UPS 2009 Annual Report Download - page 90

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Expected benefit payments for pensions will be primarily paid from plan trusts. Expected benefit payments
for postretirement medical benefits will be paid from plan trusts and corporate assets. Our funding policy for U.S.
plans is to contribute amounts annually that are at least equal to the amounts required by applicable laws and
regulations, or to directly fund payments to plan participants, as applicable. International plans will be funded in
accordance with local regulations. Additional discretionary contributions will be made when deemed appropriate
to meet the long-term obligations of the plans.
NOTE 6. BUSINESS ACQUISITIONS, GOODWILL AND INTANGIBLE 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, 2007 balance ...................... — $295 $2,282 $2,577
Acquired ................................. — 4 — 4
Impairments .............................. — — (548) (548)
Currency / Other .......................... — (11) (36) (47)
December 31, 2008 balance ...................... $— $288 $1,698 $1,986
Acquired ................................. — 82 — 82
Disposals ................................ — — (6) (6)
Currency / Other .......................... — 4 23 27
December 31, 2009 balance ...................... $— $374 $1,715 $2,089
Business Acquisitions
The goodwill acquired in the International Package segment in 2009 was primarily due to the acquisition of
an agent in Turkey, as discussed further below. We also acquired an agent in Slovenia during the second quarter
of 2009. The increase in goodwill in the Supply Chain & Freight segment was due to the impact of fluctuations in
the U.S. Dollar with other currencies on the translation of non-U.S. Dollar goodwill balances, partially offset by
the allocation of goodwill to the sale of certain non-U.S. Mail Boxes Etc. franchise relationships.
In August 2009, we completed the formation of a new joint venture headquartered in Dubai to develop and
grow UPS express package, freight forwarding and contract logistics services across the Middle East, Turkey and
portions of Central Asia. We own 80% of this joint venture, and we consolidate the financial statements of the
joint venture. In conjunction with the formation of this joint venture, the joint venture acquired the small package
operations of Unsped Paket Servisi San ve Ticaret A.S. (“Unsped”), our existing service agent in Turkey. We are
contributing certain existing UPS operations in the region to the new joint venture, along with cash consideration
of $40 million and an additional $40 million that will be due on a deferred basis. We maintain an option to
purchase the remaining 20% of the joint venture, and the joint venture partner maintains a put option to require
us to purchase the remaining 20% interest. Upon exercise of the call or put option, a payment of $20 million will
be required. An additional payment may be due depending upon the earnings of the joint venture. The 20%
portion of the joint venture that we do not own, which represents temporary equity, is recorded as a
noncontrolling interest in shareowners’ equity. The express package business operations of Unsped are included
in our International Package segment, while the freight forwarding business of Unsped is included in our Supply
Chain & Freight segment.
The goodwill acquired in the International Package segment during 2008 was due to our purchase of a
package delivery company in Romania and our buyout of a joint venture in Korea. The currency / other balance
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