United Rentals Inc. announced that president and CFO John Milne failed to perform his duties and would be fired if he does not remedy matters within the “30-day cure period” under his employment agreement.
A special committee of United’s board of directors recommended the measure after Milne said he was unwilling to respond to the committee’s questions about a Securities and Exchange Commission investigation. Reuters reported that a spokesman for Milne said the CFO would assist the committee if mutually agreeable circumstances could be reached, and if not, would assist in the transition of his responsibilities.
United Rentals — North America’s largest equipment renter, according to the Associated Press — previously disclosed an SEC inquiry into several short-term, equipment sale-leaseback transactions.
The company added in its statement that the accounting for some of its transactions in 2000, 2001, and 2002 was incorrect, and that “the special committee is continuing to review these transactions as part of its broader review relating to the SEC inquiry.”
United also announced that it will restate its financials for 2000 through 2003 and the first nine months of 2004 to correct the expense associated with its self-insurance reserve. The restatement will increase the company’s pre-tax earnings for 2003 and 2004 and decrease them for prior years. United had previously announced that it had identified a material weakness related to estimating reserves for workers’ compensation claims. The company added that it believes it has taken adequate measures to remedy this weakness.
In addition, United announced that it is withdrawing prior estimates related to a planned restatement to correct the provision for income taxes. In March, the company stated that it expected to decrease the provision for income taxes by about $25 million for years prior to 2004, but United subsequently determined that additional analysis was required to quantify the restatement. “The company continues to believe the restatement is likely to decrease aggregate income tax expense for periods prior to 2004, although the expense in particular periods could increase,” it added, noting that the restatement will not impact 2004.
“The board and management are committed to ensuring full cooperation with the board’s special committee and the SEC inquiry,” said chief executive officer Wayland Hicks, in a statement. “We are working to resolve outstanding issues and file our financial statements as soon as possible.”
Milne, the chief financial officer, helped found United Rentals in 1997, and has been president since 2001 and CFO since 2002. He also serves as vice chairman, chief acquisition officer, and director. Earlier in his career he worked in the corporate finance department of Drexel Burnham Lambert Inc., where he was instrumental in completing numerous financings and acquisition transactions, according to his official biography on United’s website.