ComEd 2006 Annual Report Download - page 231

Exelon Corporation and Subsidiary Companies
Exelon Generation Company, LLC and Subsidiary Companies
Commonwealth Edison Company and Subsidiary Companies
PECO Energy Company and Subsidiary Companies
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
value of ComEd to its carrying value, including goodwill, indicated an impairment of goodwill existed.
The second step of the analysis indicated ComEd’s goodwill was impaired by $1.2 billion. This
impairment was primarily driven by the fair value of ComEd’s below market PPA with Generation, the
end of ComEd’s regulatory transition period at December 31, 2006 and the elimination of related
transition revenues, developments in the regulatory and political environment as of November 1, 2005,
anticipated increases in capital expenditures in future years and decreases in market valuations of
comparable companies that are used to estimate the fair value of ComEd.
Other Intangible Assets (Exelon)
Exelon’s other intangible assets, included in deferred debits and other assets, consisted of the
following as of December 31, 2005:
Gross
Accumulated
Amortization Net
Synthetic fuel investments (a) ...................................... $264 $(121) $143
Intangible pension asset (b) ........................................ 34 — 34
Total intangible assets ........................................... $298 $(121) $177
(a) See Note 12—Income Taxes for a description of Exelon’s right to acquire tax credits through investments in synthetic fuel-
producing facilities. In the second quarter of 2006, Exelon recorded an impairment charge of $115 million (before income
taxes) associated with the full write-off of the intangible asset related to its investment in synthetic fuel-producing facilities.
(b) See Note 14—Retirement Benefits for a description of the impact to Exelon’s Consolidated Balance Sheet as a result of
adopting SFAS No. 158, including the elimination of the intangible pension asset in 2006.
For the year ended December 31, 2006, Exelon’s amortization expense related to intangible
assets was $28 million. For the year ended December 31, 2005, the intangible pension asset
decreased by $137 million as a result of an annual actuarial valuation associated with Exelon’s pension
plans. For the year ended December 31, 2005, Exelon’s amortization expense related to intangible
assets was $68 million, of which $4 million has been reflected as a reduction in revenues related to the
energy purchase agreement and the tolling agreement. For the year ended December 31, 2004,
Exelon’s amortization expense related to intangible assets was $90 million, of which $32 million has
been reflected as a reduction in revenues related to the energy purchase agreement and the tolling
agreement.
Generation sold Sithe on January 31, 2005, which resulted in the elimination of the intangible
assets related to Sithe’s energy purchase agreement and tolling agreement from Exelon’s
Consolidated Balance Sheets. See Note 2—Acquisitions and Dispositions for further information
regarding this sale.
226