CenterPoint Energy 2008 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2008 CenterPoint Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

68
(d) Long-lived Assets and Intangibles
The Company records property, plant and equipment at historical cost. The Company expenses repair and
maintenance costs as incurred. Property, plant and equipment include the following:
Weighted Average
December 31,
Useful Lives
(Years)
2007
2008
(In millions)
Electric Transmission & Distribution................................................................
27
$ 6,993
$ 7,256
Natural Gas Distribution ................................................................................................
32
3,065
3,266
Competitive Natural Gas Sales and Services ................................................................
23
59
67
Interstate Pipelines ................................................................................................
56
2,194
2,334
Field Services ................................................................................................
51
493
601
Other property ................................................................................................
26
446
482
Total ................................................................................................
13,250
14,006
Accumulated depreciation and amortization:
Electric Transmission & Distribution ................................................................
2,602
2,652
Natural Gas Distribution ................................................................................................
590
708
Competitive Natural Gas Sales and Services ................................................................
9
11
Interstate Pipelines ................................................................................................
160
182
Field Services ................................................................................................
29
28
Other property ................................................................................................
120
129
Total accumulated depreciation and amortization ................................
3,510
3,710
Property, plant and equipment, net ................................................................
$ 9,740
$ 10,296
Goodwill by reportable business segment as of December 31, 2007 and 2008 is as follows (in millions):
Natural Gas Distribution .......................................................
$ 746
Interstate Pipelines ................................................................
579
Competitive Natural Gas Sales and Services ........................
335
Field Services ........................................................................
25
Other Operations ...................................................................
11
Total .....................................................................................
$ 1,696
The Company performs its goodwill impairment tests at least annually and evaluates goodwill when events or
changes in circumstances indicate that the carrying value of these assets may not be recoverable. The impairment
evaluation for goodwill is performed by using a two-step process. In the first step, the fair value of each reporting
unit is compared with the carrying amount of the reporting unit, including goodwill. The estimated fair value of the
reporting unit is generally determined on the basis of discounted future cash flows. If the estimated fair value of the
reporting unit is less than the carrying amount of the reporting unit, then a second step must be completed in order to
determine the amount of the goodwill impairment that should be recorded. In the second step, the implied fair value
of the reporting unit’s goodwill is determined by allocating the reporting unit’s fair value to all of its assets and
liabilities other than goodwill (including any unrecognized intangible assets) in a manner similar to a purchase price
allocation. The resulting implied fair value of the goodwill that results from the application of this second step is
then compared to the carrying amount of the goodwill and an impairment charge is recorded for the difference.
The Company performed the test at July 1, 2008, the Company’s annual impairment testing date, and determined
that no impairment charge for goodwill was required.
The Company periodically evaluates long-lived assets, including property, plant and equipment, and specifically
identifiable intangibles, when events or changes in circumstances indicate that the carrying value of these assets may
not be recoverable. The determination of whether an impairment has occurred is based on an estimate of
undiscounted cash flows attributable to the assets, as compared to the carrying value of the assets.
At December 31, 2007 and 2008, the Company’s asset retirement obligations were $81 million and $63 million,
respectively. The decrease in asset retirement obligations in 2008 of $18 million is primarily attributable to the
increase in the credit-adjusted risk-free rate used to value the asset retirement obligations as of the end of the period.