UPS 2005 Annual Report Download - page 80

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 6. GOODWILL, INTANGIBLES, AND OTHER ASSETS
The following table indicates the allocation of goodwill by reportable segment (in millions):
U.S. Domestic
Package
International
Package
Supply Chain
& Freight Consolidated
December 31, 2003 balance ....................... $— $100 $1,073 $1,173
Acquired .................................. — 41 38 79
Impaired ................................... — — — —
Currency / Other ............................ — — 3 3
December 31, 2004 balance ....................... — 141 1,114 1,255
Acquired .................................. — 145 1,171 1,316
Impaired ................................... — — — —
Currency / Other ............................ — 4 (26) (22)
December 31, 2005 balance ....................... $— $290 $2,259 $2,549
The goodwill acquired in the International Package segment during 2005 resulted primarily from the
purchase of Lynx Express Ltd. in the United Kingdom, Messenger Service Stolica S.A. in Poland, and the
express operations of Sinotrans Air Transportation Development Co. Ltd. in China. The goodwill acquired in the
Supply Chain & Freight segment during 2005 resulted primarily from the purchase of Overnite Corp., as well as
the restructuring costs incurred in exiting certain activities from the Menlo Worldwide Forwarding operations
acquired previously. The goodwill acquired in the International Package segment during 2004 resulted from the
purchase of the remaining minority interest in UPS Yamato Express Co., while the goodwill acquired in the
Supply Chain & Freight segment in 2004 resulted primarily from the purchase of Menlo Worldwide Forwarding.
The currency/other balance includes escrow reimbursements from acquisitions completed previously. See Note 7
for further discussion of these business acquisition transactions.
The following is a summary of intangible assets at December 31, 2005 and 2004 (in millions):
Trademarks,
Licenses, Patents,
and Other
Franchise
Rights
Capitalized
Software
Intangible
Pension
Asset
Total
Intangible
Assets
December 31, 2005:
Gross carrying amount ..................... $139 $ 108 $1,391 $ 13 $1,651
Accumulated amortization .................. (31) (23) (913) — (967)
Net carrying value ........................ $108 $ 85 $ 478 $ 13 $ 684
Weighted-average amortization period (in years) .... 9.6 20.0 3.1 N/A 4.8
December 31, 2004:
Gross carrying amount ..................... $ 29 $ 97 $1,249 $ 4 $1,379
Accumulated amortization .................. (16) (18) (676) — (710)
Net carrying value ........................ $ 13 $ 79 $ 573 $ 4 $ 669
Amortization of intangible assets was $255, $221, and $196 million during 2005, 2004 and 2003,
respectively. Expected amortization of finite-lived intangible assets recorded as of December 31, 2005 for the
next five years is as follows (in millions): 2006—$179; 2007—$180; 2008—$179; 2009—$23; 2010—$23.
Amortization expense in future periods will be affected by business acquisitions, software development, and
other factors.
F-24