GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

The following table shows changes to our goodwill balances by segment during the six months ended June 30, 2014:



(Millions)	Natural Gas Utility			IES			Holding Company and Other		Total
Balance as of January 1, 2014
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
Rounding adjustment	(0.1		)	0.1			—		—
Goodwill impairment loss	—			(6.7		)	—		(6.7		)

Balance as of June 30, 2014
Gross goodwill	933.5			6.7			19.6		959.8
Accumulated impairment losses	(297.7		)	(6.7		)	—		(304.4		)
Net goodwill	$	635.8		$	—		$	19.6	$	655.4

In June 2014, we announced that we were in the late stages of a process to divest of IES's retail energy business. In anticipation of this divestiture, IES performed an interim goodwill impairment analysis. Based on the results of the interim goodwill impairment analysis, IES recorded a non-cash goodwill impairment loss of $6.7 million in the second quarter of 2014. This goodwill impairment loss reflected the offers received for IES's retail energy business. See Note 4, Dispositions, for more information on the pending sale of IES's retail energy business.

In the second quarter of 2014, annual impairment tests were completed at all of our reporting units that carried a goodwill balance as of April 1, 2014. No impairments resulted from our annual impairment tests. As discussed above, IES recorded a goodwill impairment loss as a result of an interim test in June 2014.

The identifiable intangible assets other than goodwill listed below are part of other current and long-term assets on the balance sheets.



	June 30, 2014							December 31, 2013
(Millions)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets
Contractual service agreements ⁽¹⁾	15.6		(3.0		)	12.6		15.6		(1.8		)	13.8
Customer-related ⁽²⁾	26.8		(16.5		)	10.3		26.8		(15.7		)	11.1
Renewable energy credits ⁽³⁾	7.2		—			7.2		8.4		—			8.4
Customer-owned equipment modifications ⁽⁴⁾	4.0		(1.0		)	3.0		4.0		(0.9		)	3.1
Patents/intellectual property⁽⁵⁾	3.4		(0.6		)	2.8		3.4		(0.5		)	2.9
Compressed natural gas fueling contract assets ⁽⁶⁾	5.6		(3.1		)	2.5		5.6		(2.7		)	2.9
Nonregulated easements⁽⁷⁾	3.7		(1.3		)	2.4		3.7		(1.1		)	2.6
Natural gas and electric contract assets ⁽⁸⁾	3.9		(2.0		)	1.9		3.9		(0.5		)	3.4
Other	0.5		(0.3		)	0.2		0.5		(0.3		)	0.2
Total	$	70.7	$	(27.8	)	$	42.9	$	71.9	$	(23.5	)	$	48.4

Unamortized intangible assets
MGU trade name	$	5.2	$	—		$	5.2	$	5.2	$	—		$	5.2
Trillium trade name ⁽⁹⁾	3.5		—			3.5		3.5		—			3.5
Pinnacle trade name ⁽⁹⁾	1.5		—			1.5		1.5		—			1.5
Total intangible assets	$	80.9	$	(27.8	)	$	53.1	$	82.1	$	(23.5	)	$	58.6


⁽¹⁾	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 June 30, 2014, was approximately six years.


⁽²⁾	Represents customer relationship assets associated with PELLC’s former nonregulated retail natural gas and electric operations, ITF's compressed natural gas fueling operations, and IES's retail natural gas operations. The remaining weighted-average amortization period for customer-related intangible assets at June 30, 2014, was approximately 11 years.


⁽³⁾	Used at IES to comply with state Renewable Portfolio Standards and to support customer commitments.


⁽⁴⁾	Relates to modifications made by IES and ITF to customer-owned equipment. These intangible assets are amortized on a straight-line basis, with a remaining weighted-average amortization period at June 30, 2014, of approximately ten years.


⁽⁵⁾	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. The remaining amortization period at June 30, 2014, was approximately eight years.


⁽⁶⁾	Represents the fair value of ITF contracts acquired in September 2011. The remaining amortization period at June 30, 2014, was approximately seven years.


⁽⁷⁾	Relates to easements supporting a pipeline at IES. The easements are amortized on a straight-line basis, with a remaining amortization period at June 30, 2014, of approximately ten years.


⁽⁸⁾	Represents the fair value of certain natural gas and electric customer contracts acquired by IES during 2013 that were not considered to be derivative instruments. The remaining amortization period for these intangible assets at June 30, 2014, was approximately three years.


⁽⁹⁾	Trillium USA (Trillium) and Pinnacle CNG Systems (Pinnacle) are wholly-owned subsidiaries of ITF.

The table below shows our amortization expense recognized in the statements of income:



	Three Months Ended June 30				Six Months Ended June 30
(Millions)	2014		2013		2014		2013
Amortization recorded in nonregulated cost of sales	$	1.1	$	0.5	$	2.1	$	0.9
Amortization recorded in depreciation and amortization expense	1.1		1.2		2.2		1.7

An insignificant amount of amortization expense was recorded in discontinued operations for the six months ended June 30, 2013.

The following table shows our estimated amortization expense for the next five years, including amounts recorded through June 30, 2014:



	For the Year Ending December 31
(Millions)	2014		2015		2016		2017		2018
Amortization to be recorded in nonregulated cost of sales	$	3.4	$	2.0	$	1.1	$	0.9	$	0.8
Amortization to be recorded in depreciation and amortization expense	4.3		4.2		4.0		3.9		3.8

- 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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