Edgar Filing: UNITED RENTALS INC /DE

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________

FORM 10-Q

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x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016



o	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.)

100 First Stamford Place, Suite 700 Stamford, Connecticut		06902
(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 o 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 o

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	o
Non-Accelerated Filer	o	Smaller Reporting Company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

As of October 17, 2016, there were 84,224,499 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.

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UNITED RENTALS, INC.

UNITED RENTALS (NORTH AMERICA), INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016

INDEX



		Page
PART I	FINANCIAL INFORMATION

Item 1	Unaudited Condensed Consolidated Financial Statements	5

	United Rentals, Inc. Condensed Consolidated Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015	5

	United Rentals, Inc. Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)	6

	United Rentals, Inc. Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)	7

	United Rentals, Inc. Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2016 (unaudited)	8

	United Rentals, Inc. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (unaudited)	9

	Notes to Unaudited Condensed Consolidated Financial Statements	10

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4	Controls and Procedures	43

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	44

Item 1A	Risk Factors	44

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 6	Exhibits	45

	Signatures	46

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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 companies that we have acquired or may acquire, in our specialty business or otherwise, could have undiscovered liabilities or involve other unexpected costs, may strain our management capabilities or may be difficult to integrate;


•	the cyclical nature of our business, which is highly sensitive to North American construction and industrial activities; if construction or industrial activity decline, our revenues and, because many of our costs are fixed, our profitability may be adversely affected;


•	our significant indebtedness (which totaled $8.0 billion at September 30, 2016) 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;


•	inability to refinance our indebtedness on terms that are favorable to us, or at all;


•	incurrence of additional debt, which could exacerbate the risks associated with our current level of indebtedness;


•	noncompliance with financial or other covenants in our debt agreements, which could result in our lenders terminating the agreements and requiring us to repay outstanding borrowings;


•	restrictive covenants and amount of borrowings permitted in our debt instruments, which can limit our financial and operational flexibility;


•	overcapacity of fleet in the equipment rental industry;


•	inability to benefit from government spending, including spending associated with infrastructure projects;


•	fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame and/or on the terms anticipated;


•	rates we charge and time utilization we achieve being less than anticipated;


•	inability to manage credit risk adequately or to collect on contracts with a large number of customers;


•	inability to access the capital that our businesses or growth plans may require;


•	incurrence of impairment charges;


•	trends in oil and natural gas could adversely affect the demand for our services and products;


•	the fact that our holding company structure requires us to depend in part on distributions from subsidiaries and such distributions could be limited by contractual or legal restrictions;


•	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;


•	the outcome or other potential consequences of regulatory matters and commercial litigation;


•	shortfalls in our insurance coverage;


•	our charter provisions as well as provisions of certain debt agreements and our significant indebtedness may have the effect of making more difficult or otherwise discouraging, delaying or deterring a takeover or other change of control of us;


•	turnover in our management team and inability to attract and retain key personnel;


•	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;


•	inability to sell our new or used fleet in the amounts, or at the prices, we expect;


•	competition from existing and new competitors;


•	risks related to security breaches, cybersecurity attacks and other significant disruptions in our information technology systems;


•	the costs of complying with environmental, safety and foreign law and regulations, as well as other risks associated with non-U.S. operations, including currency exchange risk;

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•	labor disputes, work stoppages or other labor difficulties, which may impact our productivity, and potential enactment of new legislation or other changes in law affecting our labor relations or operations generally; and


•	increases in our maintenance and replacement costs and/or decreases in the residual value of our equipment.

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, 2015, 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.

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PART I. FINANCIAL INFORMATION


Item 1.	Financial Statements

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)



	September 30, 2016			December 31, 2015
	(unaudited)			December 31, 2015
ASSETS
Cash and cash equivalents	$	297		$	179
Accounts receivable, net of allowance for doubtful accounts of $55 at September 30, 2016 and December 31, 2015	929			930
Inventory	72			69
Prepaid expenses and other assets	56			116
Total current assets	1,354			1,294
Rental equipment, net	6,427			6,186
Property and equipment, net	435			445
Goodwill	3,267			3,243
Other intangible assets, net	782			905
Other long-term assets	10			10
Total assets	$	12,275		$	12,083
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt and current maturities of long-term debt	$	609		$	607
Accounts payable	409			271
Accrued expenses and other liabilities	402			355
Total current liabilities	1,420			1,233
Long-term debt	7,393			7,555
Deferred taxes	1,863			1,765
Other long-term liabilities	60			54
Total liabilities	10,736			10,607
Common stock—$0.01 par value, 500,000,000 shares authorized, 111,944,470 and 84,687,234 shares issued and outstanding, respectively, at September 30, 2016 and 111,586,585 and 91,776,436 shares issued and outstanding, respectively, at December 31, 2015	1			1
Additional paid-in capital	2,270			2,197
Retained earnings	1,501			1,088
Treasury stock at cost—27,257,236 and 19,810,149 shares at September 30, 2016 and December 31, 2015, respectively	(2,037		)	(1,560		)
Accumulated other comprehensive loss	(196		)	(250		)
Total stockholders’ equity	1,539			1,476
Total liabilities and stockholders’ equity	$	12,275		$	12,083

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						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenues:
Equipment rentals	$	1,322		$	1,326		$	3,643		$	3,671
Sales of rental equipment	112			141			361			381
Sales of new equipment	30			38			96			110
Contractor supplies sales	19			21			60			60
Service and other revenues	25			24			79			72
Total revenues	1,508			1,550			4,239			4,294
Cost of revenues:
Cost of equipment rentals, excluding depreciation	486			470			1,391			1,359
Depreciation of rental equipment	250			249			735			724
Cost of rental equipment sales	68			85			215			217
Cost of new equipment sales	25			31			79			91
Cost of contractor supplies sales	13			15			41			42
Cost of service and other revenues	10			10			32			29
Total cost of revenues	852			860			2,493			2,462
Gross profit	656			690			1,746			1,832
Selling, general and administrative expenses	179			178			533			534
Merger related costs	—			—			—			(26		)
Restructuring charge	4			—			8			1
Non-rental depreciation and amortization	61			66			192			202
Operating income	412			446			1,013			1,121
Interest expense, net	110			107			349			460
Other income, net	(1		)	(1		)	(3		)	(10		)
Income before provision for income taxes	303			340			667			671
Provision for income taxes	116			125			254			255
Net income	$	187		$	215		$	413		$	416
Basic earnings per share	$	2.18		$	2.28		$	4.68		$	4.33
Diluted earnings per share	$	2.16		$	2.25		$	4.66		$	4.27

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In millions)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016		2015
Net income	$	187		$	215		$	413	$	416
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(9		)	(71		)	51		(144		)
Fixed price diesel swaps	—			(1		)	3		—
Other comprehensive (loss) income	(9		)	(72		)	54		(144		)
Comprehensive income (1)	$	178		$	143		$	467	$	272

(1)There were no material reclassifications from accumulated other comprehensive loss reflected in other comprehensive (loss) income during 2016 or 2015. There is no tax impact related to the foreign currency translation adjustments, as the earnings are considered permanently reinvested. There were no material taxes associated with other comprehensive (loss) income during 2016 or 2015.

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)



	Common Stock									Treasury Stock
	Number of Shares (1)		Amount		Additional Paid-in Capital			Retained Earnings		Number of Shares	Amount			Accumulated Other Comprehensive (Loss) Income (2)
Balance at December 31, 2015	92		$	1	$	2,197		$	1,088	20	$	(1,560	)	$	(250	)
Net income								413
Foreign currency translation adjustments														51
Fixed price diesel swaps														3
Stock compensation expense, net					33
Shares repurchased and retired					(11		)
Repurchase of common stock	(7	)								7	(477		)
Excess tax benefits from share-based payment arrangements, net					51
Balance at September 30, 2016	85		$	1	$	2,270		$	1,501	27	$	(2,037	)	$	(196	)

(1)Common stock outstanding decreased by approximately 6 million net shares during the year ended December 31, 2015.

(2)The Accumulated Other Comprehensive Loss balance primarily reflects foreign currency translation adjustments.

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)



	Nine Months Ended
	September 30,
	2016			2015
Cash Flows From Operating Activities:
Net income	$	413		$	416
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	927			926
Amortization of deferred financing costs and original issue discounts	7			8
Gain on sales of rental equipment	(146		)	(164		)
Gain on sales of non-rental equipment	(3		)	(6		)
Stock compensation expense, net	33			37
Merger related costs	—			(26		)
Restructuring charge	8			1
Loss on repurchase/redemption of debt securities and amendment of ABL facility	36			123
Excess tax benefits from share-based payment arrangements	(53		)	(57		)
Increase in deferred taxes	90			94
Changes in operating assets and liabilities, net of amounts acquired:
Decrease (increase) in accounts receivable	7			(72		)
Increase in inventory	(3		)	—
Decrease in prepaid expenses and other assets	75			17
Increase in accounts payable	137			195
Increase in accrued expenses and other liabilities	102			65
Net cash provided by operating activities	1,630			1,557
Cash Flows From Investing Activities:
Purchases of rental equipment	(1,145		)	(1,425		)
Purchases of non-rental equipment	(65		)	(76		)
Proceeds from sales of rental equipment	361			381
Proceeds from sales of non-rental equipment	12			14
Purchases of other companies, net of cash acquired	(28		)	(86		)
Net cash used in investing activities	(865		)	(1,192		)
Cash Flows From Financing Activities:
Proceeds from debt	5,812			7,453
Payments of debt	(6,021		)	(7,093		)
Payment of contingent consideration	—			(52		)
Proceeds from the exercise of common stock options	—			1
Common stock repurchased	(488		)	(667		)
Payments of financing costs	(12		)	(27		)
Excess tax benefits from share-based payment arrangements	53			57
Net cash used in financing activities	(656		)	(328		)
Effect of foreign exchange rates	9			(24		)
Net increase in cash and cash equivalents	118			13
Cash and cash equivalents at beginning of period	179			158
Cash and cash equivalents at end of period	$	297		$	171
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	$	14		$	55
Cash paid for interest	294			304

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.

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, 2015 (the “2015 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 2015 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.

New Accounting Pronouncements

Revenue from Contracts with Customers. In May 2014, and in subsequent updates, the Financial Accounting Standards Board (“FASB”) issued guidance to clarify the principles for recognizing revenue. This guidance 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. The FASB has agreed to a one-year deferral of the original effective date of this guidance and as a result it will be effective for fiscal years and interim periods beginning after December 15, 2017. The FASB's update allows entities to apply the new guidance as of the original effective date (for fiscal years and interim periods beginning after December 15, 2016). We expect to adopt this guidance when effective, and the impact on our financial statements is not currently estimable.

Leases. In March 2016, the FASB issued guidance (“Topic 842”) to increase transparency and comparability among organizations by requiring i) recognition of lease assets and lease liabilities on the balance sheet and ii) disclosure of key information about leasing arrangements. The accounting applied by lessors under Topic 842 is largely unchanged from previous GAAP. Some changes to the lessor accounting guidance were made to align both of the following: i) the lessor accounting guidance with certain changes made to the lessee accounting guidance and ii) key aspects of the lessor accounting model with revenue recognition guidance. Topic 842 will be effective for fiscal years and interim periods beginning after December 15, 2018, and early adoption is permitted. 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 are currently assessing whether we will early adopt, and the impact on our financial statements is not currently estimable.

Improvements to Employee Share-Based Payment Accounting. In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2016, and early adoption is permitted. Different components of the guidance require prospective, retrospective and/or modified retrospective adoption. We expect to adopt this guidance when effective, and do not expect the guidance to have a significant impact on our financial statements.

Statement of Cash Flows. In August 2016, the FASB issued guidance 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 eight 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)

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separately identifiable cash flows and application of predominance principle. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The guidance requires retrospective adoption. We are currently assessing whether we will early adopt, and the impact on our financial statements is not currently estimable.

2. Segment Information

Our reportable segments are i) general rentals and ii) trench, power and pump. 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 nine geographic regions—Industrial (which serves the geographic Gulf region and has a strong industrial presence), Mid-Atlantic, Midwest, Northeast, Pacific West, South-Central, South, Southeast and Western Canada—and operates throughout the United States and Canada.

The trench, power and pump 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) pumps primarily used by municipalities, industrial plants, and mining, construction, and agribusiness customers. The trench, power and pump 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, and (iii) the Pump Solutions region. The trench, power and pump 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, power and pump		Total
Three Months Ended September 30, 2016
Equipment rentals	$	1,097	$	225	$	1,322
Sales of rental equipment	103		9		112
Sales of new equipment	27		3		30
Contractor supplies sales	16		3		19
Service and other revenues	23		2		25
Total revenue	1,266		242		1,508
Depreciation and amortization expense	266		45		311
Equipment rentals gross profit	469		117		586
Three Months Ended September 30, 2015
Equipment rentals	$	1,120	$	206	$	1,326
Sales of rental equipment	132		9		141
Sales of new equipment	33		5		38
Contractor supplies sales	18		3		21
Service and other revenues	23		1		24
Total revenue	1,326		224		1,550
Depreciation and amortization expense	272		43		315
Equipment rentals gross profit	500		107		607
Nine Months Ended September 30, 2016
Equipment rentals	$	3,067	$	576	$	3,643
Sales of rental equipment	334		27		361
Sales of new equipment	84		12		96
Contractor supplies sales	49		11		60
Service and other revenues	71		8		79
Total revenue	3,605		634		4,239
Depreciation and amortization expense	791		136		927
Equipment rentals gross profit	1,243		274		1,517
Capital expenditures	1,086		124		1,210
Nine Months Ended September 30, 2015
Equipment rentals	$	3,144	$	527	$	3,671
Sales of rental equipment	356		25		381
Sales of new equipment	94		16		110
Contractor supplies sales	51		9		60
Service and other revenues	65		7		72
Total revenue	3,710		584		4,294
Depreciation and amortization expense	798		128		926
Equipment rentals gross profit	1,339		249		1,588
Capital expenditures	1,325		176		1,501

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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)



	September 30, 2016		December 31, 2015
Total reportable segment assets
General rentals	$	10,731	$	10,561
Trench, power and pump	1,544		1,522
Total assets	$	12,275	$	12,083

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						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Total equipment rentals gross profit	$	586		$	607		$	1,517		$	1,588
Gross profit from other lines of business	70			83			229			244
Selling, general and administrative expenses	(179		)	(178		)	(533		)	(534		)
Merger related costs	—			—			—			26
Restructuring charge	(4		)	—			(8		)	(1		)
Non-rental depreciation and amortization	(61		)	(66		)	(192		)	(202		)
Interest expense, net	(110		)	(107		)	(349		)	(460		)
Other income, net	1			1			3			10
Income before provision for income taxes	$	303		$	340		$	667		$	671

3. Restructuring Charges

Closed Restructuring Programs

We have two closed restructuring programs. The first was initiated in 2008 in recognition of a challenging economic environment and was completed in 2011. The second closed restructuring program was initiated following the April 30, 2012 acquisition of RSC Holdings Inc. ("RSC"), and was completed in 2013. The restructuring charges under the closed restructuring programs include severance costs associated with headcount reductions, as well as branch closure charges which principally relate to continuing lease obligations at vacant facilities.

2015-2016 Cost Savings Restructuring Program

In the fourth quarter of 2015, we initiated a restructuring program 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 Pump 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. Though we expect solid industry growth in the foreseeable future, the restructuring program was initiated in an effort to reduce costs in an environment with continuing pressures on volume and pricing. We expect to complete the restructuring program in 2016, and expect the total costs incurred under the program to be approximately $20, including $11 recognized through September 30, 2016.

The table below provides certain information concerning our restructuring charges for the nine months ended September 30, 2016:

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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)



	Reserve Balance at		Charged to Costs and Expenses (1)		Payments and Other			Reserve Balance at
Description	December 31, 2015		Charged to Costs and Expenses (1)		Payments and Other			September 30, 2016
Closed Restructuring Programs
Branch closure charges	$	13	$	1	$	(5	)	$	9
Severance costs	—		—		—			—
Total	$	13	$	1	$	(5	)	$	9
2015-2016 Cost Savings Restructuring Program
Branch closure charges	$	—	$	3	$	—		$	3
Severance costs	3		4		(6		)	1
Total	$	3	$	7	$	(6	)	$	4
Total
Branch closure charges	$	13	$	4	$	(5	)	$	12
Severance costs	3		4		(6		)	1
Total	$	16	$	8	$	(11	)	$	13

_________________


(1)	Reflected in our condensed consolidated statements of income as “Restructuring charge.” These charges are not allocated to our reportable segments.

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. We are exposed to certain risks relating to our ongoing business operations. During the nine months ended September 30, 2016 and 2015, the risks we managed using derivative instruments were diesel price risk and foreign currency exchange rate risk. At September 30, 2016, 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 nine months ended September 30, 2016, 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. There were no outstanding forward contracts to purchase Canadian dollars at September 30, 2016.

Fixed Price Diesel Swaps

The fixed price swap contracts on diesel purchases that were outstanding at September 30, 2016 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 September 30, 2016, we had outstanding fixed price swap contracts covering 9.8 million gallons of diesel which will be purchased throughout 2016, 2017 and 2018.

Foreign Currency Forward Contracts

The forward contracts to purchase Canadian dollars, which were all settled as of September 30, 2016, 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 and nine months ended September 30, 2016, forward contracts were used to purchase $301 and $552 Canadian dollars, respectively, representing the total amount due at maturity for certain Canadian dollar denominated intercompany loans that were settled during the three and nine months ended September 30, 2016. Upon maturity, the proceeds from the forward contracts were used to pay down the Canadian dollar denominated intercompany loans.

Financial Statement Presentation

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As of September 30, 2016 and December 31, 2015, immaterial amounts ($6 or less) were reflected in prepaid expenses and other assets, accrued expenses and other liabilities, and 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 and nine months ended September 30, 2016 and 2015 was as follows:



		Three Months Ended September 30, 2016					Three Months Ended September 30, 2015
	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)	(1	)	$	(6	)	(2	)	$	(7	)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts (4)	Other income (expense), net	(4	)	4			(5	)	5
		Nine Months Ended September 30, 2016					Nine Months Ended September 30, 2015
	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)	(5	)	$	(17	)	(5	)	$	(23	)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts (4)	Other income (expense), net	(1	)	1			(5	)	5


*	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 2.7 million and 2.8 million gallons of diesel covered by the fixed price swaps during the three months ended September 30, 2016 and 2015, respectively, and the use of 7.7 million and 8.2 million gallons and of diesel covered by the fixed price swaps during the nine months ended September 30, 2016 and 2015, respectively. These amounts are reflected, net of cash received from, or paid to, the counterparties to the fixed price swaps, in operating cash flows in our condensed consolidated statement of cash flows.


(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 gains/losses recognized on the derivatives were offset by the gains/losses recognized on the hedged items.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

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 or liabilities.

Level 2- Observable inputs other than quoted prices in active markets for identical assets or 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.

Assets and Liabilities Measured at Fair Value

As of September 30, 2016 and December 31, 2015, 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 September 30, 2016 and December 31, 2015, immaterial amounts ($6 or less) were reflected in prepaid expenses and other assets, and accrued expenses and other liabilities in our condensed consolidated balance sheets, reflecting the fair 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 September 30, 2016, we have fixed price swap contracts that mature throughout 2016, 2017 and 2018 covering 9.8 million gallons of diesel which we will buy at the average contract price of $2.60 per gallon, while the average forward price for the hedged gallons was $2.56 per gallon as of September 30, 2016.

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 senior secured asset-based revolving credit facility (“ABL facility”), accounts receivable securitization facility and capital leases approximated their book values as of September 30, 2016 and December 31, 2015. The estimated fair values of our financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of September 30, 2016 and December 31, 2015 have been calculated based upon available market information, and were as follows:



	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior notes	$	5,605	$	5,855	$	5,916	$	6,030

6. Debt

Debt, net of unamortized original issue discounts or premiums, and unamortized debt issuance costs, consists of the following:

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(Dollars in millions, except per share data, unless otherwise indicated)



	September 30, 2016			December 31, 2015
Accounts Receivable Securitization Facility (1)	$	579		$	571
$2.5 billion ABL Facility (2)	1,737			1,579
7 ³/₈ percent Senior Notes (3)	—			740
8¹/₄ percent Senior Notes (3)	—			315
7 ⁵/₈ percent Senior Notes	1,308			1,306
6¹/₈ percent Senior Notes	936			937
4 ⁵/₈ percent Senior Secured Notes	990			989
5 ³/₄ percent Senior Notes	839			838
5 ¹/₂ percent Senior Notes	792			791
5 ⁷/₈ percent Senior Notes (4)	740			—
Capital leases	81			96
Total debt	8,002			8,162
Less short-term portion (5)	(609		)	(607		)
Total long-term debt	$	7,393		$	7,555

___________________

(1)

In August 2016, the accounts receivable securitization facility was amended, primarily to extend the maturity date. The amended facility expires on August 29, 2017 and may be further extended on a 364-day basis by mutual agreement with the purchasers under the accounts receivable securitization facility. At September 30, 2016, $44 was available under our accounts receivable securitization facility. The interest rate applicable to the accounts receivable securitization facility was 1.4 percent at September 30, 2016. During the nine months ended September 30, 2016, the monthly average amount outstanding under the accounts receivable securitization facility was $539, and the weighted-average interest rate thereon was 1.2 percent. The maximum month-end amount outstanding under the accounts receivable securitization facility during the nine months ended September 30, 2016 was $580. 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 September 30, 2016, there were $623 of receivables, net of applicable reserves, in the collateral pool.

(2)

At September 30, 2016, $716 was available under our ABL facility, net of $37 of letters of credit. The interest rate applicable to the ABL facility was 2.0 percent at September 30, 2016. During the nine months ended September 30, 2016, the monthly average amount outstanding under the ABL facility was $1.4 billion, and the weighted-average interest rate thereon was 2.1 percent. The maximum month-end amount outstanding under the ABL facility during the nine months ended September 30, 2016 was $1.7 billion. In June 2016, the ABL facility was amended, primarily to extend the maturity date. All amounts borrowed under the ABL facility must be repaid by June 2021.

(3)

In May 2016, we redeemed all of our 8 ¹/₄ percent Senior Notes and $550 principal amount of our 7³/₈ percent Senior Notes. Upon redemption, we recognized an aggregate loss of $25 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the notes. In August 2016, we redeemed the remaining $200 principal amount of our 7³/₈ percent Senior Notes using borrowings available under our ABL facility. We recognized a loss representing the difference between the net carrying amount and the total purchase price of the notes of $10 in interest expense, net upon redemption.

(4)

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. The net proceeds from the issuance were approximately $741 (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

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

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.


(5)	As of September 30, 2016, our short-term debt primarily reflects $579 of borrowings under our accounts receivable securitization facility.

Loan Covenants and Compliance

As of September 30, 2016, we were in compliance with the covenants and other provisions of the ABL facility, the accounts receivable securitization facility 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 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 September 30, 2016, specified availability under the ABL facility exceeded the required threshold and, as a result, this 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.

7. Legal and Regulatory Matters

We are subject to a number of claims and proceedings that generally arise in the ordinary course of our business. These matters include, but are not limited to, general liability claims (including personal injury, property and auto claims), indemnification and guarantee obligations, employee injuries and employment-related claims, self-insurance obligations, contract and real estate matters, and other general business litigation. 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 such 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.

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. The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Numerator:
Net income available to common stockholders	$	187	$	215	413		416
Denominator:
Denominator for basic earnings per share—weighted-average common shares	85,945		94,213		88,175		95,992
Effect of dilutive securities:
Employee stock options	278		291		281		311
4 percent Convertible Senior Notes	—		574		—		786
Restricted stock units	222		113		168		196
Denominator for diluted earnings per share—adjusted weighted-average common shares	86,445		95,191		88,624		97,285
Basic earnings per share	$	2.18	$	2.28	$	4.68	$	4.33
Diluted earnings per share	$	2.16	$	2.25	$	4.66	$	4.27

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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, as of September 30, 2016 and/or December 31, 2015, had outstanding (i) 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 facility (the “SPV”), all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”) and (ii) certain indebtedness that was guaranteed only by the guarantor subsidiaries (specifically, the 8¹/4 percent Senior Notes). As discussed in note 6 to the condensed consolidated financial statements, in May 2016, all of the 8 ¹/₄ percent Senior Notes were redeemed. 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 or designating the guarantor subsidiary 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.

URNA covenants in the ABL facility, accounts receivable securitization 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 September 30, 2016, the amount available for distribution under the most restrictive of these covenants was $332. The Company’s total available capacity for making share repurchases and dividend payments includes the intercompany receivable balance of Parent. As of September 30, 2016, 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 $561.

The condensed consolidating financial information of Parent and its subsidiaries is as follows:

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2016



	Parent		URNA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries					Eliminations			Total
	Parent		URNA			Guarantor Subsidiaries			Foreign			SPV		Eliminations			Total
ASSETS
Cash and cash equivalents	$	—	$	20		$	—		$	277		$	—	$	—		$	297
Accounts receivable, net	—		25			—			97			807		—			929
Intercompany receivable (payable)	229		(29		)	(190		)	(121		)	—		111			—
Inventory	—		65			—			7			—		—			72
Prepaid expenses and other assets	—		47			—			9			—		—			56
Total current assets	229		128			(190		)	269			807		111			1,354
Rental equipment, net	—		5,929			—			498			—		—			6,427
Property and equipment, net	38		329			23			45			—		—			435
Investments in subsidiaries	1,293		1,033			990			—			—		(3,316		)	—
Goodwill	—		3,014			—			253			—		—			3,267
Other intangible assets, net	—		721			—			61			—		—			782
Other long-term assets	3		7			—			—			—		—			10
Total assets	$	1,563	$	11,161		$	823		$	1,126		$	807	$	(3,205	)	$	12,275
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	1	$	26		$	—		$	3		$	579	$	—		$	609
Accounts payable	—		378			—			31			—		—			409
Accrued expenses and other liabilities	—		368			14			19			1		—			402
Total current liabilities	1		772			14			53			580		—			1,420
Long-term debt	3		7,268			114			8			—		—			7,393
Deferred taxes	20		1,768			—			75			—		—			1,863
Other long-term liabilities	—		60			—			—			—		—			60
Total liabilities	24		9,868			128			136			580		—			10,736
Total stockholders’ equity (deficit)	1,539		1,293			695			990			227		(3,205		)	1,539
Total liabilities and stockholders’ equity (deficit)	$	1,563	$	11,161		$	823		$	1,126		$	807	$	(3,205	)	$	12,275

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2015



	Parent		URNA		Guarantor Subsidiaries			Non-Guarantor Subsidiaries					Eliminations			Total
	Parent		URNA		Guarantor Subsidiaries			Foreign			SPV		Eliminations			Total
ASSETS
Cash and cash equivalents	$	—	$	18	$	—		$	161		$	—	$	—		$	179
Accounts receivable, net	—		41		—			104			785		—			930
Intercompany receivable (payable)	144		40		(176		)	(109		)	—		101			—
Inventory	—		62		—			7			—		—			69
Prepaid expenses and other assets	—		98		—			18			—		—			116
Total current assets	144		259		(176		)	181			785		101			1,294
Rental equipment, net	—		5,657		—			529			—		—			6,186
Property and equipment, net	45		334		20			46			—		—			445
Investments in subsidiaries	1,307		958		924			—			—		(3,189		)	—
Goodwill	—		3,000		—			243			—		—			3,243
Other intangible assets, net	—		838		—			67			—		—			905
Other long-term assets	3		7		—			—			—		—			10
Total assets	$	1,499	$	11,053	$	768		$	1,066		$	785	$	(3,088	)	$	12,083
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	1	$	34	$	—		$	—		$	572	$	—		$	607
Accounts payable	—		237		—			34			—		—			271
Accrued expenses and other liabilities	—		314		14			27			—		—			355
Total current liabilities	1		585		14			61			572		—			1,233
Long-term debt	4		7,430		110			11			—		—			7,555
Deferred taxes	18		1,677		—			70			—		—			1,765
Other long-term liabilities	—		54		—			—			—		—			54
Total liabilities	23		9,746		124			142			572		—			10,607
Total stockholders’ equity (deficit)	1,476		1,307		644			924			213		(3,088		)	1,476
Total liabilities and stockholders’ equity (deficit)	$	1,499	$	11,053	$	768		$	1,066		$	785	$	(3,088	)	$	12,083

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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 September 30, 2016





	Parent			URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations		Total
								Foreign			SPV
Revenues:
Equipment rentals	$	—		$	1,208	$	—	$	114		$	—		$	—	$	1,322
Sales of rental equipment	—			99		—		13			—			—		112
Sales of new equipment	—			28		—		2			—			—		30
Contractor supplies sales	—			17		—		2			—			—		19
Service and other revenues	—			22		—		3			—			—		25
Total revenues	—			1,374		—		134			—			—		1,508
Cost of revenues:
Cost of equipment rentals, excluding depreciation	—			435		—		51			—			—		486
Depreciation of rental equipment	—			227		—		23			—			—		250
Cost of rental equipment sales	—			61		—		7			—			—		68
Cost of new equipment sales	—			23		—		2			—			—		25
Cost of contractor supplies sales	—			11		—		2			—			—		13
Cost of service and other revenues	—			11		—		(1		)	—			—		10
Total cost of revenues	—			768		—		84			—			—		852
Gross profit	—			606		—		50			—			—		656
Selling, general and administrative expenses	2			151		—		18			8			—		179
Restructuring charge	—			4		—		—			—			—		4
Non-rental depreciation and amortization	3			52		—		6			—			—		61
Operating (loss) income	(5		)	399		—		26			(8		)	—		412
Interest (income) expense, net	(1		)	109