BUSINESS COMBINATIONS (Notes)
|9 Months Ended|
Sep. 30, 2015
|Business Combinations [Abstract]|
In March 2015, we acquired Poltraf, a Polish-based pharmaceutical logistics company recognized for its temperature-sensitive warehousing and transportation solutions. In May 2015, we acquired Parcel Pro and in June 2015, we acquired IPS, both are businesses that provide services and insurance coverage for the transport of high value luxury goods. These acquisitions were funded with cash from operations. These acquisitions were not material to our consolidated financial position or results of operations.
In August 2015, we acquired Coyote, a U.S.-based truckload freight brokerage company for $1.853 billion. This acquisition will allow us to expand our existing portfolio by adding large scale truckload freight brokerage and transportation management services to our existing supply chain and freight businesses. The acquisition was funded using cash from operations and issuances of commercial paper.
The following table summarizes the estimated fair values of the Coyote assets acquired and liabilities assumed at the acquisition date. We have engaged a third-party to prepare valuations for certain intangible assets; therefore, the initial estimates of purchase price, intangible assets, goodwill and deferred income taxes are subject to change. The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition.
The goodwill recognized of approximately $1.246 billion is attributable to synergies anticipated from more efficient usage of our existing transportation networks and the assembled workforce of Coyote. We have allocated $709 and $537 million of the recognized goodwill to the U.S. Domestic Package and Supply Chain & Freight segments, respectively. None of the goodwill is expected to be deductible for income tax purposes.
The intangible assets acquired of approximately $658 million primarily consist of $426 million of customer relationships (amortized over 10 years), $27 million of non-compete agreements (amortized over 4 years), and $200 million of trademarks and trade name, which have an indefinite useful life. As noted earlier, the fair value of the acquired intangible assets are estimates and are subject to change depending on the final valuation report. The carrying value of acquired accounts receivable approximates fair value.
We recognized approximately $17 million of acquisition related costs that were expensed in the current period. These costs are included in "other expenses" within the statements of consolidated income.
The financial results of these acquired businesses are included in the Supply Chain & Freight segment from the date of acquisition and were not material to our results of operations.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://www.xbrl.org/2003/role/presentationRef