Liberty TripAdvisor Holdings, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

(6) Goodwill and Other Intangible Assets

Goodwill and Indefinite Lived Intangible Assets

Changes in the carrying amount of goodwill are as follows (amounts in millions):


			Corporate
	TripAdvisor		and Other	Total
Balance at January 1, 2016	$	3,689	—	3,689
Acquisition (1)		17	—	17
Other (3)		(12)	—	(12)
Balance at December 31, 2016		3,694	—	3,694
Impairment (2)		(1,271)	—	(1,271)
Other (3)		22	—	22
Balance at December 31, 2017	$	2,445	—	2,445

(1)

Additions to goodwill relate to TripAdvisor’s acquisitions. See “Note 4 – TripAdvisor Acquisitions and Dispositions,” for further information.

(2)

See discussion of impairment below.

(3)

Other changes are primarily due to foreign currency translation on goodwill.

As presented in the accompanying consolidated balance sheets, trademarks are the other significant indefinite lived intangible asset. See the disclosure below for information related to the current period impairment of the Company’s trademarks. Other fluctuations in the trademark balance from the prior year were due to the change in foreign exchange rates.

Intangible Assets subject to amortization

Intangible assets subject to amortization are comprised of the following:


	December 31, 2017					December 31, 2016
	Weighted
	Average	Gross			Net	Gross		Net
	Remaining	carrying		Accumulated	carrying	carrying	Accumulated	carrying
	Useful Life	amount		amortization	amount	amount	amortization	amount
	in years	amounts in millions
Customer relationships	4		908	(735)	173	866	(615)	251
Other	3		542	(333)	209	480	(244)	236
Total			1,450	(1,068)	382	1,346	(859)	487

Intangible assets are being amortized on an accelerated basis as reflected in amortization expense and in the future amortization table below.

Amortization expense was $188 million, $198 million and $245 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The estimated future amortization expense for the next five years related to intangible assets with definite lives as of December 31, 2017, assuming no subsequent impairment of the underlying assets, is as follows (amounts in millions):


2018	$	95
2019	$	92
2020	$	86
2021	$	70
2022	$	27

Impairments

Due to certain marketplace factors impacting TripAdvisor’s operating results, which led to a decline in TripAdvisor’s stock price, impairment losses of $527 million and $1,271 million were recorded during the year ended December 31, 2017 related to trademarks and goodwill, respectively, related to the hotel reporting unit. The fair value of the trademarks was determined using the relief from royalty method. The fair values of the reporting units were determined using a combination of market multiples (market approach) and discounted cash flow (income approach) calculations (Level 3). As of December 31, 2017, accumulated goodwill impairment losses for TripAdvisor totaled $1,271 million.

During the year ended December 31, 2015, we recorded an impairment related to BuySeasons, presented in the statements of operations, which is included in the Corporate and other segment. The impairment is primarily related to trademarks. Continued declining operating results as compared to budgeted results and certain trends required a quantitative impairment test and a determination of fair value for BuySeasons. This fair value, including the related intangibles and goodwill, was determined using projections of future operating performance and applying a combination of market multiples (market approach) and discounted cash flow (income approach) calculations (Level 3).

- 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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