Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | ||
Sep. 30, 2014 | Oct. 28, 2014 | Oct. 28, 2014 | |
Common Stock, Unclassified | Class B Common Stock | ||
Document And Entity Information [Line Items] | ' | ' | ' |
Document Type | '10-Q | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 30-Sep-14 | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'Q3 | ' | ' |
Entity Registrant Name | 'TripAdvisor, Inc. | ' | ' |
Entity Central Index Key | '0001526520 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 130,124,274 | 12,799,999 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, except Share data in Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Revenue | $354 | $255 | $958 | $732 | ||||
Costs and expenses: | ' | ' | ' | ' | ||||
Cost of revenue | 11 | [1] | 6 | [1] | 28 | [1] | 15 | [1] |
Selling and marketing | 159 | [2] | 97 | [2] | 387 | [2] | 258 | [2] |
Technology and content | 46 | [2] | 34 | [2] | 125 | [2] | 95 | [2] |
General and administrative | 36 | [2] | 25 | [2] | 94 | [2] | 73 | [2] |
Depreciation | 12 | [3] | 8 | [3] | 33 | [3] | 21 | [3] |
Amortization of intangible assets | 6 | 1 | 11 | 4 | ||||
Total costs and expenses: | 270 | 171 | 678 | 466 | ||||
Amortization adjustment | 9 | 5 | 23 | 14 | ||||
Operating income | 84 | 84 | 280 | 266 | ||||
Other income (expense): | ' | ' | ' | ' | ||||
Interest expense | -2 | -3 | -6 | -8 | ||||
Interest income and other, net | -7 | 3 | -7 | ' | ||||
Total other expense, net | -9 | ' | -13 | -8 | ||||
Income before income taxes | 75 | 84 | 267 | 258 | ||||
Provision for income taxes | -21 | -28 | -77 | -73 | ||||
Net income | 54 | 56 | 190 | 185 | ||||
Earnings per share attributable to common stockholders (Note 15): | ' | ' | ' | ' | ||||
Basic | $0.38 | $0.39 | $1.33 | $1.29 | ||||
Diluted | $0.37 | $0.38 | $1.30 | $1.27 | ||||
Weighted average common shares outstanding (Note 15): | ' | ' | ' | ' | ||||
Basic | 142,842 | 142,690 | 142,648 | 143,095 | ||||
Diluted | 146,071 | 145,454 | 145,839 | 145,258 | ||||
Stock-based compensation: | ' | ' | ' | ' | ||||
Stock-based compensation | 17 | 11 | 46 | 35 | ||||
Acquired technology | ' | ' | ' | ' | ||||
Costs and expenses: | ' | ' | ' | ' | ||||
Amortization of intangible assets | 1 | ' | 2 | 1 | ||||
Website development costs | ' | ' | ' | ' | ||||
Costs and expenses: | ' | ' | ' | ' | ||||
Depreciation | 8 | 5 | 21 | 13 | ||||
Selling and Marketing | ' | ' | ' | ' | ||||
Stock-based compensation: | ' | ' | ' | ' | ||||
Stock-based compensation | 4 | 3 | 10 | 7 | ||||
Technology and Content | ' | ' | ' | ' | ||||
Stock-based compensation: | ' | ' | ' | ' | ||||
Stock-based compensation | 7 | 5 | 19 | 16 | ||||
General and Administrative | ' | ' | ' | ' | ||||
Stock-based compensation: | ' | ' | ' | ' | ||||
Stock-based compensation | $6 | $3 | $17 | $12 | ||||
[1] | Excludes amortization as follows: | |||||||
[2] | Includes stock-based compensation expense as follows: | |||||||
[3] | Includes amortization of internal use software and website development costs. |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement Of Income And Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income | $54 | $56 | $190 | $185 |
Other comprehensive income (loss), net of tax: | ' | ' | ' | ' |
Foreign currency translation adjustments | -14 | 3 | -14 | ' |
Available-for-sale investments: | ' | ' | ' | ' |
Change in net unrealized gain (loss) | ' | 1 | ' | ' |
Total other comprehensive (loss) income, net of tax | -14 | 4 | -14 | ' |
Comprehensive income | $40 | $60 | $176 | $185 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents (Note 5) | $491 | $351 |
Short-term marketable securities (Note 5) | 85 | 131 |
Accounts receivable, net of allowance for doubtful accounts of $6 and $3 at September 30, 2014 and December 31, 2013, respectively | 180 | 113 |
Prepaid expenses and other current assets | 36 | 35 |
Total current assets | 792 | 630 |
Long-term assets: | ' | ' |
Long-term marketable securities (Note 5) | 38 | 188 |
Property and equipment, net (Note 6) | 161 | 82 |
Other long-term assets | 37 | 19 |
Intangible assets, net (Note 7) | 200 | 52 |
Goodwill (Note 7) | 728 | 502 |
TOTAL ASSETS | 1,956 | 1,473 |
Current liabilities: | ' | ' |
Accounts payable | 18 | 10 |
Deferred merchant payables (Note 3) | 115 | 30 |
Deferred revenue | 60 | 44 |
Credit facility borrowings (Note 8) | 36 | 28 |
Borrowings, current (Note 8) | 40 | 40 |
Taxes payable | 14 | 5 |
Accrued expenses and other current liabilities (Note 10) | 134 | 86 |
Total current liabilities | 417 | 243 |
Deferred income taxes, net | 49 | 13 |
Other long-term liabilities (Note 11) | 134 | 52 |
Borrowings, net of current portion (Note 8) | 270 | 300 |
Total Liabilities | 870 | 608 |
Commitments and contingencies (Note 12) | ' | ' |
Stockholdersb equity: | ' | ' |
Preferred stock, $0.001 par value Authorized shares: 100,000,000 Shares issued and outstanding: 0 and 0 | ' | ' |
Common stock | ' | ' |
Additional paid-in capital | 653 | 608 |
Retained earnings | 592 | 402 |
Accumulated other comprehensive income (loss) (Note 13) | -14 | ' |
Treasury stock-common stock, at cost, 2,120,709 and 2,120,709 shares | -145 | -145 |
Total Stockholdersb Equity | 1,086 | 865 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 1,956 | 1,473 |
Class B Common Stock | ' | ' |
Stockholdersb equity: | ' | ' |
Common stock | ' | ' |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, except Share data, unless otherwise specified | ||
Allowance for doubtful accounts | $6 | $3 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 1,600,000,000 | 1,600,000,000 |
Common stock, shares issued | 132,233,676 | 131,537,798 |
Common stock, shares outstanding | 130,112,967 | 129,417,089 |
Treasury stock, shares | 2,120,709 | 2,120,709 |
Class B Common Stock | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 12,799,999 | 12,799,999 |
Common stock, shares outstanding | 12,799,999 | 12,799,999 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Total | Class B Common Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock |
In Millions, except Share data | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||
Beginning balance at Dec. 31, 2013 | $865 | ' | ' | $608 | $402 | ' | ($145) |
Beginning balance, shares at Dec. 31, 2013 | 131,537,798 | 12,799,999 | 131,537,798 | ' | ' | ' | 2,120,709 |
Net income | 190 | ' | ' | ' | 190 | ' | ' |
Foreign currency translation adjustments | -14 | ' | ' | ' | ' | -14 | ' |
Issuance of common stock related to exercises of options and vesting of RSUs | 2 | ' | ' | 2 | ' | ' | ' |
Issuance of common stock related to exercise of options and vesting of RSUs, shares | ' | ' | 695,878 | ' | ' | ' | ' |
Tax benefits on equity awards, net | 20 | ' | ' | 20 | ' | ' | ' |
Minimum withholding taxes on net share settlements of equity awards | -32 | ' | ' | -32 | ' | ' | ' |
Fair value of stock options assumed in connection with acquisitions | 5 | ' | ' | 5 | ' | ' | ' |
Stock-based compensation | 50 | ' | ' | 50 | ' | ' | ' |
Ending balance at Sep. 30, 2014 | $1,086 | ' | ' | $653 | $592 | ($14) | ($145) |
Ending balance, shares at Sep. 30, 2014 | 132,233,676 | 12,799,999 | 132,233,676 | ' | ' | ' | 2,120,709 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | ||
Operating activities: | ' | ' | ||
Net income | $190 | $185 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ||
Depreciation of property and equipment, including amortization of internal-use software and website development | 33 | [1] | 21 | [1] |
Stock-based compensation expense | 46 | 35 | ||
Amortization of intangible assets | 11 | 4 | ||
Amortization of deferred financing costs | 1 | 1 | ||
Amortization of discounts and premiums on marketable securities, net | 2 | 4 | ||
Deferred tax benefit | -8 | ' | ||
Excess tax benefits from stock-based compensation | -20 | -9 | ||
Provision (recovery) for doubtful accounts | 2 | 1 | ||
Other, net | 8 | 2 | ||
Changes in operating assets and liabilities, net of effects from acquisitions: | ' | ' | ||
Accounts receivable, prepaid expenses and other assets | -45 | -42 | ||
Accounts payable, accrued expenses and other liabilities | 47 | 19 | ||
Deferred merchant payables | 13 | 13 | ||
Income taxes, net | 34 | 35 | ||
Deferred revenue | 12 | 9 | ||
Net cash provided by operating activities | 326 | 278 | ||
Investing activities: | ' | ' | ||
Acquisitions, net of cash acquired | -284 | -32 | ||
Capital expenditures, including internal-use software and website development | -55 | -39 | ||
Purchases of marketable securities | -219 | -375 | ||
Sales of marketable securities | 325 | 124 | ||
Maturities of marketable securities | 88 | 106 | ||
Net cash used in investing activities | -145 | -216 | ||
Financing activities: | ' | ' | ||
Repurchase of common stock | ' | -138 | ||
Proceeds from credit facilities | 11 | 8 | ||
Payments to credit facilities | -3 | -15 | ||
Principal payments on long-term debt | -30 | -30 | ||
Proceeds from exercise of stock options | 2 | 21 | ||
Payment of minimum withholding taxes on net share settlements of equity awards | -32 | -10 | ||
Excess tax benefits from stock-based compensation | 20 | 9 | ||
Payments on construction in-process related to build to suit lease obligation | -3 | ' | ||
Net cash used in financing activities | -35 | -155 | ||
Effect of exchange rate changes on cash and cash equivalents | -6 | 1 | ||
Net increase (decrease) in cash and cash equivalents | 140 | -92 | ||
Cash and cash equivalents at beginning of period | 351 | 368 | ||
Cash and cash equivalents at end of period | 491 | 276 | ||
Supplemental disclosure of non-cash investing and financing activities: | ' | ' | ||
Capitalization of construction in-process related to build to suit lease obligation | 42 | ' | ||
Marketable securities sold during the period but settled after period end | ' | $40 | ||
[1] | Includes amortization of internal use software and website development costs. |
Organization_Business_Descript
Organization, Business Description and Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Organization, Business Description and Basis of Presentation | ' |
NOTE 1: ORGANIZATION, BUSINESS DESCRIPTION AND BASIS OF PRESENTATION | |
We refer to TripAdvisor, Inc. and our wholly-owned subsidiaries as “TripAdvisor,” “the Company,” “us,” “we” and “our” in these Notes to Unaudited Consolidated Financial Statements. | |
Description of Business | |
TripAdvisor is an online travel company, empowering users to plan and have the perfect trip. TripAdvisor’s travel research platform aggregates reviews and opinions of members about destinations, accommodations, restaurants and activities throughout the world through our flagship TripAdvisor brand. TripAdvisor-branded websites include tripadvisor.com in the United States and localized versions of the website in 44 countries, including in China under the brand daodao.com. Beyond travel-related content, TripAdvisor websites also include links to the websites of our travel advertisers allowing travelers to book their travel arrangements with our travel advertisers. In addition to the flagship TripAdvisor brand, we manage and operate 24 other travel brands, connected by the common goal of providing comprehensive travel planning resources across the travel sector. We derive substantially all of our revenue from advertising, primarily through sales of click-based advertising, and, to a lesser extent, display-based advertising. In addition, we earn revenue from a combination of subscription-based and transaction-based offerings, including Business Listings and Vacation Rentals as well as revenue from, among other things, licensing our content to third-parties. Transaction revenue is derived from making hotel room nights and destination activities available for booking and fulfilling online restaurant reservations on our restaurant pages and on our transaction sites. We have one operating and reportable segment: TripAdvisor. The segment is determined based on how our chief operating decision maker manages our business, makes operating decisions, evaluates operating performance and allocates resources. | |
Basis of Presentation | |
We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). We have included all adjustments necessary for a fair presentation of the results of the interim period. These adjustments consist of normal recurring items. We prepared the unaudited consolidated financial statements following the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, we have condensed or omitted certain footnotes or other financial information that are normally required by GAAP for annual financial statements. Our interim unaudited consolidated financial statements are not necessarily indicative of results that may be expected for any other interim period or for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2013, previously filed with the SEC. | |
Principles of Consolidation | |
These accompanying unaudited financial statements present our results of operations, financial position and cash flows on a consolidated basis. The accompanying unaudited consolidated financial statements include TripAdvisor, our wholly-owned subsidiaries, and entities we control, or in which we have a variable interest and are the primary beneficiary of expected cash profits or losses. We have eliminated significant intercompany transactions and accounts. | |
Certain of our subsidiaries that operate in China have variable interests in affiliated entities in China in order to comply with Chinese laws and regulations, which restrict foreign investment in Internet content provision businesses. Although we do not own the capital stock of some of our Chinese affiliates, we consolidate their results as we are the primary beneficiary of the cash losses or profits of these variable interest affiliates and have the power to direct the activities of these affiliates. Our variable interest entities are not material for all periods presented. | |
Reclassifications | |
Pursuant to our disclosure in “Note 15— Related Party Transactions” in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013, we no longer consider Expedia, Inc. ("Expedia”) a related party. Certain reclassifications have been made to conform the prior period to the current presentation relating to Expedia transactions, which includes the reclassification of revenue from Expedia on our unaudited statements of operations to revenue and the reclassification of receivables from Expedia, net on our unaudited consolidated balance sheets to accounts receivable. These reclassifications had no net effect on our unaudited consolidated financial statements. | |
All other reclassifications, made to conform the prior period to the current presentation, were not material and had no net effect on our unaudited consolidated financial statements. | |
Accounting Estimates | |
We use estimates and assumptions in the preparation of our unaudited consolidated financial statements in accordance with GAAP. Our estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our unaudited consolidated financial statements. These estimates and assumptions also affect the reported amount of net income or loss during any period. Our actual financial results could differ significantly from these estimates. The significant estimates underlying our unaudited consolidated financial statements include recoverability and useful life of long-lived assets; recoverability of intangible assets and goodwill; accounting for income taxes; purchase accounting for business combinations and stock-based compensation. | |
Seasonality | |
Expenditures by travel advertisers tend to be seasonal. Traditionally, our strongest quarter has been the third quarter, which is a key travel research period, with the weakest quarter being the fourth quarter. However, adverse economic conditions or continued growth of our international operations with differing holiday peaks may influence the typical trend of our seasonality in the future. |
Significant_Accounting_Policie
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Significant Accounting Policies | ' |
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES | |
New Accounting Pronouncements Not Yet Adopted | |
Revenue From Contracts With Customers | |
In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a retrospective or cumulative effect transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our unaudited consolidated financial statements and related disclosures. | |
Recently Adopted Accounting Pronouncements | |
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | |
In July 2013, the FASB issued new accounting guidance on the presentation of unrecognized tax benefits. The new guidance requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use the deferred tax asset for such purpose, then the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013, with early adoption permitted. Accordingly, we adopted these presentation requirements during the first quarter of 2014. The adoption of this new guidance did not have a material impact on our unaudited consolidated financial statements and related disclosures. | |
There have been no material changes to our significant accounting policies since December 31, 2013. For additional information about our critical accounting policies and estimates, refer to “Note 2— Significant Accounting Policies”, in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013. |
Acquisitions
Acquisitions | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||
Acquisitions | ' | ||||||||||||
NOTE 3: ACQUISITIONS | |||||||||||||
On August 8, 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 nine months ended September 30, 2014, we completed three other acquisitions for a total purchase price consideration of $160 million, for which the Company paid total cash consideration of $152 million, net of cash acquired of $6 million and approximately $2 million in holdbacks for general representations and warranties of the respective sellers. The total cash consideration was paid primarily from our international subsidiaries. We acquired Vacation Home Rentals, a U.S.-based vacation rental website featuring more than 14,000 properties around the world; London-based Tripbod, a travel community that helps connect travelers to local experts; and Lafourchette, a provider of an online and mobile reservations platform for restaurants in Europe. The total purchase price consideration is subject to an adjustment based on the finalization of working capital adjustments for Lafourchette, as of September 30, 2014. | |||||||||||||
The total purchase price of Viator and our other acquisitions, all of which were accounted for as purchases of businesses under the acquisition method, have been allocated to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values on the acquisition date. The purchase price allocation related to 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 Viator, and income tax related balances for all 2014 acquisitions. Acquisition-related costs were expensed as incurred and were $3 million during the nine months ended September 30, 2014. All acquisition-related expenses are included in general and administrative expenses on our unaudited consolidated statements of operations. | |||||||||||||
The following table presents the purchase price allocations initially recorded on our consolidated balance sheet on September 30, 2014 for all 2014 acquisitions (in millions): | |||||||||||||
Viator | Other Acquisitions | Total | |||||||||||
Goodwill (1) | $ | 133 | $ | 105 | $ | 238 | |||||||
Intangible assets (2) | 100 | 66 | 166 | ||||||||||
Net tangible assets (liabilities) (3) | (14 | ) | 6 | (8 | ) | ||||||||
Deferred tax liabilities, net | (27 | ) | (17 | ) | (44 | ) | |||||||
Total purchase price consideration (4) | $ | 192 | $ | 160 | $ | 352 | |||||||
-1 | The goodwill represents the excess value over both tangible and intangible assets acquired. The goodwill in these transactions is primarily attributable to expected operational synergies, potential new and expanded business relationships and user bases, the assembled workforces, and the future development initiatives of the assembled workforces. Goodwill in the amount of $5 million is expected to be deductible for tax purposes. | ||||||||||||
-2 | Identifiable definite-lived intangible assets were comprised of developed technology of $27 million, trade names of $45 million, and subscriber and customer relationships of $94 million. The overall weighted-average life of the identifiable definite-lived intangible assets acquired in the purchase of the companies was 7.3 years, which will be amortized on a straight-line basis over their estimated useful lives. | ||||||||||||
-3 | Includes assets acquired, including cash of $61 million and accounts receivable of $24 million and liabilities assumed, including deferred merchant payables of $76 million, accrued expenses and other current liabilities of $14 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 calculation for Lafourchette and (ii) indemnification obligations of the acquired company stockholders for all 2014 acquisitions as of September 30, 2014. | ||||||||||||
Our unaudited consolidated financial statements include the operating results of all acquired businesses from the date of each acquisition. Pro-forma results of operations for all of these acquisitions have not been presented as the financial impact to our unaudited consolidated financial statements, both individually and in aggregate, are not material. |
Stock_Based_Awards_and_Other_E
Stock Based Awards and Other Equity Instruments | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ||||||||||||||||
Stock Based Awards and Other Equity Instruments | ' | ||||||||||||||||
NOTE 4: STOCK BASED AWARDS AND OTHER EQUITY INSTRUMENTS | |||||||||||||||||
Stock-Based Compensation Expense | |||||||||||||||||
The following table presents the amount of stock-based compensation expense related to stock-based awards, primarily stock options and restricted stock units (“RSUs”), on our unaudited consolidated statements of operations during the periods presented: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(in millions) | (in millions) | ||||||||||||||||
Selling and marketing | $ | 4 | $ | 3 | $ | 10 | $ | 7 | |||||||||
Technology and content | 7 | 5 | 19 | 16 | |||||||||||||
General and administrative | 6 | 3 | 17 | 12 | |||||||||||||
Total stock-based compensation | 17 | 11 | 46 | 35 | |||||||||||||
Income tax benefit from stock-based compensation | (6 | ) | (4 | ) | (17 | ) | (14 | ) | |||||||||
Total stock-based compensation, net of tax effect | $ | 11 | $ | 7 | $ | 29 | $ | 21 | |||||||||
Stock-Based Award Activity and Valuation | |||||||||||||||||
2014 Stock Option Activity | |||||||||||||||||
During the nine months ended September 30, 2014, we issued 658,332 of service-based non-qualified stock options primarily from the TripAdvisor, Inc. 2011 Stock and Incentive Plan, as amended (the “2011 Plan”). These stock options generally have a term of ten years from the date of grant and generally vest equitably over a four-year requisite service period. We will amortize the fair value of the 2014 grants, net of estimated forfeitures, as stock-based compensation expense over the vesting term on a straight-line basis, with the amount of compensation expense recognized at any date at least equaling the portion of the grant-date fair value of the award that is vested at that date. | |||||||||||||||||
A summary of the status and activity for stock option awards relating to our common stock for the nine months ended September 30, 2014, is presented below: | |||||||||||||||||
Weighted | Weighted | ||||||||||||||||
Average | Average | ||||||||||||||||
Exercise | Remaining | Aggregate | |||||||||||||||
Options | Price Per | Contractual | Intrinsic | ||||||||||||||
Outstanding | Share | Life | Value | ||||||||||||||
(in thousands) | (in years) | (in millions) | |||||||||||||||
Options outstanding at January 1, 2014 | 9,470 | $ | 40.18 | ||||||||||||||
Assumed options from acquisition | 101 | $ | 16.36 | ||||||||||||||
Granted | 557 | 96.42 | |||||||||||||||
Exercised (1) | (1,139 | ) | 33.67 | ||||||||||||||
Cancelled or expired | (234 | ) | 45.05 | ||||||||||||||
Options outstanding at September 30, 2014 | 8,755 | $ | 44.21 | 5.3 | $ | 416 | |||||||||||
Exercisable as of September 30, 2014 | 3,845 | $ | 31.68 | 2.9 | $ | 230 | |||||||||||
Vested and expected to vest after September 30, 2014 | 8,203 | $ | 43.38 | 5.1 | $ | 396 | |||||||||||
-1 | Inclusive of 613,261 options which were not converted into shares due to net share settlement in order to cover the aggregate exercise price and the minimum amount of required employee withholding taxes. Potential shares that had been convertible under stock options that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited consolidated statements of cash flows. | ||||||||||||||||
Aggregate intrinsic value represents the difference between the closing stock price of our common stock and the exercise price of outstanding, in-the-money options. Our closing stock price as reported on NASDAQ as of September 30, 2014 was $91.42. The total intrinsic value of stock options exercised for the nine months ended September 30, 2014 and 2013 was $71 million and $45 million, respectively. | |||||||||||||||||
The fair value of stock option grants under the 2011 Plan has been estimated at the date of grant using the Black–Scholes option pricing model with the following weighted average assumptions for the periods presented: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Risk free interest rate | 1.76 | % | 1.83 | % | 1.93 | % | 1.4 | % | |||||||||
Expected term (in years) | 5.77 | 5.8 | 6.27 | 6.05 | |||||||||||||
Expected volatility | 46.09 | % | 49.62 | % | 47.7 | % | 50.81 | % | |||||||||
Expected dividend yield | — % | — % | — % | — % | |||||||||||||
The weighted-average grant date fair value of options granted, excluding assumed acquisition-related options, was $47.03 and $28.11 for the nine months ended September 30, 2014 and 2013, respectively. The weighted-average grant date fair value of assumed acquisition-related options granted was $80.31 for the three and nine months ended September 30, 2014. There were no assumed acquisition-related options granted for the three and nine months ended September 30, 2013. The total fair value of stock options vested for the nine months ended September 30, 2014 and 2013 was $27 million and $23 million, respectively. | |||||||||||||||||
2014 RSU Activity | |||||||||||||||||
During the nine months ended September 30, 2014, we issued 617,693 RSUs under the 2011 Plan for which the fair value was measured based on the quoted price of our common stock on the date of grant. These RSUs generally vest over a four-year requisite service period. We will amortize the fair value of the 2014 grants, net of estimated forfeitures, as stock-based compensation expense over the vesting term on a straight-line basis, with the amount of compensation expense recognized at any date at least equaling the portion of the grant-date fair value of the award that is vested at that date. | |||||||||||||||||
The following table presents a summary of RSU activity on our common stock during the nine months ended September 30, 2014: | |||||||||||||||||
Weighted | |||||||||||||||||
Average | |||||||||||||||||
Grant- | Aggregate | ||||||||||||||||
RSUs | Date Fair | Intrinsic | |||||||||||||||
Outstanding | Value Per Share | Value | |||||||||||||||
(in thousands) | (in millions) | ||||||||||||||||
Unvested RSUs outstanding as of January 1, 2014 | 1,135 | $ | 49.64 | ||||||||||||||
Granted | 618 | 96.15 | |||||||||||||||
Vested and released (1) | (265 | ) | 46.36 | ||||||||||||||
Cancelled | (106 | ) | 66.09 | ||||||||||||||
Unvested RSUs outstanding as of September 30, 2014 | 1,382 | $ | 69.79 | $ | 126 | ||||||||||||
-1 | Inclusive of 94,445 RSUs withheld to satisfy employee minimum tax withholding requirements due to net share settlement. Potential shares which had been convertible under RSUs that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited consolidated statements of cash flows. | ||||||||||||||||
Unrecognized Stock-Based Compensation | |||||||||||||||||
A summary of our remaining unrecognized stock-based compensation expense, net of estimated forfeitures, and the weighted average remaining amortization period at September 30, 2014 related to our non-vested stock options and RSU awards is presented below (in millions): | |||||||||||||||||
Stock | |||||||||||||||||
Options | RSUs | ||||||||||||||||
Unrecognized compensation expense (net of forfeitures) | $ | 87 | $ | 57 | |||||||||||||
Weighted average period remaining (in years) | 2.9 | 3 | |||||||||||||||
Financial_Instruments
Financial Instruments | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Investments All Other Investments [Abstract] | ' | ||||||||||||||||||||||||||||
Financial Instruments | ' | ||||||||||||||||||||||||||||
NOTE 5: FINANCIAL INSTRUMENTS | |||||||||||||||||||||||||||||
Cash, Cash Equivalents and Marketable Securities | |||||||||||||||||||||||||||||
The following tables show our cash and available-for-sale securities’ amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short and long-term marketable securities for the periods presented (in millions): | |||||||||||||||||||||||||||||
30-Sep-14 | |||||||||||||||||||||||||||||
Cash and | Short-Term | Long-Term | |||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Cash | Marketable | Marketable | |||||||||||||||||||||||
Cost | Gains | Losses | Value | Equivalents | Securities | Securities | |||||||||||||||||||||||
Cash | $ | 468 | $ | - | $ | - | $ | 468 | $ | 468 | $ | - | $ | - | |||||||||||||||
Level 1: | |||||||||||||||||||||||||||||
Money market funds | 23 | - | - | 23 | 23 | - | - | ||||||||||||||||||||||
Level 2: | |||||||||||||||||||||||||||||
U.S. agency securities | 30 | - | - | 30 | - | 24 | 6 | ||||||||||||||||||||||
Certificates of deposit | 9 | - | - | 9 | - | 9 | - | ||||||||||||||||||||||
Corporate debt securities | 84 | - | - | 84 | - | 52 | 32 | ||||||||||||||||||||||
Subtotal | 123 | - | - | 123 | - | 85 | 38 | ||||||||||||||||||||||
Total | $ | 614 | $ | - | $ | - | $ | 614 | $ | 491 | $ | 85 | $ | 38 | |||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||||||
Cash and | Short-Term | Long-Term | |||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Cash | Marketable | Marketable | |||||||||||||||||||||||
Cost | Gains | Losses | Value | Equivalents | Securities | Securities | |||||||||||||||||||||||
Cash | $ | 195 | $ | - | $ | - | $ | 195 | $ | 195 | $ | - | $ | - | |||||||||||||||
Level 1: | |||||||||||||||||||||||||||||
Money market funds | 156 | - | - | 156 | 156 | - | - | ||||||||||||||||||||||
Level 2: | |||||||||||||||||||||||||||||
U.S. agency securities | 37 | - | - | 37 | - | 14 | 23 | ||||||||||||||||||||||
Certificates of deposit | 23 | - | - | 23 | - | 16 | 7 | ||||||||||||||||||||||
Commercial paper | 5 | - | - | 5 | - | 5 | - | ||||||||||||||||||||||
Corporate debt securities | 254 | - | - | 254 | - | 96 | 158 | ||||||||||||||||||||||
Subtotal | 319 | - | - | 319 | - | 131 | 188 | ||||||||||||||||||||||
Total | $ | 670 | $ | - | $ | - | $ | 670 | $ | 351 | $ | 131 | $ | 188 | |||||||||||||||
Our cash and cash equivalents consist of cash on hand in global financial institutions, money market funds and marketable securities with maturities of 90 days or less at the date purchased. The remaining maturities of our long-term marketable securities range from one to three years and our short-term marketable securities include maturities that were greater than 90 days at the date purchased and have twelve months or less remaining at September 30, 2014. | |||||||||||||||||||||||||||||
We classify our cash equivalents and marketable securities within Level 1 and Level 2 as we value our cash equivalents and marketable securities using quoted market prices (Level 1) or alternative pricing sources (Level 2). The valuation technique we used to measure the fair value of money market funds was derived from quoted prices in active markets for identical assets or liabilities. Fair values for our U.S. agency securities, commercial paper, corporate debt securities and certificates of deposit are considered “Level 2” valuations because they are obtained from pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. | |||||||||||||||||||||||||||||
There were no material realized gains or losses related to sales of our marketable securities for the three and nine months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||||||||||||||
As of September 30, 2014, we had marketable securities with an aggregate fair value of $29 million currently in an unrealized loss position. The gross unrealized loss amount was not material at September 30, 2014. We consider the declines in market value of our marketable securities investment portfolio to be temporary in nature and do not consider any of our investments other-than-temporarily impaired. When evaluating an investment for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, and our intent to sell, or whether it is more likely than not we will be required to sell the investment before recovery of the investment’s cost basis. During the three and nine months ended September 30, 2014 and 2013, we did not recognize any impairment charges. We did not have any material investments in marketable securities that were in a continuous unrealized loss position for twelve months or greater at September 30, 2014 or December 31, 2013. | |||||||||||||||||||||||||||||
Derivative Financial Instruments | |||||||||||||||||||||||||||||
In the normal course of business, we are exposed to the impact of foreign currency fluctuations, which we attempt to mitigate through the use of derivative instruments. Accordingly, we have entered into forward contracts to reduce the effects of fluctuating foreign currency exchange rates on our cash flows denominated in foreign currencies. We do not use derivatives for trading or speculative purposes. In accordance with current accounting guidance on derivative instruments and hedging activities, we record all our derivative instruments as either an asset or liability measured at their fair value. Our derivative instruments are typically short-term in nature. | |||||||||||||||||||||||||||||
Our current forward contracts are not designated as hedges. Consequently, any gain or loss resulting from the change in fair value is recognized in the current period earnings. These gains or losses are offset by the exposure related to receivables and payables with our foreign subsidiaries and were not material for the three and nine months ended September 30, 2014 and 2013, and are included in interest income and other, net on our unaudited consolidated statements of operations. The net cash received or paid related to our derivative instruments are classified as operating in our unaudited consolidated statements of cash flows, which is based on the objective of the derivative instruments. | |||||||||||||||||||||||||||||
The following table shows the notional principal amounts of our outstanding derivative instruments for the periods presented: | |||||||||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Foreign exchange-forward contracts (1)(2) | $ | 5 | $ | 5 | |||||||||||||||||||||||||
-1 | Derivative contracts address foreign exchange fluctuations for the Euro versus the U.S. Dollar. | ||||||||||||||||||||||||||||
-2 | The fair value of our derivatives are not material for all periods presented and are reported as liabilities in accrued and other current liabilities on our unaudited consolidated balance sheets. We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active markets. | ||||||||||||||||||||||||||||
Concentration of Credit Risk | |||||||||||||||||||||||||||||
Counterparties to currency exchange derivatives consist of major international financial institutions. We monitor our positions and the credit ratings of the counterparties involved and, by policy limits, the amount of credit exposure to any one party. While we may be exposed to potential losses due to the credit risk of non-performance by these counterparties, losses are not anticipated and any credit risk amounts associated with our outstanding or unsettled derivative instruments are deemed to be not material for any period presented. | |||||||||||||||||||||||||||||
Other Financial Instruments | |||||||||||||||||||||||||||||
Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, deferred merchant payables, short-term debt, accrued and other current liabilities and long-term debt. With the exception of long-term debt, the carrying amount approximates fair value because of the short maturity of these instruments as reported on our unaudited consolidated balance sheets as of September 30, 2014 and December 31, 2013. The carrying value of the long-term borrowings outstanding on our Credit Agreement bears interest at a variable rate and therefore is also considered to approximate fair value. | |||||||||||||||||||||||||||||
We did not have any Level 3 assets or liabilities for the periods ended September 30, 2014 and December 31, 2013. |
Property_and_Equipment_Net
Property and Equipment, Net | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Property Plant And Equipment [Abstract] | ' | ||||||||
Property and Equipment, Net | ' | ||||||||
NOTE 6: PROPERTY AND EQUIPMENT, NET | |||||||||
Property and equipment consists of the following for the periods presented: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(in millions) | |||||||||
Capitalized software and website development | $ | 108 | $ | 73 | |||||
Leasehold improvements | 37 | 22 | |||||||
Computer equipment | 31 | 21 | |||||||
Furniture, office equipment and other | 9 | 6 | |||||||
185 | 122 | ||||||||
Less: accumulated depreciation | (79 | ) | (48 | ) | |||||
Construction in progress (1) | 55 | 8 | |||||||
Property and equipment, net | $ | 161 | $ | 82 | |||||
-1 | We capitalize construction in progress for build-to-suit lease agreements where we are considered the owner, for accounting purposes only, during the construction period. These amounts represent construction costs to date incurred by the landlord and the Company related to our future corporate headquarters in Needham, MA. During the nine months ended September 30, 2014 we capitalized $42 million in non-cash construction costs which were incurred by the landlord, with a corresponding liability recorded in other long-term liabilities on our unaudited consolidated balance sheet. Refer to “Note 12 – Commitments and Contingencies,” in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013 for additional information on our future corporate headquarters lease. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets, Net | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net | ' | ||||||||||||||||||||||||||||
NOTE 7: GOODWILL AND INTANGIBLE ASSETS, NET | |||||||||||||||||||||||||||||
The change in goodwill for the nine months ended September 30, 2014 consists of the following: | |||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Beginning balance as of January 1, 2014 | $ | 502 | |||||||||||||||||||||||||||
Additions (1) | 238 | ||||||||||||||||||||||||||||
Foreign exchange translation adjustment | (12 | ) | |||||||||||||||||||||||||||
Ending balance as of September 30, 2014 | $ | 728 | |||||||||||||||||||||||||||
-1 | The additions to goodwill relate to our 2014 business acquisitions. See “Note 3— Acquisitions” above, for further information. | ||||||||||||||||||||||||||||
Intangible assets, which were acquired in business combinations and recorded at fair value on the date of purchase, consist of the following: | |||||||||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Intangible assets with definite lives | $ | 195 | $ | 36 | |||||||||||||||||||||||||
Less: accumulated amortization | (25 | ) | (14 | ) | |||||||||||||||||||||||||
Intangible assets with definite lives, net | 170 | 22 | |||||||||||||||||||||||||||
Intangible assets with indefinite lives | 30 | 30 | |||||||||||||||||||||||||||
$ | 200 | $ | 52 | ||||||||||||||||||||||||||
The following table presents the components of our intangible assets with definite lives: | |||||||||||||||||||||||||||||
30-Sep-14 | December 31, 2013 | ||||||||||||||||||||||||||||
Weighted Average | Gross | Net | Gross | Net | |||||||||||||||||||||||||
Remaining Life | Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | |||||||||||||||||||||||
(in years) | Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||||||
Trade names and trademarks | 9.7 | $ | 62 | $ | (10 | ) | $ | 52 | $ | 18 | $ | (7 | ) | $ | 11 | ||||||||||||||
Subscriber and customer relationships | 6.3 | 102 | (11 | ) | 91 | 14 | (6 | ) | 8 | ||||||||||||||||||||
Technology and other | 4.6 | 31 | (4 | ) | 27 | 4 | (1 | ) | 3 | ||||||||||||||||||||
Total | 7 | $ | 195 | $ | (25 | ) | $ | 170 | $ | 36 | $ | (14 | ) | $ | 22 | ||||||||||||||
Intangible assets with definite lives are amortized on a straight-line basis. The estimated amortization expense for intangible assets with definite lives for the remainder of 2014, the annual expense for the next five years, and the expense thereafter, assuming no subsequent impairment of the underlying assets, is expected to be as follows (in millions): | |||||||||||||||||||||||||||||
2014 (remaining three months) | $ | 7 | |||||||||||||||||||||||||||
2015 | 27 | ||||||||||||||||||||||||||||
2016 | 27 | ||||||||||||||||||||||||||||
2017 | 25 | ||||||||||||||||||||||||||||
2018 | 23 | ||||||||||||||||||||||||||||
2019 and thereafter | 61 | ||||||||||||||||||||||||||||
Total | $ | 170 | |||||||||||||||||||||||||||
Debt
Debt | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Debt | ' | ||||||||
NOTE 8: DEBT | |||||||||
Term Loan Facility Due 2016 and Revolving Credit Facility | |||||||||
On December 20, 2011, we entered into a credit agreement, by and among TripAdvisor, TripAdvisor Holdings, LLC, and TripAdvisor LLC, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Europe Limited, as London agent (this credit agreement, together with all exhibits, schedules, annexes, certificates, assignments and related documents contemplated thereby, is referred to herein as the “Credit Agreement”), which provides $600 million of borrowing including: | |||||||||
— | the Term Loan Facility (“Term Loan”) in an aggregate principal amount of $400 million with a term of five years due December 2016; and | ||||||||
— | the Revolving Credit Facility in an aggregate principal amount of $200 million available in U.S. dollars, Euros and British pound sterling with a term of five years expiring December 2016. | ||||||||
The Term Loan and any loans under the Revolving Credit Facility bear interest by reference to a base rate or a Eurocurrency rate, in either case plus an applicable margin based on our leverage ratio. We are also required to pay a quarterly commitment fee, on the average daily unused portion of the Revolving Credit Facility for each fiscal quarter and fees in connection with the issuance of letters of credit. The Term Loan and loans under the Revolving Credit Facility currently bear interest at LIBOR plus 150 basis points, or the Eurocurrency Spread, or the alternate base rate (“ABR”) plus 50 basis points, and undrawn amounts are currently subject to a commitment fee of 22.5 basis points. As of September 30, 2014 we are using a one-month interest period Eurocurrency Spread which is approximately 1.7% per annum. Interest is currently payable on a monthly basis while we are borrowing under the one-month interest rate period. The current interest rates are based on current assumptions, leverage and LIBOR rates and do not take into account that rates will reset periodically. | |||||||||
The Term Loan principal is currently repayable in quarterly installments on the last day of each calendar quarter equal to 2.5% of the original principal amount with the balance due on the final maturity date. Principal payments aggregating $30 million were made during the nine months ended September 30, 2014. | |||||||||
The Revolving Credit Facility includes $40 million of borrowing capacity available for letters of credit and $40 million for borrowings on same-day notice. As of September 30, 2014 there are no outstanding borrowings under our Revolving Credit Facility. | |||||||||
During the three and nine months ended September 30, 2014, we recorded to interest expense on our unaudited consolidated statements of operations total interest and commitment fees on our Credit Agreement of $1 million and $5 million, respectively. During the three and nine months ended September 30, 2013, we recorded to interest expense on our unaudited consolidated statements of operations total interest and commitment fees on our Credit Agreement of $2 million and $6 million, respectively. All unpaid interest and commitment fee amounts as of September 30, 2014 and December 31, 2013 were not material. | |||||||||
Total outstanding borrowings under the Credit Agreement consist of the following: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(in millions) | |||||||||
Short-Term Debt: | |||||||||
Term Loan | $ | 40 | $ | 40 | |||||
Total Short-Term Borrowings | $ | 40 | $ | 40 | |||||
Long-Term Debt: | |||||||||
Term Loan | $ | 270 | $ | 300 | |||||
Total Long-Term Borrowings | $ | 270 | $ | 300 | |||||
As of September 30, 2014, we are in compliance with all of our debt covenants. | |||||||||
Chinese Credit Facilities | |||||||||
In addition to our borrowings under the Credit Agreement, we maintain our Chinese Credit Facilities. As of September 30, 2014 and December 31, 2013, we had short-term borrowings outstanding of $36 million and $28 million, respectively. | |||||||||
Certain of our Chinese subsidiaries entered into a RMB 189,000,000 (approximately $30 million), one-year revolving credit facility with Bank of America (the “Chinese Credit Facility—BOA”) that is currently subject to review on a periodic basis with no-specific expiration period. We had $17 million of outstanding borrowings from the Chinese Credit Facility—BOA as of September 30, 2014. Our Chinese Credit Facility—BOA currently bears interest at a rate based on 100% of the People’s Bank of China’s base rate, which was 5.6% as of September 30, 2014. | |||||||||
In addition, during April 2014, certain of our Chinese subsidiaries renewed a RMB 125,000,000 (approximately $20 million) one-year revolving credit facility with J.P. Morgan Chase Bank (“Chinese Credit Facility—JPM”). We had $19 million of outstanding borrowings from the Chinese Credit Facility—JPM as of September 30, 2014. Our Chinese Credit Facility—JPM currently bears interest at a rate based on 100% of the People’s Bank of China’s base rate, which was 5.6% as of September 30, 2014. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
NOTE 9: INCOME TAXES | |
Each interim period is considered an integral part of the annual period and, accordingly, we measure our tax expense using an estimated annual effective tax rate. An enterprise is required, at the end of each interim reporting period, to make its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the interim period. | |
Our effective tax rate for the three and nine months ended September 30, 2014 was 28.0% and 28.8%, respectively. Our effective tax rate for the three and nine months ended September 30, 2013 was 33.3% and 28.3%, respectively. For the three and nine months ended September 30, 2014, the effective tax rate is less than the federal statutory rate primarily due to earnings in jurisdictions outside the United States, where our effective tax rate is lower, which was partially offset by state income taxes, non-deductible stock-based compensation and accruals on uncertain tax positions. The change in the effective tax rate for 2014 compared to the 2013 rate was primarily due to a change in jurisdictional earnings and certain discrete items. | |
Our policy is to recognize accrued interest and penalties related to unrecognized tax benefits and income tax liabilities as part of our income tax expense. As of September 30, 2014, accrued interest is $1 million, net of federal benefit, and no penalties have been accrued. We do not anticipate any material releases in the next twelve months. | |
We are routinely under audit by federal, state and foreign tax authorities. By virtue of previous consolidated income tax returns filed with Expedia, we are currently under an IRS audit for the 2009 and 2010 tax years, and have various ongoing state income tax audits. As of September 30, 2014, no material assessments have resulted from these audits. These audits include questioning the timing and the amount of income and deductions and the allocation of income among various tax jurisdictions. Annual tax provisions include amounts considered sufficient to pay assessments that may result from the examination of prior year returns. We are no longer subject to tax examinations by tax authorities for years prior to 2007. |
Accrued_Expenses_and_Other_Cur
Accrued Expenses and Other Current Liabilities | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Payables And Accruals [Abstract] | ' | ||||||||
Accrued Expenses and Other Current Liabilities | ' | ||||||||
NOTE 10: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||||||||
Accrued expenses and other current liabilities consisted of the following for the periods presented: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(in millions) | |||||||||
Accrued salary, bonus, and related benefits | $ | 43 | $ | 35 | |||||
Accrued marketing costs | 45 | 22 | |||||||
Accrued charitable foundation payments (1) | 7 | 7 | |||||||
Other | 39 | 22 | |||||||
Total accrued expenses and other current liabilities | $ | 134 | $ | 86 | |||||
-1 | See “Note 12 – Commitments and Contingencies,” in the Notes to our Consolidated Financial Statements in Items 8 of our Annual Report on Form 10-K for the year ended December 31, 2013 for information regarding our charitable foundation . | ||||||||
Other_LongTerm_Liabilities
Other Long-Term Liabilities | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Other Liabilities Noncurrent [Abstract] | ' | ||||||||
Other Long-Term Liabilities | ' | ||||||||
NOTE 11: OTHER LONG-TERM LIABILITIES | |||||||||
Other long-term liabilities consisted of the following for the periods presented: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(in millions) | |||||||||
Unrecognized tax benefits (1) | $ | 66 | $ | 38 | |||||
Construction liabilities (2) | 50 | 8 | |||||||
Other (3) | 18 | 6 | |||||||
Total other long-term liabilities | $ | 134 | $ | 52 | |||||
-1 | Amount includes accrued interest related to this liability. | ||||||||
-2 | We capitalize construction in progress and record a corresponding long-term liability for build-to-suit lease agreements where we are considered the owner during the construction period for accounting purposes only. | ||||||||
-3 | Amounts primarily consist of long term deferred rent balances related to operating leases for office space. | ||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments And Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
NOTE 12: COMMITMENTS AND CONTINGENCIES | |
There have been no material changes to our commitments and contingencies since December 31, 2013. Refer to “Note 12— Commitments and Contingencies,” in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013. | |
In the ordinary course of business, we are parties to legal proceedings and claims involving alleged infringement of third-party intellectual property rights, defamation, and other claims. Rules of the SEC require the description of material pending legal proceedings, other than ordinary, routine litigation incident to the registrant’s business, and advise that proceedings ordinarily need not be described if they primarily involve damages claims for amounts (exclusive of interest and costs) not individually exceeding 10% of the current assets of the registrant and its subsidiaries on a consolidated basis. In the judgment of management, none of the pending litigation matters that we and our subsidiaries are defending involves or is likely to involve amounts of that magnitude. There may be claims or actions pending or threatened against us of which we are currently not aware and the ultimate disposition of which could have a material adverse effect on us. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | ' | ||||||||
Accumulated Other Comprehensive Income (Loss) | ' | ||||||||
NOTE 13: ACCUMULATED OTHER COMPRENSIVE INCOME (LOSS) | |||||||||
Accumulated other comprehensive income (loss) primarily relates to cumulative foreign currency translation adjustments, as follows for the periods presented: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(In millions) | |||||||||
Cumulative foreign currency translation adjustments (1) | $ | (14 | ) | $ | - | ||||
Total accumulated other comprehensive income (loss) | $ | (14 | ) | $ | - | ||||
-1 | Our foreign subsidiary earnings are considered indefinitely reinvested; therefore, deferred taxes are not provided on foreign currency translation adjustments. | ||||||||
Segment_Information
Segment Information | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
Segment Information | ' | ||||||||||||||||
NOTE 14: SEGMENT INFORMATION | |||||||||||||||||
We have one operating and reportable segment: TripAdvisor. We determined our segment based on how our chief operating decision maker manages our business, makes operating decisions, evaluates operating performance and allocates resources. The chief operating decision maker for the Company is our Chief Executive Officer. | |||||||||||||||||
Our primary operating metric for evaluating segment performance is Adjusted EBITDA, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) plus: (1) provision for income taxes; (2) other income (expense), net; (3) depreciation of property and equipment, including amortization of internal use software and website development; (4) amortization of intangible assets; (5) stock-based compensation; and (6) non-recurring expenses. Such amounts are detailed in our segment reconciliation below. In addition, please see our discussion of Adjusted EBITDA in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below. | |||||||||||||||||
The following table is a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the periods presented: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(in millions) | (in millions) | ||||||||||||||||
Adjusted EBITDA | $ | 119 | $ | 104 | $ | 370 | $ | 326 | |||||||||
Depreciation (1) | (12 | ) | (8 | ) | (33 | ) | (21 | ) | |||||||||
OIBA (2) | 107 | 96 | 337 | 305 | |||||||||||||
Amortization of intangible assets | (6 | ) | (1 | ) | (11 | ) | (4 | ) | |||||||||
Stock-based compensation | (17 | ) | (11 | ) | (46 | ) | (35 | ) | |||||||||
Other expense, net | (9 | ) | - | (13 | ) | (8 | ) | ||||||||||
Provision for income taxes | (21 | ) | (28 | ) | (77 | ) | (73 | ) | |||||||||
Net income | $ | 54 | $ | 56 | $ | 190 | $ | 185 | |||||||||
-1 | Includes amortization of internal use software and website development costs. | ||||||||||||||||
-2 | We define OIBA as net income (loss) plus: (1) provision for income taxes; (2) other income (expense), net; (3) stock-based compensation; (4) amortization of intangible assets; and (5) non-recurring expenses. This operating metric is only used by our management to calculate our annual obligation for our charitable foundation. Refer to “Note 12— Commitments and Contingencies,” in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013 for information regarding our charitable foundation. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||
NOTE 15: EARNINGS PER SHARE | |||||||||||||||||
Basic Earnings Per Share Attributable to Common Stockholders | |||||||||||||||||
We compute basic earnings per share (“Basic EPS”) by dividing net income attributable to TripAdvisor by the weighted average number of common shares outstanding during the period. For the three and nine months ended September 30, 2014 and 2013, we computed the weighted average number of common shares outstanding during the period using the total of common stock and Class B common stock outstanding as of December 31, 2013 and 2012, respectively, plus the weighted average of any additional shares issued and outstanding during the three and nine months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||
Diluted Earnings Per Share Attributable to Common Stockholders | |||||||||||||||||
We compute diluted earnings per share (“Diluted EPS”), by dividing net income attributable to TripAdvisor by the sum of the weighted average number of common and common equivalent shares outstanding during the period. For the three and nine months ended September 30, 2014 and 2013, we computed the weighted average number of common and common equivalent shares outstanding during the period using the sum of (i) the number of shares of common stock and Class B common stock used in the Basic EPS calculation as indicated above, (ii) if dilutive, the incremental weighted average common stock that we would issue upon the assumed exercise of common equivalent shares related to stock options and the vesting of restricted stock units using the treasury stock method during the three and nine months ended September 30, 2014 and 2013, respectively, and (iii) if dilutive, performance based awards based on the number of shares that would be issuable as of the end of the reporting period assuming the end of the reporting period was also the end of the contingency period. | |||||||||||||||||
Under the treasury stock method, the assumed proceeds calculation includes the actual proceeds to be received from the employee upon exercise, the average unrecognized compensation cost during the period and any tax benefits credited upon exercise to additional paid-in-capital. The treasury stock method assumes that a company uses the proceeds from the exercise of an award to repurchase common stock at the average market price for the period. Windfall tax benefits created upon the exercise of an award would be added to assumed proceeds, while shortfalls charged to additional paid-in-capital would be deducted from assumed proceeds. Any shortfalls not covered by the windfall tax pool would be charged to the income statement and would be excluded from the calculation of assumed proceeds, if any. | |||||||||||||||||
Below is a reconciliation of the weighted average number of shares of common stock outstanding in calculating Diluted EPS (shares in thousands and dollars in millions, except per share amounts): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income | $ | 54 | $ | 56 | $ | 190 | $ | 185 | |||||||||
Denominator: | |||||||||||||||||
Weighted average shares used to compute Basic EPS | 142,842 | 142,690 | 142,648 | 143,095 | |||||||||||||
Weighted average effect of dilutive securities: | |||||||||||||||||
Stock options | 2,851 | 2,435 | 2,837 | 1,925 | |||||||||||||
RSUs | 378 | 329 | 354 | 238 | |||||||||||||
Weighted average shares used to compute Diluted EPS | 146,071 | 145,454 | 145,839 | 145,258 | |||||||||||||
Basic EPS | $ | 0.38 | $ | 0.39 | $ | 1.33 | $ | 1.29 | |||||||||
Diluted EPS | $ | 0.37 | $ | 0.38 | $ | 1.3 | $ | 1.27 | |||||||||
The following potential common shares related to stock options and RSUs were excluded from the calculation of Diluted EPS because their effect would have been anti-dilutive for the periods presented (in thousands): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014(1) | 2013(2) | 2014(1) | 2013(2) | ||||||||||||||
Stock options | 599 | 1,360 | 1,325 | 2,559 | |||||||||||||
RSUs | 6 | 47 | 167 | 32 | |||||||||||||
Total | 605 | 1,407 | 1,492 | 2,591 | |||||||||||||
-1 | These totals do not include 66,666 performance based options and 44,000 performance based RSUs representing the right to acquire 110,666 shares of common stock for which all targets required to trigger vesting have not been achieved as of September 30, 2014; therefore, such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods. | ||||||||||||||||
-2 | These totals do not include 155,000 performance based options and 44,000 performance based RSUs representing the right to acquire 199,000 shares of common stock for which all targets required to trigger vesting had not been achieved as of September 30, 2013; therefore, such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods. | ||||||||||||||||
The earnings per share amounts are the same for common stock and Class B common stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
NOTE 16: RELATED PARTY TRANSACTIONS | |
Liberty Interactive Corporation and Liberty TripAdvisor Holdings, Inc. | |
On August 27, 2014, the entire beneficial ownership of our common stock and Class B common stock held by Liberty Interactive Corporation (“Liberty”) was indirectly acquired by Liberty TripAdvisor Holdings, Inc. (“LTRIP”) by means of a spin-off (the “Liberty Spin-Off”). In the Liberty Spin-Off, Liberty, LTRIP’s former parent company, distributed, by means of a dividend, to the holders of its Liberty Ventures common stock, Liberty’s entire equity interest in LTRIP. As a result of the Liberty Spin-Off, LTRIP became a separate, publicly traded company and 100% of Liberty’s interest in TripAdvisor is now held by LTRIP. Given the change in ownership of our shares, we no longer consider Liberty as a related party effective as of the Liberty Spin-Off. | |
As of September 30, 2014, LTRIP beneficially owned 18,159,752 shares of our common stock and 12,799,999 shares of our Class B common stock, which shares constitute 14.0% of the outstanding shares of Common Stock and 100% of the outstanding shares of Class B Common Stock. Assuming the conversion of all of LTRIP’s shares of Class B common stock into common stock, LTRIP would beneficially own 21.7% of the outstanding common stock (calculated in accordance with Rule 13d-3). Because each share of Class B common stock is generally entitled to ten votes per share and each share of common stock is entitled to one vote per share, LTRIP may be deemed to beneficially own equity securities representing approximately 56.6% of our voting power. | |
We had no material related party transactions with LTRIP or Liberty during the three and nine months ended September 30, 2014 and 2013, respectively. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). We have included all adjustments necessary for a fair presentation of the results of the interim period. These adjustments consist of normal recurring items. We prepared the unaudited consolidated financial statements following the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, we have condensed or omitted certain footnotes or other financial information that are normally required by GAAP for annual financial statements. Our interim unaudited consolidated financial statements are not necessarily indicative of results that may be expected for any other interim period or for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2013, previously filed with the SEC. | |
Principles of Consolidation | ' |
Principles of Consolidation | |
These accompanying unaudited financial statements present our results of operations, financial position and cash flows on a consolidated basis. The accompanying unaudited consolidated financial statements include TripAdvisor, our wholly-owned subsidiaries, and entities we control, or in which we have a variable interest and are the primary beneficiary of expected cash profits or losses. We have eliminated significant intercompany transactions and accounts. | |
Certain of our subsidiaries that operate in China have variable interests in affiliated entities in China in order to comply with Chinese laws and regulations, which restrict foreign investment in Internet content provision businesses. Although we do not own the capital stock of some of our Chinese affiliates, we consolidate their results as we are the primary beneficiary of the cash losses or profits of these variable interest affiliates and have the power to direct the activities of these affiliates. Our variable interest entities are not material for all periods presented. | |
Reclassifications | ' |
Reclassifications | |
Pursuant to our disclosure in “Note 15— Related Party Transactions” in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013, we no longer consider Expedia, Inc. ("Expedia”) a related party. Certain reclassifications have been made to conform the prior period to the current presentation relating to Expedia transactions, which includes the reclassification of revenue from Expedia on our unaudited statements of operations to revenue and the reclassification of receivables from Expedia, net on our unaudited consolidated balance sheets to accounts receivable. These reclassifications had no net effect on our unaudited consolidated financial statements. | |
All other reclassifications, made to conform the prior period to the current presentation, were not material and had no net effect on our unaudited consolidated financial statements. | |
Accounting Estimates | ' |
Accounting Estimates | |
We use estimates and assumptions in the preparation of our unaudited consolidated financial statements in accordance with GAAP. Our estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our unaudited consolidated financial statements. These estimates and assumptions also affect the reported amount of net income or loss during any period. Our actual financial results could differ significantly from these estimates. The significant estimates underlying our unaudited consolidated financial statements include recoverability and useful life of long-lived assets; recoverability of intangible assets and goodwill; accounting for income taxes; purchase accounting for business combinations and stock-based compensation. | |
Seasonality | ' |
Seasonality | |
Expenditures by travel advertisers tend to be seasonal. Traditionally, our strongest quarter has been the third quarter, which is a key travel research period, with the weakest quarter being the fourth quarter. However, adverse economic conditions or continued growth of our international operations with differing holiday peaks may influence the typical trend of our seasonality in the future. | |
New Accounting Pronouncements Not Yet Adopted | ' |
New Accounting Pronouncements Not Yet Adopted | |
Revenue From Contracts With Customers | |
In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a retrospective or cumulative effect transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our unaudited consolidated financial statements and related disclosures. | |
Recently Adopted Accounting Pronouncements | ' |
Recently Adopted Accounting Pronouncements | |
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | |
In July 2013, the FASB issued new accounting guidance on the presentation of unrecognized tax benefits. The new guidance requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use the deferred tax asset for such purpose, then the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013, with early adoption permitted. Accordingly, we adopted these presentation requirements during the first quarter of 2014. The adoption of this new guidance did not have a material impact on our unaudited consolidated financial statements and related disclosures. |
Acquisitions_Tables
Acquisitions (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||
Summary of Purchase Price Allocation Initially Recorded on Consolidated Balance Sheet for All Acquisitions | ' | ||||||||||||
The following table presents the purchase price allocations initially recorded on our consolidated balance sheet on September 30, 2014 for all 2014 acquisitions (in millions): | |||||||||||||
Viator | Other Acquisitions | Total | |||||||||||
Goodwill (1) | $ | 133 | $ | 105 | $ | 238 | |||||||
Intangible assets (2) | 100 | 66 | 166 | ||||||||||
Net tangible assets (liabilities) (3) | (14 | ) | 6 | (8 | ) | ||||||||
Deferred tax liabilities, net | (27 | ) | (17 | ) | (44 | ) | |||||||
Total purchase price consideration (4) | $ | 192 | $ | 160 | $ | 352 | |||||||
-1 | The goodwill represents the excess value over both tangible and intangible assets acquired. The goodwill in these transactions is primarily attributable to expected operational synergies, potential new and expanded business relationships and user bases, the assembled workforces, and the future development initiatives of the assembled workforces. Goodwill in the amount of $5 million is expected to be deductible for tax purposes. | ||||||||||||
-2 | Identifiable definite-lived intangible assets were comprised of developed technology of $27 million, trade names of $45 million, and subscriber and customer relationships of $94 million. The overall weighted-average life of the identifiable definite-lived intangible assets acquired in the purchase of the companies was 7.3 years, which will be amortized on a straight-line basis over their estimated useful lives. | ||||||||||||
-3 | Includes assets acquired, including cash of $61 million and accounts receivable of $24 million and liabilities assumed, including deferred merchant payables of $76 million, accrued expenses and other current liabilities of $14 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 calculation for Lafourchette and (ii) indemnification obligations of the acquired company stockholders for all 2014 acquisitions as of September 30, 2014. | ||||||||||||
Stock_Based_Awards_and_Other_E1
Stock Based Awards and Other Equity Instruments (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ||||||||||||||||
Amount of Stock-Based Compensation Expense Related to Stock-Based Awards, Primarily Stock Options and Restricted Stock Units ("RSUs") | ' | ||||||||||||||||
The following table presents the amount of stock-based compensation expense related to stock-based awards, primarily stock options and restricted stock units (“RSUs”), on our unaudited consolidated statements of operations during the periods presented: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(in millions) | (in millions) | ||||||||||||||||
Selling and marketing | $ | 4 | $ | 3 | $ | 10 | $ | 7 | |||||||||
Technology and content | 7 | 5 | 19 | 16 | |||||||||||||
General and administrative | 6 | 3 | 17 | 12 | |||||||||||||
Total stock-based compensation | 17 | 11 | 46 | 35 | |||||||||||||
Income tax benefit from stock-based compensation | (6 | ) | (4 | ) | (17 | ) | (14 | ) | |||||||||
Total stock-based compensation, net of tax effect | $ | 11 | $ | 7 | $ | 29 | $ | 21 | |||||||||
Summary of Status and Activity for Stock Option Awards Relating to Common Stock | ' | ||||||||||||||||
A summary of the status and activity for stock option awards relating to our common stock for the nine months ended September 30, 2014, is presented below: | |||||||||||||||||
Weighted | Weighted | ||||||||||||||||
Average | Average | ||||||||||||||||
Exercise | Remaining | Aggregate | |||||||||||||||
Options | Price Per | Contractual | Intrinsic | ||||||||||||||
Outstanding | Share | Life | Value | ||||||||||||||
(in thousands) | (in years) | (in millions) | |||||||||||||||
Options outstanding at January 1, 2014 | 9,470 | $ | 40.18 | ||||||||||||||
Assumed options from acquisition | 101 | $ | 16.36 | ||||||||||||||
Granted | 557 | 96.42 | |||||||||||||||
Exercised (1) | (1,139 | ) | 33.67 | ||||||||||||||
Cancelled or expired | (234 | ) | 45.05 | ||||||||||||||
Options outstanding at September 30, 2014 | 8,755 | $ | 44.21 | 5.3 | $ | 416 | |||||||||||
Exercisable as of September 30, 2014 | 3,845 | $ | 31.68 | 2.9 | $ | 230 | |||||||||||
Vested and expected to vest after September 30, 2014 | 8,203 | $ | 43.38 | 5.1 | $ | 396 | |||||||||||
-1 | Inclusive of 613,261 options which were not converted into shares due to net share settlement in order to cover the aggregate exercise price and the minimum amount of required employee withholding taxes. Potential shares that had been convertible under stock options that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited consolidated statements of cash flows. | ||||||||||||||||
Weighted-Average Assumptions of Estimated Fair Value of Stock Option Grants | ' | ||||||||||||||||
The fair value of stock option grants under the 2011 Plan has been estimated at the date of grant using the Black–Scholes option pricing model with the following weighted average assumptions for the periods presented: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Risk free interest rate | 1.76 | % | 1.83 | % | 1.93 | % | 1.4 | % | |||||||||
Expected term (in years) | 5.77 | 5.8 | 6.27 | 6.05 | |||||||||||||
Expected volatility | 46.09 | % | 49.62 | % | 47.7 | % | 50.81 | % | |||||||||
Expected dividend yield | — % | — % | — % | — % | |||||||||||||
Summary of RSU Activity on Common Stock | ' | ||||||||||||||||
The following table presents a summary of RSU activity on our common stock during the nine months ended September 30, 2014: | |||||||||||||||||
Weighted | |||||||||||||||||
Average | |||||||||||||||||
Grant- | Aggregate | ||||||||||||||||
RSUs | Date Fair | Intrinsic | |||||||||||||||
Outstanding | Value Per Share | Value | |||||||||||||||
(in thousands) | (in millions) | ||||||||||||||||
Unvested RSUs outstanding as of January 1, 2014 | 1,135 | $ | 49.64 | ||||||||||||||
Granted | 618 | 96.15 | |||||||||||||||
Vested and released (1) | (265 | ) | 46.36 | ||||||||||||||
Cancelled | (106 | ) | 66.09 | ||||||||||||||
Unvested RSUs outstanding as of September 30, 2014 | 1,382 | $ | 69.79 | $ | 126 | ||||||||||||
-1 | Inclusive of 94,445 RSUs withheld to satisfy employee minimum tax withholding requirements due to net share settlement. Potential shares which had been convertible under RSUs that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited consolidated statements of cash flows. | ||||||||||||||||
Summary of Unrecognized Stock-Based Compensation Expense, Net of Estimated Forfeitures and Weighted Average Period Remaining | ' | ||||||||||||||||
A summary of our remaining unrecognized stock-based compensation expense, net of estimated forfeitures, and the weighted average remaining amortization period at September 30, 2014 related to our non-vested stock options and RSU awards is presented below (in millions): | |||||||||||||||||
Stock | |||||||||||||||||
Options | RSUs | ||||||||||||||||
Unrecognized compensation expense (net of forfeitures) | $ | 87 | $ | 57 | |||||||||||||
Weighted average period remaining (in years) | 2.9 | 3 | |||||||||||||||
Financial_Instruments_Tables
Financial Instruments (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Investments All Other Investments [Abstract] | ' | ||||||||||||||||||||||||||||
Schedule of Cash, Cash Equivalents and Marketable Securities | ' | ||||||||||||||||||||||||||||
The following tables show our cash and available-for-sale securities’ amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short and long-term marketable securities for the periods presented (in millions): | |||||||||||||||||||||||||||||
30-Sep-14 | |||||||||||||||||||||||||||||
Cash and | Short-Term | Long-Term | |||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Cash | Marketable | Marketable | |||||||||||||||||||||||
Cost | Gains | Losses | Value | Equivalents | Securities | Securities | |||||||||||||||||||||||
Cash | $ | 468 | $ | - | $ | - | $ | 468 | $ | 468 | $ | - | $ | - | |||||||||||||||
Level 1: | |||||||||||||||||||||||||||||
Money market funds | 23 | - | - | 23 | 23 | - | - | ||||||||||||||||||||||
Level 2: | |||||||||||||||||||||||||||||
U.S. agency securities | 30 | - | - | 30 | - | 24 | 6 | ||||||||||||||||||||||
Certificates of deposit | 9 | - | - | 9 | - | 9 | - | ||||||||||||||||||||||
Corporate debt securities | 84 | - | - | 84 | - | 52 | 32 | ||||||||||||||||||||||
Subtotal | 123 | - | - | 123 | - | 85 | 38 | ||||||||||||||||||||||
Total | $ | 614 | $ | - | $ | - | $ | 614 | $ | 491 | $ | 85 | $ | 38 | |||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||||||
Cash and | Short-Term | Long-Term | |||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Cash | Marketable | Marketable | |||||||||||||||||||||||
Cost | Gains | Losses | Value | Equivalents | Securities | Securities | |||||||||||||||||||||||
Cash | $ | 195 | $ | - | $ | - | $ | 195 | $ | 195 | $ | - | $ | - | |||||||||||||||
Level 1: | |||||||||||||||||||||||||||||
Money market funds | 156 | - | - | 156 | 156 | - | - | ||||||||||||||||||||||
Level 2: | |||||||||||||||||||||||||||||
U.S. agency securities | 37 | - | - | 37 | - | 14 | 23 | ||||||||||||||||||||||
Certificates of deposit | 23 | - | - | 23 | - | 16 | 7 | ||||||||||||||||||||||
Commercial paper | 5 | - | - | 5 | - | 5 | - | ||||||||||||||||||||||
Corporate debt securities | 254 | - | - | 254 | - | 96 | 158 | ||||||||||||||||||||||
Subtotal | 319 | - | - | 319 | - | 131 | 188 | ||||||||||||||||||||||
Total | $ | 670 | $ | - | $ | - | $ | 670 | $ | 351 | $ | 131 | $ | 188 | |||||||||||||||
Fair Value and Notional Principal Amounts of Outstanding or Unsettled Derivative Instruments | ' | ||||||||||||||||||||||||||||
The following table shows the notional principal amounts of our outstanding derivative instruments for the periods presented: | |||||||||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Foreign exchange-forward contracts (1)(2) | $ | 5 | $ | 5 | |||||||||||||||||||||||||
-1 | Derivative contracts address foreign exchange fluctuations for the Euro versus the U.S. Dollar. | ||||||||||||||||||||||||||||
-2 | The fair value of our derivatives are not material for all periods presented and are reported as liabilities in accrued and other current liabilities on our unaudited consolidated balance sheets. We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active markets. |
Property_and_Equipment_Net_Tab
Property and Equipment, Net (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Property Plant And Equipment [Abstract] | ' | ||||||||
Property and Equipment, Net | ' | ||||||||
Property and equipment consists of the following for the periods presented: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(in millions) | |||||||||
Capitalized software and website development | $ | 108 | $ | 73 | |||||
Leasehold improvements | 37 | 22 | |||||||
Computer equipment | 31 | 21 | |||||||
Furniture, office equipment and other | 9 | 6 | |||||||
185 | 122 | ||||||||
Less: accumulated depreciation | (79 | ) | (48 | ) | |||||
Construction in progress (1) | 55 | 8 | |||||||
Property and equipment, net | $ | 161 | $ | 82 | |||||
-1 | We capitalize construction in progress for build-to-suit lease agreements where we are considered the owner, for accounting purposes only, during the construction period. These amounts represent construction costs to date incurred by the landlord and the Company related to our future corporate headquarters in Needham, MA. During the nine months ended September 30, 2014 we capitalized $42 million in non-cash construction costs which were incurred by the landlord, with a corresponding liability recorded in other long-term liabilities on our unaudited consolidated balance sheet. Refer to “Note 12 – Commitments and Contingencies,” in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013 for additional information on our future corporate headquarters lease. |
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets, Net (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||||
Summary of Changes in Goodwill | ' | ||||||||||||||||||||||||||||
The change in goodwill for the nine months ended September 30, 2014 consists of the following: | |||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Beginning balance as of January 1, 2014 | $ | 502 | |||||||||||||||||||||||||||
Additions (1) | 238 | ||||||||||||||||||||||||||||
Foreign exchange translation adjustment | (12 | ) | |||||||||||||||||||||||||||
Ending balance as of September 30, 2014 | $ | 728 | |||||||||||||||||||||||||||
-1 | The additions to goodwill relate to our 2014 business acquisitions. See “Note 3— Acquisitions” above, for further information. | ||||||||||||||||||||||||||||
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | ' | ||||||||||||||||||||||||||||
Intangible assets, which were acquired in business combinations and recorded at fair value on the date of purchase, consist of the following: | |||||||||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Intangible assets with definite lives | $ | 195 | $ | 36 | |||||||||||||||||||||||||
Less: accumulated amortization | (25 | ) | (14 | ) | |||||||||||||||||||||||||
Intangible assets with definite lives, net | 170 | 22 | |||||||||||||||||||||||||||
Intangible assets with indefinite lives | 30 | 30 | |||||||||||||||||||||||||||
$ | 200 | $ | 52 | ||||||||||||||||||||||||||
Components of Intangible Assets with Definite Lives | ' | ||||||||||||||||||||||||||||
The following table presents the components of our intangible assets with definite lives: | |||||||||||||||||||||||||||||
30-Sep-14 | December 31, 2013 | ||||||||||||||||||||||||||||
Weighted Average | Gross | Net | Gross | Net | |||||||||||||||||||||||||
Remaining Life | Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | |||||||||||||||||||||||
(in years) | Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||||||
Trade names and trademarks | 9.7 | $ | 62 | $ | (10 | ) | $ | 52 | $ | 18 | $ | (7 | ) | $ | 11 | ||||||||||||||
Subscriber and customer relationships | 6.3 | 102 | (11 | ) | 91 | 14 | (6 | ) | 8 | ||||||||||||||||||||
Technology and other | 4.6 | 31 | (4 | ) | 27 | 4 | (1 | ) | 3 | ||||||||||||||||||||
Total | 7 | $ | 195 | $ | (25 | ) | $ | 170 | $ | 36 | $ | (14 | ) | $ | 22 | ||||||||||||||
Summary of Estimated Future Amortization Expense Related to Intangible Assets with Definite Lives | ' | ||||||||||||||||||||||||||||
Intangible assets with definite lives are amortized on a straight-line basis. The estimated amortization expense for intangible assets with definite lives for the remainder of 2014, the annual expense for the next five years, and the expense thereafter, assuming no subsequent impairment of the underlying assets, is expected to be as follows (in millions): | |||||||||||||||||||||||||||||
2014 (remaining three months) | $ | 7 | |||||||||||||||||||||||||||
2015 | 27 | ||||||||||||||||||||||||||||
2016 | 27 | ||||||||||||||||||||||||||||
2017 | 25 | ||||||||||||||||||||||||||||
2018 | 23 | ||||||||||||||||||||||||||||
2019 and thereafter | 61 | ||||||||||||||||||||||||||||
Total | $ | 170 | |||||||||||||||||||||||||||
Debt_Tables
Debt (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Summary of Total Outstanding Borrowings | ' | ||||||||
Total outstanding borrowings under the Credit Agreement consist of the following: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(in millions) | |||||||||
Short-Term Debt: | |||||||||
Term Loan | $ | 40 | $ | 40 | |||||
Total Short-Term Borrowings | $ | 40 | $ | 40 | |||||
Long-Term Debt: | |||||||||
Term Loan | $ | 270 | $ | 300 | |||||
Total Long-Term Borrowings | $ | 270 | $ | 300 | |||||
Accrued_Expenses_and_Other_Cur1
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Payables And Accruals [Abstract] | ' | ||||||||
Details of Accrued Expenses and Other Current Liabilities | ' | ||||||||
Accrued expenses and other current liabilities consisted of the following for the periods presented: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(in millions) | |||||||||
Accrued salary, bonus, and related benefits | $ | 43 | $ | 35 | |||||
Accrued marketing costs | 45 | 22 | |||||||
Accrued charitable foundation payments (1) | 7 | 7 | |||||||
Other | 39 | 22 | |||||||
Total accrued expenses and other current liabilities | $ | 134 | $ | 86 | |||||
-1 | See “Note 12 – Commitments and Contingencies,” in the Notes to our Consolidated Financial Statements in Items 8 of our Annual Report on Form 10-K for the year ended December 31, 2013 for information regarding our charitable foundation . | ||||||||
Other_LongTerm_Liabilities_Tab
Other Long-Term Liabilities (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Other Liabilities Noncurrent [Abstract] | ' | ||||||||
Schedule of Other Long-Term Liabilities | ' | ||||||||
Other long-term liabilities consisted of the following for the periods presented: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(in millions) | |||||||||
Unrecognized tax benefits (1) | $ | 66 | $ | 38 | |||||
Construction liabilities (2) | 50 | 8 | |||||||
Other (3) | 18 | 6 | |||||||
Total other long-term liabilities | $ | 134 | $ | 52 | |||||
-1 | Amount includes accrued interest related to this liability. | ||||||||
-2 | We capitalize construction in progress and record a corresponding long-term liability for build-to-suit lease agreements where we are considered the owner during the construction period for accounting purposes only. | ||||||||
-3 | Amounts primarily consist of long term deferred rent balances related to operating leases for office space. | ||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | ' | ||||||||
Accumulated Other Comprehensive Income (Loss) Primarily Relates to Accumulated Foreign Currency Translation | ' | ||||||||
Accumulated other comprehensive income (loss) primarily relates to cumulative foreign currency translation adjustments, as follows for the periods presented: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(In millions) | |||||||||
Cumulative foreign currency translation adjustments (1) | $ | (14 | ) | $ | - | ||||
Total accumulated other comprehensive income (loss) | $ | (14 | ) | $ | - | ||||
-1 | Our foreign subsidiary earnings are considered indefinitely reinvested; therefore, deferred taxes are not provided on foreign currency translation adjustments. | ||||||||
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
Reconciliation of Adjusted EBITDA to Net Income | ' | ||||||||||||||||
The following table is a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the periods presented: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(in millions) | (in millions) | ||||||||||||||||
Adjusted EBITDA | $ | 119 | $ | 104 | $ | 370 | $ | 326 | |||||||||
Depreciation (1) | (12 | ) | (8 | ) | (33 | ) | (21 | ) | |||||||||
OIBA (2) | 107 | 96 | 337 | 305 | |||||||||||||
Amortization of intangible assets | (6 | ) | (1 | ) | (11 | ) | (4 | ) | |||||||||
Stock-based compensation | (17 | ) | (11 | ) | (46 | ) | (35 | ) | |||||||||
Other expense, net | (9 | ) | - | (13 | ) | (8 | ) | ||||||||||
Provision for income taxes | (21 | ) | (28 | ) | (77 | ) | (73 | ) | |||||||||
Net income | $ | 54 | $ | 56 | $ | 190 | $ | 185 | |||||||||
-1 | Includes amortization of internal use software and website development costs. | ||||||||||||||||
-2 | We define OIBA as net income (loss) plus: (1) provision for income taxes; (2) other income (expense), net; (3) stock-based compensation; (4) amortization of intangible assets; and (5) non-recurring expenses. This operating metric is only used by our management to calculate our annual obligation for our charitable foundation. Refer to “Note 12— Commitments and Contingencies,” in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013 for information regarding our charitable foundation. |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Reconciliation of Weighted Average Number of Shares of Common Stock Outstanding | ' | ||||||||||||||||
Below is a reconciliation of the weighted average number of shares of common stock outstanding in calculating Diluted EPS (shares in thousands and dollars in millions, except per share amounts): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income | $ | 54 | $ | 56 | $ | 190 | $ | 185 | |||||||||
Denominator: | |||||||||||||||||
Weighted average shares used to compute Basic EPS | 142,842 | 142,690 | 142,648 | 143,095 | |||||||||||||
Weighted average effect of dilutive securities: | |||||||||||||||||
Stock options | 2,851 | 2,435 | 2,837 | 1,925 | |||||||||||||
RSUs | 378 | 329 | 354 | 238 | |||||||||||||
Weighted average shares used to compute Diluted EPS | 146,071 | 145,454 | 145,839 | 145,258 | |||||||||||||
Basic EPS | $ | 0.38 | $ | 0.39 | $ | 1.33 | $ | 1.29 | |||||||||
Diluted EPS | $ | 0.37 | $ | 0.38 | $ | 1.3 | $ | 1.27 | |||||||||
Common Shares Related to Stock Options and RSUs Excluded from Calculated Diluted Net Income Per Share | ' | ||||||||||||||||
The following potential common shares related to stock options and RSUs were excluded from the calculation of Diluted EPS because their effect would have been anti-dilutive for the periods presented (in thousands): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014(1) | 2013(2) | 2014(1) | 2013(2) | ||||||||||||||
Stock options | 599 | 1,360 | 1,325 | 2,559 | |||||||||||||
RSUs | 6 | 47 | 167 | 32 | |||||||||||||
Total | 605 | 1,407 | 1,492 | 2,591 | |||||||||||||
-1 | These totals do not include 66,666 performance based options and 44,000 performance based RSUs representing the right to acquire 110,666 shares of common stock for which all targets required to trigger vesting have not been achieved as of September 30, 2014; therefore, such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods. | ||||||||||||||||
-2 | These totals do not include 155,000 performance based options and 44,000 performance based RSUs representing the right to acquire 199,000 shares of common stock for which all targets required to trigger vesting had not been achieved as of September 30, 2013; therefore, such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods. |
Organization_Business_Descript1
Organization, Business Description and Basis of Presentation - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Segment | |
Country | |
Brand | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ' |
Number of countries with localized versions of website | 44 |
Number of other travel brands with websites | 24 |
Number of reportable segment | 1 |
Acquisitions_Additional_Inform
Acquisitions - Additional Information (Details) (USD $) | 9 Months Ended | 0 Months Ended | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | Aug. 08, 2014 | Sep. 30, 2014 | |
Viator Incorporated | Series of Individually Immaterial Business Acquisitions | |||
Business | ||||
Property | ||||
Business Acquisition [Line Items] | ' | ' | ' | ' |
Total purchase price consideration | ' | ' | $192,000,000 | $160,000,000 |
Cash consideration paid | ' | ' | 187,000,000 | 152,000,000 |
Cash consideration paid, net of cash acquired | 284,000,000 | 32,000,000 | 132,000,000 | ' |
Cash acquired from acquisition | 61,000,000 | ' | 55,000,000 | 6,000,000 |
Stock option issued related to acquisition | ' | ' | 100,595 | ' |
Fair value of stock option issued related to acquisition | ' | ' | 5,000,000 | ' |
Unrecognized compensation expense, Stock Options | ' | ' | 3,000,000 | ' |
Period of recognition (in years) | ' | ' | '3 years | ' |
Number of business acquired | ' | ' | ' | 3 |
Cash held back on acquisition | ' | ' | ' | 2,000,000 |
Number of properties featured | ' | ' | ' | 14,000 |
Acquisition-related costs | ' | ' | ' | $3,000,000 |
Acquisitions_Summary_of_Purcha
Acquisitions - Summary of Purchase Price Allocation Initially Recorded on Consolidated Balance Sheet for all Acquisitions (Details) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | |
Business Acquisition [Line Items] | ' | |
Goodwill | $238 | [1],[2] |
Intangible assets | 166 | [3] |
Net tangible liabilities | -8 | [4] |
Deferred tax liabilities, net | -44 | |
Total purchase price consideration | 352 | [5] |
Viator Incorporated | ' | |
Business Acquisition [Line Items] | ' | |
Goodwill | 133 | [1] |
Intangible assets | 100 | [3] |
Net tangible liabilities | -14 | [4] |
Deferred tax liabilities, net | -27 | |
Total purchase price consideration | 192 | [5] |
Other Acquisitions | ' | |
Business Acquisition [Line Items] | ' | |
Goodwill | 105 | [1] |
Intangible assets | 66 | [3] |
Net tangible assets | 6 | [4] |
Deferred tax liabilities, net | -17 | |
Total purchase price consideration | $160 | [5] |
[1] | The goodwill represents the excess value over both tangible and intangible assets acquired. The goodwill in these transactions is primarily attributable to expected operational synergies, potential new and expanded business relationships and user bases, the assembled workforces, and the future development initiatives of the assembled workforces. Goodwill in the amount of $5 million is expected to be deductible for tax purposes. | |
[2] | The additions to goodwill relate to our 2014 business acquisitions. See bNote 3b Acquisitionsb above, for further information. | |
[3] | Identifiable definite-lived intangible assets were comprised of developed technology of $27 million, trade names of $45 million, and subscriber and customer relationships of $94 million. The overall weighted-average life of the identifiable definite-lived intangible assets acquired in the purchase of the companies was 7.3 years, which will be amortized on a straight-line basis over their estimated useful lives. | |
[4] | Includes assets acquired, including cash of $61 million and accounts receivable of $24 million and liabilities assumed, including deferred merchant payables of $76 million, accrued expenses and other current liabilities of $14 million and deferred revenue of $5 million which reflect their respective fair values at acquisition date. | |
[5] | Subject to adjustment based on (i) final working capital adjustment calculation for Lafourchette and (ii)B indemnification obligations of the acquired company stockholders for all 2014 acquisitions as of September 30, 2014. |
Acquisitions_Summary_of_Purcha1
Acquisitions - Summary of Purchase Price Allocation Initially Recorded on Consolidated Balance Sheet for all Acquisitions (Parenthetical) (Details) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | |
Business Acquisition [Line Items] | ' | |
Goodwill expected to be deductible for tax purposes | $5 | |
Identifiable definite-lived intangible assets | 166 | [1] |
Weighted average life of identifiable definite-lived intangible assets acquired | '7 years 3 months 18 days | |
Cash acquired from acquisition | 61 | |
Assets acquired, accounts receivable | 24 | |
Liabilities assumed, deferred merchant payables | 76 | |
Liabilities assumed, accrued expenses | 14 | |
Liabilities assumed, deferred revenue | 5 | |
Developed Technology | ' | |
Business Acquisition [Line Items] | ' | |
Identifiable definite-lived intangible assets | 27 | |
Trade Names | ' | |
Business Acquisition [Line Items] | ' | |
Identifiable definite-lived intangible assets | 45 | |
Customer Relationships | ' | |
Business Acquisition [Line Items] | ' | |
Identifiable definite-lived intangible assets | $94 | |
[1] | Identifiable definite-lived intangible assets were comprised of developed technology of $27 million, trade names of $45 million, and subscriber and customer relationships of $94 million. The overall weighted-average life of the identifiable definite-lived intangible assets acquired in the purchase of the companies was 7.3 years, which will be amortized on a straight-line basis over their estimated useful lives. |
Stock_Based_Awards_and_Other_E2
Stock Based Awards and Other Equity Instruments - Amount of Stock-Based Compensation Expense Related to Stock-Based Awards, Primarily Stock Options and Resticted Stock Units ("RSUs") (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Total stock-based compensation | $17 | $11 | $46 | $35 |
Income tax benefit from stock-based compensation | -6 | -4 | -17 | -14 |
Total stock-based compensation, net of tax effect | 11 | 7 | 29 | 21 |
Selling and Marketing | ' | ' | ' | ' |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Total stock-based compensation | 4 | 3 | 10 | 7 |
Technology and Content | ' | ' | ' | ' |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Total stock-based compensation | 7 | 5 | 19 | 16 |
General and Administrative | ' | ' | ' | ' |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Total stock-based compensation | $6 | $3 | $17 | $12 |
Stock_Based_Awards_and_Other_E3
Stock Based Awards and Other Equity Instruments - Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' | ' | ' |
Number of stock options issued | ' | ' | 557,000 | ' |
Closing stock price | $91.42 | ' | $91.42 | ' |
Total intrinsic value | ' | ' | $71 | $45 |
Total fair value of stock options vested | ' | ' | $27 | $23 |
Stock Options | ' | ' | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' | ' | ' |
Number of stock options issued | ' | ' | 658,332 | ' |
Term of stock options | ' | ' | '10 years | ' |
Stock options vest period | ' | ' | '4 years | ' |
Weighted average grant date fair value of options granted | ' | ' | $47.03 | $28.11 |
Acquisition Related Options | ' | ' | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' | ' | ' |
Weighted average grant date fair value of options granted | $80.31 | $0 | $80.31 | $0 |
Restricted Stock Units (RSUs) | ' | ' | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' | ' | ' |
Stock options vest period | ' | ' | '4 years | ' |
RSU's issued under incentive plan | ' | ' | 617,693 | ' |
Stock_Based_Awards_and_Other_E4
Stock Based Awards and Other Equity Instruments - Summary of Status and Activity for Stock Option Awards Relating to Common Stock (Details) (USD $) | 9 Months Ended | |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | |
Options Outstanding | ' | |
Options Outstanding, Beginning balance | 9,470,000 | |
Options Outstanding, Assumed from acquisition | 101,000 | |
Options Outstanding, Granted | 557,000 | |
Options Outstanding, Exercised | -1,139,000 | [1] |
Options Outstanding, Cancelled or expired | -234,000 | |
Options Outstanding, Ending balance | 8,755,000 | |
Options Outstanding, Exercisable | 3,845,000 | |
Options Outstanding, Vested and expected to vest | 8,203,000 | |
Weighted Average Exercise Price per share | ' | |
Options Outstanding, Weighted Average Exercise Price, Beginning Balance | $40.18 | |
Options Assumed from acquisition, Weighted Average Exercise Price | $16.36 | |
Options Granted, Weighted Average Exercise Price | $96.42 | |
Options Exercised, Weighted Average Exercise Price | $33.67 | [1] |
Options Cancelled or expired, Weighted Average Exercise Price | $45.05 | |
Options Outstanding, Weighted Average Exercise Price, Ending balance | $44.21 | |
Options Exercisable, Weighted Average Exercise Price | $31.68 | |
Options Vested and expected to vest, Weighted Average Exercise Price | $43.38 | |
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | ' | |
Options Outstanding, Weighted Average Remaining Contractual Life | '5 years 3 months 18 days | |
Options Exercisable, Weighted Average Remaining Contractual Life | '2 years 10 months 24 days | |
Options Vested and expected to vest, Weighted Average Remaining Contractual Life | '5 years 1 month 6 days | |
Options Outstanding, Aggregate Intrinsic Value | $416 | |
Options Exercisable, Aggregate Intrinsic Value | 230 | |
Options Vested and expected to vest, Aggregate Intrinsic Value | $396 | |
[1] | Inclusive of 613,261 options which were not converted into shares due to net share settlement in order to cover the aggregate exercise price and the minimum amount of required employee withholding taxes. Potential shares that had been convertible under stock options that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Plan and can be reissued by the Company. Total payments for the employeesb tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited consolidated statements of cash flows. |
Stock_Based_Awards_and_Other_E5
Stock Based Awards and Other Equity Instruments - Summary of Status and Activity for Stock Option Awards Relating to Common Stock (Parenthetical) (Details) (Stock Options) | 9 Months Ended |
Sep. 30, 2014 | |
Stock Options | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
Options non converted into shares due to net share settlement | 613,261 |
Stock_Based_Awards_and_Other_E6
Stock Based Awards and Other Equity Instruments - Weighted-Average Assumptions of Estimated Fair Value of Stock Option Grants (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ' | ' | ' |
Risk free interest rate | 1.76% | 1.83% | 1.93% | 1.40% |
Expected term (in years) | '5 years 9 months 7 days | '5 years 9 months 18 days | '6 years 3 months 7 days | '6 years 18 days |
Expected volatility | 46.09% | 49.62% | 47.70% | 50.81% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Stock_Based_Awards_and_Other_E7
Stock Based Awards and Other Equity Instruments - Summary of RSU Activity on Common Stock (Details) (Restricted Stock Units (RSUs), USD $) | 9 Months Ended | |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | |
Restricted Stock Units (RSUs) | ' | |
RSUs outstanding | ' | |
Unvested RSUs outstanding, Beginning balance | 1,135,000 | |
Unvested RSUs, Granted | 617,693 | |
Unvested RSUs, Vested and released | -265,000 | [1] |
Unvested RSUs, Cancelled | -106,000 | |
Unvested RSUs outstanding, Ending balance | 1,382,000 | |
Weighted Average Grant-Date Fair Value Per Share | ' | |
Unvested RSUs outstanding, Weighted Average Grant-Date Fair Value Per Share, Beginning balance | $49.64 | |
Weighted Average Grant-Date Fair Value Per Share, Granted | $96.15 | |
Weighted Average Grant-Date Fair Value Per Share, Vested and released | $46.36 | [1] |
Weighted Average Grant-Date Fair Value Per Share, Cancelled | $66.09 | |
Unvested RSUs outstanding, Weighted Average Grant-Date Fair Value Per Share, Ending balance | $69.79 | |
Aggregate Intrinsic Value | ' | |
Unvested RSUs outstanding, Aggregate Intrinsic Value | $126 | |
[1] | Inclusive of 94,445 RSUs withheld to satisfy employee minimum tax withholding requirements due to net share settlement. Potential shares which had been convertible under RSUs that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Plan and can be reissued by the Company. Total payments for the employeesb tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited consolidated statements of cash flows. |
Stock_Based_Awards_and_Other_E8
Stock Based Awards and Other Equity Instruments - Summary of RSU Activity on Common Stock (Parenthetical) (Details) (Restricted Stock Units (RSUs)) | 9 Months Ended |
Sep. 30, 2014 | |
Restricted Stock Units (RSUs) | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
RSUs withheld to satisfy minimum tax withholding requirements | 94,445 |
Stock_Based_Awards_and_Other_E9
Stock Based Awards and Other Equity Instruments - Summary of Unrecognized Stock-Based Compensation Expense, Net of Estimated Forfeitures and Weighted Average Period Remaining (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Stock Options | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
Unrecognized compensation expense (net of forfeitures), Stock Options | $87 |
Period of recognition (in years) | '2 years 10 months 24 days |
Restricted Stock Units (RSUs) | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
Period of recognition (in years) | '3 years |
Unrecognized compensation expense (net of forfeitures), RSUs | $57 |
Financial_Instruments_Schedule
Financial Instruments - Schedule of Cash, Cash Equivalents and Marketable Securities (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ' | ' | ' | ' |
Amortized Cost | $614 | $670 | ' | ' |
Unrealized Gains | 0 | 0 | ' | ' |
Unrealized Losses | 0 | 0 | ' | ' |
Fair Value | 614 | 670 | ' | ' |
Cash and cash equivalents | 491 | 351 | 276 | 368 |
Short-Term Marketable Securities | 85 | 131 | ' | ' |
Long-Term Marketable Securities | 38 | 188 | ' | ' |
Cash | 468 | 195 | ' | ' |
Level 2 | ' | ' | ' | ' |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ' | ' | ' | ' |
Amortized Cost | 123 | 319 | ' | ' |
Unrealized Gains | 0 | 0 | ' | ' |
Unrealized Losses | 0 | 0 | ' | ' |
Fair Value | 123 | 319 | ' | ' |
Short-Term Marketable Securities | 85 | 131 | ' | ' |
Long-Term Marketable Securities | 38 | 188 | ' | ' |
Level 2 | U.S. Agency Securities | ' | ' | ' | ' |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ' | ' | ' | ' |
Amortized Cost | 30 | 37 | ' | ' |
Unrealized Gains | 0 | 0 | ' | ' |
Unrealized Losses | 0 | 0 | ' | ' |
Fair Value | 30 | 37 | ' | ' |
Short-Term Marketable Securities | 24 | 14 | ' | ' |
Long-Term Marketable Securities | 6 | 23 | ' | ' |
Level 2 | Certificates of Deposit | ' | ' | ' | ' |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ' | ' | ' | ' |
Amortized Cost | 9 | 23 | ' | ' |
Unrealized Gains | 0 | 0 | ' | ' |
Unrealized Losses | 0 | 0 | ' | ' |
Fair Value | 9 | 23 | ' | ' |
Short-Term Marketable Securities | 9 | 16 | ' | ' |
Long-Term Marketable Securities | 0 | 7 | ' | ' |
Level 2 | Commercial Paper | ' | ' | ' | ' |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ' | ' | ' | ' |
Amortized Cost | ' | 5 | ' | ' |
Unrealized Gains | ' | 0 | ' | ' |
Unrealized Losses | ' | 0 | ' | ' |
Fair Value | ' | 5 | ' | ' |
Short-Term Marketable Securities | ' | 5 | ' | ' |
Long-Term Marketable Securities | ' | 0 | ' | ' |
Level 2 | Corporate Debt Securities | ' | ' | ' | ' |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ' | ' | ' | ' |
Amortized Cost | 84 | 254 | ' | ' |
Unrealized Gains | 0 | 0 | ' | ' |
Unrealized Losses | 0 | 0 | ' | ' |
Fair Value | 84 | 254 | ' | ' |
Short-Term Marketable Securities | 52 | 96 | ' | ' |
Long-Term Marketable Securities | 32 | 158 | ' | ' |
Level 1 | Money Market Funds | ' | ' | ' | ' |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ' | ' | ' | ' |
Cash equivalents | $23 | $156 | ' | ' |
Financial_Instruments_Addition
Financial Instruments - Additional Information (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Amortized Cost And Fair Value Debt Securities [Abstract] | ' |
Financial instruments including money market funds maturities period | '90 days |
Maximum maturities period of long-term marketable securities | '3 years |
Minimum maturities period of long-term marketable securities | '1 year |
Maximum maturities period of short-term marketable securities | '12 months |
Minimum maturities period of short-term marketable securities | '90 days |
Total fair value of marketable securities | $29 |
Financial_Instruments_Fair_Val
Financial Instruments - Fair Value and Notional Principal Amounts of Outstanding or Unsettled Derivative Instruments (Details) (Foreign Exchange Forward, USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Foreign Exchange Forward | ' | ' | ||
Derivatives Fair Value [Line Items] | ' | ' | ||
Foreign exchange-forward contracts | $5 | [1],[2] | $5 | [1],[2] |
[1] | Derivative contracts address foreign exchange fluctuations for the Euro versus the U.S. Dollar. | |||
[2] | The fair value of our derivatives are not material for all periods presented and are reported as liabilities in accrued and other current liabilities on our unaudited consolidated balance sheets. We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active markets |
Property_and_Equipment_Net_Com
Property and Equipment, Net - Components of Property and Equipment (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Property Plant And Equipment [Line Items] | ' | ' | ||
Property and equipment, gross | $185 | $122 | ||
Less: accumulated depreciation | -79 | -48 | ||
Construction in progress | 55 | [1] | 8 | [1] |
Property and equipment, net | 161 | 82 | ||
Capitalized Software and Website Development | ' | ' | ||
Property Plant And Equipment [Line Items] | ' | ' | ||
Property and equipment, gross | 108 | 73 | ||
Leasehold Improvements | ' | ' | ||
Property Plant And Equipment [Line Items] | ' | ' | ||
Property and equipment, gross | 37 | 22 | ||
Computer Equipment | ' | ' | ||
Property Plant And Equipment [Line Items] | ' | ' | ||
Property and equipment, gross | 31 | 21 | ||
Furniture, Office Equipment and Other | ' | ' | ||
Property Plant And Equipment [Line Items] | ' | ' | ||
Property and equipment, gross | $9 | $6 | ||
[1] | We capitalize construction in progress for build-to-suit lease agreements where we are considered the owner, for accounting purposes only, during the construction period. These amounts represent construction costs to date incurred by the landlord and the Company related to our future corporate headquarters in Needham, MA. During the nine months ended September 30, 2014 we capitalized $42 million in non-cash construction costs which were incurred by the landlord, with a corresponding liability recorded in other long-term liabilities on our unaudited consolidated balance sheet. Refer to bNote 12 b Commitments and Contingencies,b in the Notes to Consolidated and Combined Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013 for additional information on our future corporate headquarters lease |
Property_and_Equipment_Net_Com1
Property and Equipment, Net - Components of Property and Equipment (Parenthetical) (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Property Plant And Equipment [Abstract] | ' |
Capitalization of construction in-process related to build to suit lease obligation | $42 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets, Net - Summary of Changes in Goodwill (Details) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ' | |
Beginning balance as of January 1, 2014 | $502 | |
Additions | 238 | [1],[2] |
Foreign exchange translation adjustment | -12 | |
Ending balance as of September 30, 2014 | $728 | |
[1] | The goodwill represents the excess value over both tangible and intangible assets acquired. The goodwill in these transactions is primarily attributable to expected operational synergies, potential new and expanded business relationships and user bases, the assembled workforces, and the future development initiatives of the assembled workforces. Goodwill in the amount of $5 million is expected to be deductible for tax purposes. | |
[2] | The additions to goodwill relate to our 2014 business acquisitions. See bNote 3b Acquisitionsb above, for further information. |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets, Net - Summary of Intangible Assets Acquired in Business Combinations (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ' |
Intangible assets with definite lives | $195 | $36 |
Less: accumulated amortization | -25 | -14 |
Intangible assets with definite lives, net | 170 | 22 |
Intangible assets with indefinite lives | 30 | 30 |
Intangible assets, net | $200 | $52 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets, Net - Components of Intangible Assets with Definite Lives (Details) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted Average Remaining Life (in years) | '7 years | ' |
Gross Carrying Amount | $195 | $36 |
Accumulated Amortization | -25 | -14 |
Intangible assets with definite lives, net | 170 | 22 |
Trade Names and Trademarks | ' | ' |
Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted Average Remaining Life (in years) | '9 years 8 months 12 days | ' |
Gross Carrying Amount | 62 | 18 |
Accumulated Amortization | -10 | -7 |
Intangible assets with definite lives, net | 52 | 11 |
Subscriber and Customer Relationships | ' | ' |
Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted Average Remaining Life (in years) | '6 years 3 months 18 days | ' |
Gross Carrying Amount | 102 | 14 |
Accumulated Amortization | -11 | -6 |
Intangible assets with definite lives, net | 91 | 8 |
Technology and Other | ' | ' |
Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted Average Remaining Life (in years) | '4 years 7 months 6 days | ' |
Gross Carrying Amount | 31 | 4 |
Accumulated Amortization | -4 | -1 |
Intangible assets with definite lives, net | $27 | $3 |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets, Net - Summary of Estimated Future Amortization Expense Related to Intangible Assets with Definite Lives (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ' |
2014 (remaining three months) | $7 | ' |
2015 | 27 | ' |
2016 | 27 | ' |
2017 | 25 | ' |
2018 | 23 | ' |
2019 and thereafter | 61 | ' |
Intangible assets with definite lives, net | $170 | $22 |
Debt_Term_Loan_Facility_Due_Tw
Debt - Term Loan Facility Due Twenty Sixteen and Revolving Credit Facility - Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | ||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 20, 2011 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 20, 2011 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 20, 2011 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
Term Loan and Revolving Credit Facility | Term Loan and Revolving Credit Facility | Term Loan and Revolving Credit Facility | Term Loan and Revolving Credit Facility | Term Loan | Term Loan | Term Loan | Term Loan | Term Loan | Revolving Credit Facility | Revolving Credit Facility | Letter of Credit | Borrowings On Same Day Notice | ||||||
London Interbank Offered Rate (LIBOR) | Alternate Base Rate | |||||||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing limits | ' | ' | ' | ' | ' | ' | $600,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term Loan Facility, principal amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Period of Term Loan Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowings, maturity date | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31-Dec-16 | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowing capacity under Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | ' | 40,000,000 | 40,000,000 |
Credit facility, expiration period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' |
Borrowings, maturity date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31-Dec-16 | ' | ' | ' |
Borrowings, interest rate description | ' | ' | ' | ' | ' | 'interest at LIBOR plus 150 basis points, or the Eurocurrency Spread, or the alternate base rate (bABRb) plus 50 basis points | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowings interest rate basis point | ' | ' | ' | ' | ' | ' | ' | 1.50% | 0.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fee on undrawn amount | ' | ' | ' | ' | ' | 0.23% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowings, interest rate basis | ' | ' | ' | ' | ' | 1.70% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal repayment of term loan | ' | ' | 2.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal payments on long-term debt | ' | ' | 30,000,000 | 30,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding borrowings | 36,000,000 | ' | 36,000,000 | ' | 28,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' |
Total interest and commitments fees | $2,000,000 | $3,000,000 | $6,000,000 | $8,000,000 | ' | ' | ' | ' | ' | ' | $1,000,000 | $2,000,000 | $5,000,000 | $6,000,000 | ' | ' | ' | ' |
Debt_Summary_of_Total_Outstand
Debt - Summary of Total Outstanding Borrowings (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Short-Term Debt: | ' | ' |
Total Short-Term Borrowings | $40 | $40 |
Long-Term Debt: | ' | ' |
Total Long-Term Borrowings | 270 | 300 |
Term Loan | ' | ' |
Short-Term Debt: | ' | ' |
Total Short-Term Borrowings | 40 | 40 |
Long-Term Debt: | ' | ' |
Total Long-Term Borrowings | $270 | $300 |
Debt_Chinese_Credit_Facilities
Debt - Chinese Credit Facilities - Additional Information (Details) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
USD ($) | USD ($) | Chinese Credit Facility | Chinese Credit Facility | Chinese Credit Facility-BOA | Chinese Credit Facility-BOA | Chinese Credit Facility-JPM | Chinese Credit Facility-JPM | |
USD ($) | USD ($) | USD ($) | CNY | USD ($) | CNY | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding borrowings | $36,000,000 | $28,000,000 | $36,000,000 | $28,000,000 | $17,000,000 | ' | $19,000,000 | ' |
Borrowing capacity under Credit Facility | ' | ' | ' | ' | $30,000,000 | 189,000,000 | $20,000,000 | 125,000,000 |
Period of Term Loan Facility | ' | ' | ' | ' | '1 year | '1 year | '1 year | '1 year |
Line of credit rate basis | ' | ' | ' | ' | 100.00% | 100.00% | 100.00% | 100.00% |
Borrowings, interest rate basis | ' | ' | ' | ' | 5.60% | 5.60% | 5.60% | 5.60% |
Interest rate of Chinese Credit Facility BOA | ' | ' | ' | ' | 'Chinese Credit FacilitybBOA currently bears interest at a rate based on 100% of the Peoplebs Bank of Chinabs base rate, which was 5.6% as of September 30, 2014 | 'Chinese Credit FacilitybBOA currently bears interest at a rate based on 100% of the Peoplebs Bank of Chinabs base rate, which was 5.6% as of September 30, 2014 | 'Chinese Credit FacilitybJPM currently bears interest at a rate based on 100% of the Peoplebs Bank of Chinabs base rate, which was 5.6% as of September 30, 2014. | 'Chinese Credit FacilitybJPM currently bears interest at a rate based on 100% of the Peoplebs Bank of Chinabs base rate, which was 5.6% as of September 30, 2014. |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Effective tax rate | 28.00% | 33.30% | 28.80% | 28.30% |
Accrued interest | $1,000,000 | ' | $1,000,000 | ' |
Accrued penalties | $0 | ' | $0 | ' |
Accrued_Expenses_and_Other_Cur2
Accrued Expenses and Other Current Liabilities - Details of Accrued Expenses and Other Current Liabilities (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Payables And Accruals [Abstract] | ' | ' | ||
Accrued salary, bonus, and related benefits | $43 | $35 | ||
Accrued marketing costs | 45 | 22 | ||
Accrued charitable foundation payments | 7 | [1] | 7 | [1] |
Other | 39 | 22 | ||
Total accrued expenses and other current liabilities | $134 | $86 | ||
[1] | See bNote 12 b Commitments and Contingencies,b in the Notes to our Consolidated Financial Statements in Items 8 of our Annual Report on Form 10-K for the year ended December 31, 2013 for information regarding our charitable foundation |
Other_LongTerm_Liabilities_Sch
Other Long-Term Liabilities - Schedule of Other Long-Term Liabilities (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Other Liabilities Noncurrent [Abstract] | ' | ' | ||
Unrecognized tax benefits | $66 | [1] | $38 | [1] |
Construction liabilities | 50 | [2] | 8 | [2] |
Other | 18 | [3] | 6 | [3] |
Total other long-term liabilities | $134 | $52 | ||
[1] | Amount includes accrued interest related to this liability. | |||
[2] | We capitalize construction in progress and record a corresponding long-term liability for build-to-suit lease agreements where we are considered the owner during the construction period for accounting purposes only. | |||
[3] | Amounts primarily consist of long term deferred rent balances related to operating leases for office space. |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Details) (Maximum) | 9 Months Ended |
Sep. 30, 2014 | |
Maximum | ' |
Commitment And Contingencies [Line Items] | ' |
Criteria percentage of damages claims | 10.00% |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) Primarily Comprised of Accumulated Foreign Currency Translation (Details) (USD $) | Sep. 30, 2014 | |
In Millions, unless otherwise specified | ||
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | ' | |
Cumulative foreign currency translation adjustments | ($14) | [1] |
Total accumulated other comprehensive income (loss) | ($14) | |
[1] | Our foreign subsidiary earnings are considered indefinitely reinvested; therefore, deferred taxes are not provided on foreign currency translation adjustments. |
Segment_Information_Additional
Segment Information - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Segment | |
Segment Reporting [Abstract] | ' |
Number of reportable segment | 1 |
Number of operating segments | 1 |
Segment_Information_Reconcilia
Segment Information - Reconciliation of Adjusted EBITDA to Net Income (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Segment Reporting [Abstract] | ' | ' | ' | ' | ||||
Adjusted EBITDA | $119 | $104 | $370 | $326 | ||||
Depreciation | -12 | [1] | -8 | [1] | -33 | [1] | -21 | [1] |
OIBA | 107 | [2] | 96 | [2] | 337 | [2] | 305 | [2] |
Amortization of intangible assets | -6 | -1 | -11 | -4 | ||||
Stock-based compensation | -17 | -11 | -46 | -35 | ||||
Other expense, net | -9 | ' | -13 | -8 | ||||
Provision for income taxes | -21 | -28 | -77 | -73 | ||||
Net income | $54 | $56 | $190 | $185 | ||||
[1] | Includes amortization of internal use software and website development costs. | |||||||
[2] | We define OIBA as net income (loss) plus: (1)B provision for income taxes; (2)B other income (expense), net; (3)B stock-based compensation; (4)B amortization of intangible assets; and (5)B non-recurring expenses. This operating metric is only used by our management to calculate our annual obligation for our charitable foundation. Refer to bNote 12b Commitments and Contingencies,b in the Notes to Consolidated and Combined Financial Statements in ItemB 8 of our Annual Report on Form 10-K for the year ended DecemberB 31, 2013 for information regarding our charitable foundation. |
Earnings_Per_Share_Reconciliat
Earnings Per Share - Reconciliation of Weighted Average Number of Shares of Common Stock Outstanding (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data in Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Numerator: | ' | ' | ' | ' |
Net income | $54 | $56 | $190 | $185 |
Denominator: | ' | ' | ' | ' |
Weighted average shares used to compute Basic EPS | 142,842 | 142,690 | 142,648 | 143,095 |
Weighted average effect of dilutive securities: | ' | ' | ' | ' |
Stock options | 2,851 | 2,435 | 2,837 | 1,925 |
RSUs | 378 | 329 | 354 | 238 |
Weighted average shares used to compute Diluted EPS | 146,071 | 145,454 | 145,839 | 145,258 |
Basic EPS | $0.38 | $0.39 | $1.33 | $1.29 |
Diluted EPS | $0.37 | $0.38 | $1.30 | $1.27 |
Earnings_Per_Share_Common_Shar
Earnings Per Share - Common Shares Related to Stock Options and RSUs Excluded from Calculated Diluted Net Income Per Share (Details) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ' | ' | ' | ' | ||||
Potential common shares excluded from the calculation of Diluted EPS | 605 | [1] | 1,407 | [2] | 1,492 | [1] | 2,591 | [2] |
Stock Options | ' | ' | ' | ' | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ' | ' | ' | ' | ||||
Potential common shares excluded from the calculation of Diluted EPS | 599 | [1] | 1,360 | [2] | 1,325 | [1] | 2,559 | [2] |
Restricted Stock Units (RSUs) | ' | ' | ' | ' | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ' | ' | ' | ' | ||||
Potential common shares excluded from the calculation of Diluted EPS | 6 | [1] | 47 | [2] | 167 | [1] | 32 | [2] |
[1] | These totals do not include 66,666 performance based options and 44,000 performance based RSUs representing the right to acquire 110,666 shares of common stock for which all targets required to trigger vesting have not been achieved as of September 30, 2014; therefore, such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods | |||||||
[2] | These totals do not include 155,000 performance based options and 44,000 performance based RSUs representing the right to acquire 199,000 shares of common stock for which all targets required to trigger vesting had not been achieved as of September 30, 2013; therefore, such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods. |
Earnings_Per_Share_Common_Shar1
Earnings Per Share - Common Shares Related to Stock Options and RSUs Excluded from Calculated Diluted Net Income Per Share (Parenthetical) (Details) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ' | ' |
Performance based securities excluded from computation of earnings per share | 110,666 | 199,000 |
Stock options | ' | ' |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ' | ' |
Performance based securities excluded from computation of earnings per share | 66,666 | 155,000 |
Restricted Stock Units (RSUs) | ' | ' |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ' | ' |
Performance based securities excluded from computation of earnings per share | 44,000 | 44,000 |
Related_Party_Transactions_Add
Related Party Transactions - Additional Information (Details) | Aug. 27, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Liberty | LTRIP | LTRIP | |
Class B Common Stock | |||
Related Party Transaction [Line Items] | ' | ' | ' |
Percentage of interest held by related party | 100.00% | ' | ' |
Beneficially ownership of shares of common stock | ' | 18,159,752 | 12,799,999 |
Percentage taken from outstanding shares of Common Stock | ' | 14.00% | 100.00% |
Percentage of beneficially ownership of shares of common stock | ' | 21.70% | ' |
Right to voting | ' | 'one vote per share | 'ten votes per share |
Beneficially ownership of equity securities | ' | 56.60% | ' |