Broker-Consultant Owned By Utility Holding Co. Records $25 Million Goodwill Impairment

Edison International recorded a goodwill impairment at broker-consultant and energy services provider Edison Energy Group of $25 million ($18 million after-tax) in the fourth quarter of 2019, the company said in reporting earnings

In a 10-K, Edison International said, "In October 2019 and 2018, Edison International qualitatively determined that it was more likely than not that the carrying value of the Edison Energy reporting unit exceeded the fair value, therefore, Edison International performed quantitative assessments. The fair value of the Edison Energy reporting unit was estimated using the income approach, which utilizes a discounted cash flow analysis based on the earnings expected to be generated in the future. This determination requires significant assumptions and estimates in forecasting future cash flows and establishing a market discount rate and a terminal value. The most critical assumption affecting the estimate of the Edison Energy reporting unit's fair value was a reduction in forecasted growth. During the fourth quarter of 2019 and 2018, Edison International recorded an impairment of its Edison Energy reporting unit goodwill totaling $25 million ($18 million after-tax) and $19 million ($13 million after-tax), respectively. At December 31, 2019 and 2018, Edison International has $34 million and $59 million of goodwill, all of which is related to its Edison Energy reporting unit. Goodwill constitutes the majority of Edison International's $57 million investment in Edison Energy."

"Edison International assesses goodwill at the reporting unit level. The fair value of the Edison Energy reporting unit is classified as Level 3 and is estimated using the income approach. During the fourth quarter of 2019 and 2018, Edison International evaluated the recoverability of goodwill and recorded impairment charges of Edison Energy's goodwill totaling $25 million ($18 million after-tax) and $19 million ($13 million after-tax), respectively," the company said

Edison Energy Group and subsidiaries reported a loss from continuing operations of $24 million for the year 2019, an improvement from the loss of $78 million in 2018