What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-01-27 compared with 2020-01-29 · 390 added, 603 removed, 1030 unchanged (49% of the section changed)

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We have audited the accompanying consolidated balance sheets of United Rentals, Inc.

(“the Company”) as of December 31, 2019 and 2018, 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, 2019, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S.

(“the Company”) as of December 31, 2020 and 2019, 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, 2020, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.

generally accepted accounting principles.

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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 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 audits in accordance with the standards of the PCAOB.

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Description of

At December 31, 2019, the Company’s goodwill was $5.2 billion.

the Matter At December 31, 2020, the Company’s goodwill was $5.2 billion.

As discussed in Note 2 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level.

Auditing management’s annual goodwill impairment test was complex and highly judgmental due to the significant estimations required to determine the fair value of the reporting units.

In particular, the fair value estimates were sensitive to significant assumptions, including the discount rates, revenue growth rates, EBITDA margin, capital expenditures, long-term growth rates and market multiples, all of which are affected by expectations about future operational, rental industry market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s development and review of the significant assumptions described above and review of the reasonableness of the data utilized in the Company’s valuation analysis.

To test the estimated fair value of the Company’s reporting units, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends and key performance indicators, and evaluated whether changes in the company’s business would affect the significant assumptions.

In particular, the fair value estimates were sensitive to significant assumptions, including the discount rates, revenue growth rates, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin, capital expenditures, long-term growth rates and market multiples, all of which are affected by expectations about future operational, rental industry market or economic conditions, including the impact of COVID-19.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s development and review of the significant assumptions described above and review of the reasonableness of the data utilized in the Company’s valuation analysis.

To test the fair value of the Company’s reporting units, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends, including the impact of COVID-19, and key performance indicators, and evaluated whether changes in the company’s business would affect the significant assumptions.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

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Accounts receivable, net of allowance for doubtful accounts of $ 108 at December 31, 2020 and $ 103 at December 31, 2019

Inventory 125 120

Prepaid expenses and other assets 375 140

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Property and equipment, net 604 604

Goodwill 5,168 5,154

Other intangible assets, net 648 895

Operating lease right-of-use assets (note 13)

Operating lease right-of-use assets 688 669

Other long-term assets 38 19

Total assets $ 17,868 $ 18,970

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Deferred taxes 1,768 1,887

Operating lease liabilities (note 13)

Operating lease liabilities 549 533

Other long-term liabilities 138 91

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Treasury stock at cost— 42,013,509 and 39,463,472 shares at December 31, 2020 and December 31, 2019, respectively

( 3,957 ) ( 3,700 )

Accumulated other comprehensive loss ( 146 ) ( 186 )

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Year Ended December 31,

2020 2019 2018

Equipment rentals $ 7,140 $ 7,964 $ 6,940

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Total cost of revenues 5,347 5,681 4,683

Gross profit 3,183 3,670 3,364

Selling, general and administrative expenses 979 1,092 1,038

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Income before provision (benefit) for income taxes 1,139 1,514 1,476

Provision (benefit) for income taxes (note 14)

Provision (benefit) for income taxes 249 340 380

Net income $ 890 $ 1,174 $ 1,096

Basic earnings per share $ 12.24 $ 15.18 $ 13.26

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Year Ended December 31,

2020 2019 2018

Net income $ 890 $ 1,174 $ 1,096

Other comprehensive income (loss):

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Fixed price diesel swaps — 2 ( 2 )

Other comprehensive (loss) income (1)

Other comprehensive income (loss) (1) 40 51 ( 86 )

Comprehensive income $ 930 $ 1,225 $ 1,010

(1) There were no material reclassifications from accumulated other comprehensive loss reflected in other comprehensive income (loss) during the years ended December 31, 2020, 2019 or 2018.

There is no tax impact related to the foreign currency translation adjustments, as the earnings are considered permanently reinvested (see note 14 to the consolidated financial statements for further discussion addressing this determination).

There was no material tax impact related to the foreign currency translation adjustments during the years ended December 31, 2020, 2019 or 2018.

See note 14 to the consolidated financial statements for a discussion addressing our determination pertaining to the permanent reinvestment of unremitted foreign earnings.

There were no material taxes associated with other comprehensive income (loss) during the years ended December 31, 2020, 2019 or 2018.

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(In millions)

Treasury Stock

Retained Earnings

Comprehensive

Additional Treasury Stock Accumulated

Shares Amount

Capital Retained Earnings Number of

Shares Amount Comprehensive

(Loss) Income

Balance at January 1, 2018 84 $ 1 $ 2,356 $ 3,005 28 $ ( 2,105 ) $ ( 151 )

Net income 1,096

Foreign currency translation adjustments ( 84 )

Neff acquisition

Fixed price diesel swaps ( 2 )

Stock compensation expense, net 1 102

Exercise of common stock options — 2

Cumulative effect of a change in accounting for share-based payments

Shares repurchased and retired ( 52 )

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Balance at December 31, 2018 80 $ 1 $ 2,408 $ 4,101 33 $ ( 2,870 ) $ ( 237 )

(1) 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.

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(In millions)

Treasury Stock

Retained Earnings

Comprehensive

Common Stock Additional Treasury Stock Accumulated

Shares Amount Paid-in

Capital Retained Earnings Number of

Shares Amount Comprehensive

(Loss) Income

Balance at December 31, 2018 80 $ 1 $ 2,408 $ 4,101 33 $ ( 2,870 ) $ ( 237 )

Net income 1,174

Foreign currency translation adjustments 49

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(In millions)

Treasury Stock

Retained Earnings

Comprehensive

Common Stock Additional Treasury Stock Accumulated

Shares Amount Paid-in

Capital Retained Earnings Number of

Shares Amount Comprehensive

(Loss) Income (1)

Balance at December 31, 2019 74 $ 1 $ 2,440 $ 5,275 39 $ ( 3,700 ) $ ( 186 )

Net income 890

Foreign currency translation adjustments 40

Fixed price diesel swaps

Stock compensation expense, net 1 70

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Year Ended December 31,

2020 2019 2018

(In millions)

Cash Flows From Operating Activities:

$ 890 $ 1,174 $ 1,096

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

1,988 2,038 1,671

Amortization of deferred financing costs and original issue discounts

Gain on sales of rental equipment

( 332 ) ( 313 ) ( 278 )

Gain on sales of non-rental equipment

Gain on insurance proceeds from damaged equipment

( 8 ) ( 6 ) ( 6 )

Insurance proceeds from damaged equipment ( 40 ) ( 24 ) ( 22 )

Stock compensation expense, net

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Loss on repurchase/redemption of debt securities and amendment of ABL facility

Increase (decrease) in deferred taxes (note 14)

(Decrease) increase in deferred taxes ( 121 ) 204 257

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

(Increase) decrease in inventory

218 39 ( 115 )

Increase in inventory ( 5 ) ( 8 ) ( 20 )

(Increase) decrease in prepaid expenses and other assets

(Decrease) increase in accounts payable

(Decrease) increase in accrued expenses and other liabilities

( 228 ) ( 59 ) 75

Increase (decrease) in accounts payable 10 ( 86 ) 49

Increase (decrease) in accrued expenses and other liabilities 2 ( 91 ) ( 35 )

Net cash provided by operating activities

2,658 3,024 2,853

Cash Flows From Investing Activities:

Purchases of rental equipment

( 961 ) ( 2,132 ) ( 2,106 )

Purchases of non-rental equipment

( 197 ) ( 218 ) ( 185 )

Proceeds from sales of rental equipment

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Purchases of other companies, net of cash acquired

( 2 ) ( 249 ) ( 2,966 )

Purchases of investments

( 3 ) ( 3 ) ( 3 )

Net cash used in investing activities

( 223 ) ( 1,710 ) ( 4,551 )

Cash Flows From Financing Activities:

Proceeds from debt

9,260 9,260 12,178

Payments of debt

( 11,245 ) ( 9,678 ) ( 9,942 )

Payments of financing costs

( 23 ) ( 28 ) ( 24 )

Proceeds from the exercise of common stock options

Common stock repurchased

( 286 ) ( 870 ) ( 817 )

Net cash (used in) provided by financing activities ( 2,293 ) ( 1,305 ) 1,397

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Net increase (decrease) in cash and cash equivalents

150 9 ( 309 )

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

$ 202 $ 52 $ 43

Supplemental disclosure of cash flow information:

Cash paid for interest

$ 483 $ 581 $ 455

Cash paid for income taxes, net

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We rent equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and others in the United States, Canada and Europe.

As discussed in note 4 to the consolidated financial statements, with the recently completed acquisition of BakerCorp International Holdings, Inc.

With the July 2018 acquisition of BakerCorp International Holdings, Inc.

(“BakerCorp”), which added 11 European locations in France, Germany, the United Kingdom and the Netherlands to our branch network, we entered into select European markets.

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We consolidate variable interest entities if we are deemed the primary beneficiary of the entity.

The novel coronavirus (“COVID-19”) was first identified in people in late 2019.

COVID-19 spread rapidly throughout the world and, in March 2020, the World Health Organization characterized COVID-19 as a pandemic.

COVID-19 is a pandemic of respiratory disease spreading from person-to-person that poses a serious public health risk.

It has significantly disrupted supply chains and businesses around the world.

The extent and duration of the COVID-19 impact, on the operations and financial position of United Rentals, and on the global economy, is uncertain.

Business- Industry Overview and Economic Outlook" above for a discussion of market performance in 2020.

The health and safety of our employees and customers remains our top priority, and we have also engaged in extensive contingency planning to manage the business impact of the pandemic.

Prior to mid-March 2020, our results were largely in line with expectations.

We began to experience a decline in revenues in March 2020, when rental volume declined in response to shelter-in-place orders and other market restrictions.

COVID-19 is discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Summary of Significant Accounting Policies

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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.

These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectibility.

Our allowance for doubtful accounts as of December 31, 2020 included an adjustment for the estimated impact of COVID-19 on future collectibility that was not material to our financial statements.

Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers.

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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"), in 2020, we will adopt accounting guidance that eliminates the second step from the goodwill impairment test (this guidance is not expected to have a significant impact on our financial statements).

In connection with our goodwill impairment test that was conducted as of October 1, 2018, we bypassed the qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test.

As discussed below (see "Guidance Adopted in 2020-Simplifying the Test for Goodwill Impairment"), in 2020, we adopted accounting guidance that eliminated the second step from the goodwill impairment test (this guidance did not have a significant impact on our financial statements).

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.

We did not perform this second step for the goodwill impairment test conducted as of October 1, 2020 or 2019 (for 2020, because the adopted accounting guidance eliminated the second step, and, for 2019, because there was no indication that an impairment may have existed).

The first step of the impairment test requires comparing the fair value of a reporting unit with its carrying amount.

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.

In connection with our goodwill impairment test that was conducted as of October 1, 2020, we bypassed the qualitative assessment for each reporting unit and quantitatively compared the fair values of our reporting units with their carrying amounts.

We considered the impact of COVID-19 when performing the test, and it did not have a material impact on the test results.

Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Fluid Solutions Europe reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 42 percent.

As discussed in note 4 to the consolidated financial statements, in July 2018, we completed the acquisition of BakerCorp, which added 11 European locations to our branch network.

The European locations are in our Fluid Solutions Europe reporting unit.

As discussed above, in July 2018, we completed the acquisition of BakerCorp.

All of the assets in the Fluid Solutions Europe reporting unit were acquired in the BakerCorp acquisition.

The estimated fair value of our Fluid Solutions Europe reporting unit exceeded its carrying amount by 22 percent.

As all of the assets in the Fluid Solutions Europe reporting unit were recorded at fair value as of the July 2018 acquisition date, we expected the percentage by which the Fluid

Solutions Europe reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units.

As all of the assets in the Fluid Solutions Europe reporting unit were recorded at fair value as of the July 2018 acquisition date, we expected the percentage by which the Fluid Solutions Europe reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units.

In connection with our goodwill impairment test that was conducted as of October 1, 2019, we bypassed the qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test.

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Revenue Recognition

As discussed in note 3 to our consolidated financial statements, in 2018, we adopted updated FASB revenue recognition guidance ("Topic 606").

Topic 606 replaced Topic 605, which was the revenue recognition accounting standard in effect for the year ended December 31, 2017.

As discussed in note 13 to our consolidated financial statements, in 2019, we adopted updated FASB lease accounting guidance ("Topic 842").

Topic 842 replaced Topic 840, which was the lease accounting standard in effect for the years ended December 31, 2018 and 2017.

As discussed in note 3 to our consolidated financial statements, we recognize revenue in accordance with two different accounting standards:

1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic 842 (which addresses lease revenue).

As discussed in note 13 to our consolidated financial statements, in 2019, we adopted Topic 842.

Topic 842 replaced Topic 840, which was the lease accounting standard in effect for the year ended December 31, 2018.

As discussed in note 3, most of our revenue is accounted for under Topic 842.

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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.

We are also self-insured for group medical claims but purchase “stop loss” insurance as protection against any one significant loss.

We use the liability method of accounting for income taxes.

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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.

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.

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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 (the "Tax Act"), which was enacted in December 2017, had a substantial impact on our income tax benefit for the year ended December 31, 2017.

The Tax Act reduced the U.S.

federal statutory tax rate from 35 percent to 21 percent and the years ended December 31, 2019 and 2018 reflect the decreased tax rate.

See note 14 to the consolidated financial statements for further detail.

We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes have been provided on such earnings.

We continue to evaluate our plans for reinvestment or repatriation of unremitted foreign earnings and have not changed our previous indefinite reinvestment determination following the enactment of the Tax Act.

We have not repatriated funds to the U.S.

to satisfy domestic liquidity needs, nor do we anticipate the need to do so.

The Tax Act required a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments.

As discussed in note 14 to the consolidated financial statements, we completed our accounting for the tax effects of enactment of the Tax Act in 2018.

We regularly review our cash positions and our determination of permanent reinvestment of foreign earnings.

We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes were provided on such earnings prior to the fourth quarter of 2020.

In the fourth quarter of 2020, we identified $ 135 of cash in our foreign operations in excess of near-term working capital needs, and determined that this amount could no longer be considered indefinitely reinvested.

As a result, our prior assertion that all undistributed earnings of our foreign subsidiaries should be considered indefinitely reinvested has changed, and, in the fourth quarter of 2020, we recorded the immaterial taxes on a distribution of the $ 135 of cash.

We continue to expect that the remaining balance of our undistributed foreign earnings will be indefinitely reinvested.

If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S.

state income taxes.

The Tax Cuts and Jobs Act (the "Tax Act") was enacted in December 2017, and required a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments, which we primarily recognized upon adoption of the Tax Act in 2017.

As discussed in note 14 to the consolidated financial statements, we completed our accounting for the tax effects of enactment of the Tax Act in 2018.

Use of Estimates

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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.

Determining the fair value of stock option awards requires judgment, including estimating stock price volatility 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.

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New Accounting Pronouncements

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.

Different components of the guidance require modified retrospective or prospective adoption.

This guidance does not apply to receivables arising from operating leases.

As discussed in note 3 to the consolidated financial statements, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 78 percent of our total revenues for the year ended December 31, 2019 ).

We will adopt this guidance when effective, and the impact of adoption on our financial statements is not material.

The future impact of this guidance will be limited to our non-operating lease receivables, and will depend on future market conditions and forecast expectations.

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.

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.

We will adopt this guidance when effective, and it is not expected to have a significant impact on our financial statements.

Simplifying the Accounting for Income Taxes.

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Additionally, the guidance simplifies the accounting for income taxes by:

1) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, 3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements (although the entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority), 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date and 5) making minor improvements for income tax accounting related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.

the book goodwill was originally recognized and when it should be considered a separate transaction, 3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements (although the entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority), 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date and 5) making minor improvements for income tax accounting related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.

The guidance will be effective for fiscal years and interim periods beginning after December 15, 2020.

Different components of the guidance require retrospective, modified retrospective or prospective adoption, and early adoption is permitted.

We are currently assessing whether we will early adopt this guidance, and the impact on our financial statements is not currently estimable.

We will adopt this guidance when it becomes effective, in the first quarter of 2021, and the impact on our financial statements is not expected to be material.

Guidance Adopted in 2020

See note 13 to our consolidated financial statements for a discussion of our lease accounting following our adoption of an updated FASB lease accounting standard in 2019.

Measurement of Credit Losses on Financial Instruments.

In June 2016, the FASB issued guidance that requires companies to present certain financial assets net of the amount expected to be collected.

Trade receivables (as noted below, excluding receivables arising from operating lease revenues) are the only material financial asset we have that is impacted by this guidance.

This guidance does not apply to receivables arising from operating lease revenues.

As discussed in note 3 to the consolidated financial statements, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 77 percent of our total revenues for the year ended December 31, 2020).

We adopted this guidance in 2020, and the impact of adoption on our financial statements was not material.

See note 3 (see "Receivables and contract assets and liabilities") for further discussion of our receivables.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

In March 2020, the FASB issued guidance that provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued.

We adopted this guidance in 2020, and the impact of adoption on our financial statements was not material.

The expedients and exceptions in this guidance are optional, and we are evaluating the potential future financial statement impact of any such expedient or exception that we may elect to apply.

Simplifying the Test for Goodwill Impairment .

In January 2017, the Financial Accounting Standards Board ("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.

The new guidance eliminates the second step from the goodwill impairment test.

The guidance requires prospective adoption.

We adopted the guidance for the goodwill impairment test that we conducted as of October 1, 2020, and adoption of the guidance did not have a significant impact on our financial statements.

Revenue Recognition

Revenue Recognition Accounting Standards

In May 2014, and in subsequent updates, the FASB issued guidance ("Topic 606") to clarify the principles for recognizing revenue.

Topic 606 replaced Topic 605, which was the revenue recognition standard in effect through December 31, 2017, as reflected in the table below.

We adopted Topic 606 on January 1, 2018.

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.

In March 2016, the FASB issued updated lease accounting guidance ("Topic 842"), as explained further in note 13 to the consolidated financial statements.

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Topic 842 is an update to Topic 840, which was the lease accounting standard in place through December 31, 2018.

As reflected below, most of our revenue is accounted for under Topic 842 (Topic 840 for 2018 and 2017).

As reflected below, most of our revenue is accounted for under Topic 842 (Topic 840 for 2018).

There were no significant changes to our revenue accounting upon adoption of Topic 842.

We recognize revenue in accordance with two different accounting standards:

1) Topic 606 and 2) Topic 842.

1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic 842 (which, as discussed above, addresses lease revenue).

Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties.

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Our contracts with customers generally do not include multiple performance obligations.

We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer.

We recognize revenue when we satisfy a performance obligation by transferring control over a

product or service to a customer.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services.

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Year Ended December 31,

2020 2019 2018

Topic 842 Topic 606 Total Topic 842 Topic 606 Total Topic 840 Topic 606 Total

Owned equipment rentals $ 6,056 $ — $ 6,056 $ 6,777 $ — $ 6,777 $ 5,946 $ — $ 5,946

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Delivery and pick-up — 506 506 — 564 564 — 477 477

Other 338 98 436 356 112 468 287 92 379

Total ancillary and other rental revenues 338 604 942 356 676 1,032 287 569 856

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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.

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.

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).

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).

We record amounts billed to customers in excess of recognizable revenue as deferred revenue on our balance sheet.

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We manage credit risk associated with our accounts receivables at the customer level.

Because the same customers generate the revenues that are accounted for under both Topic 606 and Topic 842, the discussions below on credit risk and our allowances for doubtful accounts address receivables arising from revenues from both Topic 606 (Topic 605 for 2017) and Topic 842 (Topic 840 for 2018 and 2017).

Concentration of credit risk with respect to our 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 2020, 2019, and 2018.

Our customer with the largest receivable balance represented approximately one percent of total receivables at December 31, 2019 and 2018 .

Our customer with the largest receivable balance represented approximately two percent and one percent of total receivables at December 31, 2020 and 2019, respectively.

We manage credit risk through credit approvals, credit limits and other monitoring procedures.

Our allowances for doubtful accounts reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience.

Our allowances for doubtful accounts reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts

that affect collectibility.

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.

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, 2019 , 2018 and 2017 , we recognized total additions, excluding acquisitions, to our allowances for doubtful accounts of $ 42 , $ 45 and $ 40 , respectively, primarily 1) as a reduction to equipment rental revenue (primarily for 2019 doubtful accounts associated with lease revenues) or 2) as bad debt expense within selling, general and administrative expenses in our consolidated statements of income.

See the table below for a rollforward of our allowance for doubtful accounts.

In 2020, we adopted accounting guidance that requires companies to present certain financial assets net of the amount expected to be collected.

This 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.

Our allowance for doubtful accounts as of December 31, 2020 included an adjustment for the estimated impact of COVID-19 on future collectibility that was not material to our financial statements.

Trade receivables are the only material financial asset we have that is impacted by this guidance, which does not apply to receivables arising from operating lease revenues.

Substantially all of our non-lease trade receivables are due in one year or less.

As discussed above, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 77 percent of our total revenues for the year ended December 31, 2020), and these revenues account for corresponding portions of the $ 1.315 billion of net accounts receivable and the associated allowance for doubtful accounts of $ 108 reported on our consolidated balance sheet as of December 31, 2020).

During the year ended December 31, 2020, we recognized total bad debt expenses for our non-lease trade receivables, within selling, general and administrative expenses on our consolidated statement of income, of $ 9 associated with our allowance for doubtful accounts.

Adoption of this guidance did not materially impact 1) net accounts receivable or the associated allowance for doubtful accounts as reported on our consolidated balance sheet as of December 31, 2020 or 2) total bad debt expenses recognized associated with our allowance for doubtful accounts for the year ended December 31, 2020.

As discussed above, most of our equipment rental revenue is accounted for under Topic 842.

The customers that are responsible for the remaining revenue that is accounted for under Topic 606 are generally the same customers that rent our equipment.

We manage credit risk associated with our accounts receivables at the customer level.

The rollforward of our allowance for doubtful accounts (in total, and associated with revenues arising from both Topic 606 and Topic 842/840) is shown below.

Year ended December 31,

2020 2019 2018

Beginning balance $ 103 $ 93 $ 68

Acquired — 2 14

Charged to costs and expenses (1) 9 8 45

Charged to revenue (2) 25 34 —

Deductions (3) ( 29 ) ( 34 ) ( 34 )

Ending balance $ 108 $ 103 $ 93

_________________

(1) Reflects bad debt expenses recognized within selling, general and administrative expenses (associated with Topic 606 revenues).

(2) Primarily reflects doubtful accounts associated with lease revenues that were recognized as a reduction to equipment rentals revenue (primarily associated with Topic 842 revenues).

We adopted Topic 842 in 2019 using a transition method that does not require application to periods prior to adoption.

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

We do no t have material contract assets, or impairment losses associated therewith, or material contract liabilities, associated with contracts with customers.

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We monitor and review our estimated standalone selling prices on a regular basis.

BakerCorp Acquisition

In July 2018, we completed the acquisition of BakerCorp.

BakerCorp was a leading multinational provider of tank, pump, filtration and trench shoring rental solutions for a broad range of industrial and construction applications.

BakerCorp had approximately 950 employees, and its operations were primarily concentrated in the United States and Canada, where it had 46 locations.

BakerCorp also had 11 locations in France, Germany, the United Kingdom and the Netherlands.

BakerCorp had annual revenues of approximately $ 295 .

The acquisition:

• Augmented our bundled solutions for fluid storage, transfer and treatment;

• Expanded our strategic account base;

• Provided a significant opportunity to increase revenue and enhance customer service by cross-selling to our broader customer base.

The aggregate consideration paid was approximately $ 720 .

The acquisition and related fees and expenses were funded through drawings on our ABL facility.

The following table summarizes the fair values of the assets acquired and liabilities assumed.

Accounts receivable, net of allowance for doubtful accounts (1)

Rental equipment

Property and equipment

Intangibles (2)

Total identifiable assets acquired

Current liabilities

Deferred taxes

Total liabilities assumed

Net identifiable assets acquired

Net assets acquired

(1) The fair value of accounts receivables acquired was $ 74 , and the gross contractual amount was $ 81 .

We estimated that $ 7 would be uncollectible.

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

Customer relationships

Trade names and associated trademarks

(3) All of the goodwill was assigned to our trench, power and fluid solutions segment.

The level of goodwill that resulted from the acquisition is primarily reflective of BakerCorp's going-concern value, the value of BakerCorp's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets.

$ 6 of goodwill is expected to be deductible for income tax purposes.

The years ended December 31, 2019 and 2018 include BakerCorp acquisition-related costs 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.

Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired BakerCorp locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of BakerCorp since the acquisition date.

The impact of the BakerCorp acquisition on our equipment rentals revenue is primarily reflected in the increase in average OEC of 17.7 percent for the year ended December 31, 2019 (such increase also includes the impact of the acquisition of BlueLine discussed below).

BlueLine Acquisition

In October 2018, we completed the acquisition of BlueLine.

BlueLine was one of the ten largest equipment rental companies in North America and served customers in the construction and industrial sectors with a focus on mid-sized and local accounts.

BlueLine had 114 locations and over 1,700 employees based in 25 U.S.

states, Canada and Puerto Rico.

BlueLine had annual revenues of approximately $ 786 .

The acquisition:

• Expanded our equipment rental capacity in many of the largest metropolitan areas in North America, including both U.S.

coasts, the Gulf South and Ontario;

• Provided a well-diversified customer base with a balanced mix of commercial construction and industrial accounts;

• Added more mid-sized and local accounts to our customer base;

• Provided a significant opportunity to increase revenue and enhance customer service by cross-selling to our broader customer base.

The aggregate consideration paid was approximately $ 2.069 billion .

The acquisition and related fees and expenses were funded through borrowings under a new $ 1 billion senior secured term loan credit facility (the “term loan facility”) and the issuance of $ 1.1 billion principal amount of 6 1 / 2 percent Senior Notes due 2026.

The following table summarizes the fair values of the assets acquired and liabilities assumed.

Accounts receivable, net of allowance for doubtful accounts (1)

Rental equipment

Property and equipment

Intangibles (customer relationships) (2)

Total identifiable assets acquired

Short-term debt and current maturities of long-term debt (3)

Current liabilities

Long-term debt (3)

Other long-term liabilities

Total liabilities assumed

Net identifiable assets acquired

Net assets acquired

(1) The fair value of accounts receivables acquired was $ 117 , and the gross contractual amount was $ 125 .

We estimated that $ 8 would be uncollectible.

(2) The customer relationships are being amortized over a 5 year life.

(3) The acquired debt reflects finance 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 BlueLine's going-concern value, the value of BlueLine's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets.

$ 25 of goodwill is expected to be deductible for income tax purposes.

The years ended December 31, 2019 and 2018 include BlueLine acquisition-related costs 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 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.

Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired BlueLine locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of BlueLine since the acquisition date.

The impact of the BlueLine acquisition on our equipment rentals revenue is primarily reflected in the increase in average OEC of 17.7 percent for the year ended December 31, 2019 (such increase also includes the impact of the acquisition of BakerCorp discussed above).

Pro forma financial information

The pro forma information below gives effect to the BakerCorp and BlueLine acquisitions as if they had been completed on January 1, 2018 (“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 table below presents unaudited pro forma consolidated income statement information as if BakerCorp and BlueLine had been included in our consolidated results for the year ended December 31, 2018.

December 31, 2018

United Rentals

Historic/pro forma revenues

Historic/combined pretax income (loss)

Pro forma adjustments to pretax income (loss):

Impact of fair value mark-ups/useful life changes on depreciation (1)

Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)

Intangible asset amortization (3)

Interest expense (4)

Elimination of historic interest (5)

Elimination of merger related costs (6)

Restructuring charges (7)

Pro forma pretax income

(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 BakerCorp and BlueLine acquisitions.

(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the BlueLine acquisition.

BakerCorp did not historically recognize a material amount of rental equipment sales, and accordingly no adjustment was required for BakerCorp.

(3) The intangible assets acquired in the BakerCorp and BlueLine acquisitions were amortized.

(4) As discussed above, we issued debt to partially fund the BakerCorp and BlueLine acquisitions.

Interest expense was adjusted to reflect these changes in our debt portfolio.

(5) Historic interest, including losses on repurchase/redemption of debt securities, on debt that is not part of the combined entity was eliminated.

(6) Merger related costs primarily comprised of financial and legal advisory fees associated with the BakerCorp and BlueLine acquisitions were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date.

The adjustment for BakerCorp includes $ 57 of merger related costs recognized by BakerCorp prior to the acquisition.

The adjustment for BlueLine includes $ 142 of merger related costs recognized by BlueLine prior to the acquisition.

(7) As discussed in note 6 to the consolidated financial statements, in 2019, we completed a restructuring program associated with the BakerCorp and BlueLine acquisitions.

The adjustments above reflect the restructuring charges recognized under this program.

The restructuring charges reflected in our consolidated statements of income also include non acquisition-related restructuring charges, as discussed in note 6 .

Segment Information

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We evaluate segment performance primarily based on segment equipment rentals gross profit.

lifts and scissor lifts and iii) general tools and light equipment, such as pressure washers, water pumps and power tools.

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.

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i) the Trench Safety region, ii) the Power and HVAC region, iii) the Fluid Solutions region and iv) the Fluid Solutions Europe region.

The trench, power and fluid solutions segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies.

The trench, power and fluid solutions

segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies.

This segment operates throughout the United States and in Canada and Europe.

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Year Ended December 31,

2020 2019 2018

Primarily rented by our general rentals segment:

General construction and industrial equipment

43 % 43 % 44 %

Aerial work platforms

27 % 28 % 28 %

General tools and light equipment

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The following table sets forth financial information by segment as of and for the years ended December 31, 2020, 2019 and 2018:

power and fluid solutions

rentals Trench,

power and fluid solutions Total

Equipment rentals $ 5,472 $ 1,668 $ 7,140

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Capital expenditures 969 189 1,158

Total assets $ 15,051 $ 2,817 $ 17,868

Equipment rentals $ 6,202 $ 1,762 $ 7,964

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Capital expenditures 1,967 383 2,350

Total assets $ 16,036 $ 2,934 $ 18,970

Equipment rentals $ 5,550 $ 1,390 $ 6,940

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Capital expenditures 1,980 311 2,291

Total assets $ 15,597 $ 2,536 $ 18,133

Equipment rentals gross profit is the primary measure management reviews to make operating decisions and assess segment performance.

The following is a reconciliation of equipment rentals gross profit to income before provision (benefit) for income taxes:

The following is a reconciliation of equipment rentals gross profit to income before provision for income taxes:

Year Ended December 31,

2020 2019 2018

Total equipment rentals gross profit

$ 2,719 $ 3,207 $ 2,963

Gross profit from other lines of business

Selling, general and administrative expenses

( 979 ) ( 1,092 ) ( 1,038 )

Merger related costs

— ( 1 ) ( 36 )

Restructuring charge

( 17 ) ( 18 ) ( 31 )

Non-rental depreciation and amortization

( 387 ) ( 407 ) ( 308 )

Interest expense, net

( 669 ) ( 648 ) ( 481 )

Other income, net

Income before provision (benefit) for income taxes

Income before provision for income taxes $ 1,139 $ 1,514 $ 1,476

We operate in the United States, Canada and Europe.

As discussed in note 4 to the consolidated financial statements, in July 2018, we completed the acquisition of BakerCorp, which allowed for our entry into select European markets.

In July 2018, we completed the acquisition of BakerCorp, which allowed for our entry into select European markets.

Our presence in Europe is limited, and the foreign information in the table below primarily reflects Canada.

The following table presents geographic area information for the years ended December 31, 2020, 2019 and 2018, except for balance sheet information, which is presented as of December 31, 2020 and 2019:

Foreign Total

Equipment rentals $ 6,543 $ 597 $ 7,140

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Total revenue $ 7,387 $ 660 $ 8,047

Restructuring Charges

Restructuring and Asset Impairment Charges

Restructuring charges primarily include severance costs associated with headcount reductions, as well as branch closure charges.

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We only include such costs that are part of a restructuring program as restructuring charges.

Since the first such program was initiated in 2008, we have completed four restructuring programs and have incurred total restructuring charges of $ 333 .

Since the first such program was initiated in 2008, we have completed five restructuring programs and have incurred total restructuring charges of $ 350 .

Closed Restructuring Programs

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As of December 31, 2020, we have incurred total restructuring charges under the closed restructuring programs of $ 334 , comprised of $ 193 of branch closure charges and $ 141 of severance and other costs.

BakerCorp/BlueLine Restructuring Program

In the third quarter of 2018, we initiated a restructuring program following the closing of the BakerCorp acquisition discussed in note 4 to the consolidated financial statements.

The restructuring program also includes actions undertaken associated with the BlueLine acquisition discussed in note 4 to the consolidated financial statements.

We completed this restructuring program in 2019.

The table below provides certain information concerning our restructuring charges under the BakerCorp/BlueLine restructuring program:

2020-2021 Cost Savings Restructuring Program

In the fourth quarter of 2019, we initiated a restructuring program associated with the consolidation of certain common functions, the relocation of our shared-service facilities and certain other cost reduction measures.

We expect to complete the restructuring program in the first half of 2021.

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 2020-2021 Cost Savings restructuring program:

Description Beginning

Reserve Balance

Expenses (1) Payments

and Other Ending

Reserve Balance

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Severance and other — 8 ( 6 ) 2

Year ended December 31, 2019:

Branch closure charges

Severance and other

Total $ — $ 15 $ ( 10 ) $ 5

________________

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The restructuring charges are not allocated to our segments.

As of December 31, 2019 , we have incurred total restructuring charges under the BakerCorp/BlueLine restructuring program of $ 44 , comprised of $ 20 of branch closure charges and $ 24 of severance and other costs.

2020-2021 Cost Savings Restructuring Program

We expect to complete the restructuring program in the first half of 2021.

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.

As of December 31, 2019 , we have not recognized material costs under this program, and the liability balance associated with the program is not material.

As of December 31, 2020, we have incurred total restructuring charges under the 2020-2021 Cost Savings restructuring program of $ 16 , comprised of $ 8 of branch closure charges and $ 8 of severance and other costs.

Asset Impairment Charges

In addition to the restructuring charges discussed above, during the year ended December 31, 2020, we recorded asset impairment charges of $ 36 primarily in our general rentals segment.

The asset impairment charges, which were not related to COVID-19, are primarily reflected in depreciation of rental equipment in our consolidated statements of income and principally relate to the discontinuation of certain equipment programs.

There were no material asset impairment charges during the years ended December 31, 2019 and 2018.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

Equipment (1) $ 300 $ —

Insurance 18 12

Advertising reimbursements (2) 11 27

Income taxes 4 51

Other (3) 42 50

Prepaid expenses and other assets $ 375 $ 140

_________________

(1) Reflects refundable deposits on expected rental equipment purchases pursuant to advanced purchase agreements.

Such deposits are presented as a component of our cash flows from operations.

We expect to purchase and receive the equipment in 2021.

(2) Reflects reimbursements due for advertising that promotes a vendor’s products or services.

See note 2 ("Advertising Expense") for further detail.

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

Rental Equipment

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Rental equipment

$ 14,216 $ 14,852

Less accumulated depreciation

( 5,511 ) ( 5,065 )

Rental equipment, net (1) $ 8,705 $ 9,787

_________________

(1) As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan, which contributed to the year-over-year decrease in net rental equipment.

Property and Equipment

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Less accumulated depreciation and amortization

( 788 ) ( 708 )

Property and equipment, net

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The following table presents the changes in the carrying amount of goodwill for each of the three years in the period ended December 31, 2020:

General rentals

power and fluid solutions

General rentals Trench,

power and fluid solutions Total

Balance at January 1, 2018 (1) $ 3,607 $ 475 $ 4,082

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(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.

For additional detail on the acquisitions of BakerCorp and BlueLine in July 2018 and October 2018, respectively, which accounted for most of the 2018 goodwill related to acquisitions, see note 4 to our consolidated financial statements.

The acquisitions of NES and Neff accounted for most of the 2017 goodwill related to acquisitions.

(3) The acquisitions of BakerCorp and BlueLine in July 2018 and October 2018, respectively, accounted for most of the 2018 goodwill related to acquisitions.

Other intangible assets were comprised of the following at December 31, 2020 and 2019:

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Weighted-Average Remaining

Amortization Period

Non-compete agreements

Customer relationships

Trade names and associated trademarks

Amortization Period Gross

Amount Accumulated

Amortization Net

Non-compete agreements 35 months $ 12 $ 6 $ 6

Customer relationships 6 years $ 2,252 $ 1,614 $ 638

Trade names and associated trademarks 4 years $ 8 $ 4 $ 4

December 31, 2019

Weighted-Average Remaining

Amortization Period

Non-compete agreements

Customer relationships

Trade names and associated trademarks

Amortization Period Gross

Amount Accumulated

Non-compete agreements 43 months $ 24 $ 14 $ 10

Customer relationships 7 years $ 2,246 $ 1,364 $ 882

Trade names and associated trademarks 4 years $ 5 $ 2 $ 3

Amortization expense for other intangible assets was $ 250 , $ 290 and $ 213 for the years ended December 31, 2020, 2019 and 2018, respectively.

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Operating lease liability 178 178

Other (3) 77 94

Accrued expenses and other liabilities

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See note 3 for additional detail.

As discussed in note 13 , we adopted an updated lease accounting standard on January 1, 2019, which resulted in recognition of operating lease liabilities (the amount reflected above represents the current portion of the liability).

We adopted the new standard using a transition method that does not require application to periods prior to adoption.

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

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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 ABL, accounts receivable securitization and term loan facilities and finance/capital leases (the classification of such leases changed upon adoption of a new lease accounting standard, as explained further in note 13 to the consolidated financial statements) approximated their book values as of December 31, 2019 and 2018 .

The fair values of our ABL, accounts receivable securitization and term loan facilities and finance leases approximated their

book values as of December 31, 2020 and 2019.

The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of December 31, 2020 and 2019 have been calculated based upon available market information, and were as follows:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Value Carrying

Senior notes $ 6,965 $ 7,470 $ 7,755 $ 8,176

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

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Term loan facility expiring 2025 (1) 971 979

4 5 / 8 percent Senior Secured Notes due 2023 (2)

5 1 / 2 percent Senior Notes due 2025 (3)

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5 1 / 2 percent Senior Notes due 2027

3 7 / 8 percent Senior Secured Notes due 2027

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5 1 / 4 percent Senior Notes due 2030

4 percent Senior Notes due 2030 (5)

3 7 / 8 percent Senior Notes due 2031 (6)

Finance leases 135 127

Capital leases (7)

Total debt 9,682 11,428

Less short-term portion ( 704 ) ( 997 )

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The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.

Accounts receivable securitization facility

Term loan facility

ABL facility Accounts receivable securitization facility Term loan facility

Borrowing capacity, net of letters of credit

$ 2,705 $ 166 $ —

Letters of credit

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Weighted-average interest rate on average debt outstanding

1.9 % 1.8 % 2.2 %

Maximum month-end debt outstanding

In November 2019, URNA redeemed all of its 4 5 / 8 percent Senior Secured Notes.

Upon redemption, we recognized a loss of $ 29 in interest expense, net.

The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.

In May 2019, URNA redeemed all of its 5 3 / 4 percent Senior Notes.

Upon redemption, we recognized a loss of $ 32 in interest expense, net.

The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.

In November 2019, URNA issued $ 750 aggregate principal amount of 3 7 / 8 percent Senior Secured Notes due 2027.

The proceeds were primarily used to partially finance the redemption of 4 5 / 8 percent Senior Secured Notes discussed above.

See below for additional detail on the issued debt.

1,494 811 988

(2) The decrease in the outstanding debt under the ABL facility since December 31, 2019 primarily reflects the use of proceeds from operations to reduce borrowings under the ABL facility.

As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan, and, in 2020, capital expenditures

decreased significantly year-over-year.

The decreased capital expenditures contributed to our ability to use proceeds from operations to reduce borrowings under the ABL facility.

(3) URNA redeemed all of its 5 1 / 2 percent Senior Notes due 2025 and 6 1 / 2 percent Senior Notes due 2026 in August 2020, and redeemed all of its 4 5 / 8 percent Senior Notes due 2025 in October 2020.

During the year ended December 31, 2020, we recognized an aggregate debt redemption loss, in interest expense, net in our consolidated statement of income, of $ 183 (comprised of $ 27 , $ 132 and $ 24 for the 5 1 / 2 percent Senior Notes due 2025, 6 1 / 2 percent Senior Notes due 2026 and 4 5 / 8 percent Senior Notes due 2025, respectively).

The loss reflects the difference between the net carrying amount and the total purchase price of the redeemed notes.

Prior to redeeming the notes, we considered the impact of COVID-19 on liquidity, and assessed our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment.

(4) URNA separately issued 4 7 / 8 percent Senior Notes in August 2017 and in September 2017.

Following the issuances, we consummated an exchange offer pursuant to which most 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.

In May 2019, URNA issued $ 750 aggregate principal amount of 5 1 / 4 percent Senior Notes due 2030.

The proceeds were primarily used to partially finance the redemption of 5 3 / 4 percent Senior Notes discussed above.

(5) In February 2020, URNA issued $ 750 aggregate principal amount of 4 percent Notes due 2030.

See below for additional detail on the issued debt.

As discussed in note 13 to the consolidated financial statements, we adopted an updated lease accounting standard on January 1, 2019.

Upon adoption of the new standard, the leases that were previously classified as capital leases through December 31, 2018 were classified as finance leases.

There were no significant changes to the accounting upon this change in classification.

(6) In August 2020, URNA issued $ 1.100 billion aggregate principal amount of 3 7 / 8 percent Senior Notes due 2031.

See below for additional detail on the issued debt.

Short-term debt

As of December 31, 2020, our short-term debt primarily reflects $ 634 of borrowings under our accounts receivable securitization facility.

See the table above for financial information associated with the accounts receivable securitization facility.

Accounts receivable securitization facility .

In 2019, the accounts receivable securitization facility was amended, primarily to extend the maturity date.

In 2020, the accounts receivable securitization facility was amended, primarily to (a) extend the maturity date, (b) reduce the size of the facility and (c) adjust the financial tests (including the method of calculation) relating to (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding.

The amended facility expires on June 25, 2021, has a facility size of $ 800 , and may be extended on a 364 -day basis by mutual agreement of the Company and the lenders under the facility.

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• 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, 2019 , there were $ 1.046 billion of receivables, net of applicable reserves, in the collateral pool;

As of December 31, 2020, there were $ 922 of receivables, net of applicable reserves, in the collateral pool;

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

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• 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).

See the table above for financial information associated with the accounts receivable securitization facility.

Long-term debt

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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.

Borrowings under the credit agreement by URNA’s subsidiaries in Europe and Puerto Rico are guaranteed by Holdings, URNA, URNA’s Canadian

subsidiaries and, subject to certain exceptions, our domestic subsidiaries and secured by substantially all the assets of our U.S.

Borrowings under the credit agreement by URNA’s subsidiaries in Europe and Puerto Rico are guaranteed by Holdings, URNA, URNA’s Canadian subsidiaries and, subject to certain exceptions, our domestic subsidiaries and secured by substantially all the assets of our U.S.

subsidiaries (other than real property and certain accounts receivable) and substantially all the assets of URNA’s Canadian subsidiaries.

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5 7 / 8 percent Senior Notes due 2026.

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 .

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.

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5 1 / 2 percent Senior Notes due 2027.

In October 2018, URNA issued $ 1.1 billion aggregate principal amount of 6 1 / 2 percent Senior Notes (the “6 1 / 2 percent Notes”) which are due December 15, 2026.

The net proceeds from the issuance were approximately $ 1.089 billion (after deducting offering expenses).

The 6 1 / 2 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

The 6 1 / 2 percent Notes may be redeemed on or after December 15, 2021, at specified redemption prices that range from 103.250 percent in 2021, to 100 percent in 2024 and thereafter, in each case, plus accrued and unpaid interest, if any.

The indenture governing the 6 1 / 2 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 6 1 / 2 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 6 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.

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”).

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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.

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.

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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.

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The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 1 / 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.

4 percent Senior Notes due 2030.

In February 2020, URNA issued $ 750 aggregate principal amount of 4 percent Notes which are due July 15, 2030.

The net proceeds from the issuance were approximately $ 741 (after deducting offering expenses).

The 4 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

The 4 percent Notes may be redeemed on or after July 15, 2025, at specified redemption prices that range from 102.000 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any.

In addition, at any time on or prior to July 15, 2023, up to 40 percent of the aggregate principal amount of the 4 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 104.000 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any.

The indenture governing the 4 percent Notes contains certain restrictive

covenants, including, among others, limitations on (i) liens and (ii) mergers and consolidations, 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 requirements to provide subsidiary guarantees and to make an offer to repurchase the notes upon the occurrence of a change of control will not apply to URNA and its restricted subsidiaries during any period when the 4 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 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.

3 7 / 8 percent Senior Notes due 2031.

In August 2020, URNA issued $ 1.100 billion aggregate principal amount of 3 7 / 8 percent Senior Notes (the “3 7 / 8 percent Notes”) which are due February 15, 2031.

The net proceeds from the issuance were approximately $ 1.087 billion (after deducting offering expenses).

The 3 7 / 8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

The 3 7 / 8 percent Notes may be redeemed on or after August 15, 2025, at specified redemption prices that range from 101.938 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any.

In addition, at any time on or prior to August 15, 2023, up to 40 percent of the aggregate principal amount of the 3 7 / 8 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 103.875 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any.

The indenture governing the 3 7 / 8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens and (ii) mergers and consolidations, 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 requirements to provide subsidiary guarantees and to make an offer to repurchase the notes upon the occurrence of a change of control will not apply to URNA and its restricted subsidiaries during any period when the 3 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 3 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.

Loan Covenants and Compliance

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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, 2020 are as follows:

Thereafter 7,025

Total $ 9,755

Adoption of Accounting Standards Codification (“ASC”) Topic 842, “Leases”

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See note 3 for a discussion of our revenue accounting (such discussion includes lessor disclosures required under Topic 842).

The adoption of Topic 842 had a material impact on our consolidated balance sheet due to the recognition of right-of-use (“ROU”) assets and lease liabilities, as discussed further below.

The adoption of Topic 842 resulted in the recognition of right-of-use (“ROU”) assets and lease liabilities on our consolidated balance sheet, as discussed further below.

The adoption of Topic 842 did not have a material impact on our consolidated income statement (as noted above, although a significant portion of our revenue is accounted for under Topic 842 following adoption, there were no significant changes to our revenue accounting upon adoption) or our consolidated cash flow statement.

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The primary leases we enter into with initial terms of 12 months or less are for equipment that we rent from vendors and then rent to our customers.

We generate sublease revenue from such leases

that we refer to as "re-rent revenue" as discussed in note 3 to the consolidated financial statements.

We generate sublease revenue from such leases that

we refer to as "re-rent revenue" as discussed in note 3 to the consolidated financial statements.

Apart from the re-rent revenue discussed in note 3, we do not generate material sublease income.

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The tables below present financial information associated with our leases.

This information is only presented as of, and for the year ended, December 31, 2019 because, as noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.

Classification

December 31, 2019

Operating lease assets

Operating lease right-of-use assets

Finance lease assets

Rental equipment

This information is only presented as of, and for the years ended, December 31, 2020 and December 31, 2019 because, as noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.

Classification December 31, 2020 December 31, 2019

Operating lease assets Operating lease right-of-use assets $ 688 $ 669

Finance lease assets Rental equipment 295 286

Less accumulated depreciation ( 86 ) ( 89 )

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Non-rental vehicles 8 8

Buildings 19 18

Less accumulated depreciation and amortization ( 11 ) ( 15 )

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Total leased assets 913 877

Accrued expenses and other liabilities

Short-term debt and current maturities of long-term debt

Operating lease liabilities

Long-term debt

Operating Accrued expenses and other liabilities 178 178

Finance Short-term debt and current maturities of long-term debt 60 58

Operating Operating lease liabilities 549 533

Finance Long-term debt 75 69

Total lease liabilities $ 862 $ 838

Classification

Year Ended December 31, 2019

Operating lease cost (1)

Cost of equipment rentals, excluding depreciation (1)

Lease cost Classification Year Ended December 31, 2020 Year Ended December 31, 2019

Operating lease cost (1) Cost of equipment rentals, excluding depreciation (1) $ 366 $ 370

Selling, general and administrative expenses 10 10

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Finance lease cost

Amortization of leased assets

Depreciation of rental equipment

Amortization of leased assets Depreciation of rental equipment 31 28

Non-rental depreciation and amortization 1 2

Interest on lease liabilities

Interest expense, net

Interest on lease liabilities Interest expense, net 5 6

Sublease income (2) ( 142 ) ( 157 )

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(1) Includes variable lease costs, which are immaterial.

Cost of equipment rentals, excluding depreciation for the year ended December 31, 2019 includes $ 142 of short-term lease costs associated with equipment that we rent from vendors and then rent to our customers, as discussed further above.

Cost of equipment rentals, excluding depreciation for the years ended December 31, 2020 and 2019 includes $ 124 and $ 142 , respectively, of short-term lease costs associated with equipment that we rent from vendors and then rent to our customers, as discussed further above.

Apart from these costs, short-term lease costs are immaterial.

(2) Primarily reflects re-rent revenue as discussed further above.

Maturity of lease liabilities (as of December 31, 2019)

Operating leases (1)

Finance leases (2)

Maturity of lease liabilities (as of December 31, 2020) Operating leases (1) Finance leases (2)

2021 $ 205 $ 63

Thereafter 113 3

Total 826 145

Less amount representing interest ( 99 ) ( 10 )

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(2) The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate.

Lease term and discount rate

December 31, 2019

Lease term and discount rate December 31, 2020 December 31, 2019

Weighted-average remaining lease term (years)

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Finance leases 3.4 % 4.0 %

Other information

Year Ended December 31, 2019

Other information Year Ended December 31, 2020 Year Ended December 31, 2019

Cash paid for amounts included in the measurement of lease liabilities

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There were no significant changes to the accounting upon this change in classification.

The following table presents historic financial statement information for our leases (accounted for under Topic 840) for the years ended December 31, 2018 and 2017 , except for balance sheet information, which is presented as of December 31, 2018 :

The following table presents historic financial statement information for our leases (accounted for under Topic 840) for the year ended December 31, 2018:

Capital leases

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Non-rental depreciation and amortization 1

Rental equipment

Less accumulated depreciation

Rental equipment, net

Property and equipment, net:

Non-rental vehicles

Less accumulated depreciation and amortization

Property and equipment, net

Capital lease obligations

Operating leases

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_________________

(1) Rent expense on non-cancelable operating leases does not include short-term lease costs associated with equipment that we rent from vendors and then rent to our customers (which is a component of the 2019 operating lease costs under Topic 842 as reflected in the table above).

Under Topic 840, rental payments under leases with terms of a month or less that were not renewed are not included in rent expense, and we excluded such expenses because of the short-term duration of the arrangements under which we rented equipment from vendors and then rented such equipment to our customers.

The amount of such rentals was $ 121 and $ 94 for the years ended December 31, 2018 and 2017 , respectively.

The Tax Act was enacted in December 2017.

The Tax Act reduced the U.S.

federal corporate tax rate from 35 percent to 21 percent, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign earnings.

We completed our accounting for the tax effects of enactment of the Tax Act in 2018.

During the year ended December 31, 2017, we recognized the reasonably estimated (i) effects on our existing deferred tax balances and (ii) one-time transition tax.

During the year ended December 31, 2018, we finalized the accounting for the enactment of the Tax Act.

The following table presents the impact of the accounting for the enactment of the Tax Act on our provision (benefit) for income taxes for the years ended December 31, 2018 and 2017:

(1) Rent expense on non-cancelable operating leases does not include short-term lease costs associated with equipment that we rent from vendors and then rent to our customers (which is a component of the 2020 and 2019 operating lease costs under Topic 842 as reflected in the table above).

Under Topic 840, rental payments under leases with terms of a month or less that were not renewed are not included in rent expense, and we excluded such expenses because of the short-term duration of

the arrangements under which we rented equipment from vendors and then rented such equipment to our customers.

The amount of such rentals was $ 121 for the year ended December 31, 2018.

The components of the provision (benefit) for income taxes for each of the three years in the period ended December 31, 2020 are as follows:

Year ended December 31,

Revaluation of deferred tax balances (1)

One-time transition tax (2)

Total provision (benefit) for income taxes impact

2020 2019 2018

Reflects the revaluation of our net deferred tax liability based on a U.S.

federal tax rate of 21 percent.

Reflects a one-time transition tax on our unremitted foreign earnings and profits.

See below for further discussion addressing our unremitted foreign earnings and profits.

The substantial 2017 impact of the enactment of the Tax Act discussed above 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, 2019 are

Year ended December 31,

Federal $ 290 $ 97 $ 47

Foreign 15 ( 6 ) 18

State and local 65 45 58

Federal ( 107 ) 185 243

Foreign 6 14 3

State and local ( 20 ) 5 11

A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rates ( 21 percent for the years ended December 31, 2019 and 2018 and 35 percent for the year ended December 31, 2017 ) to the income before provision (benefit) for income taxes for each of the three years in the period ended December 31, 2019 is as follows:

( 121 ) 204 257

Total $ 249 $ 340 $ 380

A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate of 21 percent to the income before provision (benefit) for income taxes for each of the three years in the period ended December 31, 2020 is as follows:

Year ended December 31,

2020 2019 2018

Computed tax at statutory tax rate $ 239 $ 318 $ 310

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Other permanent items ( 3 ) ( 17 ) ( 1 )

Change in valuation allowance ( 22 ) ( 3 ) 7

Enactment of the Tax Act (1) — — 6

Foreign tax rate differential 4 ( 1 ) 4

Total $ 249 $ 340 $ 380

_________________

(1) The Tax Act was enacted in December 2017 and required (i) the revaluation of our net deferred tax liability based on a U.S.

federal tax rate of 21 percent and (ii) a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments.

We primarily recognized the accounting for the enactment of the Tax Act upon adoption in 2017, and finalized the accounting in 2018.

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

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Reserves and allowances $ 129 $ 111

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Total net deferred tax assets 543 629

Property and equipment

Property and equipment, including rental equipment ( 1,962 ) ( 2,135 )

Operating lease liabilities ( 183 ) ( 182 )

Intangibles ( 166 ) ( 199 )

Total deferred tax liability ( 2,311 ) ( 2,516 )

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_________________

(1) As discussed in note 13 to the consolidated financial statements, in 2019, we adopted an updated lease accounting standard that resulted in the recognition of operating lease right-of-use assets and lease liabilities.

We adopted this standard using a transition method that does not require application to periods prior to adoption.

(1) Relates to foreign tax credits, state net operating loss carryforwards, and state tax credits that may not be realized.

All of the remaining valuation allowance for foreign tax credits was released in 2020.

We file income tax returns in the U.S., Canada and Europe.

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For financial reporting purposes, income before provision for income taxes for our foreign subsidiaries was $ 83 , $ 62 and $ 71 for the years ended December 31, 2020, 2019 and 2018, respectively.

We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes have been provided on such earnings.

We have not repatriated funds to the U.S.

to satisfy domestic liquidity needs, nor do we anticipate the need to do so.

The Tax Act required a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments, and, as discussed above, we completed the accounting for the transition tax in 2018.

If we determine that all or a portion of our foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S.

We continue to expect that the remaining balance of our undistributed foreign earnings will be indefinitely reinvested.

If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S.

state income taxes.

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Determination of the amount of unrecognized deferred tax liability on these unremitted earnings is not practicable.

We have net operating loss carryforwards (“NOLs”) of $ 1.217 billion for federal income tax purposes that expire from 2023 through 2037, $ 15 for foreign income tax purposes that expire from 2024 through 2037 and $ 994 for state income tax purposes that expire from 2020 through 2037.

We have net operating loss carryforwards (“NOLs”) of $ 759 for federal income tax purposes that expire from 2030 through 2037, $ 3 for foreign income tax purposes that expire from 2024 through 2029 and $ 744 for state income tax purposes that expire from 2021 through 2034.

Commitments and Contingencies

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We have 500 million authorized shares of common stock, $ 0.01 par value.

At December 31, 2019 and 2018 , there were 0.0 million and 0.5 million shares of common stock reserved for issuance pursuant to options granted under our stock option plans, respectively.

At December 31, 2020 and 2019, there were 0.0 million shares of common stock reserved for issuance pursuant to options granted under our stock option plans.

As of December 31, 2020, there were an aggregate of 0.8 million outstanding time and performance-based RSUs and 2.0 million shares available for grants of stock and options under our 2019 Long Term Incentive Plan.

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

Weighted-Average

Shares Weighted-Average

Exercise Price

Outstanding at December 31, 2019 37 50.40

Exercised ( 26 ) 45.88

Canceled ( 1 ) 43.63

Outstanding at December 31, 2020 10 61.93

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The following table presents information associated with stock options as of December 31, 2020 and 2019, and for the years ended December 31, 2020, 2019 and 2018:

2020 2019 2018

Intrinsic value of options outstanding as of December 31 $ 2 $ 4

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Year Ended December 31,

2020 2019 2018

RSUs granted 643 456 566

Weighted-average grant date price per unit $ 140.99 $ 124.37 $ 175.79

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A summary of RSU activity for the year ended December 31, 2020 follows (RSUs in thousands):

Weighted-Average

Stock Units Weighted-Average

Grant Date Fair Value

Nonvested as of December 31, 2019 461 $ 104.40

Granted 643 140.99

Vested ( 520 ) 138.48

Forfeited ( 67 ) 135.44

Nonvested as of December 31, 2020 517 $ 164.62

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Stockholders’ Rights Plan.

Our stockholders' rights plan expired in accordance with its terms on September 27, 2011.

Our stockholders' rights plan expired in accordance with its terms in 2011.

Our Board of Directors elected not to renew or extend the plan.

Quarterly Financial Information (Unaudited)

Quarter Second

Quarter Third

For the year ended December 31, 2020 (1):

Total revenues $ 2,125 $ 1,939 $ 2,187 $ 2,279 $ 8,530

Gross profit 727 701 886 869 3,183

Operating income 358 381 551 510 1,800

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Total revenues $ 2,117 $ 2,290 $ 2,488 $ 2,456 $ 9,351

Gross profit 761 911 1,033 965 3,670

Operating income 368 529 656 599 2,152

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Earnings per share—diluted (3) 2.19 3.44 5.08 4.49 15.11

As discussed in note 12 to our consolidated financial statements, in the fourth quarter of 2019 , we issued $ 750 aggregate principal amount of 3 7 / 8 percent Senior Secured Notes due 2027 and redeemed all of our 4 5 / 8 percent Senior Secured Notes.

(1) As discussed in note 12 to our consolidated financial statements, in the fourth quarter of 2020, we redeemed all of our 4 5 / 8 percent Senior Notes due 2025, and recognized a redemption loss of $ 24 in interest expense, net.

The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.

(2) In the fourth quarter of 2019, we issued $ 750 aggregate principal amount of 3 7 / 8 percent Senior Secured Notes due 2027 and redeemed all of our 4 5 / 8 percent Senior Secured Notes.

Upon redemption, we recognized a loss of $ 29 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 2018 included $ 22 of merger related costs and $ 16 of restructuring charges primarily associated with the BakerCorp and BlueLine acquisitions discussed in note 4 to our consolidated financial statements.

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

Quarter Second

Quarter Third

For the year ended December 31, 2020:

Merger related costs (4)

Merger related intangible asset amortization (4) ( 0.59 ) ( 0.59 ) ( 0.55 ) ( 0.52 ) ( 2.22 )

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Restructuring charge (7) ( 0.07 ) ( 0.06 ) ( 0.02 ) ( 0.03 ) ( 0.18 )

This reflects transaction costs associated with the NES and Neff acquisitions that were completed in 2017, and the BakerCorp and BlueLine acquisitions discussed in note 4 to our consolidated financial statements.

Asset impairment charge (8) ( 0.01 ) ( 0.03 ) ( 0.02 ) 0.01 ( 0.05 )

Loss on extinguishment of debt securities and amendment of ABL facility (9) — ( 0.30 ) — ( 0.28 ) ( 0.58 )

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

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(8) This reflects write-offs of leasehold improvements and other fixed assets.

As discussed in note 5 to our consolidated financial statements, the 2020 charges primarily reflect the discontinuation of certain equipment programs, and were not related to COVID-19.

(9) This primarily reflects the difference between the net carrying amount and the total purchase price of the redeemed notes.

(10) This reflects transaction costs associated with the BakerCorp and BlueLine acquisitions that were completed in 2018.

Earnings Per Share

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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 Act discussed further in note 14 to the consolidated financial statements.

Net income and earnings per share for 2019 and 2018 reflect a reduction in the U.S.

federal statutory tax rate from 35 percent to 21 percent following enactment of the Tax Act.

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

Year Ended December 31,

2020 2019 2018

Net income available to common stockholders $ 890 $ 1,174 $ 1,096

6 unchanged sentences

Diluted earnings per share $ 12.20 $ 15.11 $ 13.12

Condensed Consolidating Financial Information of Guarantor Subsidiaries

URNA is 100 percent owned by Holdings (“Parent”) and has certain outstanding indebtedness that is guaranteed by both Parent and, with the exception of its U.S.

special purpose vehicle which holds receivable assets relating to the Company’s accounts receivable securitization facility (the “SPV”), all of URNA’s U.S.

subsidiaries (the “guarantor subsidiaries”).

Other than the guarantee by certain Canadian subsidiaries of URNA's indebtedness under the ABL facility, none of URNA’s indebtedness is guaranteed by URNA's foreign subsidiaries or the SPV (together, the “non-guarantor subsidiaries”).

The receivable assets owned by the SPV have been sold or contributed by URNA to the SPV and are not available to satisfy the obligations of URNA or Parent’s other subsidiaries.

The guarantor subsidiaries are all 100 percent -owned and the guarantees are made on a joint and several basis.

The guarantees are not full and unconditional because a guarantor subsidiary can be automatically released and relieved of its obligations under certain circumstances, including sale of the guarantor subsidiary, the sale of all or substantially all of the guarantor subsidiary's assets, the requirements for legal defeasance or covenant defeasance under the applicable indenture being met, designating the guarantor subsidiary as an unrestricted subsidiary for purposes of the applicable covenants or the notes being rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA.

The guarantees are also subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws.

Based on our understanding of Rule 3-10 of Regulation S-X ("Rule 3-10"), we believe that the guarantees of the guarantor subsidiaries comply with the conditions set forth in Rule 3-10 and therefore continue to utilize Rule 3-10 to present condensed consolidating financial information for Holdings, URNA, the guarantor subsidiaries and the non-guarantor subsidiaries.

Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes that such information would not be material to investors.

However, condensed consolidating financial information is presented.

Covenants in the ABL facility, accounts receivable securitization and term loan facilities, and the other agreements governing our debt, impose operating and financial restrictions on URNA, Parent and the guarantor subsidiaries, including limitations on the ability to make share repurchases and dividend payments.

As of December 31, 2019 , the amount available for distribution under the most restrictive of these covenants was $ 674 .

The Company’s total available capacity for making share repurchases and dividend payments includes the intercompany receivable balance of Parent.

As of December 31, 2019 , our total available capacity for making share repurchases and dividend payments, which includes URNA’s capacity to make restricted payments and the intercompany receivable balance of Parent, was $ 2.929 billion .

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

CONDENSED CONSOLIDATING BALANCE SHEETS

December 31, 2019

Non-Guarantor

Cash and cash equivalents

Accounts receivable, net

Intercompany receivable (payable)

Prepaid expenses and other assets

Total current assets

Rental equipment, net

Property and equipment, net

Investments in subsidiaries

Other intangible assets, net

Operating lease right-of-use assets

Other long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Short-term debt and current maturities of long-term debt

Accounts payable

Accrued expenses and other liabilities

Total current liabilities

Long-term debt

Deferred taxes

Operating lease liabilities

Other long-term liabilities

Total liabilities

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

CONDENSED CONSOLIDATING BALANCE SHEETS

December 31, 2018

Non-Guarantor

Cash and cash equivalents

Accounts receivable, net

Intercompany receivable (payable)

Prepaid expenses and other assets

Total current assets

Rental equipment, net

Property and equipment, net

Investments in subsidiaries

Other intangible assets, net

Other long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Short-term debt and current maturities of long-term debt

Accounts payable

Accrued expenses and other liabilities

Total current liabilities

Long-term debt

Deferred taxes

Other long-term liabilities

Total liabilities

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the Year Ended December 31, 2019

Non-Guarantor

Equipment rentals

Sales of rental equipment

Sales of new equipment

Contractor supplies sales

Service and other revenues

Total revenues

Cost of revenues:

Cost of equipment rentals, excluding depreciation

Depreciation of rental equipment

Cost of rental equipment sales

Cost of new equipment sales

Cost of contractor supplies sales

Cost of service and other revenues

Total cost of revenues

Selling, general and administrative expenses

Merger related costs

Restructuring charge

Non-rental depreciation and amortization

Operating (loss) income

Interest (income) expense, net

Other (income) expense, net

Income before provision for income taxes

Provision for income taxes

Income before equity in net earnings (loss) of subsidiaries

Equity in net earnings (loss) of subsidiaries

Net income (loss)

Other comprehensive income (loss)

Comprehensive income (loss)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the Year Ended December 31, 2018

Non-Guarantor

Equipment rentals

Sales of rental equipment

Sales of new equipment

Contractor supplies sales

Service and other revenues

Total revenues

Cost of revenues:

Cost of equipment rentals, excluding depreciation

Depreciation of rental equipment

Cost of rental equipment sales

Cost of new equipment sales

Cost of contractor supplies sales

Cost of service and other revenues

Total cost of revenues

Selling, general and administrative expenses

Merger related costs

Restructuring charge

Non-rental depreciation and amortization

Operating (loss) income

Interest (income) expense, net

Other (income) expense, net

Income before provision for income taxes

Provision for income taxes

Income before equity in net earnings (loss) of subsidiaries

Equity in net earnings (loss) of subsidiaries

Net income (loss)

Other comprehensive (loss)

Comprehensive income (loss)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the Year Ended December 31, 2017

Non-Guarantor

Equipment rentals

Sales of rental equipment

Sales of new equipment

Contractor supplies sales

Service and other revenues

Total revenues

Cost of revenues:

Cost of equipment rentals, excluding depreciation

Depreciation of rental equipment

Cost of rental equipment sales

Cost of new equipment sales

Cost of contractor supplies sales

Cost of service and other revenues

Total cost of revenues

Selling, general and administrative expenses

Merger related costs

Restructuring charge

Non-rental depreciation and amortization

Operating (loss) income

Interest (income) expense, net

Other (income) expense, net

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

Provision (benefit) for income taxes

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

Equity in net earnings (loss) of subsidiaries

Net income (loss)

Other comprehensive income (loss)

Comprehensive income (loss)

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Year Ended December 31, 2019

Non-Guarantor

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Effect of foreign exchange rates

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Year Ended December 31, 2018

Non-Guarantor

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Effect of foreign exchange rates

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Year Ended December 31, 2017

Non-Guarantor

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Effect of foreign exchange rate

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

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(In millions)

of Period Acquired

Expenses Charged to

Revenue Deductions

Year Ended December 31, 2020:

Allowance for doubtful accounts

Reserve for obsolescence and shrinkage

Self-insurance reserve

Allowance for doubtful accounts $ 103 $ — $ 9 (a) $ 25 (a) $ 29 (b) $ 108

Reserve for obsolescence and shrinkage 10 — 34 — 36 (c) 8

Self-insurance reserve 121 — 169 — 163 (d) 127

Year Ended December 31, 2019:

Allowance for doubtful accounts

Reserve for obsolescence and shrinkage

Self-insurance reserve

Allowance for doubtful accounts $ 93 $ 2 $ 8 (a) $ 34 (a) $ 34 (b) $ 103

Reserve for obsolescence and shrinkage 5 4 40 — 39 (c) 10

Self-insurance reserve 106 — 180 — 165 (d) 121

Year Ended December 31, 2018:

Allowance for doubtful accounts

Reserve for obsolescence and shrinkage

Self-insurance reserve

Allowance for doubtful accounts $ 68 $ 14 $ 45 (a) $ — (a) $ 34 (b) $ 93

Reserve for obsolescence and shrinkage 7 1 26 — 29 (c) 5

Self-insurance reserve 100 5 144 — 143 (d) 106

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.

Amounts charged to cost and expenses reflect bad debt expenses recognized within selling, general and administrative expenses.

(a) Amounts charged to cost and expenses reflect bad debt expenses recognized within selling, general and administrative expenses.

The amounts charged to revenue primarily reflect doubtful accounts associated with lease revenues that were recognized as a reduction to equipment rentals revenue.

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We adopted the updated lease accounting standard using a transition method that does not require application to periods prior to adoption.

Represents write-offs of accounts, net of recoveries.

Represents write-offs.

Represents payments.

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

(d) Represents payments.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data