United Rentals last week filed a report on Form 8-K that included disclosure of a likely non-cash charge in the third quarter for the impairment of goodwill relating to the company’s traffic control business.
John Milne, United Rentals’ president and chief financial officer, commented, “As we previously disclosed in our second quarter 10-Q, continued weakness in our traffic control business may necessitate a goodwill write-off. The goodwill balance of our traffic control business was $140.5 million at the end of the second quarter.
“We continue to see weakness in our traffic control business. Although disappointing, the weakness in this segment was anticipated in our previously issued earnings guidance. As a result of this weakness, we believe it likely that we will be required to record a significant non-cash goodwill impairment charge in the third quarter. We have not yet completed our analysis and, accordingly, currently cannot quantify the amount of this write-off. However, we expect that this write-off is likely to have a material adverse affect on our GAAP results for the third quarter and full-year 2004.”
After United’s announcement last Tuesday, shares of its stock closed at $14.30, down $1.44, or 9.1 percent on New York Stock Exchange composite volume of 2.8 million shares. On Friday, the stock closed at $15.18.
Greenwich, Conn.-based United Rentals is No. 1 on the RER 100.
