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Goodwill and Intangible Assets Accounting Policy

Goodwill

Booking Holdings accounts for acquired businesses using the acquisition method of accounting which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Booking Holdings' Consolidated Financial Statements reflect an acquired business starting at the date of the acquisition.

Goodwill is not subject to amortization and is reviewed at least annually for impairment, or earlier if an event occurs or circumstances change and there is an indication of impairment. Booking Holdings tests goodwill at a reporting unit level. The fair value of the reporting unit is compared to its carrying value, including goodwill. Fair values are determined 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) and based on market participant assumptions. An impairment is recorded to the extent that the implied fair value of goodwill is less than the carrying value of goodwill.

Source: Booking Holdings Inc., Annual Report

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Goodwill and Intangible Assets Disclosure

Booking Holdings Inc., Statement of Financial Position, Goodwill and Intangible Assets

USD $ in thousands

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Supply and distribution agreements
Technology
Patents
Internet domain names
Trade names
Non-compete agreements
Other
Intangible assets, gross carrying amount
Accumulated amortization
Intangible assets, net carrying amount
Goodwill
Intangible assets and goodwill

Source: Based on data from Booking Holdings Inc. Annual Reports

Item Description The company
Intangible assets, net carrying amount Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Booking Holdings Inc.'s intangible assets, net carrying amount declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
Goodwill Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions. Booking Holdings Inc.'s goodwill declined from 2015 to 2016 but then slightly increased from 2016 to 2017.
Intangible assets and goodwill Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Booking Holdings Inc.'s intangible assets and goodwill declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

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Analyst Adjustments: Removal of Goodwill

Booking Holdings Inc., adjustments to financial data

USD $ in thousands

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Adjustment to Total Assets
Total assets (as reported)
Less: Goodwill
Total assets (adjusted)
Adjustment to Stockholders' Equity
Stockholders' equity (as reported)
Less: Goodwill
Stockholders' equity (adjusted)
Adjustment to Net Income Applicable To Common Stockholders
Net income applicable to common stockholders (as reported)
Add: Impairment of goodwill
Net income applicable to common stockholders (adjusted)

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Adjusted Ratios: Removal of Goodwill (Summary)

Booking Holdings Inc., adjusted ratios

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net Profit Margin
Reported net profit margin % % % % %
Adjusted net profit margin % % % % %
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE % % % % %
Adjusted ROE % % % % %
Return on Assets (ROA)
Reported ROA % % % % %
Adjusted ROA % % % % %
Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Booking Holdings Inc.'s adjusted net profit margin improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Booking Holdings Inc.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Booking Holdings Inc.'s adjusted financial leverage declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. Booking Holdings Inc.'s adjusted ROE deteriorated from 2015 to 2016 and from 2016 to 2017.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Booking Holdings Inc.'s adjusted ROA deteriorated from 2015 to 2016 and from 2016 to 2017.

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Adjusted Net Profit Margin

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income applicable to common stockholders (USD $ in thousands)
Revenues (USD $ in thousands)
Net profit margin1 % % % % %
Adjusted for Goodwill
Adjusted net income applicable to common stockholders (USD $ in thousands)
Revenues (USD $ in thousands)
Adjusted net profit margin2 % % % % %

2017 Calculations

1 Net profit margin = 100 × Net income applicable to common stockholders ÷ Revenues
= 100 × ÷ = %

2 Adjusted net profit margin = 100 × Adjusted net income applicable to common stockholders ÷ Revenues
= 100 × ÷ = %

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Booking Holdings Inc.'s adjusted net profit margin improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

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Adjusted Total Asset Turnover

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Revenues (USD $ in thousands)
Total assets (USD $ in thousands)
Total asset turnover1
Adjusted for Goodwill
Revenues (USD $ in thousands)
Adjusted total assets (USD $ in thousands)
Adjusted total asset turnover2

2017 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= ÷ =

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Booking Holdings Inc.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017.

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Adjusted Financial Leverage

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Total assets (USD $ in thousands)
Stockholders' equity (USD $ in thousands)
Financial leverage1
Adjusted for Goodwill
Adjusted total assets (USD $ in thousands)
Adjusted stockholders' equity (USD $ in thousands)
Adjusted financial leverage2

2017 Calculations

1 Financial leverage = Total assets ÷ Stockholders' equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders' equity
= ÷ =

Ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Booking Holdings Inc.'s adjusted financial leverage declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

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Adjusted Return on Equity (ROE)

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income applicable to common stockholders (USD $ in thousands)
Stockholders' equity (USD $ in thousands)
ROE1 % % % % %
Adjusted for Goodwill
Adjusted net income applicable to common stockholders (USD $ in thousands)
Adjusted stockholders' equity (USD $ in thousands)
Adjusted ROE2 % % % % %

2017 Calculations

1 ROE = 100 × Net income applicable to common stockholders ÷ Stockholders' equity
= 100 × ÷ = %

2 Adjusted ROE = 100 × Adjusted net income applicable to common stockholders ÷ Adjusted stockholders' equity
= 100 × ÷ = %

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. Booking Holdings Inc.'s adjusted ROE deteriorated from 2015 to 2016 and from 2016 to 2017.

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Adjusted Return on Assets (ROA)

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income applicable to common stockholders (USD $ in thousands)
Total assets (USD $ in thousands)
ROA1 % % % % %
Adjusted for Goodwill
Adjusted net income applicable to common stockholders (USD $ in thousands)
Adjusted total assets (USD $ in thousands)
Adjusted ROA2 % % % % %

2017 Calculations

1 ROA = 100 × Net income applicable to common stockholders ÷ Total assets
= 100 × ÷ = %

2 Adjusted ROA = 100 × Adjusted net income applicable to common stockholders ÷ Adjusted total assets
= 100 × ÷ = %

Ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Booking Holdings Inc.'s adjusted ROA deteriorated from 2015 to 2016 and from 2016 to 2017.

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