Prudential 2005 Annual Report Download - page 117

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
6. VALUATION OF BUSINESS ACQUIRED, GOODWILL AND OTHER INTANGIBLES (continued)
Goodwill
The changes in the book value of goodwill by segment are as follows:
Year Ended December 31, 2005
Balance at
January 1 Acquisitions
Impairment
Charge
Disposal of
Reporting
Unit Other(1)
Balance at
December 31
(in millions)
Asset Management ........................... $246 $— $— $— $ (6) $240
Retirement .................................. 342 — — — — 342
International Insurance ........................ 15 — — — 2 17
International Investments ...................... 120 — — — — 120
Real Estate and Relocation Services .............. 117 1 — — (2) 116
Total ................................... $840 $ 1 $— $— $ (6) $835
Year Ended December 31, 2004
Balance at
January 1 Acquisitions
Impairment
Charge
Disposal of
Reporting
Unit Other(1)
Balance at
December 31
(in millions)
Asset Management ........................... $142 $ 86 $— $— $ 18 $246
Retirement .................................. — 342 — — — 342
International Insurance ........................ 14 — — — 1 15
International Investments ...................... 113 — — — 7 120
Corporate Operations .......................... 50 — (53) (6) 9 —
Real Estate and Relocation Services .............. 116 — — — 1 117
Total ................................... $435 $428 $ (53) $ (6) $ 36 $840
(1) Other represents foreign currency translation and purchase price adjustments.
The Company tests goodwill for impairment annually as of December 31 and more frequently if an event occurs or
circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. There
were no impairments recorded in 2005. In 2004, the Company decided to either exit or sell the Dryden Wealth Management
business and determined that the goodwill related to this business, which is included in Corporate Operations above, was impaired.
Accordingly, in 2004 the Company recorded an impairment charge of $53 million representing the entire carrying amount of the
business’s goodwill.
Other Intangibles
At December 31, 2005, the gross carrying amount and accumulated amortization for the Company’s other intangibles subject
to amortization amounted to $379 million and $183 million, respectively, and at December 31, 2004, $384 million and $168
million, respectively. Other intangibles not subject to amortization amounted to $14 million and $18 million at December 31, 2005
and 2004, respectively. Other intangibles consist primarily of mortgage servicing rights and customer relationships included in the
Asset Management segment. At December 31, 2005, the gross carrying amount and accumulated amortization for mortgage
servicing rights, including both purchased and originated servicing rights, amounted to $215 million and $77 million, respectively,
and at December 31, 2004, $210 million and $75 million, respectively. The fair value of net mortgage servicing rights were $163
million and $149 million at December 31, 2005 and 2004, respectively. At December 31, 2005, the gross carrying amount and
accumulated amortization for customer relationships amounted to $141 million and $94 million, respectively, and at December 31,
2004, $148 million and $84 million respectively. Amortization expense for other intangibles was $42 million, $34 million and $35
million for the years ended December 31, 2005, 2004 and 2003, respectively. Amortization expense for other intangibles is
expected to be approximately $33 million for each of the next three years, $25 million in 2009 and $20 million in 2010.
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