Acquisitions (Tables)

12 Months Ended

Dec. 31, 2015

Summary of fair value of consideration transferred

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) Includes a ‘hold back’ of $58 that was paid in April 2015.

(2) Reflects the acquisition date fair value of the contingent consideration that was paid in June 2015 as discussed in note 11 to our consolidated financial statements.

(3) Total purchase consideration excludes $15 of stock which was issued in connection with the acquisition and was 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 merger 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 merger, and operational synergies that we expect to achieve that would not be available to other market participants. $325 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 year ended December 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 11 to our consolidated financial statements.

Schedule of finite-lived 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 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 periods reflected:



	Year Ended December 31,
	2014			2013
United Rentals historic revenues	$	5,685		$	4,955
National Pump historic revenues	62			208
Pro forma revenues	5,747			5,163
United Rentals historic pretax income	850			605
National Pump historic pretax income	20			62
Combined pretax income	870			667
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)	(1		)	(4		)
Intangible asset amortization (2)	(12		)	(52		)
Interest expense (3)	58			(95		)
Elimination of historic National Pump interest (4)	—			2
Elimination of merger costs (5)	8			—
Pro forma pretax income	$	923		$	518

(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. For the pro forma presentation, the $64 loss recognized upon redemption of the 9 ¹/₄ percent Senior Notes was moved from the year ended December 31, 2014 to the year ended December 31, 2013.

(4) Interest on National Pump historic debt was eliminated.

(5) 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.

For the years ended December 31, 2015 and 2014, National Pump revenue and pretax (loss) income included in our consolidated financial statements were as follows:



	Year Ended December 31,
	2015			2014
Revenue	$	225		$	215
Pretax (loss) income (1)	(6		)	42

(1) Pretax (loss) income excludes merger related costs which are not allocated to our segments. Pretax loss for the year ended December 31, 2015 reflects volume and pricing pressure associated with upstream oil and gas customers, and the amortization of the intangible assets acquired in the National Pump acquisition.