US Bank 2003 Annual Report Download - page 86

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The following table reflects the changes in the carrying value of goodwill for the years ended December 31, 2002 and 2003:
Private Client,
Wholesale Consumer Trust and Asset Payment Capital Consolidated
(Dollars in Millions) Banking Banking Management Services Markets (a) Company
Balance at December 31, 2001 ******** $1,244 $1,810 $289 $1,810 $ 306 $5,459
Goodwill acquired******************* 45 431 447 2 — 925
Disposal *************************** (59)————(59)
Balance at December 31, 2002 ******** $1,230 $2,241 $736 $1,812 $ 306 $6,325
Goodwill acquired******************* —164—11
Disposal *************************** (5) — — — (306) (311)
Balance at December 31, 2003 ******** $1,225 $2,242 $742 $1,816 $ — $6,025
(a) In 2003, the Company completed a tax-free distribution of Piper Jaffray Companies. The reduction represents goodwill associated with Piper Jaffray Companies.
Intangible assets consisted of the following:
Estimated Amortization Balance
December 31 (Dollars in Millions) Life (a) Method (b) 2003 2002
Goodwill ****************************************************** — — $6,025 $6,325
Merchant processing contracts ********************************** 8 years AC 552 596
Core deposit benefits******************************************* 10 years/6 years SL/AC 417 505
Mortgage servicing rights *************************************** 5 years AC 670 642
Trust relationships********************************************** 15 years/10 years SL/AC 311 371
Other identified intangibles ************************************** 8 years/9 years SL/AC 174 207
Total ****************************************************** $8,149 $8,646
(a) Estimated life represents the amortization period for assets subject to the straight line method and the weighted average amortization period for intangibles subject to accelerated
methods. If more than one amortization method is used for a category, the estimated life for each method is calculated and reported separately.
(b) Amortization methods: SL = straight line method
AC= accelerated methods generally based on cash flows
Aggregate amortization and impairment expense consisted of the following:
Year Ended December 31 (Dollars in Millions) 2003 2002 2001
Goodwill (a) ***************************************************************************** $ — $ — $236.7
Merchant processing contracts ************************************************************ 132.4 135.1 15.3
Core deposit benefits********************************************************************* 88.2 80.9 80.9
Mortgage servicing rights ***************************************************************** 365.1 280.1 106.1
Trust relationships************************************************************************ 53.3 19.3 19.3
Other identified intangibles **************************************************************** 43.4 37.6 56.8
Total ******************************************************************************** $682.4 $553.0 $515.1
(a) The Company adopted SFAS 142 on January 1, 2002, resulting in the elimination of amortization of goodwill and other indefinite lived intangible assets.
Below is the estimated amortization expense for the next five years:
(Dollars in Millions)
2004*********************************************************************************************************************** $477.5
2005*********************************************************************************************************************** 370.2
2006*********************************************************************************************************************** 306.9
2007*********************************************************************************************************************** 261.3
2008*********************************************************************************************************************** 209.6
84 U.S. Bancorp