Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2011

Intangible Assets and Goodwill [Abstract]

Note 9. Intangible Assets and Goodwill

Identifiable Intangible Assets

The following table summarizes our intangible assets by business segment at the dates indicated:

	September 30, 2011							December 31, 2010
	Gross Value		Accum. Amort.			Carrying Value		Gross Value		Accum. Amort.			Carrying Value
NGL Pipelines & Services:
Customer relationship intangibles	$	340.8	$	(122.9	)	$	217.9	$	340.8	$	(106.7	)	$	234.1
Contract-based intangibles (1)		293.7		(164.4	)		129.3		322.2		(176.6	)		145.6
Segment total		634.5		(287.3	)		347.2		663.0		(283.3	)		379.7
Onshore Natural Gas Pipelines & Services:
Customer relationship intangibles		1,163.6		(197.9	)		965.7		1,163.6		(160.8	)		1,002.8
Contract-based intangibles (2)		464.8		(285.2	)		179.6		565.3		(322.0	)		243.3
Segment total		1,628.4		(483.1	)		1,145.3		1,728.9		(482.8	)		1,246.1
Onshore Crude Oil Pipelines & Services:
Customer relationship intangibles		9.7		(4.0	)		5.7		9.7		(3.7	)		6.0
Contract-based intangibles		0.4		(0.2	)		0.2		0.4		(0.2	)		0.2
Segment total		10.1		(4.2	)		5.9		10.1		(3.9	)		6.2
Offshore Pipelines & Services:
Customer relationship intangibles		205.8		(126.6	)		79.2		205.8		(118.1	)		87.7
Contract-based intangibles		1.2		(0.3	)		0.9		1.2		(0.2	)		1.0
Segment total		207.0		(126.9	)		80.1		207.0		(118.3	)		88.7
Petrochemical & Refined Products Services:
Customer relationship intangibles		104.4		(27.3	)		77.1		104.7		(23.8	)		80.9
Contract-based intangibles		57.8		(26.8	)		31.0		60.3		(20.2	)		40.1
Segment total		162.2		(54.1	)		108.1		165.0		(44.0	)		121.0
Total all segments	$	2,642.2	$	(955.6	)	$	1,686.6	$	2,774.0	$	(932.3	)	$	1,841.7

(1) In March 2011, we sold a non-strategic fractionation facility and its related contract-based intangible assets. (2) The intangible assets of Petal and Hattiesburg have been reclassified to assets held for sale as of September 30, 2011. See Note 6 for additional information regarding Petal and Hattiesburg's assets held for sale.

The following table presents the amortization expense of our intangible assets by business segment for the periods presented:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2011		2010		2011		2010
NGL Pipelines & Services	$	10.3	$	10.4	$	30.7	$	29.8
Onshore Natural Gas Pipelines & Services		19.5		20.1		59.6		52.4
Onshore Crude Oil Pipelines & Services		0.1		0.1		0.3		0.3
Offshore Pipelines & Services		2.8		3.1		8.6		9.7
Petrochemical & Refined Products Services		4.3		2.7		12.9		7.9
Total	$	37.0	$	36.4	$	112.1	$	100.1

The following table presents forecast amortization expense associated with existing intangible assets for the years presented:

Remainder of 2011				2012				2013				2014				2015
$	33.4			$	130.3			$	126.2			$	125.1			$	122.2

In general, our intangible assets fall within two categories – customer relationship and contract-based intangible assets. The values assigned to such intangible assets are amortized to earnings using either (i) a straight-line approach or (ii) other methods that closely resemble the pattern in which the economic benefits of associated resource bases are estimated to be consumed or otherwise used, as appropriate.

Customer relationship intangible assets. Customer relationship intangible assets represent the estimated economic value assigned to certain relationships acquired in connection with business combinations and asset purchases whereby (i) we acquired information about or access to customers and now have regular contact with them and (ii) the customers now have the ability to make direct contact with us. Customer relationships may arise from contractual arrangements (such as supplier contracts and service contracts) and through means other than contracts, such as through regular contact by sales or service representatives. At September 30, 2011, the carrying value of our customer relationship intangible assets was $1.35 billion.

Contract-based intangible assets. Contract-based intangible assets represent specific commercial rights we acquired in connection with business combinations or asset purchases. At September 30, 2011, the carrying value of our contract-based intangible assets was $341.0 million.

Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the amounts assigned to assets acquired and liabilities assumed in the transaction. Goodwill is not amortized; however, it is subject to annual impairment testing at the beginning of each fiscal year, and more frequently, if circumstances indicate it is probable that the fair value of goodwill is below its carrying amount. The following table presents changes in the carrying amount of goodwill for the period presented:

	NGL Pipelines & Services		Onshore Natural Gas Pipelines & Services			Onshore Crude Oil Pipelines & Services		Offshore Pipelines & Services		Petrochemical & Refined Products Services			Consolidated Total
Balance at December 31, 2010 (1)	$	341.2	$	311.1		$	311.2	$	82.1	$	1,062.1		$	2,107.7
Goodwill adjustment (2)		--		--			--		--		(0.6	)		(0.6	)
Reclassification of Crystal goodwill to assets held for sale (3)		--		(14.8	)		--		--		--			(14.8	)
Balance at September 30, 2011 (1)	$	341.2	$	296.3		$	311.2	$	82.1	$	1,061.5		$	2,092.3

(1) The total carrying amount of goodwill at September 30, 2011 and December 31, 2010 is presented net of $1.3 million of accumulated impairment charges. (2) The goodwill we recorded in connection with a marine business acquisition completed in November 2010 was subsequently reduced by $0.6 million in May 2011 due to a purchase price adjustment. (3) See Note 6 for information related to the reclassification of Petal and Hattiesburg's goodwill to assets held for sale.

Goodwill impairment testing involves determining the fair value of the associated reporting unit. These fair value amounts are based on assumptions regarding the future economic prospects of the businesses that make up the reporting unit. Such assumptions include (i) discrete financial forecasts for the businesses contained within the reporting unit, which rely on management's estimates of operating margins, throughput volumes and similar factors; (ii) long-term growth rates for cash flows beyond the discrete forecast period; and (iii) appropriate discount rates. Based on our most recent goodwill impairment tests, each reporting unit's fair value was substantially in excess of its carrying value (i.e., by at least 10%).

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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