NEFF CORP, 10-Q filed on 11/12/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2015
Nov. 5, 2015
Common Class A
Nov. 5, 2015
Common Class B
Entity Information [Line Items]
 
 
 
Entity Registrant Name
Neff Corp 
 
 
Entity Central Index Key
0001617667 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Non-accelerated Filer 
 
 
Document Type
10-Q 
 
 
Document Period End Date
Sep. 30, 2015 
 
 
Document Fiscal Year Focus
2015 
 
 
Document Fiscal Period Focus
Q3 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
10,494,191 
14,951,625 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Jun. 30, 2014
Dec. 31, 2013
ASSETS
 
 
 
 
Cash and cash equivalents
$ 232 
$ 207 
$ 1,999 
$ 190 
Accounts receivable, net of allowance for doubtful accounts of $2,197 in 2015 and $2,125 in 2014
60,869 
66,375 
 
 
Inventories
2,244 
2,005 
 
 
Rental equipment, net
468,534 
420,245 
 
 
Property and equipment, net
34,637 
30,210 
 
 
Prepaid expenses and other assets
15,429 
16,959 
 
 
Goodwill
58,765 
58,765 
 
 
Intangible assets, net
15,635 
16,600 
 
 
Total assets
656,345 
611,366 
 
 
Liabilities
 
 
 
 
Accounts payable
9,338 
27,389 
 
 
Accrued expenses and other liabilities
33,555 
31,203 
 
 
Revolving credit facility
278,000 
245,200 
 
 
Second lien loan, net of original issue discount
476,898 
476,713 
 
 
Payable pursuant to tax receivable agreement
29,081 
31,557 
 
 
Deferred tax liability, net
7,490 
5,405 
 
 
Total liabilities
834,362 
817,467 
 
 
Stockholders' deficit
 
 
 
 
Additional paid-in capital
(111,567)
(112,185)
 
 
Retained earnings
13,153 
1,599 
 
 
Total stockholders' deficit
(98,159)
(110,331)
 
 
Non-controlling interest
(79,858)
(95,770)
 
 
Total stockholders' deficit and non-controlling interest
(178,017)
(206,101)
 
 
Total liabilities and stockholders' deficit and non-controlling interest
656,345 
611,366 
 
 
Common Class A
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
105 
105 
 
 
Common Class B
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
$ 150 
$ 150 
 
 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Accounts receivable, allowance for doubtful accounts
 
$ 2,125 
Common Class A
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
 
10,476,190 
Common stock, shares outstanding
 
10,476,190 
Common Class B
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized
15,000,000 
15,000,000 
Common stock, shares issued
 
14,951,625 
Common stock, shares outstanding
 
14,951,625 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Revenues
 
 
Rental revenues
$ 249,493 
$ 240,362 
Equipment sales
18,520 
17,355 
Parts and service
9,724 
10,125 
Total revenues
277,737 
267,842 
Cost of revenues
 
 
Cost of equipment sold
11,864 
9,877 
Depreciation of rental equipment
62,280 
54,831 
Cost of rental revenues
58,556 
59,669 
Cost of parts and service
5,534 
6,158 
Total cost of revenues
138,234 
130,535 
Gross profit
139,503 
137,307 
Other operating expenses
 
 
Selling, general and administrative expenses
67,610 
61,453 
Other depreciation and amortization
7,796 
7,149 
Transaction bonus
24,506 
Total other operating expenses
75,406 
93,108 
Income from operations
64,097 
44,199 
Other expenses
 
 
Interest expense
32,174 
28,313 
Adjustment to tax receivable agreement
(2,476)
Loss on extinguishment of debt
15,896 
Loss on interest rate swap
4,097 
Amortization of debt issue costs
1,144 
2,695 
Total other expenses
34,939 
46,904 
Income before income taxes
29,158 
(2,705)
(Provision for) benefit from income taxes
(1,692)
4,610 
Net income
27,466 
1,905 
Less: net income attributable to non-controlling interest
15,912 
1,905 
Net income attributable to Neff Corporation
$ 11,554 
$ 0 
Common Class A
 
 
Net income attributable to Neff Corporation per share of Class A common stock (in dollars per share)
 
 
Basic
$ 1.10 
 
Diluted
$ 0.96 
 
Weighted average shares of Class A common stock outstanding (in shares)
 
 
Basic
10,484 
 
Diluted
12,038 
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT AND NON-CONTROLLING INTEREST (USD $)
In Thousands, except Share data, unless otherwise specified
Total
USD ($)
Common Class A
Common Class B
Common Stock
Common Class A
USD ($)
Common Stock
Common Class B
USD ($)
Additional Paid-in Capital
USD ($)
Retained Earnings
USD ($)
Non-controlling Interest
USD ($)
Beginning balance at Dec. 31, 2014
$ (206,101)
 
 
$ 105 
$ 150 
$ (112,185)
$ 1,599 
$ (95,770)
Beginning balance (in shares) at Dec. 31, 2014
 
10,476,190 
14,951,625 
10,476,000 
14,952,000 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Payment of costs directly associated with the issuance of Class A common stock
(283)
 
 
 
 
(283)
 
 
Equity-based compensation
901 
 
 
 
 
901 
 
 
Stock issued for restricted stock units (in shares)
 
 
 
18,000 
 
 
 
 
Stock issued for restricted stock units
 
 
 
 
 
 
 
Net income attributable to Neff Corporation
11,554 
 
 
 
 
 
11,554 
 
Net income
27,466 
 
 
 
 
 
 
 
Net income attributable to non-controlling interest
15,912 
 
 
 
 
 
 
15,912 
Ending balance at Sep. 30, 2015
$ (178,017)
 
 
$ 105 
$ 150 
$ (111,567)
$ 13,153 
$ (79,858)
Ending balance (in shares) at Sep. 30, 2015
 
 
 
10,494,000 
14,952,000 
 
 
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Cash Flows from Operating Activities
 
 
Net income
$ 27,466 
$ 1,905 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
69,111 
60,849 
Amortization of debt issue costs
1,144 
2,695 
Amortization of intangible assets
965 
1,131 
Amortization of original issue discount
185 
70 
Gain on sale of equipment
(6,656)
(7,478)
Provision for bad debt
1,431 
1,929 
Equity-based compensation
901 
792 
Deferred income taxes
2,085 
Adjustment to tax receivable agreement
(2,476)
Unrealized loss on interest rate swap
3,852 
Loss on extinguishment of debt
15,896 
Changes in operating assets and liabilities:
 
 
Accounts receivable
4,075 
(5,293)
Inventories, prepaid expenses and other assets
147 
(2,904)
Accounts payable
(1,271)
(856)
Accrued expenses and other liabilities
(1,270)
(380)
Net cash provided by operating activities
99,689 
68,356 
Cash Flows from Investing Activities
 
 
Purchases of rental equipment
(138,959)
(135,930)
Proceeds from sale of equipment
18,520 
17,355 
Purchases of property and equipment
(11,742)
(11,729)
Net cash used in investing activities
(132,181)
(130,304)
Cash Flows from Financing Activities
 
 
Repayments under revolving credit facility
(95,239)
(464,939)
Borrowings under revolving credit facility
128,039 
502,739 
Proceeds from second lien loan, net
572,125 
Distribution to members
329,885 
Repayments of senior secured notes
200,000 
Call premiums
7,218 
Debt issue costs
(9,065)
Payment of costs directly associated with the issuance of Class A common stock
(283)
Net cash provided by financing activities
32,517 
63,757 
Net increase in cash and cash equivalents
25 
1,809 
Cash and cash equivalents, beginning of period
207 
190 
Cash and cash equivalents, end of period
232 
 
Cash paid for interest
32,190 
27,790 
Cash paid for interest rate swap settlements
245 
Purchases of rental equipment included in accounts payable and other accrued liabilities at period end
$ 7,967 
$ 7,764 
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION

Neff Corporation was formed as a Delaware corporation on August 18, 2014. On November 26, 2014, Neff Corporation completed an initial public offering (the "IPO") of 10,476,190 shares of Class A common stock at a public offering price of $15.00 per share. A portion of the gross proceeds received by Neff Corporation from the IPO were used to purchase common membership units ("Common Units") in Neff Holdings LLC, ("Neff Holdings") which was wholly owned by private investment funds managed by Wayzata Investment Partners ("Wayzata") prior to the IPO. We refer to these transactions as the “Organizational Transactions”. Neff Corporation's only business is to act as the sole managing member of Neff Holdings. As a result, Neff Corporation consolidates Neff Holdings for all periods presented (see Supplemental Unaudited Condensed Consolidating Financial Statements). Neff Corporation and its consolidated subsidiaries, including Neff Holdings and Neff Holdings' subsidiaries, Neff LLC and Neff Rental LLC, are referred to as the "Company", "we" or "us".

The Company owns and operates equipment rental locations in the United States. The Company also sells used equipment, parts and merchandise and provides ongoing repair and maintenance services.
BASIS OF PRESENTATION
BASIS OF PRESENTATION
BASIS OF PRESENTATION
Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States (“US GAAP”) and the rules and regulations of the SEC. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with US GAAP have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements are presented on a consolidated basis. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s balance sheets as of September 30, 2015 and December 31, 2014, the results of its operations for the three and nine months ended September 30, 2015 and 2014, the cash flows for the nine months ended September 30, 2015 and 2014 and the changes in its stockholders’ deficit and non-controlling interest for the nine months ended September 30, 2015. Interim results may not be indicative of full year performance. The Company believes that the disclosures herein are adequate so that the information presented is not misleading; however, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto in the 2014 10-K.

Unaudited Condensed Consolidated Financial Statements
Balance Sheets - The assets, liabilities and equity of Neff Corporation and Neff Holdings have been consolidated and carried forward at historical values;
Statements of Operations - The consolidated statements of operations include the historical consolidated statements of operations of Neff Holdings consolidated with the statement of operations of Neff Corporation;
Statement of Stockholders' Deficit and Non-Controlling Interest - Following the IPO, Wayzata retained a portion of its economic interest in Neff Holdings directly through the ownership of Neff Holdings Common Units and these interests are included within non-controlling interest subsequent to the IPO; and
Statements of Cash Flows - The statements of cash flows include the historical consolidated statements of cash flows of Neff Holdings consolidated with the statement of cash flows of Neff Corporation.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company considers critical accounting estimates to be those that require more significant judgments in the preparation of the unaudited condensed consolidated financial statements including those related to depreciation, bad debts, income taxes, self-insurance reserves, goodwill and intangible assets, derivative financial instruments, contingencies and amounts payable pursuant to the tax receivable agreement, as amended (Note 3) ("Tax Receivable Agreement"). Management relies on historical experience and other assumptions, believed

NOTE 2—BASIS OF PRESENTATION (Continued)
to be reasonable under the circumstances, in making its judgments and estimates. Actual results could differ from those judgments and estimates.

Goodwill and Intangible Assets

Goodwill and trademarks and tradenames are reviewed at least annually for impairment. The Company conducts annual impairment tests on October 1 of each fiscal year or whenever an indicator of impairment exists. The customer list is amortized over its useful life (Note 5). The Company expenses costs to renew or extend the term of its recognized intangible assets.
Segment Reporting
The Company's operations consist of the rental and sale of equipment, and parts and services in five regions in the United States: Florida, Atlantic, Central, Southeastern and Western. The five regions are the Company's operating segments and are aggregated into one reportable segment because they rent similar products and have similar economic characteristics. The Company operates in the United States and had minimal international sales for each of the periods presented.

Comprehensive Income (Loss)

The Company had no items of other comprehensive income (loss) in any of the periods presented.
Recently Issued Accounting Pronouncements
Under the Jumpstart Our Business Startups Act (the “JOBS Act”), the Company meets the definition of an emerging growth company. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has irrevocably elected to avail itself of this exemption from adopting new or revised accounting standards and, therefore, will not be subject to new or revised accounting standards until such time as those standards apply to private companies. There were no significant new accounting pronouncements that the Company adopted during the nine months ended September 30, 2015.

In April 2015, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2015-03 Interest-Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03") which provides guidance on the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability and amortization of debt issuance costs will be reported as interest expense. This guidance is effective for private companies for fiscal years after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016, and requires application on a retrospective basis. The Company expects to adopt this guidance when effective for private companies, and does not expect this guidance to have a material impact on its financial statements, although it will change the financial statement classification of debt issuance costs. As of September 30, 2015, $9.3 million of debt issuance costs were included in total assets in the Company's unaudited condensed consolidated balance sheet.

In July 2015, the FASB issued ASU No. 2015-11 Inventory (Topic 330) - Simplifying the Measurement of Inventory ("ASU 2015-11") which requires an entity to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Current US GAAP requires that an entity measure inventory at the lower of cost or market. Market under current US GAAP could be replacement cost, net realizable value or net realizable value less a normal profit margin. This guidance is effective for private companies for fiscal years beginning after December 15, 2016 and interim periods within fiscal years beginning after December 15, 2017. This update should be applied prospectively. The Company expects to adopt this guidance when effective for private companies and does not expect this guidance to have a significant impact on the Company's financial statements.
NON-CONTROLLING INTEREST
NON-CONTROLLING INTEREST
NON-CONTROLLING INTEREST

Following the IPO, Neff Corporation became Neff Holdings sole managing member. As a result, Neff Corporation operates and controls all of the business and affairs of Neff Holdings while owning a 41.2% minority economic interest in Neff Holdings. Therefore, on November 26, 2014, Neff Corporation began to consolidate the financial results of Neff Holdings and Neff Holdings' subsidiaries, Neff LLC and Neff Rental LLC, and to record a non-controlling interest for the remaining 58.8%

NOTE 3—NON-CONTROLLING INTEREST (Continued)

economic interest in Neff Holdings held by Wayzata. On a stand alone basis, Neff Corporation's only sources of cash flow from operations are distributions from Neff Holdings. Net income attributable to the non-controlling interest on the unaudited condensed consolidated statements of operations represents the portion of earnings attributable to the economic interest in Neff Holdings held by the non-controlling unitholders. The non-controlling interest on the unaudited condensed consolidated balance sheets represents the carryover basis of Wayzata's capital account in Neff Holdings. Non-controlling interest is adjusted to reflect the distributions to and income allocated to the non-controlling unitholders. The ownership of the Common Units is summarized as follows:
 
Non-controlling ownership of Common Units in Neff Holdings
 
Neff Corporation ownership of Common Units in Neff Holdings
 
Total
As of September 30, 2015
14,951,625

 
10,494,191

 
25,445,816

 
58.8
%
 
41.2
%
 
100.0
%
 
Non-controlling ownership of Common Units in Neff Holdings
 
Neff Corporation ownership of Common Units in Neff Holdings
 
Total
As of December 31, 2014
14,951,625

 
10,476,190

 
25,427,815

 
58.8
%
 
41.2
%
 
100.0
%

The following table summarizes the activity in non-controlling interest from December 31, 2014 to September 30, 2015 (in thousands):
Balance of non-controlling interest as of December 31, 2014
$
(95,770
)
Net income attributable to non-controlling interest
15,912

Balance of non-controlling interest as of September 30, 2015
$
(79,858
)


Distributions for Taxes

As a limited liability company (treated as a partnership for income tax purposes), Neff Holdings does not incur significant federal or state and local income taxes, as these taxes are primarily the obligation of the members of Neff Holdings. As authorized by the Neff Holdings LLC agreement, Neff Holdings is required to distribute cash, generally, on a pro rata basis, to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to their share of Neff Holdings' earnings.

Payable Pursuant to the Tax Receivable Agreement

As of September 30, 2015, the Company recorded a liability of $29.1 million, representing the estimated payments due to Wayzata and certain members of management of Neff Holdings and certain non-executive members of its board of managers (collectively, the "Prior LLC Owners") under the Tax Receivable Agreement with the Prior LLC Owners as a result of the special allocation of depreciation and amortization deductions in excess of the pro rata share of such items. The liability as of September 30, 2015 decreased by $2.5 million from December 31, 2014, due to the Tax Receivable Agreement Amendment (defined below) and changes in estimated future payments as a result of the tax benefit Neff Corporation will obtain as a result of the special allocation of gain, to Wayzata, resulting from the sale of equipment that existed at the date of the IPO, in accordance with Section 704(c) of the Internal Revenue Code. The Company expects these changes from the special allocation of gain will likely occur quarterly.

On June 2, 2015, the Company, Wayzata and the Prior LLC Owners entered into an amendment to the Tax Receivable Agreement (the "Tax Receivable Agreement Amendment"), dated as of May 27, 2015. The Tax Receivable Agreement Amendment amended the Tax Receivable Agreement to eliminate any benefit to Wayzata and the Prior LLC Owners relating to tax adjustments arising from state, local or foreign taxes in order to relieve the substantial burden on the Company to calculate such benefit.

No amounts were paid pursuant to the terms of the Tax Receivable Agreement during the three and nine months ended September 30, 2015.


NOTE 3—NON-CONTROLLING INTEREST (Continued)

Payments are anticipated to be made under the Tax Receivable Agreement when Neff Corporation utilizes a benefit. The payments are to be made in accordance with the terms of the Tax Receivable Agreement. The timing of the payments is subject to certain contingencies including Neff Corporation having sufficient taxable income to utilize the tax benefits defined in the Tax Receivable Agreement.

Obligations pursuant to the Tax Receivable Agreement, are obligations of Neff Corporation and are not obligations of Neff Holdings. They do not impact the balance of non-controlling interest. These obligations are not income tax obligations and have no impact on the tax provision or the allocation of taxes. In general, items of income, gain, loss and deduction are allocated on the basis of members' respective ownership interests pursuant to the Neff Holdings LLC agreement after taking into consideration all relevant sections of the Internal Revenue Code.
EARNINGS PER SHARE
EARNINGS PER SHARE
EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, including vested restricted stock units ("RSUs"). Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares plus the dilutive effect of potential common shares outstanding during the period. For RSUs with performance-based vesting, no common equivalent shares are included in the computation of diluted earnings per share until the related performance criteria have been met. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):
 
For the Three Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2015
Numerator:
 
 
 
Net income attributable to Neff Corporation
$
3,206

 
$
11,554

Denominator for basic net income per share of Class A common stock:
 
 
 
Weighted average shares of Class A common stock outstanding
10,494

 
10,484

Denominator for diluted net income per share of Class A common stock:
 
 
 
Weighted average shares of Class A common stock outstanding
10,494

 
10,484

Add dilutive effect of the following:
 
 

Neff Holdings options (redeemable for cash or Class A common stock)
1,265

 
1,265

Neff Corporation stock options
289

 
289

Weighted average shares of Class A common stock outstanding, diluted
12,048

 
12,038

Earnings per share of Class A common stock:
 
 
 
Net income attributable to Neff Corporation per share of Class A common stock, basic
$
0.31

 
$
1.10

Net income attributable to Neff Corporation per share of Class A common stock, diluted
$
0.27

 
$
0.96



The shares of Class B common stock outstanding do not participate in the earnings of Neff Corporation and are therefore not participating securities. Accordingly, basic and diluted net income per share of Class B common stock have not been presented.
INTANGIBLE ASSETS
INTANGIBLE ASSETS
—INTANGIBLE ASSETS
The carrying amount and accumulated amortization of intangible assets as of September 30, 2015 and December 31, 2014, consisted of the following (in thousands, except as noted):
 
 
 
September 30, 2015
 
Average
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Book Value
Indefinite life:
 
 
 

 
 

 
 

Trademarks and tradenames
N/A
 
$
10,854

 
$

 
$
10,854

Finite life:
 
 
 

 
 

 
 

Customer list
12
 
13,987

 
(9,206
)
 
4,781

Total intangible assets
 
 
$
24,841

 
$
(9,206
)
 
$
15,635

 
 
 
December 31, 2014
 
Average
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Book Value
Indefinite life:
 
 
 

 
 

 
 

Trademarks and tradenames
N/A
 
$
10,854

 
$

 
$
10,854

Finite life:
 
 
 

 
 

 
 

Customer list
12
 
13,987

 
(8,241
)
 
5,746

Total intangible assets
 
 
$
24,841

 
$
(8,241
)
 
$
16,600

The customer list is amortized on an accelerated basis, based on estimated cash flows over the useful life of the customer list. Accumulated amortization and expected future annual amortization expense are as follows (in thousands):
Accumulated amortization at September 30, 2015
$
9,206

Estimated amortization expense for:
 

Remainder of 2015
321

2016
1,070

2017
877

2018
719

2019
589

2020 through 2022
1,205

Total
$
13,987


Amortization expense related to the customer list was $0.3 million and $0.4 million for the three months ended September 30, 2015 and 2014, respectively. Amortization expense related to the customer list was $1.0 million and $1.1 million for the nine months ended September 30, 2015 and 2014, respectively.
DEBT
DEBT
DEBT
Debt consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands, except percent data):
 
September 30, 2015
 
December 31, 2014
Revolving Credit Facility with interest ranging from the lender's prime rate plus up to 1.5% to LIBOR plus up to 2.5% (2.5% at September 30, 2015)
$
278,000

 
$
245,200

Second Lien Loan with interest of LIBOR plus 6.25%, with 1.0% LIBOR floor, net of unamortized discount of $2,102 in 2015 and $2,287 in 2014 (7.25% at September 30, 2015)
476,898

 
476,713

Total indebtedness
$
754,898

 
$
721,913


On October 1, 2010, Neff Rental LLC and Neff LLC (subsidiaries of Neff Holdings) entered into a senior secured revolving credit facility (the “Revolving Credit Facility”) as co-borrowers. The obligations under the Revolving Credit Facility are guaranteed by Neff Holdings. The Revolving Credit Facility is secured by a first priority security interest in substantially all of the Company’s assets. Interest on any base rate loans under the Revolving Credit Facility is due quarterly and interest on any LIBOR rate loans under the Revolving Credit Facility is due at three month intervals or, if shorter, at the end of the selected LIBOR period. Availability under the Revolving Credit Facility is subject to a borrowing base formula consisting of eligible accounts receivable and eligible rental fleet.

In May 2011, Neff Rental LLC and Neff Rental Finance Corp. (then a wholly-owned subsidiary of Neff Holdings), as co-issuers, completed a private offering of $200.0 million aggregate principal amount of 9.625% Senior Secured Notes (the “Senior Secured Notes”). The terms of the Senior Secured Notes were governed by an indenture. The obligations under the Senior Secured Notes were guaranteed by Neff Holdings and Neff LLC and were secured by a second priority security interest in substantially all of the Company’s assets. Interest on the Senior Secured Notes was payable in cash semi-annually in arrears on May 15 and November 15 of each year. The Senior Secured Notes maturity date was May 15, 2016. The Senior Secured Notes were repaid in full on June 9, 2014. Following the repayment of the Senior Secured Notes, Neff Rental Finance Corp. was dissolved on July 18, 2014.

On March 12, 2012, the Revolving Credit Facility was amended (the “March 2012 Amendment”). The March 2012 Amendment increased total borrowing capacity to $200.0 million, provided for a mechanism whereby the Company could request (but the lenders under the Revolving Credit Facility have no obligation to provide) up to $100.0 million of incremental revolving loan commitments under the Revolving Credit Facility, reduced applicable margins applicable to loans and other credit extensions, extended the maturity to the earlier of March 12, 2016 and ninety days prior to the maturity date of the Senior Secured Notes and modified the excess availability requirements relating to cash dominion and the implementation of certain financial covenants.

On October 25, 2012, the Revolving Credit Facility was amended (the “October 2012 Amendment”). The October 2012 Amendment increased total maximum borrowing capacity from $200.0 million to $225.0 million.

On November 20, 2013, the Revolving Credit Facility was amended and restated (the “2013 Amendment and Restatement”). Among other things, the 2013 Amendment and Restatement increased total maximum borrowing capacity from $225.0 million to $375.0 million and permitted the payment of a $110.0 million cash distribution to the members of Neff Holdings (the “2013 Distribution”), extended the maturity to the earlier of November 20, 2018 and ninety days prior to the maturity date of the Senior Secured Notes and modified the excess availability requirements relating to cash dominion and the implementation of certain financial covenants and covenants relating to appraisals and field audits. Following the repayment of the Senior Secured Notes, the maturity date of the Revolving Credit Facility is November 20, 2018.

On June 9, 2014, Neff Rental LLC entered into a second lien credit agreement (the “Second Lien Credit Agreement”) as borrower. Under the terms of the Second Lien Credit Agreement, Neff Rental LLC borrowed $575.0 million of second lien term loans (the “Second Lien Loan”).

The obligations under the Second Lien Credit Agreement are guaranteed by Neff Holdings and Neff LLC and are secured by a second priority security interest in substantially all of the Company’s assets. The Second Lien Loan included $2.9 million of original issue discount that is being amortized as interest expense over the term of the Second Lien Loan. The Second Lien Loan has a maturity date of June 9, 2021.


NOTE 6—DEBT (Continued)

The Company used the net proceeds from the Second Lien Loan to redeem the outstanding Senior Secured Notes, to pay a $329.9 million cash distribution to the members of Neff Holdings (the “June 2014 Distribution”), to pay incentive bonuses earned in connection with consummation of the refinancing (the "Refinancing") to management and certain members of Neff Holdings’ board of managers (the “Transaction Bonus”) and to pay fees and expenses. As a result of the repayment of the Senior Secured Notes, the Company recorded a loss on extinguishment of debt of $15.9 million (including $8.7 million of unamortized debt issue costs and $7.2 million for call premiums).

On June 9, 2014, in connection with entering into the Second Lien Credit Agreement and repayment of the Senior Secured Notes, the Revolving Credit Facility was further amended (the “June 2014 Amendment”). Among other things, the June 2014 Amendment increased total maximum borrowing capacity from $375.0 million to $425.0 million, permitted the payment of the June 2014 Distribution, permitted the payment of the Transaction Bonus, permitted the repayment of the Senior Secured Notes and modified the consolidated total leverage ratio covenant.

On October 14, 2014, the Revolving Credit Facility and Second Lien Loan were amended in anticipation of and conditional upon completion of the IPO (the "October 2014 Amendments"). The October 2014 Amendments, among other things, reflected the changes in the Company's structure as a result of the Organization Transactions and the IPO. The Company also prepaid $96.0 million of the principal amount of the Second Lien Loan with the net proceeds from the IPO.
Accumulated amortization at September 30, 2015 for debt issue costs was $3.9 million and $0.8 million for the Revolving Credit Facility and Second Lien Loan, respectively. Accumulated amortization at December 31, 2014 for debt issue costs was $3.2 million and $0.3 million for the Revolving Credit Facility and Second Lien Loan, respectively.

The Revolving Credit Facility and Second Lien Credit Agreement contain various affirmative, negative and financial reporting covenants. The covenants, among other things, place restrictions on the Company’s ability to acquire and sell assets, incur additional indebtedness and prepay other indebtedness other than the Revolving Credit Facility. The Company is subject to certain financial covenants under its Revolving Credit Facility if availability declines below $42.5 million. The Company was in compliance with all financial covenants under the Revolving Credit Facility and the Second Lien Credit Agreement as of September 30, 2015.

The Company had $3.7 million and $4.5 million in outstanding letters of credit at September 30, 2015 and December 31, 2014, respectively, that were primarily associated with its insurance coverage. As of September 30, 2015, total availability under the Revolving Credit Facility was $143.2 million.
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION
EQUITY—BASED COMPENSATION
On November 7, 2014, the Company's board of directors adopted the Neff Corporation 2014 Incentive Award Plan (the "2014 Incentive Plan"). The 2014 Incentive Plan became effective on November 7, 2014 and provides for the grant of options, restricted stock awards, performance awards, dividend equivalent awards, deferred stock awards, deferred stock unit awards, stock payment awards or stock appreciation rights to employees, consultants and directors of the Company.

For the three months ended September 30, 2015 and 2014, the Company recognized equity-based compensation expense of $0.2 million and $0.3 million, respectively. For the nine months ended September 30, 2015 and 2014, the Company recognized equity-based compensation expense of $0.9 million and $0.8 million, respectively. Each Common Unit held by Wayzata or acquired by individuals upon exercise of existing options granted by Neff Holdings will be redeemable, at the election of such member, for, at Neff Corporation's option, newly issued shares of Neff Corporation's Class A common stock on a 1-for-1 basis or for a cash payment equal to the market price of one share of Neff Corporation's Class A common stock.






NOTE 7—EQUITY—BASED COMPENSATION (Continued)
The following table summarizes equity-based compensation activity for the nine months ended September 30, 2015 (in thousands):
 
 
Neff Corporation
 
Neff Holdings
 
 
RSUs
 
Options
 
Options
Balance as of January 1, 2015
 
85

 
270

 
1,265

Granted
 
4

 
19

 

Exercised
 
(18
)
 

 

Forfeited
 

 

 

Balance as of September 30, 2015
 
71

 
289

 
1,265

 
 
 
 
 
 
 
Vested
 

 

 
1,261

Unvested
 
71

 
289

 
4

Total
 
71

 
289

 
1,265


At September 30, 2015, there were 1.1 million additional shares available for the Company to grant under the 2014 Incentive Plan.
DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS
On March 24, 2015, the Company entered into an interest rate swap (the "Interest Rate Swap"), effectively converting a portion of its variable rate debt into fixed rate debt. The Interest Rate Swap is not accounted for as a hedge and changes in fair value are included directly in the unaudited condensed consolidated statement of operations. The Company adjusts the accrued swap asset or liability by the amount of the monthly net settlement as settlements are made. Under the terms of the Interest Rate Swap, a monthly net settlement is made on approximately the 8th of each month for the difference between the fixed rate (see the fixed rate schedule below) and the variable rate, based upon the one month LIBOR rate on the notional amount of the Interest Rate Swap. The Interest Rate Swap has a notional amount of $200.0 million through April 8, 2020.
The fixed rate follows the schedule below:
April 8, 2015 to April 7, 2016
0.4726
%
April 8, 2016 to April 9, 2017
1.1570
%
April 10, 2017 to April 8, 2018
1.6810
%
April 9, 2018 to April 7, 2019
1.9610
%
April 8, 2019 to April 8, 2020
2.1430
%

The Company's transactions in derivative financial instruments are authorized and executed pursuant to its regularly reviewed policies and procedures, which prohibit the use of derivative financial instruments for trading or speculative purposes.
For the three months ended September 30, 2015, the Company recognized a loss on the Interest Rate Swap of $4.2 million which consisted of $4.1 million of unrealized losses related to the change in fair value of the Interest Rate Swap and a $0.1 million realized loss for the settlement payments made. The Company did not record a gain or loss on the Interest Rate Swap for the three months ended September 30, 2014. For the nine months ended September 30, 2015, the Company recognized a loss on the Interest Rate Swap of $4.1 million which consisted of $3.9 million of unrealized losses related to the change in fair value of the Interest Rate Swap and a $0.2 million realized loss for the settlement payments made. The Company did not record a gain or loss on the Interest Rate Swap for the nine months ended September 30, 2014.





NOTE 8—DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
The following tables provide details regarding the Company's derivative financial instruments (in thousands):
 
 
For the Three Months Ended September 30, 2015
 
For the Three Months Ended September 30, 2014
 
For the Nine Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2014
 
 
Loss Recognized in Earnings (a)
 
Loss Recognized in Earnings
 
Loss Recognized in Earnings (a)
 
Loss Recognized in Earnings
Interest Rate Swap
 
$
4,216

 
$

 
$
4,097

 
$


 
 
September 30, 2015
 
December 31, 2014
 
 
Fair Value of
Derivative (b)
 
Fair Value of
Derivative
Interest Rate Swap (Note 9)
 
$
3,852

 
$

 
(a)
Classified in Other expenses (income)—Loss on interest rate swap
(b)
Classified in LiabilitiesAccrued expenses and other liabilities
INCOME TAXES
INCOME TAXES
INCOME TAXES
Neff Corporation is required to file federal and applicable state corporate income tax returns and recognizes income taxes on its pre-tax income, which to date has consisted primarily of its share of Neff Holdings' pre-tax income. Neff Holdings is a limited liability company that is treated as a partnership for federal and state income tax purposes. Neff Holdings is not subject to income taxes for federal and state purposes. Rather, taxable income or loss is included in the respective federal and state income tax returns of Neff Holdings' members.
The components of provision for (benefit from) income taxes included in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 were as follows (in thousands):
 
For the Three Months Ended September 30, 2015
 
For the Three Months Ended September 30, 2014
 
For the Nine Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2014
Current expense
 
 
 
 
 
 
 
Federal
$

 
$

 
$

 
$

State and local
(527
)
 
(4,848
)
 
(393
)
 
(4,610
)
Total current expense
$
(527
)
 
$
(4,848
)
 
$
(393
)
 
$
(4,610
)
Deferred expense
 
 
 
 
 
 
 
Federal
$
1,265

 
$

 
$
2,520

 
$

State and local
(391
)
 

 
(435
)
 

Total deferred expense
874

 

 
2,085

 

Total
$
347

 
$
(4,848
)
 
$
1,692

 
$
(4,610
)


The following table summarizes the differences between the statutory federal income tax rate and the Company’s effective income tax rate (percent data):

 
For the Three Months Ended September 30, 2015
 
For the Three Months Ended September 30, 2014
 
For the Nine Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2014
U.S. federal statutory income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
Increase (decrease) in tax rate resulting from:
 
 
 
 
 
 
 
State and local income taxes, net of federal benefit
(1.2
)
 

 
(0.3
)
 

Uncertain tax positions
(5.9
)
 
(33.5
)
 
(2.0
)
 
170.4

Permanent book/tax differences
(2.7
)
 

 
(7.9
)
 

Change in tax rate

 

 
0.1

 

Non-controlling interest
(20.6
)
 
(35.0
)
 
(18.6
)
 
(35.0
)
Other
(1.2
)
 

 
(0.6
)
 

Effective tax rate
3.4
 %
 
(33.5
)%
 
5.7
 %
 
170.4
 %







NOTE 10—INCOME TAXES (Continued)
The components of deferred income tax assets (liabilities) are as follows (in thousands):
 
September 30, 2015
 
December 31, 2014
Deferred Tax Assets
 
 
 
Net operating loss carryforwards
$
10,534

 
$
2,535

Provision for bad debt
346

 
336

Accrued liabilities
592

 
902

Equity-based compensation
238

 
139

Loss on interest rate swap
606

 

Insurance/parts reserves
525

 
543

Straight-line rent adjustment
97

 
100

Uncertain tax positions

 
104

Subtotal
12,938

 
4,659

Less: valuation allowance

 

Total deferred tax assets
$
12,938

 
$
4,659

Deferred Tax Liabilities
 
 
 
Intangible assets
$
(3,310
)
 
$
(2,841
)
Deferred debt costs
(333
)
 
(230
)
Depreciation
(16,785
)
 
(6,993
)
Total deferred tax liabilities
$
(20,428
)
 
$
(10,064
)
 
 
 
 
Deferred Tax Liability, net
$
(7,490
)
 
$
(5,405
)


Management periodically assesses the recoverability of its deferred tax assets based upon expected future earnings, future deductibility of the asset and changes in applicable tax laws and other factors. If management determines that it is not probable that the deferred tax asset will be fully recoverable in the future, a valuation allowance may be established for the difference between the asset balance and the amount expected to be recoverable in the future. The allowance will result in a charge to the Company’s unaudited condensed consolidated statements of operations. Based on management’s assessment of the available positive and negative evidence, including future reversal of taxable temporary differences, we believe it is more likely than not that the deferred tax assets will be realized.
On October 1, 2010, Neff Holdings purchased substantially all of the assets of Neff Holdings Corp. and certain of its affiliates (collectively, the "Predecessor") in connection with the Predecessor's bankruptcy cases under Chapter 11 of Title 11 of the United States Bankruptcy Code (the "Acquisition").
In connection with the Acquisition, uncertain tax liabilities were assumed by Neff Holdings and are recorded in the Company's accrued expenses as of December 31, 2014. As a taxable entity, the Company recognizes tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. At December 31, 2014, the amount of uncertain tax positions recorded in accrued expenses was approximately $0.4 million. There were no uncertain tax positions as of September 30, 2015.
The Company's practice is to recognize interest and penalties on uncertain tax positions in income tax expense. The Company recognized accrued interest and penalties of $0.3 million as of December 31, 2014. During the third quarter of 2015, as a result of the expiration of statute of limitations, the Company reversed $0.4 million and $0.3 million in uncertain tax positions and interest and penalties, respectively. During the third quarter of 2014, as a result of the expiration of statute of limitations, the Company reversed $3.2 million and $1.7 million in uncertain tax positions and interest and penalties, respectively.
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES
The carrying amounts for accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value due to their immediate to short-term maturity. The fair value of the Revolving Credit Facility and the Second Lien Loan approximate carrying value as of September 30, 2015 and December 31, 2014, as variable interest rates approximate market rates. The Company has classified these instruments in Level 2 of the fair value hierarchy.
The Company used the following methods to measure the fair value of certain assets and liabilities:
Interest Rate Swap.   The Interest Rate Swap is valued utilizing pricing models taking into account inputs such as interest rates and notional amounts.
The FASB has established a framework for measuring fair value and requires that assets and liabilities measured at fair value be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs that are not corroborated by market data
The following table provides fair value measurement information of the Company's financial liability measured on a recurring basis as of September 30, 2015 (in thousands):
 
Fair Value Measurements Using:
 
Quoted Prices in Active Markets
 
Observable Inputs
 
Unobservable Inputs
 
(Level 1)
 
(Level 2)
 
(Level 3)
Interest Rate Swap
$

 
$
3,852

 
$


There were no transfers into or out of Level 1, 2 or 3 during the nine months ended September 30, 2015 and 2014.
SUPPLEMENTAL CONSOLIDATING STATEMENTS
SUPPLEMENTAL CONSOLIDATING STATEMENTS
NEFF CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2015
(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
230

 
$

 
$

 
$
2

 
$

 
$
232

Accounts receivable, net
60,869

 

 

 

 

 
60,869

Inventories
2,244

 

 

 

 

 
2,244

Rental equipment, net
468,534

 

 

 

 

 
468,534

Property and equipment, net
34,637

 

 

 

 

 
34,637

Prepaid expenses and other assets
15,429

 

 

 

 

 
15,429

Goodwill
58,765

 

 

 

 

 
58,765

Investment in subsidiary

 
52,688

 
52,688

 
160,841

 
(266,217
)
 

Intercompany
6,490

 

 

 
(6,490
)
 

 

Intangible assets, net
15,635

 

 

 

 

 
15,635

Total assets
$
662,833

 
$
52,688

 
$
52,688

 
$
154,353

 
$
(266,217
)
 
$
656,345

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT / MEMBERS' DEFICIT
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
9,338

 
$

 
$

 
$

 
$

 
$
9,338

Accrued expenses and other liabilities
33,555

 

 

 

 

 
33,555

Revolving credit facility
278,000

 

 

 

 

 
278,000

Second lien loan, net
476,898

 

 

 

 

 
476,898

Payable pursuant to tax receivable agreement

 

 

 
29,081

 

 
29,081

Deferred tax liability, net

 

 

 
7,490

 

 
7,490

Total liabilities
797,791

 

 

 
36,571

 

 
834,362

 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' deficit / members' deficit
 
 
 
 
 
 
 
 
 
 
 
   Class A Common Stock

 

 

 
105

 

 
105

   Class B Common Stock

 

 

 
150

 

 
150

   Additional paid-in capital

 

 

 
34,576

 
(146,143
)
 
(111,567
)
   Retained earnings

 

 

 
13,153

 

 
13,153

Members' deficit
(187,646
)
 

 

 

 
187,646

 

Accumulated surplus
52,688

 
52,688

 
52,688

 

 
(158,064
)
 

Total stockholders' deficit / members' deficit
(134,958
)
 
52,688

 
52,688

 
47,984

 
(116,561
)
 
(98,159
)
Non-controlling interest

 

 

 
69,798

 
(149,656
)
 
(79,858
)
Total stockholders' deficit / members' deficit and non-controlling interest
(134,958
)
 
52,688

 
52,688

 
117,782

 
(266,217
)
 
(178,017
)
Total liabilities and stockholders' deficit / members' deficit and non-controlling interest
$
662,833

 
$
52,688

 
$
52,688

 
$
154,353

 
$
(266,217
)
 
$
656,345

NEFF CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2014
(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
205

 
$

 
$

 
$
2

 
$

 
$
207

Accounts receivable, net
66,375

 

 

 

 

 
66,375

Inventories
2,005

 

 

 

 

 
2,005

Rental equipment, net
420,245

 

 

 

 

 
420,245

Property and equipment, net
30,210

 

 

 

 

 
30,210

Prepaid expenses and other assets
16,959

 

 

 

 

 
16,959

Goodwill
58,765

 

 

 

 

 
58,765

Investment in subsidiary

 
25,627

 
25,627

 
148,791

 
(200,045
)
 

Intercompany
6,206

 

 

 
(6,206
)
 

 

Intangible assets, net
16,600

 

 

 

 

 
16,600

Total assets
$
617,570

 
$
25,627

 
$
25,627

 
$
142,587

 
$
(200,045
)
 
$
611,366

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT / MEMBERS' DEFICIT
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
27,389

 
$

 
$

 
$

 
$

 
$
27,389

Accrued expenses and other liabilities
31,188

 

 

 
15

 

 
31,203

Revolving credit facility
245,200

 

 

 

 

 
245,200

Second lien loan, net
476,713

 

 

 

 

 
476,713

Payable pursuant to tax receivable agreement

 

 

 
31,557

 

 
31,557

Deferred tax liability, net

 

 

 
5,405

 

 
5,405

Total liabilities
780,490

 

 

 
36,977

 

 
817,467

 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' deficit / members' deficit
 
 
 
 
 
 
 
 
 
 
 
   Class A Common Stock

 

 

 
105

 

 
105

   Class B Common Stock

 

 

 
150

 

 
150

   Additional paid-in capital

 

 

 
33,958

 
(146,143
)
 
(112,185
)
   Retained earnings

 

 

 
1,599

 

 
1,599

Members' deficit
(188,547
)
 

 

 

 
188,547

 

Accumulated surplus
25,627

 
25,627

 
25,627

 

 
(76,881
)
 

Total stockholders' deficit / members' deficit
(162,920
)
 
25,627

 
25,627

 
35,812

 
(34,477
)
 
(110,331
)
Non-controlling interest

 

 

 
69,798

 
(165,568
)
 
(95,770
)
Total stockholders' deficit / members' deficit and non-controlling interest
(162,920
)
 
25,627

 
25,627

 
105,610

 
(200,045
)
 
(206,101
)
Total liabilities and stockholders' deficit / members' deficit and non-controlling interest
$
617,570

 
$
25,627

 
$
25,627

 
$
142,587

 
$
(200,045
)
 
$
611,366






NEFF CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015
(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
Revenues
 
 
 
 
 
 
 
 
 
 
 
Rental revenues
$
90,532

 
$

 
$

 
$

 
$

 
$
90,532

Equipment sales
5,559

 

 

 

 

 
5,559

Parts and service
3,333

 

 

 

 

 
3,333

Total revenues
99,424

 

 

 

 

 
99,424

Cost of revenues
 
 
 
 
 
 
 
 
 
 
 
Cost of equipment sold
3,474

 

 

 

 

 
3,474

Depreciation of rental equipment
21,553

 

 

 

 

 
21,553

Cost of rental revenues
21,186

 

 

 

 

 
21,186

Cost of parts and service
1,964

 

 

 

 

 
1,964

Total cost of revenues
48,177

 

 

 

 

 
48,177

Gross profit
51,247

 

 

 

 

 
51,247

Other operating expenses
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
22,852

 

 

 

 

 
22,852

Other depreciation and amortization
2,678

 

 

 

 

 
2,678

Total other operating expenses
25,530

 

 

 

 

 
25,530

Income from operations
25,717

 

 

 

 

 
25,717

Other expenses
 
 
 
 
 
 
 
 
 
 
 
Interest expense
10,907

 

 

 

 

 
10,907

Adjustment to tax receivable agreement

 

 

 
411

 

 
411

Loss on interest rate swap
4,216

 

 

 

 

 
4,216

Amortization of debt issue costs
392

 

 

 

 

 
392

Total other expenses
15,515

 

 

 
411

 

 
15,926

Income (loss) before income taxes
10,202

 

 

 
(411
)
 

 
9,791

Equity earnings in subsidiaries

 
10,608

 
10,608

 
4,370

 
(25,586
)
 

Benefit from (provision for) income taxes
406

 

 

 
(753
)
 

 
(347
)
Net income
10,608

 
10,608

 
10,608

 
3,206

 
(25,586
)
 
9,444

Less: net income attributable to non-controlling interest
6,238

 
6,238

 
6,238

 

 
(12,476
)
 
6,238

Net income attributable to Neff Corporation
$
4,370

 
$
4,370

 
$
4,370

 
$
3,206

 
$
(13,110
)
 
$
3,206


NEFF CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
Revenues
 
 
 
 
 
 
 
 
 
 
 
Rental revenues
$
249,493

 
$

 
$

 
$

 
$

 
$
249,493

Equipment sales
18,520

 

 

 

 

 
18,520

Parts and service
9,724

 

 

 

 

 
9,724

Total revenues
277,737

 

 

 

 

 
277,737

Cost of revenues
 
 
 
 
 
 
 
 
 
 
 
Cost of equipment sold
11,864

 

 

 

 

 
11,864

Depreciation of rental equipment
62,280

 

 

 

 

 
62,280

Cost of rental revenues
58,556

 

 

 

 

 
58,556

Cost of parts and service
5,534

 

 

 

 

 
5,534

Total cost of revenues
138,234

 

 

 

 

 
138,234

Gross profit
139,503

 

 

 

 

 
139,503

Other operating expenses
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
67,610

 

 

 

 

 
67,610

Other depreciation and amortization
7,796

 

 

 

 

 
7,796

Total other operating expenses
75,406

 

 

 

 

 
75,406

Income from operations
64,097

 

 

 

 

 
64,097

Other expenses (income)
 
 
 
 
 
 
 
 
 
 
 
Interest expense
32,174

 

 

 

 

 
32,174

Adjustment to tax receivable agreement

 

 

 
(2,476
)
 

 
(2,476
)
Loss on interest rate swap
4,097

 

 

 

 

 
4,097

Amortization of debt issue costs
1,144

 

 

 

 

 
1,144

Total other expenses (income)
37,415

 

 

 
(2,476
)
 

 
34,939

Income before income taxes
26,682

 

 

 
2,476

 

 
29,158

Equity earnings in subsidiaries

 
27,061

 
27,061

 
11,149

 
(65,271
)
 

Benefit from (provision for) income taxes
379

 

 

 
(2,071
)
 

 
(1,692
)
Net income
27,061

 
27,061

 
27,061

 
11,554

 
(65,271
)
 
27,466

Less: net income attributable to non-controlling interest
15,912

 
15,912

 
15,912

 

 
(31,824
)
 
15,912

Net income attributable to Neff Corporation
$
11,149

 
$
11,149

 
$
11,149

 
$
11,554

 
$
(33,447
)
 
$
11,554

NEFF CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
Cash Flows from Operating Activities
 
 
 
 
 
 
 
 
 
 
 
Net income
$
27,061

 
$
27,061

 
$
27,061

 
$
11,554

 
$
(65,271
)
 
$
27,466

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
 
 
Depreciation
69,111

 

 

 

 

 
69,111

Amortization of debt issue costs
1,144

 

 

 

 

 
1,144

Amortization of intangible assets
965

 

 

 

 

 
965

Amortization of original issue discount
185

 

 

 

 

 
185

Gain on sale of equipment
(6,656
)
 

 

 

 

 
(6,656
)
Provision for bad debt
1,431

 

 

 

 

 
1,431

Equity-based compensation
901

 

 

 

 

 
901

Deferred income taxes

 

 

 
2,085

 

 
2,085

Adjustment to tax receivable agreement

 

 

 
(2,476
)
 

 
(2,476
)
Unrealized loss on interest rate swap
3,852

 

 

 

 

 
3,852

Equity earnings in subsidiaries

 
(27,061
)
 
(27,061
)
 
(11,149
)
 
65,271

 

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
4,075

 

 

 

 

 
4,075

Inventories, prepaid expenses and other assets
147

 

 

 

 

 
147

Accounts payable
(1,271
)
 

 

 

 

 
(1,271
)
Accrued expenses and other liabilities
(1,255
)
 

 

 
(15
)
 

 
(1,270
)
Net cash provided by (used in) operating activities
99,690

 

 

 
(1
)
 

 
99,689

Cash Flows from Investing Activities
 
 
 
 
 
 
 
 
 
 
 
Purchases of rental equipment
(138,959
)
 

 

 

 

 
(138,959
)
Proceeds from sale of equipment
18,520

 

 

 

 

 
18,520

Purchases of property and equipment
(11,742
)
 

 

 

 

 
(11,742
)
Net cash used in investing activities
(132,181
)
 

 

 

 

 
(132,181
)
Cash Flows from Financing Activities
 
 
 
 
 
 
 
 
 
 
 
Repayments under revolving credit facility
(95,239
)
 

 

 

 

 
(95,239
)
Borrowings under revolving credit facility
128,039

 

 

 

 

 
128,039

Payment of costs directly associated with the issuance of Class A common stock

 

 

 
(283
)
 

 
(283
)
Intercompany
(284
)
 

 

 
284

 

 

Net cash provided by financing activities
32,516

 

 

 
1

 

 
32,517

Net increase in cash and cash equivalents
25

 

 

 

 

 
25

Cash and cash equivalents, beginning of period
205

 

 

 
2

 

 
207

Cash and cash equivalents, end of period
$
230

 
$

 
$

 
$
2

 
$

 
$
232

SUBSEQUENT EVENTS
Subsequent Events
SUBSEQUENT EVENTS

On November 10, 2015, the Company’s board of directors authorized a share repurchase program pursuant to which the Company may purchase shares of its Class A common stock. Under the share repurchase program, the Company may acquire up to $25.0 million of shares of Class A common stock in open market and negotiated purchases from time to time, dependent upon market conditions.

The repurchases will be subject to market conditions, applicable legal requirements, the ability of the Company to receive restricted payments from its operating subsidiaries, and other factors. The share repurchase program does not obligate the Company to acquire any minimum amount of common stock, and the program may be modified, limited, extended, suspended or terminated at any time at the Company’s discretion without prior notice. The Company currently expects that repurchases under the program will be made in compliance with the SEC's Rule 10b-18.
BASIS OF PRESENTATION (Policies)
Condensed Consolidated Financial Statements
Balance Sheets - The assets, liabilities and equity of Neff Corporation and Neff Holdings have been consolidated and carried forward at historical values;
Statements of Operations - The consolidated statements of operations include the historical consolidated statements of operations of Neff Holdings consolidated with the statement of operations of Neff Corporation;
Statement of Stockholders' Deficit and Non-Controlling Interest - Following the IPO, Wayzata retained a portion of its economic interest in Neff Holdings directly through the ownership of Neff Holdings Common Units and these interests are included within non-controlling interest subsequent to the IPO; and
Statements of Cash Flows - The statements of cash flows include the historical consolidated statements of cash flows of Neff Holdings consolidated with the statement of cash flows of Neff Corporation
Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company considers critical accounting estimates to be those that require more significant judgments in the preparation of the unaudited condensed consolidated financial statements including those related to depreciation, bad debts, income taxes, self-insurance reserves, goodwill and intangible assets, derivative financial instruments, contingencies and amounts payable pursuant to the tax receivable agreement, as amended (Note 3) ("Tax Receivable Agreement"). Management relies on historical experience and other assumptions, believed

NOTE 2—BASIS OF PRESENTATION (Continued)
to be reasonable under the circumstances, in making its judgments and estimates. Actual results could differ from those judgments and estimates.

Goodwill and Intangible Assets

Goodwill and trademarks and tradenames are reviewed at least annually for impairment. The Company conducts annual impairment tests on October 1 of each fiscal year or whenever an indicator of impairment exists. The customer list is amortized over its useful life (Note 5). The Company expenses costs to renew or extend the term of its recognized intangible assets.
Segment Reporting
The Company's operations consist of the rental and sale of equipment, and parts and services in five regions in the United States: Florida, Atlantic, Central, Southeastern and Western. The five regions are the Company's operating segments and are aggregated into one reportable segment because they rent similar products and have similar economic characteristics. The Company operates in the United States and had minimal international sales for each of the periods presented.
Comprehensive Income (Loss)

The Company had no items of other comprehensive income (loss) in any of the periods presented.
Recently Issued Accounting Pronouncements
Under the Jumpstart Our Business Startups Act (the “JOBS Act”), the Company meets the definition of an emerging growth company. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has irrevocably elected to avail itself of this exemption from adopting new or revised accounting standards and, therefore, will not be subject to new or revised accounting standards until such time as those standards apply to private companies. There were no significant new accounting pronouncements that the Company adopted during the nine months ended September 30, 2015.

In April 2015, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2015-03 Interest-Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03") which provides guidance on the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability and amortization of debt issuance costs will be reported as interest expense. This guidance is effective for private companies for fiscal years after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016, and requires application on a retrospective basis. The Company expects to adopt this guidance when effective for private companies, and does not expect this guidance to have a material impact on its financial statements, although it will change the financial statement classification of debt issuance costs. As of September 30, 2015, $9.3 million of debt issuance costs were included in total assets in the Company's unaudited condensed consolidated balance sheet.

In July 2015, the FASB issued ASU No. 2015-11 Inventory (Topic 330) - Simplifying the Measurement of Inventory ("ASU 2015-11") which requires an entity to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Current US GAAP requires that an entity measure inventory at the lower of cost or market. Market under current US GAAP could be replacement cost, net realizable value or net realizable value less a normal profit margin. This guidance is effective for private companies for fiscal years beginning after December 15, 2016 and interim periods within fiscal years beginning after December 15, 2017. This update should be applied prospectively. The Company expects to adopt this guidance when effective for private companies and does not expect this guidance to have a significant impact on the Company's financial statements.
NON-CONTROLLING INTEREST - (Tables)
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net
distributions to and income allocated to the non-controlling unitholders. The ownership of the Common Units is summarized as follows:
 
Non-controlling ownership of Common Units in Neff Holdings
 
Neff Corporation ownership of Common Units in Neff Holdings
 
Total
As of September 30, 2015
14,951,625

 
10,494,191

 
25,445,816

 
58.8
%
 
41.2
%
 
100.0
%
 
Non-controlling ownership of Common Units in Neff Holdings
 
Neff Corporation ownership of Common Units in Neff Holdings
 
Total
As of December 31, 2014
14,951,625

 
10,476,190

 
25,427,815

 
58.8
%
 
41.2
%
 
100.0
%

The following table summarizes the activity in non-controlling interest from December 31, 2014 to September 30, 2015 (in thousands):
Balance of non-controlling interest as of December 31, 2014
$
(95,770
)
Net income attributable to non-controlling interest
15,912

Balance of non-controlling interest as of September 30, 2015
$
(79,858
)
EARNINGS PER SHARE - (Tables)
Computation of Basic and Diluted Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):
 
For the Three Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2015
Numerator:
 
 
 
Net income attributable to Neff Corporation
$
3,206

 
$
11,554

Denominator for basic net income per share of Class A common stock:
 
 
 
Weighted average shares of Class A common stock outstanding
10,494

 
10,484

Denominator for diluted net income per share of Class A common stock:
 
 
 
Weighted average shares of Class A common stock outstanding
10,494

 
10,484

Add dilutive effect of the following:
 
 

Neff Holdings options (redeemable for cash or Class A common stock)
1,265

 
1,265

Neff Corporation stock options
289

 
289

Weighted average shares of Class A common stock outstanding, diluted
12,048

 
12,038

Earnings per share of Class A common stock:
 
 
 
Net income attributable to Neff Corporation per share of Class A common stock, basic
$
0.31

 
$
1.10

Net income attributable to Neff Corporation per share of Class A common stock, diluted
$
0.27

 
$
0.96

INTANGIBLE ASSETS - (Tables)




NOTE 5—INTANGIBLE ASSETS
The carrying amount and accumulated amortization of intangible assets as of September 30, 2015 and December 31, 2014, consisted of the following (in thousands, except as noted):
 
 
 
September 30, 2015
 
Average
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Book Value
Indefinite life:
 
 
 

 
 

 
 

Trademarks and tradenames
N/A
 
$
10,854

 
$

 
$
10,854

Finite life:
 
 
 

 
 

 
 

Customer list
12
 
13,987

 
(9,206
)
 
4,781

Total intangible assets
 
 
$
24,841

 
$
(9,206
)
 
$
15,635

 
 
 
December 31, 2014
 
Average
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Book Value
Indefinite life:
 
 
 

 
 

 
 

Trademarks and tradenames
N/A
 
$
10,854

 
$

 
$
10,854

Finite life:
 
 
 

 
 

 
 

Customer list
12
 
13,987

 
(8,241
)
 
5,746

Total intangible assets
 
 
$
24,841

 
$
(8,241
)
 
$
16,600





NOTE 5—INTANGIBLE ASSETS
The carrying amount and accumulated amortization of intangible assets as of September 30, 2015 and December 31, 2014, consisted of the following (in thousands, except as noted):
 
 
 
September 30, 2015
 
Average
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Book Value
Indefinite life:
 
 
 

 
 

 
 

Trademarks and tradenames
N/A
 
$
10,854

 
$

 
$
10,854

Finite life:
 
 
 

 
 

 
 

Customer list
12
 
13,987

 
(9,206
)
 
4,781

Total intangible assets
 
 
$
24,841

 
$
(9,206
)
 
$
15,635

 
 
 
December 31, 2014
 
Average
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Book Value
Indefinite life:
 
 
 

 
 

 
 

Trademarks and tradenames
N/A
 
$
10,854

 
$

 
$
10,854

Finite life:
 
 
 

 
 

 
 

Customer list
12
 
13,987

 
(8,241
)
 
5,746

Total intangible assets
 
 
$
24,841

 
$
(8,241
)
 
$
16,600

Accumulated amortization and expected future annual amortization expense are as follows (in thousands):
Accumulated amortization at September 30, 2015
$
9,206

Estimated amortization expense for:
 

Remainder of 2015
321

2016
1,070

2017
877

2018
719

2019
589

2020 through 2022
1,205

Total
$
13,987

DEBT - (Tables)
Schedule of Long-term Debt Instruments
Debt consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands, except percent data):
 
September 30, 2015
 
December 31, 2014
Revolving Credit Facility with interest ranging from the lender's prime rate plus up to 1.5% to LIBOR plus up to 2.5% (2.5% at September 30, 2015)
$
278,000

 
$
245,200

Second Lien Loan with interest of LIBOR plus 6.25%, with 1.0% LIBOR floor, net of unamortized discount of $2,102 in 2015 and $2,287 in 2014 (7.25% at September 30, 2015)
476,898

 
476,713

Total indebtedness
$
754,898

 
$
721,913

EQUITY-BASED COMPENSATION - (Tables)
Schedule of Share-based Compensation, Stock Options and Restricted Stock Units, Activity
The following table summarizes equity-based compensation activity for the nine months ended September 30, 2015 (in thousands):
 
 
Neff Corporation
 
Neff Holdings
 
 
RSUs
 
Options
 
Options
Balance as of January 1, 2015
 
85

 
270

 
1,265

Granted
 
4

 
19

 

Exercised
 
(18
)
 

 

Forfeited
 

 

 

Balance as of September 30, 2015
 
71

 
289

 
1,265

 
 
 
 
 
 
 
Vested
 

 

 
1,261

Unvested
 
71

 
289

 
4

Total
 
71

 
289

 
1,265


DERIVATIVE FINANCIAL INSTRUMENTS - (Tables)
The fixed rate follows the schedule below:
April 8, 2015 to April 7, 2016
0.4726
%
April 8, 2016 to April 9, 2017
1.1570
%
April 10, 2017 to April 8, 2018
1.6810
%
April 9, 2018 to April 7, 2019
1.9610
%
April 8, 2019 to April 8, 2020
2.1430
%
The following tables provide details regarding the Company's derivative financial instruments (in thousands):
 
 
For the Three Months Ended September 30, 2015
 
For the Three Months Ended September 30, 2014
 
For the Nine Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2014
 
 
Loss Recognized in Earnings (a)
 
Loss Recognized in Earnings
 
Loss Recognized in Earnings (a)
 
Loss Recognized in Earnings
Interest Rate Swap
 
$
4,216

 
$

 
$
4,097

 
$


 
 
September 30, 2015
 
December 31, 2014
 
 
Fair Value of
Derivative (b)
 
Fair Value of
Derivative
Interest Rate Swap (Note 9)
 
$
3,852

 
$

 
(a)
Classified in Other expenses (income)—Loss on interest rate swap
(b)
Classified in Liabilities
INCOME TAXES - (Tables)
The components of provision for (benefit from) income taxes included in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 were as follows (in thousands):
 
For the Three Months Ended September 30, 2015
 
For the Three Months Ended September 30, 2014
 
For the Nine Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2014
Current expense
 
 
 
 
 
 
 
Federal
$

 
$

 
$

 
$

State and local
(527
)
 
(4,848
)
 
(393
)
 
(4,610
)
Total current expense
$
(527
)
 
$
(4,848
)
 
$
(393
)
 
$
(4,610
)
Deferred expense
 
 
 
 
 
 
 
Federal
$
1,265

 
$

 
$
2,520

 
$

State and local
(391
)
 

 
(435
)
 

Total deferred expense
874

 

 
2,085

 

Total
$
347

 
$
(4,848
)
 
$
1,692

 
$
(4,610
)


The following table summarizes the differences between the statutory federal income tax rate and the Company’s effective income tax rate (percent data):

 
For the Three Months Ended September 30, 2015
 
For the Three Months Ended September 30, 2014
 
For the Nine Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2014
U.S. federal statutory income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
Increase (decrease) in tax rate resulting from:
 
 
 
 
 
 
 
State and local income taxes, net of federal benefit
(1.2
)
 

 
(0.3
)
 

Uncertain tax positions
(5.9
)
 
(33.5
)
 
(2.0
)
 
170.4

Permanent book/tax differences
(2.7
)
 

 
(7.9
)
 

Change in tax rate

 

 
0.1

 

Non-controlling interest
(20.6
)
 
(35.0
)
 
(18.6
)
 
(35.0
)
Other
(1.2
)
 

 
(0.6
)
 

Effective tax rate
3.4
 %
 
(33.5
)%
 
5.7
 %
 
170.4
 %
The components of deferred income tax assets (liabilities) are as follows (in thousands):
 
September 30, 2015
 
December 31, 2014
Deferred Tax Assets
 
 
 
Net operating loss carryforwards
$
10,534

 
$
2,535

Provision for bad debt
346

 
336

Accrued liabilities
592

 
902

Equity-based compensation
238

 
139

Loss on interest rate swap
606

 

Insurance/parts reserves
525

 
543

Straight-line rent adjustment
97

 
100

Uncertain tax positions

 
104

Subtotal
12,938

 
4,659

Less: valuation allowance

 

Total deferred tax assets
$
12,938

 
$
4,659

Deferred Tax Liabilities
 
 
 
Intangible assets
$
(3,310
)
 
$
(2,841
)
Deferred debt costs
(333
)
 
(230
)
Depreciation
(16,785
)
 
(6,993
)
Total deferred tax liabilities
$
(20,428
)
 
$
(10,064
)
 
 
 
 
Deferred Tax Liability, net
$
(7,490
)
 
$
(5,405
)
FAIR VALUE DISCLOSURES - (Tables)
Schedule of Fair Value, Liabilities Measured on Recurring Basis
The following table provides fair value measurement information of the Company's financial liability measured on a recurring basis as of September 30, 2015 (in thousands):
 
Fair Value Measurements Using:
 
Quoted Prices in Active Markets
 
Observable Inputs
 
Unobservable Inputs
 
(Level 1)
 
(Level 2)
 
(Level 3)
Interest Rate Swap
$

 
$
3,852

 
$

SUPPLEMENTAL CONSOLIDATING STATEMENTS (Tables)
NEFF CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2015
(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
230

 
$

 
$

 
$
2

 
$

 
$
232

Accounts receivable, net
60,869

 

 

 

 

 
60,869

Inventories
2,244

 

 

 

 

 
2,244

Rental equipment, net
468,534

 

 

 

 

 
468,534

Property and equipment, net
34,637

 

 

 

 

 
34,637

Prepaid expenses and other assets
15,429

 

 

 

 

 
15,429

Goodwill
58,765

 

 

 

 

 
58,765

Investment in subsidiary

 
52,688

 
52,688

 
160,841

 
(266,217
)
 

Intercompany
6,490

 

 

 
(6,490
)
 

 

Intangible assets, net
15,635

 

 

 

 

 
15,635

Total assets
$
662,833

 
$
52,688

 
$
52,688

 
$
154,353

 
$
(266,217
)
 
$
656,345

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT / MEMBERS' DEFICIT
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
9,338

 
$

 
$

 
$

 
$

 
$
9,338

Accrued expenses and other liabilities
33,555

 

 

 

 

 
33,555

Revolving credit facility
278,000

 

 

 

 

 
278,000

Second lien loan, net
476,898

 

 

 

 

 
476,898

Payable pursuant to tax receivable agreement

 

 

 
29,081

 

 
29,081

Deferred tax liability, net

 

 

 
7,490

 

 
7,490

Total liabilities
797,791

 

 

 
36,571

 

 
834,362

 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' deficit / members' deficit
 
 
 
 
 
 
 
 
 
 
 
   Class A Common Stock

 

 

 
105

 

 
105

   Class B Common Stock

 

 

 
150

 

 
150

   Additional paid-in capital

 

 

 
34,576

 
(146,143
)
 
(111,567
)
   Retained earnings

 

 

 
13,153

 

 
13,153

Members' deficit
(187,646
)
 

 

 

 
187,646

 

Accumulated surplus
52,688

 
52,688

 
52,688

 

 
(158,064
)
 

Total stockholders' deficit / members' deficit
(134,958
)
 
52,688

 
52,688

 
47,984

 
(116,561
)
 
(98,159
)
Non-controlling interest

 

 

 
69,798

 
(149,656
)
 
(79,858
)
Total stockholders' deficit / members' deficit and non-controlling interest
(134,958
)
 
52,688

 
52,688

 
117,782

 
(266,217
)
 
(178,017
)
Total liabilities and stockholders' deficit / members' deficit and non-controlling interest
$
662,833

 
$
52,688

 
$
52,688

 
$
154,353

 
$
(266,217
)
 
$
656,345

NEFF CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2014
(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
205

 
$

 
$

 
$
2

 
$

 
$
207

Accounts receivable, net
66,375

 

 

 

 

 
66,375

Inventories
2,005

 

 

 

 

 
2,005

Rental equipment, net
420,245

 

 

 

 

 
420,245

Property and equipment, net
30,210

 

 

 

 

 
30,210

Prepaid expenses and other assets
16,959

 

 

 

 

 
16,959

Goodwill
58,765

 

 

 

 

 
58,765

Investment in subsidiary

 
25,627

 
25,627

 
148,791

 
(200,045
)
 

Intercompany
6,206

 

 

 
(6,206
)
 

 

Intangible assets, net
16,600

 

 

 

 

 
16,600

Total assets
$
617,570

 
$
25,627

 
$
25,627

 
$
142,587

 
$
(200,045
)
 
$
611,366

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT / MEMBERS' DEFICIT
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
27,389

 
$

 
$

 
$

 
$

 
$
27,389

Accrued expenses and other liabilities
31,188

 

 

 
15

 

 
31,203

Revolving credit facility
245,200

 

 

 

 

 
245,200

Second lien loan, net
476,713

 

 

 

 

 
476,713

Payable pursuant to tax receivable agreement

 

 

 
31,557

 

 
31,557

Deferred tax liability, net

 

 

 
5,405

 

 
5,405

Total liabilities
780,490

 

 

 
36,977

 

 
817,467

 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' deficit / members' deficit
 
 
 
 
 
 
 
 
 
 
 
   Class A Common Stock

 

 

 
105

 

 
105

   Class B Common Stock

 

 

 
150

 

 
150

   Additional paid-in capital

 

 

 
33,958

 
(146,143
)
 
(112,185
)
   Retained earnings

 

 

 
1,599

 

 
1,599

Members' deficit
(188,547
)
 

 

 

 
188,547

 

Accumulated surplus
25,627

 
25,627

 
25,627

 

 
(76,881
)
 

Total stockholders' deficit / members' deficit
(162,920
)
 
25,627

 
25,627

 
35,812

 
(34,477
)
 
(110,331
)
Non-controlling interest

 

 

 
69,798

 
(165,568
)
 
(95,770
)
Total stockholders' deficit / members' deficit and non-controlling interest
(162,920
)
 
25,627

 
25,627

 
105,610

 
(200,045
)
 
(206,101
)
Total liabilities and stockholders' deficit / members' deficit and non-controlling interest
$
617,570

 
$
25,627

 
$
25,627

 
$
142,587

 
$
(200,045
)
 
$
611,366

SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015
(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
Revenues
 
 
 
 
 
 
 
 
 
 
 
Rental revenues
$
90,532

 
$

 
$

 
$

 
$

 
$
90,532

Equipment sales
5,559

 

 

 

 

 
5,559

Parts and service
3,333

 

 

 

 

 
3,333

Total revenues
99,424

 

 

 

 

 
99,424

Cost of revenues
 
 
 
 
 
 
 
 
 
 
 
Cost of equipment sold
3,474

 

 

 

 

 
3,474

Depreciation of rental equipment
21,553

 

 

 

 

 
21,553

Cost of rental revenues
21,186

 

 

 

 

 
21,186

Cost of parts and service
1,964

 

 

 

 

 
1,964

Total cost of revenues
48,177

 

 

 

 

 
48,177

Gross profit
51,247

 

 

 

 

 
51,247

Other operating expenses
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
22,852

 

 

 

 

 
22,852

Other depreciation and amortization
2,678

 

 

 

 

 
2,678

Total other operating expenses
25,530

 

 

 

 

 
25,530

Income from operations
25,717

 

 

 

 

 
25,717

Other expenses
 
 
 
 
 
 
 
 
 
 
 
Interest expense
10,907

 

 

 

 

 
10,907

Adjustment to tax receivable agreement

 

 

 
411

 

 
411

Loss on interest rate swap
4,216

 

 

 

 

 
4,216

Amortization of debt issue costs
392

 

 

 

 

 
392

Total other expenses
15,515

 

 

 
411

 

 
15,926

Income (loss) before income taxes
10,202

 

 

 
(411
)
 

 
9,791

Equity earnings in subsidiaries

 
10,608

 
10,608

 
4,370

 
(25,586
)
 

Benefit from (provision for) income taxes
406

 

 

 
(753
)
 

 
(347
)
Net income
10,608

 
10,608

 
10,608

 
3,206

 
(25,586
)
 
9,444

Less: net income attributable to non-controlling interest
6,238

 
6,238

 
6,238

 

 
(12,476
)
 
6,238

Net income attributable to Neff Corporation
$
4,370

 
$
4,370

 
$
4,370

 
$
3,206

 
$
(13,110
)
 
$
3,206

SUPPLEMENTAL UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

(in thousands)
 
Neff Rental LLC
 
Neff LLC
 
Neff Holdings LLC
 
Neff Corporation
 
Eliminations
 
Total
Cash Flows from Operating Activities
 
 
 
 
 
 
 
 
 
 
 
Net income
$
27,061

 
$
27,061

 
$
27,061

 
$
11,554

 
$
(65,271
)
 
$
27,466

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
 
 
Depreciation
69,111

 

 

 

 

 
69,111

Amortization of debt issue costs
1,144

 

 

 

 

 
1,144

Amortization of intangible assets
965

 

 

 

 

 
965

Amortization of original issue discount
185

 

 

 

 

 
185

Gain on sale of equipment
(6,656
)
 

 

 

 

 
(6,656
)
Provision for bad debt
1,431

 

 

 

 

 
1,431

Equity-based compensation
901

 

 

 

 

 
901

Deferred income taxes

 

 

 
2,085

 

 
2,085

Adjustment to tax receivable agreement

 

 

 
(2,476
)
 

 
(2,476
)
Unrealized loss on interest rate swap
3,852

 

 

 

 

 
3,852

Equity earnings in subsidiaries

 
(27,061
)
 
(27,061
)
 
(11,149
)
 
65,271

 

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
4,075

 

 

 

 

 
4,075

Inventories, prepaid expenses and other assets
147

 

 

 

 

 
147

Accounts payable
(1,271
)
 

 

 

 

 
(1,271
)
Accrued expenses and other liabilities
(1,255
)
 

 

 
(15
)
 

 
(1,270
)
Net cash provided by (used in) operating activities
99,690

 

 

 
(1
)
 

 
99,689

Cash Flows from Investing Activities
 
 
 
 
 
 
 
 
 
 
 
Purchases of rental equipment
(138,959
)
 

 

 

 

 
(138,959
)
Proceeds from sale of equipment
18,520

 

 

 

 

 
18,520

Purchases of property and equipment
(11,742
)
 

 

 

 

 
(11,742
)
Net cash used in investing activities
(132,181
)
 

 

 

 

 
(132,181
)
Cash Flows from Financing Activities
 
 
 
 
 
 
 
 
 
 
 
Repayments under revolving credit facility
(95,239
)
 

 

 

 

 
(95,239
)
Borrowings under revolving credit facility
128,039

 

 

 

 

 
128,039

Payment of costs directly associated with the issuance of Class A common stock

 

 

 
(283
)
 

 
(283
)
Intercompany
(284
)
 

 

 
284

 

 

Net cash provided by financing activities
32,516

 

 

 
1

 

 
32,517

Net increase in cash and cash equivalents
25

 

 

 

 

 
25

Cash and cash equivalents, beginning of period
205

 

 

 
2

 

 
207

Cash and cash equivalents, end of period
$
230

 
$

 
$

 
$
2

 
$

 
$
232

BUSINESS AND ORGANIZATION - Additional Information (Details) (USD $)
0 Months Ended
Sep. 30, 2015
Neff Holdings LLC
Dec. 31, 2014
Neff Holdings LLC
Nov. 26, 2014
Neff Holdings LLC
Nov. 26, 2014
IPO [Member]
Common Class A
Nov. 26, 2014
IPO [Member]
Common Class A
Class of Stock [Line Items]
 
 
 
 
 
Stock issued during period (in shares)
 
 
 
10,476,190 
 
Price of stock for public offering (in dollars per share)
 
 
 
 
$ 15.00 
Ownership percentage by parent
41.20% 
41.20% 
41.20% 
 
 
BASIS OF PRESENTATION - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2015
segment
Accounting Policies [Abstract]
 
Number of operating segments correponding to the number of regions in which entity operates
Number of reportable segments
Deferred debt issuance costs
$ 9.3 
NON-CONTROLLING INTEREST - Schedule of Ownership of Common Units (Details)
Sep. 30, 2015
Dec. 31, 2014
Nov. 26, 2014
Noncontrolling Interest [Line Items]
 
 
 
Aggregate Ownership of Noncontrolling Interest
100.00% 
100.00% 
 
Neff Holdings LLC
 
 
 
Noncontrolling Interest [Line Items]
 
 
 
Number of common units
25,445,816.000 
25,427,815.000 
 
Neff Holdings LLC |
Non-controlling Interest
 
 
 
Noncontrolling Interest [Line Items]
 
 
 
Number of common units
14,951,625 
14,951,625 
 
Neff Holdings LLC |
Neff Corporation
 
 
 
Noncontrolling Interest [Line Items]
 
 
 
Number of common units
10,494,191 
10,476,190 
 
Neff Holdings LLC
 
 
 
Noncontrolling Interest [Line Items]
 
 
 
Ownership percentage by non-controlling interest
58.80% 
58.80% 
58.80% 
Ownership percentage by parent
41.20% 
41.20% 
41.20% 
NON-CONTROLLING INTEREST - Schedule of Equity by Non-controlling Interest (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
 
 
 
 
Beginning balance
 
 
$ (95,770)
 
Equity-based compensation
 
 
901 
 
Net income attributable to non-controlling interest
6,238 
19,314 
15,912 
1,905 
Ending balance
(79,858)
 
(79,858)
 
Non-controlling Interest
 
 
 
 
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
 
 
 
 
Net income attributable to non-controlling interest
 
 
$ 15,912 
 
NON-CONTROLLING INTEREST - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Sep. 30, 2015
Neff Holdings LLC
Dec. 31, 2014
Neff Holdings LLC
Nov. 26, 2014
Neff Holdings LLC
Noncontrolling Interest [Line Items]
 
 
 
 
 
 
 
 
Ownership percentage by parent
 
 
 
 
 
41.20% 
41.20% 
41.20% 
Ownership percentage by non-controlling interest
 
 
 
 
 
58.80% 
58.80% 
58.80% 
Payable pursuant to tax receivable agreement
$ 29,081 
 
$ 29,081 
 
$ 31,557 
 
 
 
Adjustment to tax receivable agreement
$ (411)
$ 0 
$ 2,476 
$ 0 
 
 
 
 
EARNINGS PER SHARE - Computation of Basic and Diluted Earnings Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
1 Months Ended 3 Months Ended 9 Months Ended
Dec. 31, 2014
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Numerator:
 
 
 
 
 
Net income attributable to Neff Corporation
 
$ 3,206 
$ 0 
$ 11,554 
$ 0 
Add dilutive effect of the following (in shares)
 
 
 
 
 
Neff Holdings options (redeemable for cash or Class A common stock)
1,265 
 
 
 
 
Neff Corporation stock options
 
289 
 
289 
 
Common Class A
 
 
 
 
 
Denominator for diluted net income per share of Class A common stock:
 
 
 
 
 
Weighted average shares of Class A common stock outstanding
 
10,494 
 
10,484 
 
Add dilutive effect of the following (in shares)
 
 
 
 
 
Weighted average shares of Class A common stock outstanding, diluted
 
12,048 
 
12,038 
 
Net income attributable to Neff Corporation per share of Class A common stock, basic (in dollars per share)
 
$ 0.31 
 
$ 1.10 
 
Net income attributable to Neff Corporation per share of Class A common stock, diluted (in dollars per share)
 
$ 0.27 
 
$ 0.96 
 
INTANGIBLE ASSETS - Schedule of Carrying Amount and Accumulated Amortization of Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Gross Carrying Amount
$ 24,841 
 
$ 24,841 
 
$ 24,841 
Accumulated Amortization
(9,206)
 
(9,206)
 
(8,241)
Net Book Value
15,635 
 
15,635 
 
16,600 
Amortization of intangible assets
 
 
965 
1,131 
 
Customer Lists
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Average Useful Life (in years)
 
 
12 years 
 
12 years 
Gross Carrying Amount
13,987 
 
13,987 
 
13,987 
Accumulated Amortization
(9,206)
 
(9,206)
 
(8,241)
Net Book Value
4,781 
 
4,781 
 
5,746 
Amortization of intangible assets
300 
400 
1,000 
1,100 
 
Trademarks and Trade Names
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Gross Carrying Amount
10,854 
 
10,854 
 
10,854 
Net Book Value
$ 10,854 
 
$ 10,854 
 
$ 10,854 
INTANGIBLE ASSETS - Accumulated Amortization and Expected Future Amortization (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Accumulated Amortization
$ 9,206 
$ 8,241 
Estimated amortization expense for:
 
 
Remainder of 2015
321 
 
2016
1,070 
 
2017
877 
 
2018
719 
 
2019
589 
 
2020 through 2022
1,205 
 
Total
$ 13,987 
 
DEBT - Schedule of Debt (Details) (USD $)
In Thousands, unless otherwise specified
0 Months Ended 0 Months Ended
Sep. 30, 2015
Dec. 31, 2014
Sep. 30, 2015
Second Lien Loan
Dec. 31, 2014
Second Lien Loan
Jun. 9, 2014
London Interbank Offered Rate (LIBOR)
Second Lien Loan
Sep. 30, 2015
Revolving Credit Facility
Line of Credit
Dec. 31, 2014
Revolving Credit Facility
Line of Credit
Oct. 1, 2010
Revolving Credit Facility
Prime Rate
Line of Credit
Oct. 1, 2010
Revolving Credit Facility
London Interbank Offered Rate (LIBOR)
Line of Credit
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
Revolving credit facility
$ 278,000 
$ 245,200 
 
 
 
$ 278,000 
 
 
 
Long-term Debt
754,898 
721,913 
 
476,713 
 
 
245,200 
 
 
Second lien loan, net of original issue discount
476,898 
476,713 
476,898 
 
 
 
 
 
 
Debt instrument, basis spread on variable rate
 
 
 
 
6.25% 
 
 
1.50% 
2.50% 
Debt instrument, interest rate, floor of variable rate
 
 
 
 
1.00% 
 
 
 
 
Line of credit facility, interest rate at period end
 
 
 
 
 
2.50% 
 
 
 
Original issue discount
 
 
$ 2,102 
 
 
 
 
 
 
Debt instrument effective interest rate percentage
 
 
7.25% 
 
 
 
 
 
 
DEBT - Additional Information (Details) (USD $)
9 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Jun. 9, 2014
Senior Secured Notes
May 31, 2011
Neff Rental LLC and Neff Rental Finance Corp
Senior Secured Notes
Nov. 20, 2014
Neff Holdings LLC
Jun. 9, 2014
Neff Holdings LLC
Sep. 30, 2015
Neff Rental LLC
Second Lien Loan
Dec. 31, 2014
Neff Rental LLC
Second Lien Loan
Oct. 14, 2014
Second Lien Loan
Neff Rental LLC
Jun. 9, 2014
Second Lien Loan
Neff Rental LLC
Nov. 20, 2014
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Mar. 12, 2012
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Oct. 1, 2010
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Sep. 30, 2015
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Dec. 31, 2014
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Jun. 9, 2014
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Nov. 20, 2013
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Oct. 25, 2012
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Mar. 12, 2012
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Oct. 1, 2010
Revolving Credit Facility
Neff Rental LLC and Neff LLC
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit facility, interest payments due for LIBOR interest
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months 
 
 
 
 
 
 
 
Debt instrument, face amount
 
 
 
 
$ 200,000,000.0 
 
 
 
 
 
$ 575,000,000.0 
 
 
 
 
 
 
 
 
 
 
Stated interest rate
 
 
 
 
9.625% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit facility, maximum borrowing capacity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
425,000,000.0 
375,000,000.0 
225,000,000.0 
200,000,000.0 
 
Line of credit facility, accordion feature, increase limit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000,000.0 
 
Distribution to members
329,885,000 
 
 
 
110,000,000 
329,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit facility, alternate maturity date, number of days prior to maturity of senior secured debt
 
 
 
 
 
 
 
 
 
 
 
90 days 
90 days 
 
 
 
 
 
 
 
 
Original issue discount
 
 
 
 
 
 
 
 
 
 
2,900,000 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
15,896,000 
 
15,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Write off of deferred debt issuance cost
 
 
 
8,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Call premiums
7,218,000 
 
7,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current availability
 
 
 
 
 
 
 
 
 
 
 
 
 
 
143,200,000 
 
 
 
 
 
 
Repayments of Debt
 
 
 
 
 
 
 
 
 
96,000,000 
 
 
 
 
 
 
 
 
 
 
 
Accumulated amortization of deferred finance costs
 
 
 
 
 
 
 
800,000 
300,000 
 
 
 
 
 
3,900,000 
3,200,000 
 
 
 
 
 
Line of credit facility covenants, trigger, minimum availability
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42,500,000.0 
Outstanding letters of credit
$ 3,700,000 
 
$ 4,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EQUITY-BASED COMPENSATION EQUITY-BASED COMPENSATION - Schedule of Stock Option Activity (Details)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Stock options outstanding (in shares)
 
Beginning balance
270 
Granted
19 
Exercised
Forfeited
Ending balance
289 
Number of Vested and Unvested Awards (in shares)
 
Vested
Unvested
289 
Neff Holdings LLC
 
Stock options outstanding (in shares)
 
Beginning balance
1,265 
Granted
Exercised
Forfeited
Ending balance
1,265 
Number of Vested and Unvested Awards (in shares)
 
Vested
1,261 
Unvested
Restricted Stock Units (RSUs)
 
Restricted stock outstanding (in shares)
 
Beginning balance
85 
Granted
Exercised
(18)
Forfeited
Ending balance
71 
Number of Vested and Unvested Awards (in shares)
 
Vested
Unvested
71 
EQUITY-BASED COMPENSATION - Additional Information (Details) (USD $)
In Thousands, except Share data in Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation
 
 
$ 901 
$ 792 
Common stock, conversion ratio, common unit to Class A common stock
 
 
 
Neff Holdings LLC
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation
$ 200 
$ 300 
$ 900 
$ 800 
Incentive Plan 2014
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Number of additional shares available
1.1 
 
1.1 
 
DERIVIATIVE FINANCIAL INSTRUMENTS - Schedule of Derivative Fixed Interest Rates (Details)
Apr. 8, 2015
Apr. 8, 2019
Scenario, Forecast
Apr. 9, 2018
Scenario, Forecast
Apr. 10, 2017
Scenario, Forecast
Apr. 8, 2016
Scenario, Forecast
Derivative [Line Items]
 
 
 
 
 
Derivative, fixed interest rate
0.4726% 
2.143% 
1.961% 
1.681% 
1.157% 
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Derivative Financial Instruments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
 
Loss Recognized in Earnings
$ (4,216)
$ 0 
$ (4,097)
$ 0 
 
Interest Rate Swap |
Not Designated as Hedging Instrument [Member]
 
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
 
Loss Recognized in Earnings
4,216 
4,097 
 
Fair Value of Derivative
 
 
 
 
Fair Value, Inputs, Level 2 [Member] |
Interest Rate Swap |
Not Designated as Hedging Instrument [Member]
 
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
 
Fair Value of Derivative
$ 3,852 
 
$ 3,852 
 
 
DERIVATIVE FINANCIAL INSTRUMENTS - Additional Information (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Mar. 24, 2015
Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
 
 
Loss Recognized in Earnings
$ (4,216,000)
$ 0 
$ (4,097,000)
$ 0 
 
 
Unrealized gain (loss) on interest rate swap
 
 
(3,852,000)
 
 
Interest Rate Swap |
Not Designated as Hedging Instrument [Member]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
 
 
Derivative liability, notional amount
 
 
 
 
200,000,000.0 
 
Loss Recognized in Earnings
4,216,000 
4,097,000 
 
 
Unrealized gain (loss) on interest rate swap
4,100,000 
 
3,900,000 
 
 
 
Gain (loss) on settlement payments for derivatives
(100,000)
 
200,000 
 
 
 
Fair value of derivative liability
 
 
 
 
 
$ 0 
INCOME TAXES - Components of Income Taxes (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Current expense
 
 
 
 
Federal
$ 0 
$ 0 
$ 0 
$ 0 
State and local
(527)
(4,848)
(393)
(4,610)
Total current (benefit) expense
(527)
(4,848)
(393)
(4,610)
Deferred expense
 
 
 
 
Federal
1,265 
2,520 
State and local
(391)
(435)
Total deferred expense
874 
2,085 
Total
$ 347 
$ (4,848)
$ 1,692 
$ (4,610)
INCOME TAXES - Effective Income Tax Rate Reconciliation (Details)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Effective Income Tax Rate Reconciliation, Percent [Abstract]
 
 
 
 
U.S. federal statutory income tax rate
35.00% 
35.00% 
35.00% 
35.00% 
State and local income taxes, net of federal benefit
(1.20%)
0.00% 
(0.30%)
0.00% 
Uncertain tax positions
(5.90%)
(33.50%)
(2.00%)
170.40% 
Permanent book/tax differences
(2.70%)
0.00% 
(7.90%)
0.00% 
Change in tax rate
0.00% 
0.00% 
0.10% 
0.00% 
Non-controlling interest
(20.60%)
(35.00%)
(18.60%)
(35.00%)
Other
(1.20%)
0.00% 
(0.60%)
0.00% 
Effective tax rate
3.40% 
(33.50%)
5.70% 
170.40% 
INCOME TAXES - Schedule of Net Deferred Tax Asset Liability (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
Net operating loss carryforwards
$ 10,534 
$ 2,535 
Bad debt expense
346 
336 
Accrued liabilities
592 
902 
Equity-based compensation
238 
139 
Loss on interest rate swap
606 
Insurance/parts reserves
525 
543 
Straight-line rent adjustment
97 
100 
Uncertain tax positions
104 
Subtotal
12,938 
4,659 
Less: valuation allowance
Total deferred tax assets
12,938 
4,659 
Deferred Tax Liabilities
 
 
Intangible assets
(3,310)
(2,841)
Deferred debt costs
(333)
(230)
Depreciation
(16,785)
(6,993)
Total deferred tax liability
(20,428)
(10,064)
Net Deferred Tax Liability
$ (7,490)
$ (5,405)
INCOME TAXES - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Income Tax Contingency [Line Items]
 
 
 
Uncertain tax position recorded in accrued expenses
$ 0.4 
 
$ 0.4 
Interest and penalties accrued
0.3 
 
0.3 
Reversed uncertain tax position during the period
(0.4)
(3.2)
 
Scenario, Adjustment [Member]
 
 
 
Income Tax Contingency [Line Items]
 
 
 
Reversed interest and penalties during the period
$ 0.3 
$ (1.7)
 
FAIR VALUE DISCLOSURES - (Details) (Interest Rate Swap, USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Fair Value, Measurements, Recurring
Fair Value Inputs, Level 1
Sep. 30, 2015
Fair Value, Measurements, Recurring
Fair Value Inputs, Level 3
Dec. 31, 2014
Not Designated as Hedging Instrument [Member]
Sep. 30, 2015
Not Designated as Hedging Instrument [Member]
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Derivative Liability
$ 0 
$ 0 
 
 
Fair Value of Derivative
 
 
$ 0 
$ 3,852 
SUPPLEMENTAL CONSOLIDATING STATEMENTS - Condensed Consolidating Balance Sheet (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Jun. 30, 2014
Dec. 31, 2013
ASSETS
 
 
 
 
Cash and cash equivalents
$ 232 
$ 207 
$ 1,999 
$ 190 
Accounts receivable, net
60,869 
66,375 
 
 
Inventories
2,244 
2,005 
 
 
Rental equipment, net
468,534 
420,245 
 
 
Property and equipment, net
34,637 
30,210 
 
 
Prepaid expenses and other assets
15,429 
16,959 
 
 
Goodwill
58,765 
58,765 
 
 
Investment in Subsidiary
 
 
Intercompany
 
 
Intangible assets, net
15,635 
16,600 
 
 
Total assets
656,345 
611,366 
 
 
Liabilities
 
 
 
 
Accounts payable
9,338 
27,389 
 
 
Accrued expenses and other liabilities
33,555 
31,203 
 
 
Revolving credit facility
278,000 
245,200 
 
 
Second lien loan, net of original issue discount
476,898 
476,713 
 
 
Payable pursuant to tax receivable agreement
29,081 
31,557 
 
 
Deferred tax liability, net
7,490 
5,405 
 
 
Total liabilities
834,362 
817,467 
 
 
Stockholders' deficit
 
 
 
 
Additional paid-in capital
(111,567)
(112,185)
 
 
Retained earnings
13,153 
1,599 
 
 
Members' deficit
 
 
Accumulated surplus
 
 
Total stockholders' deficit
(98,159)
(110,331)
 
 
Non-controlling interest
(79,858)
(95,770)
 
 
Total stockholders' deficit and non-controlling interest
(178,017)
(206,101)
 
 
Total liabilities and stockholders' deficit and non-controlling interest
656,345 
611,366 
 
 
Eliminations
 
 
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
 
 
Accounts receivable, net
 
 
Inventories
 
 
Rental equipment, net
 
 
Property and equipment, net
 
 
Prepaid expenses and other assets
 
 
Goodwill
 
 
Investment in Subsidiary
(266,217)
(200,045)
 
 
Intercompany
 
 
Intangible assets, net
 
 
Total assets
(266,217)
(200,045)
 
 
Liabilities
 
 
 
 
Accounts payable
 
 
Accrued expenses and other liabilities
 
 
Revolving credit facility
 
 
Second lien loan, net of original issue discount
 
 
Payable pursuant to tax receivable agreement
 
 
Deferred tax liability, net
 
 
Total liabilities
 
 
Stockholders' deficit
 
 
 
 
Additional paid-in capital
(146,143)
(146,143)
 
 
Retained earnings
 
 
Members' deficit
187,646 
188,547 
 
 
Accumulated surplus
(158,064)
(76,881)
 
 
Total stockholders' deficit
(116,561)
(34,477)
 
 
Non-controlling interest
(149,656)
(165,568)
 
 
Total stockholders' deficit and non-controlling interest
(266,217)
(200,045)
 
 
Total liabilities and stockholders' deficit and non-controlling interest
(266,217)
(200,045)
 
 
Neff Rental LLC |
Reportable Legal Entities
 
 
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
230 
205 
 
 
Accounts receivable, net
60,869 
66,375 
 
 
Inventories
2,244 
2,005 
 
 
Rental equipment, net
468,534 
420,245 
 
 
Property and equipment, net
34,637 
30,210 
 
 
Prepaid expenses and other assets
15,429 
16,959 
 
 
Goodwill
58,765 
58,765 
 
 
Investment in Subsidiary
 
 
Intercompany
6,490 
6,206 
 
 
Intangible assets, net
15,635 
16,600 
 
 
Total assets
662,833 
617,570 
 
 
Liabilities
 
 
 
 
Accounts payable
9,338 
27,389 
 
 
Accrued expenses and other liabilities
33,555 
31,188 
 
 
Revolving credit facility
278,000 
245,200 
 
 
Second lien loan, net of original issue discount
476,898 
476,713 
 
 
Payable pursuant to tax receivable agreement
 
 
Deferred tax liability, net
 
 
Total liabilities
797,791 
780,490 
 
 
Stockholders' deficit
 
 
 
 
Additional paid-in capital
 
 
Retained earnings
 
 
Members' deficit
(187,646)
(188,547)
 
 
Accumulated surplus
52,688 
25,627 
 
 
Total stockholders' deficit
(134,958)
(162,920)
 
 
Non-controlling interest
 
 
Total stockholders' deficit and non-controlling interest
(134,958)
(162,920)
 
 
Total liabilities and stockholders' deficit and non-controlling interest
662,833 
617,570 
 
 
Neff LLC |
Reportable Legal Entities
 
 
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
 
 
Accounts receivable, net
 
 
Inventories
 
 
Rental equipment, net
 
 
Property and equipment, net
 
 
Prepaid expenses and other assets
 
 
Goodwill
 
 
Investment in Subsidiary
52,688 
25,627 
 
 
Intercompany
 
 
Intangible assets, net
 
 
Total assets
52,688 
25,627 
 
 
Liabilities
 
 
 
 
Accounts payable
 
 
Accrued expenses and other liabilities
 
 
Revolving credit facility
 
 
Second lien loan, net of original issue discount
 
 
Payable pursuant to tax receivable agreement
 
 
Deferred tax liability, net
 
 
Total liabilities
 
 
Stockholders' deficit
 
 
 
 
Additional paid-in capital
 
 
Retained earnings
 
 
Members' deficit
 
 
Accumulated surplus
52,688 
25,627 
 
 
Total stockholders' deficit
52,688 
25,627 
 
 
Non-controlling interest
 
 
Total stockholders' deficit and non-controlling interest
52,688 
25,627 
 
 
Total liabilities and stockholders' deficit and non-controlling interest
52,688 
25,627 
 
 
Neff Holdings LLC |
Reportable Legal Entities
 
 
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
 
 
Accounts receivable, net
 
 
Inventories
 
 
Rental equipment, net
 
 
Property and equipment, net
 
 
Prepaid expenses and other assets
 
 
Goodwill
 
 
Investment in Subsidiary
52,688 
25,627 
 
 
Intercompany
 
 
Intangible assets, net
 
 
Total assets
52,688 
25,627 
 
 
Liabilities
 
 
 
 
Accounts payable
 
 
Accrued expenses and other liabilities
 
 
Revolving credit facility
 
 
Second lien loan, net of original issue discount
 
 
Payable pursuant to tax receivable agreement
 
 
Deferred tax liability, net
 
 
Total liabilities
 
 
Stockholders' deficit
 
 
 
 
Additional paid-in capital
 
 
Retained earnings
 
 
Members' deficit
 
 
Accumulated surplus
52,688 
25,627 
 
 
Total stockholders' deficit
52,688 
25,627 
 
 
Non-controlling interest
 
 
Total stockholders' deficit and non-controlling interest
52,688 
25,627 
 
 
Total liabilities and stockholders' deficit and non-controlling interest
52,688 
25,627 
 
 
Neff Corporation |
Reportable Legal Entities
 
 
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
 
 
Accounts receivable, net
 
 
Inventories
 
 
Rental equipment, net
 
 
Property and equipment, net
 
 
Prepaid expenses and other assets
 
 
Goodwill
 
 
Investment in Subsidiary
160,841 
148,791 
 
 
Intercompany
(6,490)
(6,206)
 
 
Intangible assets, net
 
 
Total assets
154,353 
142,587 
 
 
Liabilities
 
 
 
 
Accounts payable
 
 
Accrued expenses and other liabilities
15 
 
 
Revolving credit facility
 
 
Second lien loan, net of original issue discount
 
 
Payable pursuant to tax receivable agreement
29,081 
31,557 
 
 
Deferred tax liability, net
7,490 
5,405 
 
 
Total liabilities
36,571 
36,977 
 
 
Stockholders' deficit
 
 
 
 
Additional paid-in capital
34,576 
33,958 
 
 
Retained earnings
13,153 
1,599 
 
 
Members' deficit
 
 
Accumulated surplus
 
 
Total stockholders' deficit
47,984 
35,812 
 
 
Non-controlling interest
69,798 
69,798 
 
 
Total stockholders' deficit and non-controlling interest
117,782 
105,610 
 
 
Total liabilities and stockholders' deficit and non-controlling interest
154,353 
142,587 
 
 
Common Class A
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
105 
105 
 
 
Common Class A |
Eliminations
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
 
 
Common Class A |
Neff Rental LLC |
Reportable Legal Entities
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
 
 
Common Class A |
Neff LLC |
Reportable Legal Entities
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
 
 
Common Class A |
Neff Holdings LLC |
Reportable Legal Entities
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
 
 
Common Class A |
Neff Corporation |
Reportable Legal Entities
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
105 
105 
 
 
Common Class B
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
150 
150 
 
 
Common Class B |
Eliminations
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
 
 
Common Class B |
Neff Rental LLC |
Reportable Legal Entities
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
 
 
Common Class B |
Neff LLC |
Reportable Legal Entities
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
 
 
Common Class B |
Neff Holdings LLC |
Reportable Legal Entities
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
 
 
Common Class B |
Neff Corporation |
Reportable Legal Entities
 
 
 
 
Stockholders' deficit
 
 
 
 
Common stock
$ 150 
$ 150 
 
 
SUPPLEMENTAL CONSOLIDATING STATEMENTS - Condensed Consolidating Statement of Operations (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Revenues
 
 
 
 
Rental revenues
$ 90,532 
$ 87,736 
$ 249,493 
$ 240,362 
Equipment sales
5,559 
6,561 
18,520 
17,355 
Parts and service
3,333 
3,450 
9,724 
10,125 
Total revenues
99,424 
97,747 
277,737 
267,842 
Cost of revenues
 
 
 
 
Cost of equipment sold
3,474 
3,758 
11,864 
9,877 
Depreciation of rental equipment
21,553 
18,342 
62,280 
54,831 
Cost of rental revenues
21,186 
22,045 
58,556 
59,669 
Cost of parts and service
1,964 
2,064 
5,534 
6,158 
Total cost of revenues
48,177 
46,209 
138,234 
130,535 
Gross profit
51,247 
51,538 
139,503 
137,307 
Other operating expenses
 
 
 
 
Selling, general and administrative expenses
22,852 
21,081 
67,610 
61,453 
Other depreciation and amortization
2,678 
2,441 
7,796 
7,149 
Total other operating expenses
25,530 
23,522 
75,406 
93,108 
Income from operations
25,717 
28,016 
64,097 
44,199 
Other expenses
 
 
 
 
Interest expense
10,907 
13,194 
32,174 
28,313 
Adjustment to tax receivable agreement
411 
(2,476)
Loss on interest rate swap
4,216 
4,097 
Amortization of debt issue costs
392 
356 
1,144 
2,695 
Total other expenses
15,926 
13,550 
34,939 
46,904 
Income before income taxes
9,791 
14,466 
29,158 
(2,705)
Equity earnings in subsidiaries
 
 
(Provision for) benefit from income taxes
(347)
4,848 
(1,692)
4,610 
Net income
9,444 
19,314 
27,466 
1,905 
Less: net income attributable to non-controlling interest
6,238 
19,314 
15,912 
1,905 
Net income attributable to Neff Corporation
3,206 
11,554 
Eliminations
 
 
 
 
Revenues
 
 
 
 
Rental revenues
 
 
Equipment sales
 
 
Parts and service
 
 
Total revenues
 
 
Cost of revenues
 
 
 
 
Cost of equipment sold
 
 
Depreciation of rental equipment
 
 
Cost of rental revenues
 
 
Cost of parts and service
 
 
Total cost of revenues
 
 
Gross profit
 
 
Other operating expenses
 
 
 
 
Selling, general and administrative expenses
 
 
Other depreciation and amortization
 
 
Total other operating expenses
 
 
Income from operations
 
 
Other expenses
 
 
 
 
Interest expense
 
 
Adjustment to tax receivable agreement
 
 
Loss on interest rate swap
 
 
Amortization of debt issue costs
 
 
Total other expenses
 
 
Income before income taxes
 
 
Equity earnings in subsidiaries
(25,586)
 
(65,271)
 
(Provision for) benefit from income taxes
 
 
Net income
(25,586)
 
(65,271)
 
Less: net income attributable to non-controlling interest
(12,476)
 
(31,824)
 
Net income attributable to Neff Corporation
(13,110)
 
(33,447)
 
Neff Rental LLC |
Reportable Legal Entities
 
 
 
 
Revenues
 
 
 
 
Rental revenues
90,532 
 
249,493 
 
Equipment sales
5,559 
 
18,520 
 
Parts and service
3,333 
 
9,724 
 
Total revenues
99,424 
 
277,737 
 
Cost of revenues
 
 
 
 
Cost of equipment sold
3,474 
 
11,864 
 
Depreciation of rental equipment
21,553 
 
62,280 
 
Cost of rental revenues
21,186 
 
58,556 
 
Cost of parts and service
1,964 
 
5,534 
 
Total cost of revenues
48,177 
 
138,234 
 
Gross profit
51,247 
 
139,503 
 
Other operating expenses
 
 
 
 
Selling, general and administrative expenses
22,852 
 
67,610 
 
Other depreciation and amortization
2,678 
 
7,796 
 
Total other operating expenses
25,530 
 
75,406 
 
Income from operations
25,717 
 
64,097 
 
Other expenses
 
 
 
 
Interest expense
10,907 
 
32,174 
 
Adjustment to tax receivable agreement
 
 
Loss on interest rate swap
4,216 
 
4,097 
 
Amortization of debt issue costs
392 
 
1,144 
 
Total other expenses
15,515 
 
37,415 
 
Income before income taxes
10,202 
 
26,682 
 
Equity earnings in subsidiaries
 
 
(Provision for) benefit from income taxes
406 
 
379 
 
Net income
10,608 
 
27,061 
 
Less: net income attributable to non-controlling interest
6,238 
 
15,912 
 
Net income attributable to Neff Corporation
4,370 
 
11,149 
 
Neff LLC |
Reportable Legal Entities
 
 
 
 
Revenues
 
 
 
 
Rental revenues
 
 
Equipment sales
 
 
Parts and service
 
 
Total revenues
 
 
Cost of revenues
 
 
 
 
Cost of equipment sold
 
 
Depreciation of rental equipment
 
 
Cost of rental revenues
 
 
Cost of parts and service
 
 
Total cost of revenues
 
 
Gross profit
 
 
Other operating expenses
 
 
 
 
Selling, general and administrative expenses
 
 
Other depreciation and amortization
 
 
Total other operating expenses
 
 
Income from operations
 
 
Other expenses
 
 
 
 
Interest expense
 
 
Adjustment to tax receivable agreement
 
 
Loss on interest rate swap
 
 
Amortization of debt issue costs
 
 
Total other expenses
 
 
Income before income taxes
 
 
Equity earnings in subsidiaries
10,608 
 
27,061 
 
(Provision for) benefit from income taxes
 
 
Net income
10,608 
 
27,061 
 
Less: net income attributable to non-controlling interest
6,238 
 
15,912 
 
Net income attributable to Neff Corporation
4,370 
 
11,149 
 
Neff Holdings LLC |
Reportable Legal Entities
 
 
 
 
Revenues
 
 
 
 
Rental revenues
 
 
Equipment sales
 
 
Parts and service
 
 
Total revenues
 
 
Cost of revenues
 
 
 
 
Cost of equipment sold
 
 
Depreciation of rental equipment
 
 
Cost of rental revenues
 
 
Cost of parts and service
 
 
Total cost of revenues
 
 
Gross profit
 
 
Other operating expenses
 
 
 
 
Selling, general and administrative expenses
 
 
Other depreciation and amortization
 
 
Total other operating expenses
 
 
Income from operations
 
 
Other expenses
 
 
 
 
Interest expense
 
 
Adjustment to tax receivable agreement
 
 
Loss on interest rate swap
 
 
Amortization of debt issue costs
 
 
Total other expenses
 
 
Income before income taxes
 
 
Equity earnings in subsidiaries
10,608 
 
27,061 
 
(Provision for) benefit from income taxes
 
 
Net income
10,608 
 
27,061 
 
Less: net income attributable to non-controlling interest
6,238 
 
15,912 
 
Net income attributable to Neff Corporation
4,370 
 
11,149 
 
Neff Corporation |
Reportable Legal Entities
 
 
 
 
Revenues
 
 
 
 
Rental revenues
 
 
Equipment sales
 
 
Parts and service
 
 
Total revenues
 
 
Cost of revenues
 
 
 
 
Cost of equipment sold
 
 
Depreciation of rental equipment
 
 
Cost of rental revenues
 
 
Cost of parts and service
 
 
Total cost of revenues
 
 
Gross profit
 
 
Other operating expenses
 
 
 
 
Selling, general and administrative expenses
 
 
Other depreciation and amortization
 
 
Total other operating expenses
 
 
Income from operations
 
 
Other expenses
 
 
 
 
Interest expense
 
 
Adjustment to tax receivable agreement
411 
 
(2,476)
 
Loss on interest rate swap
 
 
Amortization of debt issue costs
 
 
Total other expenses
411 
 
(2,476)
 
Income before income taxes
(411)
 
2,476 
 
Equity earnings in subsidiaries
4,370 
 
11,149 
 
(Provision for) benefit from income taxes
(753)
 
(2,071)
 
Net income
3,206 
 
11,554 
 
Less: net income attributable to non-controlling interest
 
 
Net income attributable to Neff Corporation
$ 3,206 
 
$ 11,554 
 
SUPPLEMENTAL CONSOLIDATING STATEMENTS - Condensed Consolidating Statement of Cash Flows (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Cash Flows from Operating Activities
 
 
Net income
$ 27,466 
$ 1,905 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
Depreciation
69,111 
60,849 
Amortization of debt issue costs
1,144 
2,695 
Amortization of intangible assets
965 
1,131 
Amortization of original issue discount
185 
70 
Gain on sale of equipment
(6,656)
(7,478)
Provision for bad debt
1,431 
1,929 
Equity-based compensation
901 
792 
Deferred income taxes
2,085 
Adjustment to tax receivable agreement
(2,476)
Unrealized loss on interest rate swap
3,852 
Equity earnings in subsidiaries
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
4,075 
(5,293)
Inventories, prepaid expenses and other assets
147 
(2,904)
Accounts payable
(1,271)
(856)
Accrued expenses and other liabilities
(1,270)
(380)
Net cash provided by operating activities
99,689 
68,356 
Cash Flows from Investing Activities
 
 
Purchases of rental equipment
(138,959)
(135,930)
Proceeds from sale of equipment
18,520 
17,355 
Purchases of property and equipment
(11,742)
(11,729)
Net cash used in investing activities
(132,181)
(130,304)
Cash Flows from Financing Activities
 
 
Repayments under revolving credit facility
95,239 
464,939 
Borrowings under revolving credit facility
128,039 
502,739 
Payment of costs directly associated with the issuance of Class A common stock
(283)
Intercompany
 
Net cash provided by financing activities
32,517 
63,757 
Net increase in cash and cash equivalents
25 
1,809 
Cash and cash equivalents, beginning of period
207 
190 
Cash and cash equivalents, end of period
232 
 
Eliminations
 
 
Cash Flows from Operating Activities
 
 
Net income
(65,271)
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
Depreciation
 
Amortization of debt issue costs
 
Amortization of intangible assets
 
Amortization of original issue discount
 
Gain on sale of equipment
 
Provision for bad debt
 
Equity-based compensation
 
Deferred income taxes
 
Adjustment to tax receivable agreement
 
Unrealized loss on interest rate swap
 
Equity earnings in subsidiaries
65,271 
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
 
Inventories, prepaid expenses and other assets
 
Accounts payable
 
Accrued expenses and other liabilities
 
Net cash provided by operating activities
 
Cash Flows from Investing Activities
 
 
Purchases of rental equipment
 
Proceeds from sale of equipment
 
Purchases of property and equipment
 
Net cash used in investing activities
 
Cash Flows from Financing Activities
 
 
Repayments under revolving credit facility
 
Borrowings under revolving credit facility
 
Payment of costs directly associated with the issuance of Class A common stock
 
Intercompany
 
Net cash provided by financing activities
 
Net increase in cash and cash equivalents
 
Cash and cash equivalents, beginning of period
 
Cash and cash equivalents, end of period
 
Neff Rental LLC |
Reportable Legal Entities
 
 
Cash Flows from Operating Activities
 
 
Net income
27,061 
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
Depreciation
69,111 
 
Amortization of debt issue costs
1,144 
 
Amortization of intangible assets
965 
 
Amortization of original issue discount
185 
 
Gain on sale of equipment
(6,656)
 
Provision for bad debt
1,431 
 
Equity-based compensation
901 
 
Deferred income taxes
 
Adjustment to tax receivable agreement
 
Unrealized loss on interest rate swap
3,852 
 
Equity earnings in subsidiaries
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
4,075 
 
Inventories, prepaid expenses and other assets
147 
 
Accounts payable
(1,271)
 
Accrued expenses and other liabilities
(1,255)
 
Net cash provided by operating activities
99,690 
 
Cash Flows from Investing Activities
 
 
Purchases of rental equipment
(138,959)
 
Proceeds from sale of equipment
18,520 
 
Purchases of property and equipment
(11,742)
 
Net cash used in investing activities
(132,181)
 
Cash Flows from Financing Activities
 
 
Repayments under revolving credit facility
95,239 
 
Borrowings under revolving credit facility
128,039 
 
Payment of costs directly associated with the issuance of Class A common stock
 
Intercompany
(284)
 
Net cash provided by financing activities
32,516 
 
Net increase in cash and cash equivalents
25 
 
Cash and cash equivalents, beginning of period
205 
 
Cash and cash equivalents, end of period
230 
 
Neff LLC |
Reportable Legal Entities
 
 
Cash Flows from Operating Activities
 
 
Net income
27,061 
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
Depreciation
 
Amortization of debt issue costs
 
Amortization of intangible assets
 
Amortization of original issue discount
 
Gain on sale of equipment
 
Provision for bad debt
 
Equity-based compensation
 
Deferred income taxes
 
Adjustment to tax receivable agreement
 
Unrealized loss on interest rate swap
 
Equity earnings in subsidiaries
(27,061)
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
 
Inventories, prepaid expenses and other assets
 
Accounts payable
 
Accrued expenses and other liabilities
 
Net cash provided by operating activities
 
Cash Flows from Investing Activities
 
 
Purchases of rental equipment
 
Proceeds from sale of equipment
 
Purchases of property and equipment
 
Net cash used in investing activities
 
Cash Flows from Financing Activities
 
 
Repayments under revolving credit facility
 
Borrowings under revolving credit facility
 
Payment of costs directly associated with the issuance of Class A common stock
 
Intercompany
 
Net cash provided by financing activities
 
Net increase in cash and cash equivalents
 
Cash and cash equivalents, beginning of period
 
Cash and cash equivalents, end of period
 
Neff Holdings LLC |
Reportable Legal Entities
 
 
Cash Flows from Operating Activities
 
 
Net income
27,061 
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
Depreciation
 
Amortization of debt issue costs
 
Amortization of intangible assets
 
Amortization of original issue discount
 
Gain on sale of equipment
 
Provision for bad debt
 
Equity-based compensation
 
Deferred income taxes
 
Adjustment to tax receivable agreement
 
Unrealized loss on interest rate swap
 
Equity earnings in subsidiaries
(27,061)
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
 
Inventories, prepaid expenses and other assets
 
Accounts payable
 
Accrued expenses and other liabilities
 
Net cash provided by operating activities
 
Cash Flows from Investing Activities
 
 
Purchases of rental equipment
 
Proceeds from sale of equipment
 
Purchases of property and equipment
 
Net cash used in investing activities
 
Cash Flows from Financing Activities
 
 
Repayments under revolving credit facility
 
Borrowings under revolving credit facility
 
Payment of costs directly associated with the issuance of Class A common stock
 
Intercompany
 
Net cash provided by financing activities
 
Net increase in cash and cash equivalents
 
Cash and cash equivalents, beginning of period
 
Cash and cash equivalents, end of period
 
Neff Corporation |
Reportable Legal Entities
 
 
Cash Flows from Operating Activities
 
 
Net income
11,554 
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
Depreciation
 
Amortization of debt issue costs
 
Amortization of intangible assets
 
Amortization of original issue discount
 
Gain on sale of equipment
 
Provision for bad debt
 
Equity-based compensation
 
Deferred income taxes
2,085 
 
Adjustment to tax receivable agreement
(2,476)
 
Unrealized loss on interest rate swap
 
Equity earnings in subsidiaries
(11,149)
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
 
Inventories, prepaid expenses and other assets
 
Accounts payable
 
Accrued expenses and other liabilities
(15)
 
Net cash provided by operating activities
(1)
 
Cash Flows from Investing Activities
 
 
Purchases of rental equipment
 
Proceeds from sale of equipment
 
Purchases of property and equipment
 
Net cash used in investing activities
 
Cash Flows from Financing Activities
 
 
Repayments under revolving credit facility
 
Borrowings under revolving credit facility
 
Payment of costs directly associated with the issuance of Class A common stock
(283)
 
Intercompany
284 
 
Net cash provided by financing activities
 
Net increase in cash and cash equivalents
 
Cash and cash equivalents, beginning of period
 
Cash and cash equivalents, end of period
$ 2 
 
SUBSEQUENT EVENTS (Details) (Common Class A, Subsequent Event, USD $)
In Millions, unless otherwise specified
Nov. 10, 2015
Common Class A |
Subsequent Event
 
Subsequent Event [Line Items]
 
Share repurchase program, value
$ 25