Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill — The following table summarizes the changes in the carrying amount of goodwill, by reportable segment for the years ended December 31, 2015 and 2014 in millions.



	US			Andes		MCAC		Europe				Asia		Total
Balance as of December 31, 2013
Goodwill	$	2,658		$	899	$	149	$	180			$	68	$	3,954
Accumulated impairment losses	(2,152		)	—		—		(180		)		—		(2,332		)
Net balance	506			899		149		—				68		1,622
Impairment losses	(164		)	—		—		—				—		(164		)
Balance as of December 31, 2014
Goodwill	2,658			899		149		122			₍₁₎	68		3,896
Accumulated impairment losses	(2,316		)	—		—		(122		)		—		(2,438		)
Net balance	342			899		149		—				68		1,458
Impairment losses	(317		)	—		—		—				—		(317		)
Goodwill acquired during the year	16			—		—		—				—		16
Balance as of December 31, 2015
Goodwill	2,674			899		149		122				68		3,912
Accumulated impairment losses	(2,633		)	—		—		(122		)		—		(2,755		)
Net balance	$	41		$	899	$	149	$	—			$	68	$	1,157

_____________________________

⁽¹⁾Both the gross carrying amount and the accumulated impairment losses of the Europe segment have been reduced by $58 million with no impact on the net carrying amount for the segment. This relates to Ebute, which had fully impaired goodwill of $58 million and was sold in 2014.

DP&L — During the fourth quarter of 2015, the Company performed the annual goodwill impairment test at its DP&L reporting unit ("DP&L") and recognized a goodwill impairment expense of $317 million. The reporting unit failed Step 1 as its fair value was less than its carrying amount, which was primarily due to a decrease in forecasted dark spreads that were driven by decreases in projected forward power prices, and lower than expected revenues from a new Capacity Performance ("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, the amount of non-bypassable charges from the pending ESP, expected revenues from the new CP product, and planned environmental expenditures. In Step 2, goodwill was determined to have an implied negative 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 million was recognized. DP&L is reported in the US SBU reportable segment.

Main Street Power — During the first quarter of 2015, the Company completed the acquisition of 100% of the common stock of Main Street Power Company, Inc. The transaction included recognition of $16 million of Goodwill. See Note 25—Acquisitions for additional information.

Buffalo Gap — During the first quarter of 2014, the Company recognized an $18 million impairment of its goodwill at its Buffalo Gap reporting unit, which is comprised of three wind projects in Texas. During the fourth quarter of 2014, the Company performed the annual goodwill impairment test at its Buffalo Gap reporting unit. The reporting unit failed Step 1 and Step 2 was performed to measure the amount of goodwill impairment. In Step 2, after the hypothetical purchase price allocation under the relevant accounting guidance, the implied fair value of goodwill was negative. As a result, a full impairment of goodwill of $10 million was recognized. Buffalo Gap is reported in the US SBU reportable segment.

DPLER — During the first quarter of 2014, the Company performed an interim impairment test on the $136 million in goodwill at its DPLER reporting unit, a competitive retail marketer selling retail electricity to customers in Ohio and Illinois. The DPLER reporting unit was identified as being "at risk" during the fourth quarter of 2013. The impairment indicators arose based on market information available regarding actual and proposed sales of competitive retail marketers, which indicated a significant decline in valuations during the first quarter of 2014.

In Step 1 of the interim impairment test, the fair value of the reporting unit was determined to be less than its carrying amount under both the market approach and the income approach using a discounted cash flow valuation model. The significant assumptions included commodity price curves, estimated electricity to be demanded by its customers, changes in its customer base through attrition and expansion, discount rates, the assumed tax structure and the level of working capital required to run the business.

In Step 2 of the interim impairment test, the goodwill was determined to have an implied fair value of zero after the hypothetical purchase price allocation and the Company accordingly recognized a full impairment of the $136 million in goodwill at the DPLER reporting unit. DPLER is reported in the US SBU reportable segment.

Other Intangible Assets — The following table summarizes the balances comprising other intangible assets in the accompanying Consolidated Balance Sheets (in millions) as of the periods indicated:



	December 31, 2015							December 31, 2014
	Gross Balance		Accumulated Amortization			Net Balance		Gross Balance		Accumulated Amortization			Net Balance
Subject to Amortization
Project development rights⁽¹⁾	$	4	$	(1	)	$	3	$	28	$	(1	)	$	27
Sales concessions	71		(19		)	52		86		(41		)	45
Contractual payment rights⁽²⁾	66		(46		)	20		69		(40		)	29
Management rights	24		(10		)	14		33		(13		)	20
Land use rights	28		—			28		25		—			25
Contracts	29		(12		)	17		36		(19		)	17
Customer contracts and relationships ⁽³⁾	6		(6		)	—		63		(39		)	24
Other⁽⁴⁾	15		(3		)	12		22		(5		)	17
Subtotal	243		(97		)	146		362		(158		)	204
Indefinite-Lived Intangible Assets
Land use rights	38		—			38		37		—			37
Water rights	17		—			17		20		—			20
Other	13		—			13		20		—			20
Subtotal	68		—			68		77		—			77
Total	$	311	$	(97	)	$	214	$	439	$	(158	)	$	281

_____________________________


⁽¹⁾	2014 balance includes U.K. Wind operations. In August 2014 these assets were sold, but did not meet the criteria to be reported as discontinued operations and their results are reflected within continuing operations. See Note 24—Dispositions and Held-for-Sale Businesses for further information.


⁽²⁾	Represent legal rights to receive system reliability payments from the regulator.


⁽³⁾	2014 balance includes DPLER which is considered held-for-sale as of December 31, 2015. See Note 24—Dispositions and Held-for-Sale Businesses for further information.


⁽⁴⁾	Includes renewable energy certificates, emission allowances and various other intangible assets none of which is individually significant.

The following tables summarize, by category, other intangible assets acquired during the period indicated ($ in millions):



	December 31, 2015
	Amount		Subject to Amortization/Indefinite-Lived	Weighted Average Amortization Period (in years)	Amortization Method
Contracts	$	22	Subject to Amortization	5	Straight-line
Land-use rights	13		Subject to Amortization	N/A	N/A
Other	5		Various	N/A	N/A
Total	$	40



	December 31, 2014
	Amount		Subject to Amortization/ Indefinite-Lived	Weighted Average Amortization Period (in years)	Amortization Method
Renewable energy certificates	$	3	Indefinite	N/A	N/A
Land-use rights	16		Subject to Amortization	N/A	N/A
Total	$	19

The following table summarizes the estimated amortization expense by intangible asset category for 2016 through 2020:



(in millions)	2016		2017		2018		2019		2020
Sales concessions	7		7		7		7		7
All other	4		4		4		3		3
Total	$	11	$	11	$	11	$	10	$	10

Intangible asset amortization expense was $25 million, $26 million and $29 million for the years ended December 31, 2015, 2014 and 2013, respectively.

- 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.

+ References + Details