NATIONSRENT COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
Reporting Entity
NationsRent Companies, Inc. together with its subsidiaries (the "Company") is
one of the largest full-service equipment rental companies in the United States.
The Company offers a comprehensive line of equipment for rent to a broad range
of construction, industrial and homeowner customers. The Company also sells new
and used equipment, parts, merchandise and supplies, and provides maintenance
and repair services.
Reorganization Under Chapter 11
On June 13, 2003 (the "Effective Date"), NationsRent, Inc., a Delaware
corporation, together with its subsidiaries (the "Predecessor Company" or the
"Debtors") emerged from proceedings under Chapter 11 (the "Chapter 11 Cases") of
the United States Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") pursuant
to the terms of the First Amended Joint Plan of Reorganization of NationsRent,
Inc. and its debtor subsidiaries dated February 7, 2003, as modified (the
"Plan"). On the Effective Date, the Predecessor Company merged into an indirect
subsidiary of the Company. In connection with its emergence from bankruptcy, the
Company reflected the terms of the Plan in its consolidated financial statements
by adopting the principles of Fresh Start Reporting in accordance with the
American Institute of Certified Public accountants ("AICPA") Statement of
Position ("SOP") 90-7, "Financial Reporting by Entities in Reorganization under
the Bankruptcy Code." For accounting purposes, the effects of the consummation
of the Plan, as well as adjustments for Fresh-Start Reporting, were recorded in
the consolidated financial statements as of June 1, 2003. Under Fresh-Start
Reporting, a new entity is deemed to be created for financial reporting purposes
and their recorded amounts of assets and liabilities are adjusted to reflect
their estimated fair values.
Restatements
The Company's unaudited condensed consolidated financial statements for the
three months ended March 31, 2004 have been restated for the matters described
in the Company's Current Report on Form 8-K, dated March 30, 2005 as filed with
the United States Securities and Exchange Commission ("SEC") in March 2005. The
accompanying unaudited condensed consolidated financial statements included in
this report reflect such restatements.
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
and with rules and regulations of the SEC for interim financial reporting. In
the opinion of management, the financial information included herein reflects
all adjustments considered necessary for a fair presentation of interim results
and all such adjustments are of a normal recurring nature. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates. Certain information and footnote disclosures
normally included in complete financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such SEC rules and regulations. These unaudited interim condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in our Annual
Report on Form 10-K for the year ended December 31, 2004. The results of
operations for interim periods are not necessarily indicative of the results
which may be reported for the year ending December 31, 2005.
The unaudited interim condensed consolidated financial statements include the
accounts of the Company and its 100% wholly owned subsidiaries. All material
intercompany transactions and balances have been eliminated in consolidation.
Comprehensive loss was equal to net loss for all periods presented. Certain
prior period amounts presented herein have been reclassified to conform to the
current period's presentation.
Equipment rentals in the consolidated statements of operations include revenue
earned on equipment rentals, rental equipment pick-up and delivery fees, loss
damage waiver fees and fuel sales. Revenue earned on equipment rentals, rental
equipment pick-up and delivery fees, and loss damage waiver fees are recognized
on a straight-line basis over the rental contract period which may be daily,
weekly or monthly. Fuel sales are recognized at the end of the rental contract
period.
Revenue from the sales of equipment, parts and supplies and retail merchandise
is recognized at the time of delivery to, or pick-up by, the customer. When used
rental equipment is sold, the related cost and accumulated depreciation are
removed from the respective accounts. Proceeds from the sale and the related
book value of the equipment sold are reported as revenue from sales of
equipment, merchandise, service, parts and supplies and cost of sales of
equipment, merchandise, service, parts and supplies, respectively, in the
accompanying consolidated statements of operations.
The Company recognizes revenue from sales when all of the following criteria are
met: (i) persuasive evidence of an arrangement exists; (ii) delivery has
occurred; (iii) the price is fixed or determinable; and (iv) collectibility is
probable.
Revenue from the sale of equipment includes revenue earned in connection with
sale/purchase agreements between the Company and certain manufacturers from whom
the Company purchases new equipment. If the transaction meets the accounting
requirements of a monetary transaction under Accounting Principles Board ("APB")
No. 29, "Accounting for Nonmonetary Transactions," then revenue is recognized at
the time of delivery to, or pick up by, the manufacturer. In certain instances,
the sale transaction may contain a limited subjective right of return which
extends the date of revenue recognition to the date the subjective right of
return period lapses. The Company establishes fair market value for each unit of
equipment sold in sale/purchase agreements based on independent appraisals. Any
excess sale price over the fair market value of the used equipment sold is
accounted for as a reduction of the cost of new equipment purchased by the
Company from the same manufacturer. For the three months ended March 31, 2005
and 2004, the Company recognized revenue of approximately $3,581,000 and
$3,537,000, respectively, related to sale/purchase agreements. During the three
months ended March 31, 2005 and 2004, the Company recorded excess sale price of
approximately $251,000 and zero, respectively, as a reduction of the cost of new
rental equipment acquired pursuant to sale/purchase agreements. The excess sale
price is amortized to depreciation expense over the average useful life of the
new equipment purchased from the same manufacturer. For the three months ended
March 31, 2005 and 2004, the amount amortized was $34,000 and zero,
respectively. At March 31, 2005 and December 31, 2004, the unamortized balance
of excess sale price recorded in the condensed consolidated balance sheet was
approximately $1,121,000 and $904,000, respectively.
In January 2005, the Company acquired substantially all of the assets of an
equipment rental company for cash consideration of approximately $7,600,000,
including acquisition costs. The Company did not assume any liabilities. Of the
total purchase price, $500,000 was retained by the Company pending any post
closing adjustments related to deficiencies in the acquired assets and will be
paid 120 days after the closing date. In connection with the acquisition, the
Company agreed to pay 50%, up to a maximum of $200,000, to the former owner for
certain potential income tax implications related to the tax allocation of
purchase price. The final amount will be determined upon review of the former
owner's completed income tax returns. Any future payments made related to these
contingencies will be considered additional purchase price and allocated
accordingly to the acquired assets.
The purchase price of approximately $6,900,000 (excluding $700,000 of contingent purchase
price) was allocated to the assets acquired, primarily rental equipment, based
on their estimated fair values at the date of acquisition. The purchase price
allocation is preliminary and will be adjusted once the outcome of the purchase
price contingencies is resolved.
The results of operations of the acquired business have been included in the
Company's consolidated statement of operations since the acquisition date and
did not have a material impact on the Company's results of operations. The pro
forma results of operations, assuming the acquisition took place at the
beginning of the periods presented, was not significant.
Debt consists of the following (in thousands):
March 31, December 31,
2005 2004
------------ ------------
Senior secured notes payable, net of unamortized debt discount
of $6,786 at March 31, 2005 and $7,080 at December 31, 2004, bearing
interest at 9.5%, interest payable semi-annually and principal payable in
October 2010..................................................................... $ 243,214 $ 242,920
Postpetition notes payable, bearing interest at prime, interest and principal
payable on or before January 2007.................................................. 261 261
Capital lease obligations payable in monthly installments through April 2005......... 30 489
Convertible subordinated notes payable, bearing interest at 6.5%, interest
payable quarterly (deferred until maturity) and principal payable in June 2008..... 45,211 45,211
------------ ------------
Total debt.......................................................................... $ 288,716 $ 288,881
============ ============
Senior Secured Notes
In October 2003, the Company completed a private offering of $250,000,000
aggregate principal amount of 9.5% senior secured notes due 2010 (the "Original
Senior Secured Notes"). The Company pays interest on the notes semi-annually in
cash, in arrears, on October 15 and April 15, at an annual interest rate of
9.5%. The notes mature on October 15, 2010. The net proceeds were used to repay
amounts outstanding under the Credit Facility (as defined below),
equipment-related purchase money obligations, equipment leases and for other
general corporate purposes.
The Company may redeem all of the Senior Secured Notes on or after October 15,
2007. The Company may also redeem up to 35% of the notes prior to October 15,
2006 with the net proceeds of an equity offering at 109.5% of their principal
amount, plus accrued interest; provided that at least 65% of the aggregate
principal amount of the notes issued must remain outstanding after such
redemption.
The notes were issued by NationsRent Companies, Inc. and are guaranteed by all
of its direct and indirect subsidiaries. NationsRent Companies, Inc. has no
independent assets or operations, the guarantees are full and unconditional and
joint and several, and there are no other subsidiaries other than the
guarantors. There are no restrictions on the ability of NationsRent Companies,
Inc. to obtain funds from its subsidiaries.
In April 2004, the Company filed a registration statement on Form S-4
(Registration No. 333-114115), as amended (the "Registration Statement"), with
the SEC with respect to the 9.5% senior secured notes (the "New Notes," and
together with the Original Senior Secured Notes, the "Senior Secured Notes")
that have substantially identical terms as the Original Senior Secured Notes,
except that the New Notes are freely transferable. The Registration Statement
was declared effective by the SEC on July 28, 2004 and promptly thereafter, the
Company commenced an exchange offer, pursuant to which holders of the Original
Senior Secured Notes were able to exchange Original Senior Secured Notes for the
New Notes. The New Notes evidence the same debt as the Original Senior Secured
Notes, are entitled to the benefits of the indenture governing the Original
Senior Secured Notes and are treated under the indenture as a single class with
the Original Senior Secured Notes. In September 2004, the Company completed the
exchange offer with 100% of the Original Senior Secured Notes being exchanged
for New Notes.
The Senior Secured Notes and the guarantees are secured by a first priority lien
on substantially all of the Company's and its subsidiaries' rental equipment
(other than titled vehicles), subject to certain permitted liens and certain
other liens. The Company is required to certify each December and June during
the term of the Senior Secured Notes that its collateral value coverage ratio,
as defined, is at least 2.0 to 1.0. At December 31, 2004, the Company was in
compliance with this requirement.
The indenture governing the Senior Secured Notes contains various affirmative
and negative covenants, subject to a number of important limitations and
exceptions, including limitations on the Company's ability to incur additional
indebtedness or enter into sale and leaseback transactions; limitations on the
Company's ability to repay or prepay subordinated indebtedness; certain
restrictions on dividends, stock redemptions and other distributions;
restrictions on making certain investments or acquisitions; restrictions on the
Company's ability to grant liens on assets, enter into transactions with
stockholders and affiliates, merge, consolidate or transfer assets. The
indenture also contains various customary events of default.
On April 14, 2005, the Company launched a consent solicitation seeking the
consent of the holders of the Senior Secured Notes to amend the indenture
governing the Senior Secured Notes to allow the Company to redeem all of its
outstanding 6.5% Convertible Subordinated Notes due 2008. On April 20, 2005, the
Company received the requisite number of consents and on April 26, 2005 entered
into a supplemental indenture to effect the amendment. As of March 31, 2005, the
aggregate principal amount of the convertible subordinated notes was
$45,211,000, with $5,553,000 of accrued but unpaid interest.
Credit Facility
In June 2003, the Company entered into a senior secured revolving credit
facility (the "Credit Facility") with an aggregate commitment of up to
$150,000,000 with a syndicate of lenders. The Credit Facility was used to
provide the exit financing for the Company pursuant to the Plan, to pay
transaction expenses incurred in connection therewith and to refinance then
existing indebtedness. In October 2003, the Company amended and restated the
Credit Facility to reduce the aggregate commitments to up to $75,000,000
(including a $30,000,000 sub-limit for letters of credit) and repaid all amounts
outstanding under the Credit Facility with the proceeds of the offering of
Senior Secured Notes. In December 2004, the Company entered into a second
amendment to the Credit Facility to amend certain items including extending the
maturity date. On April 21, 2005, the Company amended and restated the Credit
Facility (the "Amended and Restated Credit Facility") to, among other things,
increase the availability from $75,000,000 up to $100,000,000 (including a
$40,000,000 sub-limit for letters of credit) and extend the maturity of the
facility to April 2010.
Under the terms of the Amended and Restated Credit Facility, availability is
subject to a borrowing base test based upon eligible trade accounts receivable,
titled vehicles and real estate. Borrowings under the Amended and Restated
Credit Facility bear interest at floating rates equivalent to either a base
rate, as defined therein, plus a margin ranging from 0.25% to 1.00% or the
London Interbank Offered Rate ("LIBOR") plus a margin ranging from 1.50% to
2.50%; provided, however, that until June 30, 2005, the applicable margin shall
be no less than 0.50% for the base rate loans and 2.50% for the LIBOR loans.
Letters of credit fees range from 1.50% to 2.50%. There is an unused commitment
fee ranging from 0.375% to 0.50% and a letter of credit fronting fee of 0.125%.
The Amended and Restated Credit Facility is secured by a first lien on the
Company's assets, except for the Company's rental equipment and inventory. The
facility is also secured by a pledge of the capital stock of the Company's
subsidiaries. The Company may also grant to the lenders under such facility
certain mortgages and other security interests on certain real property owned by
the Company.
The Amended and Restated Credit Facility is available to (i) refinance existing
indebtedness, (ii) finance the ongoing capital expenditures and working capital
needs of the Company, (iii) issue standby letters of credit and (iv) finance
other general corporate purposes of the Company. The facility contains various
affirmative and negative covenants customary for similar working capital
facilities. The Amended and Restated Credit Facility also contains certain
customary events of default. In addition, the Company must maintain a debt to
cash flow ratio, as defined, of not greater than 3.00 to 1.00 for the trailing
12-month period for each fiscal quarter. At March 31, 2005, the Company was in
compliance with this requirement.
As of March 31, 2005, the Company had no cash borrowings under the Amended
Credit Facility and had $23,884,000 in outstanding letters of credit.
Senior Unsecured Notes
On April 26, 2005, the Company completed a private offering of $150,000,000
aggregate principal amount of 9.5% Senior Unsecured Notes due 2015 (the "Senior
Unsecured Notes"). The Company will pay interest on the notes semi-annually in
cash, in arrears, on May 1 and November 1, beginning on November 1, 2005, at an
annual rate of interest of 9.5%. The Senior Unsecured Notes will mature on May
1, 2015. The net proceeds from the offering will be used for general corporate
purposes, provided that the Company intends to use a portion of proceeds from
the offering to redeem the Company's outstanding 6.5% Convertible Subordinated
Notes due 2008.
The Company may redeem all of the Senior Unsecured Notes on or after May 1,
2010. The Company may also redeem up to 35% of the Senior Unsecured Notes prior
to May 1, 2009 with the net proceeds of an equity offering at 109.5% of their
principal amount, plus accrued interest; provided that at least 65% of the
aggregate principal amount of the notes issued must remain outstanding after
such redemption.
The Senior Unsecured Notes were issued by NationsRent Companies, Inc. and are
guaranteed by all of its direct and indirect subsidiaries. NationsRent
Companies, Inc. has no independent assets or operations, the guarantees are full
and unconditional and joint and several, and there are no other subsidiaries
other than the guarantors. There are no restrictions on the ability of
NationsRent Companies, Inc. to obtain funds from its subsidiaries.
The indenture governing the Senior Unsecured Notes contains various customary
affirmative and negative covenants, subject to a number of important limitations
and exceptions, including, limitations on the Company's ability to incur
additional indebtedness or enter into sale and leaseback transactions;
limitations on the Company's ability to repay or prepay subordinated
indebtedness; certain restrictions on dividends, stock redemptions and other
distributions; restrictions on making certain investments or acquisitions;
restrictions on the Company's ability to grant liens on assets, enter into
transactions with stockholders and affiliates, merge, consolidate or transfer
assets. The indenture also contains various customary events of default.
In connection with the offering of the Senior Unsecured Notes, the Company
entered into a registration rights agreement whereby it has committed to use
reasonable best efforts to register notes that have terms substantially the same
as the Senior Unsecured Notes under the Securities Act of 1933, as amended, and
effect an exchange offer shortly thereafter. The Company will have to pay
additional interest on the Senior Unsecured Notes if it does not file the
registration statement within 180 days of the issue date of the Senior Unsecured
Notes, such registration statement is not declared effective within 270 days of
the issue date, or the exchange offer is not completed within 60 days of the
effective date of the registration statement. The Company believes that it will
be able to comply with this requirement.
Postpetition Notes Payable
The Company renegotiated certain equipment leases as part of the Chapter 11
Cases. The Company entered into settlement agreements with respect to certain of
those equipment leases. As part of such settlements, the Company acquired the
equipment underlying such leases and issued notes payable to the lessors.
Capital Lease Obligations
Capital lease obligations represent leases that meet the criteria for treatment
as capital leases under accounting principles generally accepted in the United
States.
Convertible Subordinated Notes Payable
On the Effective Date, the Company issued $45,211,000 aggregate principal amount
of 6.5% Convertible Subordinated Notes due 2008 in accordance with the terms of
the Plan. The convertible subordinated notes have features that allow the holder
to convert the principal of the note, or a portion thereof, into common stock at
a conversion price of $242 per share. The convertible subordinated notes are
callable at any time at the Company's option. Calls within the first two years
are at 103.25% of par if in connection with a sale of the Company or other
business combination, or otherwise at 106.5%. Calls on or after June 30, 2005
are at par. In September 2003, the Company gave notice to the note holders that
it was deferring interest payments on the notes until further notice in
accordance with their terms. At March 31, 2005 and December 31, 2004, the
deferred interest payments amounted to $5,553,000 and $4,753,000, respectively,
and are included in accrued expenses and other in the accompanying condensed
consolidated balance sheets.
The Company intends to use a portion of the proceeds from the offering of the
Senior Unsecured Notes to redeem its outstanding 6.5% Convertible Subordinated
Notes at a price equal to the aggregate principal amount plus accrued and unpaid
interest.
| 5. |
Reorganization Items, Net |
Reorganization income of $180,000 for the three months ended March 31, 2005
resulted from changes in estimates related to accrued professional fees related
to the Company's emergence from bankruptcy.
The Company's provision for income taxes was zero in the three months ended
March 31, 2005 and 2004. The Company's calculation of its provision for income
taxes takes into account the geographical distribution of the Company's taxable
income for state purposes and changes to the Company's valuation allowance for
deferred tax assets for federal and state purposes and, therefore, results in a
significantly different provision for income taxes than would be obtained by
applying the federal statutory tax rate of 35% to the Company's pre-tax income
(loss).
In June 2003, the Company adopted a restricted stock plan (the "Restricted Stock
Plan"), pursuant to which directors, officers, management and key employees of
the Company are eligible to receive grants of restricted shares of common stock.
Under the Restricted Stock Plan, the Company may grant up to an aggregate of
141,000 shares of common stock. Such restricted shares are not transferable
(except under limited circumstances) and subject to forfeiture upon such terms
and conditions as the Company's Board of Directors or any committee thereof (if
so delegated by the Board) shall determine. The Company accounts for restricted
stock awards in accordance with Accounting Principles Board Opinion ("APB") No.
25, "Accounting for Stock Issued to Employees," and related interpretations.
As of March 31, 2005, there were an aggregate of 128,909 Shares of restricted
stock outstanding which were valued at $71.59 per share at the time of issuance
to certain of its officers and directors under the Restricted Stock Plan.
Deferred compensation is charged for the difference between the market value of
the restricted shares and the sales price of the shares and was recorded as a
reduction of stockholders' equity in the accompanying condensed consolidated
balance sheets. Deferred compensation for such shares of restricted stock is
amortized as compensation expense over the vesting period of such shares which
range from immediate vesting to a four-year vesting schedule. The Company
recognizes compensation expense for these shares as they vest and accordingly
recognized expense of $212,000 and $1,639,000 during the three months ended
March 31, 2005 and 2004, respectively. Compensation expense is included in
selling, general and administrative expenses in the accompanying unaudited
condensed consolidated statements of operations.
Rental equipment, net consists of the following:
March 31, 2005 December 31, 2004
-------------- -----------------
(in thousands)
Rental equipment................................................................ $ 560,077 $ 508,664
Less: accumulated depreciation.................................................. (159,766) (140,488)
-------------- -----------------
Rental equipment, net........................................................... $ 400,311 $ 368,176
============== =================
| 9. |
Property and Equipment, net |
Property and equipment, net consists of the following:
March 31, 2005 December 31, 2004
-------------- -----------------
(in thousands)
Buildings and improvements...................................................... $ 42,126 $ 42,015
Furniture, fixtures and office equipment........................................ 10,786 10,012
Vehicles, delivery and shop equipment........................................... 38,618 36,898
Construction in progress........................................................ 3,024 2,350
-------------- -----------------
94,554 91,275
Less: accumulated depreciation and amortization................................. (31,980) (29,283)
-------------- -----------------
Property and equipment, net..................................................... $ 62,574 $ 61,992
============== =================
At March 31, 2005 and December 31, 2004, construction in progress included
approximately $2,385,000 and $2,000,000 of software related costs.
| 10. |
Related Party Transactions |
Certain entities affiliated with The Baupost Group, L.L.C. own
approximately $17,400,000 principal amount of the Company's convertible
subordinated notes at March 31, 2005 and December 31, 2004. For the three months
ended March 31, 2005 and 2004, interest expense related to these notes was
approximately $311,000 and $327,000, respectively.
Phoenix Rental Partners, LLC owns approximately $2,800,000 principal amount of
the Company's convertible subordinated notes at March 31, 2005 and December 31,
2004. For the three months ended March 31, 2005 and 2004, interest expense
related to these notes was approximately $50,000 and $47,000, respectively.
In November 2003, the Company created a limited housing assistance program for
certain of its non-executive officers, which consisted of certain short-term
bridge loans and long-term loans to assist with relocation to Ft. Lauderdale,
Florida. In the first quarter of 2005, the remaining outstanding short-term
bridge loan under this program was repaid. The aggregate remaining outstanding
balance of the three long-term loans under such program was $2,373,000 and
$2,509,000 at March 31, 2005 and December 31, 2004, respectively. These amounts
are included in prepaid expenses and other assets in the accompanying condensed
consolidated balance sheets.
In April 2005, the Company completed the sale of $150,000,000 aggregate
principal amount of 9.5% Senior Unsecured Notes due 2015. See Note 4 –
Debt-Senior Unsecured Notes.
In April 2005, the Company entered into a supplemental indenture relating to the
Senior Secured Notes. See Note 4-Debt-Senior Secured Notes.
In April 2005, the Company entered into an amendment to its Credit Facility. See
Note 4-Debt-Credit Facility.
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
You should read the following discussion of our results of operations and
financial condition in conjunction with our financial statements and related
notes.
Overview
In June 2003 we emerged from bankruptcy with the long-term objective of becoming
a premier competitor in the construction equipment industry in terms of safety,
reputation and financial performance. Since then, our new management team has
focused on rebuilding our customer relationships, repositioning and renewing our
rental fleet, and providing the motivation and training to our people to make
them more effective.
Our results of operations in the first quarter of 2005 continue to reflect
several key initiatives launched during 2003 that were designed to improve our
profitability and leverage our infrastructure over the next several years. They
include:
|
• |
focusing on diversifying our revenue mix to increase sales of new
and used equipment, in-shop and on-site maintenance and repairs for our
customers, and sales of parts and merchandise; |
|
• |
implementing a new incentive compensation plan for our sales
people that rewards higher volumes of revenue at higher margins; and |
|
• |
focusing on strengthening our relationships with key manufacturers
to leverage pricing, service and manufacturer training. |
In the first quarter of 2005 as compared to the same period in 2004, we achieved
growth in both rental and non-rental revenue. The growth was driven by an
improved industry environment and our key initiatives. Non-rental revenue
accounted for the majority of the overall revenue growth as higher volume and
better pricing drove increases in new and used equipment sales. The higher
volume of sales was largely the result of continuing to re-emphasize sales of
equipment through training, targeted incentive compensation programs and
increasing inventories of equipment held for sale.
Rental revenue grew in the first quarter of 2005 as compared to the same period
in 2004 partly as a result of increased pricing and partly due to increased
deployment of our rental fleet. While the average first cost of our rental fleet
decreased by approximately 1.3% to $925.9 million in the first quarter of 2005
as compared to the same period in 2004, the deployment of our fleet increased.
In addition, our revenue was positively impacted by increasing penetration in
the first quarter of 2005 in other segments of the construction market through
the ramp up of revenue at NationsRent at Lowe’s Companies, Inc. locations
opened in 2003 and 2004.
We believe better pricing for sales and rentals is, in part, a function of
industry and economic conditions. Increased non-residential construction
activity in the first two months of 2005 as compared to the same period in 2004
and continued strong demand for construction equipment in the U.S. market,
relative to supply, has led to a greater demand for our services which, in turn,
has had a positive impact on the revenue we generate from rentals, and from
sales of new and used equipment.
We have also observed an increase in auction prices for used equipment. One of
our channels for disposing of used equipment is through auctions and therefore,
we have benefited from this trend.
While the increased demand for construction equipment has resulted in higher
demand for our services, it has also resulted in an increase in the delivery
times, and in some cases the prices, for the equipment that we purchase from
manufacturers. Projected delivery schedules affect us most when planning our
equipment needs for the spring and summer months, when demand for our equipment
is greatest. When equipment and parts are not received as planned it can result
in a loss of rental and equipment sales revenue. If manufacturer delivery times
lengthen further, we will have to plan our equipment purchases for our peak
periods earlier than we have in the past. Management believes, however, that our
focus on reducing the number of equipment suppliers we buy from will not only
enable us to negotiate better pricing, but also may enable us to become a
preferred customer with these vendors. We believe preferred customer status may
help us obtain better-than-average delivery times in some cases.
Worldwide price increases for steel have led to an increase in our equipment
costs from some manufacturers. Our sales prices and rental rates generally have
increased in advance of these cost increases. We believe that as long as the
demand for construction equipment exceeds the supply, industry prices will
continue to rise, thereby offsetting much of the increased equipment costs. If
construction activity begins to weaken and competition intensifies, however, we
cannot be certain that we will be able to continue to offset increased equipment
costs through price increases or to continue to maintain existing pricing.
Impact of Fresh-Start Reporting
On June 13, 2003 (the “Effective Date”), NationsRent emerged from
bankruptcy proceedings under Chapter 11 of Title 11 of the U.S. Bankruptcy Code
pursuant to a consensual plan of reorganization (the “Plan of
Reorganization”). We recognized the effects of the reorganization for
accounting purposes on June 1, 2003. Accounting for the reorganization had a
significant effect on the carrying value of our assets and liabilities, which
makes comparing and understanding the results of our operations from prior to
the Effective Date to after the Effective Date more difficult.
In connection with our emergence from bankruptcy, we determined the fair value
of our assets and liabilities pursuant to the American Institute of Certified
Public Accountants’ Statement of Position (“SOP”) 90-7,
“Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code.” The excess of the fair value of our assets, net of the fair value of
our liabilities, over our reorganization value (negative goodwill) at the
Effective Date was recorded as a pro rata reduction of the carrying value of our
long-lived assets in accordance with Statement of Financial Accounting Standards
(“SFAS”) 141, “Business Combinations.” Accordingly, our
rental fleet was written down 44.4% below fair value by $179.1 million, and our
other property and equipment was written down 44.3% below fair value by $34.4
million.
Until these assets are disposed, the write-downs recorded as a result of
fresh-start reporting increase our operating income (or decrease our operating
loss), because:
|
• |
they increase the gain, or reduce the loss, on sale or disposal of
these assets; |
|
• |
they reduce the depreciation expense we record on these assets
while in our rental fleet; and |
|
• |
they reduce depreciation expense on non-rental assets, such as our
delivery vehicles, our leasehold improvements and our information systems. |
These favorable effects on our results of operation will continue until all of
the assets written down have been sold, disposed or fully depreciated. We expect
that most of the rental assets written down in 2003 will be disposed of in the
ordinary course of business through 2010. These impacts are discussed
individually in the review of our results of operations which follows.
Results of Operations
Three Months Ended March 31, 2005 as Compared to Three
Months Ended March 31, 2004
Variance
Three Months Ended March 31, favorable/(unfavorable)
---------------------------- ------------------------------
2005 2004 $ %
------------- ------------- -------------- -----------
(dollars in thousands)
Revenue:
Equipment rentals............................. $ 100,465 $ 93,082 $ 7,383 7.9%
Sales of rental equipment..................... 25,291 16,736 8,555 51.1
Sales of new equipment........................ 8,687 5,271 3,416 64.8
Sales of merchandise,
service, parts and supplies................. 6,095 4,934 1,161 23.5
-------------- -------------- -------------- -----------
Total revenue................................. 140,538 120,023 20,515 17.1
-------------- -------------- -------------- -----------
Cost of revenue:
Cost of equipment rentals..................... 62,670 59,584 (3,086) (5.2)
Rental equipment depreciation and lease expense,
and vehicle depreciation.................. 30,480 28,852 (1,628) (5.6)
Cost of sales of equipment,
merchandise, service, parts and supplies.... 21,896 17,509 (4,387) (25.1)
-------------- -------------- -------------- -----------
Total cost of revenue......................... 115,046 105,945 (9,101) (8.6)
-------------- -------------- -------------- -----------
Gross profit:
Gross profit on equipment rentals
including depreciation and lease
expense and vehicle
depreciation................................ 7,315 4,646 2,669 57.4
Gross profit on sales of equipment,
merchandise, service, parts and supplies.... 18,177 9,432 8,745 92.7
-------------- -------------- -------------- -----------
Total gross profit............................ 25,492 14,078 11,414 81.1
-------------- -------------- -------------- -----------
Operating expenses:
Selling, general and administrative expenses.. 29,268 24,698 (4,570) (18.5)
Non-rental equipment depreciation
and amortization............................ 1,884 2,161 277 12.8
-------------- -------------- -------------- -----------
Operating loss................................ (5,660) (12,781) 7,121 55.7
-------------- -------------- -------------- -----------
Interest expense, net......................... 7,831 7,638 (193) (2.5)
Reversal of pre-petition tax liabilities...... (98) -- 98 --
Other, net.................................... (436) (132) 304 230.3
-------------- -------------- -------------- -----------
7,297 7,506 209 2.8
-------------- -------------- -------------- -----------
Loss before reorganization items and provision
for income taxes............................ (12,957) (20,287) 7,330 36.1
Reorganization items, net..................... (180) -- 180 --
-------------- -------------- -------------- -----------
Loss before provision for income taxes........ (12,777) (20,287) 7,510 37.0
Provision for income taxes.................... -- -- -- --
-------------- -------------- -------------- -----------
Net loss.................................... $ (12,777) $ (20,287) $ 7,510 37.0%
============== ============== ============== ============
Revenue. Equipment rentals revenue was impacted positively in the first quarter
of 2005 as compared to the same period in 2004 primarily by improved pricing and
higher deployment, which resulted from:
|
• |
a period-over-period improvement in non-residential construction
activity; |
|
• |
continued strong demand for our equipment; |
|
• |
a greater number of rental units deployed; and |
|
• |
increased investment through the purchase of new fleet and repair
of old fleet. |
Utilization for the first quarter of 2005 was 43.4% compared to 39.7% for the
same period in 2004. We believe that higher deployment and better pricing were
the key factors in the increase. Utilization, measured as total rental revenue
divided by the average first cost of the rental fleet over the applicable
period, is used as an approximate measure of financial return on the investment
in our rental fleet. For equipment acquired new from a manufacturer, whether
leased or owned, first cost is the purchase price paid for the equipment. For
equipment acquired in connection with business acquisitions, first cost is an
estimate of the purchase price paid by the acquired company for such equipment
where available and, if unavailable, first cost is the estimated fair value of
such equipment.
The primary drivers for the increase in sales of equipment are described above
in the “Overview.”
Gross profit. Gross profit margin on equipment rentals, including
depreciation and lease expense and vehicle depreciation, increased from 5.0% in
the first quarter of 2004 to 7.3% in the same period in 2005.
Gross profit on equipment rentals was positively impacted primarily by the $7.4
million increase in revenue.
Gross profit margin on sales of equipment, merchandise, service, parts and
supplies increased from 35.0% for the first quarter of 2004 to 45.4% for the
same period in 2005. The increase was primarily a result of the increase in
gross profit margin on rental equipment sales.
Gross profit on rental equipment sales was positively impacted primarily by:
|
• |
continued improvement in pricing; and |
|
• |
a greater volume of sales through retail channels, which yield
higher margins, versus auction channels. |
In addition, for the first quarter of 2005 and 2004, $14.6 million (57.8% gross
profit margin) and $6.9 million (41.6% gross profit margin), respectively, of
our gross profit was attributable to the sale of rental equipment, of which $1.8
million and $5.4 million, respectively, was the result of implementing
fresh-start reporting as follows:
|
• |
in each of the first quarter of 2005 and 2004, we sold rental
fleet which was written down on the Effective Date by $8.1 million as a result
of fresh-start reporting; and |
|
• |
depreciation expense since the Effective Date associated with the
equipment that was sold during the first quarter of 2005 and 2004 was $6.2
million and $2.7 million, respectively, less than it otherwise would have been
if such equipment had not been written down pursuant to fresh-start
reporting. |
Excluding these fresh-start adjustments, the normalized gross profit margin on
rental equipment sales increased from 9.5% for the first quarter of 2004 to
50.6% for the same period of 2005.
Operating expenses. Operating expenses were negatively impacted in the
first quarter of 2005 as compared to the same period in 2004 primarily by:
|
• |
a $2.5 million increase in compensation and sales commissions
related to our increased revenue and an incentive compensation plan supporting
our key initiatives; and |
|
• |
a $2.2 million increase in various consulting and professional
fees primarily for outside services related to our 2004 audit. |
Partially offsetting the increase in operating expenses was a $1.4 million
decrease in compensation expense that reflects the vesting of fewer restricted
stock awards in the first quarter of 2005 as compared to the same period in
2004.
Selling, general and administrative expenses as a percentage of total revenue
were 20.8% and 20.6% in the first quarter of 2005 and 2004, respectively.
Liquidity and Capital Resources
In our statements of cash flows included elsewhere in this report, cash flows
from operations do not include purchases of rental equipment and proceeds from
the sale of rental equipment, which are included in cash flows from investing
activities. When evaluating our cash flow it is important to consider cash flows
from the purchase and sale of our rental equipment in conjunction with operating
cash flow. Purchasing and selling rental fleet to manage fleet mix and fleet age
is an integral part of our business and failure to consider cash flows from
these activities would not accurately reflect the operating cash needs of our
business.
Sources and Uses of Cash
Our business is highly capital intensive as a result of our significant
investment in rental equipment and delivery vehicles. The annual capital
expenditures necessary to maintain, replace and grow our fleet are substantial.
While we can manage the replacement requirements to a degree, by reducing or
increasing the amount of used equipment we sell, the annual cash needs are
nonetheless considerable. In addition, while less significant, we must make
annual expenditures to maintain and invest in new and improved information
systems, and to upgrade and maintain our store locations.
From 1998 through 2000, we purchased a substantial amount of rental equipment as
we rapidly grew our rental fleet. Our financial difficulties before and during
our Chapter 11 reorganization restricted our ability to replace rental fleet
assets in 2001, 2002 and early 2003. As a result, when we emerged from our
reorganization in 2003, a portion of our rental fleet had not been replaced and
maintained on normal cycles. While we have repaired and replaced a portion of
this fleet since that time, we have approximately $100.0 million to $120.0
million in expected replacement cost of fleet still remaining from those earlier
model years. We expect to replace this fleet over the course of the next three
to four years.
Our historical sources of cash have been cash generated from operations,
proceeds from the sale of rental equipment, borrowings under credit facilities,
and proceeds from the issuance of debt and equity securities.
Cash Flows in 2004 and 2005
In connection with the completion of our reorganization, certain of our current
stockholders invested $80.0 million through the purchase of a combination of
common stock, preferred stock and convertible subordinated notes. These funds,
along with funds obtained from our credit facility, were used to pay the costs
of our reorganization, to purchase rental fleet previously financed under
leases, and for general working capital purposes. In October 2003, we issued
$250.0 million in senior secured notes and used the net proceeds to fund the
purchase of new and replacement rental fleet, and to retire then existing other
indebtedness. Detailed descriptions of our credit facility and Senior Secured
Notes are included in the discussion under “Debt and Other
Obligations” which follows.
In the first quarter of 2004, we generated cash from operations of $25.1 million
and cash from the sale of rental equipment and vehicles of $16.9 million. Our
capital expenditures in such period were principally for purchases of $29.7
million of new and replacement rental equipment and purchases and improvements
of $3.8 million for other property and equipment.
In the first quarter of 2005, we had sufficient cash on hand and cash generated
from operations to meet our cash needs. We generated cash from operations of
$40.0 million and cash from the sale of rental equipment and vehicles of $25.3
million. Our capital expenditures in such period were principally for purchases
of $66.3 million of new and replacement rental equipment, purchases and
improvements of $3.6 million for other property and equipment, and the
acquisition of a business for $6.7 million. As of April 30, 2005, we had no
borrowings under our credit facility, and our availability under this facility
was $47.1 million, after taking into account $24.1 million of outstanding
letters of credit.
Adequacy of Capital Resources
Our sources of cash in 2005 are expected to be cash on hand, cash generated from
operations, proceeds from the sale of rental equipment, borrowings under our
credit facility and the net proceeds of approximately $144.6 million from the
issuance of our Senior Unsecured Notes in April 2005 as discussed below.
Our uses of cash over the next twelve months are expected to be principally for
the purchase of new and replacement rental equipment and other non-rental
capital expenditures, for working capital needs and for debt service. We are
currently planning rental equipment expenditures over the next twelve months,
net of proceeds from sales of rental equipment, of between $120.0 million and
$150.0 million. We estimate that capital expenditures for non-rental assets over
the next twelve months will range between $20.0 million and $30.0 million,
primarily for delivery vehicles, information systems and store improvements.
Capital expenditures in future years will depend on several factors, including
economic conditions and our growth prospects at the time.
We believe that our existing infrastructure of stores, service bays and
personnel is largely sufficient to support our current and near-term operating
activities. We expect to complete our investment in a new point-of-sale
information system in 2005, which is intended to support our key initiatives. In
addition, while we are presently focused primarily on internal growth, we may
explore additional new store openings and strategic acquisitions that are
available at favorable prices. If these activities are significant, we may be
required to raise additional capital through debt or equity financing.
In addition, we intend to use a portion of the proceeds from the offering of our
Senior Unsecured Notes to redeem our outstanding 6.5% Convertible Subordinated
Notes due 2008 at a price equal to their aggregate principal amount of $45.2
million plus accrued and unpaid interest, which equalled $5.6 million at March
31, 2005.
We believe we can fund our planned business activities during the next twelve
months with a combination of cash on hand, cash generated from operations,
proceeds from the sale of rental equipment, funds from our credit facility, and
the proceeds of our offering of Senior Unsecured Notes in April 2005 as
discussed below.
Debt and Other Obligations
Senior Secured Notes. In October 2003, we completed a private offering of
$250.0 million aggregate principal amount of 9.5% senior secured notes due 2010
(the “Original Senior Secured Notes”). We pay interest on the notes
semi-annually in cash, in arrears, on October 15 and April 15, at an annual
interest rate of 9.5%. The notes mature on October 15, 2010. The net proceeds
were used to repay amounts outstanding under the Credit Facility (as defined
below), equipment-related purchase money obligations, equipment leases, and for
other general corporate purposes.
We can redeem all of the Senior Secured Notes on or after October 15, 2007. We
may also redeem up to 35% of the notes prior to October 15, 2006 with the net
proceeds of an equity offering at 109.5% of their principal amount, plus accrued
interest; provided that at least 65% of the aggregate principal amount of the
notes issued must remain outstanding after such redemption.
The notes were issued by NationsRent Companies, Inc. and are guaranteed by all
of our direct and indirect subsidiaries. NationsRent Companies, Inc. has no
independent assets or operations, the guarantees are full and unconditional and
joint and several, and there are no other subsidiaries other than the
guarantors. There are no restrictions on our ability to obtain funds from our
subsidiaries.
In April 2004, we filed a registration statement on Form S-4 (Registration No.
333-114115), as amended (the “Registration Statement”), with the SEC
with respect to the 9.5% senior secured notes (the “New Notes,” and
together with the Original Senior Secured Notes, the “Senior Secured
Notes”) that have substantially identical terms as the Original Senior
Secured Notes, except that the New Notes are freely transferable. The
Registration Statement was declared effective by the SEC in July 2004 and
promptly thereafter, we commenced an exchange offer, pursuant to which holders
of the Original Senior Secured Notes were able to exchange Original Senior
Secured Notes for the New Notes. The New Notes evidence the same debt as the
Original Senior Secured Notes, are entitled to the benefits of the indenture
governing the Original Senior Secured Notes and will be treated under the
indenture as a single class with the Original Senior Secured Notes. In September
2004, we completed the exchange offer with 100% of the Original Senior Secured
Notes being exchanged for New Notes.
The Senior Secured Notes and the guarantees are secured by a first priority lien
on substantially all of our rental equipment (other than titled vehicles),
subject to certain permitted liens and certain other liens. We are required to
certify each December and June during the term of the Senior Secured Notes that
our collateral value coverage ratio is at least 2.0 to 1.0. At December 31,
2004, we were in compliance with this requirement.
The indenture governing the notes contains various affirmative and negative
covenants, subject to a number of important limitations and exceptions,
including, limitations on our ability to incur additional indebtedness or enter
into sale and leaseback transactions; limitations on our ability to repay or
prepay subordinated indebtedness; certain restrictions on dividends, stock
redemptions and other distributions; restrictions on making certain investments
or acquisitions; restrictions on our ability to grant liens on assets, enter
into transactions with stockholders and affiliates, merge, consolidate or
transfer assets. The indenture also contains various customary events of
default.
On April 14, 2005, we launched a consent solicitation seeking the consent of the
holders of the Senior Secured Notes to amend the indenture governing the Senior
Secured Notes to allow us to redeem all of our outstanding 6.5% Convertible
Subordinated Notes due 2008. On April 20, 2005, we received the requisite number
of consents and on April 26, 2005 entered into a supplemental indenture to
effect the amendment. As of March 31, 2005, the aggregate principal amount of
the convertible subordinated notes was $45.2 million with $5.6 million of
accrued and unpaid interest.
Credit Facility. In June, 2003, we entered into a senior secured
revolving credit facility (the “Credit Facility”) with an aggregate
commitment of up to $150.0 million with a syndicate of lenders. The Credit
Facility was used to provide the exit financing for the Company pursuant to the
Plan of Reorganization, to pay transaction expenses incurred in connection
therewith and to refinance the Company’s then existing indebtedness. In
October 2003, we amended and restated the Credit Facility to reduce the
aggregate commitments to up to $75.0 million (including a $30.0 million
sub-limit for letters of credit) and repaid all amounts outstanding under the
Credit Facility with the proceeds of the offering of the Senior Secured Notes.
In December 2004, we entered into a second amendment to the Credit Facility to
amend certain items including extending the maturity date. On April 21, 2005, we
amended and restated the Credit Facility (the “Amended and Restated Credit
Facility”) to, among other things, increase the availability from $75.0
million up to $100.0 million (including a $40.0 million sub-limit for letters of
credit) and extend the maturity of the facility to April 2010.
Under the terms of the Amended and Restated Credit Facility, availability is
subject to a borrowing base test based upon eligible trade accounts receivable,
titled vehicles and real estate. Borrowings under the Amended and Restated
Credit Facility bear interest at floating rates equivalent to either a base
rate, as defined therein, plus a margin ranging from 0.25% to 1.00% or the
London Interbank Offered Rate (“LIBOR”) plus a margin ranging from
1.50% to 2.50%; provided, however, that until June 30, 2005, the applicable
margin shall be no less than 0.50% for the base rate loans and 2.50% for the
LIBOR loans. Letters of credit fees range from 1.50% to 2.50%. There is an
unused commitment fee ranging from 0.375% to 0.50% and a letter of credit
fronting fee of 0.125%. The Amended and Restated Credit Facility is secured by a
first lien on our assets, except for our rental equipment and inventory. The
facility is also secured by a pledge of the capital stock of our subsidiaries.
We may also grant to the lenders under such facility certain mortgages and other
security interests on certain of our real property.
The Amended and Restated Credit Facility is available to (i) refinance existing
indebtedness, (ii) finance our ongoing capital expenditures and working capital
needs, (iii) issue standby letters of credit and (iv) finance our other general
corporate purposes. The facility contains various affirmative and negative
covenants customary for similar working capital facilities. The Amended and
Restated Credit Facility also contains certain customary events of default. In
addition, we must maintain a debt to cash flow ratio, as defined, of not greater
than 3.00 to 1.00 for the trailing 12-month period for each fiscal quarter. At
March 31, 2005, we were in compliance with this requirement.
Senior Unsecured Notes. On April 26, 2005, we completed a private
offering of $150.0 million aggregate principal amount of 9.5% Senior Unsecured
Notes due 2015 (the “Senior Unsecured Notes”). We will pay interest on
the notes semi-annually in cash, in arrears, on May 1 and November 1, beginning
on November 1, 2005, at an annual rate of interest of 9.5%. The Senior Unsecured
Notes will mature on May 1, 2015. The net proceeds from the offering will be
used for general corporate purposes, provided that we intend to use a portion of
proceeds from the offering to redeem our outstanding 6.5% Convertible
Subordinated Notes due 2008.
We may redeem all of the Senior Unsecured Notes on or after May 1, 2010. We may
also redeem up to 35% of the Senior Unsecured Notes prior to May 1, 2009 with
the net proceeds of an equity offering at 109.5% of their principal amount, plus
accrued interest; provided that at least 65% of the aggregate principal amount
of the notes issued must remain outstanding after such redemption.
The notes were issued by NationsRent Companies, Inc. and are guaranteed by all
of our direct and indirect subsidiaries. NationsRent Companies, Inc. has no
independent assets or operations, the guarantees are full and unconditional and
joint and several, and there are no other subsidiaries other than the
guarantors. There are no restrictions on our ability to obtain funds from our
subsidiaries.
The indenture governing the Senior Unsecured Notes contains various customary
affirmative and negative covenants, subject to a number of important limitations
and exceptions, including, limitations on our ability to incur additional
indebtedness or enter into sale and leaseback transactions; limitations on our
ability to repay or prepay subordinated indebtedness; certain restrictions on
dividends, stock redemptions and other distributions; restrictions on making
certain investments or acquisitions; restrictions on our ability to grant liens
on assets, enter into transactions with stockholders and affiliates, merge,
consolidate or transfer assets. The indenture also contains various customary
events of default.
In connection with the offering of the Senior Unsecured Notes, we entered into a
registration rights agreement whereby we have committed to use reasonable best
efforts to register notes that have terms substantially the same as the Senior
Unsecured Notes under the Securities Act of 1933, as amended, and effect an
exchange offer shortly thereafter. We will have to pay additional interest on
the Senior Unsecured Notes if we do not file the registration statement within
180 days of the issue date of the Senior Unsecured Notes, such registration
statement is not declared effective within 270 days of the issue date, or the
exchange offer is not completed within 60 days of the effective date of the
registration statement.
We intend to use a portion of the proceeds from the offering of the Senior
Unsecured Notes to redeem our outstanding 6.5% Convertible Subordinated Notes
due 2008 at a price equal to their aggregate principal amount plus accrued and
unpaid interest. Upon redemption of such notes, we will be required to write off
the remaining balance of unamortized debt issuance costs related to the issuance
of such notes, which was $498,000 at March 31, 2005.
Seasonality and Fluctuations in Operating Results
Our revenue and income are dependent upon activity in the construction industry
which is dependent upon weather and other seasonal factors affecting
construction in the geographic areas where we have operations. Because of this
variability in demand, our revenue and income fluctuates. Accordingly, quarterly
or other interim results should not be considered indicative of results to be
expected for any other quarter or for a full year.
Operating results may fluctuate due to other factors including, but not limited
to:
|
• |
changes in general economic conditions including changes in
national, regional or local construction or industrial activities; |
|
• |
the timing of expenditures for new rental equipment and the
disposition of used equipment; |
|
• |
competitive pricing pressures; and |
|
• |
changes in interest rates. |
We incur significant expenses in opening new locations, such as employee
training, marketing and facility set-up costs. Initially, new locations may
generate lower operating margins than established locations and may operate at a
loss for a period of time. Our new locations have, on average, achieved
profitability within six months of their opening. In addition, when we purchase
new rental equipment, the depreciation related to such equipment may contribute
to near-term margin decline because such equipment may not initially generate
revenue at a rate that is sufficient to match such increased depreciation
expense. As such, the opening of new rental locations and the purchase of rental
equipment may reduce our operating margins during a start-up period.
Inflation
We do not believe that inflation has been a significant factor to the cost of
our operations other than the increase in steel prices discussed above in the
section entitled “Management’s Discussion and Analysis of Financial
Condition and Results of Operations – Overview” (Item 7).
Factors That May Affect Future Results
From time to time we make statements concerning our expectations, beliefs,
plans, objectives, goals, strategies, future events or performance and
underlying assumptions and other statements that are not historical facts. These
statements are “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include statements concerning our expectations, plans, objectives, goals,
strategies, future events, future revenue or performance, capital expenditures,
financing needs, plans or intentions relating to acquisitions, business trends
and other information that is not historical information and, in particular,
appear under the headings “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.” The words
“could,” “estimate,” “expect,”
“anticipate,” “project,” “plan,”
“intend,” “believe,” “goal,” “forecast”
and variations of such words or similar expressions are intended to identify
forward-looking statements. All forward-looking statements, including, without
limitation, management’s examination of historical operating trends, are
based upon our current expectations and various assumptions. Our expectations,
beliefs and projections are expressed in good faith and we believe there is a
reasonable basis for them. However, there can be no assurance that our
expectations, beliefs and projections will result or be achieved.
There may be factors not presently known to us or which we currently consider to
be immaterial that may cause our actual results to differ materially from the
forward-looking statements. Some of the risks and uncertainties that could cause
our actual results to differ materially from the forward-looking statements are
described below and elsewhere in this report as well as in our Annual Report on
Form 10-K for the year ended December 31, 2004 and other filings with the SEC,
and include, among others:
|
• |
Since emerging from bankruptcy, we have not yet achieved positive
operating income. Future operating losses may decrease our cash flow which would
limit our ability to reinvest in our business, primarily for the purchase of new
rental equipment, and may cause us not to have enough funds to satisfy our debt
obligations. |
|
• |
Our substantial level of indebtedness could materially adversely
affect our ability to execute our business strategy. |
|
• |
Disruptions in our information technology systems could limit our
ability to effectively monitor and control our operations. |
|
• |
Failure to achieve and maintain effective internal controls and
procedures could adversely impact our business and operating results. |
|
• |
As we dispose of our rental fleet in the ordinary course of
business, we may not realize as much cash as we anticipate which could
negatively impact our cash flow. As we operate a capital-intensive business,
reductions in operating cash flow could severely impact our ability to purchase
new rental fleet, which in turn could put us at a competitive disadvantage in
the marketplace. |
|
• |
Contraction in the private non-residential construction industry
may weaken demand and pricing for our equipment. |
|
• |
Implementing our new business strategy may cause significant
disruptions, which could cause customer dissatisfaction and affect our cash
flows and profitability. |
|
• |
Because all of our existing leases for our NationsRent at
Lowe’s locations expire on the same date in October 2008, if we are not
able to renew these leases we may be forced to close or relocate up to 100
locations at or around the same time. |
|
• |
Competitors with greater financial resources may have a
competitive advantage over us by being able to sustain reduced rental rates for
longer periods of time and being able to offer a broader range and volume of
rental equipment. If they employ such strategies, our cash flows and
profitability may be reduced. |
|
• |
Although we are actively negotiating to establish dealership and
distributor relationships with equipment manufactures to diversify our revenue
base, our strategy may not succeed as quickly as anticipated, or at all. |
|
• |
We have made, and will likely continue to make, strategic
acquisitions. If we are not successful in operating or integrating these newly
acquired businesses in an effective and timely manner, our ability to take
advantage of further growth opportunities and our revenue and gross margins
could be adversely affected. |
|
• |
Costs associated with compliance with, and changes in,
environmental laws and regulations could subject us to increased liabilities and
expenses. |
|
• |
Potential and certain existing claims against the Company may not
be covered by our insurance. Additionally, we may not be able to renew our
coverage on terms favorable to us that could lead to increased costs in the
event of future claims. |
|
• |
Our adoption of fresh-start reporting and related accounting rules may limit
your ability to accurately compare our financial results. |
All forward-looking statements and projections attributable to us or persons
acting on our behalf apply only as of the date of the particular statement, and
are expressly qualified in their entirety by the cautionary statements included
in this report and our other filings with the SEC. We undertake no obligation to
publicly update or revise forward-looking statements, including any of the
projections presented herein, to reflect events or circumstances after the date
made or to reflect the occurrence of unanticipated events.
Item 3: Quantitative and Qualitative Disclosures About Market
Risk
The inherent risk in market risk sensitive instruments and positions primarily
relates to potential losses arising from adverse changes in foreign currency
exchange rates and interest rates. Our exposure to market risk is limited
primarily to the fluctuating interest rates associated with our Amended Credit
Facility. Our variable interest rates are subject to interest rate changes in
the United States and the Eurodollar market. At March 31, 2005, we did not have
any variable rate debt outstanding.
Item 4: Controls and Procedures
Our management, including the Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness of disclosure controls and
procedures. Based on that evaluation and notwithstanding the items described
below, the Chief Executive Officer and Chief Financial Officer concluded that
the disclosure controls and procedures are effective in ensuring that all
material information required to be filed in this report has been made known to
them in a timely fashion.
In 2004, as part of our review of our internal controls over financial
reporting, we determined that we had certain significant deficiencies, which
when assessed in the aggregate, constituted a material weakness in controls
relating to our financial statement closing process. To correct the errors
related to these significant deficiencies, we restated certain of our financial
statements in March 2005. In addition, during the audit of our 2004 financial
statements, we determined that we had a material weakness regarding our failure
to properly assess the impact of not consistently obtaining a written customer
acknowledgement of the terms of certain rental and sales transactions on open
account. We have taken and are continuing to take remedial measures to
strengthen our internal controls and to address such deficiencies and
weaknesses.
We continue to document and test our internal control procedures in order to
satisfy the requirements of Section 404 of the Sarbanes-Oxley Act. During the
course of our testing, we may identify deficiencies which we may not be able to
remediate prior to the reporting deadline imposed by the Sarbanes-Oxley Act. In
addition, if we fail to achieve and maintain the adequacy of our internal
controls, as such standards are modified, supplemented or amended from time to
time, we may not be able to conclude on an ongoing basis that we have effective
internal controls over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act and therefore, we may report additional material weaknesses
in internal controls in the future.
We believe that our efforts are addressing the material weaknesses and
significant deficiencies in internal controls over financial reporting. However,
for the reasons stated above, we cannot give any assurances that all material
weaknesses and significant deficiencies have been entirely corrected or that
internal control weaknesses will not be identified from time to time in the
future. Effective internal controls are necessary for us to produce reliable
financial reports. If we cannot produce reliable financial reports, our ability
to effectively manage our business and raise capital and the market value of our
outstanding securities may be impaired.
PART II - OTHER INFORMATION
Item 6: Exhibits
Exhibit
Number |
Description |
| 2.1 |
First Amended Joint Plan of Reorganization of NationsRent, Inc.
and its Debtor Subsidiaries, dated February 7, 2003, as filed in the United
States Bankruptcy Court District of Delaware on February 11, 2003*(1) |
| 2.1.1 |
Modifications to First Amended Joint Plan of Reorganization of
NationsRent, Inc. and its Debtor Subsidiaries (1) |
| 2.1.2 |
Modifications (Second) to First Amended Joint Plan of
Reorganization of NationsRent, Inc. and its Debtor Subsidiaries (1) |
| 2.1.3 |
Modifications (Third) to First Amended Joint Plan of
Reorganization of NationsRent, Inc. and its Debtor Subsidiaries (1) |
| 3.1 |
Certificate of Incorporation of the Company (1) |
| 3.2 |
Certificate of Amendment of Certificate of Incorporation of the
Company (1) |
| 3.3 |
Certificate of Amendment of Certificate of Incorporation of the
Company (1) |
| 3.4 |
Certificate of Designation for Series A Preferred Stock of the
Company (1) |
| 3.5 |
Certificate of Amendment to Certificate of Designation for Series
A Preferred Stock (1) |
| 3.6 |
By-Laws of the Company (1) |
| 3.7 |
Certificate of Incorporation of NationsRent, Inc. (1) |
| 3.8 |
By-Laws of NationsRent, Inc. (1) |
| 3.9 |
Certificate of Incorporation of Las Olas Fourteen Corporation
(1) |
| 3.10 |
By-Laws of Las Olas Fourteen Corporation (1) |
| 3.11 |
Certificate of Incorporation of Las Olas Twelve Corporation
(1) |
| 3.12 |
By-Laws of Las Olas Twelve Corporation (1) |
| 3.13 |
Certificate of Incorporation of NRGP, Inc., as amended (1) |
| 3.14 |
By-Laws of NRGP, Inc. (1) |
| 3.15 |
Certificate of Incorporation of NationsRent USA, Inc. (1) |
| 3.16 |
By-Laws of NationsRent USA, Inc. (1) |
| 3.17 |
Certificate of Incorporation of NationsRent West, Inc. (1) |
| 3.18 |
By-Laws of NationsRent West, Inc. (1) |
| 3.19 |
Certificate of Incorporation of Logan Equipment Corp., as amended
(1) |
| 3.20 |
By-Laws of Logan Equipment Corp. (1) |
| 3.21 |
Certificate of Incorporation of NationsRent Transportation
Services, Inc. (1) |
| 3.22 |
By-Laws of NationsRent Transportation Services, Inc. (1) |
| 3.23 |
Articles of Incorporation of BDK Equipment Company, Inc. (1) |
| 3.24 |
Amended and Restated Bylaws of BDK Equipment Company, Inc.
(1) |
| 3.25 |
Certificate of Incorporation of NR Delaware, Inc. (1) |
| 3.26 |
By-Laws of NR Delaware, Inc. (1) |
| 3.27 |
Certificate of Limited Partnership of NationsRent of Texas, LP
(1) |
| 3.28 |
Amended and Restated Agreement of Limited Partnership of
NationsRent of Texas, LP (1) |
| 3.29 |
Certificate of Formation of NationsRent Dealer Group, LLC
(6) |
| 3.30 |
Limited Liability Company Agreement of NationsRent Dealer Group,
LLC (6) |
| 4.1 |
Form of 9.5% Senior Secured Notes due 2010 (1) |
| 4.2 |
Indenture, dated as of October 23, 2003, by and among Company, the
guarantors party thereto and Wilmington Trust Company (1) |
| 4.2.1 |
First Supplement, dated as of July 27, 2004, to the Indenture,
dated as of October 23, 2003, by and among Company, the guarantors named therein
and Wilmington Trust Company (1) |
| 4.2.2 |
Second Supplement, dated March 31, 2005, to the Indenture, dated
as of October 23, 2003, by and among Company, the guarantors named therein and
Wilmington Trust Company (6) |
| 4.2.3 |
Third Supplement, dated April 26, 2005, to the Indenture, dated as
of October 23, 2003, by and among Company, the guarantors named therein and
Wilmington Trust Company (5) |
| 4.3 |
Registration Rights Agreement, dated as of October 23, 2003,
by and among the Company, the guarantors named therein and the initial
purchasers (1) |
| 4.4 |
Form of 6.5% Unsecured Convertible Subordinated Promissory
Note due 2008 (1) |
| 4.5 |
Form of 9.5% Senior Unsecured Notes due 2015 (6) |
| 4.6 |
Indenture, dated April 26, 2005, by and among the Company, the
guarantors party thereto and Wilmington Trust Company (5) |
| 4.7 |
Registration Rights Agreement, dated April 26, 2005, by and
among the Company, the guarantors named therein and Jefferies & Company,
Inc. (5) |
| 10.1 |
NationsRent Liquidating Trust Agreement, dated as of June 13,
2003, by and among NationsRent, Inc. and its subsidiaries, as settlors, and
Perry Mandarino, as trustee of the NationsRent Unsecured Creditor's Liquidating
Trust (1) |
| 10.2 |
Call Agreement, dated as of June 13, 2003, by and between NR
Holdings, Inc. and Perry Mandarino, as trustee on behalf of NationsRent
Unsecured Creditor's Liquidating Trust (1) |
| 10.3 |
2003 Restricted Stock Plan of NR Holdings, Inc. (1) |
| 10.4 |
Stockholders' Agreement, dated as of June 13, 2003, by and
among NR Holdings, Inc. and the stockholders party thereto (1) |
| 10.5 |
First Amendment to Stockholders' Agreement, dated as of July
9, 2003, by and among NR Holdings, Inc. and the stockholders party thereto
(1) |
| 10.5.1 |
Second Amendment to Stockholders' Agreement, dated as of
December 10, 2004, by and among NationsRent Companies, Inc. and the stockholders
party thereto (4) |
| 10.6 |
Indemnification Agreement, dated as of June 13, 2003, by and
among NR Holdings, Inc. and the indemnitees signatory thereto (1) |
| 10.6.1 |
Amended and Restated Indemnification Agreement, dated as of
June 13, 2003, by and among NationsRent Companies, Inc. and the indemnities
signatory thereto (2) |
| 10.7 |
Employment Agreement, effective June 13, 2003, by and between
the Company and Thomas J. Putman (1) |
| 10.8 |
Employment Agreement, effective July 9, 2003, by and between
the Company and Bryan T. Rich (1) |
| 10.9 |
Employment Agreement, effective July 9, 2003, by and between
the Company and Douglas M. Suliman, Jr. (1) |
| 10.10 |
Employment Agreement, effective June 23, 2003, by and
between the Company and Thomas J. Hoyer (1) |
| 10.11 |
Employment Agreement, effective June 13, 2003, by and
between the Company and Joseph H. Izhakoff (1) |
| 10.12 |
Employment Agreement, effective July 9, 2003, by and between
the Company and John Scherer (1) |
| 10.13 |
Form of Key Employee Housing Assistance Program (1) |
| 10.14 |
Indenture, dated March 1, 1998, between Francis P. Rich
and/or Catherine L. Rich and Logan Equipment Corporation (1) |
| 10.15 |
First Amendment to Lease, dated April 21, 2000, between
Francis P. Rich and/or Catherine L. Rich and NationsRent USA, Inc.
(successor-in-interest to Logan Equipment Corporation) (1) |
| 10.16 |
Lease Agreement, dated December 14, 1998, between Jim Joy
Holdings, LLC and NationsRent of New Hampshire, Inc. (1) |
| 10.17 |
Lease Assignment, dated September 17, 1999, between Jim Joy
Holdings, LLC and 1216 West Hammond Street, LLC (1) |
| 10.18 |
First Amendment to Lease, dated January 10, 2000, between
1216 Hammond Street, LLC and NationsRent USA, Inc. (successor-in-interest to
NationsRent of New Hampshire, Inc.) (1) |
| 10.19 |
Lease Agreement, dated March 15, 2000, between Jim Joy
Holdings, LLC and NationsRent USA, Inc. (1) |
| 10.20 |
Lease Agreement, dated December 7, 1999, between TREC, LLC
and NationsRent USA, Inc. (1) |
| 10.21 |
Lease Agreement, dated December 14, 1998, between TREC, LLC
and NRI/LEC Merger Corp., Inc. (1) |
| 10.22 |
Lease Agreement, dated March 1, 2000, between TREC, LLC and
NationsRent USA, Inc. (1) |
| 10.23 |
First Amendment to Lease, dated May 24, 2001, between TREC,
LLC and NationsRent USA, Inc. (1) |
| 10.24 |
Subscription Agreement, dated June 13, 2003, among NR
Holdings, Inc. and the subscribers party thereto (1) |
| 10.25 |
Asset Purchase Agreement, dated June 13, 2003, among Boston
Rental Partners, LLC, NationsRent, Inc. and its subsidiaries (1) |
| 10.26 |
Rental Agreement, dated January 31, 2003, by and between
Boston Rental Partners, LLC and NationsRent, Inc. and Term Sheet Regarding
Settlement Program referenced therein (1) |
| 10.27 |
Strategic Alliance Agreement, dated October 12, 2000,
between NationsRent, Inc. and Lowe's Companies, Inc. (1) |
| 10.29 |
Employment agreement, effective July 9, 2003, by and between
the Company and Robert W. Schiller (4) |
| 10.30 |
Amended and Restated Credit Agreement, dated as of October
23, 2003, by and among the Company, certain of its subsidiaries, Wachovia Bank,
National Association, as administrative agent and as a lender, and the other
lending institutions party thereto. (1) |
| 10.30.1 |
First Amendment, dated as of December 22, 2003, to Amended
and Restated Credit Agreement, by and among the Company, certain of its
subsidiaries, Wachovia Bank, National Association, as administrative agent and a
lender, and the other lending institutions party thereto (1) |
| 10.30.2 |
Second Amendment, dated as of December 20, 2004, to Amended and
Restated Credit Agreement, by and among the Company, certain of its
subsidiaries, Wachovia Bank, National Association, as administrative agent and a
lender and the other lending institutions party thereto (4) |
| 10.30.3 |
Third Amendment, dated as of April 21, 2005, to the Amended
and Restated Credit Agreement, by and among the Company, certain of its
subsidiaries, Wachovia Bank, National Association, as administrative agent and a
lender and the other lending institutions party therein (5) |
| 10.31 |
Amended and Restated Security Agreement, dated as of October 23,
2003, between the Company, certain of its subsidiaries, and Wachovia Bank,
National Association, as administrative agent (1) |
| 31.1 |
Certification of Thomas J. Putman pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (6) |
| 31.2 |
Certification of Thomas J. Hoyer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (6) |
| 32.1 |
Certification of Thomas J. Putman pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (6) |
| 32.2 |
Certification of Thomas J. Hoyer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (6) |
____________________
| (1) |
Filed as an exhibit to the Company's Registration Statement on
Form S-4 (Registration No. 333-114115), filed April 1, 2004, as amended, and
incorporated herein by reference. |
| (2) |
Filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2004, and incorporated herein by
reference. |
| (3) |
Filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2004, and incorporated herein
by reference. |
| (4) |
Filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 2004, and incorporated herein by
reference. |
| (5) |
Filed as an exhibit to the Company's Current Report on Form
8-K filed on April 27, 2005, and incorporated herein by reference. |
| (*) |
The Company agrees to furnish supplementally a copy of any
omitted schedule to the SEC upon request. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
| |
NATIONSRENT COMPANIES, INC.
(Registrant)
|
|
Dated: May 16, 2005
|
By
Name:
Title:
|
/s/ Thomas J. Putman
Thomas J. Putman
President and Chief Executive Officer
|
|
Dated: May 16, 2005
|
By
Name:
Title:
|
/s/ Thomas J. Hoyer
Thomas J. Hoyer
Executive Vice President and Chief Financial Officer
|
|
Dated: May 16, 2005
|
By
Name:
Title:
|
/s/ Robert W. Schiller
Robert W. Schiller
Vice President and Controller
|
EXHIBIT INDEX
Exhibit
Number |
Description |
| 2.1 |
First Amended Joint Plan of Reorganization of NationsRent, Inc.
and its Debtor Subsidiaries, dated February 7, 2003, as filed in the United
States Bankruptcy Court District of Delaware on February 11, 2003*(1) |
| 2.1.1 |
Modifications to First Amended Joint Plan of Reorganization of
NationsRent, Inc. and its Debtor Subsidiaries (1) |
| 2.1.2 |
Modifications (Second) to First Amended Joint Plan of
Reorganization of NationsRent, Inc. and its Debtor Subsidiaries (1) |
| 2.1.3 |
Modifications (Third) to First Amended Joint Plan of
Reorganization of NationsRent, Inc. and its Debtor Subsidiaries (1) |
| 3.1 |
Certificate of Incorporation of the Company (1) |
| 3.2 |
Certificate of Amendment of Certificate of Incorporation of the
Company (1) |
| 3.3 |
Certificate of Amendment of Certificate of Incorporation of the
Company (1) |
| 3.4 |
Certificate of Designation for Series A Preferred Stock of the
Company (1) |
| 3.5 |
Certificate of Amendment to Certificate of Designation for Series
A Preferred Stock (1) |
| 3.6 |
By-Laws of the Company (1) |
| 3.7 |
Certificate of Incorporation of NationsRent, Inc. (1) |
| 3.8 |
By-Laws of NationsRent, Inc. (1) |
| 3.9 |
Certificate of Incorporation of Las Olas Fourteen Corporation
(1) |
| 3.10 |
By-Laws of Las Olas Fourteen Corporation (1) |
| 3.11 |
Certificate of Incorporation of Las Olas Twelve Corporation
(1) |
| 3.12 |
By-Laws of Las Olas Twelve Corporation (1) |
| 3.13 |
Certificate of Incorporation of NRGP, Inc., as amended (1) |
| 3.14 |
By-Laws of NRGP, Inc. (1) |
| 3.15 |
Certificate of Incorporation of NationsRent USA, Inc. (1) |
| 3.16 |
By-Laws of NationsRent USA, Inc. (1) |
| 3.17 |
Certificate of Incorporation of NationsRent West, Inc. (1) |
| 3.18 |
By-Laws of NationsRent West, Inc. (1) |
| 3.19 |
Certificate of Incorporation of Logan Equipment Corp., as amended
(1) |
| 3.20 |
By-Laws of Logan Equipment Corp. (1) |
| 3.21 |
Certificate of Incorporation of NationsRent Transportation
Services, Inc. (1) |
| 3.22 |
By-Laws of NationsRent Transportation Services, Inc. (1) |
| 3.23 |
Articles of Incorporation of BDK Equipment Company, Inc. (1) |
| 3.24 |
Amended and Restated Bylaws of BDK Equipment Company, Inc.
(1) |
| 3.25 |
Certificate of Incorporation of NR Delaware, Inc. (1) |
| 3.26 |
By-Laws of NR Delaware, Inc. (1) |
| 3.27 |
Certificate of Limited Partnership of NationsRent of Texas, LP
(1) |
| 3.28 |
Amended and Restated Agreement of Limited Partnership of
NationsRent of Texas, LP (1) |
| 3.29 |
Certificate of Formation of NationsRent Dealer Group, LLC
(6) |
| 3.30 |
Limited Liability Company Agreement of NationsRent Dealer Group,
LLC (6) |
| 4.1 |
Form of 9.5% Senior Secured Notes due 2010 (1) |
| 4.2 |
Indenture, dated as of October 23, 2003, by and among Company, the
guarantors party thereto and Wilmington Trust Company (1) |
| 4.2.1 |
First Supplement, dated as of July 27, 2004, to the Indenture,
dated as of October 23, 2003, by and among Company, the Guarantors and
Wilmington Trust Company (1) |
| 4.2.2 |
Second Supplemental Indenture, dated as of March 31, 2005, to the
Indenture, dated as of October 23, 2003, by and among Company, the guarantors
named therein and Wilmington Trust Company (6) |
| 4.2.3 |
Third Supplemental Indenture, dated as of April 26, 2005, to the
Indenture, dated as of October 23, 2003, by and among Company, the guarantors
named therein and Wilmington Trust Company (5) |
| 4.3 |
Registration Rights Agreement, dated as of October 23, 2003,
by and among the Company, the guarantors named therein and the initial
purchasers (1) |
| 4.4 |
Form of 6.5% Unsecured Convertible Subordinated Promissory
Note due 2008 (1) |
| 4.5 |
Form of 9.5% Senior Unsecured Notes due 2015 (6) |
| 4.6 |
Indenture, dated April 26, 2005, by and among the Company, the
guarantors party thereto and Wilmington Trust Company (5) |
| 4.7 |
Registration Rights Agreement, dated April 26, 2005, by and
among the Company, the guarantors named therein and Jefferies & Company, Inc.
(5) |
| 10.1 |
NationsRent Liquidating Trust Agreement, dated as of June 13,
2003, by and among NationsRent, Inc. and its subsidiaries, as settlors, and
Perry Mandarino, as trustee of the NationsRent Unsecured Creditor's Liquidating
Trust (1) |
| 10.2 |
Call Agreement, dated as of June 13, 2003, by and between NR
Holdings, Inc. and Perry Mandarino, as trustee on behalf of NationsRent
Unsecured Creditor's Liquidating Trust (1) |
| 10.3 |
2003 Restricted Stock Plan of NR Holdings, Inc. (1) |
| 10.4 |
Stockholders' Agreement, dated as of June 13, 2003, by and
among NR Holdings, Inc. and the stockholders party thereto (1) |
| 10.5 |
First Amendment to Stockholders' Agreement, dated as of July
9, 2003, by and among NR Holdings, Inc. and the stockholders party thereto
(1) |
| 10.5.1 |
Second Amendment to Stockholders' Agreement, dated as of
December 10, 2004, by and among NationsRent Companies, Inc. and the stockholders
party thereto (4) |
| 10.6 |
Indemnification Agreement, dated as of June 13, 2003, by and
among NR Holdings, Inc. and the indemnitees signatory thereto (1) |
| 10.6.1 |
Amended and Restated Indemnification Agreement, dated as of
June 13, 2003, by and among NationsRent Companies, Inc. and the indemnities
signatory thereto (2) |
| 10.7 |
Employment Agreement, effective June 13, 2003, by and between
the Company and Thomas J. Putman (1) |
| 10.8 |
Employment Agreement, effective July 9, 2003, by and between
the Company and Bryan T. Rich (1) |
| 10.9 |
Employment Agreement, effective July 9, 2003, by and between
the Company and Douglas M. Suliman, Jr. (1) |
| 10.10 |
Employment Agreement, effective June 23, 2003, by and
between the Company and Thomas J. Hoyer (1) |
| 10.11 |
Employment Agreement, effective June 13, 2003, by and
between the Company and Joseph H. Izhakoff (1) |
| 10.12 |
Employment Agreement, effective July 9, 2003, by and between
the Company and John Scherer (1) |
| 10.13 |
Form of Key Employee Housing Assistance Program (1) |
| 10.14 |
Indenture, dated March 1, 1998, between Francis P. Rich
and/or Catherine L. Rich and Logan Equipment Corporation (1) |
| 10.15 |
First Amendment to Lease, dated April 21, 2000, between
Francis P. Rich and/or Catherine L. Rich and NationsRent USA, Inc.
(successor-in-interest to Logan Equipment Corporation) (1) |
| 10.16 |
Lease Agreement, dated December 14, 1998, between Jim Joy
Holdings, LLC and NationsRent of New Hampshire, Inc. (1) |
| 10.17 |
Lease Assignment, dated September 17, 1999, between Jim Joy
Holdings, LLC and 1216 West Hammond Street, LLC (1) |
| 10.18 |
First Amendment to Lease, dated January 10, 2000, between
1216 Hammond Street, LLC and NationsRent USA, Inc. (successor-in-interest to
NationsRent of New Hampshire, Inc.) (1) |
| 10.19 |
Lease Agreement, dated March 15, 2000, between Jim Joy
Holdings, LLC and NationsRent USA, Inc. (1) |
| 10.20 |
Lease Agreement, dated December 7, 1999, between TREC, LLC
and NationsRent USA, Inc. (1) |
| 10.21 |
Lease Agreement, dated December 14, 1998, between TREC, LLC
and NRI/LEC Merger Corp., Inc. (1) |
| 10.22 |
Lease Agreement, dated March 1, 2000, between TREC, LLC and
NationsRent USA, Inc. (1) |
| 10.23 |
First Amendment to Lease, dated May 24, 2001, between TREC,
LLC and NationsRent USA, Inc. (1) |
| 10.24 |
Subscription Agreement, dated June 13, 2003, among NR
Holdings, Inc. and the subscribers party thereto (1) |
| 10.25 |
Asset Purchase Agreement, dated June 13, 2003, among Boston
Rental Partners, LLC, NationsRent, Inc. and its subsidiaries (1) |
| 10.26 |
Rental Agreement, dated January 31, 2003, by and between
Boston Rental Partners, LLC and NationsRent, Inc. and Term Sheet Regarding
Settlement Program referenced therein (1) |
| 10.27 |
Strategic Alliance Agreement, dated October 12, 2000,
between NationsRent, Inc. and Lowe's Companies, Inc. (1) |
| 10.28 |
Employment agreement, effective May 20, 2004, by and between
the Company and Gary N. Golden (1) |
| 10.29 |
Employment agreement, effective July 9, 2003, by and between
the Company and Robert W. Schiller (1) |
| 10.30 |
Amended and Restated Credit Agreement, dated as of October
23, 2003, by and among the Company, certain of its subsidiaries, Wachovia Bank,
National Association, as administrative agent and as a lender, and the other
lending institutions party thereto. (1) |
| 10.30.1 |
First Amendment, dated as of December 22, 2003, to Amended
and Restated Credit Agreement, by and among the Company, certain of its
subsidiaries, Wachovia Bank, National Association, as administrative agent and a
lender, and the other lending institutions party thereto (1) |
| 10.30.2 |
Second Amendment, dated as of December 20, 2004, to Amended and
Restated Credit Agreement, by and among the Company, certain of its
subsidiaries, Wachovia Bank, National Association, as administrative agent and a
lender and the other lending institutions party thereto (4) |
| 10.30.3 |
Third Amendment, dated as of April 21, 2005, to the Amended
and Restated Credit Agreement by and among the Company, certain of its
subsidiaries, Wachovia Bank, National Association, as administrative agent and a
lender and the other lending institutions party therein (5) |
| 10.31 |
Amended and Restated Security Agreement, dated as of October 23,
2003, between the Company, certain of its subsidiaries, and Wachovia Bank,
National Association, as administrative agent (1) |
| 31.1 |
Certification of Thomas J. Putman pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (6) |
| 31.2 |
Certification of Thomas J. Hoyer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (6) |
| 32.1 |
Certification of Thomas J. Putman pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (6) |
| 32.2 |
Certification of Thomas J. Hoyer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (6) |
____________________
| (1) |
Filed as an exhibit to the Company's Registration Statement on
Form S-4 (Registration No. 333-114115), filed April 1, 2004, as amended. |
| (2) |
Filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2004. |
| (3) |
Filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2004. |
| (4) |
Filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 2004. |
| (5) |
Filed as an exhibit to the Company's Current Report on Form
8-K filed on April 27, 2005, and incorporated herein by reference. |
| (*) |
The Company agrees to furnish supplementally a copy of any
omitted schedule to the SEC upon request. |