GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

The following table shows changes to our goodwill balances by segment during the nine months ended September 30, 2013:



(Millions)	Natural Gas Utility			Integrys Energy Services		Holding Company and Other		Total
Balance as of January 1, 2013
Gross goodwill	$	933.5		$	6.6	$	15.8	$	955.9
Accumulated impairment losses	(297.6		)	—		—		(297.6		)
Net goodwill	635.9			6.6		15.8		658.3
Adjustment to ITF patents/intellectual property *	—			—		3.8		3.8

Balance as of September 30, 2013
Gross goodwill	933.5			6.6		19.6		959.7
Accumulated impairment losses	(297.6		)	—		—		(297.6		)
Net goodwill	$	635.9		$	6.6	$	19.6	$	662.1


*	An immaterial adjustment was made to the gross goodwill balance at ITF in the second quarter of 2013 due to a correction to the life of certain intangible assets.

In the second quarter of 2013, annual impairment tests were completed at all of our reporting units that carried a goodwill balance. No impairments resulted from these tests.

The identifiable intangible assets other than goodwill listed below are part of other current and long-term assets on the balance sheets. An insignificant amount was recorded as assets held for sale on the balance sheets.



	September 30, 2013							December 31, 2012
(Millions)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets
Customer-related ⁽¹⁾	$	26.8	$	(15.3	)	$	11.5	$	22.4	$	(14.7	)	$	7.7
Contractual service agreements ⁽²⁾	15.6		(1.2		)	14.4		—		—			—
Patents/intellectual property⁽³⁾	3.4		(0.4		)	3.0		7.2		(0.3		)	6.9
Compressed natural gas fueling contract assets ⁽⁴⁾	5.6		(2.3		)	3.3		5.6		(1.3		)	4.3
Renewable energy credits ⁽⁵⁾	5.1		—			5.1		3.1		—			3.1
Nonregulated easements⁽⁶⁾	3.7		(1.1		)	2.6		3.8		(0.9		)	2.9
Customer-owned equipment modifications ⁽⁷⁾	4.0		(0.8		)	3.2		4.0		(0.5		)	3.5
Other	2.6		(0.8		)	1.8		0.5		(0.2		)	0.3
Total	$	66.8	$	(21.9	)	$	44.9	$	46.6	$	(17.9	)	$	28.7

Unamortized intangible assets
MGU trade name	$	5.2	$	—		$	5.2	$	5.2	$	—		$	5.2
Trillium trade name ⁽⁸⁾	3.5		—			3.5		3.5		—			3.5
Pinnacle trade name ⁽⁸⁾	1.5		—			1.5		1.5		—			1.5
Total intangible assets	$	77.0	$	(21.9	)	$	55.1	$	56.8	$	(17.9	)	$	38.9

⁽¹⁾

Represents customer relationship assets associated with PELLC’s former nonregulated retail natural gas and electric operations, ITF's compressed natural gas fueling operations, and Compass Energy Services. See Note 4, "Acquisitions," for more information regarding Integrys Energy Services' acquisition of Compass Energy Services. The remaining weighted-average amortization period for customer-related intangible assets at September 30, 2013, was approximately 11 years.


⁽²⁾	Represents contractual service agreements related to maintenance on the combustion turbine generators at the Fox Energy Center. The remaining amortization period for these intangible assets at September 30, 2013, was approximately seven years.

⁽³⁾

Represents the fair value of patents/intellectual property at ITF related to a system for more efficiently compressing natural gas to allow for faster fueling. An immaterial adjustment was made to the intangible assets balance in the second quarter of 2013 as a result of a correction to the life of the intangible assets. The remaining amortization period at September 30, 2013, was approximately nine years.


⁽⁴⁾	Represents the fair value of ITF contracts acquired in September 2011. The remaining amortization period at September 30, 2013, was approximately seven years.


⁽⁵⁾	Used at Integrys Energy Services to comply with state Renewable Portfolio Standards and to support customer commitments.


⁽⁶⁾	Relates to easements supporting a pipeline at Integrys Energy Services. The easements are amortized on a straight-line basis, with a remaining amortization period at September 30, 2013, of approximately 11 years.


⁽⁷⁾	Relates to modifications made by Integrys Energy Services and ITF to customer-owned equipment. These intangible assets are amortized on a straight-line basis, with a remaining weighted-average amortization period at September 30, 2013, of approximately 11 years.


⁽⁸⁾	Trillium USA (Trillium) and Pinnacle CNG Systems (Pinnacle) are wholly-owned subsidiaries of ITF.

Amortization expense recorded as a component of nonregulated cost of sales in the statements of income for the three months ended September 30, 2013, and 2012, was $0.6 million and $0.3 million, respectively. Amortization expense for the nine months ended September 30, 2013, and 2012, was $1.5 million and $2.2 million, respectively.

Amortization expense recorded as a component of depreciation and amortization expense in the statements of income for the three months ended September 30, 2013, and 2012, was $1.3 million and $0.5 million, respectively. Amortization expense for the nine months ended September 30, 2013, and 2012, was $3.0 million and $2.0 million, respectively.

An insignificant amount of amortization expense was recorded in discontinued operations for the three and nine months ended September 30, 2013, and 2012.

The following table shows our estimated amortization expense for the next five years, including amounts recorded through September 30, 2013:



	For the Year Ending December 31
(Millions)	2013		2014		2015		2016		2017
Amortization to be recorded in nonregulated cost of sales	$	7.2	$	2.2	$	1.4	$	0.9	$	0.9
Amortization to be recorded in depreciation and amortization expense	4.2		4.3		4.2		4.0		3.9

- 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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