Acquisitions

On April 30, 2012 (“the acquisition date”), we acquired 100 percent of the outstanding common shares and voting interest of RSC Holdings, Inc. (“RSC”). The results of RSC's operations have been included in the condensed consolidated financial statements since the acquisition date. RSC was one of the largest equipment rental providers in North America, and had a network of 440 rental locations in 43 U.S. states and three Canadian provinces as of December 31, 2011. We believe that the acquisition will create a leading North American equipment rental company with a more attractive business mix, greater scale and enhanced growth prospects, and that the acquisition will provide us with financial benefits including reduced operating expenses and additional revenue opportunities.

The acquisition date fair value of the consideration transferred of $2.6 billion consisted of the following:



Cash consideration	$	1,161
Stock consideration (30 million shares valued based on the URI acquisition date stock price)	1,396
Share-based compensation awards (1)	29
Total purchase consideration	$	2,586

(1) This relates to RSC stock options and restricted stock units which were outstanding as of the acquisition date. Each RSC stock option was converted into an adjusted URI stock option to acquire a number of shares of URI common stock, determined by multiplying the number of shares of RSC common stock subject to the RSC stock option by the option exchange ratio (rounded down, if necessary, to a whole share of URI common stock). The “option exchange ratio” means the sum of (i) 0.2783 and (ii) the quotient determined by dividing $10.80 by the volume-weighted average of the closing sale prices of shares of URI common stock as reported on the NYSE composite transactions reporting system for each of the ten consecutive trading days ending with the acquisition date. The option exchange ratio was 0.5161. The exercise price per share of URI common stock subject to the adjusted URI option is equal to the per share exercise price of such RSC stock option divided by the option exchange ratio (rounded up, if necessary, to the nearest whole cent). Each RSC restricted stock unit (other than an award held by a member of the RSC board who was not also an employee or officer of RSC at such time) was converted into an adjusted URI restricted stock unit in an amount determined by multiplying the number of shares of RSC common stock subject to the RSC restricted stock unit by the option exchange ratio. The portion of the URI replacement awards that has been included in the purchase consideration was calculated as $29 and is based on the vesting which occurred prior to the acquisition date.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period.



Accounts receivable, net of allowance for doubtful accounts (1)	$	238
Inventory	19
Deferred taxes	15
Rental equipment, net	2,011
Property and equipment, net	47
Intangibles (2)	1,239
Other assets	58
Total identifiable assets acquired	3,627
Short-term debt and current maturities of long-term debt (3)	(1,586		)
Current liabilities	(405		)
Deferred taxes	(702		)
Long-term debt (3)	(992		)
Other long-term liabilities	(13		)
Total liabilities assumed	(3,698		)
Net identifiable assets acquired	(71		)
Goodwill (4)	2,657
Net assets acquired	$	2,586

(1)The fair value of accounts receivables acquired was $238, and the gross contractual amount was $251. We estimate that $13 will be uncollectible.

(2)The following table reflects the estimated fair values and useful lives of the acquired intangible assets identified based on URI's preliminary purchase accounting assessments:



	Fair value		Life (years)
Customer relationships	$	1,110	15
Trade names, associated trademarks and other	81		5
Non-compete agreements	48		5
Total	$	1,239

(3)At the closing of the merger, URNA repaid RSC's senior ABL facility, 10 percent senior notes, and 9 ¹/₂ percent senior notes. The repaid debt is reflected as short-term above as it was paid on the acquisition date. The RSC debt reflected in our condensed consolidated balance sheet as of June 30, 2012 is discussed further in note 8 to the condensed consolidated financial statements. The debt in the table above includes $1,555 of the repaid RSC debt, and the fair values of the following debt assumed by URNA:



10 ¹/₄ percent Senior Notes	$	(225	)
8 ¹/₄ percent Senior Notes	(699		)
Capital leases	(99		)
Total assumed debt	$	(1,023	)

(4) All of the goodwill was assigned to our general rentals segment. The level of goodwill expected to result from the merger is primarily reflective of RSC's going-concern value, the value of RSC's assembled workforce, new customer relationships expected to arise from the merger, and operational synergies that we expect to achieve that would not be available to other market participants. None of the goodwill is expected to be deductible for income tax purposes.

The three and six months ended June 30, 2012 include acquisition-related costs of $80 and $90, respectively. Additionally, in 2011, we recognized $19 of additional acquisition-related costs. The acquisition-related costs are reflected in our condensed consolidated statements of operations as “RSC merger related costs” and primarily relate to financial and legal advisory fees. Additionally, the fees for the three and six months ended June 30, 2012 include $31 of interim bridge financing fees. Subsequent to June 30, 2012, we expect to incur an additional $30 to $50 of charges in connection with the merger, and we expect to recognize such costs by March 31, 2013. In addition to the acquisition-related costs reflected in our condensed consolidated statements of operations, we capitalized $67 of debt issuance costs associated with the issuance of debt to fund the acquisition, which are reflected, net of amortization subsequent to the acquisition date, in other long-term assets in our June 30, 2012 condensed consolidated balance sheet.

Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired RSC locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of RSC since the acquisition date. The impact of the RSC acquisition on our equipment rentals revenue is primarily reflected in the increases in the volume of OEC on rent of 63.7 percent and 42.9 percent for the three and six months ended June 30, 2012, respectively.

The table below presents pro forma consolidated income statement information as if RSC had been included in our consolidated results for the entire periods reflected. The pro forma information has been prepared using the purchase method of accounting, giving effect to the RSC acquisition as if the acquisition had been completed on January 1, 2011 (“the pro forma acquisition date”). The pro forma information is not necessarily indicative of our results of operations had the merger been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the merger, and also does not reflect additional revenue opportunities following the merger. The pro forma information includes adjustments to record the assets and liabilities of RSC at their respective fair values based on available information and to give effect to the financing for the acquisition and related transactions. The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed. The purchase price allocations for the assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period. Increases or decreases in the estimated fair values of the net assets acquired may impact our statements of operations in future periods. We expect that the values assigned to the assets acquired and liabilities assumed will be finalized during the one-year measurement period following the acquisition date.



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2012		2011			2012		2011
Revenues	$	1,132	$	996		$	2,196	$	1,846
Income (loss) from continuing operations before provision (benefit) for income taxes	61		(42		)	47		(245		)

Pro forma revenues reflect combined URI and RSC. Pro forma income (loss) from continuing operations before provision (benefit) for income taxes reflects combined URI and RSC with the following pro forma adjustments: 1) depreciation of rental equipment and non rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the RSC acquisition, the impact of which was offset by the impact of extending the useful lives of such equipment, 2) cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the RSC acquisition, 3) the intangible assets acquired in the RSC acquisition were amortized, 4) interest expense was adjusted to reflect interest on the merger financing notes described in note 8 to the condensed consolidated financial statements, 5) RSC historic interest on debt that is not part of the combined entity was eliminated, 6) RSC historic interest was adjusted for the fair value mark-ups of the debt acquired in the RSC acquisition, 7) the RSC merger related costs were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date and 8) restructuring charges comprised of severance costs and branch closure charges associated with the merger were recognized from the pro forma acquisition date through June 30, 2012. For the pro forma presentation, half of the restructuring charges were recognized in the first quarter following the pro forma acquisition date, and the remaining charges were recognized on a straight-line basis through June 30, 2012. As of June 30, 2012, we have recognized $52 of such restructuring charges, and expect to recognize an additional $60 to $80 of restructuring charges subsequent to June 30, 2012.