UPS 2015 Annual Report Download - page 103

Download and view the complete annual report

Please find page 103 of the 2015 UPS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
91
NOTE 6. 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
Balance on January 1, 2014 $ 6 $ 420 $ 1,764 $ 2,190
Acquired — 52 13 65
Currency / Other — (23)(48)(71)
Balance on December 31, 2014 $ 6 $ 449 $ 1,729 $ 2,184
Acquired 709 — 585 1,294
Currency / Other — (24)(35)(59)
Balance on December 31, 2015 $ 715 $ 425 $ 2,279 $ 3,419
2015 Goodwill Activity:
The goodwill acquired in the U.S. Domestic Package segment was related to our August 2015 acquisition of Coyote
Logistics Midco, Inc ("Coyote"). The goodwill acquired in the Supply Chain & Freight segment was related to our March 2015
acquisition of Poltraf Sp. z.o.o. ("Poltraf"), our May 2015 acquisition of Parcel Pro, Inc. ("Parcel Pro"), our June 2015
acquisition of the Insured Parcel Services division of G4S International Logistics ("IPS") and our August 2015 acquisition of
Coyote.
The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition. The
purchase price allocations for Coyote, Parcel Pro and IPS have not been finalized. See note 7 for further discussion of these
acquisitions.
2014 Goodwill Activity:
The goodwill acquired in the International Package segment was related to our October 2014 acquisition of i-parcel, LLC.
("i-parcel"), a U.S.-based international e-commerce enabler and logistics company that operates in the U.S. and U.K. The
goodwill acquired in the Supply Chain & Freight segment was related to our February 2014 acquisition of Polar Speed
Distribution Limited ("Polar Speed"), a U.K.-based company that provides temperature-sensitive pharmaceutical supply chain
solutions in the U.K. and continental Europe.
Goodwill Impairment
We test our goodwill for impairment annually, as of October 1st, on a reporting unit basis. Our reporting units are
comprised of the U.S. Domestic Package, Europe, Asia, Americas and ISMEA (Indian Subcontinent, Middle East and Africa)
reporting units in the International Package reporting segment, and the Forwarding, Logistics, UPS Freight, The UPS Store,
UPS Capital and Coyote Logistics reporting units in the Supply Chain & Freight reporting segment.
In assessing our goodwill for impairment, we initially evaluate qualitative factors to determine if it is more likely than not
that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive and it is
necessary to calculate the fair value of a reporting unit, then we utilize a two-step process to test goodwill for impairment. First,
a comparison of the fair value of the applicable reporting unit with the aggregate carrying value, including goodwill, is
performed. We primarily determine the fair value of our reporting units using a discounted cash flow model, and supplement
this with observable valuation multiples for comparable companies, as applicable. If the carrying amount of a reporting unit
exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test to determine the amount of
impairment loss. The second step includes comparing the implied fair value of the affected reporting unit’s goodwill with the
carrying value of that goodwill.
In 2015, we utilized a qualitative assessment to determine that it was more likely than not that the reporting unit fair value
exceeded the carrying value for our U.S. Domestic Package, Europe, Asia, Americas, ISMEA, The UPS Store, UPS Capital and
Coyote reporting units. For the remaining reporting units, we utilized the two-step process to test goodwill for impairment. We
did not have any goodwill impairment charges in 2015, 2014 or 2013. Cumulatively, our Supply Chain & Freight reporting
segment has recorded goodwill impairment charges of $622 million, while our International and U.S. Domestic Package
segments have not recorded any impairment charges.