
|
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
Branch closure charges
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
3
|
|
Severance and other
|
|
—
|
|
|
18
|
|
|
(9
|
)
|
|
9
|
|
Total
|
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
(10
|
)
|
|
$
|
12
|
|
________________
|
|
(1)
|
Reflected in our consolidated statements of income as “Restructuring charge.” The restructuring charges are not allocated to our segments. The above charges reflect the cumulative restructuring charges recognized associated with the BakerCorp/BlueLine restructuring program.
|
7
. Rental Equipment
Rental equipment consists of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2018
|
|
2017
|
Rental equipment
|
$
|
13,962
|
|
|
$
|
11,571
|
|
Less accumulated depreciation
|
(4,362
|
)
|
|
(3,747
|
)
|
Rental equipment, net
|
$
|
9,600
|
|
|
$
|
7,824
|
|
For additional detail on the acquisitions of BakerCorp and BlueLine in July 2018 and October 2018, respectively, which accounted for a significant portion of the
2018
increase in rental equipment, see note
4
to our consolidated financial statements.
8
. Property and Equipment
Property and equipment consist of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2018
|
|
2017
|
Land
|
$
|
103
|
|
|
$
|
102
|
|
Buildings
|
277
|
|
|
238
|
|
Non-rental vehicles
|
200
|
|
|
112
|
|
Machinery and equipment
|
135
|
|
|
103
|
|
Furniture and fixtures
|
240
|
|
|
204
|
|
Leasehold improvements
|
272
|
|
|
245
|
|
|
1,227
|
|
|
1,004
|
|
Less accumulated depreciation and amortization
|
(613
|
)
|
|
(537
|
)
|
Property and equipment, net
|
$
|
614
|
|
|
$
|
467
|
|
9
. Goodwill and Other Intangible Assets
The following table presents the changes in the carrying amount of goodwill for each of the
three
years in the period ended
December 31, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General rentals
|
|
Trench,
power and fluid solutions
|
|
Total
|
Balance at January 1, 2016 (1)
|
$
|
2,786
|
|
|
$
|
457
|
|
|
$
|
3,243
|
|
Goodwill related to acquisitions (2)
|
5
|
|
|
4
|
|
|
9
|
|
Foreign currency translation and other adjustments
|
6
|
|
|
2
|
|
|
8
|
|
Balance at December 31, 2016 (1)
|
2,797
|
|
|
463
|
|
|
3,260
|
|
Goodwill related to acquisitions (2) (3)
|
797
|
|
|
8
|
|
|
805
|
|
Foreign currency translation and other adjustments
|
13
|
|
|
4
|
|
|
17
|
|
Balance at December 31, 2017 (1)
|
3,607
|
|
|
475
|
|
|
4,082
|
|
Goodwill related to acquisitions (2) (3)
|
752
|
|
|
247
|
|
|
999
|
|
Foreign currency translation and other adjustments
|
(17
|
)
|
|
(6
|
)
|
|
(23
|
)
|
Balance at December 31, 2018 (1)
|
$
|
4,342
|
|
|
$
|
716
|
|
|
$
|
5,058
|
|
_________________
|
|
(1)
|
The total carrying amount of goodwill for all periods in the table above is reflected net of
$1.557 billion
of accumulated impairment charges, which were primarily recorded in our general rentals segment.
|
|
|
(2)
|
Includes goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period, which were not significant to our previously reported operating results or financial condition.
|
|
|
(3)
|
For additional detail on the acquisitions of NES, Neff, BakerCorp and BlueLine in April 2017, October 2017, July 2018 and October 2018, respectively, which accounted for most of the 2017 and 2018 goodwill related to acquisitions, see note
4
to our consolidated financial statements.
|
Other intangible assets were comprised of the following at
December 31, 2018
and
2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
Weighted-Average Remaining
Amortization Period
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
Non-compete agreements
|
31 months
|
|
$
|
24
|
|
|
$
|
16
|
|
|
$
|
8
|
|
Customer relationships
|
7 years
|
|
$
|
2,148
|
|
|
$
|
1,076
|
|
|
$
|
1,072
|
|
Trade names and associated trademarks
|
5 years
|
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
Weighted-Average Remaining
Amortization Period
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
Non-compete agreements
|
31 months
|
|
$
|
71
|
|
|
$
|
62
|
|
|
$
|
9
|
|
Customer relationships
|
9 years
|
|
$
|
1,750
|
|
|
$
|
884
|
|
|
$
|
866
|
|
Our other intangibles assets, net at
December 31, 2018
include the following assets associated with the acquisitions of BakerCorp and BlueLine discussed in note
4
to our consolidated financial statements.
No
residual value has been assigned to these assets which are being amortized using the sum of the years' digits method, which we believe best reflects the estimated pattern in which the economic benefits will be consumed.
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
Weighted-Average Remaining
Amortization Period
|
|
|
Net Carrying
Amount
|
BakerCorp:
|
|
|
|
|
Customer relationships
|
7 years
|
|
|
$
|
149
|
|
Trade names and associated trademarks
|
5 years
|
|
|
$
|
4
|
|
BlueLine:
|
|
|
|
|
Customer relationships
|
5 years
|
|
|
$
|
217
|
|
Amortization expense for other intangible assets was
$213
,
$173
and
$174
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
As of
December 31, 2018
, estimated amortization expense for other intangible assets for each of the next
five
years and thereafter was as follows:
|
|
|
|
|
2019
|
$
|
268
|
|
2020
|
232
|
|
2021
|
190
|
|
2022
|
149
|
|
2023
|
106
|
|
Thereafter
|
139
|
|
Total
|
$
|
1,084
|
|
10
. Accrued Expenses and Other Liabilities and Other Long-Term Liabilities
Accrued expenses and other liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2018
|
|
2017
|
Self-insurance accruals
|
$
|
46
|
|
|
$
|
42
|
|
Accrued compensation and benefit costs
|
127
|
|
|
128
|
|
Property and income taxes payable
|
103
|
|
|
25
|
|
Restructuring reserves (1)
|
31
|
|
|
33
|
|
Interest payable
|
147
|
|
|
131
|
|
Deferred revenue (2)
|
56
|
|
|
46
|
|
National accounts accrual
|
69
|
|
|
50
|
|
Other (3)
|
98
|
|
|
81
|
|
Accrued expenses and other liabilities
|
$
|
677
|
|
|
$
|
536
|
|
_________________
|
|
(1)
|
Primarily relates to branch closure charges and severance costs. See note
6
for additional detail.
|
|
|
(2)
|
Reflects amounts billed to customers in excess of recognizable revenue. See note
3
for additional detail.
|
|
|
(3)
|
Other includes multiple items, none of which are individually significant.
|
Other long-term liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2018
|
|
2017
|
Self-insurance accruals
|
$
|
60
|
|
|
$
|
58
|
|
Income taxes payable
|
14
|
|
|
52
|
|
Accrued compensation and benefit costs
|
9
|
|
|
10
|
|
Other long-term liabilities
|
$
|
83
|
|
|
$
|
120
|
|
11
. Fair Value Measurements
As of
December 31, 2018
and
2017
, the amounts of our assets and liabilities that were accounted for at fair value were immaterial.
Fair value measurements are categorized in one of the following three levels based on the lowest level input that is significant to the fair value measurement in its entirety:
Level
1
—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities.
Level
2
—Observable inputs other than quoted prices in active markets for identical assets and liabilities include:
a) quoted prices for similar assets or liabilities in active markets;
b) quoted prices for identical or similar assets or liabilities in inactive markets;
c) inputs other than quoted prices that are observable for the asset or liability;
d) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the Level
2
input must be observable for substantially the full term of the asset or liability.
Level
3
—Inputs to the valuation methodology are unobservable (i.e., supported by little or no market activity) and significant to the fair value measure.
Fair Value of Financial Instruments
The carrying amounts reported in our consolidated balance sheets for accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value due to the immediate to short-term maturity of these financial instruments. The fair values of our ABL, accounts receivable securitization and term loan facilities and capital leases approximated their book values as of
December 31, 2018
and
2017
. The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of
December 31, 2018
and
2017
have been calculated based upon available market information, and were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
Senior and senior subordinated notes
|
$
|
8,102
|
|
|
$
|
7,632
|
|
|
$
|
7,008
|
|
|
$
|
7,340
|
|
12
. Debt
Debt, net of unamortized original issue premiums and unamortized debt issuance costs, consists of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2018
|
|
2017
|
Accounts receivable securitization facility expiring 2019 (1)
|
$
|
850
|
|
|
$
|
695
|
|
$3.0 billion ABL facility expiring 2021 (1)
|
1,685
|
|
|
1,670
|
|
Term loan facility expiring 2025 (1) (2)
|
988
|
|
|
—
|
|
4
5
/
8
percent Senior Secured Notes due 2023
|
994
|
|
|
992
|
|
5
3
/
4
percent Senior Notes due 2024
|
842
|
|
|
841
|
|
5
1
/
2
percent Senior Notes due 2025
|
794
|
|
|
793
|
|
4
5
/
8
percent Senior Notes due 2025
|
741
|
|
|
740
|
|
5
7
/
8
percent Senior Notes due 2026
|
999
|
|
|
998
|
|
6
1
/
2
percent Senior Notes due 2026 (2)
|
1,087
|
|
|
—
|
|
5
1
/
2
percent Senior Notes due 2027
|
991
|
|
|
990
|
|
4
7
/
8
percent Senior Notes due 2028 (3)
|
1,650
|
|
|
1,648
|
|
4
7
/
8
percent Senior Notes due 2028 (3)
|
4
|
|
|
6
|
|
Capital leases
|
122
|
|
|
67
|
|
Total debt
|
11,747
|
|
|
9,440
|
|
Less short-term portion
|
(903
|
)
|
|
(723
|
)
|
Total long-term debt
|
$
|
10,844
|
|
|
$
|
8,717
|
|
(1) The table below presents financial information associated with our variable rate indebtedness as of and for the year ended
December 31, 2018
. We have borrowed the full available amount under the term loan facility. The principal obligations under the term loan facility are required to be repaid in quarterly installments in an aggregate amount equal to
1.0
percent per annum, with the balance due at the maturity of the facility. The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABL facility
|
|
Accounts receivable securitization facility
|
|
Term loan facility
|
Borrowing capacity, net of letters of credit
|
$
|
1,264
|
|
|
$
|
125
|
|
|
$
|
—
|
|
Letters of credit
|
45
|
|
|
|
|
|
Interest rate at December 31, 2018
|
4.0
|
%
|
|
3.3
|
%
|
|
4.3
|
%
|
Average month-end debt outstanding
|
1,607
|
|
|
796
|
|
|
999
|
|
Weighted-average interest rate on average debt outstanding
|
3.5
|
%
|
|
2.9
|
%
|
|
4.1
|
%
|
Maximum month-end debt outstanding
|
2,189
|
|
|
870
|
|
|
1,000
|
|
|
|
(2)
|
In 2018, URNA i) entered into a
$1 billion
senior secured term loan facility and ii) issued
$1.1 billion
principal amount of 6
1
/
2
percent Senior Notes due 2026. As discussed in note
4
to the consolidated financial statements, the proceeds from the 6
1
/
2
percent Senior Notes and borrowings under the term loan facility were used to finance the acquisition of BlueLine in October 2018. See below for additional detail on the issued debt.
|
|
|
(3)
|
URNA separately issued 4
7
/
8
percent Senior Notes in August 2017 and in September 2017. Following the issuances, we consummated an exchange offer pursuant to which most of the 4
7
/
8
percent Senior Notes issued in September 2017 were exchanged for additional notes fungible with the 4
7
/
8
percent Senior Notes issued in August 2017.
|
Short-term debt
As of
December 31, 2018
, our short-term debt primarily reflects
$850
of borrowings under our accounts receivable securitization facility. See the table above for financial information associated with the accounts receivable securitization facility.
Accounts receivable securitization facility
. In 2018, the accounts receivable securitization facility was amended, primarily to increase the facility size and to extend the maturity date. The amended facility expires on June 29, 2019, has a facility size of
$975
, and may be extended on a
364
-day basis by mutual agreement of the Company and the lenders under the facility. Borrowings under the facility are reflected as short-term debt on our consolidated balance sheets. Key provisions of the facility include the following:
|
|
•
|
borrowings are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves, exceeds the outstanding loans by a specified amount. As of
December 31, 2018
, there were
$1.158 billion
of receivables, net of applicable reserves, in the collateral pool;
|
|
|
•
|
the receivables in the collateral pool are the lenders’ only source of repayment;
|
|
|
•
|
upon early termination of the facility, no new amounts will be advanced under the facility and collections on the receivables securing the facility will be used to repay the outstanding borrowings; and
|
|
|
•
|
standard termination events including, without limitation, a change of control of Holdings, URNA or certain of its subsidiaries, a failure to make payments, a failure to comply with standard default, delinquency, dilution and days sales outstanding covenants, or breach of the fixed charge coverage ratio covenant under the ABL facility (if applicable).
|
ABL facility.
In June 2008, Holdings, URNA, and certain of our subsidiaries entered into a credit agreement providing for a
five
-year
$1.25 billion
ABL facility, a portion of which is available for borrowing in Canadian dollars. The ABL facility was subsequently upsized and extended. The size of the ABL facility was
$3.0 billion
as of
December 31, 2018
. See the table above for financial information associated with the ABL facility.
The ABL facility is subject to, among other things, 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 2021. Loans under the credit agreement bear interest, at URNA’s 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 the availability in the facility. A commitment fee accrues on any unused portion of the commitments under the credit agreement at a fixed rate per annum. Ongoing extensions of credit under the credit agreement are subject to customary conditions, including sufficient availability under the borrowing base. As discussed below (see “Loan Covenants and Compliance”), the only financial maintenance covenant that currently exists in the ABL facility is the fixed charge coverage ratio. As of
December 31, 2018
, availability under the ABL facility has exceeded the required threshold and, as a result, this financial maintenance covenant was inapplicable. In addition, the credit agreement contains customary negative covenants applicable to Holdings, 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, (iv) prepay certain indebtedness and (v) 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 Holdings and by URNA and, subject to certain exceptions, our domestic subsidiaries. Borrowings under the credit agreement by URNA’s Canadian subsidiaries are also secured by substantially all the assets of URNA’s Canadian subsidiaries and supported by guarantees from the Canadian subsidiaries and from Holdings and URNA, and, subject to certain exceptions, our domestic subsidiaries. Under the ABL facility, a change of control (as defined in the credit agreement) constitutes an event of default, entitling our lenders, among other things, to terminate our ABL facility and to require us to repay outstanding borrowings.
Term loan facility
. In October 2018, Holdings, URNA, and certain of our subsidiaries entered into a
$1 billion
senior secured term loan facility. See the table above for financial information associated with the term loan facility. The term loan facility is guaranteed by Holdings and the same domestic subsidiaries that guarantee the U.S. dollar borrowings under the ABL facility. In addition, the obligations under the term loan facility are secured by first priority security interests in the same collateral that secures the U.S. dollar borrowings under the ABL facility, on a pari passu basis with the ABL facility.
The principal obligations under the term loan facility are to be repaid in quarterly installments in an aggregate amount equal to
1.0
percent per annum, with the balance due at the maturity of the term loan facility. The term loan facility matures on October 31, 2025. Amounts drawn under the term loan facility bear annual interest, at URNA’s option, at either the London interbank offered rate plus a margin of
1.75
percent or at an alternative base rate plus a margin of
0.75
percent.
The term loan facility contains customary negative covenants applicable to URNA and its subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness; (ii) incur additional liens; (iii) make dividends and other restricted payments; and (iv) engage in mergers, acquisitions and dispositions. The term loan facility does not include any financial covenants. Under the term loan facility, a change of control (as defined in the credit agreement) constitutes an event of default, entitling our lenders to, among other things, terminate the term loan facility and require us to repay outstanding loans.
4
5
/
8
percent Senior Secured Notes due 2023.
In March 2015, URNA issued $
1.0
billion aggregate principal amount of 4
5
/
8
percent Senior Secured Notes (the “4
5
/
8
percent Notes”), which are due July 15, 2023. The net proceeds from the issuance were approximately $
990
(after deducting offering expenses). The 4
5
/
8
percent Notes are guaranteed by Holdings and certain domestic subsidiaries of URNA and are secured on a second-priority basis by liens on substantially all of URNA’s and the guarantors’ assets that secure the ABL facility, subject to certain exceptions. The 4
5
/
8
percent Notes may be redeemed on or after July 15, 2018, at specified redemption prices that range from
103.469 percent
in 2018, to
100
percent in 2021 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 4
5
/
8
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. The indenture also includes covenants relating to the grant of and maintenance of liens for the benefit of the notes collateral agent. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 4
5
/
8
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.
5
3
/
4
percent Senior Notes due 2024.
In March 2014, URNA issued $
850
aggregate principal amount of 5
3
/
4
percent Senior Notes (the “5
3
/
4
percent Notes”), which are due November 15, 2024. The net proceeds from the issuance were approximately $
837
(after deducting offering expenses). The 5
3
/
4
percent Notes are unsecured and are guaranteed by Holdings and, subject to limited exceptions, URNA's domestic subsidiaries. The 5
3
/
4
percent Notes may be redeemed on or after May 15, 2019, at specified redemption prices that range from
102.875 percent
in the 12-month period commencing on May 15, 2019, to
100 percent
in the 12-month period commencing on May 15, 2022 and thereafter, plus accrued and unpaid interest. The indenture governing the 5
3
/
4
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of these covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then outstanding 5
3
/
4
percent Notes tendered at a purchase price in cash equal to
101 percent
of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.
5
1
/
2
percent Senior Notes due 2025.
In March 2015, URNA issued $
800
aggregate principal amount of 5
1
/
2
percent Senior Notes which are due July 15, 2025 (the “2025 5
1
/
2
percent Notes”). The net proceeds from the issuance were approximately $
792
(after deducting offering expenses). The 2025 5
1
/
2
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 2025 5
1
/
2
percent Notes may be redeemed on or after July 15, 2020, at specified redemption prices that range from
102.75
percent in 2020, to
100
percent in 2023 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 2025 5
1
/
2
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 2025 5
1
/
2
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.
4
5
/
8
percent Senior Notes due 2025
. In September 2017, URNA issued $
750
principal amount of 4
5
/
8
percent Senior Notes (the “4
5
/
8
percent Notes”) which are due October 15, 2025. The net proceeds from the issuance were approximately $
741
(after deducting offering expenses). The 4
5
/
8
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 4
5
/
8
percent Notes may be redeemed on or after October 15, 2020, at specified redemption prices that range from
102.313
percent in 2020, to
100
percent in 2022 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the 4
5
/
8
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants
is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the 4
5
/
8
percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 4
5
/
8
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.
5
7
/
8
percent Senior Notes due 2026.
In May 2016, URNA issued $
750
aggregate principal amount of 5
7
/
8
percent Senior Notes (the “5
7
/
8
percent Notes”) which are due September 15, 2026. In February 2017, URNA issued $
250
aggregate principal amount of 5
7
/
8
percent Notes as an add-on to the existing 5
7
/
8
percent Notes, after which the aggregate principal amount of outstanding 5
7
/
8
percent Notes was
$1.0 billion
. The notes issued in February 2017 have identical terms, and are fungible, with the existing 5
7
/
8
percent Notes. The net proceeds from the issuances were approximately $
999
(including the original issue premium and after deducting offering expenses). The 5
7
/
8
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5
7
/
8
percent Notes may be redeemed on or after September 15, 2021, at specified redemption prices that range from
102.938
percent in 2021, to
100
percent in 2024 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 5
7
/
8
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5
7
/
8
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon. The carrying value of the 5
7
/
8
percent Notes includes the $
10
unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2026. The effective interest rate on the 5
7
/
8
percent Notes is
5.7
percent.
6
1
/
2
percent Senior Notes due 2026.
In October 2018, URNA issued
$1.1 billion
aggregate principal amount of 6
1
/
2
percent Senior Notes (the “6
1
/
2
percent Notes”) which are due December 15, 2026. The net proceeds from the issuance were approximately $
1.089 billion
(after deducting offering expenses). The 6
1
/
2
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 6
1
/
2
percent Notes may be redeemed on or after December 15, 2021, at specified redemption prices that range from
103.250
percent in 2021, to
100
percent in 2024 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the 6
1
/
2
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the 6
1
/
2
percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 6
1
/
2
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.
5
1
/
2
percent Senior Notes due 2027.
In November 2016, URNA issued $
750
aggregate principal amount of 5
1
/
2
percent Senior Notes which are due May 15, 2027 (the “2027 5
1
/
2
percent Notes”). In February 2017, URNA issued $
250
aggregate principal amount of 2027 5
1
/
2
percent Notes as an add-on to the existing 2027 5
1
/
2
percent Notes, after which the aggregate principal amount of outstanding 2027 5
1
/
2
percent Notes was
$1.0 billion
. The notes issued in February 2017 have identical terms, and are fungible, with the existing 2027 5
1
/
2
percent Notes. The net proceeds from the issuances were approximately
$991
(including the original issue premium and after deducting offering expenses). The 2027 5
1
/
2
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 2027 5
1
/
2
percent Notes may be redeemed on or after May 15, 2022, at specified redemption prices that range from
102.75
percent in 2022, to
100
percent in 2025 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 2027 5
1
/
2
percent Notes contains certain
restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 2027 5
1
/
2
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon. The carrying value of the 2027 5
1
/
2
percent Notes includes the $
3
unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2027. The effective interest rate on the 2027 5
1
/
2
percent Notes is
5.5
percent.
4
7
/
8
percent Senior Notes due 2028
. In August 2017, URNA issued
$925
principal amount of 4
7
/
8
percent Senior Notes (the “Initial 4
7
/
8
percent Notes”) which are due January 15, 2028. The net proceeds from the issuance were approximately
$913
(after deducting offering expenses). The Initial 4
7
/
8
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The Initial 4
7
/
8
percent Notes may be redeemed on or after January 15, 2023, at specified redemption prices that range from
102.438
percent in 2023, to
100
percent in 2026 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the Initial 4
7
/
8
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Initial 4
7
/
8
percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding Initial 4
7
/
8
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.
In September 2017, URNA issued
$750
principal amount of 4
7
/
8
percent Senior Notes (the “Subsequent 4
7
/
8
percent Notes”) which are due January 15, 2028. The net proceeds from the issuance were approximately
$743
(including the original issue premium and after deducting offering expenses). The Subsequent 4
7
/
8
percent Notes represent a separate a distinct series of notes from the Initial 4
7
/
8
percent Notes. The Subsequent 4
7
/
8
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The Subsequent 4
7
/
8
percent Notes may be redeemed on or after January 15, 2023, at specified redemption prices that range from
102.438
percent in 2023, to
100
percent in 2026 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the Subsequent 4
7
/
8
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Subsequent 4
7
/
8
percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding Subsequent 4
7
/
8
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon. The effective interest rate on the Subsequent 4
7
/
8
percent Notes is
4.84
percent.
In December 2017, we consummated an exchange offer pursuant to which approximately
$744
principal amount of Subsequent 4
7
/
8
percent Notes were exchanged for additional Initial 4
7
/
8
percent Notes issued under the indenture governing the Initial 4
7
/
8
percent Notes and fungible with the Initial 4
7
/
8
percent Notes. As of
December 31, 2018
, the principal amounts outstanding were
$1.669 billion
for the Initial 4
7
/
8
percent Notes and
$4
for the Subsequent 4
7
/
8
percent Notes. The carrying value of the Initial 4
7
/
8
percent Notes includes
$2
of the unamortized original issue premium, which is being amortized through the maturity date in 2028. The effective interest rate on the Initial 4
7
/
8
percent Notes is
4.86
percent.
Loan Covenants and Compliance
As of
December 31, 2018
, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan facilities and the senior notes. 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.
The only financial maintenance covenant that currently exists under the ABL facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below
10 percent
of the maximum revolver amount under the ABL facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of
December 31, 2018
, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial maintenance covenant was inapplicable. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The accounts receivable securitization facility also requires us to comply with the fixed charge coverage ratio under the ABL facility, to the extent the ratio is applicable under the ABL facility.
Maturities
Debt maturities (exclusive of any unamortized original issue premiums and unamortized debt issuance costs) for each of the next five years and thereafter at
December 31, 2018
are as follows:
|
|
|
|
|
2019
|
$
|
903
|
|
2020
|
42
|
|
2021
|
1,733
|
|
2022
|
19
|
|
2023
|
1,011
|
|
Thereafter
|
8,126
|
|
Total
|
$
|
11,834
|
|
13
. Income Taxes
The Tax Act was enacted in December 2017. The Tax Act reduced the U.S. federal corporate tax rate from
35
percent to
21
percent, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign earnings. As of December 31, 2018, we have completed our accounting for the tax effects of enactment of the Tax Act. During the year ended
December 31, 2017
, we recognized the reasonably estimated (i) effects on our existing deferred tax balances and (ii) one-time transition tax. During the year ended
December 31, 2018
, we finalized the accounting for the enactment of the Tax Act. The following table presents the impact of the accounting for the enactment of the Tax Act on our provision (benefit) for income taxes for the years ended
December 31, 2018
and
2017
:
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2018
|
|
2017
|
Revaluation of deferred tax balances (1)
|
$
|
1
|
|
|
$
|
(746
|
)
|
One-time transition tax (2)
|
5
|
|
|
57
|
|
Total provision (benefit) for income taxes impact
|
$
|
6
|
|
|
$
|
(689
|
)
|
_________________
|
|
(1)
|
Reflects the revaluation of our net deferred tax liability based on a U.S. federal tax rate of
21
percent.
|
|
|
(2)
|
Reflects a one-time transition tax on our unremitted foreign earnings and profits. See below for further discussion addressing our unremitted foreign earnings and profits.
|
The substantial 2017 impact of the enactment of the Tax Act discussed above is reflected in the tables below. The components of the provision (benefit) for income taxes for each of the three years in the period ended
December 31, 2018
are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
Current
|
|
|
|
|
|
Federal
|
$
|
47
|
|
|
$
|
190
|
|
|
$
|
186
|
|
Foreign
|
18
|
|
|
15
|
|
|
10
|
|
State and local
|
58
|
|
|
30
|
|
|
24
|
|
|
123
|
|
|
235
|
|
|
220
|
|
Deferred
|
|
|
|
|
|
Federal
|
243
|
|
|
(580
|
)
|
|
119
|
|
Foreign
|
3
|
|
|
(2
|
)
|
|
(1
|
)
|
State and local
|
11
|
|
|
49
|
|
|
5
|
|
|
257
|
|
|
(533
|
)
|
|
123
|
|
Total
|
$
|
380
|
|
|
$
|
(298
|
)
|
|
$
|
343
|
|
A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rates (
21 percent
for the year ended
December 31, 2018
and
35 percent
for the years ended
December 31, 2017
and
2016
) to the income before provision (benefit) for income taxes for each of the three years in the period ended
December 31, 2018
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
Computed tax at statutory tax rate
|
$
|
310
|
|
|
$
|
367
|
|
|
$
|
318
|
|
State income taxes, net of federal tax benefit
|
54
|
|
|
34
|
|
|
21
|
|
Non-deductible expenses and other
|
6
|
|
|
(3
|
)
|
|
9
|
|
Enactment of the Tax Act
|
6
|
|
|
(689
|
)
|
|
—
|
|
Foreign taxes
|
4
|
|
|
(7
|
)
|
|
(5
|
)
|
Total
|
$
|
380
|
|
|
$
|
(298
|
)
|
|
$
|
343
|
|
The components of deferred income tax assets (liabilities) are as follows:
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
Reserves and allowances
|
$
|
126
|
|
|
$
|
87
|
|
Debt cancellation and other
|
11
|
|
|
13
|
|
Net operating loss and credit carryforwards
|
435
|
|
|
192
|
|
Total deferred tax assets
|
572
|
|
|
292
|
|
Property and equipment
|
(1,976
|
)
|
|
(1,498
|
)
|
Intangibles
|
(237
|
)
|
|
(174
|
)
|
Valuation allowance
|
(46
|
)
|
|
(39
|
)
|
Total deferred tax liability
|
(2,259
|
)
|
|
(1,711
|
)
|
Total deferred income tax liability
|
$
|
(1,687
|
)
|
|
$
|
(1,419
|
)
|
We file income tax returns in the U.S., Canada and Europe. Without exception, 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 2010.
For financial reporting purposes, income before provision for income taxes for our foreign subsidiaries was
$71
,
$48
and
$29
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes have been provided on such earnings. We continue to evaluate our plans for reinvestment or repatriation of unremitted foreign earnings and have not changed our previous indefinite reinvestment determination following the
enactment of the Tax Act. We have not repatriated funds to the U.S. to satisfy domestic liquidity needs, nor do we anticipate the need to do so. The Tax Act requires a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments (as reflected above, as of
December 31, 2018
, we have computed a transition tax amount payable of
$62
). If we determine that all or a portion of our foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes, beyond the Tax Act's one-time transition tax. At
December 31, 2018
, unremitted earnings of foreign subsidiaries of
$651
have been included in our computation of the Tax Act transition tax.
We have net operating loss carryforwards (“NOLs”) of $
1.468
billion for federal income tax purposes that expire from 2022 through 2038,
$29
for foreign income tax purposes that expire from 2024 through 2037 and $
1.180
billion for state income tax purposes that expire from 2018 through 2038. We have recorded valuation allowances against these deferred assets of
$46
and
$39
as of
December 31, 2018
and
2017
, respectively. The valuation allowance balances as of
December 31, 2018
and
2017
include full valuation allowances associated with foreign tax credits of
$32
and
$26
, respectively. In
2018
, the Company utilized
$386
of existing NOLs to offset federal and state tax liabilities.
14
. Commitments and Contingencies
We are 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 automobile 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 included in our consolidated balance sheets 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.
Indemnification
The Company indemnifies its officers and directors pursuant to indemnification agreements and may in addition indemnify these individuals as permitted by Delaware law.
Operating Leases
We lease real estate and equipment under operating leases. Certain real estate leases require us to pay maintenance, insurance, taxes and certain other expenses in addition to the stated rental payments. Future minimum lease payments by year and in the aggregate, for non-cancelable operating leases with initial or remaining terms of one year or more are as follows at
December 31, 2018
:
|
|
|
|
|
|
|
|
|
|
Real
Estate
Leases
|
|
Equipment
Leases
|
2019
|
$
|
148
|
|
|
$
|
45
|
|
2020
|
125
|
|
|
39
|
|
2021
|
102
|
|
|
30
|
|
2022
|
71
|
|
|
23
|
|
2023
|
43
|
|
|
17
|
|
Thereafter
|
47
|
|
|
17
|
|
Total
|
$
|
536
|
|
|
$
|
171
|
|
Our equipment leases are primarily comprised of service and delivery vehicles. Our real estate leases provide for varying terms, including customary escalation clauses. Our leases generally include default provisions that are customary, and do not contain material adverse change clauses, cross-default provisions or subjective default provisions. In these leases, the occurrence of an event of default is objectively determinable based on predefined criteria. Based on the facts and circumstances that existed at lease inception and with consideration of our history as a lessee, we believe that it is reasonable to assume that an event of default will not occur.
As discussed in note
2
to the consolidated financial statements (see "New Accounting Pronouncements-Leases"), we will adopt a new lease accounting standard on January 1, 2019. Upon adoption of the new standard, our operating leases will result in lease assets and lease liabilities being recognized on the balance sheet.
Rent expense under all non-cancelable operating leases totaled
$179
,
$160
and
$149
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
Capital Leases
Capital lease obligations consist primarily of vehicle, building and equipment leases with periods expiring at various dates through 2028. Capital lease obligations were $
122
and $
67
at
December 31, 2018
and
2017
, respectively. The following table presents capital lease financial statement information for the years ended
December 31, 2018
,
2017
and
2016
, except for balance sheet information, which is presented as of
December 31, 2018
and
2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Depreciation of rental equipment
|
$
|
22
|
|
|
$
|
21
|
|
|
$
|
20
|
|
Non-rental depreciation and amortization
|
1
|
|
|
2
|
|
|
3
|
|
Rental equipment
|
257
|
|
|
203
|
|
|
|
|
Less accumulated depreciation
|
(86
|
)
|
|
(80
|
)
|
|
|
|
Rental equipment, net
|
171
|
|
|
123
|
|
|
|
|
Property and equipment, net:
|
|
|
|
|
|
|
Non-rental vehicles
|
6
|
|
|
2
|
|
|
|
|
Buildings
|
16
|
|
|
21
|
|
|
|
|
Less accumulated depreciation and amortization
|
(12
|
)
|
|
(14
|
)
|
|
|
|
Property and equipment, net
|
$
|
10
|
|
|
$
|
9
|
|
|
|
|
Future minimum lease payments for capital leases for each of the next five years and thereafter at
December 31, 2018
are as follows:
|
|
|
|
|
2019
|
$
|
47
|
|
2020
|
34
|
|
2021
|
33
|
|
2022
|
9
|
|
2023
|
2
|
|
Thereafter
|
6
|
|
Total
|
131
|
|
Less amount representing interest (1)
|
(9
|
)
|
Capital lease obligations
|
$
|
122
|
|
|
|
(1)
|
The weighted average interest rate on our capital lease obligations as of
December 31, 2018
was approximately
4.7 percent
.
|
As noted above, we will adopt a new lease accounting standard on January 1, 2019. Upon adoption of the new standard, the capital leases above are expected to be accounted for as finance leases. We do not expect any significant changes to the accounting upon this change in classification.
Employee Benefit Plans
We currently sponsor
three
defined contribution 401(k) retirement plans, which are subject to the provisions of the Employee Retirement Income Security Act of 1974. We also sponsor a deferred profit sharing plan and a registered retirement savings plan for the benefit of the full-time employees of our Canadian subsidiaries. Under these plans, we match a percentage of the participants’ contributions up to a specified amount. Company contributions to the plans were
$31
,
$26
and
$23
in the years ended
December 31, 2018
,
2017
and
2016
, respectively.
Environmental Matters
The Company and its operations are subject to various laws and related regulations governing environmental matters. Under such laws, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in, or emanating from, such property, as well as investigation of property damage. We incur ongoing expenses associated with the performance of appropriate remediation at certain locations.
15
. Common Stock
We have
500 million
authorized shares of common stock,
$0.01
par value. At
December 31, 2018
and
2017
, there were
0.5 million
shares of common stock reserved for issuance pursuant to options granted under our stock option plans.
As of
December 31, 2018
, there were an aggregate of
1.0 million
outstanding time and performance-based RSUs and
2.0 million
shares available for grants of stock and options under our 2010 Long Term Incentive Plan.
A summary of the transactions within the Company’s stock option plans follows (shares in thousands):
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-Average
Exercise Price
|
Outstanding at December 31, 2017
|
549
|
|
|
26.80
|
|
Granted
|
—
|
|
|
—
|
|
Exercised
|
(85
|
)
|
|
23.26
|
|
Canceled
|
(1
|
)
|
|
19.67
|
|
Outstanding at December 31, 2018
|
463
|
|
|
27.47
|
|
Exercisable at December 31, 2018
|
433
|
|
|
$
|
25.38
|
|
The following table presents information associated with stock options as of
December 31, 2018
and
2017
, and for the years ended
December 31, 2018
,
2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Intrinsic value of options outstanding as of December 31
|
$
|
35
|
|
|
$
|
80
|
|
|
|
Intrinsic value of options exercisable as of December 31
|
33
|
|
|
72
|
|
|
|
Intrinsic value of options exercised
|
13
|
|
|
6
|
|
|
4
|
|
Weighted-average grant date fair value per option
|
$
|
—
|
|
|
$
|
84.60
|
|
|
$
|
—
|
|
In addition to stock options, the Company issues time-based and performance-based RSUs to certain officers and key executives under various equity incentive plans. The RSUs automatically convert to shares of common stock on a
one
-for-one basis as the awards vest. The time-based RSUs typically vest over a
three
year vesting period beginning
12
months from the grant date and thereafter annually on the anniversary of the grant date. The performance-based RSUs vest based on the achievement of the performance conditions during the applicable performance periods (currently the calendar year). There were
428
thousand shares of common stock issued upon vesting of RSUs during
2018
, net of
280 thousand
shares surrendered to satisfy tax obligations. The Company measures the value of RSUs at fair value based on the closing price of the underlying common stock on the grant date. The Company amortizes the fair value of outstanding RSUs as stock-based compensation expense over the requisite service period on a straight-line basis, or sooner if the employee effectively vests upon termination of employment under certain circumstances. For performance-based RSUs, compensation expense is recognized to the extent that the satisfaction of the performance condition is considered probable.
A summary of RSUs granted follows (RSUs in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
RSUs granted
|
566
|
|
|
809
|
|
|
901
|
|
Weighted-average grant date price per unit
|
$
|
175.79
|
|
|
$
|
130.96
|
|
|
$
|
60.55
|
|
As of
December 31, 2018
, the total pretax compensation cost not yet recognized by the Company with regard to unvested RSUs was $
42
. The weighted-average period over which this compensation cost is expected to be recognized is
1.9
years.
A summary of RSU activity for the year ended
December 31, 2018
follows (RSUs in thousands):
|
|
|
|
|
|
|
|
|
Stock Units
|
|
Weighted-Average
Grant Date Fair Value
|
Nonvested as of December 31, 2017
|
756
|
|
|
$
|
94.07
|
|
Granted
|
566
|
|
|
175.79
|
|
Vested
|
(638
|
)
|
|
141.89
|
|
Forfeited
|
(35
|
)
|
|
132.14
|
|
Nonvested as of December 31, 2018
|
649
|
|
|
$
|
116.26
|
|
The total fair value of RSUs vested during the fiscal years ended
December 31, 2018
,
2017
and
2016
was $
114
, $
101
, and $
39
, respectively.
Dividend Policy
. Holdings has not paid dividends on its common stock since inception. The payment of any future dividends or the authorization of stock repurchases or other recapitalizations will be determined by our Board of Directors in light of conditions then existing, including earnings, financial condition and capital requirements, financing agreements, business conditions, stock price and other factors. The terms of certain agreements governing our outstanding indebtedness contain certain limitations on our ability to move operating cash flows to Holdings and/or to pay dividends on, or effect repurchases of, our common stock. In addition, under Delaware law, dividends may only be paid out of surplus or current or prior year’s net profits.
Stockholders’ Rights Plan.
Our stockholders' rights plan expired in accordance with its terms on September 27, 2011. Our Board of Directors elected not to renew or extend the plan.
16
. Quarterly Financial Information (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Full
Year
|
For the year ended December 31, 2018 (1):
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
1,734
|
|
|
$
|
1,891
|
|
|
$
|
2,116
|
|
|
$
|
2,306
|
|
|
$
|
8,047
|
|
Gross profit
|
646
|
|
|
782
|
|
|
938
|
|
|
998
|
|
|
3,364
|
|
Operating income
|
340
|
|
|
470
|
|
|
578
|
|
|
563
|
|
|
1,951
|
|
Net income (1)
|
183
|
|
|
270
|
|
|
333
|
|
|
310
|
|
|
1,096
|
|
Earnings per share—basic
|
2.18
|
|
|
3.22
|
|
|
4.05
|
|
|
3.84
|
|
|
13.26
|
|
Earnings per share—diluted (3)
|
2.15
|
|
|
3.20
|
|
|
4.01
|
|
|
3.80
|
|
|
13.12
|
|
For the year ended December 31, 2017 (2):
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
1,356
|
|
|
$
|
1,597
|
|
|
$
|
1,766
|
|
|
$
|
1,922
|
|
|
$
|
6,641
|
|
Gross profit
|
514
|
|
|
655
|
|
|
773
|
|
|
827
|
|
|
2,769
|
|
Operating income
|
257
|
|
|
340
|
|
|
448
|
|
|
462
|
|
|
1,507
|
|
Net income (2)
|
109
|
|
|
141
|
|
|
199
|
|
|
897
|
|
|
1,346
|
|
Earnings per share—basic
|
1.29
|
|
|
1.67
|
|
|
2.36
|
|
|
10.60
|
|
|
15.91
|
|
Earnings per share—diluted (3)
|
1.27
|
|
|
1.65
|
|
|
2.33
|
|
|
10.45
|
|
|
15.73
|
|
|
|
(1)
|
As discussed in note
13
to our consolidated financial statements, the Tax Act was enacted in December 2017. The Tax Act reduced the U.S. federal corporate tax rate from
35
percent to
21
percent, and net income for
2018
reflects the decreased tax rate. The fourth quarter of
2018
includes $
22
of merger related costs and $
16
of restructuring charges primarily associated with the BakerCorp and BlueLine acquisitions discussed in note
4
to our consolidated financial statements.
|
|
|
(2)
|
Net income for the fourth quarter and full year 2017 includes a benefit of $
689
, or $
8.03
and $
8.05
per diluted share for the fourth quarter and full year 2017, respectively, associated with the enactment of the Tax Act discussed further in note
13
to our consolidated financial statements. The fourth quarter of 2017 includes $
18
of merger related costs and $
22
of restructuring charges primarily associated with the NES and Neff acquisitions discussed in note
4
to our consolidated financial statements. Additionally, in the fourth quarter of 2017, we redeemed the remaining $
225
principal amount of our 7
5
/
8
percent Senior Notes due 2022. Upon the redemption of these notes, we recognized a loss of $
11
in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the
|
redeemed notes. The fourth quarter of 2017 also reflects a year-over-year increase of $
11
in stock compensation expense primarily due to the impact of increased revenue, improved profitability, and increases in our stock price and in the volume of stock awards.
|
|
(3)
|
Diluted earnings per share includes the after-tax impacts of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Full
Year
|
For the year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
Merger related costs (4)
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.32
|
)
|
Merger related intangible asset amortization (5)
|
(0.39
|
)
|
|
(0.37
|
)
|
|
(0.42
|
)
|
|
(0.58
|
)
|
|
(1.76
|
)
|
Impact on depreciation related to acquired fleet and property and equipment (6)
|
(0.09
|
)
|
|
(0.08
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
(0.19
|
)
|
Impact of the fair value mark-up of acquired fleet (7)
|
(0.21
|
)
|
|
(0.15
|
)
|
|
(0.11
|
)
|
|
(0.11
|
)
|
|
(0.59
|
)
|
Restructuring charge (8)
|
(0.02
|
)
|
|
(0.03
|
)
|
|
(0.09
|
)
|
|
(0.15
|
)
|
|
(0.28
|
)
|
For the year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
Merger related costs (4)
|
$
|
(0.02
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.36
|
)
|
Merger related intangible asset amortization (5)
|
(0.28
|
)
|
|
(0.30
|
)
|
|
(0.27
|
)
|
|
(0.32
|
)
|
|
(1.15
|
)
|
Impact on depreciation related to acquired fleet and property and equipment (6)
|
—
|
|
|
0.03
|
|
|
(0.07
|
)
|
|
(0.01
|
)
|
|
(0.05
|
)
|
Impact of the fair value mark-up of acquired fleet (7)
|
(0.06
|
)
|
|
(0.13
|
)
|
|
(0.17
|
)
|
|
(0.23
|
)
|
|
(0.59
|
)
|
Restructuring charge (8)
|
—
|
|
|
(0.14
|
)
|
|
(0.07
|
)
|
|
(0.15
|
)
|
|
(0.36
|
)
|
Asset impairment charge (9)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
Loss on extinguishment of debt securities and amendment of ABL facility
|
—
|
|
|
(0.09
|
)
|
|
(0.22
|
)
|
|
(0.08
|
)
|
|
(0.39
|
)
|
|
|
(4)
|
This reflects transaction costs associated with the NES, Neff, BakerCorp and BlueLine acquisitions discussed in note
4
to our consolidated financial statements.
|
|
|
(5)
|
This reflects the amortization of the intangible assets acquired in the RSC, National Pump, NES, Neff, BakerCorp and BlueLine acquisitions.
|
|
|
(6)
|
This reflects the impact of extending the useful lives of equipment acquired in the RSC, NES, Neff, BakerCorp and BlueLine acquisitions, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.
|
|
|
(7)
|
This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC, NES, Neff and BlueLine acquisitions and subsequently sold.
|
|
|
(8)
|
As discussed in note
6
to our consolidated financial statements, this primarily reflects severance costs and branch closure charges associated with our restructuring programs.
|
|
|
(9)
|
This reflects write-offs of leasehold improvements and other fixed assets in connection with our restructuring programs.
|
17
. Earnings Per Share
Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares plus the effect of dilutive potential common shares outstanding during the period. Net income and earnings per share for 2017 include the significant impact of the enactment of the Tax Act discussed further in note
13
to the consolidated financial statements. Net income and earnings per share for 2018 reflect a reduction in the U.S. federal statutory tax rate from
35
percent to
21
percent following enactment of the Tax Act. The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
Numerator:
|
|
|
|
|
|
Net income available to common stockholders
|
$
|
1,096
|
|
|
$
|
1,346
|
|
|
$
|
566
|
|
Denominator:
|
|
|
|
|
|
Denominator for basic earnings per share—weighted-average common shares
|
82,652
|
|
|
84,599
|
|
|
87,217
|
|
Effect of dilutive securities:
|
|
|
|
|
|
Employee stock options and warrants
|
379
|
|
|
403
|
|
|
277
|
|
Restricted stock units
|
499
|
|
|
560
|
|
|
281
|
|
Denominator for diluted earnings per share—adjusted weighted-average common shares
|
83,530
|
|
|
85,562
|
|
|
87,775
|
|
Basic earnings per share
|
$
|
13.26
|
|
|
$
|
15.91
|
|
|
$
|
6.49
|
|
Diluted earnings per share
|
$
|
13.12
|
|
|
$
|
15.73
|
|
|
$
|
6.45
|
|
18
. Condensed Consolidating Financial Information of Guarantor Subsidiaries
URNA is
100 percent
owned by Holdings (“Parent”) and has certain outstanding indebtedness that is guaranteed by both Parent and, with the exception of its U.S. special purpose vehicle which holds receivable assets relating to the Company’s accounts receivable securitization facility (the “SPV”), all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”). Other than the guarantee by certain Canadian subsidiaries of URNA's indebtedness under the ABL facility, none of URNA’s indebtedness is guaranteed by URNA's foreign subsidiaries or the SPV (together, the “non-guarantor subsidiaries”). The receivable assets owned by the SPV have been sold or contributed by URNA to the SPV and are not available to satisfy the obligations of URNA or Parent’s other subsidiaries. The guarantor subsidiaries are all
100 percent
-owned and the guarantees are made on a joint and several basis. The guarantees are not full and unconditional because a guarantor subsidiary can be automatically released and relieved of its obligations under certain circumstances, including sale of the guarantor subsidiary, the sale of all or substantially all of the guarantor subsidiary's assets, the requirements for legal defeasance or covenant defeasance under the applicable indenture being met, designating the guarantor subsidiary as an unrestricted subsidiary for purposes of the applicable covenants or, other than with respect to the guarantees of the 5
3
/
4
percent Senior Notes due 2024, the notes being rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA. The guarantees are also subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and 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. Based on our understanding of Rule 3-10 of Regulation S-X ("Rule 3-10"), we believe that the guarantees of the guarantor subsidiaries comply with the conditions set forth in Rule 3-10 and therefore continue to utilize Rule 3-10 to present condensed consolidating financial information for Holdings, URNA, the guarantor subsidiaries and the non-guarantor subsidiaries. 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.
URNA covenants in the ABL facility, accounts receivable securitization facility, term loan facility and the other agreements governing our debt impose operating and financial restrictions on URNA, Parent and the guarantor subsidiaries, including limitations on the ability to make share repurchases and dividend payments. As of
December 31, 2018
, the amount available for distribution under the most restrictive of these covenants was $
583
. The Company’s total available capacity for making share repurchases and dividend payments includes the intercompany receivable balance of Parent. As of
December 31, 2018
, our total available capacity for making share repurchases and dividend payments, which includes URNA’s capacity to make restricted payments and the intercompany receivable balance of Parent, was $
2.117 billion
.
The condensed consolidating financial information of Parent and its subsidiaries is as follows:
CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Foreign
|
|
SPV
|
|
Eliminations
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
—
|
|
|
159
|
|
|
1,386
|
|
|
—
|
|
|
1,545
|
|
Intercompany receivable (payable)
|
1,534
|
|
|
(1,423
|
)
|
|
(96
|
)
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Inventory
|
—
|
|
|
96
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
109
|
|
Prepaid expenses and other assets
|
—
|
|
|
60
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
64
|
|
Total current assets
|
1,534
|
|
|
(1,266
|
)
|
|
(96
|
)
|
|
203
|
|
|
1,386
|
|
|
—
|
|
|
1,761
|
|
Rental equipment, net
|
—
|
|
|
8,910
|
|
|
—
|
|
|
690
|
|
|
—
|
|
|
—
|
|
|
9,600
|
|
Property and equipment, net
|
57
|
|
|
462
|
|
|
40
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
614
|
|
Investments in subsidiaries
|
1,826
|
|
|
1,646
|
|
|
980
|
|
|
—
|
|
|
—
|
|
|
(4,452
|
)
|
|
—
|
|
Goodwill
|
—
|
|
|
4,661
|
|
|
—
|
|
|
397
|
|
|
—
|
|
|
—
|
|
|
5,058
|
|
Other intangibles, net
|
—
|
|
|
1,004
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
1,084
|
|
Other long-term assets
|
9
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
Total assets
|
$
|
3,426
|
|
|
$
|
15,424
|
|
|
$
|
924
|
|
|
$
|
1,425
|
|
|
$
|
1,386
|
|
|
$
|
(4,452
|
)
|
|
$
|
18,133
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
Short-term debt and current maturities of long-term debt
|
$
|
1
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
850
|
|
|
$
|
—
|
|
|
$
|
903
|
|
Accounts payable
|
—
|
|
|
481
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
536
|
|
Accrued expenses and other liabilities
|
—
|
|
|
619
|
|
|
14
|
|
|
42
|
|
|
2
|
|
|
—
|
|
|
677
|
|
Total current liabilities
|
1
|
|
|
1,150
|
|
|
14
|
|
|
99
|
|
|
852
|
|
|
—
|
|
|
2,116
|
|
Long-term debt
|
—
|
|
|
10,778
|
|
|
9
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
10,844
|
|
Deferred taxes
|
22
|
|
|
1,587
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
—
|
|
|
1,687
|
|
Other long-term liabilities
|
—
|
|
|
83
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
Total liabilities
|
23
|
|
|
13,598
|
|
|
23
|
|
|
234
|
|
|
852
|
|
|
—
|
|
|
14,730
|
|
Total stockholders’ equity (deficit)
|
3,403
|
|
|
1,826
|
|
|
901
|
|
|
1,191
|
|
|
534
|
|
|
(4,452
|
)
|
|
3,403
|
|
Total liabilities and stockholders’ equity (deficit)
|
$
|
3,426
|
|
|
$
|
15,424
|
|
|
$
|
924
|
|
|
$
|
1,425
|
|
|
$
|
1,386
|
|
|
$
|
(4,452
|
)
|
|
$
|
18,133
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Foreign
|
|
SPV
|
|
Eliminations
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
329
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
352
|
|
Accounts receivable, net
|
—
|
|
|
56
|
|
|
—
|
|
|
119
|
|
|
1,058
|
|
|
—
|
|
|
1,233
|
|
Intercompany receivable (payable)
|
887
|
|
|
(677
|
)
|
|
(198
|
)
|
|
(124
|
)
|
|
—
|
|
|
112
|
|
|
—
|
|
Inventory
|
—
|
|
|
68
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
75
|
|
Prepaid expenses and other assets
|
4
|
|
|
219
|
|
|
111
|
|
|
2
|
|
|
—
|
|
|
(224
|
)
|
|
112
|
|
Total current assets
|
891
|
|
|
(311
|
)
|
|
(87
|
)
|
|
333
|
|
|
1,058
|
|
|
(112
|
)
|
|
1,772
|
|
Rental equipment, net
|
—
|
|
|
7,264
|
|
|
—
|
|
|
560
|
|
|
—
|
|
|
—
|
|
|
7,824
|
|
Property and equipment, net
|
41
|
|
|
352
|
|
|
32
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
467
|
|
Investments in subsidiaries
|
2,194
|
|
|
1,148
|
|
|
1,087
|
|
|
—
|
|
|
—
|
|
|
(4,429
|
)
|
|
—
|
|
Goodwill
|
—
|
|
|
3,815
|
|
|
—
|
|
|
267
|
|
|
—
|
|
|
—
|
|
|
4,082
|
|
Other intangibles, net
|
—
|
|
|
827
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
875
|
|
Other long-term assets
|
3
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
Total assets
|
$
|
3,129
|
|
|
$
|
13,102
|
|
|
$
|
1,032
|
|
|
$
|
1,250
|
|
|
$
|
1,058
|
|
|
$
|
(4,541
|
)
|
|
$
|
15,030
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
Short-term debt and current maturities of long-term debt
|
$
|
1
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
695
|
|
|
$
|
—
|
|
|
$
|
723
|
|
Accounts payable
|
—
|
|
|
366
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
409
|
|
Accrued expenses and other liabilities
|
—
|
|
|
477
|
|
|
17
|
|
|
41
|
|
|
1
|
|
|
—
|
|
|
536
|
|
Total current liabilities
|
1
|
|
|
868
|
|
|
17
|
|
|
86
|
|
|
696
|
|
|
—
|
|
|
1,668
|
|
Long-term debt
|
1
|
|
|
8,596
|
|
|
117
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
8,717
|
|
Deferred taxes
|
21
|
|
|
1,324
|
|
|
—
|
|
|
74
|
|
|
—
|
|
|
—
|
|
|
1,419
|
|
Other long-term liabilities
|
—
|
|
|
120
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120
|
|
Total liabilities
|
23
|
|
|
10,908
|
|
|
134
|
|
|
163
|
|
|
696
|
|
|
—
|
|
|
11,924
|
|
Total stockholders’ equity (deficit)
|
3,106
|
|
|
2,194
|
|
|
898
|
|
|
1,087
|
|
|
362
|
|
|
(4,541
|
)
|
|
3,106
|
|
Total liabilities and stockholders’ equity (deficit)
|
$
|
3,129
|
|
|
$
|
13,102
|
|
|
$
|
1,032
|
|
|
$
|
1,250
|
|
|
$
|
1,058
|
|
|
$
|
(4,541
|
)
|
|
$
|
15,030
|
|
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
For the Year Ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Foreign
|
|
SPV
|
|
Eliminations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
$
|
—
|
|
|
$
|
6,388
|
|
|
$
|
—
|
|
|
$
|
552
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,940
|
|
Sales of rental equipment
|
—
|
|
|
609
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
664
|
|
Sales of new equipment
|
—
|
|
|
184
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
208
|
|
Contractor supplies sales
|
—
|
|
|
80
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
91
|
|
Service and other revenues
|
—
|
|
|
126
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
144
|
|
Total revenues
|
—
|
|
|
7,387
|
|
|
—
|
|
|
660
|
|
|
—
|
|
|
—
|
|
|
8,047
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
2,370
|
|
|
—
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
2,614
|
|
Depreciation of rental equipment
|
—
|
|
|
1,258
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
1,363
|
|
Cost of rental equipment sales
|
—
|
|
|
358
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
386
|
|
Cost of new equipment sales
|
—
|
|
|
159
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
179
|
|
Cost of contractor supplies sales
|
—
|
|
|
52
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
60
|
|
Cost of service and other revenues
|
—
|
|
|
71
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
81
|
|
Total cost of revenues
|
—
|
|
|
4,268
|
|
|
—
|
|
|
415
|
|
|
—
|
|
|
—
|
|
|
4,683
|
|
Gross profit
|
—
|
|
|
3,119
|
|
|
—
|
|
|
245
|
|
|
—
|
|
|
—
|
|
|
3,364
|
|
Selling, general and administrative expenses
|
25
|
|
|
860
|
|
|
—
|
|
|
96
|
|
|
57
|
|
|
—
|
|
|
1,038
|
|
Merger related costs
|
—
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
Restructuring charge
|
—
|
|
|
29
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
31
|
|
Non-rental depreciation and amortization
|
17
|
|
|
266
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
308
|
|
Operating (loss) income
|
(42
|
)
|
|
1,928
|
|
|
—
|
|
|
122
|
|
|
(57
|
)
|
|
—
|
|
|
1,951
|
|
Interest (income) expense, net
|
(39
|
)
|
|
497
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
(1
|
)
|
|
481
|
|
Other (income) expense, net
|
(657
|
)
|
|
742
|
|
|
—
|
|
|
51
|
|
|
(142
|
)
|
|
—
|
|
|
(6
|
)
|
Income before provision for income taxes
|
654
|
|
|
689
|
|
|
—
|
|
|
71
|
|
|
61
|
|
|
1
|
|
|
1,476
|
|
Provision for income taxes
|
164
|
|
|
181
|
|
|
—
|
|
|
20
|
|
|
15
|
|
|
—
|
|
|
380
|
|
Income before equity in net earnings (loss) of subsidiaries
|
490
|
|
|
508
|
|
|
—
|
|
|
51
|
|
|
46
|
|
|
1
|
|
|
1,096
|
|
Equity in net earnings (loss) of subsidiaries
|
606
|
|
|
98
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
(751
|
)
|
|
—
|
|
Net income (loss)
|
1,096
|
|
|
606
|
|
|
47
|
|
|
51
|
|
|
46
|
|
|
(750
|
)
|
|
1,096
|
|
Other comprehensive (loss)
income
|
(86
|
)
|
|
(86
|
)
|
|
(82
|
)
|
|
(105
|
)
|
|
—
|
|
|
273
|
|
|
(86
|
)
|
Comprehensive income (loss)
|
$
|
1,010
|
|
|
$
|
520
|
|
|
$
|
(35
|
)
|
|
$
|
(54
|
)
|
|
$
|
46
|
|
|
$
|
(477
|
)
|
|
$
|
1,010
|
|
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
For the Year Ended
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Foreign
|
|
SPV
|
|
Eliminations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
$
|
—
|
|
|
$
|
5,253
|
|
|
$
|
—
|
|
|
$
|
462
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,715
|
|
Sales of rental equipment
|
—
|
|
|
494
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
550
|
|
Sales of new equipment
|
—
|
|
|
157
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
178
|
|
Contractor supplies sales
|
—
|
|
|
70
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
80
|
|
Service and other revenues
|
—
|
|
|
102
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
118
|
|
Total revenues
|
—
|
|
|
6,076
|
|
|
—
|
|
|
565
|
|
|
—
|
|
|
—
|
|
|
6,641
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
1,933
|
|
|
—
|
|
|
218
|
|
|
—
|
|
|
—
|
|
|
2,151
|
|
Depreciation of rental equipment
|
—
|
|
|
1,033
|
|
|
—
|
|
|
91
|
|
|
—
|
|
|
—
|
|
|
1,124
|
|
Cost of rental equipment sales
|
—
|
|
|
302
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Cost of new equipment sales
|
—
|
|
|
134
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
152
|
|
Cost of contractor supplies sales
|
—
|
|
|
49
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
56
|
|
Cost of service and other revenues
|
—
|
|
|
51
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
59
|
|
Total cost of revenues
|
—
|
|
|
3,502
|
|
|
—
|
|
|
370
|
|
|
—
|
|
|
—
|
|
|
3,872
|
|
Gross profit
|
—
|
|
|
2,574
|
|
|
—
|
|
|
195
|
|
|
—
|
|
|
—
|
|
|
2,769
|
|
Selling, general and administrative expenses
|
103
|
|
|
682
|
|
|
—
|
|
|
80
|
|
|
38
|
|
|
—
|
|
|
903
|
|
Merger related costs
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
Restructuring charge
|
—
|
|
|
49
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
50
|
|
Non-rental depreciation and amortization
|
15
|
|
|
223
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
259
|
|
Operating (loss) income
|
(118
|
)
|
|
1,570
|
|
|
—
|
|
|
93
|
|
|
(38
|
)
|
|
—
|
|
|
1,507
|
|
Interest (income) expense, net
|
(15
|
)
|
|
469
|
|
|
3
|
|
|
—
|
|
|
12
|
|
|
(5
|
)
|
|
464
|
|
Other (income) expense, net
|
(543
|
)
|
|
596
|
|
|
—
|
|
|
45
|
|
|
(103
|
)
|
|
—
|
|
|
(5
|
)
|
Income (loss) before provision (benefit) for income taxes
|
440
|
|
|
505
|
|
|
(3
|
)
|
|
48
|
|
|
53
|
|
|
5
|
|
|
1,048
|
|
Provision (benefit) for income taxes
|
144
|
|
|
(469
|
)
|
|
—
|
|
|
12
|
|
|
15
|
|
|
—
|
|
|
(298
|
)
|
Income (loss) before equity in net earnings (loss) of subsidiaries
|
296
|
|
|
974
|
|
|
(3
|
)
|
|
36
|
|
|
38
|
|
|
5
|
|
|
1,346
|
|
Equity in net earnings (loss) of subsidiaries
|
1,050
|
|
|
76
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
(1,162
|
)
|
|
—
|
|
Net income (loss)
|
1,346
|
|
|
1,050
|
|
|
33
|
|
|
36
|
|
|
38
|
|
|
(1,157
|
)
|
|
1,346
|
|
Other comprehensive income (loss)
|
67
|
|
|
67
|
|
|
67
|
|
|
55
|
|
|
—
|
|
|
(189
|
)
|
|
67
|
|
Comprehensive income (loss)
|
$
|
1,413
|
|
|
$
|
1,117
|
|
|
$
|
100
|
|
|
$
|
91
|
|
|
$
|
38
|
|
|
$
|
(1,346
|
)
|
|
$
|
1,413
|
|
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
For the Year Ended
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Foreign
|
|
SPV
|
|
Eliminations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rentals
|
$
|
—
|
|
|
$
|
4,524
|
|
|
$
|
—
|
|
|
$
|
417
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,941
|
|
Sales of rental equipment
|
—
|
|
|
444
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
496
|
|
Sales of new equipment
|
—
|
|
|
129
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
144
|
|
Contractor supplies sales
|
—
|
|
|
68
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
79
|
|
Service and other revenues
|
—
|
|
|
87
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
102
|
|
Total revenues
|
—
|
|
|
5,252
|
|
|
—
|
|
|
510
|
|
|
—
|
|
|
—
|
|
|
5,762
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
1,669
|
|
|
—
|
|
|
193
|
|
|
—
|
|
|
—
|
|
|
1,862
|
|
Depreciation of rental equipment
|
—
|
|
|
900
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|
990
|
|
Cost of rental equipment sales
|
—
|
|
|
265
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
292
|
|
Cost of new equipment sales
|
—
|
|
|
107
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
119
|
|
Cost of contractor supplies sales
|
—
|
|
|
47
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
55
|
|
Cost of service and other revenues
|
—
|
|
|
35
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
41
|
|
Total cost of revenues
|
—
|
|
|
3,023
|
|
|
—
|
|
|
336
|
|
|
—
|
|
|
—
|
|
|
3,359
|
|
Gross profit
|
—
|
|
|
2,229
|
|
|
—
|
|
|
174
|
|
|
—
|
|
|
—
|
|
|
2,403
|
|
Selling, general and administrative expenses
|
43
|
|
|
579
|
|
|
—
|
|
|
72
|
|
|
25
|
|
|
—
|
|
|
719
|
|
Restructuring charge
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
14
|
|
Non-rental depreciation and amortization
|
15
|
|
|
216
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
255
|
|
Operating (loss) income
|
(58
|
)
|
|
1,427
|
|
|
—
|
|
|
71
|
|
|
(25
|
)
|
|
—
|
|
|
1,415
|
|
Interest (income) expense, net
|
(6
|
)
|
|
509
|
|
|
3
|
|
|
2
|
|
|
8
|
|
|
(5
|
)
|
|
511
|
|
Other (income) expense, net
|
(471
|
)
|
|
521
|
|
|
—
|
|
|
40
|
|
|
(95
|
)
|
|
—
|
|
|
(5
|
)
|
Income (loss) before provision for income taxes
|
419
|
|
|
397
|
|
|
(3
|
)
|
|
29
|
|
|
62
|
|
|
5
|
|
|
909
|
|
Provision for income taxes
|
154
|
|
|
157
|
|
|
—
|
|
|
8
|
|
|
24
|
|
|
—
|
|
|
343
|
|
Income (loss) before equity in net earnings (loss) of subsidiaries
|
265
|
|
|
240
|
|
|
(3
|
)
|
|
21
|
|
|
38
|
|
|
5
|
|
|
566
|
|
Equity in net earnings (loss) of subsidiaries
|
301
|
|
|
61
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
(383
|
)
|
|
—
|
|
Net income (loss)
|
566
|
|
|
301
|
|
|
18
|
|
|
21
|
|
|
38
|
|
|
(378
|
)
|
|
566
|
|
Other comprehensive income (loss)
|
32
|
|
|
32
|
|
|
28
|
|
|
22
|
|
|
—
|
|
|
(82
|
)
|
|
32
|
|
Comprehensive income (loss)
|
$
|
598
|
|
|
$
|
333
|
|
|
$
|
46
|
|
|
$
|
43
|
|
|
$
|
38
|
|
|
$
|
(460
|
)
|
|
$
|
598
|
|
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Year Ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Foreign
|
|
SPV
|
|
Eliminations
|
|
Total
|
Net cash provided by (used in) operating activities
|
$
|
36
|
|
|
$
|
3,116
|
|
|
$
|
(1
|
)
|
|
$
|
(16
|
)
|
|
$
|
(282
|
)
|
|
$
|
—
|
|
|
$
|
2,853
|
|
Net cash used in investing activities
|
(36
|
)
|
|
(4,308
|
)
|
|
—
|
|
|
(207
|
)
|
|
—
|
|
|
—
|
|
|
(4,551
|
)
|
Net cash provided by (used in) financing activities
|
—
|
|
|
1,170
|
|
|
1
|
|
|
(56
|
)
|
|
282
|
|
|
—
|
|
|
1,397
|
|
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
Net decrease in cash and cash equivalents
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(287
|
)
|
|
—
|
|
|
—
|
|
|
(309
|
)
|
Cash and cash equivalents at beginning of period
|
—
|
|
|
23
|
|
|
—
|
|
|
329
|
|
|
—
|
|
|
—
|
|
|
352
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43
|
|
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Year Ended
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Foreign
|
|
SPV
|
|
Eliminations
|
|
Total
|
Net cash provided by (used in) operating activities
|
$
|
21
|
|
|
$
|
2,291
|
|
|
$
|
(3
|
)
|
|
$
|
132
|
|
|
$
|
(232
|
)
|
|
$
|
—
|
|
|
$
|
2,209
|
|
Net cash used in investing activities
|
(21
|
)
|
|
(3,554
|
)
|
|
—
|
|
|
(109
|
)
|
|
—
|
|
|
—
|
|
|
(3,684
|
)
|
Net cash provided by (used in) financing activities
|
—
|
|
|
1,265
|
|
|
3
|
|
|
(3
|
)
|
|
232
|
|
|
—
|
|
|
1,497
|
|
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Net increase in cash and cash equivalents
|
—
|
|
|
2
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
40
|
|
Cash and cash equivalents at beginning of period
|
—
|
|
|
21
|
|
|
—
|
|
|
291
|
|
|
—
|
|
|
—
|
|
|
312
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
329
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
352
|
|
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Year Ended
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Foreign
|
|
SPV
|
|
Eliminations
|
|
Total
|
Net cash provided by (used in) operating activities
|
$
|
9
|
|
|
$
|
1,762
|
|
|
$
|
(3
|
)
|
|
$
|
136
|
|
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
1,941
|
|
Net cash used in investing activities
|
(9
|
)
|
|
(832
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(847
|
)
|
Net cash (used in) provided by financing activities
|
—
|
|
|
(927
|
)
|
|
3
|
|
|
(3
|
)
|
|
(37
|
)
|
|
—
|
|
|
(964
|
)
|
Effect of foreign exchange rate
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Net increase in cash and cash equivalents
|
—
|
|
|
3
|
|
|
—
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
133
|
|
Cash and cash equivalents at beginning of period
|
—
|
|
|
18
|
|
|
—
|
|
|
161
|
|
|
—
|
|
|
—
|
|
|
179
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
291
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
312
|
|