Delaware | 001-14387 | 06-1522496 | ||
Delaware | 001-13663 | 86-0933835 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
100 First Stamford Place, Suite 700 | ||
Stamford, Connecticut | 06902 | |
(Address of Principal Executive Offices) | (Zip Code) |
(Former name or former address if changed since last report.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
UNITED RENTALS, INC. | ||
By: | /S/ Jonathan M. Gottsegen | |
Name: Jonathan M. Gottsegen | ||
Title: Senior Vice President, General Counsel and Corporate Secretary | ||
UNITED RENTALS (NORTH AMERICA), INC. | ||
By: | /S/ Jonathan M. Gottsegen | |
Name: Jonathan M. Gottsegen | ||
Title: Senior Vice President, General Counsel and Corporate Secretary |
Exhibit No. | Description | |
99.1 | Press Release of United Rentals, Inc. |
• | Rental revenue (which includes owned equipment rental revenue, re-rent revenue and ancillary items) increased 0.8% year-over-year.3 Within rental revenue, owned equipment rental revenue increased 1.0%, reflecting a year-over-year increase of 2.4% in the volume of equipment on rent, partially offset by a 0.1% decrease in rental rates. |
• | The company’s Trench Safety and Power & HVAC businesses' rental revenue increased by a combined 17.9% year-over-year, primarily on a same store basis. |
• | Return on invested capital was 8.9% for the 12 months ended September 30, 2015, an increase of 0.5 percentage points from the 12 months ended September 30, 2014. |
• | Time utilization decreased 150 basis points year-over-year to 70.0%. Excluding the branches with the most exposure to upstream oil and gas, time utilization decreased 60 basis points year-over-year. |
• | The company generated $141 million of proceeds from used equipment sales at an adjusted gross margin of 44.0%, compared with $140 million and 47.9% for the same period last year.4 |
1. | Adjusted EPS is a non-GAAP measure that excludes the impact of the following special items: (i) merger related costs; (ii) restructuring charge; (iii) impact on interest expense related to fair value adjustment of acquired RSC indebtedness; (iv) impact on depreciation related to acquired RSC fleet and property and equipment; (v) impact of the fair value mark-up of acquired RSC fleet; (vi) merger related intangible asset amortization and (vii) loss on repurchase/redemption of debt securities and amendment of ABL facility. See table below for amounts. |
2. | Adjusted EBITDA is a non-GAAP measure that excludes the impact of the following special items: (i) merger related costs; (ii) restructuring charge; (iii) impact of the fair-value mark up of acquired RSC fleet and (iv) stock compensation expense, net. See table below for amounts. |
3. | The 0.8% rental revenue increase includes an adverse impact from currency. Excluding this impact, rental revenue would have increased 2.7% year-over-year. |
4. | Used equipment sales adjusted gross margin excludes the impact of the fair value mark-up of acquired RSC fleet that was sold. |
• | Total revenue was $4.294 billion and rental revenue was $3.671 billion, compared with $4.121 billion and $3.499 billion, respectively, for the same period last year. |
• | Rental revenue increased 4.9% year-over-year.5 Within rental revenue, owned equipment rental revenue increased 5.1%, reflecting year-over-year increases of 4.2% in the volume of equipment on rent and 1.3% in rental rates.6 |
• | The company’s Trench Safety and Power & HVAC businesses' rental revenue increased by a combined 23.7% year-over-year, primarily on a same store basis. |
• | Adjusted EBITDA was $2.088 billion and adjusted EBITDA margin was 48.6%, an increase of $145 million and 150 basis points, respectively, from the same period last year. |
• | Time utilization decreased 120 basis points year-over-year to 67.0%. Excluding the branches with the most exposure to upstream oil and gas, time utilization decreased 30 basis points year-over-year. |
• | The company generated $381 million of proceeds from used equipment sales at an adjusted gross margin of 48.0%, compared with $388 million and 48.5% for the same period last year. |
• | Flow-through, which represents the year-over-year change in adjusted EBITDA divided by the year-over-year change in total revenue, was 83.8%. |
Total revenue | $5.8 billion to $5.9 billion | |
Adjusted EBITDA | $2.80 billion to $2.85 billion | |
Increase in rental rates (year-over-year) | Approximately 0.5% | |
Time utilization | Approximately 67.5% | |
Net rental capital expenditures after gross purchases | Approximately $1.1 billion, after gross purchases of approximately $1.6 billion | |
Free cash flow (excluding the impact of merger and restructuring related costs) | $725 million to $775 million |
5. | The 4.9% rental revenue increase includes an adverse impact from currency. Excluding this impact, rental revenue would have increased 6.5% year-over-year. |
6. | On April 1, 2014, the company acquired certain assets of the following four entities: National Pump & Compressor, Ltd., Canadian Pump and Compressor Ltd., GulfCo Industrial Equipment, LP and LD Services, LLC (collectively “National Pump”). National Pump is included in the company's results subsequent to the acquisition date. Excluding the impact of the National Pump acquisition, rental revenue for the first nine months of 2015 increased 4.0% year-over-year. |
7. | Free cash flow for the first nine months of 2015 and 2014 includes aggregate merger and restructuring related payments of $3 million and $16 million, respectively. |
8. | When adjusting the denominator of the ROIC calculation to also exclude average goodwill, ROIC was 12.0% for the 12 months ended September 30, 2015, an increase of 0.6 percentage points from the 12 months ended September 30, 2014. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues: | |||||||||||||||
Equipment rentals | $ | 1,326 | $ | 1,315 | $ | 3,671 | $ | 3,499 | |||||||
Sales of rental equipment | 141 | 140 | 381 | 388 | |||||||||||
Sales of new equipment | 38 | 42 | 110 | 105 | |||||||||||
Contractor supplies sales | 21 | 23 | 60 | 64 | |||||||||||
Service and other revenues | 24 | 24 | 72 | 65 | |||||||||||
Total revenues | 1,550 | 1,544 | 4,294 | 4,121 | |||||||||||
Cost of revenues: | |||||||||||||||
Cost of equipment rentals, excluding depreciation | 470 | 480 | 1,359 | 1,336 | |||||||||||
Depreciation of rental equipment | 249 | 236 | 724 | 682 | |||||||||||
Cost of rental equipment sales | 85 | 82 | 217 | 227 | |||||||||||
Cost of new equipment sales | 31 | 33 | 91 | 84 | |||||||||||
Cost of contractor supplies sales | 15 | 16 | 42 | 44 | |||||||||||
Cost of service and other revenues | 10 | 9 | 29 | 23 | |||||||||||
Total cost of revenues | 860 | 856 | 2,462 | 2,396 | |||||||||||
Gross profit | 690 | 688 | 1,832 | 1,725 | |||||||||||
Selling, general and administrative expenses | 178 | 194 | 534 | 549 | |||||||||||
Merger related costs | — | 4 | (26 | ) | 13 | ||||||||||
Restructuring charge | — | (2 | ) | 1 | (2 | ) | |||||||||
Non-rental depreciation and amortization | 66 | 70 | 202 | 200 | |||||||||||
Operating income | 446 | 422 | 1,121 | 965 | |||||||||||
Interest expense, net | 107 | 124 | 460 | 436 | |||||||||||
Other income, net | (1 | ) | (5 | ) | (10 | ) | (10 | ) | |||||||
Income before provision for income taxes | 340 | 303 | 671 | 539 | |||||||||||
Provision for income taxes | 125 | 111 | 255 | 193 | |||||||||||
Net income | $ | 215 | $ | 192 | $ | 416 | $ | 346 | |||||||
Diluted earnings per share | $ | 2.25 | $ | 1.84 | $ | 4.27 | $ | 3.29 |
September 30, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 171 | $ | 158 | |||
Accounts receivable, net | 994 | 940 | |||||
Inventory | 77 | 78 | |||||
Prepaid expenses and other assets | 58 | 122 | |||||
Deferred taxes | 126 | 248 | |||||
Total current assets | 1,426 | 1,546 | |||||
Rental equipment, net | 6,438 | 6,008 | |||||
Property and equipment, net | 436 | 438 | |||||
Goodwill | 3,257 | 3,272 | |||||
Other intangible assets, net | 948 | 1,106 | |||||
Other long-term assets | 93 | 97 | |||||
Total assets | $ | 12,598 | $ | 12,467 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Short-term debt and current maturities of long-term debt | $ | 639 | $ | 618 | |||
Accounts payable | 475 | 285 | |||||
Accrued expenses and other liabilities | 403 | 575 | |||||
Total current liabilities | 1,517 | 1,478 | |||||
Long-term debt | 7,876 | 7,434 | |||||
Deferred taxes | 1,653 | 1,692 | |||||
Other long-term liabilities | 55 | 65 | |||||
Total liabilities | 11,101 | 10,669 | |||||
Temporary equity | — | 2 | |||||
Common stock | 1 | 1 | |||||
Additional paid-in capital | 2,235 | 2,168 | |||||
Retained earnings | 919 | 503 | |||||
Treasury stock | (1,440 | ) | (802 | ) | |||
Accumulated other comprehensive loss | (218 | ) | (74 | ) | |||
Total stockholders’ equity | 1,497 | 1,796 | |||||
Total liabilities and stockholders’ equity | $ | 12,598 | $ | 12,467 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cash Flows From Operating Activities: | |||||||||||||||
Net income | $ | 215 | $ | 192 | $ | 416 | $ | 346 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 315 | 306 | 926 | 882 | |||||||||||
Amortization of deferred financing costs and original issue discounts | 3 | 4 | 8 | 14 | |||||||||||
Gain on sales of rental equipment | (56 | ) | (58 | ) | (164 | ) | (161 | ) | |||||||
Gain on sales of non-rental equipment | (2 | ) | (3 | ) | (6 | ) | (7 | ) | |||||||
Stock compensation expense, net | 12 | 17 | 37 | 48 | |||||||||||
Merger related costs | — | 4 | (26 | ) | 13 | ||||||||||
Restructuring charge | — | (2 | ) | 1 | (2 | ) | |||||||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility | — | 5 | 123 | 80 | |||||||||||
Excess tax benefits from share-based payment arrangements | (57 | ) | — | (57 | ) | — | |||||||||
Increase in deferred taxes | 24 | 77 | 94 | 134 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Increase in accounts receivable | (109 | ) | (107 | ) | (72 | ) | (99 | ) | |||||||
Decrease (increase) in inventory | 3 | 8 | — | (23 | ) | ||||||||||
Decrease in prepaid expenses and other assets | 20 | 15 | 17 | 10 | |||||||||||
(Decrease) increase in accounts payable | (206 | ) | (118 | ) | 195 | 197 | |||||||||
Increase in accrued expenses and other liabilities | 145 | 72 | 65 | 34 | |||||||||||
Net cash provided by operating activities | 307 | 412 | 1,557 | 1,466 | |||||||||||
Cash Flows From Investing Activities: | |||||||||||||||
Purchases of rental equipment | (409 | ) | (456 | ) | (1,425 | ) | (1,484 | ) | |||||||
Purchases of non-rental equipment | (26 | ) | (32 | ) | (76 | ) | (84 | ) | |||||||
Proceeds from sales of rental equipment | 141 | 140 | 381 | 388 | |||||||||||
Proceeds from sales of non-rental equipment | 6 | 8 | 14 | 26 | |||||||||||
Purchases of other companies, net of cash acquired | (28 | ) | 4 | (86 | ) | (752 | ) | ||||||||
Net cash used in investing activities | (316 | ) | (336 | ) | (1,192 | ) | (1,906 | ) | |||||||
Cash Flows From Financing Activities: | |||||||||||||||
Proceeds from debt | 1,546 | 1,135 | 7,453 | 5,911 | |||||||||||
Payments of debt | (1,446 | ) | (1,060 | ) | (7,093 | ) | (5,082 | ) | |||||||
Payment of contingent consideration | — | — | (52 | ) | — | ||||||||||
Payments of financing costs | (1 | ) | — | (27 | ) | (22 | ) | ||||||||
Proceeds from the exercise of common stock options | — | — | 1 | 2 | |||||||||||
Common stock repurchased | (166 | ) | (152 | ) | (667 | ) | (399 | ) | |||||||
Cash received in connection with the 4 percent Convertible Senior Notes and related hedge, net | — | 6 | — | 31 | |||||||||||
Excess tax benefits from share-based payment arrangements | 57 | — | 57 | — | |||||||||||
Net cash (used in) provided by financing activities | (10 | ) | (71 | ) | (328 | ) | 441 | ||||||||
Effect of foreign exchange rates | (10 | ) | (7 | ) | (24 | ) | (8 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (29 | ) | (2 | ) | 13 | (7 | ) | ||||||||
Cash and cash equivalents at beginning of period | 200 | 170 | 158 | 175 | |||||||||||
Cash and cash equivalents at end of period | $ | 171 | $ | 168 | $ | 171 | $ | 168 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||||||
Cash paid for income taxes, net | $ | 25 | $ | 24 | $ | 55 | $ | 60 | |||||||
Cash paid for interest | 51 | 91 | 304 | 315 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||
General Rentals | |||||||||||||||||||||
Reportable segment equipment rentals revenue | $ | 1,120 | $ | 1,127 | (0.6 | )% | $ | 3,144 | $ | 3,079 | 2.1 | % | |||||||||
Reportable segment equipment rentals gross profit | 500 | 496 | 0.8 | % | 1,339 | 1,266 | 5.8 | % | |||||||||||||
Reportable segment equipment rentals gross margin | 44.6 | % | 44.0 | % | 0.6pp | 42.6 | % | 41.1 | % | 1.5pp | |||||||||||
Trench, Power and Pump | |||||||||||||||||||||
Reportable segment equipment rentals revenue | $ | 206 | $ | 188 | 9.6 | % | $ | 527 | $ | 420 | 25.5 | % | |||||||||
Reportable segment equipment rentals gross profit | 107 | 103 | 3.9 | % | 249 | 215 | 15.8 | % | |||||||||||||
Reportable segment equipment rentals gross margin | 51.9 | % | 54.8 | % | (2.9pp) | 47.2 | % | 51.2 | % | (4.0pp) | |||||||||||
Total United Rentals | |||||||||||||||||||||
Total equipment rentals revenue | $ | 1,326 | $ | 1,315 | 0.8 | % | $ | 3,671 | $ | 3,499 | 4.9 | % | |||||||||
Total equipment rentals gross profit | 607 | 599 | 1.3 | % | 1,588 | 1,481 | 7.2 | % | |||||||||||||
Total equipment rentals gross margin | 45.8 | % | 45.6 | % | 0.2pp | 43.3 | % | 42.3 | % | 1.0pp |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Numerator: | |||||||||||||||
Net income available to common stockholders | $ | 215 | $ | 192 | $ | 416 | $ | 346 | |||||||
Denominator: | |||||||||||||||
Denominator for basic earnings per share—weighted-average common shares | 94.2 | 98.5 | 96.0 | 96.9 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Employee stock options and warrants | 0.3 | 0.4 | 0.3 | 0.4 | |||||||||||
4 percent Convertible Senior Notes | 0.6 | 4.7 | 0.8 | 7.6 | |||||||||||
Restricted stock units | 0.1 | 0.5 | 0.2 | 0.5 | |||||||||||
Denominator for diluted earnings per share—adjusted weighted-average common shares | 95.2 | 104.1 | 97.3 | 105.4 | |||||||||||
Diluted earnings per share | $ | 2.25 | $ | 1.84 | $ | 4.27 | $ | 3.29 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Earnings per share - GAAP, as reported | $ | 2.25 | $ | 1.84 | $ | 4.27 | $ | 3.29 | |||||||
After-tax impact of: | |||||||||||||||
Merger related costs (1) | — | 0.02 | (0.17 | ) | 0.08 | ||||||||||
Merger related intangible asset amortization (2) | 0.28 | 0.29 | 0.87 | 0.80 | |||||||||||
Impact on depreciation related to acquired RSC fleet and property and equipment (3) | — | (0.01 | ) | (0.02 | ) | (0.02 | ) | ||||||||
Impact of the fair value mark-up of acquired RSC fleet (4) | 0.04 | 0.05 | 0.12 | 0.16 | |||||||||||
Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (5) | — | — | (0.02 | ) | (0.02 | ) | |||||||||
Restructuring charge (6) | — | (0.01 | ) | 0.01 | (0.01 | ) | |||||||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility | — | 0.02 | 0.78 | 0.46 | |||||||||||
Earnings per share - adjusted | $ | 2.57 | $ | 2.20 | $ | 5.84 | $ | 4.74 |
(1) | Reflects transaction costs associated with the 2012 RSC acquisition and the April 2014 National Pump acquisition. The income for the nine months ended September 30, 2015 reflects a decline in the fair value of the contingent cash consideration component of the National Pump purchase price. |
(2) | Reflects the amortization of the intangible assets acquired in the RSC and National Pump acquisitions. |
(3) | Reflects the impact of extending the useful lives of equipment acquired in the RSC acquisition, net of the impact of additional depreciation associated with the fair value mark-up of such equipment. |
(4) | Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold. |
(5) | Reflects a reduction of interest expense associated with the fair value mark-up of debt acquired in the RSC acquisition. |
(6) | Primarily reflects branch closure charges associated with the RSC acquisition and our closed restructuring program. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income | $ | 215 | $ | 192 | $ | 416 | $ | 346 | |||||||
Provision for income taxes | 125 | 111 | 255 | 193 | |||||||||||
Interest expense, net | 107 | 124 | 460 | 436 | |||||||||||
Depreciation of rental equipment | 249 | 236 | 724 | 682 | |||||||||||
Non-rental depreciation and amortization | 66 | 70 | 202 | 200 | |||||||||||
EBITDA (A) | $ | 762 | $ | 733 | $ | 2,057 | $ | 1,857 | |||||||
Merger related costs (1) | — | 4 | (26 | ) | 13 | ||||||||||
Restructuring charge (2) | — | (2 | ) | 1 | (2 | ) | |||||||||
Stock compensation expense, net (3) | 12 | 17 | 37 | 48 | |||||||||||
Impact of the fair value mark-up of acquired RSC fleet (4) | 6 | 9 | 19 | 27 | |||||||||||
Adjusted EBITDA (B) | $ | 780 | $ | 761 | $ | 2,088 | $ | 1,943 |
(1) | Reflects transaction costs associated with the 2012 RSC acquisition and the April 2014 National Pump acquisition. The income for the nine months ended September 30, 2015 reflects a decline in the fair value of the contingent cash consideration component of the National Pump purchase price. |
(2) | Primarily reflects branch closure charges associated with the RSC acquisition and our closed restructuring program. |
(3) | Represents non-cash, share-based payments associated with the granting of equity instruments. |
(4) | Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net cash provided by operating activities | $ | 307 | $ | 412 | $ | 1,557 | $ | 1,466 | |||||||
Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA: | |||||||||||||||
Amortization of deferred financing costs and original issue discounts | (3 | ) | (4 | ) | (8 | ) | (14 | ) | |||||||
Gain on sales of rental equipment | 56 | 58 | 164 | 161 | |||||||||||
Gain on sales of non-rental equipment | 2 | 3 | 6 | 7 | |||||||||||
Merger related costs (1) | — | (4 | ) | 26 | (13 | ) | |||||||||
Restructuring charge (2) | — | 2 | (1 | ) | 2 | ||||||||||
Stock compensation expense, net (3) | (12 | ) | (17 | ) | (37 | ) | (48 | ) | |||||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility | — | (5 | ) | (123 | ) | (80 | ) | ||||||||
Excess tax benefits from share-based payment arrangements | 57 | — | 57 | — | |||||||||||
Changes in assets and liabilities | 279 | 173 | 57 | 1 | |||||||||||
Cash paid for interest | 51 | 91 | 304 | 315 | |||||||||||
Cash paid for income taxes, net | 25 | 24 | 55 | 60 | |||||||||||
EBITDA | $ | 762 | $ | 733 | $ | 2,057 | $ | 1,857 | |||||||
Add back: | |||||||||||||||
Merger related costs (1) | — | 4 | (26 | ) | 13 | ||||||||||
Restructuring charge (2) | — | (2 | ) | 1 | (2 | ) | |||||||||
Stock compensation expense, net (3) | 12 | 17 | 37 | 48 | |||||||||||
Impact of the fair value mark-up of acquired RSC fleet (4) | 6 | 9 | 19 | 27 | |||||||||||
Adjusted EBITDA | $ | 780 | $ | 761 | $ | 2,088 | $ | 1,943 |
(1) | Reflects transaction costs associated with the 2012 RSC acquisition and the April 2014 National Pump acquisition. The income for the nine months ended September 30, 2015 reflects a decline in the fair value of the contingent cash consideration component of the National Pump purchase price. |
(2) | Primarily reflects branch closure charges associated with the RSC acquisition and our closed restructuring program. |
(3) | Represents non-cash, share-based payments associated with the granting of equity instruments. |
(4) | Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net cash provided by operating activities | $ | 307 | $ | 412 | $ | 1,557 | $ | 1,466 | |||||||
Purchases of rental equipment | (409 | ) | (456 | ) | (1,425 | ) | (1,484 | ) | |||||||
Purchases of non-rental equipment | (26 | ) | (32 | ) | (76 | ) | (84 | ) | |||||||
Proceeds from sales of rental equipment | 141 | 140 | 381 | 388 | |||||||||||
Proceeds from sales of non-rental equipment | 6 | 8 | 14 | 26 | |||||||||||
Excess tax benefits from share-based payment arrangements (1) | 57 | — | 57 | — | |||||||||||
Free cash flow | $ | 76 | $ | 72 | $ | 508 | $ | 312 |
(1) | The excess tax benefits from share-based payment arrangements result from stock-based compensation windfall deductions in excess of the amounts reported for financial reporting purposes, and are reported as financing cash flows. We added the excess tax benefits back to our calculation of free cash flow to generally classify cash flows from income taxes as operating cash flows. However, these excess tax benefits did not impact free cash flow for the three or nine months ended September 30, 2015, as they do not result in increased cash flows until the associated income taxes are settled. |
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