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Acquisitions (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of assets acquired and liabilities assumed

The following table summarizes the fair values of the assets acquired and liabilities assumed.



Accounts receivable, net of allowance for doubtful accounts (1)	$	74
Inventory	4
Rental equipment	268
Property and equipment	25
Intangibles (2)	171
Other assets	3
Total identifiable assets acquired	545
Current liabilities	(60		)
Deferred taxes	(13		)
Total liabilities assumed	(73		)
Net identifiable assets acquired	472
Goodwill (3)	248
Net assets acquired	$	720

(1) The fair value of accounts receivables acquired was $74, and the gross contractual amount was $81. We estimated that $7 would be uncollectible.

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



	Fair value		Life (years)
Customer relationships	$	166	8
Trade names and associated trademarks	5		5
Total	$	171

(3) All of the goodwill was assigned to our trench, power and fluid solutions segment. The level of goodwill that resulted from the acquisition is primarily reflective of BakerCorp's going-concern value, the value of BakerCorp's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $6 of goodwill is expected to be deductible for income tax purposes.

The following table summarizes the fair values of the assets acquired and liabilities assumed.



Accounts receivable, net of allowance for doubtful accounts (1)	$	117
Inventory	7
Rental equipment	1,078
Property and equipment	71
Intangibles (customer relationships) (2)	230
Other assets	47
Total identifiable assets acquired	1,550
Short-term debt and current maturities of long-term debt (3)	(12		)
Current liabilities	(140		)
Long-term debt (3)	(23		)
Other long-term liabilities	(4		)
Total liabilities assumed	(179		)
Net identifiable assets acquired	1,371
Goodwill (4)	698
Net assets acquired	$	2,069

(1) The fair value of accounts receivables acquired was $117, and the gross contractual amount was $125. We estimated that $8 would be uncollectible.

(2) The customer relationships are being amortized over a 5 year life.

(3) The acquired debt reflects finance lease obligations.

(4) All of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of BlueLine's going-concern value, the value of BlueLine's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $25 of goodwill is expected to be deductible for income tax purposes.

Schedule of finite-lived intangible assets acquired

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



	Fair value		Life (years)
Customer relationships	$	166	8
Trade names and associated trademarks	5		5
Total	$	171

Summary of pro forma information

The table below presents unaudited pro forma consolidated income statement information as if BakerCorp and BlueLine had been included in our consolidated results for the year ended December 31, 2018.



	Year Ended
	December 31, 2018
	United Rentals		BakerCorp			BlueLine			Total
Historic/pro forma revenues	$	8,047	$	184		$	665		$	8,896
Historic/combined pretax income (loss)	1,476		(84		)	(169		)	1,223
Pro forma adjustments to pretax income (loss):
Impact of fair value mark-ups/useful life changes on depreciation (1)			(8		)	(5		)	(13		)
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)			—			(13		)	(13		)
Intangible asset amortization (3)			(23		)	(64		)	(87		)
Interest expense (4)			(14		)	(92		)	(106		)
Elimination of historic interest (5)			30			106			136
Elimination of merger related costs (6)			67			166			233
Restructuring charges (7)			(6		)	(16		)	(22		)
Pro forma pretax income									$	1,351

(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 BakerCorp and BlueLine acquisitions.

(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the BlueLine acquisition. BakerCorp did not historically recognize a material amount of rental equipment sales, and accordingly no adjustment was required for BakerCorp.

(3) The intangible assets acquired in the BakerCorp and BlueLine acquisitions were amortized.

(4) As discussed above, we issued debt to partially fund the BakerCorp and BlueLine acquisitions. Interest expense was adjusted to reflect these changes in our debt portfolio.

(5) Historic interest, including losses on repurchase/redemption of debt securities, on debt that is not part of the combined entity was eliminated.

(6) Merger related costs primarily comprised of financial and legal advisory fees associated with the BakerCorp and BlueLine acquisitions were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date. The adjustment for BakerCorp includes $57 of merger related costs recognized by BakerCorp prior to the acquisition. The adjustment for BlueLine includes $142 of merger related costs recognized by BlueLine prior to the acquisition.

(7) As discussed in note 6 to the consolidated financial statements, in 2019, we completed a restructuring program associated with the BakerCorp and BlueLine acquisitions. The adjustments above reflect the restructuring charges recognized under this program. The restructuring charges reflected in our consolidated statements of income also include non acquisition-related restructuring charges, as discussed in note 6.