UPS 2005 Annual Report Download - page 81

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other assets as of December 31 consist of the following (in millions):
2005 2004
Non-current finance receivables, net of allowance for credit losses ............. $ 471 $ 475
Other non-current assets .............................................. 1,294 889
$1,765 $1,364
NOTE 7. BUSINESS ACQUISITIONS AND DISPOSITIONS
We regularly explore opportunities to make acquisitions that would enhance our businesses. During the
three years ended December 31, 2005, we completed several acquisitions, including both domestic and
international transactions, which were accounted for under the purchase method of accounting. In connection
with these transactions, we paid cash (net of cash acquired) in the aggregate amount of $1.488 billion, $238
million, and $30 million in 2005, 2004, and 2003, respectively. Pro forma results of operations have not been
presented for any of the acquisitions because the effects of these transactions were not material on either an
individual or aggregate basis. The results of operations of each acquired company are included in our statements
of consolidated income from the date of acquisition. The purchase price allocations of acquired companies can be
modified up to one year after the date of acquisition.
During the second quarter of 2003, we sold our Mail Technologies business unit in a transaction that
increased net income by $14 million, or $0.01 per diluted share. The gain consisted of a pre-tax loss of $24
million recorded in other operating expenses within the Supply Chain & Freight segment, and a tax benefit of
$38 million recognized in conjunction with the sale. The tax benefit exceeded the pre-tax loss from this sale
primarily because a goodwill impairment charge we previously recorded for the Mail Technologies business unit
was not deductible for income tax purposes. Consequently, our tax basis was greater than our book basis, thus
producing the tax benefit described above. The operating results of the Mail Technologies unit were previously
included in the Supply Chain & Freight segment, and were not material to our operating results in any of the
periods presented.
During the third quarter of 2003, we sold our Aviation Technologies business unit and recognized a pre-tax
gain of $24 million ($15 million after-tax, or $0.01 per diluted share), which was recorded in other operating
expenses within the U.S. Domestic Package segment. The operating results of the Aviation Technologies unit
were previously included in the U.S. Domestic Package segment, and were not material to our operating results
in any of the periods presented.
In March 2004, we acquired the remaining 49% minority interest in UPS Yamato Express Co., which was
previously a joint venture with Yamato Transport Co. in Japan, for $65 million in cash. UPS Yamato Express
provides express package delivery services in Japan. Upon the close of the acquisition, UPS Yamato Express
became a wholly-owned subsidiary of UPS, and is included in our International Package reporting segment. The
acquisition had no material effect on our financial condition or results of operations.
In December 2004, we acquired the Menlo Worldwide Forwarding, Inc. from CNF Inc. for $150 million in
cash (net of cash acquired) plus the assumption of $110 million in principal amount of debt and capital lease
obligations. Menlo Worldwide Forwarding, Inc. is a global freight forwarder that provides a full suite of heavy
air freight forwarding services, ocean services and international trade management, including customs brokerage.
Menlo Worldwide Forwarding, Inc. is now included as part of our Supply Chain & Freight reporting segment.
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