Vectren 2010 Annual Report Download - page 78

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76
Excise & Utility Receipts Taxes
Excise taxes and a portion of utility receipts taxes are included in rates charged to customers. Accordingly, the Company
records these taxes received as a component of operating revenues, which totaled $33.8 million in 2010, $36.3 million in 2009,
and $45.0 million in 2008. Expense associated with excise and utility receipts taxes are recorded as a component of Taxes
other than income taxes.
Operating Segments
The Company’s chief operating decision maker is comprised of a group of executive management led by the Chief Executive
Officer. The Company uses net income calculated in accordance with generally accepted accounting principles as its most
relevant performance measure. The Company has three operating segments within its Utility Group, five operating segments in
its Nonutility Group, and a Corporate and Other segment.
Fair Value Measurements
Certain assets and liabilities are valued and/or disclosed at fair value. Financial assets include securities held in trust by the
Company’s pension plans. Nonfinancial assets and liabilities include the initial measurement of an asset retirement obligation
or the use of fair value in goodwill, intangible assets and long-lived assets impairment tests, FASB guidance provides the
framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy are described as follows:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or
liabilities in active markets that the Plan has the ability to access.
Level 2 Inputs to the valuation methodology include
quoted prices for similar assets or liabilities in active markets;
quoted prices for identical or similar assets or liabilities in inactive markets;
inputs other than quoted prices that are observable for the asset or liability;
inputs that are derived principally from or corroborated by observable market data by
correlation or other means
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable
for substantially the full term of the asset or liability.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value
measurement.
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that
is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and
minimize the use of unobservable inputs.