United Rentals to make $1.1bn goodwill write-off

23 January 2009

United Rentals is to make a US$1.1 billion write-off in its fourth quarter of 2008, reflecting mainly a reduction in value of the goodwill associated with acquisitions the company made between 1997 and 2000. The largest acquisition during the period was that of US Rentals in 1998.

United said the one-off charge was made following an impairment test during the quarter and reflected year-end conditions.

The company has also revised downwards slightly its forecast for the full year, and is now forecasting total revenues of US$3.27 billion instead of the $3.3 to 3.4 billion estimated last October. "Both of these changes reflect a further deterioration in the company's end markets since the previous guidance was issued", said United.

Michael Kneeland, United's chief executive officer - who earlier announced he would be taking a 20% pay cut this year - said, "Our revised full year guidance reflects external factors such as the current construction cycle and the macro-economy, as well as our decision to accelerate branch closures into the fourth quarter of 2008.

"While we see 2009 as undoubtedly challenging, we are confident that with our ample liquidity, as well as our continued focus on cost reduction and other ongoing initiatives, we are well positioned to manage through this downturn and benefit from the eventual recovery." The company will report its full-year results at the end of February.

Meanwhile, the company has recruited three new board members and seen the departure of one long-standing executive. Vice chairman, Wayland Hicks, a 10 year United Rentals veteran, will resign his directorship on 1 March, while the three new director are José Alvarez, Bobby Griffin and Filippo Passerini.

Mr Alvarez joins the faculty of the Harvard Business School on 1 February 1 and was most recently executive vice president - global business development for Royal Ahold NV, one of the world's largest grocery retailers. Mr Griffin has more than 25 years of executive experience in the transportation logistics industry, including 20 years with Ryder Systems, Inc. where he most recently served as President - International Operations. Mr Passerini is president of Procter & Gamble's global business services organization and chief information officer.

Jenne Britell, chairman of United Rentals, said, "We are delighted to welcome José, Bobby and Filippo to our board of directors. They are highly seasoned executives whose expertise will be instrumental in helping our company expand its leadership position in equipment rental. Both José and Bobby are widely regarded for leading innovations in supply chain and logistics management, while Filippo is globally recognized for his ability to transform information technology into a strategic business partner."

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