DUK » Topics » 10. Goodwill

This excerpt taken from the DUK 8-K filed Dec 8, 2006.

10. Goodwill

Duke Energy evaluates the impairment of goodwill under the guidance of SFAS No. 142. As a result of the annual impairment tests required by SFAS No. 142, no charge for the impairment of goodwill was recorded in 2005 or 2004.

In 2003, Duke Energy recorded a goodwill impairment charge of $254 million to write off all DENA goodwill, most of which related to DENA’s trading and marketing business. This impairment charge reflected the reduction in scope and scale of DETM’s business and the continued deterioration of market conditions affecting DENA during 2003. Duke Energy used a discounted cash flow analysis to determine fair value. Key assumptions in the analysis included the use of an appropriate discount rate, estimated future cash flows and an estimated run rate of general and administrative costs. In estimating cash flows, Duke Energy incorporated current market information, historical factors and fundamental analysis, and other factors into its forecasted commodity prices. This charge is recorded in the Consolidated Statements of Operations as Impairment of Goodwill.

 

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PART II

DUKE ENERGY CORPORATION

Notes To Consolidated Financial Statements—(Continued)

For the Years Ended December 31, 2005, 2004 and 2003

 

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