Acquisitions (Tables)

3 Months Ended

Mar. 31, 2015

Schedule of business acquisitions purchase consideration

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



Cash consideration (1)	$	773
Contingent consideration (2)	76
Total purchase consideration (3)	$	849

(1) Consists of cash paid of $714 and a ‘hold back’ of $59 that was paid in April 2015.

(2) Reflects the acquisition date fair value of the following additional potential cash consideration to be paid based on the achievement of the following financial targets (see note 6 to our condensed consolidated financial statements for a discussion of changes to the fair value subsequent to the acquisition date):

1.A maximum payout of $75 if National Pump's trailing twelve months adjusted EBITDA (as defined below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Financial Overview”) reaches $134 twelve months post-closing; and

2.An additional maximum payout of $50 if National Pump's trailing twelve months adjusted EBITDA reaches $161 eighteen months post-closing.

(3) Total purchase consideration excludes $15 of stock which was issued in connection with the acquisition and will be treated as compensation for book purposes but primarily represents deductible goodwill for income tax purposes.

Schedule of assets acquired and liabilities assumed

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date:



Accounts receivable, net of allowance for doubtful accounts (1)	$	44
Inventory	19
Deferred taxes	6
Rental equipment	172
Property and equipment	10
Intangibles (2)	289
Other assets	1
Total identifiable assets acquired	541
Current liabilities	(25		)
Total liabilities assumed	(25		)
Net identifiable assets acquired	516
Goodwill (3)	333
Net assets acquired	$	849

(1) The fair value of accounts receivables acquired was $44, and the gross contractual amount was $47. We estimated that $3 would be uncollectible.

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



	Fair value		Life (years)
Customer relationships	$	274	10
Non-compete agreements	15		6
Total	$	289

(3) $321 of the goodwill was assigned to our trench, power and pump segment and $12 of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of National Pump's going-concern value, the value of National Pump's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that would not be available to other market participants. $321 of goodwill is expected to be deductible for income tax purposes. The amount of goodwill that is expected to be deductible for income tax purposes declined during the three months ended March 31, 2015 due to a decline in the fair value of the contingent cash consideration component of the National Pump purchase price due to lower than expected financial performance compared to agreed upon financial targets, as discussed in note 6 to our condensed consolidated financial statements.

Schedule of intangible assets acquired

The following table reflects the estimated fair values and useful lives of the acquired intangible assets identified based on our purchase accounting assessments:



	Fair value		Life (years)
Customer relationships	$	274	10
Non-compete agreements	15		6
Total	$	289

Summary of business acquisition, pro forma information

The table below presents unaudited pro forma consolidated income statement information as if National Pump had been included in our consolidated results for the entire period reflected:



	Three Months Ended
	March 31,
	2014
United Rentals historic revenues	$	1,178
National Pump historic revenues	62
Pro forma revenues	1,240
United Rentals historic pretax income	94
National Pump historic pretax income	20
Combined pretax income	114
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)	(1		)
Intangible asset amortization (2)	(12		)
Interest expense (3)	(6		)
Elimination of merger costs (4)	1
Pro forma pretax income	$	96

(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the National Pump acquisition. The useful lives assigned to such equipment didn’t change significantly from the lives historically used by National Pump.

(2) The intangible assets acquired in the National Pump acquisition were amortized.

(3) In connection with the National Pump acquisition, URNA issued $525 principal amount of 6 ¹/₈ percent Senior Notes (as an add on to our existing 6 ¹/₈ percent Senior Notes) and $850 principal amount of 5 ³/₄ percent Senior Notes, and all our outstanding 9 ¹/₄ percent Senior Notes were redeemed. Interest expense was adjusted to reflect these changes in our debt portfolio.

(4) Merger related costs, primarily comprised of financial and legal advisory fees, associated with the National Pump acquisition were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date.