What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-01-26 compared with 2021-01-27 · 288 added, 272 removed, 1148 unchanged (33% of the section changed)

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated January 26, 2022 expressed an unqualified opinion thereon.

Adoption of Accounting Standards Update (ASU) No.

As discussed in Note 13 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No.

2016-02, Leases and associated amendments (Topic 842), using the modified retrospective method.

Basis for Opinion

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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, 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 compared the significant assumptions used by management to current industry and economic trends, including 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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Retained earnings 7,551 6,165

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

Treasury stock at cost— 42,013,509 shares at December 31, 2021 and December 31, 2020

( 3,957 ) ( 3,957 )

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Interest expense, net 424 669 648

Other income, net ( 8 ) ( 10 ) ( 6 )

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

Provision (benefit) for income taxes 249 340 380

Other expense (income), net 7 ( 8 ) ( 10 )

Income before provision for income taxes 1,846 1,139 1,514

Provision for income taxes 460 249 340

Net income $ 1,386 $ 890 $ 1,174

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Foreign currency translation adjustments 40

Fixed price diesel swaps 2

Stock compensation expense, net 1 70

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Foreign currency translation adjustments ( 26 )

Fixed price diesel swaps 1

Stock compensation expense, net — 119

Exercise of common stock options — 1

Shares repurchased and retired ( 34 )

Repurchase of common stock ( 3 ) 3 $ ( 257 )

Balance at December 31, 2021 72 $ 1 $ 2,567 $ 7,551 42 $ ( 3,957 ) $ ( 171 )

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Restructuring charge

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

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

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

218 39 ( 115 )

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

(Increase) decrease in prepaid expenses and other assets

( 228 ) ( 59 ) 75

Loss on repurchase/redemption of debt securities 30 183 61

Increase (decrease) in deferred taxes 268 ( 121 ) 204

Changes in operating assets and liabilities, net of acquisitions:

(Increase) decrease in accounts receivable ( 300 ) 218 39

Decrease (increase) in inventory 9 ( 5 ) ( 8 )

Decrease (increase) in prepaid expenses and other assets 248 ( 228 ) ( 59 )

Increase (decrease) in accounts payable 307 10 ( 86 )

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( 2,998 ) ( 961 ) ( 2,132 )

Purchases of non-rental equipment

( 197 ) ( 218 ) ( 185 )

Purchases of non-rental equipment and intangible assets ( 200 ) ( 197 ) ( 218 )

Proceeds from sales of rental equipment

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( 34 ) ( 286 ) ( 870 )

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

Net cash used in financing activities ( 140 ) ( 2,293 ) ( 1,305 )

Effect of foreign exchange rates

Net increase (decrease) in cash and cash equivalents

150 9 ( 309 )

Net (decrease) increase in cash and cash equivalents ( 58 ) 150 9

Cash and cash equivalents at beginning of year

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and its subsidiaries, unless otherwise indicated.

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

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.

We rent equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities.

We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand.

In July 2018, we completed the acquisition of BakerCorp International Holdings, Inc.

(“BakerCorp”), which allowed for our entry into select European markets.

As discussed in note 4 to the consolidated financial statements, in May 2021, we completed the acquisition of General Finance Corporation (“General Finance”), which allowed for our entry into select markets in Australia and New Zealand.

In addition to renting equipment, we sell new and used rental equipment, as well as related contractor supplies, parts and service.

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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.

The COVID-19 pandemic has significantly disrupted supply chains and businesses around the world.

Uncertainty remains regarding the ongoing impact of existing and emerging variant strains of COVID-19 on the operations and financial position of United Rentals, and on the global economy.

Uncertainty also remains regarding the length of time it will take for the COVID-19 pandemic to ultimately subside, which will be impacted by the effectiveness of vaccines against COVID-19 (including against emerging variant strains), and by measures that may in the future be implemented to protect public health.

Business-Industry Overview and Economic Outlook" for a discussion of market performance in 2021 and 2020.

The health and safety of our employees and customers remains our top priority, and we also implemented a detailed COVID-19 response plan, which is explained in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and which we believe helped mitigate the impact of COVID-19 on our results.

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.

The volume declines were more pronounced in 2020 than 2021, and we have seen recent evidence of recovery across our construction and industrial markets, as well as encouraging gains in end-market indicators, as reflected in our 2022 forecast.

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

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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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Rental equipment is depreciated to a salvage value of zero to 50 percent of cost.

The weighted average salvage value of our rental equipment is 11 percent of cost.

Rental equipment is depreciated whether or not it is out on rent.

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The estimated fair values of these intangible assets reflect various assumptions about discount rates, revenue growth rates, operating margins, terminal values, useful lives and other prospective financial information.

Goodwill is calculated as the excess of the cost of the acquired entity over the net of the fair value of the assets acquired and the liabilities assumed.

Goodwill is calculated as the excess of the cost of the acquired business over the net of the fair value of the assets acquired and the liabilities assumed.

Non-compete agreements, customer relationships and trade names and associated trademarks are valued based on an excess earnings or income approach based on projected cash flows.

Determining the fair value of the assets and liabilities acquired is judgmental in nature and can involve the use of significant estimates and assumptions.

Determining the fair value of the assets and liabilities acquired can be judgmental in nature and can involve the use of significant estimates and assumptions.

The judgments made in determining the estimated fair value assigned to the assets acquired, as well as the estimated life of the assets, can materially impact net income in periods subsequent to the acquisition through depreciation and amortization, and in certain instances through impairment charges, if the asset becomes impaired in the future.

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and an assumption as to the form of the transaction in which the reporting unit would be acquired by a market participant (either a taxable or nontaxable transaction).

We estimate the fair value of our reporting units (which are our regions) using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market price data of shares of our Company and other corporations engaged in similar businesses as well as acquisition multiples paid in recent transactions within our industry (including our own acquisitions).

When conducting the goodwill impairment test, we are required to compare the fair value of our reporting units (which are our regions) with the carrying amount.

As discussed in note 5 to our consolidated financial statements, as of December 31, 2021, our divisions were our operating segments.

We conducted the goodwill impairment test as of October 1, 2021 at the reporting unit level, which is one level below the operating segment level.

We conducted the goodwill impairment test as of October 1, 2020 at the same reporting unit level, although at that time, the reporting unit was also the operating segment (see note 5 for further discussion of our segment structure).

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.

We estimate the fair

value of our reporting units using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market price data of shares of our Company and other corporations engaged in similar businesses as well as acquisition multiples paid in recent transactions.

We believe this approach, which utilizes multiple valuation techniques, yields the most appropriate evidence of fair value.

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.

In connection with our goodwill impairment test that was conducted as of October 1, 2021, we bypassed the optional qualitative assessment for each reporting unit and quantitatively compared the fair values of our reporting units with their carrying amounts.

Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Mobile Storage and Mobile Storage International reporting units, had estimated fair values which exceeded their respective carrying amounts by at least 59 percent.

As discussed in note 4 to the consolidated financial statements, in May 2021, we completed the acquisition of General Finance.

All of the assets in the Mobile Storage and Mobile Storage International reporting units were acquired in the General Finance acquisition.

The estimated fair values of our Mobile Storage and Mobile Storage International reporting units exceeded their carrying amounts by 10 percent and 17 percent, respectively.

As all of the assets in the Mobile Storage and Mobile Storage International reporting units were recorded at fair value as of the May 2021 acquisition date, we expected the percentages by which the fair values for these reporting units exceeded the carrying values 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, 2020, we bypassed the optional qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test.

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

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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.

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 32 percent.

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 12 percent.

Restructuring Charges

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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.

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

addresses lease revenue).

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

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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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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.

In the fourth quarter of 2020, we identified cash in our foreign operations in excess of near-term working capital needs, and determined that such cash 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 changed.

In the fourth quarter of 2021, we identified additional cash in our foreign operations in excess of near-term working capital needs, and remitted $ 203 of cash from foreign operations (such amount represents the cumulative amount of identified cash in our foreign operations in excess of near-term working capital needs).

The taxes recorded associated with the remitted cash were immaterial in both 2020 and 2021.

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

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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 recognize forfeitures of stock-based compensation as they occur.

New Accounting Pronouncements

Accounting/Disclosure Guidance Adopted in 2021

Simplifying the Accounting for Income Taxes.

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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 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

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.

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.

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.

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.

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.

Different components of the guidance required retrospective, modified retrospective or prospective adoption.

We adopted this guidance in the first quarter of 2021, and the impact on our financial statements was not material.

Amendments to Management's Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information .

In February 2021, a Securities and Exchange Commission ("SEC") rule intended to modernize, simplify, and enhance certain financial disclosure requirements became effective.

We have adopted this rule in this Form 10-K, and the impact on our financial statements was not material, although several disclosures were updated.

The primary disclosure changes we made associated with this rule were to remove:

1) discussions comparing 2020 and 2019 results, as such disclosures were included in our prior SEC filings, 2) selected financial data for the preceding five years and 3) the tabular disclosure of contractual obligations, although we continue to provide disclosures addressing the most significant categories of our short-term and long-term needs for cash.

Revenue Recognition

Revenue Recognition Accounting Standards

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

We adopted Topic 842 on January 1, 2019.

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).

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

1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic 842 (which 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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Revenues by reportable segment and geographical market are presented in note 5 of the consolidated financial statements using the revenue captions reflected in our consolidated statements of operations.

The majority of our revenue is recognized in our general rentals segment and in the U.S.

(for the year ended December 31, 2020, 79 percent and 91 percent of total revenues, respectively).

The majority of our revenue is recognized in

our general rentals segment and in the U.S.

(for the year ended December 31, 2021, 76 percent and 90 percent, respectively).

We believe that the disaggregation of our revenue from contracts to customers as reflected above, coupled with the further discussion below and the reportable segment and geographical market disclosures in note 5, depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

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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.

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).

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We had deferred revenue (associated with both Topic 842 and Topic 606) of $ 83 and $ 51 as of December 31, 2021 and 2020, respectively.

The increase in 2021 primarily reflects the impact of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

As noted above, we are unsure of when the customer will return rented equipment.

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The accounting for re-rent revenue is the same as the accounting for owned equipment rentals described above.

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

“Other” equipment rental revenue is primarily comprised of 1) Rental Protection Plan (or "RPP") revenue associated with the damage waiver customers can purchase when they rent our equipment to protect against potential loss or damage, 2) environmental charges associated with the rental of equipment, 3) charges for rented equipment that is damaged by our customers and 4) charges for setup and other services performed on rented equipment.

Revenues from contracts with customers (Topic 606)

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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 and Topic 842 (Topic 840 for 2018).

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 2021, 2020, and 2019.

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

Our customer with the largest receivable balance represented approximately one percent and two percent of total receivables at December 31, 2021 and 2020, 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 and, as applicable, current conditions and reasonable and supportable forecasts

that affect collectibility.

Our allowance for doubtful accounts reflects 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.

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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.

Adoption of this guidance did not materially impact our financial statements.

The measurement of expected credit losses is based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectibility.

Trade receivables are the only material financial asset we have that is subject to the requirement to measure expected credit losses as noted above, as this requirement 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, 2021), and these revenues account for corresponding portions of the $ 1.677 billion of net accounts receivable and the associated allowance for doubtful accounts of $ 112 reported on our consolidated balance sheet as of December 31, 2021.

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.

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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.

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

Year ended December 31,

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Beginning balance $ 108 $ 103 $ 93

Acquired — 2 14

Charged to costs and expenses (1) 5 9 8

Charged to revenue (2) 31 25 34

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

Deductions and other (3) ( 32 ) ( 29 ) ( 32 )

Ending balance $ 112 $ 108 $ 103

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(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.

(3) Primarily represents write-offs of accounts, net of immaterial recoveries and other activity.

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.

On May 25, 2021, we completed the acquisition of General Finance.

General Finance previously operated as Pac-Van and Container King in the U.S.

and Canada, and as Royal Wolf in Australia and New Zealand, and was a leading provider of mobile storage equipment and modular office space.

Its network served diverse end-markets, including construction, commercial, industrial, retail, transportation, petrochemical, consumer, natural resources, governmental and education.

As of March 31, 2021, General Finance’s rental fleet consisted of approximately 100,000 units at an original cost of approximately $ 650 .

For the 12 months ending December 31, 2020, General Finance had revenues of $ 342 (such amount represents General Finance’s historic revenue presented in accordance with our revenue mapping).

The acquisition is expected to:

• Complement our leading positions in general construction and industrial rentals and specialty rentals, which will further differentiate us through our ability to deliver value as a one-stop-shop for customers;

• Create immediate cross-sell opportunities, and allow us to introduce mobile storage and modular office solutions in service areas that previously were not served by General Finance;

• Provide entry into Australia and New Zealand, with an established platform run by a seasoned management team, and with a strong growth strategy already in place.

The aggregate consideration paid to acquire General Finance was $ 1.032 billion.

The acquisition and related fees and expenses were funded through available cash and drawings on our senior secured asset-based revolving credit facility (“ABL facility”).

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

The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period, although we do not expect material future changes.

Cash and cash equivalents $ 13

Accounts receivable (1) 44

Rental equipment 686

Property and equipment 42

Intangibles (2) 94

Operating lease right-of-use assets 57

Other assets 24

Total identifiable assets acquired 996

Current liabilities ( 93 )

Deferred taxes ( 122 )

Operating lease liabilities ( 44 )

Total liabilities assumed ( 259 )

Net identifiable assets acquired 737

Goodwill (3) 295

Net assets acquired $ 1,032

(1) The fair value of accounts receivables acquired was $ 44 , and the gross contractual amount was $ 50 .

We estimated that $ 6 would be uncollectible.

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

Fair value Life (years)

Customer relationships $ 87 7

Trade names and associated trademarks 7 5

(3) All of the goodwill was assigned to our specialty segment.

We have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, although we do not expect material future changes.

Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of General Finance's going-concern value, the value of General Finance's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that would not be available to other market participants.

$ 28 of goodwill is expected to be deductible for income tax purposes.

The year ended December 31, 2021 includes General Finance acquisition-related costs which are reflected as “Merger related costs” in our consolidated statements of income.

It is not practicable to reasonably estimate the amounts of revenue and earnings of General Finance since the acquisition date, primarily due to the movement of fleet between URI locations and the acquired General Finance locations, as well as our corporate structure and the allocation of corporate costs.

Pro forma financial information

The pro forma information below gives effect to the General Finance acquisition as if it had been completed on January 1, 2020 (the "pro forma acquisition date”).

The pro forma information is not necessarily indicative of our results had the acquisition been completed on the above date, nor is it necessarily indicative of our future results.

The pro forma information reflects General Finance’s historic revenue presented in accordance with our revenue mapping, does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition, and also does not reflect additional revenue opportunities following the acquisition.

The pro forma information includes adjustments to record the acquired assets and liabilities of General Finance at their respective fair values based on available information and to give effect to the financing for the acquisition.

The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed.

The purchase price allocations for the assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period, although we do not expect material future changes.

Increases or decreases in the estimated fair values of the net assets acquired may impact our statements of income in future periods.

We expect that the values assigned to the assets acquired and liabilities assumed will be finalized during the one-year measurement period following the acquisition date.

The table below presents unaudited pro forma consolidated income statement information as if General Finance had been included in our consolidated results for the entire periods reflected:

United Rentals historic revenues $ 9,716 $ 8,530

General Finance historic revenues 144 342

Pro forma revenues 9,860 8,872

United Rentals historic pretax income 1,846 1,139

General Finance historic pretax income 9 9

Combined pretax income 1,855 1,148

Pro forma adjustments to combined pretax income:

Impact of fair value mark-ups/useful life changes on depreciation (1) ( 11 ) ( 25 )

Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2) ( 6 ) ( 14 )

Intangible asset amortization (3) ( 5 ) ( 21 )

Goodwill impairment (4) — 14

Interest expense (5) ( 6 ) ( 19 )

Elimination of historic interest (6) 23 24

Elimination of merger related costs (7) 12 —

Elimination of changes in the valuation of bifurcated derivatives in convertible notes (8)

Pro forma pretax income $ 1,846 $ 1,115

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(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 General Finance acquisition.

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

(3) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets.

(4) The goodwill impairment charge that General Finance recognized during the year ended December 31, 2020 was eliminated.

If the acquisition had occurred as of the pro forma acquisition date, this impairment charge would not have been recognized (instead, we would have tested for goodwill impairment based on the post-acquisition reporting unit structure).

(5) As discussed above, we funded the General Finance acquisition using drawings on our ABL facility.

Interest expense was adjusted to reflect interest on the ABL facility borrowings.

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

The adjustment for the year ended December 31, 2021 includes a debt redemption loss of $ 12 .

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

The adjustment for the year ended December 31, 2021 includes $ 9 of merger related costs recognized by General Finance prior to the acquisition.

(8) General Finance historically recognized changes in the valuation of bifurcated derivatives in convertible notes in its statements of operations.

These historic changes were eliminated because the bifurcated derivatives are not part of the combined entity.

In addition to the General Finance acquisition discussed above, during 2021, we completed a series of acquisitions which were not significant individually or in the aggregate.

See the consolidated statements of cash flows for the total cash outflow for purchases of other companies, net of cash acquired, which includes General Finance and the other completed acquisitions, and see note 10 to our consolidated financial statements for a rollforward showing the goodwill acquired associated with these acquisitions.

The intangible assets acquired in the General Finance acquisition are discussed above, and $ 66 of intangible assets were acquired in 2021 associated with the other acquisitions.

Segment Information

Our reportable segments are i) general rentals and ii) trench, power and fluid solutions.

Our regions discussed below, which are our operating segments, are aggregated into our reportable segments.

We believe that the regions that are aggregated into our reportable segments have similar economic characteristics, as each region is capital intensive, offers similar products to similar customers, uses similar methods to distribute its products, and is subject to similar competitive risks.

The aggregation of our regions also reflects the management structure that we use for making operating decisions and assessing performance.

Our reportable segments are i) general rentals and ii) specialty (formerly "trench, power and fluid solutions").

In the fourth quarter of 2021, following a realignment of certain of our divisions and regions, and changes in leadership roles and responsibilities, we updated our analysis of operating segments and concluded that our divisions now represent our operating segments.

Prior to the fourth quarter of 2021, our regions were our operating segments.

While this update reflects a change in operating segments, it did not result in any changes to the rental locations in each reportable segment (see Item 2—Properties for detail on the locations in each reportable segment), and, as a result, there were no changes to the historically reported segment financial information.

As noted below, we evaluate segment performance primarily based on segment equipment rentals gross profit.

The primary change resulting from the change in segment presentation is to our ongoing review of segment equipment rentals margins, which we monitor on a quarterly basis to assess margin similarity between operating segments.

Because of the change in operating segments, this margin analysis is now conducted at the division level, while it was historically performed at the region level.

As discussed further in note 2 to our consolidated financial statements ("Evaluation of Goodwill Impairment"), we test for goodwill impairment at the reporting unit (the region, which is one level below the operating segment (division)) level, and the change in the segment structure did not impact our goodwill impairment testing.

For general rentals, the divisions discussed below, which are our operating segments, are aggregated into the reportable segment.

The specialty segment is a single division that is both an operating segment and a reportable segment.

We believe that the divisions that are aggregated into our reportable segments have similar economic characteristics, as each region is capital intensive, offers similar products to similar customers, uses similar methods to distribute its products, and is subject to similar competitive risks.

The aggregation of our divisions also reflects the management structure that we use for making operating decisions and assessing performance.

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

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.

The trench, power and fluid solutions segment includes the rental of specialty construction products such as i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment and iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment.

The trench, power and fluid solutions segment is comprised of the following regions, each of which primarily rents the corresponding equipment type described above:

i) the Trench Safety region, ii) the Power and HVAC region, 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.

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

The general rentals segment reflects the aggregation of four geographic divisions— Central, Northeast, Southeast and West—and operates throughout the United States and Canada.

The specialty segment, which, as noted above, is a single division that is both an operating segment and a reportable segment, includes the rental of specialty construction products such as i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment, iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment, and iv) mobile storage equipment and modular office space.

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

This segment primarily operates in the United States and Canada, and has a limited presence in Europe, Australia and New Zealand.

The following table presents the percentage of equipment rental revenue by equipment type for the years ended December 31, 2021, 2020 and 2019:

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General tools and light equipment

Primarily rented by our trench, power and fluid solutions segment:

Primarily rented by our specialty segment:

Power and HVAC equipment

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Fluid solutions equipment

Mobile storage equipment and modular office space (1)

________________

(1) As discussed in note 4 to the consolidated financial statements, in May 2021, we completed the acquisition of General Finance, which was a leading provider of mobile storage equipment and modular office space.

Prior to the General Finance acquisition, we did not rent material amounts of such equipment.

The accounting policies for our segments are the same as those described in the summary of significant accounting policies in note 2.

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The following table sets forth financial information by segment as of, and for the years ended, December 31, 2021, 2020 and 2019:

rentals Trench,

power and fluid solutions Total

rentals Specialty Total

Equipment rentals $ 6,074 $ 2,133 $ 8,207

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Merger related costs (1) ( 3 ) — ( 1 )

— ( 1 ) ( 36 )

Restructuring charge (2) ( 2 ) ( 17 ) ( 18 )

( 17 ) ( 18 ) ( 31 )

Non-rental depreciation and amortization

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( 424 ) ( 669 ) ( 648 )

Other income, net

Other (expense) income, net ( 7 ) 8 10

Income before provision for income taxes $ 1,846 $ 1,139 $ 1,514

We operate in the United States, Canada and Europe.

___________________

(1) Primarily reflects transaction costs associated with the General Finance acquisition discussed in note 4 to the consolidated financial statements.

Merger related costs only include costs associated with major acquisitions that significantly impact our operations.

For additional information, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-merger related costs" below.

(2) Primarily reflects severance and branch closure charges associated with our restructuring programs.

For additional information, see note 6 to the consolidated financial statements.

We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand.

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.

As discussed in note 4 to the consolidated financial statements, in May 2021, we completed the acquisition of General Finance, which allowed for our entry into select markets in Australia and New Zealand.

Our presence in Europe, Australia and New Zealand 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, 2021, 2020 and 2019, except for balance sheet information, which is presented as of December 31, 2021 and 2020:

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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.

We did not recognize material costs associated with this program in 2019, which is excluded from the table below.

We closed this program in the first quarter of 2022 and do not expect to expect to recognize significant future costs under the program.

The table below provides certain information concerning our restructuring charges under the 2020-2021 Cost Savings restructuring program:

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Total $ — $ 15 $ ( 10 ) $ 5

Year Ended December 31, 2021:

Branch closure charges $ 3 $ — $ ( 2 ) $ 1

Severance and other 2 1 ( 3 ) —

Total $ 5 $ 1 $ ( 5 ) $ 1

________________

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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.

In addition to the restructuring charges discussed above, during the years ended December 31, 2021, 2020 and 2019, we recorded asset impairment charges of $ 14 , $ 36 and $ 5 , respectively, primarily in our general rentals segment.

The 2020 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

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_________________

(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.

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

Such deposits are presented as a component of our cash flow from operations when paid.

The decrease in 2021 primarily reflects purchases of equipment that we had placed deposits on as of December 31, 2020.

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

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_________________

(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.

(1) As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan.

In 2020, when we significantly reduced capital expenditures largely due to COVID-19, net rental equipment declined $ 1.082 billion.

The increase in net rental equipment in 2021 primarily reflects net rental capital expenditures (purchases of rental equipment less proceeds from sales of rental equipment) that exceeded historic (pre-COVID-19) levels, as well as the impact of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

Net rental capital expenditures were $ 2.030 billion, $ 103 and $ 1.301 billion in 2021, 2020 and December 31, 2019, respectively.

Property and Equipment

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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, 2021:

General rentals Trench,

power and fluid solutions Total

General rentals Specialty Total

Balance at January 1, 2019 (1) $ 4,342 $ 716 $ 5,058

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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.

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

(3) For additional detail on the May 2021 acquisition of General Finance, which was assigned to our specialty segment and accounted for most of the goodwill related to acquisitions, see note 4 to our consolidated financial statements.

Other intangible assets were comprised of the following at December 31, 2021 and 2020:

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

Our other intangibles assets, net at December 31, 2021 include the following assets associated with the acquisition of General Finance discussed in note 4 to our consolidated financial statements.

No residual value has been assigned to these assets, which are being amortized using the sum of the years' digits method, which we believe best reflects the estimated pattern in which the economic benefits will be consumed.

The intangible asset values are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period, although we do not expect material future changes.

December 31, 2021

Weighted-Average Remaining

Amortization Period Net Carrying

Customer relationships 6 years $ 74

Trade names and associated trademarks 4 years $ 5

Amortization expense for other intangible assets was $ 233 , $ 250 and $ 290 for the years ended December 31, 2021, 2020 and 2019, respectively.

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_________________

(1) The increase from December 31, 2020 to December 31, 2021 was primarily due to a higher bonus accrual, which reflects increased profitability.

(2) Primarily relates to branch closure charges and severance costs.

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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 leases approximated their

book values as of December 31, 2020 and 2019.

The fair values of our ABL, accounts receivable securitization and term loan facilities and finance leases approximated their book values as of December 31, 2021 and 2020.

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, 2021 and 2020 have been calculated based upon available market information, and were as follows:

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5 1 / 2 percent Senior Notes due 2027

5 7 / 8 percent Senior Notes due 2026

6 1 / 2 percent Senior Notes due 2026 (3)

5 1 / 2 percent Senior Notes due 2027

3 7 / 8 percent Senior Secured Notes due 2027

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3 7 / 8 percent Senior Notes due 2031

3 3 / 4 percent Senior Notes due 2032 (4)

Finance leases 135 135

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Average month-end debt outstanding

1,032 736 973

Weighted-average interest rate on average debt outstanding

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1,672 872 978

(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.

The maximum outstanding debt under the ABL facility exceeded the average outstanding debt primarily due to the use of borrowings under the ABL facility to fund most of the cost of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

(2) URNA redeemed all of its 5 7 / 8 percent Senior Notes in August 2021.

Upon redemption, we recognized a loss of $ 30 in interest expense, net, reflecting the difference between the net carrying amount and the total purchase price of the redeemed notes.

(3) 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.

(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.

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

(4) In August 2021, URNA issued $ 750 aggregate principal amount of 3 3 / 4 percent Senior Notes due 2032.

See below for additional detail on the issued debt.

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Accounts receivable securitization facility .

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.

In 2021, the accounts receivable securitization facility was amended, primarily to increase the facility size and to extend the maturity date which may be further extended on a 364 -day basis by mutual agreement with the purchasers under the facility.

The amended facility expires on June 24, 2022 and has a facility size of $ 900 .

Borrowings under the facility are reflected as short-term debt on our consolidated balance sheets.

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

As of December 31, 2021, there were $ 1.180 billion 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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In June 2008, Holdings, URNA, and certain of our subsidiaries entered into a credit agreement providing for a five-year $ 1.25 billion ABL facility, a portion of which is available for borrowing in Canadian dollars.

The ABL facility was subsequently upsized and extended, and a portion of the facility is also now available for borrowing in British Pounds and Euros by certain subsidiaries of URNA in Europe.

The ABL facility was subsequently upsized and extended, and a portion of the facility is also now available for borrowing in British pounds, Euros, Australian dollars and New Zealand dollars by certain subsidiaries of URNA in Europe, Australia and New Zealand.

The size of the ABL facility was $ 3.75 billion as of December 31, 2021.

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(i) in the case of loans in U.S.

dollars, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, (ii) in the case of loans in Canadian dollars, at a rate equal to the Canadian prime rate or an alternate rate (Bankers' Acceptance Rate), in each case plus a spread, (iii) in the case of loans in Euros, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, or (iv) in the case of loans in British pounds, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread.

dollars, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, (ii) in the case of loans in Canadian dollars, at a rate equal to the Canadian prime rate or an alternate rate (Bankers' Acceptance Rate), in each case plus a spread, (iii) in the case of loans in Euros, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, (iv) in the case of loans in British pounds, at a rate equal to daily simple Sterling Overnight Interbank Average or an alternate base rate, in each case plus a spread or (v) in the case of loans in Australian Dollars or New Zealand Dollars, at a rate equal to the applicable bank bill rate or an alternate base rate, in each case plus a spread.

The interest rates under the credit agreement are subject to change based on the availability in the facility.

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As of December 31, 2021, availability under the ABL facility has exceeded the required threshold and, as a result, this financial covenant was inapplicable.

In addition, the credit agreement contains customary negative covenants applicable to Holdings, URNA and our subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness or engage in certain other types of financing transactions, (ii) allow certain liens to attach to assets, (iii) repurchase, or pay dividends or make certain other restricted payments on, capital stock and certain other securities, (iv) prepay certain indebtedness and (v) make acquisitions and investments.

dollar borrowings under the credit agreement are secured by substantially all of our assets and substantially all of the assets of certain of our U.S.

assets, (iii) repurchase, or pay dividends or make certain other restricted payments on, capital stock and certain other securities, (iv) prepay certain indebtedness and (v) make acquisitions and investments.

The borrowings under the credit agreement by URNA are secured by substantially all of our assets and substantially all of the assets of certain of our U.S.

subsidiaries (other than real property and certain accounts receivable).

dollar borrowings under the credit agreement are guaranteed by Holdings and by URNA and, subject to certain exceptions, our domestic subsidiaries.

The borrowings under the credit agreement by URNA are guaranteed by Holdings and, subject to certain exceptions, our domestic subsidiaries.

Borrowings under the credit agreement by URNA’s Canadian subsidiaries are also secured by substantially all the assets of URNA’s Canadian subsidiaries and supported by guarantees from the Canadian subsidiaries and from Holdings and URNA, and, subject to certain exceptions, our domestic subsidiaries.

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, Puerto Rico, Australia and New Zealand 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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See the table above for financial information associated with the term loan facility.

The term loan facility is guaranteed by Holdings and the same domestic subsidiaries that guarantee the U.S.

dollar borrowings under the ABL facility.

In addition, the obligations under the term loan facility are secured by first priority security interests in the same collateral that secures the U.S.

dollar borrowings under the ABL facility, on a pari passu basis with the ABL facility.

The term loan facility is guaranteed by Holdings and the same domestic subsidiaries that guarantee the borrowings of URNA under the ABL facility.

In addition, the obligations under the term loan facility are secured by first priority security interests in the same collateral that secures the borrowings of URNA under the ABL facility, on a pari passu basis with the ABL facility.

The principal obligations under the term loan facility are to be repaid in quarterly installments in an aggregate amount equal to 1.0 percent per annum, with the balance due at the maturity of the term loan facility.

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5 1 / 2 percent Senior Notes due 2027.

In May 2016, URNA issued $ 750 aggregate principal amount of 5 7 / 8 percent Senior Notes (the “5 7 / 8 percent Notes”) which are due September 15, 2026.

In February 2017, URNA issued $ 250 aggregate principal amount of 5 7 / 8 percent Notes as an add-on to the existing 5 7 / 8 percent Notes, after which the aggregate principal amount of outstanding 5 7 / 8 percent Notes was $ 1.0 billion.

The notes issued in February 2017 have identical terms, and are fungible, with the existing 5 7 / 8 percent Notes.

The net proceeds from the issuances were approximately $ 999 (including the original issue premium and after deducting offering expenses).

The 5 7 / 8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

The 5 7 / 8 percent Notes may be redeemed on or after September 15, 2021, at specified redemption prices that range from 102.938 percent in 2021, to 100 percent in 2024 and thereafter, plus accrued and unpaid interest, if any.

The indenture governing the 5 7 / 8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens;

(ii) additional indebtedness;

(iii) mergers, consolidations and acquisitions;

(iv) sales, transfers and other dispositions of assets;

(v) loans and other investments;

(vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments;

(vii) restrictions affecting subsidiaries;

(viii) transactions with affiliates;

and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC.

Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions.

The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 7 / 8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

The carrying value of the 5 7 / 8 percent Notes includes the $ 8 unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2026.

The effective interest rate on the 5 7 / 8 percent Notes is 5.7 percent.

5 1 / 2 percent Senior Notes due 2027.

In November 2016, URNA issued $ 750 aggregate principal amount of 5 1 / 2 percent Senior Notes which are due May 15, 2027 (the “2027 5 1 / 2 percent Notes”).

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The notes issued in February 2017 have identical terms, and are fungible, with the existing 2027 5 1 / 2 percent Notes.

The net proceeds from the issuances were approximately $ 991 (including the original issue premium and after deducting offering expenses).

The 2027 5 1 / 2 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

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The carrying value of the 2027 5 1 / 2 percent Notes includes the $ 2 unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2027.

The effective interest rate on the 2027 5 1 / 2 percent Notes is 5.5 percent.

The effective interest rate on the 2027 5 1 / 2 percent Notes, which includes the impact of the original issue premium, is 5.5 percent.

3 7 / 8 percent Senior Secured Notes due 2027.

In November 2019, URNA issued $ 750 aggregate principal amount of 3 7 / 8 percent Senior Secured Notes (the “3 7 / 8 percent Notes”) which are due November 15, 2027.

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

The 3 7 / 8 percent Notes are guaranteed by Holdings and certain domestic subsidiaries of URNA and are secured on a second-priority basis by liens on substantially all of URNA’s and the guarantors’ assets that secure the ABL facility and the term loan facility, subject to certain exceptions.

The 3 7 / 8 percent Notes may be redeemed on or after November 15, 2022, at specified redemption prices that range from 101.938 percent in 2022, to 100 percent in 2025 and thereafter, in each case, plus accrued and unpaid interest, if any.

In addition, at any time on or prior to November 15, 2022, 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.

In addition, at any time on or prior to November 15, 2022, 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.

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In August 2017, URNA issued $ 925 principal amount of 4 7 / 8 percent Senior Notes (the “Initial 4 7 / 8 percent Notes”) which are due January 15, 2028.

The net proceeds from the issuance were approximately $ 913 (after deducting offering expenses).

The Initial 4 7 / 8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

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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.

The net proceeds from the issuance were approximately $ 743 (including the original issue premium and after deducting offering expenses).

The Subsequent 4 7 / 8 percent Notes represent a separate a distinct series of notes from the Initial 4 7 / 8 percent Notes.

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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 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.

The effective interest rate on the Subsequent 4 7 / 8 percent Notes, which includes the impact of the original issue premium, is 4.84 percent.

In December 2017, we consummated an exchange offer pursuant to which approximately $ 744 principal amount of Subsequent 4 7 / 8 percent Notes were exchanged for additional Initial 4 7 / 8 percent Notes issued under the indenture governing the Initial 4 7 / 8 percent Notes and fungible with the Initial 4 7 / 8 percent Notes.

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The carrying value of the Initial 4 7 / 8 percent Notes includes $ 1 of the unamortized original issue premium, which is being amortized through the maturity date in 2028.

The effective interest rate on the Initial 4 7 / 8 percent Notes is 4.86 percent.

The effective interest rate on the Initial 4 7 / 8 percent Notes, which includes the impact of the original issue premium, is 4.86 percent.

5 1 / 4 percent Senior Notes due 2030.

In May 2019, URNA issued $ 750 aggregate principal amount of 5 1 / 4 percent Senior Notes (the “5 1 / 4 percent Notes”) which are due January 15, 2030.

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

The 5 1 / 4 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

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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.

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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.

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.

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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.

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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 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.

3 3 / 4 percent Senior Notes due 2032.

In August 2021, URNA issued $ 750 aggregate principal amount of 3 3 / 4 percent Senior Notes (the “3 3 / 4 percent Notes”) which are due January 15, 2032.

The 3 3 / 4 percent Notes are unsecured and are

guaranteed by Holdings and certain domestic subsidiaries of URNA.

The 3 3 / 4 percent Notes may be redeemed on or after July 15, 2026, at specified redemption prices that range from 101.875 percent in 2026, to 100 percent in 2029 and thereafter, in each case, plus accrued and unpaid interest, if any.

In addition, at any time on or prior to July 30, 2024, up to 40 percent of the aggregate principal amount of the 3 3 / 4 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 103.750 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any.

The indenture governing the 3 3 / 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 3 3 / 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 3 3 / 4 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

Loan Covenants and Compliance

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Total $ 9,754

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

In March 2016, the FASB issued guidance ("Topic 842") to increase transparency and comparability among organizations by requiring (1) recognition of lease assets and lease liabilities on the balance sheet and (2) disclosure of key information about leasing arrangements.

Some changes to the lessor accounting guidance were made to align both of the following:

(1) the lessor accounting guidance with certain changes made to the lessee accounting guidance and (2) key aspects of the lessor accounting model with revenue recognition guidance.

We adopted Topic 842 at the required adoption date of January 1, 2019, using the transition method that allowed us to initially apply Topic 842 as of January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

We used the package of practical expedients permitted under the transition guidance that allowed us to not reassess:

(1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases.

We additionally used, for our real estate operating leases, the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component.

We did not recognize a material adjustment to the opening balance of retained earnings upon adoption.

Because of the transition method we used to adopt Topic 842, Topic 842 was not applied to periods prior to adoption and the adoption of Topic 842 had no impact on our previously reported results.

As discussed in note 3 to the consolidated financial statements, most of our equipment rental revenues, which accounted for 84 percent of total revenues for the year ended December 31, 2020, were accounted for under the previous lease accounting standard through December 31, 2018 and are accounted for under Topic 842 following adoption.

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

As discussed in note 3 to the consolidated financial statements, most of our equipment rental revenue is accounted for as lease revenue under Topic 842 (such revenue represented 77 percent of our total revenues for the year ended December 31, 2021).

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

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.

Lease Accounting

We determine if an arrangement is a lease at inception.

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Our finance lease obligations consist primarily of rental equipment (primarily vehicles) and building leases.

Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet.

Operating leases result in the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet.

ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments.

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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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Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The tables below present financial information associated with our leases.

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.

The tables below present financial information associated with our leases as of December 31, 2021 and 2020, and for the years ended December 31, 2021, 2020 and 2019.

Classification December 31, 2021 December 31, 2020

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Total lease liabilities $ 958 $ 862

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

_________________

(1) The increases in 2021 include the impact of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

Lease cost Classification Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019

Operating lease cost (1) Cost of equipment rentals, excluding depreciation (1) $ 432 $ 366 $ 370

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Finance leases 2.8 % 3.4 %

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

Other information Year Ended December 31, 2021 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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Leased assets obtained in exchange for new finance lease liabilities $ 66 $ 64 $ 55

As discussed above, we adopted Topic 842 on January 1, 2019.

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

Upon adoption of Topic 842, 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.

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

Depreciation of rental equipment $ 22

Non-rental depreciation and amortization 1

Operating leases

Rent expense on non-cancelable leases (1) $ 179

_________________

(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.

(1) The increase in 2021 includes the impact of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

The components of the provision (benefit) for income taxes for each of the three years in the period ended December 31, 2021 are as follows:

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Other permanent items 1 ( 3 ) ( 17 )

Change in valuation allowance ( 22 ) ( 3 ) 7

Enactment of the Tax Act (1) — — 6

Change in federal valuation allowance — ( 22 ) ( 3 )

Foreign tax rate differential 7 4 ( 1 )

Total $ 460 $ 249 $ 340

_________________

(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:

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_________________

(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.

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

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

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As a result, our prior assertion that all undistributed earnings of our foreign subsidiaries should be considered indefinitely reinvested changed.

The taxes recorded associated with the remitted cash were immaterial in both 2020 and 2021.

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

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Exercised ( 5 ) 43.56

Canceled ( 1 ) 43.63

Outstanding at December 31, 2021 5 80.47

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The following table presents information associated with stock options as of December 31, 2021 and 2020, and for the years ended December 31, 2021, 2020 and 2019.

No stock options were granted during any of the years presented below.

2021 2020 2019

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Intrinsic value of options exercised 1 3 45

Weighted-average grant date fair value per option $ — $ — $ —

In addition to stock options, the Company issues time-based and performance-based RSUs to certain officers and key executives under various equity incentive plans.

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Earnings per share—diluted (3) 2.33 2.93 2.87 4.09 12.20

(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.

(1) As discussed in note 1 to our consolidated financial statements, COVID-19 has significantly disrupted supply chains and businesses around the world.

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.

(2) There were no unusual or infrequently occurring items recognized in the fourth quarter of 2021 that had a material impact on our 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.

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For the year ended December 31, 2021:

Merger related costs (4) $ — $ ( 0.03 ) $ — $ — $ ( 0.03 )

Merger related intangible asset amortization (5) ( 0.50 ) ( 0.48 ) ( 0.53 ) ( 0.47 ) ( 1.98 )

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Asset impairment charge (9) — ( 0.04 ) ( 0.02 ) ( 0.08 ) ( 0.14 )

Loss on extinguishment of debt securities and amendment of ABL facility (9) — — ( 1.64 ) ( 0.25 ) ( 1.88 )

Loss on repurchase/redemption of debt securities (10) — — ( 0.31 ) — ( 0.31 )

For the year ended December 31, 2020:

Merger related costs (10) $ ( 0.01 ) $ — $ — $ — $ ( 0.01 )

Merger related intangible asset amortization (5) $ ( 0.59 ) $ ( 0.59 ) $ ( 0.55 ) $ ( 0.52 ) $ ( 2.22 )

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Asset impairment charge (9) ( 0.26 ) — ( 0.10 ) — ( 0.37 )

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.

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

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

Loss on repurchase/redemption of debt securities (10) — — ( 1.64 ) ( 0.25 ) ( 1.88 )

(4) This reflects transaction costs associated with the General Finance acquisition discussed in note 4 to our consolidated financial statements.

Merger related costs only include costs associated with major acquisitions that significantly impact our operations (the "major acquisitions," each of which had annual revenues of over $ 200 prior to acquisition).

For additional information, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-merger related costs".

(5) This reflects the amortization of the intangible assets acquired in the major acquisitions.

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

(7) This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in certain major acquisitions that was subsequently sold.

(8) As discussed in note 6 to our consolidated financial statements, this primarily reflects severance costs and branch closure charges associated with our restructuring programs.

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As discussed in note 6 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.

(10) Reflects the difference between the net carrying amount and the total purchase price of the redeemed notes.

Earnings Per Share

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(In millions)

of Period Acquired

of Period Charged to

Expenses Charged to

Revenue Deductions

Revenue Deductions and Other Balance

Year Ended December 31, 2021:

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

In 2019, we adopted an updated lease accounting standard (see note 13 to the consolidated financial statements for further detail) that requires that we recognize doubtful accounts associated with lease revenues as a reduction to equipment rentals revenue.

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

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

(b) Primarily represents write-offs of accounts, net of recoveries and other activity.

(d) Represents payments.

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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