United Parcel Service, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

The following table indicates the allocation of goodwill as of September 30, 2024 and December 31, 2023 (in millions):


	U.S. Domestic Package		International Package		Supply Chain Solutions		Consolidated
December 31, 2023:	$	847	$	503	$	3,522	$	4,872
Acquired	—		—		22		22

Currency / Other	—		4		(487)		(483)
September 30, 2024:	$	847	$	507	$	3,057	$	4,411

During the nine months ended September 30, 2024:

•Within Supply Chain Solutions, goodwill decreased by $495 million in connection with the divestiture of our truckload brokerage business ("Coyote") as discussed in note 18.

•We recorded an increase in goodwill of $16 million as part of purchase accounting allocations for our November 2023 acquisitions of MNX Global Logistics and Happy Returns. Certain areas of purchase accounting for MNX Global Logistics, including our estimates of tax positions, remain preliminary as of September 30, 2024. In addition, we recorded $6 million of goodwill related to the acquisition of certain locations of The UPS Store.

•The remaining movements are due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances.

We conducted our most recent annual goodwill impairment testing as of July 1, 2024 using both qualitative and quantitative methods. Our quantitative tests utilize a combination of the income and market approaches. We concluded that the fair values of our reporting units were in excess of their respective carrying values. Approximately $1.2 billion of our consolidated goodwill balance of $4.4 billion is represented by our Global Freight Forwarding, Roadie and Global Logistics and Distribution reporting units which, based on our annual impairment evaluation, are exhibiting a limited excess of fair value above carrying value and reflect a greater risk of an impairment occurring in future periods. We do not expect any impairment would have a significant impact on our consolidated financial position, results of operations or cash flows.

For each of our reporting units, we continue to monitor the impact of macroeconomic conditions and business performance on our estimates of fair value. Subsequent to our annual testing date and as of September 30, 2024, none of our reporting units had indications that an impairment was more likely than not. Actual reporting unit performance, revisions to our forecasts of future performance, market factors, changes in estimates or assumptions in future impairment testing, or a combination thereof could result in an impairment charge in one or more of our reporting units during a future period. During October 2024, we realigned the management structure of certain subsidiaries within Supply Chain Solutions, bringing our Global Freight Forwarding and Global Logistics and Distribution businesses under a single management team and separately, bringing together our MNX Global Logistics and Marken businesses under a single management team. We are evaluating the impact of these managerial changes to our operating segment and reporting unit determinations during the fourth quarter.

The following is a summary of intangible assets as of September 30, 2024 and December 31, 2023 (in millions):



	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
September 30, 2024:
Capitalized software	$	6,096	$	(4,173)	$	1,923
Licenses	48		(25)		23
Franchise rights	348		(56)		292
Customer relationships	702		(203)		499
Trade name	109		(23)		86
Trademarks, patents and other	370		(89)		281
Amortizable intangible assets	$	7,673	$	(4,569)	$	3,104
Indefinite-lived intangible assets	4		—		4
Total Intangible Assets, Net	$	7,677	$	(4,569)	$	3,108
December 31, 2023:
Capitalized software	$	5,839	$	(3,900)	$	1,939
Licenses	30		(7)		23
Franchise rights	291		(49)		242
Customer relationships	1,115		(516)		599
Trade name	172		(30)		142
Trademarks, patents and other	320		(53)		267
Amortizable intangible assets	$	7,767	$	(4,555)	$	3,212
Indefinite-lived intangible assets	93		—		93
Total Intangible Assets, Net	$	7,860	$	(4,555)	$	3,305

The table as of September 30, 2024 above excludes intangible assets associated with Coyote, which was divested during the third quarter of 2024 as discussed in note 18.

Impairment tests for finite-lived intangible assets are performed when a triggering event occurs that may indicate that the carrying value of the intangible asset may not be recoverable. For the three months ended September 30, 2024, there were no material impairment charges for finite-lived intangible assets. For the nine months ended September 30, 2024, we recorded impairment charges of $48 million ($35 million after tax, or $0.04 per diluted share) within Other Expenses in our statement of consolidated income. These charges represented capitalized software license impairments of $7 million and a $41 million charge to write down the value of certain trade names acquired as part of our acquisition of Bomi Group. For the three and nine months ended September 30, 2023, impairment charges for finite-lived intangible assets were $8 million.