Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of United Rentals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of United Rentals Inc. (“the Company”) as of December 31, 2017 and 2016, 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, 2017, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, 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 24, 2018 expressed an unqualified opinion thereon.

Basis of Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1997.

Stamford, Connecticut

January 24, 2018

UNITED RENTALS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

	December 31,
	2017				2016
ASSETS
Cash and cash equivalents	$	352			$	312
Accounts receivable, net of allowance for doubtful accounts of $68 at December 31, 2017 and $54 at December 31, 2016	1,233				920
Inventory	75				68
Prepaid expenses and other assets	112				61
Total current assets	1,772				1,361
Rental equipment, net	7,824				6,189
Property and equipment, net	467				430
Goodwill	4,082				3,260
Other intangible assets, net	875				742
Other long-term assets	10				6
Total assets	$	15,030			$	11,988
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt and current maturities of long-term debt	$	723			$	597
Accounts payable	409				243
Accrued expenses and other liabilities	536				344
Total current liabilities	1,668				1,184
Long-term debt	8,717				7,193
Deferred taxes	1,419				1,896
Other long-term liabilities	120				67
Total liabilities	11,924				10,340
Common stock—$0.01 par value, 500,000,000 shares authorized, 112,394,395 and 84,463,662 shares issued and outstanding, respectively, at December 31, 2017 and 111,985,215 and 84,222,042 shares issued and outstanding, respectively, at December 31, 2016	1				1
Additional paid-in capital	2,356				2,288
Retained earnings	3,005				1,654
Treasury stock at cost—27,930,733 and 27,763,173 shares at December 31, 2017 and December 31, 2016, respectively	(2,105		)		(2,077		)
Accumulated other comprehensive loss	(151		)		(218		)
Total stockholders’ equity	3,106				1,648
Total liabilities and stockholders’ equity	$	15,030			$	11,988

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

	Year Ended December 31,
	2017				2016				2015
Revenues:
Equipment rentals	$	5,715			$	4,941			$	4,949
Sales of rental equipment	550				496				538
Sales of new equipment	178				144				157
Contractor supplies sales	80				79				79
Service and other revenues	118				102				94
Total revenues	6,641				5,762				5,817
Cost of revenues:
Cost of equipment rentals, excluding depreciation	2,151				1,862				1,826
Depreciation of rental equipment	1,124				990				976
Cost of rental equipment sales	330				292				311
Cost of new equipment sales	152				119				131
Cost of contractor supplies sales	56				55				55
Cost of service and other revenues	59				41				38
Total cost of revenues	3,872				3,359				3,337
Gross profit	2,769				2,403				2,480
Selling, general and administrative expenses	903				719				714
Merger related costs	50				—				(26		)
Restructuring charge	50				14				6
Non-rental depreciation and amortization	259				255				268
Operating income	1,507				1,415				1,518
Interest expense, net	464				511				567
Other income, net	(5		)		(5		)		(12		)
Income before (benefit) provision for income taxes	1,048				909				963
(Benefit) provision for income taxes (note 13)	(298		)		343				378
Net income	$	1,346			$	566			$	585
Basic earnings per share	$	15.91			$	6.49			$	6.14
Diluted earnings per share	$	15.73			$	6.45			$	6.07

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

	Year Ended December 31,
	2017				2016				2015
Net income	$	1,346			$	566			$	585
Other comprehensive income (loss):
Foreign currency translation adjustments	67				28				(174		)
Fixed price diesel swaps	—				4				(2		)
Other comprehensive income (loss) (1)	67				32				(176		)
Comprehensive income	$	1,413			$	598			$	409

(1)There were no material reclassifications from accumulated other comprehensive loss reflected in other comprehensive income (loss) during the years ended December 31, 2017, 2016 or 2015. There is no tax impact related to the foreign currency translation adjustments, as the earnings are considered permanently reinvested. There were no material taxes associated with other comprehensive income (loss) during the years ended December 31, 2017, 2016 or 2015.

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

	Common Stock							Additional								Treasury Stock							Accumulated Other
	Number of Shares			Amount				Paid-in Capital				Retained Earnings				Number of Shares			Amount				Comprehensive Loss
Balance at January 1, 2015	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 and the conversion of all outstanding 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 Income (Loss)
Balance at December 31, 2015	92			$	1			$	2,197			$	1,088			20			$	(1,560	)		$	(250	)
Net income												566
Foreign currency translation adjustments																							28
Fixed price diesel swaps																							4
Stock compensation expense, net								45
Exercise of common stock options	—							1
Shares repurchased and retired								(11		)
Repurchase of common stock	(8	)														8			(517		)
Excess tax benefits from share-based payment arrangements, net								56
Balance at December 31, 2016	84			$	1			$	2,288			$	1,654			28			$	(2,077	)		$	(218	)

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) Income (1)
Balance at December 31, 2016	84			$	1			$	2,288			$	1,654			28			$	(2,077	)		$	(218	)
Net income												1,346
Foreign currency translation adjustments																							67
Neff acquisition (note 3)	—							7
Stock compensation expense, net (2)								91
Exercise of common stock options	—							3
Cumulative effect of a change in accounting for share-based payments (note 2)												5
Shares repurchased and retired								(28		)
Repurchase of common stock	—															—			$	(28	)
Other								(5		)
Balance at December 31, 2017	84			$	1			$	2,356			$	3,005			28			$	(2,105	)		$	(151	)

(1)As of December 31, 2017, 2016 and 2015, the Accumulated Other Comprehensive Loss balance primarily reflects foreign currency translation adjustments.

(2)Includes net stock compensation expense as reported as a separate component in our consolidated statements of cash flows, and net stock compensation expense included in “Restructuring charge” as reported in our consolidated statements of cash flows.

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2017				2016				2015
	(In millions)
Cash Flows From Operating Activities:
Net income	$	1,346			$	566			$	585
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,383				1,245				1,244
Amortization of deferred financing costs and original issue discounts	9				9				10
Gain on sales of rental equipment	(220		)		(204		)		(227		)
Gain on sales of non-rental equipment	(4		)		(4		)		(8		)
Stock compensation expense, net	87				45				49
Merger related costs	50				—				(26		)
Restructuring charge	50				14				6
Loss on repurchase/redemption of debt securities and amendment of ABL facility	54				101				123
Excess tax benefits from share-based payment arrangements	—				(58		)		(5		)
(Decrease) increase in deferred taxes (note 13)	(533		)		123				336
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(184		)		15				(11		)
Decrease in inventory	1				1				8
(Increase) decrease in prepaid expenses and other assets	(20		)		77				(38		)
Increase (decrease) in accounts payable	141				(29		)		(8		)
Increase (decrease) in accrued expenses and other liabilities	70				52				(43		)
Net cash provided by operating activities	2,230				1,953				1,995
Cash Flows From Investing Activities:
Purchases of rental equipment	(1,769		)		(1,246		)		(1,534		)
Purchases of non-rental equipment	(120		)		(93		)		(102		)
Proceeds from sales of rental equipment	550				496				538
Proceeds from sales of non-rental equipment	16				14				17
Purchases of other companies, net of cash acquired	(2,377		)		(28		)		(86		)
Purchases of investments	(5		)		(2		)		(3		)
Net cash used in investing activities	(3,705		)		(859		)		(1,170		)
Cash Flows From Financing Activities:
Proceeds from debt	11,801				8,752				8,566
Payments of debt	(10,207		)		(9,223		)		(8,482		)
Payment of contingent consideration	—				—				(52		)
Payments of financing costs	(44		)		(24		)		(27		)
Proceeds from the exercise of common stock options	3				1				1
Common stock repurchased	(56		)		(528		)		(789		)
Cash received in connection with the 4 percent Convertible Senior Notes and related hedge, net	—				—				3
Excess tax benefits from share-based payment arrangements	—				58				5
Net cash provided by (used in) financing activities	1,497				(964		)		(775		)
Effect of foreign exchange rates	18				3				(29		)
Net increase in cash and cash equivalents	40				133				21
Cash and cash equivalents at beginning of year	312				179				158
Cash and cash equivalents at end of year	$	352			$	312			$	179
Supplemental disclosure of cash flow information:
Cash paid for interest	$	357			$	415			$	447
Cash paid for income taxes, net	205				99				60

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.

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, 2017 consist of direct obligations of financial institutions rated A or better.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience. Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowances. Trade receivables that have contractual maturities of one year or less are written-off when they are determined to be uncollectible based on the criteria necessary to qualify as a deduction for federal tax purposes. Write-offs of such receivables require management approval based on specified dollar thresholds. During the years ended December 31, 2017, 2016 and 2015, we recognized expenses of $40, $24 and $32, respectively, within selling, general and administrative expenses in our consolidated statements of income, associated with our allowances for doubtful accounts.

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 $10, $18 and $30 for the years ended December 31, 2017, 2016 and 2015, 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 $714, $629 and $628 for the years ended December 31, 2017, 2016 and 2015, respectively.

Property and Equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. The range of estimated useful lives for property and equipment is two to 39 years. Ordinary repair and maintenance costs are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining life of the lease, whichever is shorter.

Acquisition Accounting

We have made a number of acquisitions in the past and may continue to make acquisitions in the future. The assets acquired and liabilities assumed are recorded based on their respective fair values at the date of acquisition. Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of our acquisitions. Rental equipment is valued utilizing either a cost, market or income approach, or a combination of certain of these methods, depending on the asset being valued and the availability of market or income data. The intangible assets that we have acquired are non-compete agreements and customer relationships. 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 and customer relationships 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. As discussed below (see "New Accounting Pronouncements-Simplifying the Test for Goodwill Impairment"), we expect to adopt accounting guidance that eliminates the second step from the goodwill impairment test when it becomes effective (for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019).

In connection with our goodwill impairment test that was conducted as of October 1, 2016, we bypassed the qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test. Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Pump Solutions reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 53 percent. The estimated fair value of our Pump Solutions reporting unit exceeded its carrying amount by approximately 15 percent. Given the relatively small percent by which the Pump Solutions reporting unit’s fair value exceeded its carrying amount, we further tested the Pump Solution reporting unit for impairment by performing a sensitivity test that included a reduction in the long-term growth rate and an increase in the discount rate. The Pump Solutions reporting unit passed step one of the goodwill impairment test under the sensitivity test. We continue to monitor the Pump Solutions reporting unit for impairment, and the Pump Solution reporting unit’s operating results improved significantly in 2017, as evidenced in its fair value exceeding its carrying value by 62 percent in the goodwill impairment test that was conducted as of October 1, 2017.

In connection with our goodwill impairment test that was conducted as of October 1, 2017, we bypassed the qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test. Our goodwill impairment testing as of this date indicated that all of our reporting units had estimated fair values which exceeded their respective carrying amounts by at least 45 percent.

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 and customer relationships. 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. 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

As discussed below (see "New Accounting Pronouncements-Revenue from Contracts with Customers"), we expect to adopt updated FASB revenue recognition guidance ("Topic 606") on January 1, 2018. Topic 606 is an update to Topic 605, which was the revenue recognition standard in effect for each of the three years in the period ended December 31, 2017. For each of the three years in the period ended December 31, 2017, we recognized revenue in accordance with two different accounting standards: 1) Topic 605 and 2) Topic 840, which is the lease standard. The table below reflects our revenue disaggregated by type and by the accounting standard used to determine the accounting.

	Year Ended December 31,
					2017												2016												2015
	Topic 840				Topic 605				Total				Topic 840				Topic 605				Total				Topic 840				Topic 605				Total
Revenues:
Owned equipment rentals	$	4,928			$	—			$	4,928			$	4,273			$	—			$	4,273			$	4,288			$	—			$	4,288
Re-rent revenue	106				—				106				93				—				93				89				—				89
Ancillary and other rental revenues:
Delivery and pick-up	—				389				389				—				340				340				—				337				337
Other	228				64				292				186				49				235				187				48				235
Total ancillary and other rental revenues	228				453				681				186				389				575				187				385				572
Total equipment rentals	5,262				453				5,715				4,552				389				4,941				4,564				385				4,949
Sales of rental equipment	—				550				550				—				496				496				—				538				538
Sales of new equipment	—				178				178				—				144				144				—				157				157
Contractor supplies sales	—				80				80				—				79				79				—				79				79
Service and other revenues	—				118				118				—				102				102				—				94				94
Total revenues	$	5,262			$	1,379			$	6,641			$	4,552			$	1,210			$	5,762			$	4,564			$	1,253			$	5,817

Topic 840 revenues

The accounting for the types of revenue that are accounted for under Topic 840 is discussed below. As discussed below (see "New Accounting Pronouncements-Leases"), we expect to adopt Topic 842, which is an update to Topic 840, on January 1, 2019. While our review of the revenue accounting under Topic 842 is ongoing, we have tentatively concluded that no significant changes are expected to our revenue accounting upon adoption of Topic 842.

Owned equipment rentals: Owned equipment rentals represent revenues from renting equipment that we own. We account for such rentals as operating leases.

We recognize revenues from renting equipment on a straight-line basis. Our rental contract periods are hourly, daily, weekly or monthly. By way of example, if a customer were to rent a piece of equipment and the daily, weekly and monthly rental rates for that particular piece were (in actual dollars) $100, $300 and $900, respectively, we would recognize revenue of $32.14 per day. The daily rate for recognition purposes is calculated by dividing the monthly rate of $900 by the monthly term of 28 days. This daily rate assumes that the equipment will be on rent for the full 28 days, as we are unsure of when the customer will return the equipment and therefore unsure of which rental contract period will apply.

As part of this straight-line methodology, when the equipment is returned, we recognize as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the equipment was out on rent, over the cumulative amount of revenue recognized to date. We record amounts billed to customers in excess of recognizable revenue as deferred revenue on our balance sheet. We had deferred revenue of $38 and $33 as of December 31, 2017 and 2016, respectively.

In any given accounting period, we will have customers return equipment and be contractually required to pay us more than the cumulative amount of revenue recognized to date under the straight-line methodology. For instance, continuing the above example, if the customer rented the above piece of equipment on December 29 and returned it at the close of business on January 1, we would recognize incremental revenue on January 1 of $171.44 (in actual dollars, representing the difference between the amount the customer is contractually required to pay, or $300 at the weekly rate, and the cumulative amount recognized to date on a straight-line basis, or $128.56, which represents four days at $32.14 per day).

Re-rent revenue: Re-rent revenue reflects revenues from equipment that we rent from vendors and then rent to our customers. We account for such rentals as subleases. The accounting for re-rent revenue is the same as the accounting for owned equipment rentals described above.

“Other” equipment rental revenue is primarily comprised of 1) Rental Protection Plan (or "RPP") revenue associated with the damage waiver customers can purchase when they rent our equipment to protect against potential loss or damage, 2) environmental charges associated with the rental of equipment, and 3) charges for rented equipment that is damaged by our customers.

Topic 605 revenues

Delivery and pick-up: Delivery and pick-up revenue associated with renting equipment is recognized when the service is performed.

“Other” equipment rental revenue is primarily comprised of revenues associated with the consumption of fuel by our customers which are recognized when the equipment is returned by the customer (and consumption, if any, can be measured).

Sales of rental equipment, new equipment and contractor supplies are recognized at the time of delivery to, or pick-up by, the customer and when collectibility is reasonably assured.

Service and other revenues primarily represent revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). Service revenue is recognized as the services are performed.

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, branded sponsorships, yellow pages, the Internet, radio and direct mail. Advertising costs are generally expensed as incurred. These costs may include the development costs for branded content and advertising campaigns. Advertising expense, net of the qualified advertising reimbursements discussed below, was immaterial for the years ended December 31, 2017, 2016 and 2015.

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 $35, $19 and $17 for the years ended December 31, 2017, 2016 and 2015, respectively.

Insurance

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

Income Taxes

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

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

The Tax Cuts and Jobs Act, which was enacted in December 2017, had a substantial impact on our income tax benefit for the year ended December 31, 2017. We expect to meaningfully benefit from its enactment in future periods. See note 13 to the consolidated financial statements for further detail.

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 2017, 2016, and 2015. Our customer with the largest receivable balance represented approximately one percent and two percent of total receivables at December 31, 2017 and 2016, respectively. 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. As discussed below (see "Guidance Adopted in 2017-Improvements to Employee Share-Based Payment Accounting"), we adopted accounting guidance in 2017 that changed the cash flow presentation of excess tax benefits from share-based payment arrangements. For 2017, the excess tax benefits from share-based payment arrangements are presented as a component of net cash provided by operating activities, while, for 2016 and 2015, they are presented as a separate line item.

New Accounting Pronouncements

Leases. In March 2016, the FASB issued Topic 842 to increase transparency and comparability among organizations by requiring i) recognition of lease assets and lease liabilities on the balance sheet and ii) disclosure of key information about leasing arrangements. Some changes to the lessor accounting guidance were made to align both of the following: i) the lessor accounting guidance with certain changes made to the lessee accounting guidance and ii) key aspects of the lessor accounting model with revenue recognition guidance. Topic 842 will be effective for fiscal years and interim periods beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required for adoption for all leases that exist at or commence after the date of initial application with an option to use certain practical expedients. We expect to adopt this guidance when effective.

As discussed below (see "Revenue from Contracts with Customers"), most of our equipment rental revenues, which accounted for 86 percent of total revenues for the year ended December 31, 2017, will be accounted for under Topic 840, which is the current lease accounting standard, until the adoption of Topic 842. While our review of the equipment rental revenue accounting under Topic 842 is ongoing, we have tentatively concluded that no significant changes are expected to our revenue accounting upon adoption of Topic 842.

Under Topic 842, our operating leases, which include both real estate and non-rental equipment, will result in lease assets and lease liabilities being recognized on the balance sheet. We lease a significant portion of our branch locations, and also lease other premises used for purposes such as district and regional offices and service centers. We expect that the quantification of the amount of the lease assets and lease liabilities that we will recognize on our balance sheet will take a significant amount of time given the size of our lease portfolio. While our review of the lessee accounting requirements of Topic 842 is ongoing, we believe that the impact on our balance sheet, while not currently estimable, will be significant.

Revenue from Contracts with Customers. In May 2014, the FASB issued Topic 606 to clarify the principles for recognizing revenue. Topic 606 includes the required steps to achieve the core principle that an entity should recognize revenue

to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2017, and we will adopt the guidance on January 1, 2018 using the modified retrospective method. While our review of our revenue accounting is ongoing, we do not believe that Topic 606 will have a significant impact on our financial statements.

Under Topic 606, entities are required to disaggregate revenue into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See above (“Revenue Recognition”) for the disaggregation of our revenue under the accounting standards in effect for each of the three years in the period ended December 31, 2017. Upon adoption of Topic 606, we expect to disaggregate our revenues consistently with the disaggregation reflected above. We are evaluating the Topic 606 disclosure requirements, beyond the requirement to disaggregate revenue. We are additionally assessing the impact of Topic 606 on our internal controls over financial reporting.

Upon adoption of Topic 606 on January 1, 2018, we will continue to recognize revenue in accordance with two different accounting standards: 1) Topic 606 and 2) Topic 840, which is the lease standard we followed for the year ended December 31, 2017 and will follow for the year ended December 31, 2018. As discussed above, we expect to adopt Topic 842, an update to Topic 840, when it becomes effective, on January 1, 2019 and we have tentatively concluded that it will not have a significant impact on our revenue accounting.

Statement of Cash Flows. In August 2016, the FASB issued guidance to reduce the diversity in the presentation of certain cash receipts and cash payments presented and classified in the statement of cash flows. The guidance addresses the following specific cash flow issues: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (6) distributions received from equity method investees, (7) beneficial interests in securitization transitions and (8) separately identifiable cash flows and application of predominance principle. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2017. The guidance requires retrospective adoption. We expect to adopt this guidance when effective, and do not expect the guidance to have a significant impact on our financial statements.

Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued guidance that will require companies to present assets held at amortized cost and available for sale debt securities net of the amount expected to be collected. The guidance requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectibility. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2019 and early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Different components of the guidance require modified retrospective or prospective adoption. We are currently assessing whether we will early adopt, and the impact on our financial statements is not currently estimable as it will depend on market conditions and our forecast expectations upon, and following, adoption.

Intra-Entity Transfers of Assets Other Than Inventory. In October 2016, the FASB issued guidance that will require companies to recognize the income tax effects of intra-entity sales and transfers of assets other than inventory in the period in which the transfer occurs. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2017. The guidance requires modified retrospective adoption. We expect to adopt this guidance when effective, and do not expect the guidance to have a significant impact on our financial statements.

Simplifying the Test for Goodwill Impairment. In January 2017, the FASB issued guidance intended to simplify the subsequent accounting for goodwill acquired in a business combination. Prior guidance required utilizing a two-step process to review goodwill for impairment. A second step was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of the reporting unit's goodwill (as if purchase accounting were performed on the testing date) with the carrying amount of the goodwill. The new guidance eliminates the second step from the goodwill impairment test. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss should not exceed the total amount of goodwill allocated to the reporting unit). The guidance requires prospective adoption and will be effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption of this guidance is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We expect to adopt this guidance when effective, and do not expect it to have a significant impact on our financial statements.

Clarifying the Definition of a Business. In January 2017, the FASB issued guidance to clarify the definition of a business with the objective of assisting entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is intended to make determining when a set of assets and activities is a business more consistent and cost-efficient. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2017. We expect to adopt this guidance when effective. The impact of this guidance will depend on the nature of our activities after adoption, and fewer transactions may be treated as acquisitions (or disposals) of businesses after adoption.

Stock Compensation: Scope of Modification Accounting. In May 2017, the FASB issued guidance to provide clarity and reduce both the (1) diversity in practice and (2) cost and complexity when changing the terms or conditions of share-based payment awards. Under the updated guidance, a modification is defined as a change in the terms or conditions of a share-based payment award, and an entity should account for the effects of a modification unless all of the following are met:

1.The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation techniques that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.

2.The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified.

3.The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.

This guidance requires prospective adoption and will be effective for fiscal years and interim periods beginning after December 15, 2017. The majority of our modifications relate to the acceleration of vesting conditions and we would continue to be required to account for the effects of such modifications under the updated guidance. We expect to adopt this guidance when effective, and do not expect that this guidance will have a significant impact on our financial statements.

Derivatives and Hedging. In August 2017, the FASB issued guidance with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The guidance is additionally intended to simplify hedge accounting, and no longer requires separate measurement and reporting of hedge ineffectiveness. For cash flow and net investment hedges existing at the date of adoption, entities must apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings. The amended presentation and disclosure guidance is required prospectively. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2018, and early adoption is permitted. We are currently assessing whether we will early adopt. Given our currently limited use of derivative instruments (see note 10 to our consolidated financial statements), the guidance is not expected to have a significant impact on our financial statements.

Guidance Adopted in 2017

Improvements to Employee Share-Based Payment Accounting. In the first quarter of 2017, we adopted guidance that simplified several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We prospectively adopted the amendments in this guidance that relate to the classification of excess tax benefits from share-based payment arrangements on the statement of cash flows. The excess tax benefits from share-based payment arrangements result from stock-based compensation windfall deductions in excess of the amounts reported for financial reporting purposes. In the year ended December 31, 2017, we recognized $10 of such excess tax benefits, and, pursuant to the adopted guidance, net income increased by $10, or $0.11 per diluted share, reflecting the tax reduction associated with the excess tax benefits. Prior periods have not been adjusted to reflect the new guidance related to the classification of the excess tax benefits, as we have elected to prospectively adopt such guidance. Accordingly, our statement of cash flows for the year ended December 31, 2016 reflects $58 of such excess tax benefits within net cash used in financing activities. All of the excess tax benefits for the year ended December 31, 2016 pertain to share based payments that vested prior to 2016, and, accordingly, would not have impacted net income under the new guidance.

Other significant components of the adopted guidance include:

•	The guidance requires that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. We have historically classified such payments as financing activities, so no retrospective change was required to our historic statements of cash flows.

•

Certain aspects of the guidance require a cumulative change to retained earnings upon adoption. Upon adopting this guidance, we elected to record forfeitures of share-based payments as they occur. Making such an election requires a cumulative change to retained earnings upon adoption. However, we historically adjusted estimated forfeitures to reflect actual forfeitures annually, as a result of which no change to retained earnings was required. In 2016, we utilized all of the prior federal excess tax benefits from share-based payments that vested through 2016, and, accordingly, no change to retained earnings was required associated with federal excess tax benefits from share-based payments. A $5 change to retained earnings was required associated with state excess tax benefits from share-based payments that were not previously recognized because the related tax deduction had not reduced taxes payable.

3. Acquisitions

NES Acquisition

In April 2017, we completed the acquisition of NES Rentals Holdings II, Inc. (“NES”). NES was a provider of rental equipment with 73 branches located throughout the eastern half of the U.S., and had approximately 1,100 employees and approximately $900 of rental assets at original equipment cost as of December 31, 2016. NES had annual revenues of approximately $369. The acquisition is expected to:

• Increase our density in strategically important markets, including the East Coast, Gulf States and the Midwest;

• Strengthen our relationships with local and strategic accounts in the construction and industrial sectors, which we expect will enhance cross-selling opportunities and drive revenue synergies; and

• Create meaningful opportunities for cost synergies in areas such as corporate overhead, operational efficiencies and purchasing.

The aggregate consideration paid to holders of NES common stock and options was approximately $960. The acquisition and related fees and expenses were funded through available cash, drawings on our senior secured asset-based revolving credit facility (“ABL facility”) and the issuances of $250 principal amount of 5 7/8 percent Senior Notes due 2026 (as an add-on to our existing 5 7/8 percent Senior Notes due 2026) and $250 principal amount of 5 1/2 percent Senior Notes due 2027 (as an add-on to our existing 5 1/2 percent Senior Notes due 2027). See note 12 to the consolidated financial statements for additional detail on the debt issuances.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. We do not expect material changes to the assigned values.

Accounts receivable, net of allowance for doubtful accounts (1)	$	49
Inventory	4
Rental equipment	571
Property and equipment	48
Intangibles (2)	139
Other assets	7
Total identifiable assets acquired	818
Short-term debt and current maturities of long-term debt (3)	(3		)
Current liabilities	(33		)
Deferred taxes	(15		)
Long-term debt (3)	(11		)
Other long-term liabilities	(5		)
Total liabilities assumed	(67		)
Net identifiable assets acquired	751
Goodwill (4)	209
Net assets acquired	$	960

(1) The fair value of accounts receivables acquired was $49, and the gross contractual amount was $53. We estimated that $4 would be uncollectible.

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

	Fair value			Life (years)
Customer relationships	$	138		10
Non-compete agreements	1			1
Total	$	139

(3) The acquired debt reflects capital lease obligations.

(4) All of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of NES's going-concern value, the value of NES's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that would not be available to other market participants. $1 of goodwill is expected to be deductible for income tax purposes.

The year ended December 31, 2017 include NES acquisition-related costs of $17 which are included in “Merger related costs” in our consolidated statements of income. The merger related costs are comprised of financial and legal advisory fees. In addition to the acquisition-related costs reflected in our consolidated statements of income, the debt issuance costs and the original issue premiums associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets. See note 12 to the consolidated financial statements for additional detail on the debt issuances.

Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired NES locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of NES since the acquisition date. The impact of the NES acquisition on our equipment rentals revenue is primarily reflected in the increase in the volume of OEC on rent of 18.2 percent for the year ended December 31, 2017 (such increase also includes the impact of the acquisition of Neff Corporation ("Neff") discussed below).

Neff Acquisition

In October 2017, we completed the acquisition of Neff. Neff was a provider of earthmoving, material handling, aerial and other equipment, and had 69 branches located in 14 states, with a concentration in southern geographies. Neff had approximately 1,100 employees and approximately $860 of rental assets at original equipment cost as of September 30, 2017. Neff had annual revenues of approximately $413. The acquisition is expected to augment our earthmoving capabilities and efficiencies of scale in key market areas, particularly fast-growing southern geographies, and is expected to lead to revenue synergies through the cross-selling of our broader fleet.

The aggregate consideration paid to holders of Neff common stock and options was approximately $1.316 billion (including $7 of stock consideration associated with Neff stock options and restricted stock units which were converted into United Rentals stock options). The acquisition and related fees and expenses were funded through the issuances of $750 principal amount of 4 5/8 percent Senior Notes due 2025 and $750 principal amount of 4 7/8 percent Senior Notes due 2028. See note 12 to the consolidated financial statements for additional detail on the debt issuances.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. The opening balance sheet values assigned to these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period. We expect to materially finalize the assigned values in the first half of 2018.

Accounts receivable, net of allowance for doubtful accounts (1)	$	72
Inventory	5
Rental equipment	551
Property and equipment	45
Intangibles (customer relationships) (2)	153
Other assets	5
Total identifiable assets acquired	831
Current liabilities	(61		)
Deferred taxes	(35		)
Other long-term liabilities	(3		)
Total liabilities assumed	(99		)
Net identifiable assets acquired	732
Goodwill (3)	584
Net assets acquired	$	1,316

(1) The fair value of accounts receivables acquired was $72, and the gross contractual amount was $74. We estimated that $2 would be uncollectible.

(2) The customer relationships are being amortized over a 10 year life.

(3) All of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of Neff's going-concern value, the value of Neff's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that would not be available to other market participants. $12 of goodwill is expected to be deductible for income tax purposes.

The year ended December 31, 2017 include Neff acquisition-related costs of $33 which are included in “Merger related costs” in our consolidated statements of income. The merger related costs are primarily comprised of financial and legal advisory fees, and also include a termination fee we paid associated with a merger agreement Neff entered into with a prior bidder. In addition to the acquisition-related costs reflected in our consolidated statements of income, the debt issuance costs and the original issue premiums associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets. See note 12 to the consolidated financial statements for additional detail on the debt issuances.

Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired Neff locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of Neff since the acquisition date. The impact of the Neff acquisition on our equipment rentals revenue is primarily reflected in the increase in the volume of OEC on rent of 18.2 percent for the year ended December 31, 2017 (such increase also includes the impact of the acquisition of NES discussed above).

Pro forma financial information

The pro forma information below gives effect to the NES and Neff acquisitions as if they had been completed on January 1, 2016 (“the pro forma acquisition date”). The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, and also does not reflect additional revenue opportunities following the acquisitions. The pro forma information includes adjustments to record the assets and liabilities of NES and Neff at their respective fair values based on available information and to give effect to the financing for the acquisitions and related transactions. The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed. The opening balance sheet values assigned to the assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement periods. Increases or decreases in the estimated fair values of the net assets acquired may impact our statements of income in future periods. We do not expect any material changes to the values assigned to the NES assets acquired and liabilities assumed, and expect to materially finalize the assigned Neff values in the first half of 2018. The table below presents unaudited pro forma consolidated income statement information as if NES and Neff had been

included in our consolidated results for the entire periods reflected:

	Year Ended																Year Ended
	December 31, 2017																December 31, 2016
	United Rentals				NES				Neff				Total				United Rentals				NES				Neff				Total
Historic/pro forma revenues	$	6,641			$	81			$	312			$	7,034			$	5,762			$	369			$	398			$	6,529
Historic/combined pretax income (loss)	1,048				(12		)		38				1,074				909				26				46				981
Pro forma adjustments to pretax income (loss):
Impact of fair value mark-ups/useful life changes on depreciation (1)					(9		)		(8		)		(17		)						(37		)		(10		)		(47		)
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)					(1		)		(1		)		(2		)						(2		)		(1		)		(3		)
Intangible asset amortization (3)					(3		)		(18		)		(21		)						(26		)		(28		)		(54		)
Gain on sale of equity interest (4)					—				—				—								(7		)		—				(7		)
Interest expense (5)					(9		)		(51		)		(60		)						(37		)		(69		)		(106		)
Elimination of historic interest (6)					12				34				46								38				46				84
Elimination of merger related costs (7)					17				33				50								—				—				—
Restructuring charges (8)					32				14				46								(32		)		(14		)		(46		)
Pro forma pretax income													$	1,116															$	802

(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of the equipment acquired in the NES and Neff acquisitions.

(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the NES and Neff acquisitions.

(3) The intangible assets acquired in the NES and Neff acquisitions were amortized.

(4) In 2016, NES sold its equity interest in a successor company and recognized a gain of $7. This gain was eliminated as the equity interest that was sold is not a component of the combined company.

(5) As discussed above, we issued debt to partially fund the NES and Neff acquisitions. Interest expense was adjusted to reflect these changes in our debt portfolio.

(6) Historic interest on debt that is not part of the combined entity was eliminated.

(7) Merger related costs primarily comprised of financial and legal advisory fees associated with the NES and Neff acquisitions were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date. The merger related costs also include a termination fee we paid associated with a merger agreement Neff entered into with a prior bidder.

(8) We expect to recognize restructuring charges primarily comprised of severance costs and branch closure charges associated with the acquisitions over a period of approximately one year following the acquisition dates, which, for the pro forma presentation, was January 1, 2016. As such, the restructuring charges recognized in 2017 were moved to 2016. The restructuring charges reflected in our consolidated statements of income also include non-NES/Neff restructuring charges, as discussed in note 5 to the consolidated financial statements. We do not expect to recognize significant additional restructuring charges associated with the NES acquisition. We expect to recognize additional restructuring charges associated with the Neff acquisition, however the total costs expected to be incurred are not currently estimable, as we are still identifying the actions that will be undertaken.

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 11 geographic regions—Carolinas, Gulf South, Industrial (which serves the geographic Gulf region and has a strong industrial presence), Mid-Atlantic, Mid Central, Midwest, Northeast, Pacific West, South, Southeast and Western Canada—and operates throughout the United States and Canada. We periodically review the size and geographic scope of our regions, and have occasionally reorganized the regions to create a more balanced and effective structure.

The trench, power and 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, 2017, 2016 and 2015:

	Year Ended December 31,
	2017			2016			2015
Primarily rented by our general rentals segment:
General construction and industrial equipment	43	%		43	%		43	%
Aerial work platforms	32	%		32	%		32	%
General tools and light equipment	7	%		8	%		10	%
Primarily rented by our trench, power and pump segment:
Power and HVAC equipment	7	%		7	%		6	%
Trench safety equipment	6	%		6	%		5	%
Pumps	5	%		4	%		4	%

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

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

The following table sets forth financial information by segment as of and for the years ended December 31, 2017, 2016 and 2015:

	General rentals				Trench, power and pump				Total
2017
Equipment rentals	$	4,727			$	988			$	5,715
Sales of rental equipment	509				41				550
Sales of new equipment	159				19				178
Contractor supplies sales	65				15				80
Service and other revenues	105				13				118
Total revenue	5,565				1,076				6,641
Depreciation and amortization expense	1,188				195				1,383
Equipment rentals gross profit	1,950				490				2,440
Capital expenditures	1,675				214				1,889
Total assets	$	13,351			$	1,679			$	15,030
2016
Equipment rentals	$	4,166			$	775			$	4,941
Sales of rental equipment	459				37				496
Sales of new equipment	128				16				144
Contractor supplies sales	64				15				79
Service and other revenues	91				11				102
Total revenue	4,908				854				5,762
Depreciation and amortization expense	1,066				179				1,245
Equipment rentals gross profit	1,725				364				2,089
Capital expenditures	1,189				150				1,339
Total assets	$	10,496			$	1,492			$	11,988
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

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 (benefit) provision for income taxes:

	Year Ended December 31,
	2017				2016				2015
Total equipment rentals gross profit	$	2,440			$	2,089			$	2,147
Gross profit from other lines of business	329				314				333
Selling, general and administrative expenses	(903		)		(719		)		(714		)
Merger related costs	(50		)		—				26
Restructuring charge	(50		)		(14		)		(6		)
Non-rental depreciation and amortization	(259		)		(255		)		(268		)
Interest expense, net	(464		)		(511		)		(567		)
Other income, net	5				5				12
Income before (benefit) provision for income taxes	$	1,048			$	909			$	963

We operate in the United States and Canada. The following table presents geographic area information for the years ended December 31, 2017, 2016 and 2015, except for balance sheet information, which is presented as of December 31, 2017 and 2016:

	Domestic				Foreign (Canada)				Total
2017
Equipment rentals	$	5,253			$	462			$	5,715
Sales of rental equipment	494				56				550
Sales of new equipment	157				21				178
Contractor supplies sales	70				10				80
Service and other revenues	102				16				118
Total revenue	6,076				565				6,641
Rental equipment, net	7,264				560				7,824
Property and equipment, net	425				42				467
Goodwill and other intangibles, net	$	4,642			$	315			$	4,957
2016
Equipment rentals	$	4,524			$	417			$	4,941
Sales of rental equipment	444				52				496
Sales of new equipment	129				15				144
Contractor supplies sales	68				11				79
Service and other revenues	87				15				102
Total revenue	5,252				510				5,762
Rental equipment, net	5,709				480				6,189
Property and equipment, net	390				40				430
Goodwill and other intangibles, net	$	3,699			$	303			$	4,002
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

5. Restructuring Charges

Restructuring charges primarily include severance costs associated with headcount reductions, as well as branch closure charges which principally relate to continuing lease obligations at vacant facilities. We incur severance costs and branch closure

charges in the ordinary course of our business. We only include such costs that are part of a restructuring program as restructuring charges. Since the first such restructuring program was initiated in 2008, we have completed three programs and have incurred total restructuring charges of $284.

Closed Restructuring Programs

We have three closed restructuring programs. The first was initiated in 2008 in recognition of a challenging economic environment and was completed in 2011. The second was initiated following the April 30, 2012 acquisition of RSC Holdings Inc. ("RSC"), and was completed in 2013. The third was initiated in the fourth quarter of 2015 in response to challenges in our operating environment. In particular, during 2015, we experienced volume and pricing pressure in our general rental business and our Pump Solutions region associated with upstream oil and gas customers. Additionally, our Lean initiatives did not fully generate the anticipated cost savings due to lower than expected growth. In 2016, we achieved the anticipated run rate savings from the Lean initiatives, and this restructuring program was completed in 2016.

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

Description		Beginning Reserve Balance				Charged to Costs and Expenses (1)				Payments and Other				Ending Reserve Balance
Year ended December 31, 2015:
Branch closure charges		$	20			$	2			$	(9	)		$	13
Severance costs		—				4				(1		)		3
Total		$	20			$	6			$	(10	)		$	16
Year ended December 31, 2016:
Branch closure charges		$	13			$	10			$	(7	)		$	16
Severance costs		3				4				(6		)		1
Total		$	16			$	14			$	(13	)		$	17
Year ended December 31, 2017:
Branch closure charges		$	16			$	2			$	(5	)		$	13
Severance costs		1				—				(1		)		—
Total		$	17			$	2			$	(6	)		$	13

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

As of December 31, 2017, we have incurred total restructuring charges under the closed restructuring programs of $236, comprised of $162 of branch closure charges and $74 of severance costs.

NES/Neff/Project XL Restructuring Program

In the second quarter of 2017, we initiated a restructuring program following the closing of the NES acquisition discussed in note 3 to the consolidated financial statements. The restructuring program also includes actions undertaken associated with Project XL, which is a set of eight specific work streams focused on driving profitable growth through revenue opportunities and generating incremental profitability through cost savings across our business, and the Neff acquisition that is discussed in note 3 to the consolidated financial statements. We expect to complete the restructuring program in the first half of 2018. 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 NES/Neff/Project XL restructuring program:

Description		Beginning Reserve Balance				Charged to Costs and Expenses (1)				Payments and Other				Ending Reserve Balance
Year ended December 31, 2017:
Branch closure charges		$	—			$	9			$	(1	)		$	8
Severance and other		—				39				(27		)		12
Total		$	—			$	48			$	(28	)		$	20

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(1)	Reflected in our consolidated statements of income as “Restructuring charge.” The restructuring charges are not allocated to our segments. The above charges reflect the cumulative restructuring charges recognized associated with the NES/Neff/Project XL restructuring program.

6. Rental Equipment

Rental equipment consists of the following:

	December 31,
	2017				2016
Rental equipment	$	11,571			$	9,413
Less accumulated depreciation	(3,747		)		(3,224		)
Rental equipment, net	$	7,824			$	6,189

For additional detail on the acquisitions of NES and Neff in April 2017 and October 2017, respectively, which accounted for a significant portion of the 2017 increase in rental equipment, see note 3 to our consolidated financial statements.

7. Property and Equipment

Property and equipment consist of the following:

	December 31,
	2017				2016
Land	$	102			$	96
Buildings	238				212
Non-rental vehicles	112				93
Machinery and equipment	103				87
Furniture and fixtures	204				188
Leasehold improvements	245				221
	1,004				897
Less accumulated depreciation and amortization	(537		)		(467		)
Property and equipment, net	$	467			$	430

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, 2017:

	General rentals				Trench, power and pump				Total
Balance at January 1, 2015 (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
Goodwill related to acquisitions (2)	5				4				9
Foreign currency translation and other adjustments	6				2				8
Balance at December 31, 2016 (1)	2,797				463				3,260
Goodwill related to acquisitions (2) (3)	797				8				805
Foreign currency translation and other adjustments	13				4				17
Balance at December 31, 2017 (1)	$	3,607			$	475			$	4,082

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(1)	The total carrying amount of goodwill for all periods in the table above is reflected net of $1.557 billion of accumulated impairment charges, which were primarily recorded in our general rentals segment.

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

(3)	For additional detail on the acquisitions of NES and Neff in April 2017 and October 2017, respectively, which accounted for most of the 2017 goodwill related to acquisitions, see note 3 to our consolidated financial statements.

Other intangible assets were comprised of the following at December 31, 2017 and 2016:

	December 31, 2017
	Weighted-Average Remaining Amortization Period		Gross Carrying Amount				Accumulated Amortization				Net Amount
Non-compete agreements	31 months		$	71			$	62			$	9
Customer relationships	9 years		$	1,750			$	884			$	866

	December 31, 2016
	Weighted-Average Remaining Amortization Period		Gross Carrying Amount				Accumulated Amortization				Net Amount
Non-compete agreements	28 months		$	70			$	57			$	13
Customer relationships	10 years		$	1,465			$	737			$	728
Trade names and associated trademarks	4 months		$	80			$	79			$	1

Our other intangibles assets, net at December 31, 2017 include the following assets associated with the acquisitions of NES and Neff discussed in note 3 to our consolidated financial statements. No residual value has been assigned to these assets which are being amortized using the sum of the years' digits method, which we believe best reflects the estimated pattern in which the economic benefits will be consumed.

	December 31, 2017
	Weighted-Average Remaining Amortization Period			Net Carrying Amount
Customer relationships-NES	9 years			$	119
Customer relationships-Neff	10 years			$	146

Amortization expense for other intangible assets was $173, $174 and $193 for the years ended December 31, 2017, 2016 and 2015, respectively.

As of December 31, 2017, estimated amortization expense for other intangible assets for each of the next five years and thereafter was as follows:

2018	$	179
2019	158
2020	136
2021	115
2022	94
Thereafter	193
Total	$	875

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

Accrued expenses and other liabilities consist of the following:

	December 31,
	2017				2016
Self-insurance accruals	$	42			$	35
Accrued compensation and benefit costs	128				55
Property and income taxes payable	25				23
Restructuring reserves (1)	33				17
Interest payable	131				79
Deferred revenue (2)	46				40
National accounts accrual	50				40
Other (3)	81				55
Accrued expenses and other liabilities	$	536			$	344

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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,
	2017				2016
Self-insurance accruals	$	58			$	59
Property and income taxes payable	52				—
Accrued compensation and benefit costs	10				8
Other long-term liabilities	$	120			$	67

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, 2017, the risks we managed using derivative instruments were diesel price risk and foreign currency exchange rate risk. At December 31, 2017, 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, 2017, 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, 2017, 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, 2017, 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, 2017 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, 2017, we had outstanding fixed price swap contracts covering 4.7 million gallons of diesel which will be purchased throughout 2018 and 2019.

Foreign Currency Forward Contracts

The forward contracts to purchase Canadian dollars, which were all settled as of December 31, 2017, 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, 2017, forward contracts were used to purchase $1.07 billion 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, 2017. 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, 2017 and 2016, immaterial amounts ($1 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, 2017, 2016 and 2015 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, 2017, 2016 and 2015 include $17, $29 and $35, respectively, associated with the fixed price diesel swaps, comprised of 1) the cost to purchase 6.7 million, 10.1 million and 10.6 million hedged gallons of diesel during the years ended December 31, 2017, 2016 and 2015, 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, 2017, 2016 and 2015 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, 2017:
Derivatives designated as hedging instruments:
Fixed price diesel swaps	Other income (expense), net (1)		$ *
	Cost of equipment rentals, excluding depreciation (2), (3)		*			(18	)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other income (expense), net		13			(13	)
Year ended December 31, 2016:
Derivatives designated as hedging instruments:
Fixed price diesel swaps	Other income (expense), net (1)		$ *
	Cost of equipment rentals, excluding depreciation (2), (3)		(6	)		(23	)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other income (expense), net		(3	)		3
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

• 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 6.7 million, 10.1 million and 10.6 million gallons of diesel covered by the fixed price swaps during the years ended December 31, 2017, 2016 and 2015, 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

As of December 31, 2017 and 2016, our only assets and liabilities measured at fair value were our fixed price diesel swaps contracts, which are Level 2 derivatives measured at fair value on a recurring basis. As of December 31, 2017 and 2016, immaterial amounts ($1 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, 2017, we have fixed price swap contracts covering 4.7 million gallons of diesel which we will buy throughout 2018 and 2019 at the average contract price of $2.81 per gallon, while the average forward price for the hedged gallons was $2.98 per gallon as of December 31, 2017.

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, 2017 and 2016. The estimated fair values of our other financial instruments at December 31, 2017 and 2016 have been calculated based upon available market information or an appropriate valuation technique, and are as follows:

	December 31, 2017								December 31, 2016
	Carrying Amount				Fair Value				Carrying Amount				Fair Value
Level 1:
Senior and senior subordinated notes	$	7,008			$	7,340			$	5,506			$	5,715
Level 3:
Capital leases (1)	67				65				71				70

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

12. Debt

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

	December 31,
	2017				2016
Accounts Receivable Securitization Facility (1)	$	695			$	568
$3.0 billion ABL Facility (1)	1,670				1,645
7 5/8 percent Senior Notes (2)	—				469
6 1/8 percent Senior Notes (2)	—				936
4 5/8 percent Senior Secured Notes due 2023	992				991
5 3/4 percent Senior Notes due 2024	841				839
5 1/2 percent Senior Notes due 2025	793				792
4 5/8 percent Senior Notes due 2025 (3)	740				—
5 7/8 percent Senior Notes due 2026 (3)	998				740
5 1/2 percent Senior Notes due 2027 (3)	990				739
4 7/8 percent Senior Notes due 2028 (3)	1,648				—
4 7/8 percent Senior Notes due 2028 (3)	6				—
Capital leases	67				71
Total debt	9,440				7,790
Less short-term portion	(723		)		(597		)
Total long-term debt	$	8,717			$	7,193

(1)	$1.282 billion and $80 were available under our ABL facility and accounts receivable securitization facility, respectively, at December 31, 2017. The ABL facility availability is reflected net of $40 of letters of credit. At December 31, 2017, the interest rates applicable to our ABL facility and accounts receivable securitization facility were 3.0 percent and 2.3 percent, respectively.

(2)	In 2017, we redeemed all of our 7 5/8 percent Senior Notes and 6 1/8 percent Senior Notes. Upon redemption, we recognized an aggregate loss of $54 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 2017, URNA issued i) $750 principal amount of 4 5/8 percent Senior Notes due 2025, ii) $250 principal amount of 5 7/8 percent Senior Notes due 2026, as an add-on to our existing 5 7/8 percent Senior Notes due 2026, iii) $250 principal amount of 5 1/2 percent Senior Notes due 2027, as an add-on to our existing 5 1/2 percent Senior Notes due 2027, and iv) $1.675 billion principal amount of 4 7/8 percent Senior Notes due 2028 (comprised of separate and distinct issuances of $925 in August 2017 and $750 in September 2017). As discussed in note 3 to the consolidated financial statements, a portion of the proceeds from the debt issuances was used to partially finance the acquisitions of NES and Neff in April 2017 and October 2017, respectively. Additionally, a portion of the proceeds was used to finance the debt redemptions discussed above. As discussed below, following the issuances of the 4 7/8 percent Senior Notes in August 2017 and September 2017, we consummated an exchange offer pursuant to which approximately $744 of the 4 7/8 percent Senior Notes issued in September 2017 were exchanged for additional notes fungible with the 4 7/8 percent Senior Notes issued in August 2017. See below for additional detail on the issued debt.

Short-term debt

As of December 31, 2017, our short-term debt primarily reflects $695 of borrowings under our accounts receivable securitization facility. As discussed below, in 2017, we amended and extended our accounts receivable securitization facility. During the year ended December 31, 2017, the monthly average amount outstanding under the accounts receivable securitization facility was $605 and the weighted-average interest rate thereon was 1.9 percent. The maximum month-end amount outstanding under the accounts receivable securitization facility during the year ended December 31, 2017 was $695.

Accounts Receivable Securitization Facility. In 2017, the accounts receivable securitization facility was amended, primarily to increase the facility size and to extend the maturity date. The amended facility expires on August 28, 2018, has a facility size of $775, 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, 2017, there were $905 of receivables, net of applicable reserves, in the collateral pool;

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

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

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

ABL Facility. In June 2008, Holdings, URNA, and certain of our subsidiaries entered into a credit agreement providing for a five-year $1.25 billion ABL facility, a portion of which is available for borrowing in Canadian dollars. The ABL facility was subsequently upsized and extended. The size of the ABL facility was $3.0 billion as of December 31, 2017.

The ABL facility is subject to, among other things, the terms of a borrowing base derived from the value of eligible rental equipment and eligible inventory. The borrowing base is subject to certain reserves and caps customary for financings of this type. All amounts borrowed under the credit agreement must be repaid on or before June 2021. Loans under the credit agreement bear interest, at URNA’s option: (i) in the case of loans in U.S. dollars, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, or (ii) in the case of loans in Canadian dollars, at a rate equal to the Canadian prime rate or an alternate rate (Bankers' Acceptance Rate), in each case plus a spread. The interest rates under the credit agreement are subject to change based on the availability in the facility. A commitment fee accrues on any unused portion of the commitments under the credit agreement at a fixed rate per annum. Ongoing extensions of credit under the credit agreement are subject to customary conditions, including sufficient availability under the borrowing base. As discussed below (see “Loan Covenants and Compliance”), the only financial maintenance covenant that currently exists in the ABL facility is the fixed charge coverage ratio. As of December 31, 2017, availability under the ABL facility has exceeded the required threshold and, as a result, this financial maintenance covenant was inapplicable. In addition, the credit agreement contains customary negative covenants applicable to Holdings, URNA and our subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness or engage in certain other types of financing transactions, (ii) allow certain liens to attach to assets, (iii) repurchase, or pay dividends or make certain other restricted payments on, capital stock and certain other securities, (iv) prepay certain indebtedness and (v) make acquisitions and investments. The U.S. dollar borrowings under the credit agreement are secured by substantially all of our assets and substantially all of the assets of certain of our U.S. subsidiaries (other than real property and certain accounts receivable). The U.S. dollar borrowings under the credit agreement are guaranteed by Holdings and by URNA and, subject to certain exceptions, our domestic subsidiaries. Borrowings under the credit agreement by URNA’s Canadian subsidiaries are also secured by substantially all the assets of URNA’s Canadian subsidiaries and supported by guarantees from the Canadian subsidiaries and from Holdings and URNA, and, subject to certain exceptions, our domestic subsidiaries. Under the ABL facility, a change of control (as defined in the credit agreement) constitutes an event of default, entitling our lenders, among other things, to terminate our ABL facility and to require us to repay outstanding borrowings.

As of December 31, 2017, the ABL facility was our only long-term variable rate debt instrument. During the year ended December 31, 2017, the monthly average amount outstanding under the ABL facility was $1.32 billion and the weighted-average interest rate thereon was 2.6 percent. The maximum month-end amount outstanding under the ABL facility during the year ended December 31, 2017 was $1.80 billion.

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

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

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

4 5/8 percent Senior Notes due 2025. In September 2017, URNA issued $750 principal amount of 4 5/8 percent Senior Notes (the “4 5/8 percent Notes”) which are due October 15, 2025. The net proceeds from the issuance were approximately $741 (after deducting offering expenses). The 4 5/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 4 5/8 percent Notes may be redeemed on or after October 15, 2020, at specified redemption prices that range from 102.313 percent in 2020, to 100 percent in 2022 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the 4 5/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the 4 5/8 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 4 5/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

5 7/8 percent Senior Notes due 2026. In May 2016, URNA issued $750 aggregate principal amount of 5 7/8 percent Senior Notes (the “5 7/8 percent Notes”) which are due September 15, 2026. In February 2017, URNA issued $250 aggregate principal amount of 5 7/8 percent Notes as an add-on to the existing 5 7/8 percent Notes, after which the aggregate principal amount of outstanding 5 7/8 percent Notes was $1.0 billion. The notes issued in February 2017 have identical terms, and are fungible, with the existing 5 7/8 percent Notes. The net proceeds from the issuances were approximately $999 (including the original issue premium and after deducting offering expenses). The 5 7/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5 7/8 percent Notes may be redeemed on or after September 15, 2021, at specified redemption prices that range from 102.938 percent in 2021, to 100 percent in 2024 and thereafter, plus accrued and unpaid

interest, if any. The indenture governing the 5 7/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 7/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon. The carrying value of the 5 7/8 percent Notes includes the $11 unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2026. The effective interest rate on the 5 7/8 percent Notes is 5.7 percent.

5 1/2 percent Senior Notes due 2027. In November 2016, URNA issued $750 aggregate principal amount of 5 1/2 percent Senior Notes which are due May 15, 2027 (the “2027 5 1/2 percent Notes”). In February 2017, URNA issued $250 aggregate principal amount of 2027 5 1/2 percent Notes as an add-on to the existing 2027 5 1/2 percent Notes, after which the aggregate principal amount of outstanding 2027 5 1/2 percent Notes was $1.0 billion. The notes issued in February 2017 have identical terms, and are fungible, with the existing 2027 5 1/2 percent Notes. The net proceeds from the issuances were approximately $991 (including the original issue premium and after deducting offering expenses). The 2027 5 1/2 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 2027 5 1/2 percent Notes may be redeemed on or after May 15, 2022, at specified redemption prices that range from 102.75 percent in 2022, to 100 percent in 2025 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 2027 5 1/2 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 2027 5 1/2 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon. The carrying value of the 2027 5 1/2 percent Notes includes the $3 unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2027. The effective interest rate on the 2027 5 1/2 percent Notes is 5.5 percent.

4 7/8 percent Senior Notes due 2028. In August 2017, URNA issued $925 principal amount of 4 7/8 percent Senior Notes (the “Initial 4 7/8 percent Notes”) which are due January 15, 2028. The net proceeds from the issuance were approximately $913 (after deducting offering expenses). The Initial 4 7/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The Initial 4 7/8 percent Notes may be redeemed on or after January 15, 2023, at specified redemption prices that range from 102.438 percent in 2023, to 100 percent in 2026 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the Initial 4 7/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Initial 4 7/8 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding Initial 4 7/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

In September 2017, URNA issued $750 principal amount of 4 7/8 percent Senior Notes (the “Subsequent 4 7/8 percent Notes”) which are due January 15, 2028. The net proceeds from the issuance were approximately $743 (including the original issue premium and after deducting offering expenses). The Subsequent 4 7/8 percent Notes represent a separate a distinct series of notes from the Initial 4 7/8 percent Notes. The Subsequent 4 7/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The Subsequent 4 7/8 percent Notes may be redeemed on or after January 15, 2023, at specified redemption prices that range from 102.438 percent in 2023, to 100 percent in 2026 and thereafter, in each case, plus

accrued and unpaid interest, if any. The indenture governing the Subsequent 4 7/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Subsequent 4 7/8 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding Subsequent 4 7/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon. The effective interest rate on the Subsequent 4 7/8 percent Notes is 4.84 percent.

In December 2017, we consummated an exchange offer pursuant to which approximately $744 principal amount of Subsequent 4 7/8 percent Notes were exchanged for additional Initial 4 7/8 percent Notes issued under the indenture governing the Initial 4 7/8 percent Notes and fungible with the Initial 4 7/8 percent Notes. After the consummation of the exchange offer, the principal amounts outstanding were $1.669 billion for the Initial 4 7/8 percent Notes and $6 for the Subsequent 4 7/8 percent Notes. The carrying value of the Initial 4 7/8 percent Notes includes $2 of the unamortized original issue premium, which is being amortized through the maturity date in 2028. The effective interest rate on the Initial 4 7/8 percent Notes is 4.86 percent.

Loan Covenants and Compliance

As of December 31, 2017, 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 maintenance covenant that currently exists under the ABL facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below 10 percent of the maximum revolver amount under the ABL facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of December 31, 2017, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial maintenance covenant was inapplicable. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The accounts receivable securitization facility also requires us to comply with the fixed charge coverage ratio under the ABL facility, to the extent the ratio is applicable under the ABL facility.

Maturities

Debt maturities (exclusive of any unamortized original issue premiums and unamortized debt issuance costs) for each of the next five years and thereafter at December 31, 2017 are as follows:

2018	$	723
2019	20
2020	11
2021	1,683
2022	1
Thereafter	7,078
Total	$	9,516

13. Income Taxes

The Tax Cuts and Jobs Act (the "Act") was enacted in December 2017. The Act reduces the U.S. federal corporate tax rate from 35 percent to 21 percent, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign earnings. As of December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Act; however, in certain cases, as described below, we have made a reasonable estimate of (i) the effects on our existing deferred tax balances and (ii) the one-time transition tax. In

other cases, we have not been able to make a reasonable estimate and continue to account for those items based on our existing accounting under GAAP and the provisions of the tax laws that were in effect prior to enactment. We recognized an income tax benefit of $689 in the year ended December 31, 2017 associated with the items we could reasonably estimate. This benefit reflects (i) the revaluation of our net deferred tax liability based on a U.S. federal tax rate of 21 percent, partially offset by (ii) a one-time transition tax on our unremitted foreign earnings and profits, which we will elect to pay over an eight-year period.

We are still analyzing the Act and refining our calculations, which could potentially impact the measurement of our tax balances. The substantial 2017 impact of the enactment of the Act is reflected in the tables below.

The components of the provision (benefit) for income taxes for each of the three years in the period ended December 31, 2017 are as follows:

	Year ended December 31,
	2017				2016				2015
Current
Federal	$	190			$	186			$	13
Foreign	15				10				15
State and local	30				24				14
	235				220				42
Deferred
Federal	(580		)		119				300
Foreign	(2		)		(1		)		5
State and local	49				5				31
	(533		)		123				336
Total	$	(298	)		$	343			$	378

A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate of 35 percent to the income before provision (benefit) for income taxes for each of the three years in the period ended December 31, 2017 is as follows:

	Year ended December 31,
	2017				2016				2015
Computed tax at statutory tax rate	$	367			$	318			$	337
State income taxes, net of federal tax benefit	34				21				41
Non-deductible expenses and other	(3		)		9				8
Enactment of the Tax Cuts and Jobs Act	(689		)		—				—
Foreign taxes	(7		)		(5		)		(8		)
Total	$	(298	)		$	343			$	378

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

	December 31, 2017				December 31, 2016
Reserves and allowances	$	87			$	103
Debt cancellation and other	13				33
Net operating loss and credit carryforwards	192				28
Total deferred tax assets	292				164
Property and equipment	(1,498		)		(1,820		)
Intangibles	(174		)		(231		)
Valuation allowance	(39		)		(9		)
Total deferred tax liability	(1,711		)		(2,060		)
Total deferred income tax liability	$	(1,419	)		$	(1,896	)

We file income tax returns in the United States and in Canada. Without exception, we have completed our domestic and international income tax examinations, or the statute of limitations has expired in the respective jurisdictions, for years prior to 2010.

For financial reporting purposes, income before provision for income taxes for our foreign subsidiaries was $48, $29 and $70 for the years ended December 31, 2017, 2016 and 2015, respectively. At December 31, 2017, unremitted earnings of foreign subsidiaries were approximately $617 and have been included in our computation of the transition tax associated with the enactment of the Act discussed above. We do not provide for U.S. taxes on our unremitted earnings of foreign subsidiaries that have not been previously taxed since we intend to invest such undistributed earnings indefinitely outside of the U.S.

We have net operating loss carryforwards (“NOLs”) of $587 for federal income tax purposes that expire from 2020 through 2037 and $773 for state income tax purposes that expire from 2017 through 2037. We have recorded valuation allowances against these deferred assets of $39 and $9 as of December 31, 2017 and 2016, respectively. The valuation allowance balance as of December 31, 2017 includes a full valuation allowance associated with a $26 foreign tax credit. In 2017, the Company utilized $289 of existing NOLs to offset federal and state tax liabilities.

14. Commitments and Contingencies

We are subject to a number of claims and proceedings that generally arise in the ordinary conduct of our business. These matters include, but are not limited to, general liability claims (including personal injury, product liability, and property and automobile claims), indemnification and guarantee obligations, employee injuries and employment-related claims, self-insurance obligations and contract and real estate matters. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals included in our consolidated balance sheets for matters where we have established them, we currently believe that any liabilities ultimately resulting from these ordinary course claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Indemnification

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

Operating Leases

We lease 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, 2017:

	Real Estate Leases				Non-Rental Equipment Leases
2018	$	117			$	43
2019	99				37
2020	77				31
2021	58				22
2022	35				15
Thereafter	39				9
Total	$	425			$	157

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.

As discussed in note 2 to the consolidated financial statements (see "New Accounting Pronouncements-Leases"), we expect to adopt updated lease accounting guidance when it becomes effective, on January 1, 2019. Upon adoption of the

updated guidance, our operating leases will result in lease assets and lease liabilities being recognized on the balance sheet. While our review of the updated lease accounting guidance is ongoing, we believe that the impact on our balance sheet, while not currently estimable, will be significant.

Rent expense under all non-cancelable real estate, rental equipment and other equipment operating leases totaled $160, $149 and $139 for the years ended December 31, 2017, 2016 and 2015, 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 $67 and $71 at December 31, 2017 and 2016, respectively. The following table presents capital lease financial statement information for the years ended December 31, 2017, 2016 and 2015, except for balance sheet information, which is presented as of December 31, 2017 and 2016:

	2017				2016				2015
Depreciation of rental equipment	$	21			$	20			$	20
Non-rental depreciation and amortization	2				3				3
Rental equipment	203				190
Less accumulated depreciation	(80		)		(70		)
Rental equipment, net	123				120
Property and equipment, net:
Non-rental vehicles	2				7
Buildings	21				21
Less accumulated depreciation and amortization	(14		)		(16		)
Property and equipment, net	$	9			$	12

Future minimum lease payments for capital leases for each of the next five years and thereafter at December 31, 2017 are as follows:

2018	$	29
2019	21
2020	12
2021	6
2022	1
Thereafter	3
Total	72
Less amount representing interest (1)	(5		)
Capital lease obligations	$	67

(1)	The weighted average interest rate on our capital lease obligations as of December 31, 2017 was approximately 4.2 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 $26, $23 and $22 in the years ended December 31, 2017, 2016 and 2015, respectively.

Environmental Matters

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

15. Common Stock

We have 500 million authorized shares of common stock, $0.01 par value. At December 31, 2017 and 2016, there were 0.5 million shares of common stock reserved for issuance pursuant to options granted under our stock option plans.

As of December 31, 2017, there were an aggregate of 1.0 million outstanding time and performance-based RSUs and 2.6 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 December 31, 2016	507			21.37
Granted	105			60.89
Exercised	(63	)		39.72
Canceled	—			—
Outstanding at December 31, 2017	549			26.80
Exercisable at December 31, 2017	480			$	22.04

The following table presents information associated with options as of December 31, 2017 and 2016, and for the years ended December 31, 2017, 2016 and 2015:

	2017				2016				2015
Intrinsic value of options outstanding as of December 31	$	80			$	43
Intrinsic value of options exercisable as of December 31	72				43
Intrinsic value of options exercised	6				4				7
Weighted-average grant date fair value per option	$	84.60			$	—			$	—

In addition to stock options, the Company issues time-based and performance-based RSUs to certain officers and key executives under various 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 346 thousand shares of common stock issued upon vesting of RSUs during 2017, net of 227 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,
	2017				2016				2015
RSUs granted	809				901				463
Weighted-average grant date price per unit	$	130.96			$	60.55			$	86.84

As of December 31, 2017, the total pretax compensation cost not yet recognized by the Company with regard to unvested RSUs was $46. The weighted-average period over which this compensation cost is expected to be recognized is 2.1 years.

A summary of RSU activity for the year ended December 31, 2017 follows (RSUs in thousands):

	Stock Units			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2016	751			$	71.29
Granted	809			130.96
Vested	(782	)		110.37
Forfeited	(22	)		93.13
Nonvested as of December 31, 2017	756			$	94.07

The total fair value of RSUs vested during the fiscal years ended December 31, 2017, 2016 and 2015 was $101, $39, and $84, 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, 2017 (1):
Total revenues	$	1,356			$	1,597			$	1,766			$	1,922			$	6,641
Gross profit	514				655				773				827				2,769
Operating income	257				340				448				462				1,507
Net income (1)	109				141				199				897				1,346
Earnings per share—basic	1.29				1.67				2.36				10.60				15.91
Earnings per share—diluted (3)	1.27				1.65				2.33				10.45				15.73
For the year ended December 31, 2016 (2):
Total revenues	$	1,310			$	1,421			$	1,508			$	1,523			$	5,762
Gross profit	500				590				656				657				2,403
Operating income	254				347				412				402				1,415
Net income	92				134				187				153				566
Earnings per share—basic	1.01				1.52				2.18				1.82				6.49
Earnings per share—diluted (3)	1.01				1.52				2.16				1.80				6.45

(1)

Net income for the fourth quarter and full year 2017 includes a benefit of $689, or $8.03 and $8.05 per diluted share for the fourth quarter and full year 2017, respectively, associated with the enactment of the Tax Cuts and Jobs Act discussed further in note 13 to our consolidated financial statements. The fourth quarter of 2017 includes $18 of merger related costs and $22 of restructuring charges primarily associated with the NES and Neff acquisitions discussed in note 3 to our consolidated financial statements. Additionally, in the fourth quarter of 2017, we redeemed the remaining $225 principal amount of our 7 5/8 percent Senior Notes due 2022. Upon the redemption of these notes, we recognized a loss of $11 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes. The fourth quarter of 2017 also reflects a year-over-year increase of $11 in stock compensation expense primarily due to the impact of increased revenue, improved profitability, and increases in our stock price and in the volume of stock awards.

(2)

The fourth quarter of 2016 includes $6 of restructuring charges associated with the restructuring program we initiated in the fourth quarter of 2015 and closed in the fourth quarter of 2016, which is discussed further in note 5 to our consolidated financial statements. Additionally, in the fourth quarter of 2016, we redeemed $850 principal amount of our 7 5/8 percent Senior Notes due 2022 and issued $750 principal amount of 5 1/2 percent Senior Notes due 2027. Upon the partial redemption of the 7 5/8 percent Senior Notes due 2022, we recognized a loss of $65 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.

(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, 2017:
Merger related costs (4)	$	(0.02	)		$	(0.09	)		$	(0.12	)		$	(0.13	)		$	(0.36	)
Merger related intangible asset amortization (5)	$	(0.28	)		$	(0.30	)		$	(0.27	)		$	(0.32	)		$	(1.15	)
Impact on depreciation related to acquired fleet and property and equipment (6)	—				0.03				(0.07		)		(0.01		)		(0.05		)
Impact of the fair value mark-up of acquired fleet (7)	(0.06		)		(0.13		)		(0.17		)		(0.23		)		(0.59		)
Restructuring charge (8)	—				(0.14		)		(0.07		)		(0.15		)		(0.36		)
Asset impairment charge (9)	—				—				—				—				(0.01		)
Loss on extinguishment of debt securities and amendment of ABL facility	—				(0.09		)		(0.22		)		(0.08		)		(0.39		)
For the year ended December 31, 2016:
Merger related intangible asset amortization (5)	$	(0.30	)		$	(0.28	)		$	(0.28	)		$	(0.29	)		$	(1.12	)
Impact of the fair value mark-up of acquired fleet (7)	(0.06		)		(0.06		)		(0.05		)		(0.06		)		(0.25		)
Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (10)	—				—				—				—				0.01
Restructuring charge (8)	(0.01		)		(0.02		)		(0.02		)		(0.05		)		(0.11		)
Asset impairment charge (9)	(0.02		)		—				—				—				(0.03		)
Loss on extinguishment of debt securities and amendment of ABL facility	—				(0.18		)		(0.07		)		(0.47		)		(0.70		)

(4)	This reflects transaction costs associated with the NES and Neff acquisitions discussed in note 3 to our consolidated financial statements.

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

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

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

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

(9)	This reflects write-offs of leasehold improvements and other fixed assets in connection with our restructuring programs.

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

17. Earnings Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares plus the effect of dilutive potential common shares outstanding during the period. Net income and earnings per share for 2017 include the significant impact of the enactment of the Tax Cuts and Jobs Act discussed further in note 13 to the consolidated financial statements. The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):

	Year Ended December 31,
	2017				2016				2015
Numerator:
Net income available to common stockholders	$	1,346			$	566			$	585
Denominator:
Denominator for basic earnings per share—weighted-average common shares	84,599				87,217				95,170
Effect of dilutive securities:
Employee stock options and warrants	403				277				300
4 percent Convertible Senior Notes	—				—				660
Restricted stock units	560				281				249
Denominator for diluted earnings per share—adjusted weighted-average common shares	85,562				87,775				96,379
Basic earnings per share	$	15.91			$	6.49			$	6.14
Diluted earnings per share	$	15.73			$	6.45			$	6.07

18. Condensed Consolidating Financial Information of Guarantor Subsidiaries

URNA is 100 percent owned by Holdings (“Parent”) and has certain outstanding indebtedness that is guaranteed by both Parent and, with the exception of its U.S. special purpose vehicle which holds receivable assets relating to the Company’s accounts receivable securitization facility (the “SPV”), all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”). Other than the guarantee by certain Canadian subsidiaries of URNA's indebtedness under the ABL facility, none of URNA’s indebtedness is guaranteed by URNA's foreign subsidiaries or the SPV (together, the “non-guarantor subsidiaries”). The receivable assets owned by the SPV have been sold or contributed by URNA to the SPV and are not available to satisfy the obligations of URNA or Parent’s other subsidiaries. The guarantor subsidiaries are all 100 percent-owned and the guarantees are made on a joint and several basis. The guarantees are not full and unconditional because a guarantor subsidiary can be automatically released and relieved of its obligations under certain circumstances, including sale of the guarantor subsidiary, the sale of all or substantially all of the guarantor subsidiary's assets, the requirements for legal defeasance or covenant defeasance under the applicable indenture being met, designating the guarantor subsidiary as an unrestricted subsidiary for purposes of the applicable covenants or, other than with respect to the guarantees of the 5 3/4 percent Senior Notes due 2024, the notes being rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA. The guarantees are also subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws. Based on our understanding of Rule 3-10 of Regulation S-X ("Rule 3-10"), we believe that the guarantees of the guarantor subsidiaries comply with the conditions set forth in Rule 3-10 and therefore continue to utilize Rule 3-10 to present condensed consolidating financial information for Holdings, URNA, the guarantor subsidiaries and the non-guarantor subsidiaries. Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes that such information would not be material to investors. However, condensed consolidating financial information is presented.

URNA covenants in the ABL facility, accounts receivable securitization facility 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, 2017, the amount available for distribution under the most restrictive of these covenants was $982. The Company’s total available capacity for making share repurchases and dividend payments includes the intercompany receivable balance of Parent. As of December 31, 2017, 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 $1.869 billion.

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

CONDENSED CONSOLIDATING BALANCE SHEETS

December 31, 2017

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
ASSETS
Cash and cash equivalents	$	—			$	23			$	—			$	329			$	—			$	—			$	352
Accounts receivable, net	—				56				—				119				1,058				—				1,233
Intercompany receivable (payable)	887				(677		)		(198		)		(124		)		—				112				—
Inventory	—				68				—				7				—				—				75
Prepaid expenses and other assets	4				219				111				2				—				(224		)		112
Total current assets	891				(311		)		(87		)		333				1,058				(112		)		1,772
Rental equipment, net	—				7,264				—				560				—				—				7,824
Property and equipment, net	41				352				32				42				—				—				467
Investments in subsidiaries	2,194				1,148				1,087				—				—				(4,429		)		—
Goodwill	—				3,815				—				267				—				—				4,082
Other intangibles, net	—				827				—				48				—				—				875
Other long-term assets	3				7				—				—				—				—				10
Total assets	$	3,129			$	13,102			$	1,032			$	1,250			$	1,058			$	(4,541	)		$	15,030
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	1			$	25			$	—			$	2			$	695			$	—			$	723
Accounts payable	—				366				—				43				—				—				409
Accrued expenses and other liabilities	—				477				17				41				1				—				536
Total current liabilities	1				868				17				86				696				—				1,668
Long-term debt	1				8,596				117				3				—				—				8,717
Deferred taxes	21				1,324				—				74				—				—				1,419
Other long-term liabilities	—				120				—				—				—				—				120
Total liabilities	23				10,908				134				163				696				—				11,924
Total stockholders’ equity (deficit)	3,106				2,194				898				1,087				362				(4,541		)		3,106
Total liabilities and stockholders’ equity (deficit)	$	3,129			$	13,102			$	1,032			$	1,250			$	1,058			$	(4,541	)		$	15,030

CONDENSED CONSOLIDATING BALANCE SHEETS

December 31, 2016

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
ASSETS
Cash and cash equivalents	$	—			$	21			$	—			$	291			$	—			$	—			$	312
Accounts receivable, net	—				38				—				96				786				—				920
Intercompany receivable (payable)	336				(137		)		(188		)		(115		)		—				104				—
Inventory	—				61				—				7				—				—				68
Prepaid expenses and other assets	5				51				—				5				—				—				61
Total current assets	341				34				(188		)		284				786				104				1,361
Rental equipment, net	—				5,709				—				480				—				—				6,189
Property and equipment, net	38				326				26				40				—				—				430
Investments in subsidiaries	1,292				1,013				978				—				—				(3,283		)		—
Goodwill	—				3,013				—				247				—				—				3,260
Other intangibles, net	—				686				—				56				—				—				742
Other long-term assets	—				6				—				—				—				—				6
Total assets	$	1,671			$	10,787			$	816			$	1,107			$	786			$	(3,179	)		$	11,988
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	1			$	25			$	—			$	3			$	568			$	—			$	597
Accounts payable	—				217				—				26				—				—				243
Accrued expenses and other liabilities	—				305				13				25				1				—				344
Total current liabilities	1				547				13				54				569				—				1,184
Long-term debt	2				7,076				111				4				—				—				7,193
Deferred taxes	20				1,805				—				71				—				—				1,896
Other long-term liabilities	—				67				—				—				—				—				67
Total liabilities	23				9,495				124				129				569				—				10,340
Total stockholders’ equity (deficit)	1,648				1,292				692				978				217				(3,179		)		1,648
Total liabilities and stockholders’ equity (deficit)	$	1,671			$	10,787			$	816			$	1,107			$	786			$	(3,179	)		$	11,988

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the Year Ended December 31, 2017

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Revenues:
Equipment rentals	$	—			$	5,253			$	—			$	462			$	—			$	—			$	5,715
Sales of rental equipment	—				494				—				56				—				—				550
Sales of new equipment	—				157				—				21				—				—				178
Contractor supplies sales	—				70				—				10				—				—				80
Service and other revenues	—				102				—				16				—				—				118
Total revenues	—				6,076				—				565				—				—				6,641
Cost of revenues:
Cost of equipment rentals, excluding depreciation	—				1,933				—				218				—				—				2,151
Depreciation of rental equipment	—				1,033				—				91				—				—				1,124
Cost of rental equipment sales	—				302				—				28				—				—				330
Cost of new equipment sales	—				134				—				18				—				—				152
Cost of contractor supplies sales	—				49				—				7				—				—				56
Cost of service and other revenues	—				51				—				8				—				—				59
Total cost of revenues	—				3,502				—				370				—				—				3,872
Gross profit	—				2,574				—				195				—				—				2,769
Selling, general and administrative expenses	103				682				—				80				38				—				903
Merger related costs	—				50				—				—				—				—				50
Restructuring charge	—				49				—				1				—				—				50
Non-rental depreciation and amortization	15				223				—				21				—				—				259
Operating (loss) income	(118		)		1,570				—				93				(38		)		—				1,507
Interest (income) expense, net	(15		)		469				3				—				12				(5		)		464
Other (income) expense, net	(543		)		596				—				45				(103		)		—				(5		)
Income (loss) before provision (benefit) for income taxes	440				505				(3		)		48				53				5				1,048
Provision (benefit) for income taxes	144				(469		)		—				12				15				—				(298		)
Income (loss) before equity in net earnings (loss) of subsidiaries	296				974				(3		)		36				38				5				1,346
Equity in net earnings (loss) of subsidiaries	1,050				76				36				—				—				(1,162		)		—
Net income (loss)	1,346				1,050				33				36				38				(1,157		)		1,346
Other comprehensive income (loss)	67				67				67				55				—				(189		)		67
Comprehensive income (loss)	$	1,413			$	1,117			$	100			$	91			$	38			$	(1,346	)		$	1,413

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the Year Ended December 31, 2016

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Revenues:
Equipment rentals	$	—			$	4,524			$	—			$	417			$	—			$	—			$	4,941
Sales of rental equipment	—				444				—				52				—				—				496
Sales of new equipment	—				129				—				15				—				—				144
Contractor supplies sales	—				68				—				11				—				—				79
Service and other revenues	—				87				—				15				—				—				102
Total revenues	—				5,252				—				510				—				—				5,762
Cost of revenues:
Cost of equipment rentals, excluding depreciation	—				1,669				—				193				—				—				1,862
Depreciation of rental equipment	—				900				—				90				—				—				990
Cost of rental equipment sales	—				265				—				27				—				—				292
Cost of new equipment sales	—				107				—				12				—				—				119
Cost of contractor supplies sales	—				47				—				8				—				—				55
Cost of service and other revenues	—				35				—				6				—				—				41
Total cost of revenues	—				3,023				—				336				—				—				3,359
Gross profit	—				2,229				—				174				—				—				2,403
Selling, general and administrative expenses	43				579				—				72				25				—				719
Restructuring charge	—				7				—				7				—				—				14
Non-rental depreciation and amortization	15				216				—				24				—				—				255
Operating (loss) income	(58		)		1,427				—				71				(25		)		—				1,415
Interest (income) expense, net	(6		)		509				3				2				8				(5		)		511
Other (income) expense, net	(471		)		521				—				40				(95		)		—				(5		)
Income (loss) before provision for income taxes	419				397				(3		)		29				62				5				909
Provision for income taxes	154				157				—				8				24				—				343
Income (loss) before equity in net earnings (loss) of subsidiaries	265				240				(3		)		21				38				5				566
Equity in net earnings (loss) of subsidiaries	301				61				21				—				—				(383		)		—
Net income (loss)	566				301				18				21				38				(378		)		566
Other comprehensive income (loss)	32				32				28				22				—				(82		)		32
Comprehensive income (loss)	$	598			$	333			$	46			$	43			$	38			$	(460	)		$	598

CONDENSED CONSOLIDATING 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	(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

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Year Ended December 31, 2017

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Net cash provided by (used in) operating activities	$	21			$	2,312			$	(3	)		$	132			$	(232	)		$	—			$	2,230
Net cash used in investing activities	(21		)		(3,575		)		—				(109		)		—				—				(3,705		)
Net cash provided by (used in) financing activities	—				1,265				3				(3		)		232				—				1,497
Effect of foreign exchange rates	—				—				—				18				—				—				18
Net increase in cash and cash equivalents	—				2				—				38				—				—				40
Cash and cash equivalents at beginning of period	—				21				—				291				—				—				312
Cash and cash equivalents at end of period	$	—			$	23			$	—			$	329			$	—			$	—			$	352

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Year Ended December 31, 2016

													Non-Guarantor Subsidiaries
	Parent				URNA				Guarantor Subsidiaries				Foreign				SPV				Eliminations				Total
Net cash provided by (used in) operating activities	$	9			$	1,774			$	(3	)		$	136			$	37			$	—			$	1,953
Net cash used in investing activities	(9		)		(844		)		—				(6		)		—				—				(859		)
Net cash (used in) provided by financing activities	—				(927		)		3				(3		)		(37		)		—				(964		)
Effect of foreign exchange rates	—				—				—				3				—				—				3
Net increase in cash and cash equivalents	—				3				—				130				—				—				133
Cash and cash equivalents at beginning of period	—				18				—				161				—				—				179
Cash and cash equivalents at end of period	$	—			$	21			$	—			$	291			$	—			$	—			$	312

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 rate	—				—				—				(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

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

UNITED RENTALS, INC.

(In millions)

Description		Balance at Beginning of Period				Acquired				Charged to Costs and Expenses				Deductions				Balance at End of Period
Year ended December 31, 2017:
Allowance for doubtful accounts		$	54			$	6			$	40			$	32		(a)	$	68
Reserve for obsolescence and shrinkage		3				2				20				18			(b)	7
Self-insurance reserve		94				6				122				122			(c)	100
Year ended December 31, 2016:
Allowance for doubtful accounts		$	55			$	—			$	24			$	25		(a)	$	54
Reserve for obsolescence and shrinkage		4				—				17				18			(b)	3
Self-insurance reserve		90				—				108				104			(c)	94
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

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.