NOTE 3: ACQUISITIONS

We acquired a number of businesses during the years ended December 31, 2014, 2013 and 2012. These business combinations were accounted for as purchases of businesses under the acquisition method. The fair value of purchase consideration has been allocated to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values on the acquisition date, with the remaining unallocated amount recorded as goodwill. Acquired goodwill represents the premium we paid over the fair value of the net tangible and intangible assets acquired. We paid a premium in these transactions for a number of reasons, but, primarily it was attributable to expected operational synergies, the assembled workforces, and the future development initiatives of the assembled workforces. The results of each of these acquired businesses have been included in the consolidated financial statements beginning on the respective acquisition dates. Pro-forma results of operations for all of these acquisitions have not been presented as the financial impact to our consolidated financial statements, both individually and in aggregate, are not material. For the years ended December 31, 2014 and 2013, acquisition-related costs were expensed as incurred and were $4 million and $2 million, respectively, and are included in general and administrative expenses on our consolidated statements of operations. Acquisition-related expenses were not material for the year ended December 31, 2012.

2014 Acquisitions

In August 2014, we completed our acquisition of Viator, Inc. (“Viator”). Viator, which is headquartered in San Francisco and has offices in Las Vegas, London, and Sydney, is a leading resource for researching and booking destination activities around the world. Our total purchase price was $192 million, for all the outstanding shares of capital stock of Viator, consisting of approximately $187 million in cash consideration (or $132 million, net of cash acquired from Viator of $55 million) and the value of certain Viator stock options that were assumed. We issued 100,595 TripAdvisor stock options related to the assumed Viator stock options. The fair value of the earned portion of assumed stock options was $5 million and is included in the purchase price, with the remaining fair value of $3 million resulting in post-acquisition compensation expense that will generally be recognized ratably over three years from the date of acquisition. The total cash consideration was paid from one of our U.S. based subsidiaries.

During the year ended December 31, 2014, we completed six other acquisitions for a total purchase price consideration of $208 million, for which the Company paid total cash consideration of $199 million, which is net of cash acquired of $7 million and approximately $2 million in holdbacks for general representations and warranties of the respective sellers. The cash consideration was paid primarily from our international subsidiaries. We acquired 100% of the outstanding shares of capital stock for the following companies; Vacation Home Rentals, a U.S.-based vacation rental website featuring more than 14,000 properties around the world purchased in May 2014; London-based Tripbod, a travel community that helps connect travelers to local experts purchased in May 2014; Lafourchette, a provider of an online and mobile reservations platform for restaurants in Europe purchased in May 2014; MyTable and Restopolis, both providers of an online and mobile reservations platform for restaurants in Italy purchased in October 2014; and Iens, a provider of an online and mobile reservations platform for restaurants in the Netherlands purchased in December 2014. The purchase price consideration is subject to an adjustment based on the finalization of working capital adjustments for Restopolis and Iens, as of December 31, 2014. During 2014, all 2014 acquisitions accounted for approximately 3% of consolidated revenue for the year.

The purchase price allocation of our 2014 acquisitions, is preliminary and subject to revision as more information becomes available, but in any case will not be revised beyond twelve months after the acquisition date and any change to the fair value of assets acquired or liabilities assumed will lead to a corresponding change to the purchase price allocable to goodwill on a retroactive basis. The primary areas of the purchase price allocation that are not yet finalized are related to the fair values of intangibles assets and net assets for Iens, net assets of Viator, and income tax related balances for all 2014 acquisitions. Acquired goodwill related to our 2014 acquisitions was allocated to our Other segment.

The following table presents the purchase price allocations initially recorded on our consolidated balance sheet for all 2014 acquisitions (in millions):

	Total
Goodwill (1)	$	253
Intangible assets (2)		194
Net tangible assets (liabilities) (3)		(7	)
Deferred tax liabilities, net		(40	)
Total purchase price consideration (4)	$	400

(1)	Goodwill in the amount of $5 million is expected to be deductible for tax purposes.

(2)

Identifiable definite-lived intangible assets acquired during 2014 were comprised of trade names of $44 million with a weighted average life of 10.0 years, customer lists and supplier relationships of $82 million with a weighted average life of 7.2 years, subscriber relationships of $25 million with a weighted average life of 6.0 years and developed technology and other of $43 million with a weighted average life of 4.9 years. The overall weighted-average life of the identifiable definite-lived intangible assets acquired in the purchase of the companies during 2014 was 7.2 years, and will be amortized on a straight-line basis over their estimated useful lives from acquisition date.

(3)

Includes assets acquired, including cash of $62 million and accounts receivable of $25 million and liabilities assumed, including deferred merchant payables of $76 million, accrued expenses and other current liabilities of $15 million and deferred revenue of $5 million which reflect their respective fair values at acquisition date.

(4)	Subject to adjustment based on (i) final working capital adjustment calculations to be determined for Restopolis and Iens, and (ii) indemnification obligations for general representations and warranties of the acquired company stockholders.

2013 Acquisitions

During the year ended December 31, 2013, we completed six acquisitions for a total purchase price consideration of $40 million, for which the Company paid total cash consideration of $35 million, net of cash acquired of $3 million and approximately $2 million in holdbacks for general representations and warranties of the respective sellers, of which $1 million was paid in 2014. The cash consideration was paid primarily from our international subsidiaries. We acquired TinyPost, the developer of a product that enables users to write over photos and turn them into stories, Jetsetter, a members-only private sale site for hotel bookings; CruiseWise, a cruise research and planning site; Niumba, a Spain-based vacation rental site; GateGuru, a mobile app with flight and airport information around the world; Oyster, a hotel review website featuring expert reviews and photos around the world, all of which complemented our existing brands in those areas of the travel ecosystem. The purchase price allocation for our 2013 acquisitions is considered final at December 31, 2014.

The following table presents the purchase price allocation recorded on our consolidated balance sheet at fair value for all 2013 acquisitions (in millions):

	Total
Goodwill (1)	$	30
Intangible assets (2)		19
Net liabilities assumed (3)		(10	)
Deferred tax assets		1
Total purchase price consideration (4)	$	40

(1)	Goodwill in the amount of $14 million is expected to be deductible for tax purposes.

(2)

Identifiable definite-lived intangible assets acquired during 2013 were comprised of trade names of $8 million, subscriber relationships of $8 million, and developed technology and other of $3 million. The overall weighted-average life of the identifiable definite-lived intangible assets acquired in the purchase of the companies during 2013 was 8.0 years, which is being amortized on a straight-line basis over their estimated useful lives from acquisition date.

(3)

Includes assets acquired, including cash of $3 million and accounts receivable of $2 million and liabilities assumed, including accounts payables of $11 million, accrued expenses and other current liabilities of $1 million and deferred revenue of $3 million which reflected their respective fair values at acquisition date.

(4)	Subject to adjustment based on (i) indemnification obligations for general representations and warranties of the acquired company stockholders.

2012 Acquisitions

We purchased a travel media company for approximately $3 million. The purchase price consideration was primarily allocated to goodwill, which is not tax deductible. The purchase price and purchase price allocation is final for this acquisition at December 31, 2014.

We also paid $22 million for the remaining noncontrolling interest subsidiary shares related to a 2008 acquisition, which brought our ownership to 100%. This amount is included in financing activities in our consolidated statement of cash flows for the year ended December 31, 2012.