Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Note 6 – Goodwill and Other Intangible Assets

Goodwill represents the value assigned at the Merger date, as adjusted for subsequent changes in the purchase price allocation, less recognized impairments. In the fourth quarter of 2013, DPL recognized an impairment of goodwill in the amount of $306.3 million. In the third quarter of 2012, DPL recognized an estimated impairment of goodwill of $1,850.0 million; the valuation of the goodwill impairment was finalized and adjusted to $1,817.2 million in the fourth quarter of 2012. See Note 18 for more information about these impairments.

The following table summarizes the changes in Goodwill:



$ in millions		DP&L Reporting Unit		DPLER Reporting Unit		Total

Balance at December 31, 2011
Goodwill	$	2,440.5	$	135.8	$	2,576.3
Accumulated impairment losses		-		-		-
Net balance at December 31, 2011	$	2,440.5	$	135.8	$	2,576.3

Goodwill impairments during 2012	$	(1,817.2)	$	-	$	(1,817.2)

Balance at December 31, 2012
Goodwill	$	2,440.5	$	135.8	$	2,576.3
Accumulated impairment losses		(1,817.2)		-		(1,817.2)
Net balance at December 31, 2012	$	623.3	$	135.8	$	759.1

Goodwill impairments during 2013	$	(306.3)	$	-	$	(306.3)

Balance at December 31, 2013
Goodwill	$	2,440.5	$	135.8	$	2,576.3
Accumulated impairment losses		(2,123.5)		-		(2,123.5)
Net balance at December 31, 2013	$	317.0	$	135.8	$	452.8

The following tables summarize the balances comprising intangible assets as of December 31, 2013:



$ in millions	December 31, 2013						December 31, 2012
	Gross Balance		Accumulated Amortization		Net Balance		Gross Balance		Accumulated Amortization		Net Balance
Subject to Amortization
Electric Security Plan (a)	$	-	$	-	$	-	$	87.0	$	(87.0)	$	-
Customer Contracts (b)		27.0		(25.8)		1.2		28.0		(19.7)		8.3
Customer Relationships (c)		31.8		(4.6)		27.2		31.8		(1.1)		30.7
Other (d)		8.4		(0.1)		8.3		5.3		(0.3)		5.0
		67.2		(30.5)		36.7		152.1		(108.1)		44.0
Not subject to Amortization
Trademark/Trade name (e)		6.1		-		6.1		6.1		-		6.1
Total intangibles	$	73.3	$	(30.5)	$	42.8	$	158.2	$	(108.1)	$	50.1

During 2012, $1.1 million of intangibles related to the MC Squared Trademark/Trade name was reclassified from Subject to Amortization to Not subject to Amortization.

(a)Represents the value of DP&L’s Electric Security Plan which is a rate plan for the supply and pricing of electric generation services. It provides a level of price stability to consumers of electricity compared to market-based electricity prices.

(b)Represents above market contracts that DPLER has with third party customers existing as of the Merger date.

(c)Represents relationships DPLER has with third party customers as of the Merger date, where DPLER has regular contact with the customer, and the customer has the ability to make direct contact with DPLER.

(d)Consists of various intangible assets including renewable energy credits, emission allowances, and other intangibles, none of which are individually significant.

(e)Trademark/Trade name represents the value assigned to the trade names of DPLER and MC Squared.

The following table summarizes, by category, intangible assets acquired during the period ended December 31, 2013:

$ in millions

Amount

Subject to
Amortization/
Indefinite-lived

Weighted
Average
Amortization
Period
(years)

Amortization
Method

Renewable Energy Certificates

3.9

Subject to amortization

Various

As Utilized

The following table summarizes the amortization expense, broken down by intangible asset category for 2014 through 2018:



	Estimated amortization expense
	Years ending December 31,
$ in millions	2014			2015		2016		2017	2018

Customer contracts	$	1.2	$	-	$	-	$	-	$	-
Customer relationships		3.8		3.8		3.1		2.7		2.3
Renewable Energy Certificates		3.8		0.3		-		-		-
	$	8.8	$	4.1	$	3.1	$	2.7	$	2.3

- 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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