INTANGIBLE ASSETS AND GOODWILL

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

The Company's intangible assets at September 30, 2017 and December 31, 2016 consisted of the following (in thousands):



	September 30, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period	Weighted Average Useful Life
Supply and distribution agreements	$	1,050,965	$	(335,538	)	$	715,427	$	809,287	$	(270,813	)	$	538,474	3 - 20 years	16 years

Technology	136,667		(98,008		)	38,659		112,141		(80,549		)	31,592		1 - 5 years	5 years

Patents	1,623		(1,623		)	—		1,623		(1,598		)	25		15 years	15 years

Internet domain names	41,620		(27,616		)	14,004		39,495		(25,089		)	14,406		2 - 20 years	8 years

Trade names	1,777,146		(327,403		)	1,449,743		1,667,221		(261,412		)	1,405,809		4-20 years	19 years

Non-compete agreements	21,900		(21,581		)	319		21,900		(18,321		)	3,579		3-4 years	3 years
Total intangible assets	$	3,029,921	$	(811,769	)	$	2,218,152	$	2,651,667	$	(657,782	)	$	1,993,885

Intangible assets are amortized on a straight-line basis. Intangible asset amortization expense was approximately $45.3 million and $129.5 million for the three and nine months ended September 30, 2017, respectively, and $42.0 million and $127.4 million for the three and nine months ended September 30, 2016, respectively.

The amortization expense for intangible assets for the remainder of 2017, the annual expense for the next five years, and the expense thereafter is expected to be as follows (in thousands):



Remainder of 2017	$	46,160
2018	171,825
2019	160,335
2020	152,397
2021	146,295
2022	143,507
Thereafter	1,397,633
	$	2,218,152

The change in goodwill for the nine months ended September 30, 2017 consisted of the following (in thousands):



Balance at December 31, 2016	$	2,396,906
Acquisitions	292,705
Foreign currency translation adjustments	38,286
Balance at September 30, 2017	$	2,727,897

Annual Goodwill Impairment Test

A substantial portion of the Company's intangibles and goodwill relates to the acquisition of OpenTable in July 2014 and KAYAK in May 2013. As of September 30, 2017, the Company performed its annual quantitative goodwill impairment test. Other than OpenTable, the fair values of the Company’s reporting units substantially exceeded their respective carrying values.

OpenTable

The Company estimated OpenTable’s fair value using a combination of standard valuation techniques, including an income approach (discounted cash flows) and market approaches (EBITDA multiples of comparable publicly-traded companies and precedent transactions). At September 30, 2017, OpenTable's fair value was approximately 18% higher than its fair value at September 30, 2016, which reflects performance that exceeded forecast.

Despite this increase in fair value, OpenTable's carrying value was approximately 6% higher than its fair value at September 30, 2017, thus failing Step 1 of the goodwill impairment test. Therefore, the Company engaged a third-party valuation firm to develop a hypothetical purchase price allocation (Step 2). The results of Step 2 indicate there is no goodwill impairment at September 30, 2017 because the implied fair value of OpenTable's goodwill exceeded its carrying value by approximately 24%. In addition, the Company tested the recoverability of OpenTable’s other long-lived assets and concluded there was no impairment as of September 30, 2017.

During the three months ended September 30, 2016, the Company recognized a non-cash impairment charge for goodwill of $940.7 million, which was not tax deductible.

Acquisitions

On July 24, 2017, the Company completed the previously announced acquisition of the Momondo Group, which operates the travel meta-search websites momondo and Cheapflights, for $555.5 million, and will be managed as part of the Company's KAYAK business. The acquisition was funded using the Company's international cash.

The preliminary purchase price allocation in the third quarter of 2017 resulted in recognition of definite-lived intangible assets of $333.8 million, which consisted of distribution agreements of $214.0 million with a weighted-average useful life of 15 years, trade names of $104.4 million with a weighted-average useful life of 13 years and technology of $15.4 million with a weighted-average life of 4 years, and goodwill of $287.2 million.

The Company's Unaudited Consolidated Financial Statements include the accounts of the Momondo Group beginning July 24, 2017. Revenues and earnings of this business since the acquisition date and pro forma results of operations have not been presented separately as such financial information is not material to the Company's results of operations.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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