SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
CONSENT STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT
OF 1934
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14a-6(e)(2))
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RENTAL SERVICE CORPORATION
(Name of Registrant as Specified in Its Charter)
UNITED RENTALS, INC.
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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FOR IMMEDIATE RELEASE
UNITED RENTALS REPORTS STRONG FIRST QUARTER RESULTS
SAME-STORE REVENUE INCREASES 26%
CONTINUES TENDER OFFER FOR SHARES OF RENTAL SERVICE CORP.
AT $22.75 PER SHARE
GREENWICH, CT, APRIL 27, 1999 United Rentals, Inc. (NYSE:URI) today
announced financial results for the first quarter ended March 31, 1999.
Revenues for the quarter were $392.3 million, a 129% increase over the
$171.1 million reported for the first quarter of 1998. On a same-store
basis, revenues increased approximately 26%. EBITDA for the quarter was
$127.8 million, compared to $51.0 million in the year ago quarter. Net
income for the first quarter was $16.2 million, a 142% increase over the
$6.7 million reported in the same period last year. Diluted earnings per
share were $0.18, a 64% increase from the $0.11 reported in the first
quarter of 1998. The weighted average number of fully diluted shares during
the first quarter was 90.9 million shares, compared to 63.5 million shares
a year ago.
For the first quarter of 1999, rental revenues comprised 73.5% of
total revenues, sales of used equipment comprised 9.2%, and sales of new
equipment and merchandise comprised 17.3%. This compares to rental
revenues of 74.0%, sales of used equipment of 9.4% and sales of new
equipment and merchandise of 16.6% in the same period last year.
Bradley Jacobs, chairman and chief executive officer, said, "Our
operations in the quarter benefited from continued strong internal growth
in all of our regions. We continued our focus on operating fundamentals --
increasing margins, and efficiently integrating and optimizing the
companies we acquire. Among other things, we further consolidated back-
office functions throughout the Company, and achieved additional favorable
purchase discounts with equipment suppliers as a result of our increased
purchasing power."
In the first quarter, the Company acquired 17 companies with
approximately $110 million in combined annual revenues, all of which have
been previously announced. The Company today announced that it has
acquired 10 additional companies with approximately $30 million in
combined annual revenues. The companies acquired were A&B Tool and
Equipment Rental, Inc. (with two locations in Alaska), ABZ Equipment, Inc.
(two locations in Arizona), Alban Equipment Company (one location in
Ohio), Connecticut Drill Rod and Supply, Inc. (one location in
Connecticut), Koral Equipment Company, Inc. (one location in
Massachusetts), Minneapolis Equipment Company, Inc. (one location in
Minnesota), Purves Ritchie Equipment, Ltd. (five locations in British
Columbia, Canada), Southern Equipment Company, Inc. (one location in
Louisiana), Stephan's Tool Rental & Sales, Inc. (three locations in
Alaska) and West Georgia Rents, Inc. (two locations in Georgia). These
companies were acquired for approximately 4.0 times trailing adjusted
EBITDA on an aggregate basis. The Company's present letter of intent
backlog consists of 31 companies, with 75 locations and combined annual
revenues of approximately $260 million.
Mr. Jacobs also commented on the Company's $22.75 per share all cash
tender offer for all of the shares of Rental Service Corporation (NYSE:RSV)
on terms announced on April 5, 1999. The Hart-Scott-Rodino waiting period
for this offering has expired.
Mr. Jacobs said, "The choice for Rental Service stockholders is clear:
United Rentals' all cash $22.75 per share offer, or surrendering control to
NationsRent, Inc. (NYSE:NRI) with no premium. Our offer represents a
premium of approximately 32% over the $17.25 closing price of Rental
Service shares immediately prior to the announcement of our offer. We
disagree with the accretion and value estimates that have been disseminated
by Rental Service. We are disciplined buyers and will not overpay."
United Rentals said that it is continuing its litigation to invalidate
the termination fee and lock up option which the Rental Service board
built into the NationsRent merger agreement to inhibit competing offers.
The Company expects shortly to actively solicit consents from Rental
Service stockholders to remove the current board of directors and replace
them with a new slate of directors nominated by United Rentals.
United Rentals, Inc. is the largest equipment rental company in North
America and serves over 900,000 customers through its present network of
482 locations in 41 states, Canada and Mexico. The Company's 1998 annual
report is available on the Company's web site at www.unitedrentals.com.
Certain statements contained in this press release are forward-looking
in nature. These statements can be identified by the use of forward-
looking terminology such a "believes," "expects," "may," "will," "should,"
or "anticipates" or the negative thereof or comparable terminology, or by
discussions of strategy. The Company's business and operations are subject
to a variety of risks and uncertainties and, consequently, actual results
may materially differ from those projected by any forward-looking
statements. Factors that could cause actual results to differ from those
projected include, but are not limited to, the following: (1) a downturn in
construction and industrial activity could lead to a decrease in demand for
the Company's equipment, (2) the prices the Company is required to pay for
acquisitions could increase, (3) the cost or difficulty of integrating the
businesses that the Company acquires may be greater than expected, (4) the
Company may not realize expected cost savings, synergies, revenues and
earnings from its acquisitions, including its proposed transaction with
Rental Service Corporation, (5) the Company cannot be certain that it will
always have access to the additional capital that it may require for its
growth strategy or that its cost of capital will not increase, (6)
companies that United Rentals acquires could have undiscovered liabilities
and (7) the Company is highly dependent on the services of its senior
management. These risks and uncertainties, as well as others, are
discussed in greater detail in the Company's filings with the Securities
and Exchange Commission, including its most recent Annual Report on Form
10-K. The Company makes no commitment to revise or update any forward-
looking statements in order to reflect events or circumstances after the
date any such statement is made.
This press release is neither an offer to purchase nor a solicitation
of an offer to sell any shares of Rental Service Corporation. Such offer
is made solely by the Offer to Purchase dated April 5, 1999 of United
Rentals, Inc. and UR Acquisition Corporation and the related Letter of
Transmittal. In addition, this press release should not be construed to
constitute a solicitation of proxies for any meeting of the stockholders
of Rental Service, nor should this press release be construed to
constitute a solicitation of any consent. Any such solicitation which
United Rentals or any affiliate thereof might make would be made only
pursuant to separate proxy or consent materials prepared and filed with
the Securities and Exchange Commission in compliance with the requirements
of the Securities Exchange Act of 1934, as amended.
Certain Information Concerning Participants
United Rentals, Inc. ("United Rentals"), UR Acquisition Corporation
("UR Acquisition") and the following persons named below may be deemed to
be "participants" in the solicitation of consents and/or proxies from
stockholders of Rental Service Corporation ("Rental Service"): the
directors of United Rentals (Bradley Jacobs (Chairman of the Board and
Chief Executive Officer), Wayland Hicks (Vice Chairman and Chief Operating
Officer), John Milne (Vice Chairman, Chief Acquisition Officer and
Secretary), William Berry (President), John McKinney (Vice President,
Finance), Leon Black, Richard Colburn, Ronald DeFeo, Michael Gross, Richard
Heckmann, Gerald Tsai, Jr. and Christian Weyer); the following executive
officers and employees of United Rentals: Michael Nolan (Chief Financial
Officer) and Robert Miner (Vice President, Strategic Planning); and the
nominees of United Rentals (the "Nominees") to stand for election to the
Board of Directors of Rental Service (Messrs. Richard Daniel, Raymond
Troubh, William Aaron, David Bronner, Peter Gold, David Katz, Elliot Levine
and Jeffrey Parker and Ms. Stephanie Joseph).
As of the date hereof, United Rentals is the beneficial owner of 100
shares of common stock, par value $0.01 per share (the "Common Stock"), of
Rental Service. Other than set forth herein, as of the date hereof,
neither United Rentals, UR Acquisition nor any of the persons listed above,
has any interest, direct or indirect, by security holding or otherwise, in
Rental Service.
United Rentals has retained Goldman, Sachs & Co. ("Goldman Sachs") to
act as its financial advisor and the Dealer Managers in connection with the
tender offer (the "Offer") by United Rentals and UR Acquisition to purchase
the shares of Common Stock of Rental Service for $22.75 per share in cash,
for which Goldman Sachs may receive substantial fees, as well as
reimbursement of reasonable out-of-pocket expenses. In addition, United
Rentals has agreed to indemnify Goldman Sachs and certain related persons
against certain liabilities, including certain liabilities under the
federal securities laws, arising out of its engagement. United Rentals has
also entered into a commitment letter with Goldman Sachs Credit Partners
L.P. ("GSCP") relating to the financing of the Offer pursuant to which GSCP
may receive substantial fees, as well as reimbursement of reasonable out-
of-pocket expenses. Goldman Sachs does not admit that it or any of its
partners, directors, officers, employees, affiliates or controlling
persons, if any, is a "participant" as defined in Schedule 14A promulgated
under the Securities Exchange Act of 1934, as amended, in the solicitation
of consents and/or proxies, or that Schedule 14A requires the disclosure of
certain information concerning Goldman Sachs. In connection with Goldman
Sachs' role as financial advisor to United Rentals, the following
investment banking employees of Goldman Sachs may communicate in person, by
telephone or otherwise with a limited number of institutions, brokers or
other persons who are stockholders of Rental Service and may solicit
consents and/or proxies from these institutions, brokers or other persons:
Bruce Evans, Robert Lipman, Jeffrey Moslow and Cody Smith. Goldman Sachs
engages in a full range of investment banking, securities trading,
market-making and brokerage services for institutional and individual
clients. In the normal course of its business Goldman Sachs may trade
securities of Rental Service for its own account and the accounts of its
customers, and accordingly, may at any time hold a long or short position
in such securities. Goldman Sachs has informed United Rentals that, as of
the date hereof, Goldman Sachs holds no shares of the Common Stock of
Rental Service for its own account. Goldman Sachs and certain of its
affiliates may have voting and dispositive power with respect to certain
shares of Rental Service Common Stock held in asset management, brokerage
and other accounts. Goldman Sachs and such affiliates disclaim beneficial
ownership of such shares of Rental Service Common Stock.
###
Investor contact: Media contact:
Robert Miner Fred Bratman or Tracy Williams
United Rentals Sard Verbinnen & Co.
Phone: 203-622-3131 Phone: 212-687-8080
Fax: 203-622-6080 Fax: 212-687-8344
E-mail: [email protected] E-mail: [email protected]
or [email protected]
-- financial tables attached --
UNITED RENTALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's, except per share data)
Three months Three months
ended ended
March 31, 1999 March 31, 1998(a)
Revenues:
Equipment rentals $288,385 $126,611
Sales of rental equipment 35,943 16,048
Sales of new equipment,
merchandise and other revenues 67,981 28,482
Total revenues 392,309 171,141
Cost of revenues:
Cost of equipment rentals,
excluding depreciation 125,819 63,196
Depreciation of rental
equipment 59,113 29,280
Cost of rental equipment sales 20,842 8,014
Cost of new equipment
and merchandise sales and
other operating costs 52,544 22,740
Total cost of revenues 258,318 123,230
Gross profit 133,991 47,911
Selling, general and
administrative expenses 65,260 26,154
Non-rental depreciation
and amortization 12,170 5,496
Operating income 56,561 16,261
Interest expense 29,248 5,787
Other (income) expense, net (206) (796)
Income before provision
for income taxes 27,519 11,270
Provision for income taxes 11,294 4,566
Net income $16,225 $ 6,704
Diluted earnings per share $0.18 $0.11
Weighted average diluted
shares outstanding 90,941 63,532
(a) Restated to reflect the poolings-of-interests with U.S. Rentals,
Inc. and Rental Tools and Equipment Co.
