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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
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COMMISSION FILE NUMBER 001-14299
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NATIONSRENT, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 31-1570069
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
450 EAST LAS OLAS BLVD.,
FORT LAUDERDALE, FL 33301
(Address of principal executive offices) (Zip Code)
</TABLE>
(954) 760-6550
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of Common Stock, par value $0.01 per share, outstanding on
May 8, 2000 was 58,566,079.
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NATIONSRENT, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets as of March 31, 2000
and December 31, 1999.................................. 1
Unaudited Consolidated Statements of Income for the Three
Months Ended March 31, 2000 and 1999................... 2
Unaudited Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999............. 3
Notes to Unaudited Consolidated Financial Statements...... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 7
Item 3. Quantitative and Qualitative Disclosures About
Market Risk........................................ 13
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.......... 14
Item 6. Exhibits and Reports on Form 8-K................... 15
Signatures.................................................. 18
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONSRENT, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 6,242 $ 5,290
Accounts receivable, net.................................... 117,872 124,207
Inventories................................................. 42,096 39,556
Prepaid expenses and other assets........................... 33,615 30,894
Deferred financing costs.................................... 14,216 14,719
Rental equipment, net....................................... 627,533 574,846
Property and equipment, net................................. 77,183 68,394
Intangible assets related to acquired businesses, net....... 746,008 701,488
---------- ----------
Total Assets...................................... $1,664,765 $1,559,394
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable.......................................... $ 86,503 $ 72,727
Accrued compensation and related taxes.................... 6,342 5,039
Accrued expenses and other liabilities.................... 44,054 36,235
Debt...................................................... 1,057,572 989,428
Income taxes payable...................................... 316 777
Deferred income taxes..................................... 43,272 41,801
---------- ----------
Total liabilities................................. 1,238,059 1,146,007
---------- ----------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock -- $0.01 par value, 5,000,000 shares
authorized:
Series A convertible, $100,000 liquidation preference,
100,000 shares issued and outstanding at March 31, 2000
and December 31, 1999.................................. 1 1
Common stock -- $0.01 par value, 250,000,000 shares
authorized, 58,566,079 shares and 56,844,414 shares
issued and outstanding at March 31, 2000 and December
31, 1999, respectively................................. 586 568
Additional paid-in capital................................ 377,223 367,240
Retained earnings......................................... 48,896 45,578
---------- ----------
Total stockholders' equity........................ 426,706 413,387
---------- ----------
Total Liabilities and Stockholders' Equity........ $1,664,765 $1,559,394
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
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NATIONSRENT, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- -------
<S> <C> <C>
Revenue:
Equipment rentals......................................... $110,346 $75,100
Sales of equipment, merchandise, service, parts and
supplies............................................... 31,850 27,215
-------- -------
Total revenue..................................... 142,196 102,315
-------- -------
Cost of revenue:
Cost of equipment rentals................................. 38,005 24,562
Rental equipment depreciation and lease expense........... 23,173 16,375
Cost of sales of equipment, merchandise, service, parts
and supplies........................................... 21,344 18,166
-------- -------
Total cost of revenue............................. 82,522 59,103
-------- -------
Gross profit................................................ 59,674 43,212
-------- -------
Operating expenses:
Selling, general and administrative expenses.............. 25,803 19,007
Non-rental equipment depreciation and amortization........ 5,646 4,565
-------- -------
Operating income............................................ 28,225 19,640
-------- -------
Other (income)/expense:
Interest expense, net..................................... 22,599 14,446
Other, net................................................ (46) (2,185)
-------- -------
22,553 12,261
-------- -------
Income before provision for income taxes.................... 5,672 7,379
Provision for income taxes................................ 2,354 3,062
-------- -------
Net income.................................................. $ 3,318 $ 4,317
======== =======
Net income per share:
Basic..................................................... $ 0.06 $ 0.08
======== =======
Diluted................................................... $ 0.05 $ 0.08
======== =======
Weighted average common shares outstanding:
Basic..................................................... 58,566 55,706
======== =======
Diluted................................................... 73,194 64,776
======== =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
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NATIONSRENT, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 3,318 $ 4,317
Adjustments to reconcile net income to net cash provided
by/(used in) operating activities:
Depreciation and amortization............................. 18,565 16,574
Loss on disposal of non-rental equipment.................. 6 --
Gain on sale of rental equipment.......................... (6,629) (3,765)
Gain on sale of lift truck dealership..................... -- (1,818)
Deferred income tax provision............................. 1,829 2,664
Changes in operating assets and liabilities:
Accounts receivable..................................... 8,132 (634)
Inventories............................................. (2,375) (6,516)
Prepaid expenses and other assets....................... (4,247) (569)
Accounts payable........................................ 13,175 (15,520)
Accrued expenses and other liabilities.................. 5,868 (4,956)
Income taxes payable.................................... (383) (2,584)
--------- ---------
Net cash provided by/(used in) operating activities..... 37,259 (12,807)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net of cash acquired........... (19,475) (2,216)
Payment of contingent acquisition consideration........... (10,750) (500)
Deferred in-process merger costs.......................... -- (2,256)
Proceeds from sale of lift truck dealership............... -- 23,315
Purchases of rental equipment............................. (68,067) (49,760)
Purchases of property and equipment....................... (8,923) (10,633)
Proceeds from sale of rental equipment.................... 15,892 12,596
--------- ---------
Net cash used in investing activities................... (91,323) (29,454)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt........................................ 141,840 73,240
Repayments of debt........................................ (86,800) (36,171)
Debt issuance costs....................................... (24) (1,424)
--------- ---------
Net cash provided by financing activities............... 55,016 35,645
--------- ---------
Net increase/(decrease) in cash and cash equivalents........ 952 (6,616)
Cash and cash equivalents, beginning of period.............. 5,290 10,597
--------- ---------
Cash and cash equivalents, end of period.................... $ 6,242 $ 3,981
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 10,847 $ 12,400
========= =========
Cash paid for income taxes................................ $ 638 $ 3,825
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
The Company acquired the net assets and assumed certain
liabilities of certain businesses as follows:
Total assets, net of cash acquired...................... $ 35,072 $ 2,922
Total liabilities assumed............................... (11,027) (106)
Amount paid through the issuance of debt and future
contractual payments................................... (4,570) (106)
--------- ---------
Net cash paid...................................... $ 19,475 $ 2,216
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
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NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have
been prepared by NationsRent, Inc. (the "Company") and reflect all adjustments
of a normal recurring nature which are, in the opinion of management, necessary
for a fair presentation of financial results for the three months ended March
31, 2000 and 1999, in accordance with generally accepted accounting principles
for interim financial reporting and pursuant to Article 10 of Regulation S-X.
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. For interim reporting
purposes, advertising expenses are charged to earnings in proportion to the
relationship that revenue for such period bears to estimated full year revenue
and related advertising expenses. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. These unaudited interim consolidated financial statements
should be read in conjunction with the consolidated financial statements for the
year ended December 31, 1999 appearing in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results which may be reported for the year ending December 31,
2000.
The unaudited interim consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All material
intercompany transactions and balances have been eliminated in consolidation.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
The Company is required to adopt Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities -- Deferral of the Effective Date of FASB Statement No.
133." This statement is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires that an
entity shall recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. The Company believes
that the adoption of SFAS No. 133 will not have a material impact on its
financial position or results of operations.
NOTE 2 -- ACQUISITIONS
The Company made three acquisitions of equipment rental businesses during
the three months ended March 31, 2000. The aggregate consideration for these
acquisitions was $24,191,000 and consisted of (i) $19,621,000 of cash, (ii)
$3,475,000 of subordinated convertible debt and (iv) $1,095,000 of future
contractual cash payments. The cash portion of the consideration was funded
through borrowings under the Company's senior credit facility (the "Credit
Facility"). In addition, the Company repaid or assumed outstanding indebtedness
of the acquired companies in the aggregate amount of $8,930,000. These
acquisitions have been accounted for using the purchase method and, accordingly,
the acquired assets and assumed liabilities, including goodwill, have been
recorded at their estimated fair values as of the date of acquisition. Purchase
accounting values for these acquisitions have been assigned on a preliminary
basis, and are subject to adjustment when final information as to the fair
values of the net assets acquired is available. The Company is awaiting
information from third-party appraisers as to the fair value of certain rental
equipment acquired and the final determination of certain liabilities assumed.
The Company does not believe the final assignment of the fair value of the net
assets acquired will have a significant impact on future operating results. The
4
<PAGE> 7
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
operations of the acquired businesses have been included in the Company's
consolidated statements of income since the date of acquisition.
The following table sets forth the estimated fair value of the assets
acquired and liabilities assumed for the aforementioned acquisitions (in
thousands):
<TABLE>
<S> <C>
Assets, including cash...................................... $11,097
Goodwill.................................................... 24,120
Liabilities................................................. 11,027
</TABLE>
The following table sets forth the unaudited pro forma consolidated results
of operations for the three months ended March 31, 2000 and 1999 giving effect
to the acquisitions completed during 2000 and 1999 as if the acquisitions had
occurred on January 1, 1999 (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Revenue.............................................. $142,196 $134,023
Net income........................................... 3,318 5,512
Basic earnings per share............................. 0.06 0.08
Diluted earnings per share........................... 0.05 0.08
</TABLE>
The above unaudited pro forma consolidated results of operations are based
upon certain assumptions and estimates which the Company believes are
reasonable. The unaudited pro forma consolidated results of operations may not
be indicative of the operating results that actually would have been reported
had the acquisitions been consummated on January 1, 1999, nor are they
necessarily indicative of results which will be reported in the future.
During the three months ended March 31, 2000, the Company paid
consideration of $10,750,000 of cash, $700,000 of subordinated convertible debt
and 1,721,664 shares of common stock to the former owners of previously acquired
businesses related to the achievement of certain operating results. The Company
records amounts paid for contingent consideration as additional purchase price
once they are incurred since the consideration is required regardless of the
former owner's continued association with the Company.
NOTE 3 -- SEASONALITY
The Company's revenue and income are dependent upon the activity in the
construction industry in the markets served by the Company. Construction
activity is dependent upon weather and the traditional seasons for construction
work. Because of this variability in demand, the Company's quarterly revenue may
fluctuate, and revenue for the first quarter of each year can be expected to be
lower than the remaining quarters. Although the Company believes that the
historical trend in quarterly revenue for the second, third and fourth quarters
of each year is generally higher than the first quarter, there can be no
assurance that this will occur in future periods. Accordingly, quarterly or
other interim results should not be considered indicative of results to be
expected for any quarter or for the full year.
5
<PAGE> 8
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
------- -------
<S> <C> <C>
Numerator:
Numerator for basic earnings per share -- net income...... $ 3,318 $ 4,317
Interest expense on convertible subordinated debt, net of
income taxes........................................... -- 736
------- -------
Numerator for diluted earnings per share.................. $ 3,318 $ 5,053
======= =======
Denominator:
Denominator for basic earnings per
share -- weighted-average shares....................... 58,566 55,706
Effect of dilutive securities:
Convertible subordinated debt.......................... -- 8,773
Preferred stock........................................ 14,286 --
Employee stock options................................. 342 297
------- -------
Denominator for diluted earnings per share -- adjusted
weighted-average shares................................... 73,194 64,776
======= =======
Basic earnings per share.................................... $ 0.06 $ 0.08
======= =======
Diluted earnings per share.................................. $ 0.05 $ 0.08
======= =======
</TABLE>
Options and warrants to purchase 5,459,427 and 1,814,065 shares of Common
Stock were outstanding at March 31, 2000 and 1999, respectively, but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average fair value of the common shares and,
therefore, the effect would be anti-dilutive. The convertible subordinated debt
was excluded from the diluted earnings per share calculation for the three
months ended March 31, 2000 as such debt was anti-dilutive in the period.
NOTE 5 -- COMPREHENSIVE INCOME
The objective of reporting comprehensive income is to disclose all changes
in equity of an enterprise that result from transactions and other economic
events in a period other than transactions with owners. The comprehensive income
of the Company was equal to net income for all periods presented.
NOTE 6 -- NON-RECURRING GAIN
In January of 1999, the Company received net proceeds of $23,315,000
related to the sale of a lift truck dealership acquired as part of an
acquisition made in April 1998. The carrying value of the tangible assets sold
was $16,059,000 resulting in proceeds in excess of carrying value of $7,256,000.
The Company recorded a pre-tax gain of $1,818,000 included in other income, or
$0.02 per share, based on the increase in value of the dealership since the date
of acquisition. The remaining $5,438,000 of proceeds in excess of carrying value
was recorded as a reduction of goodwill. The Company continues to evaluate the
carrying value of its goodwill for impairment in accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of."
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our consolidated results of
operations and financial condition should be read in conjunction with the
unaudited interim consolidated financial statements and the related notes
included herein and the consolidated financial statements for the year ended
December 31, 1999 appearing in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
GENERAL
NationsRent is one of the fastest growing equipment rental companies in the
United States. We have acquired a platform of equipment rental businesses
concentrated in selected markets and are building a network of nationally
branded locations. As of April 30, 2000, we operated over 190 equipment rental
locations in 27 states. We have become a leading provider of rental equipment as
a result of our strategy to acquire businesses in target markets, open or
acquire additional locations concentrated around those businesses and expand our
rental fleet. We believe that this cluster strategy enables us to increase
profitability in our acquired stores and more quickly achieve profitability in
our newly opened locations. By implementing the cluster strategy and expanding
our fleet of rental equipment, we are able to provide a full range of rental
equipment to customers with a wide variety of equipment rental needs.
As part of building a nationally branded network, we seek to conform the
physical appearance and product offerings of all of our stores to a uniform
format. Distinguishing characteristics of this format include clearly marked
equipment aisles, a wide variety of newer, name brand, well maintained rental
equipment, prominent use of the NationsRent logo and colors and attractive,
well-organized and clean store facilities. In addition, our stores seek to offer
a high level of customer service which is supported through employee training
and the integration of information systems. The cost of converting an acquired
location to the NationsRent format varies depending on the physical properties
of the acquired location and the condition, breadth and depth of rental
equipment inventory at such location, which are factors considered in the
selection and pricing of acquisition candidates. The cost of opening our new
locations has varied depending on whether we leased or purchased the underlying
real property, the size of the location and the breadth and depth of inventory
at each location. See "Liquidity and Capital Resources."
We derive our revenue from equipment rentals, sales of new and used
equipment, spare parts and supplies and maintenance and repair services. Rental
revenue is dependent on several factors including demand for rental equipment,
the amount and quality of equipment available for rent, rental rates and general
economic conditions. Revenue generated from the sale of used equipment is
affected by price, general economic conditions and the condition of the
equipment. Revenue from the sale of new equipment is affected by price and
general economic conditions. Revenue from the sale of spare parts and supplies
as well as maintenance and repair services is primarily affected by equipment
rental and sales volume.
The principal components of our cost of revenue include rental equipment
depreciation and lease expense, costs of new and used equipment sold, personnel
costs, occupancy costs, repair and maintenance costs and vehicle operations.
Rental equipment depreciation is calculated using the straight-line method over
the estimated useful life of such equipment. The range of useful lives estimated
by management for rental equipment is primarily 18 to 120 months and is
depreciated to a salvage value ranging from zero to ten percent of original
cost. Since 1998, we have financed approximately $318.8 million of rental fleet
additions with operating leases. In order to more clearly reflect the cost of
our rental fleet, we have combined operating lease expense related to our rental
fleet with rental equipment depreciation and reported these amounts on a
separate line in our statements of income.
Selling, general and administrative expenses include management salaries,
advertising and marketing, travel, administrative and clerical salaries and data
processing.
Non-rental equipment depreciation and amortization includes the
depreciation of fixed assets that are not offered for rent, amortization of
leasehold improvements and amortization of intangible assets related to the
acquired businesses.
7
<PAGE> 10
ACQUISITIONS AND NEW STORES
We expect to continue to selectively acquire companies either to enter new
high growth markets or to complement our operations in existing markets. During
the three months ended March 31, 2000, we acquired three equipment rental
businesses. We paid an aggregate of approximately $24.2 million for these three
acquisitions which consisted of approximately:
- $19.6 million in cash;
- $3.5 million of subordinated convertible debt; and
- $1.1 million of future contractual payments.
We funded the cash portion of the consideration paid for these acquisitions
with borrowings under our senior credit facilities. The acquisitions have been
accounted for using the purchase method and, accordingly, the acquired assets
and assumed liabilities have been recorded at their estimated fair values as of
the date of acquisition. Purchase accounting values for certain acquisitions
have been assigned on a preliminary basis, and are subject to adjustment when
additional information as to the fair values of the net assets acquired is
available. We are awaiting information from third-party appraisers as to the
fair value of certain rental equipment acquired and the final determination of
certain liabilities assumed. We do not believe the final assignment of the fair
value of the net assets acquired will have a significant impact on future
operating results.
In markets in which we have established a presence, we may open new
locations in that geographic area or adjacent areas. During the four months
ended April 30, 2000, we have opened nine of the 20 new locations we plan to
open in 2000. We continue to evaluate the need for new locations in markets in
which we have a presence as well as in new markets that we may enter as we
acquire additional companies.
In April 2000, we announced a strategic partnership with Lowe's Companies,
Inc., the world's second largest home improvement retailer, to operate
NationsRent stores within select Lowe's stores. Operating as a store within a
store, the NationsRent stores will rent our full line of construction equipment
to Lowe's customers. Since the announcement, we have opened six pilot
NationsRent rental centers in Lowe's stores. If the pilot rental centers are
successful, we expect to open a significant number of these rental centers
nationwide. The Lowe's strategic partnership has and will require us to
accelerate investments in systems, training, brand support and other store
start-up costs.
HISTORICAL RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenue. The following table sets forth our revenue by type for the three
months ended March 31, 2000 and 1999 (in thousands, except percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------
2000 1999
----------------- -----------------
<S> <C> <C> <C> <C>
Equipment rentals............................. $110,346 77.6% $ 75,100 73.4%
Sales of equipment, merchandise, service,
parts and supplies.......................... 31,850 22.4% 27,215 26.6%
-------- ----- -------- -----
$142,196 100.0% $102,315 100.0%
======== ===== ======== =====
</TABLE>
Total revenue increased $39.9 million, or 39.0%, for the three months ended
March 31, 2000 when compared to the same period in 1999. Rental revenue
increased $35.2 million, or 46.9%, for the three months ended March 31, 2000
when compared to the same period in 1999. The increase in rental revenue was
comprised of 20.0% from internal growth and 26.9% from the inclusion of rental
revenue from businesses acquired during 1999 and 2000. The internal growth in
rental revenue was primarily a result of the expansion of our rental fleet at
existing locations. Equipment rental revenue as a percentage of total revenue
was 77.6% and 73.4% for the three months ended March 31, 2000 and 1999,
respectively. The higher mix of rental revenue in 2000 is due primarily to our
focus on increasing rental revenue by the expansion of our rental fleet.
8
<PAGE> 11
Gross Profit. Gross profit increased $16.5 million for the three months
ended March 31, 2000 when compared to the same period in 1999. The increase in
gross profit was primarily due to the increase in total revenue. Gross profit as
a percentage of total revenue was 42.0% and 42.2% for the three months ended
March 31, 2000 and 1999, respectively.
Operating Expenses. Selling, general and administrative expenses increased
$6.8 million for the three months ended March 31, 2000 when compared to the same
period in 1999. This increase was due primarily to the inclusion of such costs
from businesses acquired during 1999 and 2000 and additional corporate expenses.
Selling, general and administrative expenses as a percentage of total revenue
were 18.1% and 18.6% for the three months ended March 31, 2000 and 1999,
respectively.
Non-rental equipment depreciation and amortization increased $1.1 million
for the three months ended March 31, 2000 when compared to the same period in
1999. This increase was due primarily to additional goodwill amortization
incurred in connection with acquisitions completed during 1999 and 2000.
Operating Income. Operating income increased $8.6 million for the three
months ended March 31, 2000 when compared to the same period in 1999. Operating
income as a percentage of total revenue was 19.8% and 19.2% for the three months
ended March 31, 2000 and 1999, respectively. These increases were due primarily
to the higher percentage of revenue from equipment rentals in 2000.
Other Income and Expense. Interest expense increased $8.2 million for the
three months ended March 31, 2000 when compared to the same period in 1999. This
increase was due primarily to the increase in debt incurred to finance
acquisitions and the expansion of our rental fleet during 1999 and 2000, as well
as an increase in the interest rates charged on the variable portion of our bank
debt. Interest expense is primarily attributable to borrowings under our senior
credit facilities, notes issued to finance the purchase of equipment,
subordinated convertible notes issued to sellers of businesses we acquired and
our senior subordinated notes.
Other income for the three months ended March 31, 1999 included a pre-tax
gain of approximately $1.8 million, or $0.02 per share, from the sale in January
of a lift truck dealership.
Income Taxes. Our effective income tax rate for the three months ended
March 31, 2000 was 41.5%. The amount above statutory income tax rates is
attributable primarily to non-deductible goodwill amortization for federal
income tax purposes.
Net Income. Net income decreased $1.0 million for the three months ended
March 31, 2000 when compared to the same period in 1999. The decrease in net
income was due primarily to the gain recorded in 1999 on the sale of our lift
truck dealership and the other factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Our primary uses of cash have been the funding of acquisitions and capital
expenditures. To date, we have funded our cash requirements primarily with
borrowings under our senior credit facilities, proceeds from the issuance of
debt and equity securities, equity contributions from our founding stockholders
and cash provided by operations.
Our net cash provided by operations was $37.3 million for the three months
ended March 31, 2000 compared to net cash used of $12.8 million for the same
period in 1999. The increase in cash provided by operations was due primarily to
accounts receivable collections and an increase in accounts payable and accrued
expenses. Net cash used in investing activities was $91.3 million for the three
months ended March 31, 2000. Cash used in investing activities consisted
primarily of $68.1 million for purchases of rental equipment, $8.9 million for
purchases of and improvements to property and equipment and net cash
consideration of $19.5 million for the acquisition of businesses. Cash provided
by financing activities was $55.0 million for three months ended March 31, 2000
and was a result of net borrowings under our senior credit facilities.
Our senior credit facilities consist of a $500.0 million revolving line of
credit due July 2004 and a $300.0 million term loan due July 2006. The senior
credit facilities can be used to complete permitted acquisitions, make capital
expenditures, enter into standby letters of credit or for working capital and
other general
9
<PAGE> 12
corporate purposes. Borrowings under the revolving line of credit bear interest
at either the BankBoston, N.A. base rate or, at our option, the Eurodollar
market rate plus a percentage ranging from 1.5% to 2.5%. The term loan bears
interest at 3.0% over the Eurodollar market rate. The percentage over the
Eurodollar market rate is based on our financial performance as measured by the
total funded debt ratio. The senior credit facilities are secured by a security
interest in substantially all of our assets. The senior credit facilities also
impose, among other covenants, a tangible assets to senior debt covenant, a
restriction on all of our retained earnings including the declaration and
payment of cash dividends, consent requirements on certain acquisitions and a
restriction on the ratio of total funded debt to earnings before interest,
income taxes, depreciation and amortization. On March 31, 2000, $399.2 million
and $300.0 million of cash borrowings were outstanding under the revolving line
of credit and term loan, respectively.
During 2000, we added $39.3 million of new equipment to our rental
equipment fleet using operating leases. These operating leases have terms
expiring over the next seven years.
Our short-term cash requirements for our existing operations consist
primarily of:
- capital expenditures to maintain, modernize and expand our rental
equipment inventory;
- working capital requirements; and
- repair and maintenance of rental equipment, purchase of merchandise
inventory and other operating activities.
We estimate that equipment expenditures over the next 12 months for our
existing locations and for identified new store openings will be in the range of
$175.0 million to $225.0 million, net of proceeds from used equipment sales.
Less than 25.0% of the estimated net capital expenditures is for replacement of
existing rental equipment. We believe that we will be able to finance our
short-term cash needs for equipment expenditures through borrowings under the
senior credit facilities, the use of equipment leases and cash generated from
operations. We estimate that such sources will be sufficient to fund the cash
required for our existing operations for at least 12 months.
During the four months ended April 30, 2000, we have opened nine new
locations in markets where we already had a presence, excluding our test
locations at select Lowe's Home Improvement Centers. We estimate that the
average aggregate capital costs associated with each such new location were in
the range of $2.0 million to $4.5 million. We expect to open a total of
approximately 20 new locations in 2000. We believe that cash generated from
operations and borrowings under our senior credit facilities will be sufficient
to fund these costs without the issuance of additional debt or equity
securities.
As discussed above, if the Lowe's pilot rental centers are successful, we
expect to open a significant number of these rental locations nationwide and
focus our resources on this potentially higher return opportunity. Depending on
the timing and extent of a nationwide rollout of these rental centers, we will
be required to reallocate capital from other internal growth initiatives and/or
increase amounts available under our senior credit facilities or raise
additional capital through issuance of debt or equity securities. There can be
no assurance that additional capital, if and when required, will be available on
terms satisfactory to us or at all.
We are developing additional modules for our management information system.
We estimate the total cost to complete development and installation of the
modules at our existing locations will range from $8.0 million to $10.0 million
over the next 12 months and we believe cash generated from operations and
borrowings under our senior credit facilities will be sufficient to fund these
costs.
We plan to continue to make select acquisitions of companies in order to
either enter new markets or compliment our operations in existing markets and
believe that, in connection with new acquisitions, we will be required to make
additional expenditures to expand and modernize rental equipment of acquired
companies. We expect to finance future acquisitions and related rental equipment
expenditures using cash, equity, debt and/or assumption of indebtedness. To
fully implement our growth strategy and meet the resulting capital requirements,
we will be required to increase amounts available under our senior credit
facilities or raise additional capital through issuance of additional debt or
equity securities. There can be no assurance that additional capital, if and
when required, will be available on terms satisfactory to us or at all.
10
<PAGE> 13
There may be liabilities that we fail or are unable to discover in the
course of performing due diligence investigations on each company or business we
have acquired or seek to acquire in the future. Such liabilities could include,
among others, those arising from employee benefits contribution obligations of a
prior owner or non-compliance with applicable federal, state or local
environmental requirements by prior owners for which we, as a successor owner or
operator, may be responsible. We try to minimize these risks by conducting such
due diligence, including employee benefit and environmental reviews, as we deem
appropriate under the circumstances. However, we cannot assure you that we have
identified, or in the case of future acquisitions, will identify, all existing
or potential risks. We also generally require each seller of acquired businesses
or properties to indemnify us against undisclosed liabilities. In some cases
this indemnification obligation may be supported by deferring payment of a
portion of the purchase price or other appropriate security. However, we cannot
assure you that the indemnification, even if obtained, will be enforceable,
collectible or sufficient in amount, scope or duration to fully offset the
possible liabilities associated with the business or property acquired. Any such
liabilities, individually or in the aggregate, could have a material adverse
effect on our business, financial condition or results of operations.
SEASONALITY AND FLUCTUATIONS IN OPERATING RESULTS
Our revenue and income are dependent upon activity in the construction
industry in the markets we serve. Construction activity 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
quarterly revenue may fluctuate, and revenue for the first quarter of each year
can be expected to be lower than the remaining quarters. Although we believe
that the historical trend in quarterly revenue for the second, third and fourth
quarters of each year is generally higher than the first quarter, there can be
no assurance that this will occur in future periods. 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 acquisitions and opening of new locations;
- the timing of expenditures for new rental equipment and the
disposition of used equipment;
- competitive pricing pressures; and
- changes in interest rates.
We will 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 approximately three to 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 new equipment to expand our current rental
equipment inventory 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.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
We are required to adopt SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the Effective Date
of FASB Statement No. 133." This statement is effective for all fiscal quarters
of all fiscal years beginning after June 15, 2000. SFAS No. 133 establishes
accounting and reporting standards
11
<PAGE> 14
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity shall
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. We believe that the adoption of
SFAS No. 133 will not have a material impact on its financial position or
results of operations.
YEAR 2000
Since many computer systems and other equipment with embedded chips or
microprocessors use only two digits to represent the year, these systems may be
unable to process accurately certain data before, during or after the year 2000.
As a result, business and governmental entities are at risk for possible
miscalculations or systems failures causing disruptions in their business
operations. This is commonly known as the "Y2K" issue. The Y2K issue concerns
not only information systems used solely within a company, but also concerns
third parties, such as customers, vendors and creditors, using information
systems that may interact with or affect a company's operations.
If needed remediations and conversions to the information systems are not
made on a timely basis by our materially-significant customers or suppliers, we
could be affected by business disruption, operational problems, financial loss,
legal liability to third parties and similar risks, any of which could have a
material adverse effect on our operations, liquidity or financial condition.
Factors which could cause material differences in results, many of which are
outside of our control, include, but are not limited to, the accuracy of
representations by manufacturers of our information systems that their products
are Y2K compliant, the ability of their companies' customers and suppliers to
identify and resolve their own Y2K issues, and our ability to respond to
unforeseen Y2K complications.
As of the date hereof, we have not experienced any material disruption in
our business or operations as a result of Y2K issues. However, there is no
assurance that we will not experience disruptions in the future.
FORWARD-LOOKING STATEMENTS
Certain statements and information in this Quarterly Report on Form 10-Q
may include "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including in particular the statements about
our plans, strategies and prospects under the headings "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." These statements are based on our current plans and expectations
and involve risks and uncertainties that could cause actual future activities
and results to be materially different from those set forth in these
forward-looking statements. Important factors that could cause actual results to
differ materially from our forward-looking statements are set forth below and
elsewhere in this Quarterly Report on Form 10-Q. Such factors include, among
others:
- our substantial indebtedness and our ability to generate cash in order
to service our indebtedness depends on many factors beyond our
control;
- the availability of additional capital on terms acceptable to us which
could affect our ability to execute growth and operating strategies;
- rising interest rates which could affect our ability to operate within
the limitations imposed by financing arrangements;
- our limited operating history makes it difficult to evaluate us, our
growth strategy and our prospects in light of the risks, expenses and
difficulties frequently encountered by companies in the early stages
of development;
- compliance with and future changes in safety and environmental
regulation may increase expenses and liabilities;
- claims for personal injury or death resulting from the use of our
equipment or in connection with our operations may exceed our
insurance coverage;
12
<PAGE> 15
- stock price volatility;
- the ability to identify and complete acquisitions and open new
locations on favorable terms;
- the difficulty of integrating acquired companies which could affect
our ability to derive synergies and achieve growth;
- undiscovered liabilities of businesses acquired;
- competition and seasonality in the equipment rental industry;
- a downturn in the economy in general, or construction spending in
particular, which could decrease demand for our equipment and drive
down rental rates; and
- other risks and uncertainties described in our other filings with the
Securities and Exchange Commission.
We make no commitment to disclose any revisions to forward-looking
statements, or any fact, events or circumstances after the date hereof that may
bear upon forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk is limited primarily to the fluctuating
interest rates associated with our variable rate indebtedness. Our variable
interest rates are subject to interest rate changes in the United States and the
Eurodollar market. At March 31, 2000 we had $744.4 million of variable rate
indebtedness, representing approximately 70% of our total debt outstanding, at
an average interest rate of 8.76%. In January 2000, we entered into a two-year
modified interest rate swap contract to hedge the impact of interest rate
fluctuations on certain variable rate debt. We do not hold or issue derivative
financial instruments for trading or speculative purposes. The interest rate
swap fixes the Eurodollar interest rate at 6.80% on $165.0 million of variable
rate debt through January 30, 2002. The interest differential is paid or
received on a monthly basis and recognized as a component of interest expense.
The counterparty to the swap is a major financial institution and management
believes that the risk of incurring credit losses is remote.
13
<PAGE> 16
PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(C) RECENT SALES OF UNREGISTERED SECURITIES
During the period from October 1, 1999 through March 31, 2000, we issued
securities in the transactions set forth below. Each of these transactions was
intended to be exempt from the registration requirements of the Securities Act
of 1933, as amended, by virtue of Section 4(2) thereunder based on being issued
in a transaction not involving a public offering.
In November 1999, in connection with the acquisition of the assets of
Sylvan Equipment Corp., we issued a promissory note in the principal amount of
$3,100,000, which is convertible into shares of common stock at the option of
the holder at a price of $10.00 per share.
In November 1999, in connection with the acquisition of Blast Off Services,
Inc., we issued an aggregate of 104,492 shares of common stock.
In November 1999, in connection with the acquisition of the assets of Holt
Machinery of New York, Inc., we issued an aggregate of 286,142 shares of common
stock.
In December 1999, in connection with the acquisition of the assets of More
Equipment, Inc. d/b/a Loveland Rental Center, we issued a promissory note in the
principal amount of $325,000, which is convertible into shares of common stock
at the option of the holder at a price of $10.00 per share.
In December 1999, in connection with the acquisition of the assets of
Rental City Inc., we issued promissory notes in the aggregate principal amount
of $2,500,000, which are convertible into shares of common stock at the option
of the holder at a price of $10.00 per share.
In December 1999, in connection with the acquisition of the assets of TES,
Inc. d/b/a Rental Center USA, we issued a promissory note in the principal
amount of $770,000, which is convertible into shares of common stock at the
option of the holder at a price of $10.00 per share.
In January 2000, in connection with the acquisition of the assets of J&J
Rental, Inc., we issued a promissory note in the principal amount of $500,000,
which is convertible into shares of common stock at the option of the holder at
a price of $10.00 per share.
In January 2000, in connection with the acquisition of BDK Equipment
Company, Inc., we issued promissory notes in the aggregate principal amount of
$600,000, which are convertible into shares of common stock at the option of the
holder at a price of $10.00 per share.
In February 2000, in connection with the satisfaction of certain
performance criteria of the business of Ray L. O'Neal, Inc. and Arenco, L.L.C.,
which we acquired in October 1998, we issued an aggregate of 1,721,664 shares of
common stock.
In March 2000, in connection with the satisfaction of certain performance
criteria of the business of Sheffield Equipment Co., Inc., which we acquired in
September 1998, we issued a promissory note in the principal amount of $700,000,
which is convertible into shares of common stock at the option of the holder at
a price of $7.76 per share.
In March 2000, in connection with the acquisition of the assets of F.W.
Gartner Company, we issued a promissory note in the principal amount of
$2,375,000, which is convertible into shares of common stock at the option of
the holder at a price of $8.50 per share.
From October 1, 1999 through March 31, 2000, we granted options to certain
of our employees to purchase an aggregate of 2,207,000 shares of common stock at
exercise prices ranging from $4.63 to $7.31 per share. These options generally
vest over a four year period at the rate of 25% per year beginning on the first
anniversary of the date of grant.
14
<PAGE> 17
In connection with the acquisition of Logan Equipment Corp. in December
1998, we assumed outstanding options to purchase shares of stock of Logan, which
were granted under the Logan 1998 Stock Option Plan, and converted them into
options to purchase 196,293 shares of common stock with an exercise price of
$0.86 per share. In December 1999, pursuant to the acquisition agreement with
Logan, these options were automatically converted into options to purchase
291,347 shares of common stock with an exercise price of $0.58 per share as a
result of certain market performance criteria relating to the common stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of January 20, 1999,
between the Company and Rental Service Corporation.(5)
2.2 -- Stock Option Agreement, dated as of January 20, 1999,
between the Company and Rental Service Corporation.(5)
2.3 -- Stock Option Agreement, dated as of January 20, 1999,
between Rental Service Corporation and the Company.(5)
2.4 -- Voting Agreement, dated as of January 20, 1999, between Kirk
Holdings Limited Partnership, H. Family Investments, Inc.
and Huizenga Investments Limited Partnership, as
shareholders, and Rental Service Corporation.(5)
2.5 -- Termination and Release Agreement, dated May 20, 1999,
between the Company and Rental Service Corporation.(6)
2.6 -- Stock Option Termination Agreement dated May 20, 1999,
between the Company and Rental Service Corporation.(6)
3.1 -- Amended and Restated Certificate of Incorporation of the
Company.(2)
3.2 -- Amended and Restated By-Laws of the Company.(1)
3.3 -- Certificate of Designation for Series A Convertible
Preferred Stock.(8)
3.4 -- Certificate of Amendment to Certificate of Designation for
Series A Convertible Preferred Stock.(7)
4.1 -- Unregistered 10 3/8% Global Senior Subordinated Notes due
2008.(4)
4.2 -- Registered 10 3/8% Senior Subordinated Notes due 2008.(4)
4.3 -- Senior Subordinated Guarantee dated December 11, 1998, of
the Guarantors as defined therein.(4)
4.4 -- Indenture, dated December 11, 1998, by and among Company,
the Guarantors and The Bank of New York.(4)
4.5 -- Registration Rights Agreement, dated December 11, 1998, by
and among the Company, the Guarantors and the Initial
Purchasers as defined therein.(4)
4.6 -- Fourth Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of July 20, 1999, by and among the
Company, its subsidiaries, BankBoston N.A., as
administrative agent, Bankers Trust Company, as syndication
agent, BancBoston Robertson Stevens Inc. and Deutsche Bank
Securities Inc., as coarrangers, and the other lending
institutions named therein.(8)
4.7 -- Amended and Restated Security Agreement, dated as of July
20, 1999, between the Company, its subsidiaries and
BankBoston, N.A.(8)
4.8 -- Amended and Restated Stock Pledge Agreement, dated as of
July 20, 1999, between the Company, NRGP, Inc. and
BankBoston, N.A.(8)
10.1 -- Stock Purchase Agreement, dated August 15, 1997, by and
among the Company, Sam's and the shareholders of Sam's,
together with Amendment Nos. 1-6.(1)
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
10.2 -- Form of Unsecured Subordinated Promissory Notes -- Sam's.(1)
10.3 -- Form of Unsecured Convertible Promissory Notes -- Sam's.(1)
10.4 -- Form of Unsecured Contingent Convertible Subordinated
Promissory Notes -- Sam's.(1)
10.5 -- Agreement, dated September 22, 1997, between the Company and
Gary L. Gabriel.(1)
10.6 -- Asset Purchase Agreement, dated December 8, 1997, by and
among NationsRent of Ohio, Inc., R&R Rental, Inc. ("R&R")
and the sole shareholder of R&R, together with an Amendment
dated December 10, 1997.(1)
10.7 -- Form of Unsecured Subordinated Promissory Note-R&R.(1)
10.8 -- Asset Purchase Agreement, dated December 8, 1997, as
amended, among NationsRent of Indiana, Inc. and C&E Rental
and Service, Inc. ("C&E"), together with an Amendment dated
December 23, 1997.(1)
10.9 -- Form of Unsecured Convertible Subordinated Promissory Note
C&E.(1)
10.10 -- Stock Purchase Agreement, dated December 20, 1997, as
amended, among NationsRent of West Virginia, Inc., Titan,
together with an Amendment dated December 31, 1997.(1)
10.11 -- Form of Unsecured Convertible Subordinated Promissory
Note -- Titan.(1)
10.12 -- Stock Purchase Agreement, dated March 24, 1998, among the
Company, Bode-Finn Limited Partnership ("Bode-Finn") and the
shareholders of Bode-Finn, together with Amendment No. 1,
dated April 6, 1998, and Amendment No. 2, dated April 17,
1998.(1)
10.13 -- Form of Unsecured Convertible Subordinated Promissory
Notes -- Bode-Finn.(1)
10.14 -- Form of Warrant -- Bode-Finn.(1)
10.15 -- Registration Rights Agreement, dated May 5, 1998, among the
Company, Bode-Finn, and Raymond E. Mason Foundation.(1)
10.16 -- Asset Purchase Agreement, dated March 25, 1998, among
NationsRent of Indiana, Inc., RFL, Enterprises, Inc. and the
sole shareholder of RFL Enterprises, Inc. ("RFL").(1)
10.17 -- Asset Purchase Agreement, dated April 21, 1998, among
NationsRent of Florida, Inc. and Naples Rent-All and Sales
Company, Inc. ("Naples").(1)
10.18 -- Form of Unsecured Convertible Subordinated Promissory
Note -- Naples.(1)
10.19 -- Stock Purchase Agreement, dated May 7, 1998, among the
Company, Raymond Equipment Co. ("Raymond Equipment") and the
shareholders of Raymond Equipment.(1)
10.20 -- Form of Unsecured Subordinated Promissory Notes -- Raymond
Equipment.(1)
10.21 -- Form of Unsecured Convertible Subordinated Promissory
Notes -- Raymond Equipment.(1)
10.22 -- Asset Purchase Agreement, dated May 14, 1998, among the
Company and General Rental, Inc.(1)
10.23 -- Stock Purchase Agreement, dated May 30, 1998, among the
Company, J. Kelly Co., Inc. ("J. Kelly") and the
shareholders of J. Kelly.(1)
10.24 -- Form of Unsecured convertible Subordinated Promissory
Note -- J. Kelly.(1)
10.25 -- Form of Registration Rights Agreement among the Company and
the shareholders of J. Kelly.(1)
10.26 -- Asset Purchase Agreement, dated June 7, 1998, among the
Company, Associated Rental Equipment Management Company,
Inc. ("Associated") and the sole shareholder of
Associated.(1)
10.27 -- Form of Unsecured Convertible Subordinated Promissory
Note -- Associated.(1)
10.28 -- Form of Registration Rights Agreement -- Associated.(1)
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
10.29 -- Form of Subscription Agreement, dated May 1998, between the
Company and certain subscribers.(1)
10.30 -- NationsRent Amended and Restated 1998 Stock Option Plan.(8)
10.31 -- Form of Stock Option Agreement.(1)
10.32 -- Amended and Restated Purchase Agreement, dated as of
September 9, 1998, by and among NationsRent, Inc., Ray L.
O'Neal, Inc., Arenco, L.L.C., Don R. O'Neal, Elizabeth M.
O'Neal and the O'Neal Revocable Trust dated December 29,
1987.(3)
10.33 -- Unsecured Convertible Subordinated Promissory Note, dated as
of October 23, 1998, from the Company to Ray L. O'Neal,
Inc.(3)
10.34 -- Preferred Stock Purchase Agreement, dated July 20, 1999, by
and among the Company, NR Holdings Limited and NR
Investments Limited.(8)
10.35 -- Registration Rights Agreement, dated as of July 20, 1999, by
and between the Company, NR Holdings Limited, NR Investments
Limited, James L. Kirk and H. Wayne Huizenga.(8)
27.1* -- Financial Data Schedule. (for SEC use only)
</TABLE>
- ---------------
* Filed herewith
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1, as amended, Commission File No. 333-56233.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1998.
(3) Incorporated by reference to the Company's Current Report on Form 8-K filed
on November 9, 1998.
(4) Incorporated by reference to the Company's Registration Statement on Form
S-4, Commission File No. 333-69691.
(5) Incorporated by reference to the Company's Current Report on Form 8-K filed
on April 8, 1999.
(6) Incorporated by reference to the Company's Current Report on Form 8-K filed
on May 21, 1999.
(7) Incorporated by reference to the Company's Registration Statement on Form
S-3, Commission File No. 333-88603.
(8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1999.
(b) REPORTS ON FORM 8-K
The Company filed no Current Reports on Form 8-K during the quarter ended
March 31, 2000.
17
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONSRENT, INC.
<TABLE>
<S> <C>
Date: May 15, 2000 By: /s/ JAMES L. KIRK
--------------------------------------------------------
James L. Kirk
Chairman of the Board and Chief Executive Officer
(Duly Authorized Officer)
Date: May 15, 2000 By: /s/ GENE J. OSTROW
--------------------------------------------------------
Gene J. Ostrow
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: May 15, 2000 By: /s/ KRIS E. HANSEL
--------------------------------------------------------
Kris E. Hansel
Vice President and Controller
(Principal Accounting Officer)
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,242
<SECURITIES> 0
<RECEIVABLES> 122,113
<ALLOWANCES> 4,241
<INVENTORY> 42,096
<CURRENT-ASSETS> 0
<PP&E> 789,374
<DEPRECIATION> 84,658
<TOTAL-ASSETS> 1,664,765
<CURRENT-LIABILITIES> 0
<BONDS> 1,057,572
0
1
<COMMON> 586
<OTHER-SE> 426,119
<TOTAL-LIABILITY-AND-EQUITY> 1,664,765
<SALES> 31,850
<TOTAL-REVENUES> 142,196
<CGS> 21,344
<TOTAL-COSTS> 82,522
<OTHER-EXPENSES> 31,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,599
<INCOME-PRETAX> 5,672
<INCOME-TAX> 2,354
<INCOME-CONTINUING> 3,318
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,318
<EPS-BASIC> .06
<EPS-DILUTED> .05
</TABLE>
