GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the first six months of 2017 were as follows:



(in thousands)	Carrying Amount
Balance as of December 31, 2016	$	1,318,362
Business acquisition measurement period adjustments	194
Changes in foreign currency exchange rates	3,557
Goodwill reclassified to assets held for sale	(66		)
Balance as of July 1, 2017	$	1,322,047

As of the date of our 2016 annual impairment analysis, the fair value of our European reporting unit was estimated to be approximately 15% above the carrying value. The carrying value of goodwill associated with this reporting unit is $92.3 million as of July 1, 2017. This reporting unit consists primarily of operations within the U.K. The June 2016 referendum by British voters to exit the European Union (“Brexit”) caused uncertainty in global markets and resulted in economic uncertainty within the region which has driven competitive challenges for our products. While historical performance and current expectations have resulted in the fair value of our reporting unit in excess of the carrying value, if economic uncertainty and competitive challenges continue and our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future. Given the difference between the fair value and book value of the reporting unit as of the date of our last impairment analysis and our belief that the current challenges do not represent a long-term trend in the operations, we believe the fair value is still in excess of the book value. No triggering events occurred between the most recent annual impairment assessment and July 1, 2017.

Other intangible assets, except those classified as held for sale consisted of the following:



(in thousands)	Gross Carrying Amount		Cumulative Impairments			Accumulated Amortization			Net Carrying Amount
As of July 1, 2017:
Customer and contractual relationships⁽¹⁾ – amortized	$	498,311	$	—		$	(71,717	)	$	426,594
Non-compete agreement – amortized	710		—			(477		)	233
Developed technology – amortized	2,700		—			(550		)	2,150
Reacquired rights – amortized	3,100		—			(2,295		)	805
Patents – amortized	8,600		—			(3,699		)	4,901
Routes – unamortized	10,712		(45		)	—			10,667
Trademarks⁽²⁾– unamortized	929,364		(6,700		)	—			922,664
Balance as of July 1, 2017	$	1,453,497	$	(6,745	)	$	(78,738	)	$	1,368,014

As of December 31, 2016:
Customer and contractual relationships – amortized	$	493,026	$	—		$	(58,314	)	$	434,712
Non-compete agreement – amortized	710		—			(417		)	293
Developed technology – amortized	2,700		—			(460		)	2,240
Reacquired rights – amortized	3,100		—			(2,101		)	999
Patents – amortized	8,600		—			(3,308		)	5,292
Routes – unamortized	10,869		(45		)	—			10,824
Trademarks – unamortized	926,140		(6,700		)	—			919,440
Balance as of December 31, 2016	$	1,445,145	$	(6,745	)	$	(64,600	)	$	1,373,800

⁽¹⁾ The translation impact on customer relationships for the first six months of 2017 was an increase of $5.3 million.

⁽²⁾ The translation impact on trademarks for the first six months of 2017 was an increase of $3.2 million.

Amortization expense related to intangibles was $6.9 million and $7.3 million for the second quarters of 2017 and 2016, respectively. For the first six months of 2017 and 2016, amortization expense related to intangibles was $13.8 million and $11.6 million, respectively.

Routes and trademarks are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. Although not amortized, they are reviewed for impairment as conditions change or at least on an annual basis. There were no impairments during the second quarters or first six months of 2017 and 2016.

In addition to the $541.1 million in trademarks acquired in the Diamond Foods acquisition, certain trademarks with a total book value of $12.9 million as of July 1, 2017, currently have a book value which approximates fair value. Any adverse changes in the use of these trademarks or the sales volumes of the associated products could result in an impairment charge in the future. As discussed in Note 5, an initiative of our Transformation Plan is SKU rationalization to reduce complexity within the organization. If this process results in significant elimination of SKUs or a strategic shift away from investing in the brands for which the trademarks' book value approximates their fair value, the reduction in future cash flow may result in an impairment of these trademarks. As of July 1, 2017, no such strategic decisions have been finalized. Included within the $541.1 million of trademarks acquired in the Diamond Foods acquisition is $56.1 million related to a trademark held in the U.K. The facts and circumstances noted above as it relates to our European reporting unit goodwill also apply to the trademarks within that region. Continued economic uncertainty and competitive challenges may impact the future cash flow assumptions and estimated fair value of the impacted trademarks. No triggering events occurred between the most recent annual impairment assessment and July 1, 2017.

The changes in the carrying amount of route intangibles for the first six months of 2017 were as follows:



(in thousands)	Carrying Amount
Balance as of December 31, 2016	$	10,824
Routes reclassified to assets held for sale	(157		)
Balance as of July 1, 2017	$	10,667

Route businesses, including route intangibles and associated goodwill, allocated to assets held for sale represent assets available for sale in their present condition and for which actions to complete a sale have been initiated. The changes in the carrying amount of route businesses held for sale for the first six months of 2017 were as follows:



(in thousands)	Carrying Amount
Balance as of December 31, 2016	$	19,502
Purchases of route businesses held for sale	17,421
Sales of route businesses held for sale	(15,445		)
Reclassifications from route intangibles and goodwill	223
Balance as of July 1, 2017	$	21,701

For the second quarter of 2017, net gains on the sale of route businesses consisted of $1.8 million in gains and $1.2 million in losses, and are included within other operating income on the Condensed Consolidated Statements of Income/(Loss). Net gains on the sale of route businesses for the first six months of 2017 consisted of $2.5 million in gains and $1.8 million of losses. For the second quarter of 2016, net gains on the sale of route businesses consisted of $0.3 million in gains and $0.1 million in losses, and are included within other operating income on the Condensed Consolidated Statements of Income/(Loss). Net gains on the sale of route businesses for the first six months of 2016 consisted of $1.3 million in gains and $0.6 million of losses. The majority of the route business purchases and sales were due to route reengineering projects that were initiated in order to maximize the efficiency of route territories for the independent business owners ("IBOs"). See Note 15 for further information related to IBOs.