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Goodwill and Other Intangible Assets (Notes)
 12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets
The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. We determine the estimated fair values after review and consideration of relevant information including discounted cash flows, quoted market prices, and estimates made by management. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is recorded as goodwill.
We perform our annual goodwill impairment assessment as of October 1. We perform this assessment more frequently if impairment indicators exist. We performed our annual goodwill impairment test by comparing the fair value of each reporting unit with its carrying amount. We determine the estimated fair value of each reporting unit based on a combination of earnings before interest, taxes, depreciation, and amortization (“EBITDA”), valuation multiples, and estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the casino industry in general. We also evaluate the aggregate fair value of all of our reporting units and other non-operating assets in comparison to our aggregate debt and equity market capitalization at the test date. EBITDA multiples and discounted cash flows are common measures used to value businesses in our industry.
We perform our annual impairment assessment of other non-amortizing intangible assets as of October 1. We perform this assessment more frequently if impairment indicators exist. We determine the estimated fair value of our non-amortizing intangible assets by primarily using the “Relief from Royalty Method” and “Excess Earnings Method” under the income approach.
The evaluation of goodwill and other non-amortizing intangible assets requires the use of estimates about future operating results, valuation multiples, and discount rates to determine their estimated fair value. Changes in these assumptions can materially affect these estimates. Thus, to the extent gaming volumes deteriorate in the near future, discount rates increase significantly, or we do not meet our projected performance, we could have impairments to record in the future and such impairments could be material.
Caesars Rewards
On January 30, 2019, Caesars announced the rebranding of Total Rewards, the Company’s industry-leading loyalty program, to Caesars Rewards effective February 1, 2019. The new program leverages the premium Caesars brand to better connect Caesars’ elevated standard and prestige with the Company’s global destinations.
Changes in Carrying Value of Goodwill by Segment
(In millions)
Las Vegas
 
Other U.S.
 
All Other
 
CEC Total
Gross Goodwill
 
 
 
 
 
 
 
Balance as of January 1, 2017
$
4,410

 
$
650

 
$
—

 
$
5,060

OpCo acquisition (1)
1,794

 
352

 
61

 
2,207

Balance as of December 31, 2017
6,204

 
1,002

 
61

 
7,267

Accumulated Impairment
 
 
 
 
 
 
 
Balance as of January 1, 2017 and December 31, 2017
(3,115
)
 
(337
)
 
—

 
(3,452
)
Net carrying value, as of December 31, 2017 (2)
$
3,089

 
$
665

 
$
61

 
$
3,815

 
 
 
 
 
 
 
 
Gross Goodwill
 
 
 
 
 
 
 
Balance as of January 1, 2018
$
6,204

 
$
1,002

 
$
61

 
$
7,267

Centaur acquisition (1)
—

 
275

 
—

 
275

Other
—

 
—

 
(3
)
 
(3
)
Balance as of December 31, 2018
6,204

 
1,277

 
58

 
7,539

Accumulated Impairment
 
 
 
 
 
 
 
Balance as of January 1, 2018
(3,115
)
 
(337
)
 
—

 
(3,452
)
Impairment
—

 
(17
)
 
(26
)
 
(43
)
Balance as of December 31, 2018
(3,115
)
 
(354
)
 
(26
)
 
(3,495
)
Net carrying value, as of December 31, 2018 (2)
$
3,089

 
$
923

 
$
32

 
$
4,044

____________________
(1) 
See Note 4 for further details relating to the acquisitions of OpCo and Centaur.
(2) 
$405 million of goodwill is associated with a reporting unit with zero or negative carrying value. As the reporting unit has a positive fair value, there was no impairment associated with this reporting unit.
Changes in Carrying Value of Intangible Assets Other than Goodwill
 
Amortizing
 
Non-Amortizing
 
Total
(In millions)
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Balance as of January 1
$
355

 
$
285

 
$
1,254

 
$
148

 
$
1,609

 
$
433

Impairments (1)
—

 
—

 
(21
)
 
—

 
(21
)
 
—

Amortization expense
(68
)
 
(67
)
 
—

 
—

 
(68
)
 
(67
)
Deconsolidation of Horseshoe Baltimore (2)
—

 
—

 
—

 
(22
)
 
—

 
(22
)
OpCo acquisition (3)
—

 
137

 
—

 
1,124

 
—

 
1,261

Centaur acquisition (3)
55

 
—

 
1,390

 
—

 
1,445

 
—

Other additions (4)
—

 
—

 
20

 
—

 
20

 
—

Other
—

 
—

 
(8
)
 
4

 
(8
)
 
4

Balance as of December 31
$
342

 
$
355

 
$
2,635

 
$
1,254

 
$
2,977

 
$
1,609


____________________
(1) 
$12 million recognized in our Other U.S. segment and $9 million recognized in our All Other segment.
(2) 
See Note 2 or further details relating to the deconsolidation of Horseshoe Baltimore.
(3) 
See Note 4 for further details relating to the acquisitions of OpCo and Centaur.
(4) 
Other additions of $20 million are related to gaming rights.
During 2018, as a result of declines in our stock price and increases in market yields within our industry, which are both factors used to determine the discount rate, along with downward adjustments to expectations of future performance at certain of our properties outside of Las Vegas, we recognized impairment charges related to goodwill of $43 million and gaming rights of $21 million for certain of our properties.
Gross Carrying Value and Accumulated Amortization of Intangible Assets Other than Goodwill
 
December 31, 2018
 
December 31, 2017
(Dollars in millions)
Weighted
Average
Remaining
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Amortizing intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade names and trademarks
2.3
 
$
14

 
$
(3
)
 
$
11

 
$
—

 
$
—

 
$
—

Customer relationships
4.5
 
1,071

 
(756
)
 
315

 
1,030

 
(693
)
 
337

Contract rights
6.0
 
3

 
(2
)
 
1

 
3

 
(2
)
 
1

Gaming rights and other
5.5
 
43

 
(28
)
 
15

 
43

 
(26
)
 
17

 
 
 
$
1,131

 
$
(789
)
 
342

 
$
1,076

 
$
(721
)
 
355

Non-amortizing intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Trademarks
 
790

 
 
 
 
 
790

Gaming rights
 
1,592

 


 
 
 
211

Caesars Rewards
 
253

 
 
 
 
 
253

 
 
2,635

 
 
 


 
1,254

Total intangible assets other than goodwill
 
$
2,977

 
 
 
 
 
$
1,609


The aggregate amortization expense for intangible assets that continue to be amortized was $68 million, $67 million, and $65 million, respectively, for the years ended December 31, 2018, 2017, and 2016.
Estimated Five-Year Amortization
 
Years Ended December 31,
(In millions)
2019
 
2020
 
2021
 
2022
 
2023
Estimated annual amortization expense
$
71

 
$
71

 
$
60

 
$
17

 
$
15