Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Note 7 – Goodwill and Other Intangible Assets

Goodwill

The following table summarizes the changes in Goodwill by reportable segment for the years ended December 31, 2015, 2014 and 2013:



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

Goodwill impairments during 2014	$	—		$	(135.8	)	$	(135.8	)
Balance at December 31, 2014
Goodwill	$	2,440.5		$	135.8		$	2,576.3
Accumulated impairment losses	(2,123.5		)	(135.8		)	(2,259.3		)
Net balance at December 31, 2014	$	317.0		$	—		$	317.0

Goodwill impairments during 2015	$	(317.0	)	$	—		$	(317.0	)
Balance at December 31, 2015
Goodwill	$	2,440.5		$	135.8		$	2,576.3
Accumulated impairment losses	(2,440.5		)	(135.8		)	(2,576.3		)
Net balance at December 31, 2015	$	—		$	—		$	—

In connection with the acquisition of DPL by AES, DPL allocated the purchase price to goodwill for two reporting units, the DP&L reporting unit, which included DP&L and other entities, and DPLER. Of the total goodwill, approximately $2.4 billion was allocated to the DP&L reporting unit and the remainder was allocated to DPLER. Goodwill represented the value assigned at the Merger date, as adjusted for subsequent changes in the purchase price allocation, less recognized impairments.

DPLER Reporting Unit

During the first quarter of 2014, we performed an interim impairment test on the $135.8 million in goodwill at our DPLER reporting unit. During the second quarter of 2014, we finalized the work to determine the implied fair value for the DPLER reporting unit. There were no further adjustments to the full impairment of $135.8 million recognized in the first quarter. DPLER was sold on January 1, 2016 and is presented in discontinued operations on the Consolidated Statement of Operations. See Note 16 – Discontinued Operations for additional information.

DP&L Reporting Unit

During the fourth quarter of 2015, DPL performed its annual goodwill impairment test and recognized a goodwill impairment at its DP&L reporting unit of $317.0 million. The reporting unit failed Step 1 as its fair value was less than its carrying amount, which was primarily due to a decrease forecasted in dark spreads that were driven by decreases in projected forward power prices, and lower than expected revenues from the CP product. The fair value of the reporting unit was determined under the income approach using a discounted cash flow valuation model. The significant assumptions included within the discounted cash flow valuation model were forward commodity price curves, expected revenues from the new CP product, and planned environmental expenditures. In Step 2, goodwill was determined to have no implied fair value after the hypothetical purchase price allocation under the accounting guidance for business combinations; therefore, a full impairment of the remaining goodwill balance of $317.0 million was recognized. The goodwill associated with the Merger is not deductible for tax purposes. Accordingly, there is no financial statement tax benefit related to the impairment.

During the fourth quarter of 2013, DPL performed its annual goodwill impairment test and recognized a goodwill impairment at its DP&L reporting unit of $306.3 million. In performing the annual goodwill impairment test as of October 1, 2013, Step 1 of the test failed as the fair value of the reporting unit no longer exceeded its carrying amount due primarily to lower estimates of capacity prices in future years as well as lower dark spreads contributing to lower overall operating margins for the business. The fair value of the reporting unit was determined under the income approach using a discounted cash flow valuation model. The significant assumptions included within the discounted cash flow valuation model were capacity price curves, amount of the non-bypassable charge, commodity price curves, dispatching, valuation of regulatory assets and liabilities, discount rates and deferred income taxes. In Step 2, goodwill was determined to have an implied fair value of $317.0 million after the hypothetical purchase price allocation under the accounting guidance for business combinations.

The goodwill associated with the Merger is not deductible for tax purposes. Accordingly, there is no cash or financial statement tax benefit related to the impairment.

- 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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