Goodwill and Other Intangibles (CenterPoint Energy and CERC)

CenterPoint Energy’s and CERC’s goodwill by reportable segment as of both December 31, 2018 and 2017 is as follows:



	(in millions)
Natural Gas Distribution	$	746
Energy Services (1)	110
Other Operations	11
Total	$	867


(1)	Amount presented is net of the accumulated goodwill impairment charge of $252 million recorded in 2012.

CenterPoint Energy and CERC perform goodwill impairment tests at least annually and evaluate goodwill when events or changes in circumstances indicate that its carrying value may not be recoverable. The impairment evaluation for goodwill is performed by comparing the fair value of each reporting unit with the carrying amount of the reporting unit, including goodwill. The estimated fair value of the reporting unit is primarily determined on the basis of discounted cash flows. If the carrying amount is in excess of the estimated fair value of the reporting unit, then the excess amount is the impairment charge that should be recorded, not to exceed the carrying amount of goodwill. See Note 2(e) for further discussion.

CenterPoint Energy and CERC performed the annual goodwill impairment test in the third quarter of each of 2018 and 2017 and determined that no goodwill impairment charge was required for any reporting unit, which approximate the Registrants’ applicable reportable segments.

The tables below present information on CenterPoint Energy’s and CERC’s finite lived intangible assets recorded in Other non-current assets on the Consolidated Balance Sheets. Finite lived intangible assets are amortized over their estimated useful lives.



	December 31, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Balance		Gross Carrying Amount		Accumulated Amortization			Net Balance
	(in millions)
Customer relationships	$	86	$	(27	)	$	59	$	86	$	(21	)	$	65
Covenants not to compete	4		(3		)	1		4		(2		)	2
Other	16		(11		)	5		15		(8		)	7
Total	$	106	$	(41	)	$	65	$	105	$	(31	)	$	74



	Year Ended December 31,
	2018		2017		2016
	(in millions)
Amortization expense of intangible assets (1)	$	10	$	13	$	4


(1)	Recorded in Depreciation and amortization expenses on CenterPoint Energy’s and CERC’s respective Statements of Consolidated Income.

CenterPoint Energy and CERC estimate that amortization expense of intangible assets with finite lives for the next five years will be as follows:



	Amortization Expense
	(in millions)
2019	$	11
2020	6
2021	6
2022	6
2023	5