01—Abstract
Summary
Summary of the 8-K filed April 3, 2006. Cited figures are marked; the original filing is the authoritative source.
United Rentals, Inc. (URI) has filed a Form 8-K to announce a restatement of its previously issued financial statements.
This restatement is due to the reallocation of a portion of the purchase price for acquisitions made since July 1, 2001. Specifically, the company is moving expense recognition from goodwill (which is not amortized) to customer relationships (which are amortized). As a result of this accounting adjustment, investors are cautioned not to rely on the company's historical financial statements.
The restated consolidated financial statements, reflecting these changes, are included in the company's Form 10-K filed concurrently. This decision was made by authorized officers and discussed with the independent accountants.
02—Key points
Key Highlights
- United Rentals is restating previously issued financial statements.
- The restatement involves reallocating purchase price from goodwill to customer relationships for acquisitions since July 1, 2001.
- Goodwill is not amortized, while customer relationships are amortized.
- Investors are advised not to rely on historical financial statements prior to the restatement.
- The updated consolidated financial statements are included in the Form 10-K filed on the same date.
- The determination to restate was made on March 29, 2006, and discussed with independent accountants.
03—Questions
Frequently Asked Questions
What is the primary reason for the restatement of United Rentals' financial statements?
United Rentals is restating its financial statements to correct the accounting treatment of acquisition purchase prices. Specifically, a portion of the purchase price previously allocated to goodwill (which is not amortized) is being reallocated to customer relationships (which are amortized) for acquisitions made since July 1, 2001.
What is the impact of this restatement on the company's financial performance?
The reallocation will result in increased amortization expense due to the amortization of customer relationships. This means that previously reported net income may be lower than initially stated, and the company's balance sheet will reflect a change in intangible assets.
Why should investors not rely on previously issued financial statements?
The company has identified an error in the accounting treatment that requires a restatement. Until the restated financials are reviewed and understood, relying on the old figures could lead to misinformed investment decisions based on inaccurate financial performance and position.
When were the restated financial statements filed?
The consolidated financial statements reflecting the restatement were included in United Rentals' annual report on Form 10-K filed with the SEC on April 2, 2006 (the filing date of this 8-K).
04—Continue