Acquisitions (Tables)

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of assets acquired and liabilities assumed

The following table summarizes the fair values of the assets acquired and liabilities assumed. 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, although we do not expect material future changes.

Cash and cash equivalents	$	13
Accounts receivable (1)	44
Inventory	36
Rental equipment	686
Property and equipment	42
Intangibles (2)	123
Operating lease right-of-use assets	59
Other assets	23
Total identifiable assets acquired	1,026
Current liabilities	(93)
Deferred taxes	(120)
Operating lease liabilities	(44)
Total liabilities assumed	(257)
Net identifiable assets acquired	769
Goodwill (3)	263
Net assets acquired	$	1,032

(1)The fair value of accounts receivables acquired was $44, and the gross contractual amount was $50. We estimated that $6 would be uncollectible.

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

	Fair value		Life (years)
Customer relationships	$	116	7
Trade names and associated trademarks	7		5
Total	$	123

(3)All of the goodwill was assigned to our specialty segment. We have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, although we do not expect material future changes. Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of General Finance's going-concern value, the value of General Finance'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. $28 of goodwill is expected to be deductible for income tax purposes.

Finite-lived and indefinite-lived intangible assets acquired as part of business combination

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

	Fair value		Life (years)
Customer relationships	$	116	7
Trade names and associated trademarks	7		5
Total	$	123

Summary of business acquisition, pro forma information

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

	Three Months Ended
	March 31,
		2021
United Rentals historic revenues		$	2,057
General Finance historic revenues		89
Pro forma revenues		2,146
United Rentals historic pretax income		275
General Finance historic pretax income (loss)		15
Combined pretax income		290
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)		(7)
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)		(4)
Intangible asset amortization (3)		(6)
Interest expense (4)		(3)
Elimination of historic interest (5)		5
Elimination of changes in the valuation of bifurcated derivatives in convertible notes (6)		(4)
Pro forma pretax income		$	271

________________

(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of the equipment acquired in the General Finance acquisition.

(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the General Finance acquisition.

(3) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets.

(4) As discussed above, we funded the General Finance acquisition using drawings on our ABL facility. Interest expense was adjusted to reflect interest on the ABL facility borrowings.

(5) Historic interest on debt that is not part of the combined entity was eliminated.

(6) General Finance historically recognized changes in the valuation of bifurcated derivatives in convertible notes in its statements of operations. These historic changes were eliminated because the bifurcated derivatives are not part of the combined entity.