Intangible Assets

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

Goodwill by segment and changes in the carrying amount are as follows:


	Real Estate Franchise Services		Company Owned Brokerage Services		Relocation Services		Title and Settlement Services		Total Company
Balance at December 31, 2018	$	2,292	$	906	$	360	$	154	$	3,712
Goodwill acquired	—		—		—		—		—
Impairment loss	—		(180)		—		—		(180)
Balance at September 30, 2019	$	2,292	$	726	$	360	$	154	$	3,532

Accumulated impairment losses (a)	$	1,023	$	338	$	281	$	324	$	1,966

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(a)Includes impairment charges which reduced goodwill by $180 million, $1,279 million and $507 million during the third quarter of 2019, fourth quarter of 2008 and fourth quarter of 2007, respectively.

Goodwill and indefinite-lived intangibles are not amortized, but are subject to impairment testing. The testing compares carrying values to fair values and, when appropriate, the carrying value is reduced to fair value.

During the third quarter of 2019, the Company determined that the decrease in the stock price of the Company and the impact on future earnings related to the discontinuation of the USAA program qualified as triggering events for all of its reporting segments and accordingly the Company performed an impairment analysis of goodwill and indefinite-lived intangible assets as of September 1, 2019.

As a result of the interim impairment test, the Company recognized a goodwill impairment charge totaling $180 million related to the Company Owned Real Estate Brokerage Services segment. The results of the Company's interim impairment test indicated no other impairment charges were required for the other reporting segments or indefinite-lived intangibles. Management evaluated the effect of lowering the estimated fair value for each of the passing reporting units by 10% and determined no impairment of goodwill or other indefinite-lived intangible assets would have been recognized under this evaluation.

The Company estimated the fair value of each reporting unit using the income approach, utilizing long-term cash flow forecasts adjusted for terminal value assumptions. We determine the fair value of our reporting segments utilizing our best estimate of future revenues, operating expenses including commission expense, cash flows, market and general economic conditions, trends in the industry, as well as assumptions that we believe marketplace participants would utilize including discount rates, cost of capital, trademark royalty rates, and long-term growth rates. The trademark royalty rate was determined by reviewing similar trademark agreements with third parties. Although we believe our assumptions are reasonable, actual results may vary significantly. These impairment tests involve the use of accounting estimates and assumptions, changes in which could materially impact our financial condition or operating performance if actual results differ from such estimates and assumptions. To address this uncertainty, we perform a sensitivity analysis on key estimates and assumptions.

Intangible assets are as follows:


	As of September 30, 2019										As of December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable—Franchise agreements (a)	$	2,019	$	843	$	1,176	$	2,019	$	792	$	1,227
Indefinite life—Trademarks (b)	$	749			$	749	$	749			$	749
Other Intangibles
Amortizable—License agreements (c)	$	45	$	12	$	33	$	45	$	11	$	34
Amortizable—Customer relationships (d)	549		376		173		549		359		190
Indefinite life—Title plant shares (e)	19				19		18				18
Amortizable—Other (f)	30		23		7		33		21		12
Total Other Intangibles	$	643	$	411	$	232	$	645	$	391	$	254

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(a)Generally amortized over a period of 30 years.

(b)Primarily related to real estate franchise brands and Cartus tradenames, which are expected to generate future cash flows for an indefinite period of time.

(c)Relates to the Sotheby’s International Realty^® and Better Homes and Gardens^® Real Estate agreements which are being amortized over 50 years (the contractual term of the license agreements).

(d)Relates to the customer relationships at the Relocation Services segment, the Title and Settlement Services segment and our Company Owned Real Estate Brokerage Services segment. These relationships are being amortized over a period of 2 to 20 years.

(e)Ownership in a title plant is required to transact title insurance in certain states. The Company expects to generate future cash flows for an indefinite period of time.

(f)Consists of covenants not to compete which are amortized over their contract lives and other intangibles which are generally amortized over periods ranging from 5 to 10 years.

Intangible asset amortization expense is as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Franchise agreements	$	17	$	17	$	51	$	51
License agreements	1		1		1		1
Customer relationships	5		5		17		17
Other	2		1		4		4
Total	$	25	$	24	$	73	$	73

Based on the Company’s amortizable intangible assets as of September 30, 2019, the Company expects related amortization expense for the remainder of 2019, the four succeeding years and thereafter to be approximately $24 million, $95 million, $93 million, $92 million, $91 million and $994 million, respectively.