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GOODWILL AND OTHER INTANGIBLE ASSETS
 3 Months Ended
Mar. 31, 2012
GOODWILL AND OTHER INTANGIBLE ASSETS  
GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 7—GOODWILL AND OTHER INTANGIBLE ASSETS

 

We had no material changes to the carrying amount of goodwill during the three months ended March 31, 2012, and 2011.

 

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

 

(Millions)

 

March 31, 2012

 

December 31, 2011

 

 

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

Amortized intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer-related (1)

 

$

34.5

 

$

(25.4

)

$

9.1

 

$

34.5

 

$

(24.8

)

$

9.7

 

Electric contract assets (2)

 

—

 

—

 

—

 

7.8

 

(6.6

)

1.2

 

Patents (3)

 

7.2

 

(0.1

)

7.1

 

7.2

 

—

 

7.2

 

Compressed natural gas fueling contract assets (4)

 

5.6

 

(0.6

)

5.0

 

5.6

 

(0.3

)

5.3

 

Renewable energy credits (5)

 

3.3

 

—

 

3.3

 

2.8

 

—

 

2.8

 

Nonregulated easements (6) 

 

3.8

 

(0.7

)

3.1

 

3.8

 

(0.7

)

3.1

 

Customer-owned equipment modifications (7)

 

3.8

 

(0.3

)

3.5

 

3.6

 

(0.2

)

3.4

 

Emission allowances (8)

 

1.6

 

(0.1

)

1.5

 

1.7

 

(0.2

)

1.5

 

Other

 

0.8

 

(0.3

)

0.5

 

1.4

 

(0.3

)

1.1

 

Total

 

$

60.6

 

$

(27.5

)

$

33.1

 

$

68.4

 

$

(33.1

)

$

35.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortized intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

MGU trade name

 

$

5.2

 

—

 

$

5.2

 

$

5.2

 

—

 

$

5.2

 

Trillium trade name

 

3.5

 

—

 

3.5

 

3.5

 

—

 

3.5

 

Pinnacle trade name

 

1.5

 

—

 

1.5

 

1.5

 

—

 

1.5

 

Total intangible assets

 

$

70.8

 

$

(27.5

)

$

43.3

 

$

78.6

 

$

(33.1

)

$

45.5

 

 

(1)         Includes customer relationship assets associated with PELLC’s former nonregulated retail natural gas and electric operations, MERC’s nonutility ServiceChoice business, and Trillium USA (Trillium) and Pinnacle CNG Systems (Pinnacle) compressed natural gas fueling operations. The remaining weighted-average amortization period for customer-related intangible assets at March 31, 2012, was approximately 10 years.

 

(2)         Represents electric customer contracts acquired in exchange for risk management assets.

 

(3)         Includes the fair value of patents at Pinnacle related to a system for more efficiently compressing natural gas to allow for faster fueling. The remaining amortization period at March 31, 2012, was approximately 18 years.

 

(4)         Represents the fair value of Trillium and Pinnacle compressed natural gas customer fueling contracts acquired in September 2011. The remaining amortization period at March 31, 2012, was approximately 9 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 March 31, 2012, of approximately 12 years.

 

(7)   Relates to modifications to customer-owned equipment that allow the end-use customer of a pipeline to accept landfill gas. These intangible assets are amortized on a straight-line basis, with a remaining weighted-average amortization period at March 31, 2012, of approximately 12 years.

 

(8)   Emission allowances do not have a contractual term or expiration date. If the EPA’s Cross State Air Pollution Rule, which was stayed in December 2011, is reinstated, it will affect our ability to use certain existing emission allowances in the future. See Note 11, “Commitments and Contingencies,” for more information.

 

Amortization expense recorded as a component of nonregulated cost of sales in the statements of income for the three months ended March 31, 2012, and 2011, was $1.6 million and $0.3 million, respectively.

 

Amortization expense recorded as a component of depreciation and amortization expense in the statements of income for the three months ended March 31, 2012, and 2011, was $0.7 million and $0.8 million, respectively.

 

Amortization expense for the next five fiscal years is estimated to be:

 

 

 

For the year ending December 31

 

(Millions)

 

2012

 

2013

 

2014

 

2015

 

2016

 

Amortization recorded in nonregulated cost of sales

 

$

5.9

 

$

1.8

 

$

1.4

 

$

1.3

 

$

1.1

 

Amortization recorded in depreciation and amortization expense

 

2.5

 

2.0

 

1.7

 

1.7

 

1.5