Condensed Consolidating Financial Information of Guarantor Subsidiaries

3 Months Ended

Mar. 31, 2020

Condensed Financial Information Disclosure [Abstract]

Condensed Consolidating Financial Information of Guarantor Subsidiaries

Condensed Consolidating Financial Information of Guarantor Subsidiaries

URNA is 100 percent owned by Holdings (“Parent”) and has certain outstanding indebtedness that is guaranteed by both Parent and, with the exception of its U.S. special purpose vehicle which holds receivable assets relating to the Company’s accounts receivable securitization facility (the “SPV”), all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”). Other than the guarantee by certain Canadian subsidiaries of URNA's indebtedness under the ABL facility, none of URNA’s indebtedness is guaranteed by URNA's foreign subsidiaries or the SPV (together, the “non-guarantor subsidiaries”). The receivable assets owned by the SPV have been sold or contributed by URNA to the SPV and are not available to satisfy the obligations of URNA or Parent’s other subsidiaries. The guarantor subsidiaries are all 100 percent-owned and the guarantees are made on a joint and several basis. The guarantees are not full and unconditional because a guarantor subsidiary can be automatically released and relieved of its obligations under certain circumstances, including sale of the guarantor subsidiary, the sale of all or substantially all of the guarantor subsidiary's assets, the requirements for legal defeasance or covenant defeasance under the applicable indenture being met, designating the guarantor subsidiary as an unrestricted subsidiary for purposes of the applicable covenants or the notes being rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA. The guarantees are also subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws. Based on our understanding of Rule 3-10 of Regulation S-X ("Rule 3-10"), we believe that the guarantees of the guarantor subsidiaries comply with the conditions set forth in Rule 3-10 and therefore continue to utilize Rule 3-10 to present condensed consolidating financial information for Holdings, URNA, the guarantor subsidiaries and the non-guarantor subsidiaries. Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes that such information would not be material to investors. However, condensed consolidating financial information is presented.

Covenants in the ABL, accounts receivable securitization and term loan facilities, 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 March 31, 2020, the amount available for distribution under the most restrictive of these covenants was $445. The Company’s total available capacity for making share repurchases and dividend payments includes the intercompany receivable balance of Parent. As of March 31, 2020, our total available capacity for making share repurchases and dividend payments, which includes URNA’s capacity to make restricted payments and the intercompany receivable balance of Parent, was $2.906 billion.

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

CONDENSED CONSOLIDATING BALANCE SHEET

March 31, 2020  

	Parent		URNA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries					Eliminations			Total
									Foreign			SPV
ASSETS
Cash and cash equivalents	$	—	$	473		$	—		$	40		$	—	$	—		$	513
Accounts receivable, net	—		—			—			143			1,270		—			1,413
Intercompany receivable (payable)	2,461		(2,351		)	(107		)	(4		)	1		—			—
Inventory	—		105			—			10			—		—			115
Prepaid expenses and other assets	—		158			—			15			—		—			173
Total current assets	2,461		(1,615		)	(107		)	204			1,271		—			2,214
Rental equipment, net	—		8,713			—			709			—		—			9,422
Property and equipment, net	90		395			71			44			—		—			600
Investments in subsidiaries	1,093		1,592			985			—			—		(3,670		)	—
Goodwill	—		4,756			—			366			—		—			5,122
Other intangible assets, net	—		770			—			53			—		—			823
Operating lease right-of-use assets	—		187			415			64			—		—			666
Other long-term assets	13		8			—			—			—		—			21
Total assets	$	3,657	$	14,806		$	1,364		$	1,440		$	1,271	$	(3,670	)	$	18,868
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	—	$	57		$	—		$	2		$	795	$	—		$	854
Accounts payable	—		437			—			47			—		—			484
Accrued expenses and other liabilities	—		496			118			43			1		—			658
Total current liabilities	—		990			118			92			796		—			1,996
Long-term debt	—		10,728			7			8			—		—			10,743
Deferred taxes	21		1,766			—			91			—		—			1,878
Operating lease liabilities	—		144			333			53			—		—			530
Other long-term liabilities	1		85			—			—			—		—			86
Total liabilities	22		13,713			458			244			796		—			15,233
Total stockholders’ equity (deficit)	3,635		1,093			906			1,196			475		(3,670		)	3,635
Total liabilities and stockholders’ equity (deficit)	$	3,657	$	14,806		$	1,364		$	1,440		$	1,271	$	(3,670	)	$	18,868

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2019

	Parent		URNA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries					Eliminations			Total
									Foreign			SPV
ASSETS
Cash and cash equivalents	$	—	$	28		$	—		$	24		$	—	$	—		$	52
Accounts receivable, net	—		—			—			171			1,359		—			1,530
Intercompany receivable (payable)	2,255		(2,130		)	(112		)	(14		)	1		—			—
Inventory	—		108			—			12			—		—			120
Prepaid expenses and other assets	—		124			—			16			—		—			140
Total current assets	2,255		(1,870		)	(112		)	209			1,360		—			1,842
Rental equipment, net	—		8,995			—			792			—		—			9,787
Property and equipment, net	76		400			78			50			—		—			604
Investments in subsidiaries	1,509		1,636			1,069			—			—		(4,214		)	—
Goodwill	—		4,759			—			395			—		—			5,154
Other intangible assets, net	—		833			—			62			—		—			895
Operating lease right-of-use assets	—		194			403			72			—		—			669
Other long-term assets	12		7			—			—			—		—			19
Total assets	$	3,852	$	14,954		$	1,438		$	1,580		$	1,360	$	(4,214	)	$	18,970
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	—	$	66		$	—		$	2		$	929	$	—		$	997
Accounts payable	—		395			—			59			—		—			454
Accrued expenses and other liabilities	—		572			118			55			2		—			747
Total current liabilities	—		1,033			118			116			931		—			2,198
Long-term debt	—		10,402			7			22			—		—			10,431
Deferred taxes	22		1,768			—			97			—		—			1,887
Operating lease liabilities	—		151			323			59			—		—			533
Other long-term liabilities	—		91			—			—			—		—			91
Total liabilities	22		13,445			448			294			931		—			15,140
Total stockholders’ equity (deficit)	3,830		1,509			990			1,286			429		(4,214		)	3,830
Total liabilities and stockholders’ equity (deficit)	$	3,852	$	14,954		$	1,438		$	1,580		$	1,360	$	(4,214	)	$	18,970

 CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2020

	Parent			URNA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Eliminations			Total
										Foreign			SPV
Revenues:
Equipment rentals	$	—		$	1,630		$	—		$	153		$	—		$	—		$	1,783
Sales of rental equipment	—			189			—			19			—			—			208
Sales of new equipment	—			53			—			9			—			—			62
Contractor supplies sales	—			22			—			3			—			—			25
Service and other revenues	—			42			—			5			—			—			47
Total revenues	—			1,936			—			189			—			—			2,125
Cost of revenues:
Cost of equipment rentals, excluding depreciation	—			676			—			71			—			—			747
Depreciation of rental equipment	—			393			—			33			—			—			426
Cost of rental equipment sales	—			116			—			9			—			—			125
Cost of new equipment sales	—			46			—			8			—			—			54
Cost of contractor supplies sales	—			16			—			2			—			—			18
Cost of service and other revenues	—			25			—			3			—			—			28
Total cost of revenues	—			1,272			—			126			—			—			1,398
Gross profit	—			664			—			63			—			—			727
Selling, general and administrative expenses	37			190			—			25			16			(1		)	267
Restructuring charge	—			2			—			—			—			—			2
Non-rental depreciation and amortization	5			87			—			8			—			—			100
Operating (loss) income	(42		)	385			—			30			(16		)	1			358
Interest (income) expense, net	(17		)	148			—			—			5			—			136
Other (income) expense, net	(172		)	196			—			14			(43		)	1			(4		)
Income before provision for income taxes	147			41			—			16			22			—			226
Provision for income taxes	34			9			—			4			6			—			53
Income before equity in net earnings (loss) of subsidiaries	113			32			—			12			16			—			173
Equity in net earnings (loss) of subsidiaries	60			28			11			—			—			(99		)	—
Net income (loss)	173			60			11			12			16			(99		)	173
Other comprehensive (loss) income	(106		)	(106		)	(95		)	(102		)	—			303			(106		)
Comprehensive income (loss)	$	67		$	(46	)	$	(84	)	$	(90	)	$	16		$	204		$	67

CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2019

	Parent			URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations			Total
								Foreign			SPV
Revenues:
Equipment rentals	$	—		$	1,638	$	—	$	157		$	—		$	—		$	1,795
Sales of rental equipment	—			173		—		19			—			—			192
Sales of new equipment	—			53		—		9			—			—			62
Contractor supplies sales	—			22		—		2			—			—			24
Service and other revenues	—			39		—		5			—			—			44
Total revenues	—			1,925		—		192			—			—			2,117
Cost of revenues:
Cost of equipment rentals, excluding depreciation	—			657		—		85			—			—			742
Depreciation of rental equipment	—			364		—		31			—			—			395
Cost of rental equipment sales	—			113		—		12			—			—			125
Cost of new equipment sales	—			46		—		8			—			—			54
Cost of contractor supplies sales	—			16		—		1			—			—			17
Cost of service and other revenues	—			21		—		2			—			—			23
Total cost of revenues	—			1,217		—		139			—			—			1,356
Gross profit	—			708		—		53			—			—			761
Selling, general and administrative expenses	53			183		—		27			17			—			280
Merger related costs	—			1		—		—			—			—			1
Restructuring charge	—			9		—		(1		)	—			—			8
Non-rental depreciation and amortization	4			91		—		9			—			—			104
Operating (loss) income	(57		)	424		—		18			(17		)	—			368
Interest (income) expense, net	(16		)	159		—		—			8			—			151
Other (income) expense, net	(172		)	197		—		14			(42		)	—			(3		)
Income before provision for income taxes	131			68		—		4			17			—			220
Provision for income taxes	23			16		—		1			5			—			45
Income before equity in net earnings (loss) of subsidiaries	108			52		—		3			12			—			175
Equity in net earnings (loss) of subsidiaries	67			15		2		—			—			(84		)	—
Net income (loss)	175			67		2		3			12			(84		)	175
Other comprehensive income (loss)	21			21		21		19			—			(61		)	21
Comprehensive income (loss)	$	196		$	88	$	23	$	22		$	12		$	(145	)	$	196

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Three Months Ended March 31, 2020

	Parent			URNA			Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations		Total
									Foreign			SPV
Net cash provided by operating activities	$	18		$	483		$	—	$	39		$	104		$	—	$	644
Net cash used in investing activities	(18		)	(15		)	—		(6		)	—			—		(39		)
Net cash used in financing activities	—			(23		)	—		(15		)	(104		)	—		(142		)
Effect of foreign exchange rates	—			—			—		(2		)	—			—		(2		)
Net increase in cash and cash equivalents	—			445			—		16			—			—		461
Cash and cash equivalents at beginning of period	—			28			—		24			—			—		52
Cash and cash equivalents at end of period	$	—		$	473		$	—	$	40		$	—		$	—	$	513

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Three Months Ended March 31, 2019

	Parent			URNA			Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations		Total
									Foreign			SPV
Net cash provided by operating activities	$	5		$	566		$	—	$	35		$	61		$	—	$	667
Net cash used in investing activities	(5		)	(256		)	—		(4		)	—			—		(265		)
Net cash used in financing activities	—			(287		)	—		(45		)	(61		)	—		(393		)
Effect of foreign exchange rates	—			—			—		—			—			—		—
Net increase (decrease) in cash and cash equivalents	—			23			—		(14		)	—			—		9
Cash and cash equivalents at beginning of period	—			1			—		42			—			—		43
Cash and cash equivalents at end of period	$	—		$	24		$	—	$	28		$	—		$	—	$	52