Vectren 2010 Annual Report Download - page 83

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81
The following is summarized financial information as to the assets, liabilities, and results of operations of Haddington. For the
year ended December 31, 2010, revenues, operating loss, and net income were (in millions) zero, $(0.3), and $(18.1),
respectively. For the year ended December 31, 2009, revenues, operating loss, and net income were (in millions) zero, $(0.4),
and $7.9, respectively. For the year ended December 31, 2008, revenues, operating loss, and net loss were (in millions) zero,
$(0.4), and $(0.3), respectively. As of December 31, 2010, investments, other assets, and liabilities were (in millions) $8.6,
zero, and zero, respectively. As of December 31, 2009, investments, other assets, and liabilities were (in millions) $26.4, zero,
and zero, respectively.
Leveraged Leases
The Company is a lessor in leveraged lease agreements under which real estate or equipment is leased to third parties. The
total equipment and facilities cost was approximately $45.2 million at December 31, 2010. The cost of the equipment and
facilities was partially financed by non-recourse debt provided by lenders who have been granted an assignment of rentals due
under the leases and a security interest in the leased property, which they accepted as their sole remedy in the event of default
by the lessee. Such debt amounted to approximately $44.5 million at December 31, 2010. At December 31, 2010, the
Company’s $17.9 million leveraged lease investment when netted against related deferred tax liabilities was $3.7 million.
Notes Receivable
At December 31, 2010 and 2009, notes receivable totaled $10.9 million and $16.7 million, respectively. These amounts are
inclusive of accrued interest and net of reserves totaling $6.1 million and 9.2 million, respectively. Of the $40.9 million in Other
nonutility investments identified above, notes receivable comprise approximately $8.8 million of the commercial real estate
investments, $0.2 million of the affordable housing projects, and $1.9 million of the other investments. As of December 31,
2010, the Company is recognizing interest on the cash basis for substantially the entire note portfolio. Such interest income has
been insignificant during the past three years. Second mortgages serve as collateral for notes associated with the commercial
real estate investments.
Commercial Real Estate Charge
The recent recession impacted the value of commercial real estate investments within this portfolio. During 2008, the Company
assessed its commercial real estate investments for impairment and identified the need to reduce their carrying values. The
impairment charge totaled $10.0 million. Of the $10.0 million charge, $5.2 million is included in Other-net and $4.8 million is
included in Other operating expenses. The impairment impacted the carrying values of primarily notes receivable collateralized
by commercial real estate and an office building. The Company took possession of the office building when a leveraged lease
expired in 2008; the building is currently for sale.
Variable Interest Entities
Some of these legacy nonutility investments are partnership-like structures involved in activities surrounding multifamily housing
and office properties and are variable interest entities. The Company is either a limited partner or a subordinated lender and
does not consolidate any of these entities. The Company’s exposure to loss is limited to its investment which as of December
31, 2010, and 2009, totaled $7.0 million and $7.7 million, respectively, recorded in Investments in unconsolidated affiliates, and
$9.0 million and $10.1 million, respectively, recorded in Other nonutility investments.
7. Intangible Assets
Intangible assets, which are included in Other assets, consist of the following:
(In millions) At December 31,
2010 2009
Amortizing Non-amortizing Amortizing Non-amortizing
Customer-related assets 7.4$ -$ 8.0$ -$
Market-related assets - 7.0 - 7.0
Intangible assets, net 7.4$ 7.0$ 8.0$ 7.0$
As of December 31, 2010, the weighted average remaining life for amortizing customer-related assets and all amortizing
intangibles is 23 years. These amortizing intangible assets have no significant residual values. Intangible assets are presented
net of accumulated amortization totaling $3.4 million for customer-related assets and $0.3 million for market-related assets at
December 31, 2010 and $2.8 million for customer-related assets and $0.2 million for market-related assets at December 31,