Business Combination (Notes)

12 Months Ended

Dec. 31, 2017

Business Combination [Abstract]

Business Combination Disclosure [Text Block]

Business Combination

The Company completed the Merger on July 12, 2016 and has accounted for the transaction as a business combination under the acquisition method of accounting. TCIL was treated as the acquirer for accounting purposes. In making the determination of the accounting acquirer, the Company considered all pertinent information and facts, which included relative voting rights, presence of a large minority interest, composition of the Board of Directors and senior management, terms of the exchange of equity interests, and relative size in making the determination of the accounting acquirer. In the aggregate, it was concluded that factors, such as the former TCIL shareholders’ 55% voting rights in the combined entity, after considering certain voting limitations, the presence of a large minority voting interest concentrated within the former Company TCIL shareholders and the relative size of TCIL in relation to TAL, indicated that TCIL should be the accounting acquirer.

The consideration for the transaction was paid in common shares of Triton. TAL stockholders received one common share of Triton in exchange for each share of TAL common stock, or approximately 33.4 million Triton common shares. TCIL shareholders received approximately 0.80 common shares of Triton, or approximately 40.8 million of Triton common shares for each of TCIL's common shares. The fair value of the consideration, or the purchase price, was $510.2 million. This amount was derived based on the fair value of the shares issued to former TAL stockholders on the closing date of July 12, 2016 when the closing stock price was $15.28 per share.

Note 4—Business Combination (continued)

The Company finalized the allocation of the purchase price to the fair value of the TAL assets acquired and liabilities assumed as of December 31, 2016. The purchase price allocation presented below has been developed based on management analysis and with the assistance of third-party valuation advisers using valuation techniques as appropriate as follows (in thousands):

Net assets acquired:
Assets:
Cash and cash equivalents	$	50,349
Restricted cash	59,115
Accounts receivable, net	75,846
Leasing equipment	3,052,693
Net investment in finance leases	159,885
Equipment held for sale	80,655
Other assets	32,084
Intangible Assets:
Lease intangibles	298,457
Customer intangibles	4,300
Goodwill	236,665
Accounts payable and other accrued expenses	(63,858		)
Derivative instruments	(64,206		)
Equipment purchases payable	(10,071		)
Deferred income tax liability	(280,610		)
Debt	(3,121,118		)
Total consideration	$	510,186

The acquired intangible assets are comprised of a lease intangible for leases acquired with lease rates that were above market and a customer intangible related to the chassis and tank customer lists acquired. The estimated weighted average remaining useful lives of 1.9 years for the lease intangibles and 1.5 years for customer intangibles are consistent with the expected remaining benefit period of these intangible assets.

The following table summarizes the intangible assets amortization as of December 31, 2017 (in thousands):

Years ending December 31,	Above market lease intangibles		Customer intangibles (1)		Total intangible assets
2018	$	61,451	$	1,433	$	62,884
2019	36,426		758		37,184
2020	22,632		—		22,632
2021	16,652		—		16,652
2022	10,572		—		10,572
2023 and thereafter	6,643		—		6,643
Total	$	154,376	$	2,191	$	156,567

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(1): Customer intangibles are included in other assets on the consolidated balance sheets.

Note 4—Business Combination (continued)

The Company incurred transaction and other costs related to the Merger which are included in transaction and other costs on the consolidated statements of operations. Transaction and other costs associated with the Merger for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands):

	December 31, 2017			December 31, 2016		December 31, 2015
Employee compensation costs	$	9,271		$	40,360	$	3,520
Professional fees	—			14,295		2,841
Legal expenses	10			3,370		3,919
Other	(9		)	2,412		—
Total	$	9,272		$	60,437	$	10,280

Employee compensation costs include costs to maintain and retain key employees, severance expenses, and certain stock compensation expense. Professional fees and legal expenses include costs paid for services directly related to the closing of the Merger and include legal fees, accounting fees and transaction and advisory fees.

Unaudited Pro Forma Disclosure

The unaudited pro forma results of operations gives effect to the transaction as if it had occurred on January 1, 2015. The pro forma results of operations reflects adjustments (i) to leasing revenues for the amortization of the fair value of operating lease contracts over the current market rate (ii) to amortization and depreciation expense resulting from the write-down of leasing equipment to fair value and the amortization of customer intangibles acquired and (iii) to eliminate non-recurring charges that were incurred in connection with the transactions including acquisition-related share-based compensation, transaction costs related to legal, accounting, and other advisory fees, and transaction costs related to retention and benefit costs.

The unaudited pro forma results do not include any anticipated synergies or other expected benefits of the Merger. The unaudited pro forma financial information presented below is not necessarily indicative of results that might have been achieved had the Merger occurred as of January 1, 2015. The following table summarizes the unaudited pro forma results of operations (in thousands):

	December 31, 2016		December 31, 2015
Total leasing revenues	$	1,076,753	$	1,198,148
Net income attributable to shareholders	$	36,015	$	180,638