Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2010

8. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes the changes in the carrying amount of goodwill, by segment for the years ended December 31, 2010, 2009 and 2008. There was no goodwill associated with our North America—Utilities segment during the years ended December 31, 2010, 2009 and 2008.

			Latin		Latin		North
			America -		America -		America -		Europe -		Asia -		Corporate
			Generation		Utilities		Generation		Generation		Generation		and Other		Total

Balance as of December 31, 2008
	Goodwill		$	926	$	140	$	121	$	127	$	78	$	101	$	1,493
	Accumulated impairment losses			(24)		(7)		(20)		(19)		-		(2)		(72)
		Net balance		902		133		101		108		78		99		1,421

	Impairment losses			-		-		-		(118)		-		(4)		(122)
	Goodwill associated with the
		sale of a business		-		-		-		-		(2)		-		(2)
	Foreign currency translation
		and other		-		-		(10)		10		2		-		2

Balance as of December 31, 2009
	Goodwill			926		140		111		137		78		101		1,493
	Accumulated impairment losses			(24)		(7)		(20)		(137)		-		(6)		(194)
		Net balance		902		133		91		-		78		95		1,299
	Impairment losses			-		-		(18)		-		-		(3)		(21)
	Foreign currency translation
		and other		-		-		(10)		-		3		-		(7)

Balance as of December 31, 2010
	Goodwill			926		140		101		137		81		101		1,486
	Accumulated impairment losses			(24)		(7)		(38)		(137)		-		(9)		(215)
		Net balance	$	902	$	133	$	63	$	-	$	81	$	92	$	1,271

During the third quarter of 2010, Deepwater, our petcoke-fired merchant generation facility in Texas, reported in the North America Generation segment, incurred a goodwill impairment of $18 million. The Company determined that there was an impairment indicator for Deepwater's goodwill. This determination was based primarily on the fact that Deepwater did not operate for more than 30 days in the third quarter of 2010, incurred current operating and cash flow losses and, at that time, was forecasting operating and cash flow losses for the remainder of 2010 through 2014. This resulted from a decrease in future power price expectations and an increase in petcoke prices affecting the market. The Company performed the two-step goodwill impairment test of Deepwater's goodwill as of August 31, 2010 and recognized the entire $18 million carrying amount of goodwill as goodwill impairment.

In 2009, Kilroot, our subsidiary in the United Kingdom, reported in the Europe Generation segment, incurred a goodwill impairment loss of $118 million. Kilroot is a generation plant fired primarily by coal. Factors contributing to the impairment included: reduced profit expectations based on latest estimates of future commodity prices and reduced expectations on the recovery of cash flows on the existing plant following the Company's decision to forgo capital expenditures to meet emission allowance requirements taking effect in 2024. Additionally, one of our subsidiaries located in the Ukraine and reported within “Corporate and Other” incurred a goodwill impairment loss of $4 million. For the year ended December 31, 2008, the Company had no goodwill impairment.

The following tables summarize the balances comprising other intangible assets in the accompanying Consolidated Balance Sheets as of December 31, 2010 and 2009:

		December 31, 2010						December 31, 2009
		Gross		Accumulated		Net		Gross		Accumulated		Net
		Balance		Amortization		Balance		Balance		Amortization		Balance

			(in millions)					(in millions)
Subject to Amortization
Project development rights⁽¹⁾		$	141	$	-	$	141	$	-	$	-	$	-
Sales concessions			162		(88)		74		167		(84)		83
Contractual payment rights⁽²⁾			65		(4)		61		-		-		-
Land use rights			50		(2)		48		48		(1)		47
Management rights			66		(30)		36		64		(27)		37
Emission allowances⁽³⁾			26		-		26		11		-		11
Other⁽⁴⁾			94		(33)		61		118		(28)		90
	Subtotal		604		(157)		447		408		(140)		268
Indefinite-Lived Intangible Assets
Land use rights			51		-		51		50		-		50
Emission allowances⁽⁵⁾			8		-		8		15		-		15
Other			5		-		5		-		-		-
	Subtotal		64		-		64		65		-		65

Total		$	668	$	(157)	$	511	$	473	$	(140)	$	333

Represent development rights, including but not limited to, land control, various permits and right to acquire equity interests in development projects resulting from asset acquisitions by our Wind group.
Represent legal rights to receive system reliability payments from the regulator.
Acquired or purchased emission allowances are expensed when utilized and included in net income for the year.
Consists of various intangible assets including PPAs and transmission rights, none of which is individually significant.
Represent perpetual emission allowances without an expiration date.

The following table summarizes, by category, intangible assets acquired during the years ended December 31, 2010 and 2009:

December 31, 2010

Subject to

Amortization/

Weighted Average

Amortization

Amount

Indefinite-Lived

Amortization Period

Method

(in millions)

(in years)

Project development rights

141

Subject to amortization

Various

Straight line

Contractual payment rights

Subject to amortization

Straight line

Emission allowances

Subject to amortization

Various

As utilized

Land use rights

Indefinite-lived

N/A

Total

227

December 31, 2009

Subject to

Amortization/

Weighted Average

Amortization

Amount

Indefinite-Lived

Amortization Period

Method

(in millions)

(in years)

Emission allowances

Subject to amortization

Various

As utilized

Land use rights

Indefinite-lived

N/A

Other

Subject to amortization

Total

In 2009, the Company reclassified $42 million from other assets into intangible assets at a subsidiary in Latin America.

The following table summarizes the estimated amortization expense, broken down by intangible asset category, for 2011 through 2015:

	Estimated amortization expense
	2011		2012		2013		2014		2015

		(in millions)
Contractual payment rights	$	9	$	9	$	9	$	9	$	9
Sales concessions		6		6		6		6		6
All other		7		6		4		3		3
Total	$	22	$	21	$	19	$	18	$	18

Intangible asset amortization expense was $14 million, $17 million and $11 million for the years ended December 31, 2010, 2009 and 2008, respectively.

- Definition

Discloses 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 or 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. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

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