Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of United Rentals, Inc.

We have audited the accompanying consolidated balance sheets of United Rentals, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of United Rentals, Inc. at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), United Rentals, Inc.’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated January 27, 2016 expressed an unqualified opinion thereon.

As discussed in Note 2 to the consolidated financial statements, the Company changed its presentation of debt issuance costs as a result of the adoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, effective March 31, 2015 and the Company changed the classification of all deferred tax assets and liabilities to noncurrent on the balance sheet as a result of the adoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes, effective December 31, 2015.

/s/ Ernst & Young LLP

Stamford, Connecticut

January 27, 2016

UNITED RENTALS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

	December 31,
	2015				2014
ASSETS
Cash and cash equivalents	$	179			$	158
Accounts receivable, net of allowance for doubtful accounts of $55 at December 31, 2015 and $43 at December 31, 2014	930				940
Inventory	69				78
Prepaid expenses and other assets	116				122
Total current assets	1,294				1,298
Rental equipment, net	6,186				6,008
Property and equipment, net	445				438
Goodwill	3,243				3,272
Other intangible assets, net	905				1,106
Other long-term assets	10				7
Total assets	$	12,083			$	12,129
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt and current maturities of long-term debt	$	607			$	618
Accounts payable	271				285
Accrued expenses and other liabilities	355				575
Total current liabilities	1,233				1,478
Long-term debt	7,555				7,344
Deferred taxes	1,765				1,444
Other long-term liabilities	54				65
Total liabilities	10,607				10,331
Temporary equity	—				2
Common stock—$0.01 par value, 500,000,000 shares authorized, 111,586,585 and 91,776,436 shares issued and outstanding, respectively, at December 31, 2015 and 108,233,686 and 97,877,580 shares issued and outstanding, respectively, at December 31, 2014	1				1
Additional paid-in capital	2,197				2,168
Retained earnings	1,088				503
Treasury stock at cost—19,810,149 and 10,356,106 shares at December 31, 2015 and December 31, 2014, respectively	(1,560		)		(802		)
Accumulated other comprehensive loss	(250		)		(74		)
Total stockholders’ equity	1,476				1,796
Total liabilities and stockholders’ equity	$	12,083			$	12,129

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

	Year Ended December 31,
	2015				2014				2013
Revenues:
Equipment rentals	$	4,949			$	4,819			$	4,196
Sales of rental equipment	538				544				490
Sales of new equipment	157				149				104
Contractor supplies sales	79				85				87
Service and other revenues	94				88				78
Total revenues	5,817				5,685				4,955
Cost of revenues:
Cost of equipment rentals, excluding depreciation	1,826				1,806				1,634
Depreciation of rental equipment	976				921				852
Cost of rental equipment sales	311				315				314
Cost of new equipment sales	131				120				84
Cost of contractor supplies sales	55				59				59
Cost of service and other revenues	38				32				25
Total cost of revenues	3,337				3,253				2,968
Gross profit	2,480				2,432				1,987
Selling, general and administrative expenses	714				758				642
Merger related costs	(26		)		11				9
Restructuring charge	6				(1		)		12
Non-rental depreciation and amortization	268				273				246
Operating income	1,518				1,391				1,078
Interest expense, net	567				555				475
Interest expense—subordinated convertible debentures	—				—				3
Other income, net	(12		)		(14		)		(5		)
Income before provision for income taxes	963				850				605
Provision for income taxes	378				310				218
Net income	$	585			$	540			$	387
Basic earnings per share	$	6.14			$	5.54			$	4.14
Diluted earnings per share	$	6.07			$	5.15			$	3.64

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

	Year Ended December 31,
	2015				2014				2013
Net income	$	585			$	540			$	387
Other comprehensive loss:
Foreign currency translation adjustments	(174		)		(90		)		(65		)
Fixed price diesel swaps	(2		)		(3		)		—
Other comprehensive loss (1)	(176		)		(93		)		(65		)
Comprehensive income	$	409			$	447			$	322

(1)There were no material reclassifications from accumulated other comprehensive (loss) income reflected in other comprehensive loss during the years ended December 31, 2015, 2014 or 2013. 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 during the years ended December 31, 2015, 2014 or 2013.

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

	Common Stock							Additional				(Accumulated Deficit)				Treasury Stock							Accumulated Other
	Number of Shares			Amount				Paid-in Capital				Retained Earnings				Number of Shares			Amount				Comprehensive Income (Loss)
Balance at January 1, 2013	93			$	1			$	1,997			$	(424	)		3			$	(115	)		$	84
Net income												387
Foreign currency translation adjustments																							(65		)
Stock compensation expense, net								46
Exercise of common stock options	1							6
Conversion of subordinated convertible debentures	1							40
4 percent Convertible Senior Notes (1)								(14		)
Shares repurchased and retired								(21		)
Repurchase of common stock	(2	)														2			(94		)
Balance at December 31, 2013	93			$	1			$	2,054			$	(37	)		5			$	(209	)		$	19

(1)Reflects amortization of the original issue discount on the 4 percent Convertible Senior Notes (an amount equal to the unamortized portion of the original issue discount is reflected as “temporary equity” in our consolidated balance sheet) and a reduction reflecting the excess of the cash transferred upon conversion of a portion of the 4 percent Convertible Senior Notes during the year ended December 31, 2013 over the principal amount of the converted notes, net of cash received from the option counterparties to our convertible note hedges upon the conversion.

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(In millions)

	Common Stock							Additional				(Accumulated Deficit)				Treasury Stock							Accumulated Other
	Number of Shares			Amount				Paid-in Capital				Retained Earnings				Number of Shares			Amount				Comprehensive Income (Loss)
Balance at December 31, 2013	93			$	1			$	2,054			$	(37	)		5			$	(209	)		$	19
Net income												540
Foreign currency translation adjustments																							(90		)
Fixed price diesel swaps																							(3		)
Stock compensation expense, net								74
Exercise of common stock options	—							2
4 percent Convertible Senior Notes (1)	10							58
Shares repurchased and retired								(20		)
Repurchase of common stock	(5	)														5			(593		)
Balance at December 31, 2014	98			$	1			$	2,168			$	503			10			$	(802	)		$	(74	)

(1)Primarily reflects amortization of the original issue discount on the 4 percent Convertible Senior Notes (an amount equal to the unamortized portion of the original issue discount is reflected as “temporary equity” in our consolidated balance sheet) and cash received from the option counterparties to our convertible note hedges associated with conversions of a portion of our 4 percent Convertible Senior Notes.

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(In millions)

	Common Stock							Additional								Treasury Stock							Accumulated Other
	Number of Shares			Amount				Paid-in Capital				Retained Earnings				Number of Shares			Amount				Comprehensive Loss (2)
Balance at December 31, 2014	98			$	1			$	2,168			$	503			10			$	(802	)		$	(74	)
Net income												585
Foreign currency translation adjustments																							(174		)
Fixed price diesel swaps																							(2		)
Stock compensation expense, net								49
Exercise of common stock options	—							1
4 percent Convertible Senior Notes (1)	4							5
Shares repurchased and retired								(31		)
Repurchase of common stock	(10	)														10			$	(758	)
Excess tax benefits from share-based payment arrangements, net								5
Balance at December 31, 2015	92			$	1			$	2,197			$	1,088			20			$	(1,560	)		$	(250	)

(1)Reflects amortization of the original issue discount on the 4 percent Convertible Senior Notes (an amount equal to the unamortized portion of the original issue discount is reflected as “temporary equity” in our consolidated balance sheet) and the conversion of all outstanding 4 percent Convertible Senior Notes. See note 12 to our consolidated financial statements for additional detail.

(2)As of December 31, 2015, 2014 and 2013, the Accumulated Other Comprehensive Income (Loss) balance primarily reflects foreign currency translation adjustments.

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2015				2014				2013
	(In millions)
Cash Flows From Operating Activities:
Net income	$	585			$	540			$	387
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,244				1,194				1,098
Amortization of deferred financing costs and original issue discounts	10				17				21
Gain on sales of rental equipment	(227		)		(229		)		(176		)
Gain on sales of non-rental equipment	(8		)		(11		)		(6		)
Loss on sale of software subsidiary	—				—				1
Stock compensation expense, net	49				74				46
Merger related costs	(26		)		11				9
Restructuring charge	6				(1		)		12
Loss on repurchase/redemption of debt securities and amendment of ABL facility	123				80				1
Loss on retirement of subordinated convertible debentures	—				—				2
Excess tax benefits from share-based payment arrangements	(5		)		—				—
Increase in deferred taxes	336				261				167
Changes in operating assets and liabilities:
Increase in accounts receivable	(11		)		(101		)		(20		)
Decrease (increase) in inventory	8				11				(2		)
(Increase) decrease in prepaid expenses and other assets	(38		)		(52		)		60
(Decrease) increase in accounts payable	(8		)		(23		)		9
(Decrease) increase in accrued expenses and other liabilities	(43		)		30				(58		)
Net cash provided by operating activities	1,995				1,801				1,551
Cash Flows From Investing Activities:
Purchases of rental equipment	(1,534		)		(1,701		)		(1,580		)
Purchases of non-rental equipment	(102		)		(120		)		(104		)
Proceeds from sales of rental equipment	538				544				490
Proceeds from sales of non-rental equipment	17				33				26
Purchases of other companies, net of cash acquired	(86		)		(756		)		(9		)
Purchases of investments	(3		)		—				—
Net cash used in investing activities	(1,170		)		(2,000		)		(1,177		)
Cash Flows From Financing Activities:
Proceeds from debt	8,566				7,070				3,805
Payments of debt, including subordinated convertible debentures	(8,482		)		(6,283		)		(3,965		)
Payment of contingent consideration	(52		)		—				—
Payments of financing costs	(27		)		(22		)		(2		)
Proceeds from the exercise of common stock options	1				2				6
Common stock repurchased	(789		)		(613		)		(115		)
Cash received (paid) in connection with the 4 percent Convertible Senior Notes and related hedge, net	3				42				(24		)
Excess tax benefits from share-based payment arrangements	5				—				—
Net cash (used in) provided by financing activities	(775		)		196				(295		)
Effect of foreign exchange rates	(29		)		(14		)		(10		)
Net increase (decrease) in cash and cash equivalents	21				(17		)		69
Cash and cash equivalents at beginning of year	158				175				106
Cash and cash equivalents at end of year	$	179			$	158			$	175
Supplemental disclosure of cash flow information:
Cash paid for interest, including subordinated convertible debentures	$	447			$	457			$	461
Cash paid for income taxes, net	60				100				48

See accompanying notes.

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1. Organization, Description of Business and Consolidation

United Rentals, Inc. ("Holdings") is principally a holding company and conducts its operations primarily through its wholly owned subsidiary, United Rentals (North America), Inc. (“URNA”), and subsidiaries of URNA. Holdings’ primary asset is its sole ownership of all issued and outstanding shares of common stock of URNA. URNA’s various credit agreements and debt instruments place restrictions on its ability to transfer funds to its stockholder. As used in this report, the terms the “Company,” “United Rentals,” “we,” “us,” and “our” refer to United Rentals, Inc. and its subsidiaries, unless otherwise indicated.

We rent equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and others in the United States and Canada. In addition to renting equipment, we sell new and used rental equipment, as well as related contractor supplies, parts and service.

The accompanying consolidated financial statements include our accounts and those of our controlled subsidiary companies. All significant intercompany accounts and transactions have been eliminated. We consolidate variable interest entities if we are deemed the primary beneficiary of the entity. Certain reclassifications of prior years’ amounts have been made to conform to the current year’s presentation (see note 2 to our consolidated financial statements for a summary of accounting standards adopted in 2015 that resulted in changes to our previously reported financial statements).

2. Summary of Significant Accounting Policies

Cash Equivalents

We consider all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents. Our cash equivalents at December 31, 2015 consist of direct obligations of financial institutions rated A or better.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience. Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowances. Trade receivables that have contractual maturities of one year or less are written-off when they are determined to be uncollectible based on the criteria necessary to qualify as a deduction for federal tax purposes. Write-offs of such receivables require management approval based on specified dollar thresholds.

Inventory

Inventory consists of new equipment, contractor supplies, tools, parts, fuel and related supply items. Inventory is stated at the lower of cost or market. Cost is determined, depending on the type of inventory, using either a specific identification, weighted-average or first-in, first-out method.

Rental Equipment

Rental equipment, which includes service and delivery vehicles, is recorded at cost and depreciated over the estimated useful life of the equipment using the straight-line method. The range of estimated useful lives for rental equipment is two to 12 years. Rental equipment is depreciated to a salvage value of zero to 10 percent of cost. Rental equipment is depreciated whether or not it is out on rent. Costs we incur in connection with refurbishment programs that extend the life of our equipment are capitalized and amortized over the remaining useful life of the equipment. The costs incurred under these refurbishment programs were $30, $39 and $44 for the years ended December 31, 2015, 2014 and 2013, respectively, and are included in purchases of rental equipment in our consolidated statements of cash flows. Ordinary repair and maintenance costs are charged to operations as incurred. Repair and maintenance costs are included in cost of revenues on our consolidated statements of income. Repair and maintenance expense (including both labor and parts) for our rental equipment was $628, $604 and $563 for the years ended December 31, 2015, 2014 and 2013, respectively.

Property and Equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. The range of estimated useful lives for property and equipment is two to 39 years. Ordinary repair and maintenance

costs are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining life of the lease, whichever is shorter.

Purchase Price Allocation

We have made a number of acquisitions in the past (including the National Pump acquisition discussed in note 3 to our consolidated financial statements) and may continue to make acquisitions in the future. The assets acquired and liabilities assumed are recorded based on their respective fair values at the date of acquisition. Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of our acquisitions. The intangible assets that we have acquired are non-compete agreements, customer relationships and trade names and associated trademarks. Goodwill is calculated as the excess of the cost of the acquired entity over the net of the fair value of the assets acquired and the liabilities assumed. Non-compete agreements, customer relationships and trade names and associated trademarks are valued based on an excess earnings or income approach based on projected cash flows.

When we make an acquisition, we also acquire other assets and assume liabilities. These other assets and liabilities typically include, but are not limited to, parts inventory, accounts receivable, accounts payable and other working capital items. Because of their short-term nature, the fair values of these other assets and liabilities generally approximate the book values on the acquired entities' balance sheets.

Evaluation of Goodwill Impairment

Goodwill is tested for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. Application of the goodwill impairment test requires judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; assignment of goodwill to reporting units; determination of the fair value of each reporting unit; and an assumption as to the form of the transaction in which the reporting unit would be acquired by a market participant (either a taxable or nontaxable transaction).

We estimate the fair value of our reporting units (which are our regions) using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market price data of shares of our Company and other corporations engaged in similar businesses as well as acquisition multiples paid in recent transactions within our industry (including our own acquisitions). We believe this approach, which utilizes multiple valuation techniques, yields the most appropriate evidence of fair value. We review goodwill for impairment utilizing a two-step process. The first step of the impairment test requires a comparison of the fair value of each of our reporting units' net assets to the respective carrying value of net assets. If the carrying value of a reporting unit's net assets is less than its fair value, no indication of impairment exists and a second step is not performed. If the carrying amount of a reporting unit's net assets is higher than its fair value, there is an indication that an impairment may exist and a second step must be performed. In the second step, the impairment is calculated by comparing the implied fair value of the reporting unit's goodwill (as if purchase accounting were performed on the testing date) with the carrying amount of the goodwill. If the carrying amount of the reporting unit's goodwill is greater than the implied fair value of its goodwill, an impairment loss must be recognized for the excess and charged to operations.

Financial Accounting Standards Board ("FASB") guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.

In connection with our goodwill impairment test that was conducted as of October 1, 2014, we bypassed the qualitative assessment for each of our reporting units and proceeded directly to the first step of the goodwill impairment test. Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Pump Solutions reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 63 percent. In April 2014, we completed the acquisition of assets of the following four entities: National Pump & Compressor, Ltd., Canadian Pump and Compressor Ltd., GulfCo Industrial Equipment, LP and LD Services, LLC (collectively “National Pump”). All of the assets in the Pump Solutions reporting unit were acquired in the National Pump acquisition. The estimated fair value of our Pump Solutions reporting unit exceeded its carrying amount by 13 percent. As all of the assets in the Pump Solutions reporting unit were recorded at fair value as of the April 2014 acquisition date, we expected the percentage by which the Pump Solutions reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units.

In connection with our goodwill impairment test that was conducted as of October 1, 2015, we bypassed the qualitative assessment for each of our reporting units and proceeded directly to the first step of the goodwill impairment test. Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Pump Solutions reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 51 percent.

In April 2014, we completed the acquisition of National Pump. Most of the assets in the Pump Solutions reporting unit were acquired in the National Pump acquisition. Based on the October 1, 2015 test, the Pump Solutions reporting unit’s estimated fair value exceeded its carrying amount by 3.3 percent. In light of continuing pressures on the Pump Solutions reporting unit related primarily to upstream oil and gas customers, we continued to monitor the Pump Solutions reporting unit for impairment through the end of 2015, and performed another impairment test as of November 30, 2015. As of the November 30, 2015 testing date, the estimated fair value of the Pump Solutions reporting unit exceeded its carrying amount by 1 percent. No additional impairment indicators were noted as of December 31, 2015. As of December 31, 2015, there was $311 of goodwill in the Pump Solutions reporting unit.

Given the narrow margin by which the estimated fair value of the Pump Solutions reporting unit exceeded its carrying amount, we also performed a sensitivity analysis related to the discount rate and long-term growth rate used in the November 30, 2015 test. Specifically, we performed the sensitivity analysis by: (i) increasing the discount rate by 50 basis points and (ii) reducing the long-term growth rate by 25 basis points. The Pump Solutions reporting unit failed step one of the goodwill impairment test under the sensitivity test, and would have required step two testing to determine potential goodwill impairment.

The November 30, 2015 impairment test assumed earnings growth for the Pump Solutions reporting unit over the next three years. Should this growth not occur, if the reporting unit otherwise fails to meet its current financial plans, or if there were changes to any other key assumption used in the test, the Pump Solutions reporting unit could fail step one of the goodwill impairment test in a future period. We will continue to monitor the Pump Solutions reporting unit for impairment.

Restructuring Charges

Costs associated with exit or disposal activities, including lease termination costs and certain employee severance costs associated with restructuring, branch closings or other activities, are recognized at fair value when they are incurred.

Other Intangible Assets

Other intangible assets consist of non-compete agreements, customer relationships and trade names and associated trademarks. The non-compete agreements are being amortized on a straight-line basis over initial periods of approximately 5 years. The customer relationships are being amortized either using the sum of the years' digits method or on a straight-line basis over initial periods ranging from 7 to 15 years. The trade names and associated trademarks are being amortized using the sum of the years' digits method over an initial period of 5 years. We believe that the amortization methods used reflect the estimated pattern in which the economic benefits will be consumed.

Long-Lived Assets

Long-lived assets are recorded at the lower of amortized cost or fair value. As part of an ongoing review of the valuation of long-lived assets, we assess the carrying value of such assets if facts and circumstances suggest they may be impaired. If this review indicates the carrying value of such an asset may not be recoverable, as determined by an undiscounted cash flow analysis over the remaining useful life, the carrying value would be reduced to its estimated fair value.

Translation of Foreign Currency

Assets and liabilities of our Canadian subsidiaries that have a functional currency other than U.S. dollars are translated into U.S. dollars using exchange rates at the balance sheet date. Revenues and expenses are translated at average exchange rates effective during the year. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive (loss) income within stockholders’ equity.

Revenue Recognition

Our rental contract periods are hourly, daily, weekly or monthly and we recognize revenues from renting equipment on a straight-line basis. As part of this straight-line methodology, when the equipment is returned, we recognize as incremental revenue the excess, if any, between the amount the customer is contractually required to pay over the cumulative amount of revenue recognized to date. We record amounts billed to customers in excess of recognizable revenue as deferred revenue on our balance sheet. We had deferred revenue of $32 and $36 as of December 31, 2015 and 2014, respectively.

Equipment rentals include our revenues from renting equipment, as well as revenue related to the fees we charge customers: for equipment delivery and pick-up; to protect the customer against liability for damage to our equipment while on rent; and for fuel. Delivery and pick-up revenue is recognized when the service is performed. Customers have the option of purchasing a damage waiver when they rent our equipment to protect against potential loss or damage; we refer to the fee we charge for the waiver as Rental Protection Plan (or "RPP") revenue. RPP revenue is recognized ratably over the contract term.

Fees related to the consumption of fuel by our customers are recognized when the equipment is returned by the customer (and consumption, if any, can be measured).

Revenues from the sale of rental equipment and new equipment are recognized at the time of delivery to, or pick-up by, the customer and when collectibility is reasonably assured. Sales of contractor supplies are also recognized at the time of delivery to, or pick-up by, the customer. Service revenue is recognized as the services are performed. Sales tax amounts collected from customers are recorded on a net basis.

Delivery Expense

Equipment rentals include our revenues from fees we charge for equipment delivery. Delivery costs are charged to operations as incurred, and are included in cost of revenues on our consolidated statements of income.

Advertising Expense

We promote our business through local and national advertising in various media, including television, trade publications, yellow pages, the Internet, radio and direct mail. Advertising costs are generally expensed as incurred. Advertising expense, net of qualified advertising reimbursements, was $0 for each of the years ended December 31, 2015, 2014 and 2013.

We receive reimbursements for advertising that promotes a vendor’s products or services. Such reimbursements that meet the applicable criteria under U.S. generally accepted accounting principles (“GAAP”) are offset against advertising costs in the period in which we recognize the incremental advertising cost. The amounts of qualified advertising reimbursements that reduced advertising expense were $17, $16 and $15 for the years ended December 31, 2015, 2014 and 2013, respectively.

Insurance

We are insured for general liability, workers’ compensation and automobile liability, subject to deductibles or self-insured retentions per occurrence. Losses within the deductible amounts are accrued based upon the aggregate liability for reported claims incurred, as well as an estimated liability for claims incurred but not yet reported. These liabilities are not discounted. The Company is also self-insured for group medical claims but purchases “stop loss” insurance to protect itself from any one significant loss.

Income Taxes

We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities and are measured using the tax rates and laws that are expected to be in effect when the differences are expected to reverse. Recognition of deferred tax assets is limited to amounts considered by management to be more likely than not to be realized in future periods. The most significant positive evidence that we consider in the recognition of deferred tax assets is the expected reversal of cumulative deferred tax liabilities resulting from book versus tax depreciation of our rental equipment fleet that is well in excess of the deferred tax assets.

We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return regarding uncertainties in income tax positions. The first step is recognition: we determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority with full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset or an increase in a deferred tax liability.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates impact the calculation of the allowance for doubtful accounts, depreciation and amortization, income taxes, reserves for claims, loss contingencies (including legal contingencies) and the fair values of financial instruments. Actual results could materially differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain cash and cash equivalents with high quality financial institutions. Concentration of credit risk with respect to receivables is limited because a large number of geographically diverse customers makes up our customer base. Our largest customer accounted for less than one percent of total revenues in each of 2015, 2014, and 2013. Our customer with the largest receivable balance represented approximately one percent of total receivables at December 31, 2015 and 2014. We manage credit risk through credit approvals, credit limits and other monitoring procedures.

Stock-Based Compensation

We measure stock-based compensation at the grant date based on the fair value of the award and recognize stock-based compensation expense over the requisite service period. Determining the fair value of stock option awards requires judgment, including estimating stock price volatility, forfeiture rates and expected option life. Restricted stock awards are valued based on the fair value of the stock on the grant date and the related compensation expense is recognized over the service period. Similarly, for time-based restricted stock awards subject to graded vesting, we recognize compensation cost on a straight-line basis over the requisite service period. For performance-based restricted stock units ("RSUs"), compensation expense is recognized if satisfaction of the performance condition is considered probable. We classify cash flows from tax benefits resulting from tax deductions in excess of the compensation cost recognized for stock-based awards (“excess tax benefits”) as financing cash flows.

New Accounting Pronouncements

Revenue from Contracts with Customers. In May 2014, 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.

Inventory. In July 2015, the FASB issued guidance that requires an entity to measure inventory at the lower of cost or net realizable value. Current GAAP requires that an entity measure inventory at the lower of cost or market, and market under current GAAP could be replacement cost, net realizable value, or net realizable value less a normal profit margin. This guidance is effective for fiscal years and interim periods beginning after December 15, 2016, and requires prospective application. Early adoption is permitted. We expect to adopt this guidance when effective, and do not expect this guidance to have a significant impact on our financial statements.

Business Combinations. In September 2015, the FASB issued guidance to simplify the accounting for adjustments made during the measurement period to provisional amounts recognized in a business combination. This guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition the acquirer is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. This guidance is effective for fiscal years and interim periods beginning after December 15, 2015, and requires prospective application. Early adoption is permitted. We expect to adopt this guidance when effective, and do not expect this guidance to have a significant impact on our financial statements.

Guidance Adopted in the Fourth Quarter of 2015

Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued guidance on the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. We early adopted this guidance retrospectively during the fourth quarter of 2015. As a result of adopting this guidance, total assets and total liabilities as of December 31, 2014 decreased as discussed below.

Balance Sheet Classification of Deferred Taxes. In November 2015, the FASB issued guidance that requires that deferred tax liabilities and assets be classified as non-current in the balance sheet. We early adopted this guidance retrospectively during

the fourth quarter of 2015. As a result of adopting this guidance, total assets and total liabilities as of December 31, 2014 decreased as discussed below.

The impact of adopting the above guidance as of December 31, 2014 was as follows:

	Deferred tax current assets				Total current assets				Other long-term assets				Total assets				Long-term debt				Deferred tax long-term liabilities				Total liabilities				Total liabilities and stockholders' equity
Previously reported	$	248			$	1,546			$	97			$	12,467			$	7,434			$	1,692			$	10,669			$	12,467
Simplifying the Presentation of Debt Issuance Costs	—				—				(90		)		(90		)		(90		)		—				(90		)		(90		)
Balance Sheet Classification of Deferred Taxes	(248		)		(248		)		—				(248		)		—				(248		)		(248		)		(248		)
Current presentation	$	—			$	1,298			$	7			$	12,129			$	7,344			$	1,444			$	10,331			$	12,129

3. Acquisitions

In April 2014, we completed the acquisition of assets of National Pump. National Pump was the second largest specialty pump rental company in North America. National Pump was a leading supplier of pumps for energy and petrochemical customers, with upstream oil and gas customers representing about half of its revenue. National Pump had a total of 35 branches, including four branches in western Canada, and had annual revenues of approximately $210. The acquisition is expected to expand our product offering, and supports our strategy of expanding our presence in industrial and specialty rental markets.

The acquisition date fair value of the consideration transferred consisted of the following:

Cash consideration (1)	$	773
Contingent consideration (2)	76
Total purchase consideration (3)	$	849

(1) Includes a ‘hold back’ of $58 that was paid in April 2015.

(2) Reflects the acquisition date fair value of the contingent consideration that was paid in June 2015 as discussed in note 11 to our consolidated financial statements.

(3) Total purchase consideration excludes $15 of stock which was issued in connection with the acquisition and was treated as compensation for book purposes but primarily represents deductible goodwill for income tax purposes.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date:

Accounts receivable, net of allowance for doubtful accounts (1)	$	44
Inventory	19
Deferred taxes	6
Rental equipment	172
Property and equipment	10
Intangibles (2)	289
Other assets	1
Total identifiable assets acquired	541
Current liabilities	(25		)
Total liabilities assumed	(25		)
Net identifiable assets acquired	516
Goodwill (3)	333
Net assets acquired	$	849

(1) The fair value of accounts receivables acquired was $44, and the gross contractual amount was $47. We estimated that $3 would be uncollectible.

(2) The following table reflects the estimated fair values and useful lives of the acquired intangible assets identified based on our purchase accounting assessments:

	Fair value			Life (years)
Customer relationships	$	274		10
Non-compete agreements	15			6
Total	$	289

(3) $321 of the goodwill was assigned to our trench, power and pump segment and $12 of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the merger is primarily reflective of National Pump's going-concern value, the value of National Pump's assembled workforce, new customer relationships expected to arise from the merger, and operational synergies that we expect to achieve that would not be available to other market participants. $325 of goodwill is expected to be deductible for income tax purposes. The amount of goodwill that is expected to be deductible for income tax purposes declined during the year ended December 31, 2015 due to a decline in the fair value of the contingent cash consideration component of the National Pump purchase price due to lower than expected financial performance compared to agreed upon financial targets, as discussed in note 11 to our consolidated financial statements.

The year ended December 31, 2015 includes a National Pump acquisition-related cost reduction of $26. The cost reduction reflects a decline in the fair value of the contingent cash consideration component of the National Pump purchase price due to lower than expected financial performance compared to agreed upon financial targets, as discussed in note 11 to our consolidated financial statements. The year ended December 31, 2014 includes National Pump acquisition-related costs of $10. The acquisition-related costs are reflected in our consolidated statements of income as “Merger related costs” which also include costs associated with the acquisition of RSC Holdings Inc. (“RSC”). The merger related costs primarily relate to financial and legal advisory fees, and also include changes subsequent to the acquisition date to the fair value of the contingent cash consideration component of the National Pump purchase price as discussed in note 11 to our consolidated financial statements. We do not expect to incur significant additional charges in connection with the merger subsequent to December 31, 2015. In addition to the acquisition-related costs reflected in our consolidated statements of income, we capitalized $22 of debt issuance costs associated with the issuance of debt to fund the acquisition, which are reflected, net of amortization subsequent to the acquisition date, in other long-term assets in our consolidated balance sheets.

The pro forma information below has been prepared using the purchase method of accounting, giving effect to the National Pump acquisition as if it had been completed on January 1, 2013 (“the pro forma acquisition date”). The pro forma information is not necessarily indicative of our results of operations had the acquisition been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition, and also does not reflect additional revenue opportunities following the acquisition. The table below presents unaudited pro forma consolidated income statement information as if

National Pump had been included in our consolidated results for the entire periods reflected:

	Year Ended December 31,
	2014				2013
United Rentals historic revenues	$	5,685			$	4,955
National Pump historic revenues	62				208
Pro forma revenues	5,747				5,163
United Rentals historic pretax income	850				605
National Pump historic pretax income	20				62
Combined pretax income	870				667
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)	(1		)		(4		)
Intangible asset amortization (2)	(12		)		(52		)
Interest expense (3)	58				(95		)
Elimination of historic National Pump interest (4)	—				2
Elimination of merger costs (5)	8				—
Pro forma pretax income	$	923			$	518

(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the National Pump acquisition. The useful lives assigned to such equipment didn’t change significantly from the lives historically used by National Pump.

(2) The intangible assets acquired in the National Pump acquisition were amortized.

(3) In connection with the National Pump acquisition, URNA issued $525 principal amount of 6 1/8 percent Senior Notes (as an add on to our existing 6 1/8 percent Senior Notes) and $850 principal amount of 5 3/4 percent Senior Notes, and all our outstanding 9 1/4 percent Senior Notes were redeemed. Interest expense was adjusted to reflect these changes in our debt portfolio. For the pro forma presentation, the $64 loss recognized upon redemption of the 9 1/4 percent Senior Notes was moved from the year ended December 31, 2014 to the year ended December 31, 2013.

(4) Interest on National Pump historic debt was eliminated.

(5) Merger related costs, primarily comprised of financial and legal advisory fees, associated with the National Pump acquisition were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date.

For the years ended December 31, 2015 and 2014, National Pump revenue and pretax (loss) income included in our consolidated financial statements were as follows:

	Year Ended December 31,
	2015				2014
Revenue	$	225			$	215
Pretax (loss) income (1)	(6		)		42

(1) Pretax (loss) income excludes merger related costs which are not allocated to our segments. Pretax loss for the year ended December 31, 2015 reflects volume and pricing pressure associated with upstream oil and gas customers, and the amortization of the intangible assets acquired in the National Pump acquisition.

In addition to the acquisitions of National Pump, in May 2014, we completed the acquisition of Blue Stream, an equipment rental company with four locations in Louisiana and Texas. Blue Stream had annual rental revenues of approximately $20. Additionally, in September 2015, we completed the acquisition of DDR Propane and Equipment Rental ("DDR"), an equipment rental company with two locations in Alberta, Canada. DDR had annual revenues of approximately $20.

4. Segment Information

Our two 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. We periodically review the size and geographic scope of our regions, and have occasionally reorganized the regions to create a more balanced and effective structure. In 2015, we reorganized certain of our regions to arrive at the current general rentals' region structure.

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 energy and petrochemical 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.

The following table presents the percentage of equipment rental revenue by equipment type for the years ended December 31, 2015, 2014 and 2013:

	Year Ended December 31,
	2015			2014			2013
Primarily rented by our general rentals segment:
General construction and industrial equipment	43	%		43	%		44	%
Aerial work platforms	32	%		33	%		36	%
General tools and light equipment	10	%		10	%		9	%
Primarily rented by our trench, power and pump segment:
Power and HVAC equipment	6	%		6	%		6	%
Trench safety equipment	5	%		5	%		5	%
Pumps	4	%		3	%		*

• There was no material equipment rental revenue associated with pumps prior to the April 2014 acquisition of National Pump discussed in note 3 to our consolidated financial statements.

These segments align our external segment reporting with how management evaluates business performance and allocates resources. We evaluate segment performance based on segment equipment rentals gross profit.

The accounting policies for our segments are the same as those described in the summary of significant accounting policies in note 2. Certain corporate costs, including those related to selling, finance, legal, risk management, human resources, corporate management and information technology systems, are deemed to be of an operating nature and are allocated to our segments based primarily on rental fleet size.

The following table sets forth financial information by segment as of and for the years ended December 31, 2015, 2014 and 2013:

	General rentals				Trench, power and pump				Total
2015
Equipment rentals	$	4,241			$	708			$	4,949
Sales of rental equipment	504				34				538
Sales of new equipment	137				20				157
Contractor supplies sales	67				12				79
Service and other revenues	83				11				94
Total revenue	5,032				785				5,817
Depreciation and amortization expense	1,071				173				1,244
Equipment rentals gross profit	1,819				328				2,147
Capital expenditures	1,439				197				1,636
Total assets	$	10,561			$	1,522			$	12,083
2014
Equipment rentals	$	4,222			$	597			$	4,819
Sales of rental equipment	519				25				544
Sales of new equipment	113				36				149
Contractor supplies sales	73				12				85
Service and other revenues	75				13				88
Total revenue	5,002				683				5,685
Depreciation and amortization expense	1,060				134				1,194
Equipment rentals gross profit	1,790				302				2,092
Capital expenditures	1,594				227				1,821
Total assets (1)	$	10,597			$	1,532			$	12,129
2013
Equipment rentals	$	3,869			$	327			$	4,196
Sales of rental equipment	474				16				490
Sales of new equipment	97				7				104
Contractor supplies sales	79				8				87
Service and other revenues	72				6				78
Total revenue	4,591				364				4,955
Depreciation and amortization expense	1,038				60				1,098
Equipment rentals gross profit	1,557				153				1,710
Capital expenditures	1,556				128				1,684
Total assets	$	10,322			$	554			$	10,876

(1)The increase in the trench safety, power and HVAC, and pump solutions assets in 2014 primarily reflects the impact of the National Pump acquisition discussed in note 3 to the consolidated financial statements.

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:

	Year Ended December 31,
	2015				2014				2013
Total equipment rentals gross profit	$	2,147			$	2,092			$	1,710
Gross profit from other lines of business	333				340				277
Selling, general and administrative expenses	(714		)		(758		)		(642		)
Merger related costs	26				(11		)		(9		)
Restructuring charge	(6		)		1				(12		)
Non-rental depreciation and amortization	(268		)		(273		)		(246		)
Interest expense, net	(567		)		(555		)		(475		)
Interest expense- subordinated convertible debentures	—				—				(3		)
Other income, net	12				14				5
Income before provision for income taxes	$	963			$	850			$	605

We operate in the United States and Canada. The following table presents geographic area information for the years ended December 31, 2015, 2014 and 2013, except for balance sheet information, which is presented as of December 31, 2015 and 2014:

	Domestic				Foreign (Canada)				Total
2015
Equipment rentals	$	4,452			$	497			$	4,949
Sales of rental equipment	480				58				538
Sales of new equipment	137				20				157
Contractor supplies sales	69				10				79
Service and other revenues	80				14				94
Total revenue	5,218				599				5,817
Rental equipment, net	5,657				529				6,186
Property and equipment, net	399				46				445
Goodwill and other intangibles, net	$	3,838			$	310			$	4,148
2014
Equipment rentals	$	4,217			$	602			$	4,819
Sales of rental equipment	478				66				544
Sales of new equipment	124				25				149
Contractor supplies sales	70				15				85
Service and other revenues	73				15				88
Total revenue	4,962				723				5,685
Rental equipment, net	5,399				609				6,008
Property and equipment, net	395				43				438
Goodwill and other intangibles, net	$	4,014			$	364			$	4,378
2013
Equipment rentals	$	3,612			$	584			$	4,196
Sales of rental equipment	438				52				490
Sales of new equipment	82				22				104
Contractor supplies sales	70				17				87
Service and other revenues	62				16				78
Total revenue	$	4,264			$	691			$	4,955

5. 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 closed in 2011. The second closed restructuring program was initiated following the April 30, 2012 acquisition of RSC, and was completed in 2013. The restructuring charges under the closed restructuring programs for the years ended December 31, 2015, 2014 and 2013 include severance costs associated with headcount reductions, as well as branch closure charges which principally relate to continuing lease obligations at vacant facilities.

The table below provides certain information concerning our restructuring charges under the closed restructuring programs:

Description		Beginning Reserve Balance				Charged to Costs and Expenses (1)				Payments and Other				Ending Reserve Balance
Year ended December 31, 2013:
Branch closure charges		$	52			$	10			$	(29	)		$	33
Severance costs		9				2				(9		)		2
Total		$	61			$	12			$	(38	)		$	35
Year ended December 31, 2014:
Branch closure charges		$	33			$	(1	)		$	(12	)		$	20
Severance costs		2				—				(2		)		—
Total		$	35			$	(1	)		$	(14	)		$	20
Year ended December 31, 2015:
Branch closure charges		$	20			$	2			$	(9	)		$	13
Severance costs		—				—				—				—
Total		$	20			$	2			$	(9	)		$	13

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

Between January 1, 2008 and December 31, 2015, we incurred total restructuring charges under the closed restructuring programs of $216, comprised of $150 of branch closure charges and $66 of severance costs.

2015-2016 Cost Savings Restructuring Program

In the fourth quarter of 2015, we initiated a restructuring program in response to recent 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 have not fully generated the anticipated cost savings due to lower than expected growth. Though we expect solid industry growth in 2016, 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. We recognized $4 of costs for this program in the fourth quarter of 2015, and expect to recognize most of the costs associated with the program in 2016. The total costs expected to be incurred in connection with the program are not currently estimable, as we are still identifying the actions that will be undertaken.

The table below provides certain information concerning our restructuring charges under the current restructuring program:

Description		Beginning Reserve Balance				Charged to Costs and Expenses (1)				Payments and Other				Ending Reserve Balance
Year ended December 31, 2015:
Branch closure charges		$	—			$	—			$	—			$	—
Severance costs		—				4				(1		)		3
Total		$	—			$	4			$	(1	)		$	3

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

6. Rental Equipment

Rental equipment consists of the following:

	December 31,
	2015				2014
Rental equipment	$	9,022			$	8,527
Less accumulated depreciation	(2,836		)		(2,519		)
Rental equipment, net	$	6,186			$	6,008

7. Property and Equipment

Property and equipment consist of the following:

	December 31,
	2015				2014
Land	$	98			$	97
Buildings	226				223
Non-rental vehicles	86				75
Machinery and equipment	78				68
Furniture and fixtures	171				152
Leasehold improvements	212				200
	871				815
Less accumulated depreciation and amortization	(426		)		(377		)
Property and equipment, net	$	445			$	438

8. Goodwill and Other Intangible Assets

The following table presents the changes in the carrying amount of goodwill for each of the three years in the period ended December 31, 2015:

	General rentals				Trench, power and pump				Total
Balance at January 1, 2013 (1)	$	2,828			$	142			$	2,970
Foreign currency translation and other adjustments	(16		)		(1		)		(17		)
Balance at December 31, 2013 (1)	2,812				141				2,953
Goodwill related to acquisitions (2)	12				330				342
Foreign currency translation and other adjustments	(20		)		(3		)		(23		)
Balance at December 31, 2014 (1)	2,804				468				3,272
Goodwill related to acquisitions (2)	16				—				16
Foreign currency translation and other adjustments	(34		)		(11		)		(45		)
Balance at December 31, 2015 (1)	$	2,786			$	457			$	3,243

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(1)	The total carrying amount of goodwill for all periods in the table above is reflected net of $1,557 of accumulated impairment charges, which were primarily recorded in our general rentals segment.

(2)	Includes goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period, which were not significant to our previously reported operating results or financial condition.

Other intangible assets were comprised of the following at December 31, 2015 and 2014:

	December 31, 2015
	Weighted-Average Remaining Amortization Period		Gross Carrying Amount				Accumulated Amortization				Net Amount
Non-compete agreements	31 months		$	69			$	44			$	25
Customer relationships	11 years		$	1,453			$	583			$	870
Trade names and associated trademarks	16 months		$	80			$	70			$	10

	December 31, 2014
	Weighted-Average Remaining Amortization Period		Gross Carrying Amount				Accumulated Amortization				Net Amount
Non-compete agreements	40 months		$	70			$	31			$	39
Customer relationships	12 years		$	1,496			$	451			$	1,045
Trade names and associated trademarks	28 months		$	80			$	58			$	22

Amortization expense for other intangible assets was $193, $204 and $178 for the years ended December 31, 2015, 2014 and 2013, respectively. The increase for the year ended December 31, 2014 primarily reflects the National Pump acquisition discussed in note 3 to our consolidated financial statements.

As of December 31, 2015, estimated amortization expense for other intangible assets for each of the next five years and thereafter was as follows:

2016	$	173
2017	144
2018	124
2019	110
2020	94
Thereafter	260
Total	$	905

9. Accrued Expenses and Other Liabilities and Other Long-Term Liabilities

Accrued expenses and other liabilities consist of the following:

	December 31,
	2015				2014
Self-insurance accruals	$	43			$	42
Accrued compensation and benefit costs	41				97
Property and income taxes payable	22				35
Restructuring reserves (1)	16				20
Interest payable	91				102
Deferred revenue (2)	38				39
National accounts accrual	39				38
Due to seller	4				129
Other (3)	61				73
Accrued expenses and other liabilities	$	355			$	575

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(1)	Relates to branch closure charges and severance costs. See note 5 for additional detail.

(2)	Primarily relates to amounts billed to customers in excess of recognizable equipment rental revenue. See note 2 (“Revenue Recognition”) for additional detail.

(3)	Other includes multiple items, none of which are individually significant.

Other long-term liabilities consist of the following:

	December 31,
	2015				2014
Self-insurance accruals	$	47			$	50
Due to seller	—				8
Accrued compensation and benefit costs	7				7
Other long-term liabilities	$	54			$	65

10. 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 year ended December 31, 2015, the risks we managed using derivative instruments were diesel price risk and foreign currency exchange rate risk. At December 31, 2015, 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 year ended December 31, 2015, 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 December 31, 2015, 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, which were all settled as of December 31, 2015, represented derivative instruments not designated as hedging instruments.

Fixed Price Diesel Swaps

The fixed price swap contracts on diesel purchases that were outstanding at December 31, 2015 were designated and qualify as cash flow hedges and the effective portion of the unrealized 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 consolidated statements of income during the current period. As of December 31, 2015, we had outstanding fixed price swap contracts covering 10.3 million gallons of diesel which will be purchased throughout 2016 and 2017.

Foreign Currency Forward Contracts

The forward contracts to purchase Canadian dollars, which were all settled as of December 31, 2015, 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 consolidated statements of income during the period in which the changes in fair value occurred. During the year ended December 31, 2015, forward contracts were used to purchase $221 Canadian dollars, representing the total amount due at maturity for certain Canadian dollar denominated intercompany loans that were settled during the year ended December 31, 2015. Upon maturity, the proceeds from the forward contracts were used to pay down the Canadian dollar denominated intercompany loans.

Financial Statement Presentation

As of December 31, 2015 and 2014, 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 consolidated balance sheets associated with the outstanding fixed price swap contracts that were designated and qualify as cash flow hedges. Insignificant amounts (less than $1) were reflected in our consolidated statement of cash flows for the years ended December 31, 2015, 2014 and 2013 associated with the forward contracts to purchase Canadian dollars. Operating cash flows in our consolidated statement of cash flows for the years ended December 31, 2015, 2014 and 2013 include $35, $41 and $38, respectively, associated with the fixed price diesel swaps, comprised of 1) the cost to purchase 10.6 million, 10.5 million and 9.7 million hedged gallons of diesel during the years ended December 31, 2015, 2014 and 2013, respectively, and 2) cash paid to or received from the counterparties to the fixed price swaps.

The effect of our derivative instruments on our consolidated statements of income for the years ended December 31, 2015, 2014 and 2013 was as follows:

	Location of income (expense) recognized on derivative/hedged item		Amount of income (expense) recognized on derivative			Amount of income (expense) recognized on hedged item
Year ended December 31, 2015:
Derivatives designated as hedging instruments:
Fixed price diesel swaps	Other income (expense), net (1)		$ *
	Cost of equipment rentals, excluding depreciation (2), (3)		(7	)		(29	)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other income (expense), net		(5	)		5
Year ended December 31, 2014:
Derivatives designated as hedging instruments:
Fixed price diesel swaps	Other income (expense), net (1)		$ *
	Cost of equipment rentals, excluding depreciation (2), (3)		*			(40	)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other income (expense), net		(7	)		7
Year ended December 31, 2013:
Derivatives designated as hedging instruments:
Fixed price diesel swaps	Other income (expense), net (1)		$ *
	Cost of equipment rentals, excluding depreciation (2), (3)		*			(38	)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other income (expense), net		(3	)		3

• 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 10.6 million, 10.5 million and 9.7 million gallons of diesel covered by the fixed price swaps during the years ended December 31, 2015, 2014 and 2013, respectively.

11. Fair Value Measurements

We account for certain assets and liabilities at fair value, and 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 and liabilities include:

a) quoted prices for similar assets or liabilities in active markets;

b) quoted prices for identical or similar assets or liabilities in inactive markets;

c) inputs other than quoted prices that are observable for the asset or liability;

d) inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3—Inputs to the valuation methodology are unobservable (i.e., supported by little or no market activity) and significant to the fair value measure.

Assets and Liabilities Measured at Fair Value

Our fixed price diesel swap contracts are Level 2 derivatives measured at fair value on a recurring basis. As of December 31, 2015 and 2014, immaterial amounts ($6 or less) were reflected in prepaid expenses and other assets, and accrued expenses and other liabilities in our consolidated balance sheets, reflecting the fair values of the fixed price swap contracts. As

discussed in note 10 to the 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 December 31, 2015, we have fixed price swap contracts covering 10.3 million gallons of diesel which we will buy throughout 2016 and 2017 at the average contract price of $2.93 per gallon, while the average forward price for the hedged gallons was $2.35 per gallon as of December 31, 2015.

The fair value of the contingent cash consideration component of the National Pump purchase price discussed in note 3 to our consolidated financial statements was $0 as of December 31, 2015 and $78 as of December 31, 2014. In June 2015, we paid the contingent consideration and were relieved of further liabilities associated therewith. The contingent consideration was recorded in accrued expenses and other liabilities in our condensed consolidated balance sheets, and was a Level 3 liability that was measured at fair value on a recurring basis. Fair value was determined using a probability weighted discounted cash flow methodology. Key inputs to the valuation included: (i) discrete scenarios of potential payouts; (ii) probability weightings assigned to each of the scenarios; and (iii) a rate of return with which to discount the probability weighted payouts to present value. Changes to the fair value of the contingent cash consideration are reflected in our consolidated statements of income as “Merger related costs” which included a $26 fair value reduction for the year ended December 31, 2015. In June 2015, we paid the liability remaining after recognizing the decline in fair value, and were relieved of further liabilities associated therewith. The decline in the fair value of the contingent cash consideration primarily related to lower than expected financial performance compared to agreed upon financial targets.

Fair Value of Financial Instruments

The carrying amounts reported in our consolidated balance sheets for accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value due to the immediate to short-term maturity of these financial instruments. The fair values of our senior secured asset-based revolving credit facility (“ABL facility”) and accounts receivable securitization facility approximate their book values as of December 31, 2015 and 2014. The estimated fair values of our other financial instruments at December 31, 2015 and 2014 have been calculated based upon available market information or an appropriate valuation technique, and are as follows:

	December 31, 2015								December 31, 2014
	Carrying Amount				Fair Value				Carrying Amount				Fair Value
Level 1:
Senior and senior subordinated notes	$	5,916			$	6,030			$	5,984			$	6,390
Level 2:
4 percent Convertible Senior Notes (1)	—				—				32				33
Level 3:
Capital leases (2)	96				95				105				104

(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. The 4 percent Convertible Senior Notes matured in 2015. To exclude the equity component and calculate the fair value as of December 31, 2014, we used an effective interest rate of 7.3 percent.

(2)	The fair value of capital leases reflects the present value of the leases using a 7.0 percent interest rate.

12. Debt

Debt consists of the following:

	December 31,
	2015				2014
URNA and subsidiaries debt:
Accounts Receivable Securitization Facility (1)	$	571			$	548
$2.5 billion ABL Facility (1)	1,579				1,293
5 3/4 percent Senior Secured Notes (2)	—				741
8 3/8 percent Senior Subordinated Notes (2)	—				740
7 3/8 percent Senior Notes	740				738
8 1/4 percent Senior Notes (2)	315				687
7 5/8 percent Senior Notes	1,306				1,303
6 1/8 percent Senior Notes	937				938
4 5/8 percent Senior Secured Notes (3)	989				—
5 3/4 percent Senior Notes	838				837
5 1/2 percent Senior Notes (3)	791				—
Capital leases	96				105
Total URNA and subsidiaries debt	8,162				7,930
Holdings:
4 percent Convertible Senior Notes (4)	—				32
Total debt (5)	8,162				7,962
Less short-term portion	(607		)		(618		)
Total long-term debt	$	7,555			$	7,344

(1)	$873 and $48 were available under our ABL facility and accounts receivable securitization facility, respectively, at December 31, 2015. The ABL facility availability is reflected net of $37 of letters of credit. At December 31, 2015, the interest rates applicable to our ABL facility and accounts receivable securitization facility were 2.3 percent and 1.1 percent, respectively.

(2)	In 2015, we redeemed all of our 5 3/4 percent Senior Secured Notes and 8 3/8 percent Senior Subordinated Notes, and $350 principal amount of our 8 1/4 percent Senior Notes. Upon redemption, we recognized an aggregate loss of $121 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.

(3)	In 2015, URNA issued $1.0 billion principal amount of 4 5/8 percent Senior Secured Notes and $800 principal amount of 5 1/2 percent Senior Notes. See below for additional detail.

(4)	The 4 percent Convertible Senior Notes matured in 2015. During the year ended December 31, 2015, $34 principal amount of the 4 percent Convertible Senior Notes was redeemed. We recognized a loss of approximately $1 in interest expense, net upon redemption. The loss represented the difference between the net carrying amount and the fair value of the debt component of the notes.

(5)

In 2015, we adopted accounting guidance on the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. Total debt as of December 31, 2015 and 2014 is presented above in accordance with this new guidance. Under the new presentation, total debt as of December 31, 2014 as presented above decreased by $90 from the previously reported total debt.

Short-term debt

As of December 31, 2015, our short-term debt primarily reflects $571 of borrowings under our accounts receivable securitization facility. As discussed below, in 2015, we amended and extended our accounts receivable securitization facility. During the year ended December 31, 2015, the monthly average amount outstanding under the accounts receivable securitization facility, including both prior to and after the amendment and extension of the facility, was $516 and the weighted-average interest rate thereon was 0.8 percent. The maximum month-end amount outstanding under the accounts receivable securitization facility during the year ended December 31, 2015, including both prior to and after the amendment and extension of the facility, was $608.

Accounts Receivable Securitization Facility. In September 2015, we amended and extended our accounts receivable securitization facility. The amended facility expires on August 30, 2016, has a facility size of $625, and may be extended on a

364-day basis by mutual agreement of the Company and the lenders under the facility. Borrowings under the facility are reflected as short-term debt on our consolidated balance sheets. Key provisions of the facility include the following:

•	borrowings are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves, exceeds the outstanding loans by a specified amount. As of December 31, 2015, there were $620 of receivables, net of applicable reserves, in the collateral pool;

•	the receivables in the collateral pool are the lenders’ only source of repayment;

•	upon early termination of the facility, no new amounts will be advanced under the facility and collections on the receivables securing the facility will be used to repay the outstanding borrowings; and

•	standard termination events including, without limitation, a change of control of Holdings, URNA or certain of its subsidiaries, a failure to make payments, a failure to comply with standard default, delinquency, dilution and days sales outstanding covenants, or breach of the fixed charge coverage ratio covenant under the ABL facility (if applicable).

ABL Facility. In June 2008, Holdings, URNA, and certain of our subsidiaries entered into a credit agreement providing for a five-year $1.25 billion ABL facility, a portion of which is available for borrowing in Canadian dollars. The ABL facility was subsequently upsized and extended, and in March 2015, the ABL facility was again amended and extended, with the size of the facility increased to $2.5 billion.

The ABL facility is subject to, among other things, the terms of a borrowing base derived from the value of eligible rental equipment and eligible inventory. The borrowing base is subject to certain reserves and caps customary for financings of this type. All amounts borrowed under the credit agreement must be repaid on or before March 2020. Loans under the credit agreement bear interest, at URNA’s option: (i) in the case of loans in U.S. dollars, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, or (ii) in the case of loans in Canadian dollars, at a rate equal to the Canadian prime rate or an alternate rate (Bankers' Acceptance Rate), in each case plus a spread. The interest rates under the credit agreement are subject to change based on the availability in the facility. A commitment fee accrues on any unused portion of the commitments under the credit agreement at a fixed rate per annum. Ongoing extensions of credit under the credit agreement are subject to customary conditions, including sufficient availability under the borrowing base. The credit agreement also contains covenants that, unless certain financial and other conditions are satisfied, require URNA to satisfy various financial tests and to maintain certain financial ratios. As discussed below (see “Loan Covenants and Compliance”), the only material financial covenant that currently exists in the ABL facility is the fixed charge coverage ratio. As of December 31, 2015, availability under the ABL facility has exceeded the required threshold and, as a result, this maintenance covenant is inapplicable. In addition, the credit agreement contains customary negative covenants applicable to Holdings, URNA and our subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness or engage in certain other types of financing transactions, (ii) allow certain liens to attach to assets, (iii) repurchase, or pay dividends or make certain other restricted payments on, capital stock and certain other securities, (iv) prepay certain indebtedness and (v) make acquisitions and investments. The U.S. dollar borrowings under the credit agreement are secured by substantially all of our assets and substantially all of the assets of certain of our U.S. subsidiaries (other than real property and certain accounts receivable). The U.S. dollar borrowings under the credit agreement are guaranteed by Holdings and by URNA and, subject to certain exceptions, our domestic subsidiaries. Borrowings under the credit agreement by URNA’s Canadian subsidiaries are also secured by substantially all the assets of URNA’s Canadian subsidiaries and supported by guarantees from the Canadian subsidiaries and from Holdings and URNA, and, subject to certain exceptions, our domestic subsidiaries. Under the ABL facility, a change of control (as defined in the credit agreement) constitutes an event of default, entitling our lenders, among other things, to terminate our ABL facility and to require us to repay outstanding borrowings.

As of December 31, 2015, the ABL facility was our only long-term variable rate debt instrument. During the year ended December 31, 2015, the monthly average amount outstanding under the ABL facility, including both prior to and after the amendment and extension of the facility, was $1.5 billion and the weighted-average interest rate thereon was 1.9 percent. The maximum month-end amount outstanding under the ABL facility during the year ended December 31, 2015, including both prior to and after the amendment and extension of the facility, was $1.8 billion.

7 3/8 percent Senior Notes. In March 2012, a special purpose entity formed for the purpose of issuing the notes and subsequently merged into URNA ("Funding SPV") issued $750 aggregate principal amount of 7 3/8 percent Senior Notes (the “7 3/8 percent Notes”), which are due May 15, 2020. The net proceeds from the sale of the 7 3/8 percent Notes were approximately $732 (after deducting the initial purchasers' fees and offering expenses). Upon consummation of the RSC merger, URNA assumed the 7 3/8 percent Notes. The 7 3/8 percent Notes are unsecured and are guaranteed by Holdings and, subject to limited exceptions, URNA's domestic subsidiaries. The 7 3/8 percent Notes may be redeemed on or after May 15, 2016, at specified redemption prices that range from 103.688 percent in 2016, to 100 percent in 2018 and thereafter, plus accrued and unpaid interest. The indenture governing the 7 3/8 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) dividends, other payments and other matters affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of these covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then outstanding 7 3/8 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.

8 1/4 percent Senior Notes. In January 2011, RSC issued $650 aggregate principal amount of 8 1/4 percent Senior Notes (the “8 1/4 percent Notes”), which are due February 1, 2021. Upon consummation of the RSC merger, URNA assumed the 8 1/4 percent Notes. In 2015, we redeemed $350 principal amount of the 8 1/4 percent Notes. The 8 1/4 percent Notes are unsecured and are guaranteed by URNA's domestic subsidiaries, subject to limited exceptions. The 8 1/4 percent Notes may be redeemed on or after February 1, 2016 at specified redemption prices that range from 104.125 percent in 2016 to 100 percent in 2019 and thereafter. The indenture governing the 8 1/4 percent Notes contains certain restrictive covenants that apply to URNA and its restricted subsidiaries, including, among others, limitations on their ability to (i) incur additional debt; (ii) pay dividends or distributions on their capital stock or repurchase their capital stock; (iii) make certain investments; (iv) create liens on their assets to secure debt; (v) enter into transactions with affiliates; (vi) create limitations on the ability of the restricted subsidiaries to make dividends or distributions to their respective parents; (vii) merge or consolidate with another company and (viii) transfer and sell assets. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then outstanding 8 1/4 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof plus accrued and unpaid interest, if any, thereon. The difference between the December 31, 2015 carrying value of the 8 1/4 percent Notes and the $300 principal amount relates to the $15 unamortized portion of the fair value adjustment recognized upon consummation of the RSC merger, which is being amortized through the above maturity date. The effective interest rate on the 8 1/4 percent Notes is 7.0 percent.

7 5/8 percent Senior Notes. In March 2012, Funding SPV issued $1.325 billion aggregate principal amount of 7 5/8 percent Senior Notes (the “7 5/8 percent Notes”), which are due April 15, 2022. The net proceeds from the sale of the 7 5/8 percent Notes were approximately $1.295 billion (after deducting the initial purchasers' fees and offering expenses). Upon consummation of the RSC merger, URNA assumed the 7 5/8 percent Notes. The 7 5/8 percent Notes are unsecured and are guaranteed by Holdings and, subject to limited exceptions, URNA's domestic subsidiaries. The 7 5/8 percent Notes may be redeemed on or after April 15, 2017, at specified redemption prices that range from 103.813 percent in 2017, to 100 percent in 2020 and thereafter, plus accrued and unpaid interest. The indenture governing the 7 5/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) dividends, other payments and other matters affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of these covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then outstanding 7 5/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

6 1/8 percent Senior Notes. In October 2012, URNA issued $400 aggregate principal amount of 6 1/8 percent Senior Notes (the “6 1/8 percent Notes”), which are due June 15, 2023. In March 2014, URNA issued $525 principal amount of 6 1/8 percent Notes as an add on to the existing 6 1/8 percent Notes. The notes issued in March 2014 have identical terms, and are fungible, with the existing 6 1/8 percent Notes. The net proceeds from the issuances of the 6 1/8 percent Notes were $939 (after deducting offering expenses). The 6 1/8 percent Notes are unsecured and are guaranteed by Holdings and, subject to limited exceptions, URNA's domestic subsidiaries. The 6 1/8 percent Notes may be redeemed by URNA on or after December 15, 2017, at specified redemption prices that range from 103.063 percent in 2017 to 100 percent in 2020 and thereafter. The indenture governing the 6 1/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) additional indebtedness; (ii) restricted payments; (iii) liens; (iv) asset sales; (v) preferred stock of certain subsidiaries; (vi) transactions with affiliates; (vii) dividends and other payments; (viii) designations of unrestricted subsidiaries; (ix) additional subsidiary guarantees and (x) mergers, consolidations or sales of substantially all of our assets. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then outstanding 6 1/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof plus accrued and unpaid interest, if any, thereon. The carrying value of the 6 1/8 percent Notes includes the $23 unamortized portion of the original issue premium recognized in conjunction with the March 2014 issuance, which is being amortized through the maturity date in 2023. The effective interest rate on the 6 1/8 percent Senior Notes is 5.7 percent.

4 5/8 percent Senior Secured Notes. In March 2015, URNA issued $1.0 billion aggregate principal amount of 4 5/8 percent Senior Secured Notes (the “4 5/8 percent Notes”), which are due July 15, 2023. The net proceeds from issuance were approximately $990 (after deducting offering expenses). The 4 5/8 percent Notes are guaranteed by Holdings and certain domestic subsidiaries of URNA and are secured on a second-priority basis by liens on substantially all of URNA’s and the guarantors’ assets that secure the ABL facility, subject to certain exceptions. The 4 5/8 percent Notes may be redeemed on or after July 15, 2018, at specified redemption prices that range from 103.469 percent in 2018, to 100 percent in 2021 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 4 5/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. The indenture also includes covenants relating to the grant of and maintenance of liens for the benefit of the notes collateral agent. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 4 5/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

5 3/4 percent Senior Notes. In March 2014, URNA issued $850 aggregate principal amount of 5 3/4 percent Senior Notes (the “5 3/4 percent Notes”), which are due November 15, 2024. The net proceeds from the issuance were $837 (after deducting offering expenses). The 5 3/4 percent Notes are unsecured and are guaranteed by Holdings and, subject to limited exceptions, URNA's domestic subsidiaries. The 5 3/4 percent Notes may be redeemed on or after May 15, 2019, at specified redemption prices that range from 102.875 percent in the 12-month period commencing on May 15, 2019, to 100 percent in the 12-month period commencing on May 15, 2022 and thereafter, plus accrued and unpaid interest. The indenture governing the 5 3/4 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of these covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then outstanding 5 3/4 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

5 1/2 percent Senior Notes. In March 2015, URNA issued $800 aggregate principal amount of 5 1/2 percent Senior Notes (the “5 1/2 percent Notes”), which are due July 15, 2025. The net proceeds from the issuance were approximately $792 (after deducting offering expenses). The 5 1/2 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5 1/2 percent Notes may be redeemed on or after July 15, 2020, at specified redemption prices that range from 102.75 percent in 2020, to 100 percent in 2023 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 5 1/2 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 1/2 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

Loan Covenants and Compliance

As of December 31, 2015, 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 December 31, 2015,

specified availability under the ABL facility exceeded the required threshold and, as a result, this maintenance covenant is inapplicable. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The accounts receivable securitization facility also requires us to comply with the fixed charge coverage ratio under the ABL facility, to the extent the ratio is applicable under the ABL facility.

Maturities

Maturities of the Company’s debt (exclusive of any unamortized original issue discounts or premiums, and unamortized debt issuance costs) for each of the next five years and thereafter at December 31, 2015 are as follows:

2016	$	607
2017	24
2018	17
2019	9
2020	2,343
Thereafter	5,206
Total	$	8,206

13. Income Taxes

The components of the provision for income taxes for each of the three years in the period ended December 31, 2015 are as follows:

	Year ended December 31,
	2015				2014				2013
Current
Federal	$	13			$	2			$	10
Foreign	15				42				39
State and local	14				5				2
	42				49				51
Deferred
Federal	300				240				149
Foreign	5				2				4
State and local	31				19				14
	336				261				167
Total	$	378			$	310			$	218

A reconciliation of the provision for income taxes and the amount computed by applying the statutory federal income tax rate of 35 percent to the income before provision for income taxes for each of the three years in the period ended December 31, 2015 is as follows:

	Year ended December 31,
	2015				2014				2013
Computed tax at statutory tax rate	$	337			$	297			$	212
State income taxes, net of federal tax benefit	41				22				15
Non-deductible expenses and other	8				8				8
Foreign taxes	(8		)		(17		)		(17		)
Total	$	378			$	310			$	218

The components of deferred income tax assets (liabilities) are as follows:

	December 31, 2015				December 31, 2014
Reserves and allowances	$	112			$	107
Intangibles	—				1
Debt cancellation and other	48				58
Net operating loss and credit carryforwards	73				237
Total deferred tax assets	233				403
Property and equipment	(1,714		)		(1,535		)
Intangibles	(272		)		(312		)
Valuation allowance	(12		)		—
Total deferred tax liability	(1,998		)		(1,847		)
Total deferred income tax liability (1)	$	(1,765	)		$	(1,444	)

(1) In 2015, we adopted guidance that requires that deferred tax liabilities and assets be classified as non-current in the balance sheet. The total deferred income tax liability as of December 31, 2015 and 2014 is presented above in accordance with this new guidance. See note 2 to our consolidated financial statements for additional detail.

The following table summarizes the activity related to unrecognized tax benefits, some of which would impact our effective tax rate if recognized:

	2015				2014
Balance at January 1	$	7			$	7
Additions for tax positions of prior years	1				—
Reductions for tax positions of prior years	(1		)		—
Settlements	(4		)		—
Balance at December 31	$	3			$	7

We include interest accrued on the underpayment of income taxes in interest expense, and penalties, if any, related to unrecognized tax benefits in selling, general and administrative expense. Interest expense of less than $1 related to income tax was reflected in our consolidated statements of income for each of the years ended December 31, 2015, 2014 and 2013.

We file income tax returns in the United States and in Canada. With few exceptions, we have completed our domestic and international income tax examinations, or the statute of limitations has expired in the respective jurisdictions, for years prior to 2010. The Internal Revenue Service (“IRS”) has completed audits for periods prior to 2010. Canadian authorities have concluded income tax audits for periods through 2010. Included in the balance of unrecognized tax benefits at December 31, 2015 are certain tax positions associated with Canadian transfer pricing. The Company has submitted a request to Canadian Competent Authority for an Advanced Pricing Arrangement ("APA") associated with our intercompany transactions. It is reasonably possible that the APA request will be concluded within the next 12 months, and that the conclusion of the request will result in a settlement of reported unrecognized tax benefits for those tax positions during the next 12 months. However, it is not possible to estimate the amount of the change, if any, to the previously recorded uncertain tax positions.

For financial reporting purposes, income before provision for income taxes for our foreign subsidiaries was $70, $168 and $153 for the years ended December 31, 2015, 2014 and 2013, respectively. At December 31, 2015, unremitted earnings of foreign subsidiaries were approximately $651. Since it is our intention to indefinitely reinvest these earnings, no U.S. taxes have been provided for these amounts. If we changed our reinvestment policy and decided to remit earnings as a dividend, a deferred tax liability would arise. Determination of the amount of unrecognized deferred tax liability on these unremitted taxes is not practicable.

We have net operating loss carryforwards (“NOLs”) of $667 for state income tax purposes that expire from 2016 through 2035. We have recorded valuation allowances against this deferred asset of $12 and less than $1 as of December 31, 2015 and 2014, respectively. The increase in 2015 primarily reflects the enactment of Connecticut state limitations on net operating loss utilization. We have no NOLs recorded for federal income tax purposes. We have a federal alternative minimum tax (“AMT”) credit carryforward of $39. We have not recorded a valuation allowance against the AMT credit carryforward because it is deemed more likely than not that such benefits will be realized in the future. There were no new NOLs for federal income tax purposes recognized in 2015. In 2015, the Company utilized $463 of existing NOLs to offset tax liabilities.

14. Commitments and Contingencies

We are subject to a number of claims and proceedings that generally arise in the ordinary conduct of our business. These matters include, but are not limited to, general liability claims (including personal injury, product liability, and property and 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 included in our consolidated balance sheets for matters where we have established them, we currently believe that any liabilities ultimately resulting from these ordinary course claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Indemnification

The Company indemnifies its officers and directors pursuant to indemnification agreements and may in addition indemnify these individuals as permitted by Delaware law.

Operating Leases

We lease rental equipment, real estate and certain office equipment under operating leases. Certain real estate leases require us to pay maintenance, insurance, taxes and certain other expenses in addition to the stated rental payments. Future minimum lease payments by year and in the aggregate, for non-cancelable operating leases with initial or remaining terms of one year or more are as follows at December 31, 2015:

	Real Estate Leases				Non-Rental Equipment Leases
2016	$	100			$	38
2017	82				36
2018	63				29
2019	45				23
2020	26				23
Thereafter	44				—
Total	$	360			$	149

Our real estate leases provide for varying terms, including customary escalation clauses. We evaluate our operating leases in accordance with GAAP. Our leases generally include default provisions that are customary, and do not contain material adverse change clauses, cross-default provisions or subjective default provisions. In these leases, the occurrence of an event of default is objectively determinable based on predefined criteria. Based on the facts and circumstances that existed at lease inception and with consideration of our history as a lessee, we believe that it is reasonable to assume that an event of default will not occur.

Rent expense under all non-cancelable real estate, rental equipment and other equipment operating leases totaled $139, $131 and $135 for the years ended December 31, 2015, 2014 and 2013, respectively.

Capital Leases

Capital lease obligations consist primarily of vehicle and building leases with periods expiring at various dates through 2028. Capital lease obligations were $96 and $105 at December 31, 2015 and 2014, respectively. The following table presents capital lease financial statement information for the years ended December 31, 2015, 2014 and 2013, except for balance sheet information, which is presented as of December 31, 2015 and 2014:

	2015				2014				2013
Depreciation of rental equipment	$	20			$	20			$	22
Non-rental depreciation and amortization	3				4				5
Rental equipment	186				177
Less accumulated depreciation	(56		)		(45		)
Rental equipment, net	130				132
Property and equipment, net:
Non-rental vehicles	8				13
Buildings	21				20
Less accumulated depreciation and amortization	(16		)		(15		)
Property and equipment, net	$	13			$	18

Future minimum lease payments for capital leases for each of the next five years and thereafter at December 31, 2015 are as follows:

2016	$	38
2017	27
2018	19
2019	10
2020	4
Thereafter	9
Total	107
Less amount representing interest (1)	(11		)
Capital lease obligations	$	96

(1)	The weighted average interest rate on our capital lease obligations as of December 31, 2015 was approximately 5.9 percent.

Employee Benefit Plans

We currently sponsor a defined contribution 401(k) retirement plan, which is subject to the provisions of the Employee Retirement Income Security Act of 1974. We also sponsor a deferred profit sharing plan for the benefit of the full-time employees of our Canadian subsidiaries. Under these plans, we match a percentage of the participants’ contributions up to a specified amount. Company contributions to the plans were $22, $19 and $17 in the years ended December 31, 2015, 2014 and 2013, respectively.

Environmental Matters

The Company and its operations are subject to various laws and related regulations governing environmental matters. Under such laws, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in, or emanating from, such property, as well as investigation of property damage. We incur ongoing expenses associated with the removal of underground storage tanks and the performance of appropriate remediation at certain of our locations.

15. Common Stock

We have 500 million authorized shares of common stock, $0.01 par value. At December 31, 2015 and 2014, there were (i) 0.6 million and 0.7 million shares of common stock reserved for issuance pursuant to options granted under our stock option plans, respectively, and (ii) 0.0 million and 3.8 million shares of common stock reserved for the conversion of 4 percent Convertible Notes, respectively. The 4 percent Convertible Senior Notes matured in 2015.

As of December 31, 2015, there were an aggregate of 0.7 million outstanding time and performance-based RSUs and 5.5 million shares available for grant of stock and options under our 2010 Long Term Incentive Plan.

A summary of the transactions within the Company’s stock option plans follows (shares in thousands):

	Shares			Weighted-Average Exercise Price
Outstanding at January 1, 2013	1,288			$	13.69
Granted	74			53.78
Exercised	(484	)		12.22
Canceled	(3	)		23.63
Outstanding at December 31, 2013	875			17.85
Granted	—			—
Exercised	(213	)		11.21
Canceled	(10	)		19.98
Outstanding at December 31, 2014	652			19.99
Granted	—			—
Exercised	(87	)		13.54
Canceled	(4	)		20.29
Outstanding at December 31, 2015	561			20.99
Exercisable at December 31, 2013	684			$	11.67
Exercisable at December 31, 2014	564			$	16.18
Exercisable at December 31, 2015	537			$	19.49

As of December 31, 2015 (options in thousands):

		Options Outstanding									Options Exercisable
Range of Exercise Prices		Amount Outstanding			Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price				Amount Exercisable			Weighted Average Exercise Price
$0.01-5.00		100			3.2		$	3.38			100			$	3.38
5.01-10.00		189			4.2		8.32				189			8.32
10.01-15.00		14			3.1		14.45				14			14.45
15.01-20.00		20			3.7		15.58				20			15.58
25.01-30.00		51			3.5		25.85				51			25.85
30.01-35.00		62			5.2		31.49				62			31.49
40.01-45.00		51			6.1		41.25				51			41.25
50.01-55.00		74			7.2		53.78				50			53.78
		561					$	20.99			537			$	19.49

The following table presents information associated with options as of December 31, 2015 and 2014, and for the years ended December 31, 2015, 2014 and 2013:

	2015				2014				2013
Intrinsic value of options outstanding as of December 31	$	29			$	53
Intrinsic value of options exercisable as of December 31	28				48
Intrinsic value of options exercised	7				17				21
Weighted-average grant date fair value per option	$	—			$	—			$	24.56

In addition to stock options, the Company issues time-based and performance-based RSUs to certain officers and key executives under various plans. The RSUs automatically convert to shares of common stock on a one-for-one basis as the awards vest. The time-based RSUs typically vest over a three year vesting period beginning 12 months from the grant date and thereafter annually on the anniversary of the grant date. The performance-based RSUs vest over the performance period which is currently the calendar year. There were 597 thousand shares of common stock issued upon vesting of RSUs during 2015, net of 351 thousand shares surrendered to satisfy tax obligations. The Company measures the value of RSUs at fair value based on

the closing price of the underlying common stock on the grant date. The Company amortizes the fair value of outstanding RSUs as stock-based compensation expense over the requisite service period on a straight-line basis, or sooner if the employee effectively vests upon termination of employment under certain circumstances. For performance-based RSUs, compensation expense is recognized to the extent that the satisfaction of the performance condition is considered probable.

A summary of RSUs granted follows (RSUs in thousands):

	Year Ended December 31,
	2015				2014				2013
RSUs granted	463				805				894
Weighted-average grant date price per unit	$	86.84			$	92.28			$	57.50

As of December 31, 2015, the total pretax compensation cost not yet recognized by the Company with regard to unvested RSUs was $26. The weighted-average period over which this compensation cost is expected to be recognized is 1.6 years.

We issued $15 of restricted stock in connection with the National Pump acquisition discussed in note 3 to our consolidated financial statements. We are recording stock compensation expense associated with these grants over the restriction period which is generally three years. We recorded $5 and $4 of expense related to these grants in the years ended December 31, 2015 and 2014, respectively.

A summary of RSU activity for the year ended December 31, 2015 follows (RSUs in thousands):

	Stock Units			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2014	702			$	68.11
Granted	463			86.84
Vested	(599	)		68.75
Forfeited	(36	)		94.30
Nonvested as of December 31, 2015	530			$	81.94

The total fair value of RSUs vested during the fiscal years ended December 31, 2015, 2014 and 2013 was $84, $54, and $53, respectively.

Stockholders’ Rights Plan. Our stockholders' rights plan expired in accordance with its terms on September 27, 2011. Our board of directors elected not to renew or extend the plan.

16. Quarterly Financial Information (Unaudited)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter				Full Year
For the year ended December 31, 2015 (1):
Total revenues	$	1,315			$	1,429			$	1,550			$	1,523			$	5,817
Gross profit	524				618				690				648				2,480
Operating income	300				375				446				397				1,518
Net income	115				86				215				169				585
Earnings per share—basic	1.19				0.89				2.28				1.82				6.14
Earnings per share—diluted (3)	1.16				0.88				2.25				1.81				6.07
For the year ended December 31, 2014 (2):
Total revenues	$	1,178			$	1,399			$	1,544			$	1,564			$	5,685
Gross profit	448				589				688				707				2,432
Operating income	218				325				422				426				1,391
Net income	60				94				192				194				540
Earnings per share—basic	0.63				0.98				1.95				1.96				5.54
Earnings per share—diluted (3)	0.56				0.90				1.84				1.88				5.15

(1)

The fourth quarter of 2015 includes a decrease in stock compensation, net of $14 as compared to the fourth quarter of 2014 primarily due to lower than expected revenue and profitability. Additionally, as discussed in note 5 to our consolidated financial statements, in the fourth quarter of 2015, we initiated a restructuring program in response to recent challenges in our operating environment. Though we expect solid industry growth in 2016, 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 recognized $4 of costs for the program in the fourth quarter of 2015. Additionally, during the fourth quarter of 2015, we reached agreement on a settlement that will provide us with a $5 refund on previously paid property taxes. We recognized a reduction of $5 in cost of equipment rentals, excluding depreciation, associated with the settlement during the fourth quarter of 2015. Additionally, our provision for income taxes for the fourth quarter of 2015 includes the impact of a $5 increase in valuation allowances resulting from the enactment of Connecticut state limitations on net operating loss utilization.

(2)

The fourth quarter of 2014 includes an increase in bad debt expense of $8 as compared to the fourth quarter of 2013 primarily due to improved receivable aging which reduced the expense in the fourth quarter of 2013. Additionally, the fourth quarter of 2014 includes an increase in stock compensation, net of $14 as compared to the fourth quarter of 2013 primarily due to improved profitability which resulted in increased performance based stock compensation.

(3)	Diluted earnings per share includes the after-tax impacts of the following:

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter				Full Year
For the year ended December 31, 2015:
Merger related costs (4)	$	0.17			$	—			$	—			$	—			$	0.17
Merger related intangible asset amortization (5)	(0.32		)		(0.27		)		(0.28		)		(0.28		)		(1.15		)
Impact on depreciation related to acquired RSC fleet and property and equipment (6)	0.01				—				—				—				0.02
Impact of the fair value mark-up of acquired RSC fleet (7)	(0.04		)		(0.04		)		(0.04		)		(0.07		)		(0.19		)
Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (8)	0.01				—				—				—				0.02
Restructuring charge (9)	—				—				—				(0.03		)		(0.04		)
Loss on extinguishment of debt securities and amendment of ABL facility	(0.01		)		(0.76		)		—				—				(0.78		)
For the year ended December 31, 2014:
Merger related costs (4)	$	(0.01	)		$	(0.05	)		$	(0.02	)		$	0.02			$	(0.06	)
Merger related intangible asset amortization (5)	(0.22		)		(0.29		)		(0.29		)		(0.30		)		(1.10		)
Impact on depreciation related to acquired RSC fleet and property and equipment (6)	—				0.01				0.01				0.01				0.03
Impact of the fair value mark-up of acquired RSC fleet (7)	(0.05		)		(0.06		)		(0.05		)		(0.05		)		(0.21		)
Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (8)	0.01				0.01				—				0.01				0.03
Restructuring charge (9)	(0.01		)		0.01				0.01				—				0.01
Loss on extinguishment of debt securities	(0.06		)		(0.38		)		(0.02		)		—				(0.46		)

(4)	This primarily reflects transaction costs associated with the National Pump acquisition discussed above. The income during the year ended December 31, 2015 reflects a decline in the fair value of the contingent cash consideration component of the National Pump purchase price. For additional information concerning the National Pump acquisition, see note 3 to our consolidated financial statements.

(5)	This reflects the amortization of the intangible assets acquired in the RSC and National Pump acquisitions.

(6)	This reflects the impact of extending the useful lives of equipment acquired in the RSC acquisition, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.

(7)	This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold.

(8)	This reflects a reduction of interest expense associated with the fair value mark-up of debt acquired in the RSC acquisition.

(9)	As discussed in note 5 to our consolidated financial statements, this reflects severance costs and branch closure charges associated with our closed restructuring programs and our current restructuring program.

17. Earnings Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares plus the effect of dilutive potential common shares outstanding during the period. The diluted earnings per share for the year ended December 31, 2013 excludes the impact of approximately 0.3 million common stock equivalents, 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):

	Year Ended December 31,
	2015				2014				2013
Numerator:
Net income available to common stockholders	$	585			$	540			$	387
Denominator:
Denominator for basic earnings per share—weighted-average common shares	95,170				97,489				93,436
Effect of dilutive securities:
Employee stock options and warrants	300				394				504
4 percent Convertible Senior Notes	660				6,386				11,769
Restricted stock units	249				687				582
Denominator for diluted earnings per share—adjusted weighted-average common shares	96,379				104,956				106,291
Basic earnings per share	$	6.14			$	5.54			$	4.14
Diluted earnings per share	$	6.07			$	5.15			$	3.64

18. 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 facility (the “SPV”), all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”) and (iii) certain indebtedness that is guaranteed only by the guarantor subsidiaries (specifically, the 8 1/4 percent Senior Notes). 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 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 December 31, 2015, the amount available for distribution under the most restrictive of these covenants was $355. The Company’s total available capacity for making share repurchases and dividend payments includes the intercompany receivable balance of Parent. As of December 31, 2015, 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 $499.

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

CONDENSED CONSOLIDATING BALANCE SHEETS

December 31, 2015

													Non-Guarantor Subsidiaries
	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 intangibles, 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
Temporary equity	—				—				—				—				—				—				—
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

CONDENSED CONSOLIDATING BALANCE SHEETS

December 31, 2014

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
ASSETS
Cash and cash equivalents	$	—			$	8			$	—			$	150			$	—			$	—			$	158
Accounts receivable, net	—				37				—				144				759				—				940
Intercompany receivable (payable)	476				(428		)		(60		)		(109		)		—				121				—
Inventory	—				69				—				9				—				—				78
Prepaid expenses and other assets	—				113				1				8				—				—				122
Total current assets	476				(201		)		(59		)		202				759				121				1,298
Rental equipment, net	—				5,399				—				609				—				—				6,008
Property and equipment, net	43				331				21				43				—				—				438
Investments in subsidiaries	1,330				1,185				1,040				—				—				(3,555		)		—
Goodwill	—				3,000				—				272				—				—				3,272
Other intangibles, net	—				1,014				—				92				—				—				1,106
Other long-term assets	—				7				—				—				—				—				7
Total assets	$	1,849			$	10,735			$	1,002			$	1,218			$	759			$	(3,434	)		$	12,129
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	32			$	38			$	—			$	—			$	548			$	—			$	618
Accounts payable	—				248				—				37				—				—				285
Accrued expenses and other liabilities	—				499				19				57				—				—				575
Total current liabilities	32				785				19				94				548				—				1,478
Long-term debt	—				7,208				130				6				—				—				7,344
Deferred taxes	19				1,348				—				77				—				—				1,444
Other long-term liabilities	—				64				—				1				—				—				65
Total liabilities	51				9,405				149				178				548				—				10,331
Temporary equity	2				—				—				—				—				—				2
Total stockholders’ equity (deficit)	1,796				1,330				853				1,040				211				(3,434		)		1,796
Total liabilities and stockholders’ equity (deficit)	$	1,849			$	10,735			$	1,002			$	1,218			$	759			$	(3,434	)		$	12,129

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the Year Ended December 31, 2015

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Revenues:
Equipment rentals	$	—			$	4,452			$	—			$	497			$	—			$	—			$	4,949
Sales of rental equipment	—				480				—				58				—				—				538
Sales of new equipment	—				137				—				20				—				—				157
Contractor supplies sales	—				69				—				10				—				—				79
Service and other revenues	—				80				—				14				—				—				94
Total revenues	—				5,218				—				599				—				—				5,817
Cost of revenues:
Cost of equipment rentals, excluding depreciation	—				1,603				—				223				—				—				1,826
Depreciation of rental equipment	—				881				—				95				—				—				976
Cost of rental equipment sales	—				279				—				32				—				—				311
Cost of new equipment sales	—				115				—				16				—				—				131
Cost of contractor supplies sales	—				48				—				7				—				—				55
Cost of service and other revenues	—				33				—				5				—				—				38
Total cost of revenues	—				2,959				—				378				—				—				3,337
Gross profit	—				2,259				—				221				—				—				2,480
Selling, general and administrative expenses	5				596				1				79				33				—				714
Merger related costs	—				(26		)		—				—				—				—				(26		)
Restructuring charge	—				5				—				1				—				—				6
Non-rental depreciation and amortization	15				228				1				24				—				—				268
Operating (loss) income	(20		)		1,456				(2		)		117				(33		)		—				1,518
Interest (income) expense, net	(3		)		559				8				3				5				(5		)		567
Other (income) expense, net (1)	(471		)		513				—				44				(98		)		—				(12		)
Income (loss) before provision (benefit) for income taxes	454				384				(10		)		70				60				5				963
Provision (benefit) for income taxes	201				141				(5		)		18				23				—				378
Income (loss) before equity in net earnings (loss) of subsidiaries	253				243				(5		)		52				37				5				585
Equity in net earnings (loss) of subsidiaries	332				89				52				—				—				(473		)		—
Net income (loss)	585				332				47				52				37				(468		)		585
Other comprehensive (loss) income	(176		)		(176		)		(175		)		(139		)		—				490				(176		)
Comprehensive income (loss)	$	409			$	156			$	(128	)		$	(87	)		$	37			$	22			$	409

(1)	Other (income) expense, net includes an adjustment to the amount of royalties Holdings receives from URNA and its subsidiaries as discussed above (see Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operations- Liquidity and Capital Resources- Relationship between Holdings and URNA).

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the Year Ended December 31, 2014

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Revenues:
Equipment rentals	$	—			$	4,217			$	—			$	602			$	—			$	—			$	4,819
Sales of rental equipment	—				478				—				66				—				—				544
Sales of new equipment	—				124				—				25				—				—				149
Contractor supplies sales	—				70				—				15				—				—				85
Service and other revenues	—				73				—				15				—				—				88
Total revenues	—				4,962				—				723				—				—				5,685
Cost of revenues:
Cost of equipment rentals, excluding depreciation	—				1,558				—				248				—				—				1,806
Depreciation of rental equipment	—				820				—				101				—				—				921
Cost of rental equipment sales	—				277				—				38				—				—				315
Cost of new equipment sales	—				101				—				19				—				—				120
Cost of contractor supplies sales	—				49				—				10				—				—				59
Cost of service and other revenues	—				27				—				5				—				—				32
Total cost of revenues	—				2,832				—				421				—				—				3,253
Gross profit	—				2,130				—				302				—				—				2,432
Selling, general and administrative expenses	55				607				3				84				9				—				758
Merger related costs	—				11				—				—				—				—				11
Restructuring charge	—				(1		)		—				—				—				—				(1		)
Non-rental depreciation and amortization	17				226				1				29				—				—				273
Operating (loss) income	(72		)		1,287				(4		)		189				(9		)		—				1,391
Interest expense (income), net	9				538				5				4				5				(6		)		555
Other (income) expense, net	(149		)		212				(3		)		17				(91		)		—				(14		)
Income (loss) before provision for income taxes	68				537				(6		)		168				77				6				850
Provision for income taxes	1				236				—				43				30				—				310
Income (loss) before equity in net earnings (loss) of subsidiaries	67				301				(6		)		125				47				6				540
Equity in net earnings (loss) of subsidiaries	473				172				125				—				—				(770		)		—
Net income (loss)	540				473				119				125				47				(764		)		540
Other comprehensive (loss) income	(93		)		(93		)		(90		)		(72		)		—				255				(93		)
Comprehensive income (loss)	$	447			$	380			$	29			$	53			$	47			$	(509	)		$	447

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the Year Ended December 31, 2013

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV (1)				Eliminations				Total
Revenues:
Equipment rentals	$	—			$	3,612			$	—			$	584			$	—			$	—			$	4,196
Sales of rental equipment	—				438				—				52				—				—				490
Sales of new equipment	—				82				—				22				—				—				104
Contractor supplies sales	—				70				—				17				—				—				87
Service and other revenues	—				62				—				16				—				—				78
Total revenues	—				4,264				—				691				—				—				4,955
Cost of revenues:
Cost of equipment rentals, excluding depreciation	—				1,391				—				243				—				—				1,634
Depreciation of rental equipment	—				752				—				100				—				—				852
Cost of rental equipment sales	—				283				—				31				—				—				314
Cost of new equipment sales	—				67				—				17				—				—				84
Cost of contractor supplies sales	—				48				—				11				—				—				59
Cost of service and other revenues	—				19				—				6				—				—				25
Total cost of revenues	—				2,560				—				408				—				—				2,968
Gross profit	—				1,704				—				283				—				—				1,987
Selling, general and administrative expenses	8				541				—				88				5				—				642
Merger related costs	—				9				—				—				—				—				9
Restructuring charge	—				12				—				—				—				—				12
Non-rental depreciation and amortization	17				210				—				19				—				—				246
Operating (loss) income	(25		)		932				—				176				(5		)		—				1,078
Interest expense (income), net	12				454				6				5				5				(7		)		475
Interest expense-subordinated convertible debentures	3				—				—				—				—				—				3
Other (income) expense, net	(132		)		191				—				18				(82		)		—				(5		)
Income (loss) before provision (benefit) for income taxes	92				287				(6		)		153				72				7				605
Provision (benefit) for income taxes	38				113				(2		)		41				28				—				218
Income (loss) before equity in net earnings (loss) of subsidiaries	54				174				(4		)		112				44				7				387
Equity in net earnings (loss) of subsidiaries	333				159				112				—				—				(604		)		—
Net income (loss)	387				333				108				112				44				(597		)		387
Other comprehensive (loss) income	(65		)		(65		)		(65		)		(50		)		—				180				(65		)
Comprehensive income (loss)	$	322			$	268			$	43			$	62			$	44			$	(417	)		$	322

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Year Ended December 31, 2015

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Net cash provided by (used in) operating activities	$	13			$	1,804			$	(3	)		$	170			$	11			$	—			$	1,995
Net cash used in investing activities	(13		)		(1,035		)		—				(122		)		—				—				(1,170		)
Net cash (used in) provided by financing activities	—				(759		)		3				(8		)		(11		)		—				(775		)
Effect of foreign exchange rates	—				—				—				(29		)		—				—				(29		)
Net increase in cash and cash equivalents	—				10				—				11				—				—				21
Cash and cash equivalents at beginning of period	—				8				—				150				—				—				158
Cash and cash equivalents at end of period	$	—			$	18			$	—			$	161			$	—			$	—			$	179

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Year Ended December 31, 2014

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Net cash provided by (used in) operating activities	$	13			$	1,644			$	4			$	223			$	(83	)		$	—			$	1,801
Net cash used in investing activities	(13		)		(1,773		)		—				(214		)		—				—				(2,000		)
Net cash provided by (used in) financing activities	—				120				(4		)		(3		)		83				—				196
Effect of foreign exchange rates	—				—				—				(14		)		—				—				(14		)
Net decrease in cash and cash equivalents	—				(9		)		—				(8		)		—				—				(17		)
Cash and cash equivalents at beginning of period	—				17				—				158				—				—				175
Cash and cash equivalents at end of period	$	—			$	8			$	—			$	150			$	—			$	—			$	158

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Year Ended December 31, 2013

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Net cash provided by operating activities	$	26			$	1,285			$	4			$	216			$	20			$	—			$	1,551
Net cash used in investing activities	(26		)		(1,018		)		—				(133		)		—				—				(1,177		)
Net cash used in financing activities	—				(270		)		(4		)		(1		)		(20		)		—				(295		)
Effect of foreign exchange rate	—				—				—				(10		)		—				—				(10		)
Net (decrease) increase in cash and cash equivalents	—				(3		)		—				72				—				—				69
Cash and cash equivalents at beginning of period	—				20				—				86				—				—				106
Cash and cash equivalents at end of period	$	—			$	17			$	—			$	158			$	—			$	—			$	175

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

UNITED RENTALS, INC.

(In millions)

Description		Balance at Beginning of Period				Charged to Costs and Expenses				Deductions				Balance at End of Period
Year ended December 31, 2015:
Allowance for doubtful accounts		$	43			$	32			$	20		(a)	$	55
Reserve for obsolescence and shrinkage		3				18				17			(b)	4
Self-insurance reserve		92				110				112			(c)	90
Year ended December 31, 2014:
Allowance for doubtful accounts		$	49			$	13			$	19		(a)	$	43
Reserve for obsolescence and shrinkage		3				18				18			(b)	3
Self-insurance reserve		94				105				107			(c)	92
Year ended December 31, 2013:
Allowance for doubtful accounts		$	64			$	4			$	19		(a)	$	49
Reserve for obsolescence and shrinkage		3				16				16			(b)	3
Self-insurance reserve		97				92				95			(c)	94

The above information reflects the continuing operations of the Company for the periods presented. Additionally, because the Company has retained certain self-insurance liabilities associated with the discontinued traffic control business, those amounts have been included as well.

(a)	Represents write-offs of accounts, net of recoveries.

(b)	Represents write-offs.

(c)	Represents payments.