Executing for Growth and Returns
Free Cash Flow GAAP
Reconciliation
We define free cash flow as (i) net cash provided by operating activities less (ii) purchases of rental and non-rental equipment plus (iii) proceeds from sales of rental
and non-rental equipment and excess tax benefits from share-based payment arrangements. Management believes that free cash flow provides useful additional
information concerning cash flow available to meet future debt service obligations and working capital requirements. However, free cash flow is not a measure of
financial performance or liquidity under GAAP. Accordingly, free cash flow should not be considered an alternative to net income or cash flow from operating activities
as an indicator of operating performance or liquidity. The table below provides a reconciliation between net cash provided by operating activities and free cash flow.
Three Months Ended
Six Months Ended
$ Millions
Net cash provided by operating activities
Purchases of rental equipment
Purchases of non-rental equipment
Proceeds from sales of rental equipment
Proceeds from sales of non-rental equipment
Excess tax benefits from share-based payment arrangements (1)
Free cash flow (2)
June 30,
June 30,
2017
2016
2017
2016
$
714 $ 643
$ 1,337 $ 1,247
(694)
(622)
(913)
(722)
(33)
(19)
(55)
(42)
133
134
239
249
3
6
7
26
53
$
124
$ 165
$ 614 $
792
(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. We adopted accounting guidance in 2017 that changed the cash flow presentation of excess
tax benefits from share-based payment arrangements. In the table above, the excess tax benefits from share-based payment arrangements for 2017
are presented as a component of net cash provided by operating activities, while, for 2016, they are presented as a separate line item. Because we
historically included the excess tax benefits from share-based payment arrangements in the free cash flow calculation, the adoption of this guidance did
not change the calculation of free cash flow.
(2) Free cash flow included aggregate merger and restructuring related payments of $29 million and $3 million for the three months ended June 30, 2017
and 2016, respectively, and $31 million and $6 million for the six months ended June 30, 2017 and 2016, respectively.
The table below provides a reconciliation between 2017 forecasted net cash provided by operating activities and free cash flow.
$ Millions
Net cash provided by operating activities
Purchases of rental equipment
Proceeds from sales of rental equipment
Purchases of non-rental equipment, net of proceeds from sales
Free cash flow (excluding the impact of merger and restructuring related costs)
$1,975-$2,175
$(1,550)-$(1,650)
$475-$525
$(75)-$(125)
$825- $925
United Rentals®
Executing for Growth and Returns 24View entire presentation