URI-3.31.2013-10Q
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 ___________________________________
FORM 10-Q
___________________________________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 1-14387
Commission File Number 1-13663
___________________________________ 
United Rentals, Inc.
United Rentals (North America), Inc.
(Exact Names of Registrants as Specified in Their Charters)
 ___________________________________
Delaware
Delaware
 
06-1522496
86-0933835
(States of Incorporation)
 
(I.R.S. Employer Identification Nos.)
 
 
Five Greenwich Office Park,
Greenwich, Connecticut
 
06831
(Address of Principal Executive Offices)
 
(Zip Code)
Registrants’ Telephone Number, Including Area Code: (203) 622-3131 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
 
x
Accelerated Filer
 
¨
 
 
Non-Accelerated Filer
 
¨
Smaller Reporting Company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x   No
As of April 12, 2013, there were 94,234,996 shares of United Rentals, Inc. common stock, $0.01 par value, outstanding. There is no market for the common stock of United Rentals (North America), Inc., all outstanding shares of which are owned by United Rentals, Inc.
This combined Form 10-Q is separately filed by (i) United Rentals, Inc. and (ii) United Rentals (North America), Inc. (which is a wholly owned subsidiary of United Rentals, Inc.). United Rentals (North America), Inc. meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this report with the reduced disclosure format permitted by such instruction.

Table of Contents

UNITED RENTALS, INC.
UNITED RENTALS (NORTH AMERICA), INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013
INDEX
 
 
 
Page
PART I
 
 
 
 
Item 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2
 
 
 
Item 3
 
 
 
Item 4
 
 
 
PART II
 
 
 
 
Item 1
 
 
 
Item 1A
 
 
 
Item 2
 
 
 
Item 6
 
 
 
 

2
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “on-track,” “plan,” “project,” “forecast,” “intend” or “anticipate,” or the negative thereof or comparable terminology, or by discussions of strategy or outlook. You are cautioned that our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected.

Factors that could cause actual results to differ materially from those projected include, but are not limited to, the following:

•
the possibility that RSC Holdings Inc. ("RSC") or other companies that we have acquired or may acquire could have undiscovered liabilities or involve other unexpected costs, may strain our management capabilities or may be difficult to integrate;
•
our highly leveraged capital structure requires us to use a substantial portion of our cash flow for debt service and can constrain our flexibility in responding to unanticipated or adverse business conditions;
•
a change in the pace of the recovery in our end markets. Our business is cyclical and highly sensitive to North American construction and industrial activities. Although we have recently experienced an upturn in rental activity, there is no certainty this trend will continue. If the pace of the recovery slows or construction activity declines, our revenues and, because many of our costs are fixed, our profitability, may be adversely affected;
•
inability to benefit from government spending, including spending associated with infrastructure projects;
•
restrictive covenants in our debt instruments, which can limit our financial and operational flexibility;
•
noncompliance with financial or other covenants in our debt agreements, which could result in our lenders terminating our credit facilities and requiring us to repay outstanding borrowings;
•
inability to access the capital that our businesses or growth plans may require;
•
inability to manage credit risk adequately or to collect on contracts with a large number of customers;
•
incurrence of impairment charges;
•
the outcome or other potential consequences of regulatory matters and commercial litigation;
•
increases in our loss reserves to address business operations or other claims and any claims that exceed our established levels of reserves;
•
incurrence of additional expenses (including indemnification obligations) and other costs in connection with litigation, regulatory and investigatory matters;
•
increases in our maintenance and replacement costs and decreases in the residual value of our equipment;
•
inability to sell our new or used fleet in the amounts, or at the prices, we expect;
•
turnover in our management team and inability to attract and retain key personnel;
•
rates we charge and time utilization we achieve being less than anticipated;
•
costs we incur being more than anticipated, and the inability to realize expected savings in the amounts or time frames planned;
•
dependence on key suppliers to obtain equipment and other supplies for our business on acceptable terms;
•
competition from existing and new competitors;
•
disruptions in our information technology systems;
•
the costs of complying with environmental and safety regulations;
•
labor disputes, work stoppages or other labor difficulties, which may impact our productivity, and potential enactment of new legislation or other changes in law affecting our labor relations or operations generally; and
•
shortfalls in our insurance coverage.

For a more complete description of these and other possible risks and uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, 2012, as well as to our subsequent filings with the SEC. Our forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.


3
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PART I. FINANCIAL INFORMATION
 
Item 1.
Financial Statements

UNITED RENTALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
 
 
March 31, 2013
 
December 31, 2012
 
(unaudited)
 
ASSETS
 
 
 
Cash and cash equivalents
$
147

 
$
106

Accounts receivable, net of allowance for doubtful accounts of $65 at March 31, 2013 and $64 at December 31, 2012
725

 
793

Inventory
103

 
68

Prepaid expenses and other assets
81

 
111

Deferred taxes
255

 
265

Total current assets
1,311

 
1,343

Rental equipment, net
4,963

 
4,966

Property and equipment, net
420

 
428

Goodwill, net
2,963

 
2,970

Other intangible assets, net
1,151

 
1,200

Other long-term assets
113

 
119

Total assets
$
10,921

 
$
11,026

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Short-term debt and current maturities of long-term debt
$
567

 
$
630

Accounts payable
406

 
286

Accrued expenses and other liabilities
396

 
435

Total current liabilities
1,369

 
1,351

Long-term debt
6,580

 
6,679

Subordinated convertible debentures
17

 
55

Deferred taxes
1,293

 
1,302

Other long-term liabilities
67

 
65

Total liabilities
9,326

 
9,452

Temporary equity (note 6)
29

 
31

Common stock—$0.01 par value, 500,000,000 shares authorized, 97,487,189 and 94,232,796 shares issued and outstanding, respectively, at March 31, 2013 and 95,891,809 and 92,984,016 shares issued and outstanding, respectively, at December 31, 2012
1

 
1

Additional paid-in capital
2,037

 
1,997

Accumulated deficit
(403
)
 
(424
)
Treasury stock at cost—3,254,393 and 2,907,793 shares at March 31, 2013 and December 31, 2012, respectively
(133
)
 
(115
)
Accumulated other comprehensive income
64

 
84

Total stockholders’ equity
1,566

 
1,543

Total liabilities and stockholders’ equity
$
10,921

 
$
11,026

See accompanying notes.

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UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share amounts)
 
 
Three Months Ended
 
 
March 31,
 
 
2013

2012
 
Revenues:
 
 
 
 
Equipment rentals
$
916

 
$
523

 
Sales of rental equipment
123

 
76

 
Sales of new equipment
21

 
18

 
Contractor supplies sales
20

 
18

 
Service and other revenues
20

 
21

 
Total revenues
1,100

 
656

 
Cost of revenues:
 
 
 
 
Cost of equipment rentals, excluding depreciation
393

 
246

 
Depreciation of rental equipment
202

 
115

 
Cost of rental equipment sales
83

 
47

 
Cost of new equipment sales
17

 
15

 
Cost of contractor supplies sales
13

 
12

 
Cost of service and other revenues
7

 
8

 
Total cost of revenues
715

 
443

 
Gross profit
385

 
213

 
Selling, general and administrative expenses
160

 
102

 
RSC merger related costs
6

 
10

 
Restructuring charge
6

 
—

 
Non-rental depreciation and amortization
64

 
14

 
Operating income
149

 
87

 
Interest expense, net
118

 
68

 
Interest expense—subordinated convertible debentures
2

 
1

 
Other income, net
(1
)
 
(1
)
 
Income before provision for income taxes
30

 
19

 
Provision for income taxes
9

 
6

 
Net income
$
21

 
$
13

 
Basic earnings per share
$
0.22

 
$
0.21

 
Diluted earnings per share
$
0.19

 
$
0.17

 
See accompanying notes.

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UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In millions)
 
 
Three Months Ended
 
 
March 31,
 
 
2013
 
2012
 
 Net income
$
21


$
13

 
 Other comprehensive (loss) income, net of tax:
 
 
 
 
 Foreign currency translation adjustments
(20
)

9

 
 Fixed price diesel swaps
—


1

 
 Other comprehensive (loss) income
(20
)
 
10

 
 Comprehensive income
$
1

 
$
23

 


See accompanying notes.


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UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(In millions)
 
 
Common Stock
 
Additional
 
 
 
Treasury Stock
 
Accumulated
Other
 
Number of
Shares (1)
 
Amount
 
Paid-in
Capital
 
Accumulated
Deficit
 
Number of
Shares
 
Amount
 
Comprehensive
Income
Balance at December 31, 2012
93

 
$
1

 
$
1,997

 
$
(424
)
 
3

 
$
(115
)
 
$
84

Net income
 
 
 
 
 
 
21

 
 
 
 
 
 
Foreign currency translation adjustments
 
 
 
 
 
 
 
 
 
 
 
 
(20
)
Stock compensation expense, net
 
 
 
 
9

 
 
 
 
 
 
 
 
Exercise of common stock options
 
 
 
 
3

 
 
 
 
 
 
 
 
Conversion of subordinated convertible debentures
1

 
 
 
38

 
 
 
 
 
 
 
 
4 percent Convertible Senior Notes
 
 
 
 
2

 
 
 
 
 
 
 
 
Shares repurchased and retired
 
 
 
 
(12
)
 
 
 
 
 
 
 
 
Repurchase of common stock
 
 
 
 
 
 
 
 
—

 
(18
)
 
 
Balance at March 31, 2013
94

 
$
1

 
$
2,037

 
$
(403
)
 
3

 
$
(133
)
 
$
64

 
(1) An aggregate of 30 million net shares were issued during the year ended December 31, 2012. The shares were primarily issued in connection with the acquisition of RSC Holdings Inc. discussed in in note 1 to the condensed consolidated financial statements.


See accompanying notes.

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UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In millions)
 
Three Months Ended
 
March 31,
 
2013
 
2012
Cash Flows From Operating Activities:
 
 
 
Net income
$
21

 
$
13

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
266

 
129

Amortization of deferred financing costs and original issue discounts
6

 
5

Gain on sales of rental equipment
(40
)
 
(29
)
Gain on sales of non-rental equipment
(1
)
 
(1
)
Stock compensation expense, net
9

 
4

RSC merger related costs
6

 
10

Restructuring charge
6

 
—

Loss on retirement of subordinated convertible debentures
1

 
—

Increase in restricted cash- RSC merger related debt interest
—

 
(25
)
Increase in deferred taxes
3

 
1

Changes in operating assets and liabilities, net of amounts acquired:
 
 
 
Decrease in accounts receivable
65

 
50

Increase in inventory
(34
)
 
(41
)
Decrease in prepaid expenses and other assets
30

 
11

Increase in accounts payable
121

 
172

Decrease in accrued expenses and other liabilities
(50
)
 
(45
)
Net cash provided by operating activities
409

 
254

Cash Flows From Investing Activities:
 
 
 
Purchases of rental equipment
(289
)
 
(390
)
Purchases of non-rental equipment
(14
)
 
(36
)
Proceeds from sales of rental equipment
123

 
76

Proceeds from sales of non-rental equipment
5

 
7

Purchases of other companies
—

 
(57
)
Net cash used in investing activities
(175
)
 
(400
)
Cash Flows From Financing Activities:
 
 
 
Proceeds from debt
631

 
3,351

Payments of debt, including subordinated convertible debentures
(795
)
 
(385
)
Increase in restricted cash- proceeds from RSC merger related debt
—

 
(2,825
)
Proceeds from the exercise of common stock options
3

 
5

Common stock repurchased
(30
)
 
(8
)
Payments of financing costs
—

 
(3
)
Net cash (used in) provided by financing activities
(191
)
 
135

Effect of foreign exchange rates
(2
)
 
1

Net increase (decrease) in cash and cash equivalents
41

 
(10
)
Cash and cash equivalents at beginning of period
106

 
36

Cash and cash equivalents at end of period
$
147

 
$
26

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for income taxes, net
$
15

 
$
12

Cash paid for interest, including subordinated convertible debentures
90

 
40

See accompanying notes.

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UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data, unless otherwise indicated)
1. Organization, Description of Business and Basis of Presentation
United Rentals, Inc. (“Holdings,” “URI” or the “Company”) is principally a holding company and conducts its operations primarily through its wholly owned subsidiary, United Rentals (North America), Inc. (“URNA”), and subsidiaries of URNA. Holdings’ primary asset is its sole ownership of all issued and outstanding shares of common stock of URNA. URNA’s various credit agreements and debt instruments place restrictions on its ability to transfer funds to its shareholder.
We rent equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities in the United States and Canada. In addition to renting equipment, we sell new and used rental equipment, as well as related contractor supplies, parts and service.
On April 30, 2012 (“the acquisition date”), we acquired 100 percent of the outstanding common shares and voting interest of RSC Holdings Inc. (“RSC”). The results of RSC's operations have been included in our condensed consolidated financial statements since the acquisition date. RSC was one of the largest equipment rental providers in North America, and had a network of 440 rental locations in 43 U.S. states and three Canadian provinces as of December 31, 2011. Our total revenues were $1,100 for the three months ended March 31, 2013. Pro forma total revenues for the three months ended March 31, 2012, comprised of United Rentals and RSC historic revenues, were $1,064.
We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with the accounting policies described in our annual report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”) and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the 2012 Form 10-K.
In our opinion, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of financial condition, operating results and cash flows for the interim periods presented have been made. Interim results of operations are not necessarily indicative of the results of the full year.
2. Segment Information
Our reportable segments are general rentals and trench safety, power and HVAC (“heating, ventilating and air conditioning”). The general rentals segment includes the rental of construction, infrastructure, industrial and homeowner equipment and related services and activities. The general rentals segment’s customers include construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. The general rentals segment comprises 12 geographic regions—Eastern Canada, Gulf South, Industrial (which serves the geographic Gulf region and has a strong industrial presence), Mid-Atlantic, Mid-Central, Midwest, Mountain West, Northeast, Pacific West, South, Southeast and Western Canada—and operates throughout the United States and Canada. The trench safety, power and HVAC segment includes the rental of specialty construction products and related services. The trench safety, power and HVAC segment is comprised of the Trench Safety region, which rents trench safety equipment such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, and the Power and HVAC region, which rents power and HVAC equipment such as portable diesel generators, electrical distribution equipment, and temperature control equipment including heating and cooling equipment. The trench safety, power and HVAC segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This segment operates throughout the United States and in Canada. These segments align our external segment reporting with how management evaluates and allocates resources. We evaluate segment performance based on segment equipment rentals gross profit.
 
The following tables set forth financial information by segment.  

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UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


 
General
rentals
 
Trench safety,
power and  HVAC
 
Total
Three Months Ended March 31, 2013
 
 
 
 
 
Equipment rentals
$
854

 
$
62

 
$
916

Sales of rental equipment
119

 
4

 
123

Sales of new equipment
20

 
1

 
21

Contractor supplies sales
18

 
2

 
20

Service and other revenues
19

 
1

 
20

Total revenue
1,030

 
70

 
1,100

Depreciation and amortization expense
252

 
14

 
266

Equipment rentals gross profit
295

 
26

 
321

Capital expenditures
288

 
15

 
303

Three Months Ended March 31, 2012
 
 
 
 
 
Equipment rentals
$
475

 
$
48

 
$
523

Sales of rental equipment
74

 
2

 
76

Sales of new equipment
17

 
1

 
18

Contractor supplies sales
16

 
2

 
18

Service and other revenues
20

 
1

 
21

Total revenue
602

 
54

 
656

Depreciation and amortization expense
119

 
10

 
129

Equipment rentals gross profit
144

 
18

 
162

Capital expenditures
413

 
13

 
426

 
March 31,
2013
 
December 31,
2012
Total reportable segment assets
 
 
 
General rentals
$
10,448

 
$
10,545

Trench safety, power and HVAC
473

 
481

Total assets
$
10,921

 
$
11,026

 
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 for income taxes: 

Three Months Ended

 
March 31,

 
2013

2012

Total equipment rentals gross profit
$
321

 
$
162

 
Gross profit from other lines of business
64

 
51

 
Selling, general and administrative expenses
(160
)
 
(102
)
 
RSC merger related costs
(6
)
 
(10
)
 
Restructuring charge
(6
)
 
—

 
Non-rental depreciation and amortization
(64
)
 
(14
)
 
Interest expense, net
(118
)
 
(68
)
 
Interest expense- subordinated convertible debentures
(2
)
 
(1
)
 
Other income, net
1

 
1

 
Income before provision for income taxes
$
30

 
$
19




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UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


3. Restructuring and Asset Impairment Charges
Closed Restructuring Program
Between 2008 and 2011 and in recognition of the very challenging economic environment, we were intensely focused on reducing our operating costs. During this period, we reduced our employee headcount from approximately 10,900 at January 1, 2008 (the beginning of the restructuring period) to approximately 7,500 at December 31, 2011 (the end of the restructuring period). Additionally, we reduced our branch network from 697 locations at January 1, 2008 to 529 locations at December 31, 2011. For the three months ended March 31, 2013, the restructuring charges primarily reflected branch closure charges due to continuing lease obligations at vacant facilities.
Current Restructuring Program
In the second quarter of 2012, we initiated a new restructuring program related to severance costs and branch closure charges associated with the RSC acquisition. The branch closure charges principally relate to continuing lease obligations at vacant facilities closed subsequent to the RSC acquisition. As of March 31, 2013, our employee headcount is approximately 11,400 and our branch network has 830 rental locations. Subsequent to March 31, 2013, we expect to incur approximately $5 of additional charges in connection with the restructuring, which is expected to be substantially complete by June 30, 2013.
The table below provides certain information concerning our restructuring charges for the three months ended March 31, 2013:
 
 
 
Reserve Balance at
 
Charged to
Costs and
Expenses(1)
 
Payments
and Other
 
Reserve Balance at
Description 
 
December 31, 2012
 
 
 
March 31, 2013
Closed Restructuring Program
 
 
 
 
 
 
 
 
Branch closure charges
 
$
19

 
$
1

 
$
(3
)
 
$
17

Severance costs
 
—

 
—

 
—

 
—

Total
 
$
19

 
$
1

 
$
(3
)
 
$
17

Current Restructuring Program
 
 
 
 
 
 
 
 
Branch closure charges
 
$
33

 
$
3

 
$
(7
)
 
$
29

Severance costs
 
9

 
2

 
(4
)
 
7

Total
 
$
42

 
$
5

 
$
(11
)
 
$
36

Total
 
 
 
 
 
 
 
 
Branch closure charges
 
$
52

 
$
4

 
$
(10
)
 
$
46

Severance costs
 
9

 
2

 
(4
)
 
7

Total
 
$
61

 
$
6

 
$
(14
)
 
$
53

 
_________________
(1)
Reflected in our condensed consolidated statements of income as “Restructuring charge.” These charges are not allocated to our reportable segments.
 Asset Impairment Charges
In addition to the restructuring charges discussed above, during the three months ended March 31, 2013 and 2012, we recorded asset impairment charges of $1 and $0, respectively, in our general rentals segment. The asset impairment charges are primarily reflected in non-rental depreciation and amortization in the accompanying consolidated statements of income and principally relate to write-offs of leasehold improvements and other fixed assets in connection with the restructuring activity discussed above.
4. Derivatives
We recognize all derivative instruments as either assets or liabilities at fair value, and recognize changes in the fair value of the derivative instruments based on the designation of the derivative. For derivative instruments that are designated and qualify as hedging instruments, we designate the hedging instrument, based upon the exposure being hedged, as either a fair value hedge or a cash flow hedge. As of March 31, 2013, we do not have any outstanding derivative instruments designated as fair value hedges. The effective portion of the changes in fair value of derivatives that are designated as cash flow hedges is recorded as a component of accumulated other comprehensive income. Amounts included in accumulated other comprehensive

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UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


income for cash flow hedges are reclassified into earnings in the same period that the hedged item is recognized in earnings. The ineffective portion of changes in the fair value of derivatives designated as cash flow hedges is recorded currently in earnings. For derivative instruments that do not qualify for hedge accounting, we recognize gains or losses due to changes in fair value in our condensed consolidated statements of income during the period in which the changes in fair value occur.
We are exposed to certain risks related to our ongoing business operations. During the three months ended March 31, 2013, the primary risks we managed using derivative instruments were diesel price risk and foreign currency exchange rate risk. At March 31, 2013, we had outstanding fixed price swap contracts on diesel purchases which were entered into to mitigate the price risk associated with forecasted purchases of diesel. During the three months ended March 31, 2013, we entered into forward contracts to purchase Canadian dollars to mitigate the foreign currency exchange rate risk associated with certain Canadian dollar denominated intercompany loans. At March 31, 2013 and December 31, 2012, there were no outstanding forward contracts to purchase Canadian dollars. The outstanding forward contracts on diesel purchases were designated and qualify as cash flow hedges and the forward contracts to purchase Canadian dollars represented derivative instruments not designated as hedging instruments.
Fixed Price Diesel Swaps
The fixed price swap contracts on diesel purchases that were outstanding at March 31, 2013 were designated and qualify as cash flow hedges and the effective portion of the gain or loss on these contracts is reported as a component of accumulated other comprehensive income and is reclassified into earnings in the period during which the hedged transaction affects earnings (i.e., when the hedged gallons of diesel are used). The remaining gain or loss on the fixed price swap contracts in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion), is recognized in our condensed consolidated statements of income during the current period. As of March 31, 2013, we had outstanding fixed price swap contracts covering 8.6 million gallons of diesel which will be purchased throughout 2013 and 2014.
Foreign Currency Forward Contracts
The forward contracts to purchase Canadian dollars, which were all settled as of March 31, 2013, represented derivative instruments not designated as hedging instruments and gains or losses due to changes in the fair value of the forward contracts were recognized in our condensed consolidated statements of income during the period in which the changes in fair value occurred. During the three months ended March 31, 2013, forward contracts were used to purchase $70 Canadian dollars, representing the total amount due at maturity for certain Canadian dollar denominated intercompany loans that were settled during the three months ended March 31, 2013. Upon maturity, the proceeds from the forward contracts were used to pay down the Canadian dollar denominated intercompany loans.
Financial Statement Presentation
As of March 31, 2013 and December 31, 2012, $1 and less than $1 were reflected in prepaid expenses and other assets, respectively, less than $1 was reflected in accrued expenses and other liabilities, and less than $1 was reflected in accumulated other comprehensive income in our condensed consolidated balance sheets associated with the outstanding fixed price swap contracts that were designated and qualify as cash flow hedges.
The effect of our derivative instruments on our condensed consolidated statements of income for the three months ended March 31, 2013 and 2012 was as follows:
 

12
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UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


 
 
 
Three Months Ended March 31, 2013
 
Three Months Ended March 31, 2012
 
Location of income
(expense)
recognized on
derivative/hedged item
 
Amount of  income
(expense)
recognized
on derivative
 
Amount of  income
(expense)
recognized
on hedged item
 
Amount of  income
(expense)
recognized
on derivative
 
Amount of  income
(expense)
recognized
on hedged item
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
Fixed price diesel swaps
Other income
(expense), net (1)
 
 $ *

 
 
 
 $ *

 
 
 
Cost of equipment
rentals, excluding
depreciation (2),
(3)
 
 *

 
$
(9
)
 
 *

 
$
(5
)
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts (4)
Other income
(expense), net
 
(2
)
 
2

 
—

 
—

*
Amounts are insignificant (less than $1).
(1)
Represents the ineffective portion of the fixed price diesel swaps.
(2)
Amounts recognized on derivative represent the effective portion of the fixed price diesel swaps.
(3)
Amounts recognized on hedged item reflect the use of 2.2 million and 1.2 million gallons of diesel covered by the fixed price swaps during the three months ended March 31, 2013 and 2012, respectively. These amounts are reflected, net of cash received from the counterparties to the fixed price swaps, in operating cash flows in our condensed consolidated statement of cash flows.
(4)
Insignificant amounts were reflected in our condensed consolidated statement of cash flows associated with the forward contracts to purchase Canadian dollars, as the cash impact of the loss recognized on the derivative was offset by the gain recognized on the hedged item.

5. Fair Value Measurements
We account for certain assets and liabilities at fair value. We categorize each of our fair value measurements 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.
Level 2- Observable inputs other than quoted prices in active markets for identical assets and liabilities include:
a)
quoted prices for similar assets in active markets;
b)
quoted prices for identical or similar assets in inactive markets;
c)
inputs other than quoted prices that are observable for the asset;
d)
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset.
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.
Assets and Liabilities Measured at Fair Value
As of March 31, 2013 and December 31, 2012, our only assets and liabilities measured at fair value were our fixed price diesel swaps contracts, which are Level 2 derivatives measured at fair value on a recurring basis. As of March 31, 2013 and December 31, 2012, $1 and less than $1 were reflected in prepaid expenses and other assets, respectively, and less than $1 was reflected in accrued expenses and other liabilities in our condensed consolidated balance sheets, respectively, reflecting the fair

13
Table of Contents

values of the fixed price diesel swaps contracts. As discussed in note 4 to the condensed consolidated financial statements, we entered into the fixed price swap contracts on diesel purchases to mitigate the price risk associated with forecasted purchases of diesel. Fair value is determined based on observable market data. As of March 31, 2013, we have fixed price swap contracts that mature throughout 2013 and 2014 covering 8.6 million gallons of diesel which we will buy at the average contract price of $3.87 per gallon, while the average forward price for the hedged gallons was $3.93 per gallon as of March 31, 2013.
 
Fair Value of Financial Instruments
The carrying amounts reported in our condensed 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 facility, accounts receivable securitization facility and capital leases approximate their book values as of March 31, 2013 and December 31, 2012. The estimated fair values of our financial instruments as of March 31, 2013 and December 31, 2012 have been calculated based upon available market information, and are presented below by level in the fair value hierarchy: 
 
March 31, 2013
 
December 31, 2012
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
Level 1:
 
 
 
 
 
 
 
Subordinated convertible debentures
$
17

 
$
22

 
$
55

 
$
63

Senior and senior subordinated notes
5,386

 
5,921

 
5,387

 
5,881

Level 2:
 
 
 
 
 
 
 
4 percent Convertible Senior Notes (1)
139

 
155

 
137

 
155

___________________ 
(1)
The fair value of the 4 percent Convertible Senior Notes is based on the market value of comparable notes. Consistent with the carrying amount, the fair value excludes the equity component of the notes. To exclude the equity component and calculate the fair value, we used an effective interest rate of 6.7 percent.

6. Debt and Subordinated Convertible Debentures
Debt consists of the following: 
 
March 31, 2013
 
December 31, 2012
URNA and subsidiaries debt:
 
 
 
Accounts Receivable Securitization Facility (1)
$
390

 
$
453

$1.9 billion ABL Facility (2)
1,091

 
1,184

5 3/4 percent Senior Secured Notes
750

 
750

10 1/4 percent Senior Notes
222

 
223

9 1/4 percent Senior Notes
494

 
494

7 3/8 percent Senior Notes
750

 
750

8 3/8 percent Senior Subordinated Notes
750

 
750

8 1/4 percent Senior Notes
695

 
695

7 5/8 percent Senior Notes
1,325

 
1,325

6 1/8 percent Senior Notes
400

 
400

Capital leases
141

 
148

Total URNA and subsidiaries debt
7,008

 
7,172

Holdings:
 
 
 
4 percent Convertible Senior Notes (3)
139

 
137

Total debt (4)
7,147

 
7,309

Less short-term portion (5)
(567
)
 
(630
)
Total long-term debt
$
6,580

 
$
6,679

 ___________________


14
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UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


(1)
In February 2013, we amended our accounts receivable securitization facility to increase the facility size from $475 to $550. An additional purchaser was also added to the facility, and the facility was not otherwise amended. At March 31, 2013, $60 was available under our accounts receivable securitization facility. The interest rate applicable to the accounts receivable securitization facility was 0.8 percent at March 31, 2013. During the three months ended March 31, 2013, the monthly average amount outstanding under the accounts receivable securitization facility, including the former facility and the amended facility, was $412, and the weighted-average interest rate thereon was 0.8 percent. The maximum month-end amount outstanding under the accounts receivable securitization facility, including the former facility and the amended facility, during the three months ended March 31, 2013 was $435. Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves, exceeds the outstanding loans. As of March 31, 2013, there were $451 of receivables, net of applicable reserves, in the collateral pool.
(2)
At March 31, 2013, $748 was available under our ABL facility, net of $61 of letters of credit. The interest rate applicable to the ABL facility was 2.3 percent at March 31, 2013. During the three months ended March 31, 2013, the monthly average amount outstanding under the ABL facility was $1,014, and the weighted-average interest rate thereon was 2.3 percent. The maximum month-end amount outstanding under the ABL facility during the three months ended March 31, 2013 was $1,091.
(3)
The difference between the March 31, 2013 carrying value of the 4 percent Convertible Senior Notes and the $168 principal amount reflects the $29 unamortized portion of the original issue discount recognized upon issuance of the notes, which is being amortized through the maturity date of November 15, 2015. Because the 4 percent Convertible Senior Notes were redeemable at March 31, 2013, an amount equal to the $29 unamortized portion of the original issue discount is separately classified in our condensed consolidated balance sheets and referred to as “temporary equity.” Based on the price of our common stock during the first quarter of 2013, holders of the 4 percent Convertible Senior Notes have the right to redeem the notes during the second quarter of 2013 at a conversion price of $11.11 per share of common stock. Since April 1, 2013 (the beginning of the second quarter), none of the 4 percent Convertible Senior Notes were redeemed.
(4)
In August 1998, a subsidiary trust of Holdings (the “Trust”) issued and sold $300 of 6 1/2 percent Convertible Quarterly Income Preferred Securities (“QUIPS”) in a private offering. The Trust used the proceeds from the offering to purchase 6 1/2 percent subordinated convertible debentures due 2028 (the “Debentures”), which resulted in Holdings receiving all of the net proceeds of the offering. The QUIPS are non-voting securities, carry a liquidation value of $50 (fifty dollars) per security and are convertible into Holdings’ common stock. During the three months ended March 31, 2013, an aggregate of $38 of QUIPS was converted into Holdings' common stock. In connection with this transaction, we retired $38 principal amount of our subordinated convertible debentures and recognized a loss of $1, inclusive of the write-off of capitalized debt issuance costs. This loss is reflected in interest expense-subordinated convertible debentures in our condensed consolidated statements of income. Since April 1, 2013 (the beginning of the second quarter), an additional $2 of QUIPS was converted into Holdings' common stock. Total debt at March 31, 2013 and December 31, 2012 excludes $17 and $55 of these Debentures, respectively, which are separately classified in our condensed consolidated balance sheets and referred to as “subordinated convertible debentures.” The subordinated convertible debentures reflect the obligation to our subsidiary that has issued the QUIPS. This subsidiary is not consolidated in our financial statements because we are not the primary beneficiary of the Trust.
(5)
As of March 31, 2013, our short-term debt primarily reflects $390 of borrowings under our accounts receivable securitization facility and $139 of 4 percent Convertible Senior Notes. The 4 percent Convertible Senior Notes mature in 2015, but are reflected as short-term debt because they are redeemable at March 31, 2013.
Convertible Note Hedge Transactions
In connection with the November 2009 issuance of $173 aggregate principal amount of 4 percent Convertible Senior Notes, Holdings entered into convertible note hedge transactions with option counterparties. The convertible note hedge transactions cost $26, and decreased additional paid-in capital by $17, net of taxes, in our accompanying condensed consolidated statements of stockholders’ equity. The convertible note hedge transactions cover, subject to anti-dilution adjustments, 15.1 million shares of our common stock. The convertible note hedge transactions are intended to reduce, subject to a limit, the potential dilution with respect to our common stock upon conversion of the 4 percent Convertible Senior Notes. The effect of the convertible note hedge transactions is to increase the effective conversion price to $15.56 per share, equal to an approximately 75 percent premium over the $8.89 closing price of our common stock at issuance. The effective conversion price is subject to change in certain circumstances, such as if the 4 percent Convertible Senior Notes are converted prior to May 15, 2015. In the event the market value of our common stock exceeds the effective conversion price per share, the settlement amount received from such transactions will only partially offset the potential dilution. For example, if, at the time of exercise

15
Table of Contents
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


of the conversion right, the price of our common stock was $50.00 or $55.00 per share, assuming an effective conversion price of $15.56 per share, on a net basis, we would issue 10.4 million or 10.8 million shares, respectively.
Loan Covenants and Compliance
As of March 31, 2013, we were in compliance with the covenants and other provisions of the ABL facility, the accounts receivable securitization facility, the senior notes and the QUIPS. 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.
In October 2011, we amended the ABL facility. The only material financial covenants which currently exist relate to the fixed charge coverage ratio and the senior secured leverage ratio under the ABL facility. Since the October 2011 amendment of the ABL facility and through March 31, 2013, availability under the ABL facility has exceeded the required threshold and, as a result, these maintenance covenants have been inapplicable. Subject to certain limited exceptions specified in the amended ABL facility, the fixed charge coverage ratio and the senior secured leverage ratio under the amended ABL facility will only apply in the future if availability under the amended ABL facility falls below the greater of 10 percent of the maximum revolver amount under the amended ABL facility and $150. 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.

7. Legal and Regulatory Matters
In addition to the disclosures provided in note 15 to our consolidated financial statements for the year ended December 31, 2012 filed on Form 10-K on January 23, 2013, we are also subject to a number of claims and proceedings that generally arise in the ordinary conduct of our business. These matters include, but are not limited to, general liability claims (including personal injury, product liability, and property and auto claims), indemnification and guarantee obligations, employee injuries and employment-related claims, self-insurance obligations and contract and real estate matters. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals for matters where we have established them, we currently believe that any liabilities ultimately resulting from these ordinary course claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

16
Table of Contents
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


8. 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. Diluted earnings per share for the three months ended March 31, 2013 and 2012 excludes the impact of approximately 1.2 million and 1.3 million common stock equivalents, respectively, since the effect of including these securities would be anti-dilutive. The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):
 
 
Three Months Ended
 
 
March 31,
 
 
2013
 
2012
 
Numerator:
 
 
 
 
Net income
$
21

 
$
13

 
Convertible debt interest—1 7/8 percent notes
—

 
—

 
Net income available to common stockholders
$
21

 
$
13

 
Denominator:
 
 
 
 
Denominator for basic earnings per share—weighted-average common shares
93,310

 
63,131

 
Effect of dilutive securities:
 
 
 
 
Employee stock options and warrants
619

 
709

 
Convertible subordinated notes—1 7/8 percent
—

 
1,015

 
Convertible subordinated notes—4 percent
11,866

 
10,794

 
Restricted stock units
585

 
617

 
Denominator for diluted earnings per share—adjusted weighted-average common shares
106,380

 
76,266

 
Basic earnings per share
$
0.22

 
$
0.21

 
Diluted earnings per share
$
0.19

 
$
0.17

 


17
Table of Contents
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


9. Condensed Consolidating Financial Information of Guarantor Subsidiaries
URNA is 100 percent owned by Holdings (“Parent”) and has outstanding (i) certain indebtedness that is guaranteed by Parent, (ii) certain 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 (the “SPV”), all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”) and (iii) certain indebtedness that is guaranteed by the guarantor subsidiaries. However, this indebtedness is not guaranteed by URNA’s foreign subsidiaries and the SPV (together, the “non-guarantor 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 subsidiary guarantor, the sale of all or substantially all of the subsidiary guarantor's assets, the requirements for legal defeasance or covenant defeasance under the applicable indenture being met or designating the subsidiary guarantor as an unrestricted subsidiary for purposes of the applicable covenants. 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. The condensed consolidating financial information of Parent and its subsidiaries is as follows:

18
Table of Contents
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2013  
 
Parent
 
URNA
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
Foreign
 
SPV
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
24

 
$
—

 
$
123

 
$
—

 
$
—

 
$
147

Accounts receivable, net
—

 
34

 
—

 
127

 
564

 
—

 
725

Intercompany receivable (payable)
200

 
(152
)
 
(42
)
 
(156
)
 
—

 
150

 
—

Inventory
—

 
94

 
—

 
9

 
—

 
—

 
103

Prepaid expenses and other assets
—

 
58

 
—

 
23

 
—

 
—

 
81

Deferred taxes
—

 
253

 
—

 
2

 
—

 
—

 
255

Total current assets
200

 
311

 
(42
)
 
128

 
564

 
150

 
1,311

Rental equipment, net
—

 
4,376

 
—

 
587

 
—

 
—

 
4,963

Property and equipment, net
45

 
322

 
16

 
37

 
—

 
—

 
420

Investments in subsidiaries
1,528

 
1,055

 
934

 
—

 
—

 
(3,517
)
 
—

Goodwill, net
—

 
2,708

 
—

 
255

 
—

 
—

 
2,963

Other intangible assets, net
—

 
1,052

 
—

 
99

 
—

 
—

 
1,151

Other long-term assets
2

 
111

 
—

 
—

 
—

 
—

 
113

Total assets
$
1,775

 
$
9,935

 
$
908

 
$
1,106

 
$
564

 
$
(3,367
)
 
$
10,921

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term debt and current maturities of long-term debt
$
139

 
$
38

 
$
—

 
$
—

 
$
390

 
$
—

 
$
567

Accounts payable
—

 
358

 
—

 
48

 
—

 
—

 
406

Accrued expenses and other liabilities
3

 
332

 
30

 
31

 
—

 
—

 
396

Total current liabilities
142

 
728

 
30

 
79

 
390

 
—

 
1,369

Long-term debt
—

 
6,426

 
147

 
7

 
—

 
—

 
6,580

Subordinated convertible debentures
17

 
—

 
—

 
—

 
—

 
—

 
17

Deferred taxes
21

 
1,189

 
—

 
83

 
—

 
—

 
1,293

Other long-term liabilities
—

 
64

 
—

 
3

 
—

 
—

 
67

Total liabilities
180

 
8,407

 
177

 
172

 
390

 
—

 
9,326

Temporary equity (note 6)
29

 
—

 
—

 
—

 
—

 
—

 
29

Total stockholders’ equity (deficit)
1,566

 
1,528

 
731

 
934

 
174

 
(3,367
)
 
1,566

Total liabilities and stockholders’ equity (deficit)
$
1,775

 
$
9,935

 
$
908

 
$
1,106

 
$
564

 
$
(3,367
)
 
$
10,921






19
Table of Contents
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)



CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2012
 
 
Parent
 
URNA
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
Foreign
 
SPV
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
20

 
$
—

 
$
86

 
$
—

 
$
—

 
$
106

Accounts receivable, net
—

 
43

 
—

 
146

 
604

 
—

 
793

Intercompany receivable (payable)
168

 
(108
)
 
(49
)
 
(163
)
 
—

 
152

 
—

Inventory
—

 
60

 
—

 
8

 
—

 
—

 
68

Prepaid expenses and other assets
—

 
87

 
10

 
14

 
—

 
—

 
111

Deferred taxes
—

 
263

 
—

 
2

 
—

 
—

 
265

Total current assets
168

 
365

 
(39
)
 
93

 
604

 
152

 
1,343

Rental equipment, net
—

 
4,357

 
—

 
609

 
—

 
—

 
4,966

Property and equipment, net
41

 
333

 
16

 
38

 
—

 
—

 
428

Investments in subsidiaries
1,575

 
1,029

 
932

 
—

 
—

 
(3,536
)
 
—

Goodwill, net
—

 
2,710

 
—

 
260

 
—

 
—

 
2,970

Other intangible assets, net
—

 
1,094

 
—

 
106

 
—

 
—

 
1,200

Other long-term assets
4

 
115

 
—

 
—

 
—

 
—

 
119

Total assets
$
1,788

 
$
10,003

 
$
909

 
$
1,106

 
$
604

 
$
(3,384
)
 
$
11,026

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term debt and current maturities of long-term debt
$
137

 
$
40

 
$
—

 
$
—

 
$
453

 
$
—

 
$
630

Accounts payable
—

 
243

 
—

 
43

 
—

 
—

 
286

Accrued expenses and other liabilities
1

 
361

 
33

 
40

 
—

 
—

 
435

Total current liabilities
138

 
644

 
33

 
83

 
453

 
—

 
1,351

Long-term debt
—

 
6,522

 
150

 
7

 
—

 
—

 
6,679

Subordinated convertible debentures
55

 
—

 
—

 
—

 
—

 
—

 
55

Deferred taxes
21

 
1,199

 
—

 
82

 
—

 
—

 
1,302

Other long-term liabilities
—

 
63

 
—

 
2

 
—

 
—

 
65

Total liabilities
214

 
8,428

 
183

 
174

 
453

 
—

 
9,452

Temporary equity (note 6)
31

 
—

 
—

 
—

 
—

 
—

 
31

Total stockholders’ equity (deficit)
1,543

 
1,575

 
726

 
932

 
151

 
(3,384
)
 
1,543

Total liabilities and stockholders’ equity (deficit)
$
1,788

 
$
10,003

 
$
909

 
$
1,106

 
$
604

 
$
(3,384
)
 
$
11,026


20
Table of Contents
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)



CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2013
 
 
Parent
 
URNA
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
Foreign
 
SPV
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Equipment rentals
$
—

 
$
781

 
$
—

 
$
135

 
$
—

 
$
—

 
$
916

Sales of rental equipment
—

 
112

 
—

 
11

 
—

 
—

 
123

Sales of new equipment
—

 
16

 
—

 
5

 
—

 
—

 
21

Contractor supplies sales
—

 
16

 
—

 
4

 
—

 
—

 
20

Service and other revenues
—

 
15

 
—

 
5

 
—

 
—

 
20

Total revenues
—

 
940

 
—

 
160

 
—

 
—

 
1,100

Cost of revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of equipment rentals, excluding depreciation
—

 
333

 
—

 
60

 
—

 
—

 
393

Depreciation of rental equipment
—

 
178

 
—

 
24

 
—

 
—

 
202

Cost of rental equipment sales
—

 
76

 
—

 
7

 
—

 
—

 
83

Cost of new equipment sales
—

 
13

 
—

 
4

 
—

 
—

 
17

Cost of contractor supplies sales
—

 
10

 
—

 
3

 
—

 
—

 
13

Cost of service and other revenues
—

 
6

 
—

 
1

 
—

 
—

 
7

Total cost of revenues
—

 
616

 
—

 
99

 
—

 
—

 
715

Gross profit
—

 
324

 
—

 
61

 
—

 
—

 
385

Selling, general and administrative expenses
19

 
118

 
—

 
22

 
1

 
—

 
160

RSC merger related costs
—

 
6

 
—

 
—

 
—

 
—

 
6

Restructuring charge
—

 
6

 
—

 
—

 
—

 
—

 
6

Non-rental depreciation and amortization
4

 
55

 
—

 
5

 
—

 
—

 
64

Operating (loss) income
(23
)
 
139

 
—

 
34

 
(1
)
 
—

 
149

Interest expense (income), net
2

 
114

 
1

 
1

 
1

 
(1
)
 
118

Interest expense-subordinated convertible debentures
2

 
—

 
—

 
—

 
—

 
—

 
2

Other (income) expense, net
(30
)
 
45

 
—

 
3

 
(19
)
 
—

 
(1
)
Income (loss) before provision (benefit) for income taxes
3

 
(20
)
 
(1
)
 
30

 
17

 
1

 
30

Provision (benefit) for income taxes
1

 
(8
)
 
—

 
9

 
7

 
—

 
9

Income (loss) before equity in net earnings (loss) of subsidiaries
2

 
(12
)
 
(1
)
 
21

 
10

 
1

 
21

Equity in net earnings (loss) of subsidiaries
19

 
31

 
21

 
—

 
—

 
(71
)
 
—

Net income (loss)
21

 
19

 
20

 
21

 
10

 
(70
)
 
21

Other comprehensive (loss) income
(20
)
 
(20
)
 
(20
)
 
(15
)
 
—

 
55

 
(20
)
Comprehensive income (loss)
$
1

 
$
(1
)
 
$
—

 
$
6

 
$
10

 
$
(15
)
 
$
1






21
Table of Contents
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share data, unless otherwise indicated)


CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2012
 
 
Parent
 
URNA
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
Foreign
 
SPV
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Equipment rentals
$
—

 
$
250

 
$
183

 
$
90

 
$
—

 
$
—

 
$
523

Sales of rental equipment
—

 
39

 
26

 
11

 
—

 
—

 
76

Sales of new equipment
—

 
8

 
5

 
5