Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 31, 2017 | Jun. 30, 2016 | |
Entity Registrant Name | Liberty TripAdvisor Holdings, Inc. | ||
Entity Central Index Key | 1,606,745 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1.5 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Series A | |||
Entity Common Stock, Shares Outstanding | 72,072,899 | ||
Series B | |||
Entity Common Stock, Shares Outstanding | 2,929,777 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 654 | $ 644 |
Trade and other receivables, net | 191 | 181 |
Marketable securities | 118 | 47 |
Other current assets | 47 | 34 |
Total current assets | 1,010 | 906 |
Investments in available-for-sale securities | 16 | 37 |
Property and equipment, at cost | 225 | 216 |
Accumulated depreciation | (49) | (36) |
Property and equipment, net | 176 | 180 |
Intangible Assets [Abstract] | ||
Goodwill | 3,694 | 3,689 |
Trademarks | 1,782 | 1,803 |
Intangible assets not subject to amortization | 5,476 | 5,492 |
Intangible assets subject to amortization, net | 487 | 625 |
Other assets, at cost, net of accumulated amortization | 117 | 45 |
Total assets | 7,282 | 7,285 |
Current liabilities: | ||
Deferred Merchant and other payables | 146 | 121 |
Accrued liabilities | 132 | 129 |
Long-term Debt, Current Maturities | 80 | 1 |
Deferred revenue | 64 | 64 |
Other current liabilities | 13 | 5 |
Total current liabilities | 435 | 320 |
Total long-term debt | 555 | 620 |
Deferred income tax liabilities | 659 | 719 |
Other liabilities | 209 | 190 |
Total liabilities | 1,858 | 1,849 |
Equity: | ||
Preferred Stock value | ||
Additional paid-in capital | 245 | 260 |
Accumulated other comprehensive earnings, net of taxes | (36) | (25) |
Retained earnings | 593 | 572 |
Total stockholders' equity | 803 | 808 |
Noncontrolling interests in equity of combined companies | 4,621 | 4,628 |
Total equity | 5,424 | 5,436 |
Total liabilities and equity | 7,282 | 7,285 |
Series A | ||
Equity: | ||
Common stock value | $ 1 | $ 1 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Trade and other receivables, net of allowance for doubtful accounts | $ 9 | $ 6 |
Equity: | ||
Preferred Stock, Par value | $ 0.01 | $ 0.01 |
Preferred Stock | ||
Equity: | ||
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Series A | ||
Equity: | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 72,046,485 | 71,920,260 |
Common stock, shares outstanding | 72,046,485 | 71,920,260 |
Series B | ||
Equity: | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 7,500,000 | 7,500,000 |
Common stock shares issued | 2,929,777 | 2,929,777 |
Common stock, shares outstanding | 2,929,777 | 2,929,777 |
Series C | ||
Equity: | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Service Revenue, Net | $ 1,480 | $ 1,492 | $ 1,246 |
Other Revenue, Net | 52 | 73 | 83 |
Total revenue, net | 1,532 | 1,565 | 1,329 |
Operating costs and expenses: | |||
Operating expense, including stock-based compensation (note 2) | 369 | 345 | 294 |
Selling, general and administrative, including stock-based compensation | 918 | 935 | 667 |
Depreciation and amortization | 222 | 268 | 298 |
Impairment of intangible assets | 2 | 2 | |
Total operating costs and expenses | 1,509 | 1,550 | 1,261 |
Operating income (loss) | 23 | 15 | 68 |
Other income (expense): | |||
Interest expense | (25) | (28) | (13) |
Realized and unrealized gains (losses) on financial instruments, net | 53 | 2 | 1 |
Other, net | (5) | 15 | (12) |
Total other income (expense) | 23 | (11) | (24) |
Earnings (loss) before income taxes | 46 | 4 | 44 |
Income tax (expense) benefit | 1 | 10 | (35) |
Net earnings (loss) | 47 | 14 | 9 |
Less net earnings (loss) attributable to noncontrolling interests | 26 | 54 | 31 |
Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders | $ 21 | $ (40) | $ (22) |
Earnings Per Share, Basic | $ 0.28 | $ (0.53) | $ (0.30) |
Earnings Per Share, Diluted | $ 0.28 | $ (0.53) | $ (0.30) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Earnings (Loss) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net earnings (loss) | $ 47 | $ 14 | $ 9 |
Other comprehensive earnings (loss), net of taxes: | |||
Foreign currency translation adjustments | (52) | (58) | (57) |
Reclassification adjustment on sale of business | 1 | ||
Other comprehensive earnings (loss) | (52) | (57) | (57) |
Comprehensive earnings (loss) | (5) | (43) | (48) |
Less comprehensive earnings (loss) attributable to the noncontrolling interests | (15) | 9 | (14) |
Comprehensive earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders | $ 10 | $ (52) | $ (34) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Cash Flows [Abstract] | |||
Net earnings (loss) | $ 47 | $ 14 | $ 9 |
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities | |||
Depreciation and amortization | 222 | 268 | 298 |
Stock-based compensation | 91 | 82 | 74 |
Non-cash contribution to charitable foundation (note 13) | 67 | ||
Gains (losses) on transactions, net (note 4) | (19) | ||
Impairment of intangible assets | 2 | 2 | |
Unrealized Gain (Loss) on Securities | (53) | (2) | (1) |
Deferred income tax expense (benefit) | (52) | (85) | (70) |
Non-cash interest on margin loans | 13 | 17 | 4 |
Other noncash charges (credits), net | (12) | (6) | 11 |
Changes in operating assets and liabilities | |||
Current and other assets | (24) | (31) | (16) |
Payables and other liabilities | 69 | 84 | 74 |
Net cash provided (used) by operating activities | 301 | 391 | 385 |
Cash flows from investing activities: | |||
Capital expended for property and equipment | (73) | (112) | (90) |
Acquisitions and other investments, net of cash acquired (note 3) | (43) | (29) | (331) |
Purchases of short term investments and other marketable securities | (166) | (205) | (251) |
Sales and maturities of short term investments and other marketable securities | 116 | 258 | 429 |
Other investing activities, net | 2 | 27 | 2 |
Net cash provided (used) by investing activities | (164) | (61) | (241) |
Cash flows from financing activities: | |||
Proceeds from Issuance of Debt | 440 | 291 | 429 |
Repayments of debt | (439) | (431) | (43) |
Distribution to Parent Company | (348) | ||
Payment of withholding taxes on net share settlements of equity awards | (15) | (72) | (33) |
Shares issued by subsidiary | 7 | 12 | 3 |
Shares repurchased by subsidiary | (105) | ||
Option exercises | 2 | 5 | 12 |
Other financing activities, net | 12 | ||
Net cash provided (used) by financing activities | (110) | (183) | 20 |
Effect of foreign currency exchange rates on cash | (17) | (12) | (9) |
Net increase (decrease) in cash and cash equivalents | 10 | 135 | 155 |
Cash and cash equivalents at beginning of period | 644 | 509 | 354 |
Cash and cash equivalents at end of period | $ 654 | $ 644 | $ 509 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Equity - USD ($) $ in Millions | Common Stock [Member] | Additional Paid-in Capital [Member] | Parent's investment [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Balance at beginning of the period at Dec. 31, 2013 | $ 226 | $ 982 | $ 4,373 | $ 5,581 | |||
Net earnings (loss) | (22) | 31 | 9 | ||||
Other comprehensive earnings (loss) | $ (12) | (45) | (57) | ||||
Stock compensation | $ 7 | 11 | 63 | 81 | |||
Stock Issued During Period, Value, Stock Options Exercised | 13 | 2 | 15 | ||||
Withholding taxes on net share settlements of stock based compensation | (1) | (32) | (33) | ||||
Tax benefits on stock based compensation, net | 1 | 3 | 16 | 20 | |||
Intercompany taxes and debt forgiven by former parent | 75 | 75 | |||||
Fair value of stock options assumed in connection with acquisition | 1 | 4 | 5 | ||||
Change in capitalization in connection with Trip Spin-Off | $ 1 | 277 | (278) | ||||
Distribution to Liberty | (348) | (348) | |||||
Shares issued by subsidiary | (2) | $ (7) | 9 | ||||
Other | (1) | (1) | |||||
Balance at end of the period at Dec. 31, 2014 | 1 | 296 | (12) | 612 | 4,450 | 5,347 | |
Net earnings (loss) | (40) | 54 | 14 | ||||
Other comprehensive earnings (loss) | (12) | (45) | (57) | ||||
Stock compensation | 24 | 67 | 91 | ||||
Stock Issued During Period, Value, Stock Options Exercised | 5 | 5 | |||||
Withholding taxes on net share settlements of stock based compensation | (72) | (72) | |||||
Tax benefits on stock based compensation, net | 10 | 21 | 31 | ||||
Shares issued by subsidiary | (8) | 20 | 12 | ||||
Stock settled charitable contribution by subsidiary (note 13) | 6 | 61 | 67 | ||||
Other | (1) | (1) | (2) | ||||
Balance at end of the period at Dec. 31, 2015 | 1 | 260 | (25) | 572 | 4,628 | 5,436 | |
Net earnings (loss) | 21 | 26 | 47 | ||||
Other comprehensive earnings (loss) | (11) | (41) | (52) | ||||
Stock compensation | 26 | 77 | 103 | ||||
Stock Issued During Period, Value, Stock Options Exercised | 2 | 2 | |||||
Withholding taxes on net share settlements of stock based compensation | (15) | (15) | |||||
Shares issued by subsidiary | (6) | 13 | 7 | ||||
Shares repurchased by subsidiary | (23) | (82) | (105) | ||||
Other | 1 | 1 | |||||
Balance at end of the period at Dec. 31, 2016 | $ 1 | $ 245 | $ (36) | $ 593 | $ 4,621 | $ 5,424 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2016 | |
Basis of Presentation | |
Basis of Presentation | (1) Basis of Presentatio During October 2013, the Board of Directors of Liberty Interactive Corporation and its subsidiaries (“Liberty”) authorized a plan to distribute to the stockholders of Liberty’s Liberty Ventures common stock shares of a wholly-owned subsidiary, Liberty TripAdvisor Holdings, Inc. (“TripCo” or the “Company”) (the “TripCo Spin-Off”). TripCo holds the subsidiaries TripAdvisor, Inc. (“TripAdvisor”) and BuySeasons, Inc., which includes the retail businesses of BuyCostumes.com and Celebrate Express (“BuySeasons”), both of which operate as stand-alone operating entities. Both TripAdvisor and BuySeasons have more revenue in the third quarter, based on a higher travel research period and the Halloween period, respectively, as compared to the other quarters of the year. The TripCo Spin-Off was completed on August 27, 2014 and effected as a pro-rata dividend of shares of TripCo to the stockholders of Series A and Series B Liberty Ventures common stock of Liberty. The TripCo Spin-Off was intended to be tax-free and was accounted for at historical cost due to the pro rata nature of the distribution to shareholders of Liberty Ventures common stock. The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and represent a consolidation of the historical financial information of TripAdvisor (see note 4 for a more detailed discussion of transactions related to TripAdvisor) and BuySeasons. Although TripAdvisor and BuySeasons were reported as a combined company until the date of the TripCo Spin-Off, these financial statements present all periods as consolidated. These financial statements refer to the combination of TripAdvisor and BuySeasons as “TripCo,” “the Company,” “us,” “we” and “our” in the notes to the consolidated financial statements. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Description of Business TripAdvisor, by and through its subsidiaries, owns and operates a portfolio of online travel brands. TripAdvisor is the world’s largest travel site and its mission is to help people around the world plan, book and experience the perfect trip. TripAdvisor accomplishes this by, among other things, aggregating millions of travelers’ reviews and opinions about destinations, accommodations, activities and attractions, and restaurants worldwide, thereby creating the foundation for a unique platform that enables users to research and plan their travel experiences. TripAdvisor’s platform also enables users to compare real-time pricing and availability for these experiences as well as to book hotels, flights, cruises, vacation rentals, tours, activities and attractions, and restaurants, either on a TripAdvisor site or app, or on the site or app of one of TripAdvisor’s travel partner sites. TripAdvisor-branded websites include tripadvisor.com in the United States and localized versions of the website in 48 markets and 28 languages worldwide. In addition to the flagship TripAdvisor brand, TripAdvisor manages and operates 2 3 other travel media brands, connected by the common goal of providing users the most comprehensive travel-planning and trip-taking resources in the travel industry. TripAdvisor derives the majority of its revenue from its Hotel segment, which includes click-based advertising and transaction revenue, display-based advertising and subscription-based advertising revenue and other hotel revenue. The remainder of TripAdvisor’s revenue is generated through its Non-Hotel segment, which includes its attractions, restaurants and vacation rental businesses. BuySeasons is an online retailer and supplier of costumes, accessories, seasonal décor, and party supplies. BuySeasons is dedicated to offering a large selection at affordable prices through its brands BuyCostumes.com and Celebrate Express. BuySeasons also operates a private-label drop ship program for other Internet retailers. Spin-Off of TripCo from Liberty Following the TripCo Spin-Off, Liberty and TripCo operate as separate, publicly traded companies, and neither has any stock ownership, beneficial or otherwise, in the other. In connection with the TripCo Spin-Off, TripCo entered into certain agreements, including the reorganization agreement, the services agreement, the facilities sharing agreement and the tax sharing agreement, with Liberty and/or Liberty Media Corporation (“Liberty Media”) (or certain of their subsidiaries) in order to govern certain of the ongoing relationships between the companies after the TripCo Spin-Off and to provide for an orderly transition. The reorganization agreement provides for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the TripCo Spin-Off, certain conditions to the TripCo Spin-Off and provisions governing the relationship between TripCo and Liberty with respect to and resulting from the TripCo Spin-Off. Pursuant to the services agreement, Liberty Media provides TripCo with general and administrative services including legal, tax, accounting, treasury and investor relations support. TripCo will reimburse Liberty Media for direct, out-of-pocket expenses incurred by Liberty Media in providing these services and TripCo will pay a services fee to Liberty Media under the services agreement that will be subject to adjustment semi-annually, as necessary. Under the facilities sharing agreement, TripCo shares office space with Liberty Media and related amenities at Liberty Media’s corporate headquarters in Englewood, Colorado. The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Liberty and TripCo and other agreements related to tax matters. Pursuant to the tax sharing agreement, TripCo has agreed to indemnify Liberty, subject to certain limited exceptions, for losses and taxes resulting from the TripCo Spin-Off to the extent such losses or taxes result primarily from, individually or in the aggregate, the breach of certain restrictive covenants made by TripCo (applicable to actions or failures to act by TripCo and its subsidiaries following the completion of the TripCo Spin-Off). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies Cash and Cash Equivalents Cash consists of cash deposits held in global financial institutions. Cash equivalents consist of highly liquid investments with maturities of three months or less at the time of acquisition. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are generally due within 30 days and are recorded net of an allowance for doubtful accounts. Such allowance aggregated $9 million and $6 million at December 31, 2016 and 2015, respectively. For accounts outstanding longer than the contractual payment terms, the Company determines an allowance by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history, a specific customer’s ability to pay its obligations to us, and the condition of the general economy and industry as a whole. Investments All marketable debt and equity securities held by the Company are classified as available-for-sale (“AFS”) and are carried at fair value generally based on quoted market prices. Fair values are determined for each individual security in the investment portfolio. Unrealized gains and losses, net of taxes, arising from changes in fair value are reported in accumulated other comprehensive income (loss) as a component of equity. The classification of investments is determined at the time of purchase and reevaluated at each balance sheet date. We invest in highly-rated securities, and our investment policy limits the amount of credit exposure to any one issuer, industry group and currency. The policy requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss and providing liquidity of investments sufficient to meet our operating and capital spending requirements and debt repayments. Marketable debt securities are classified as either short-term or long-term based on each instrument’s underlying contractual maturity date and as to whether and when we intend to sell a particular security prior to its maturity date. Marketable debt securities with maturities greater than 90 days at the date of purchase and 12 months or less remaining at the balance sheet date will be classified as short-term and marketable debt securities with maturities greater than 12 months from the balance sheet date will generally be classified as long-term. We classify our marketable equity securities, limited to money market funds and mutual funds, as either short-term or long-term based on the nature of each security and its availability for use in current operations. Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis. We may sell certain of our marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and liquidity and duration management. The weighted average maturity of our total invested cash shall not exceed 18 months, and no security shall have a final maturity date greater than three years. Derivative Instruments All of the Company’s derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive earnings and are recognized in the statement of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. If the derivative is not designated as a hedge, changes in the fair value of the derivative are recognized in earnings. None of the Company’s derivatives are currently designated as hedges. The fair value of certain of the Company’s derivative instruments are estimated using the Black-Scholes-Merton model. The Black-Scholes-Merton model incorporates a number of variables in determining such fair values, including expected volatility of the underlying security and an appropriate discount rate. The Company obtains volatility rates from pricing services based on the expected volatility of the underlying security over the remaining term of the derivative instrument. A discount rate is obtained at the inception of the derivative instrument and updated each reporting period, based on the Company’s estimate of the discount rate at which it could currently settle the derivative instrument. The Company considered its own credit risk as well as the credit risk of its counterparties in estimating the discount rate. Management judgment is required in estimating the Black-Scholes-Merton model variables. Property and Equipment Property and equipment consists of the following (amounts in millions): December 31, 2016 2015 Buildings $ Leasehold improvements Computer equipment Furniture, office equipment and other Total property and equipment $ Property and equipment is recorded at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is three to five years for computer equipment and furniture, office equipment and other. Leasehold improvements are depreciated using the straight-line method, over the shorter of the estimated useful life of the improvement or the remaining term of the lease. TripAdvisor’s building, which is considered an asset for accounting purposes, is depreciated over its estimated useful life of 40 years. Leases The Company, through its consolidated companies, leases facilities in several countries around the world and certain equipment under non-cancelable lease agreements. The terms of some of the lease agreements provide for rental payments on a graduated basis. Rent expense is recognized on a straight-line basis over the lease period and accrued as rent expense incurred but not paid. Any lease incentives are recognized as reductions of rental expense on a straight-line basis over the term of the lease. The lease term begins on the date we become legally obligated for the rent payments or when we take possession of the office space, whichever is earlier. We establish assets and liabilities for the estimated construction costs incurred under lease arrangements where we are considered the owner for accounting purposes only, or build-to-suit leases, to the extent we are involved in the construction of structural improvements or take construction risk prior to commencement of a lease. Upon occupancy of facilities under build-to-suit leases, we assess whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If we continue to be the deemed owner, the facilities are accounted for as financing leases. Intangible Assets Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment upon certain triggering events. Goodwill and other intangible assets with indefinite useful lives (collectively, "indefinite lived intangible assets") are not amortized, but instead are tested for impairment at least annually. Our annual impairment assessment of our indefinite-lived intangible assets is performed during the fourth quarter of each year. The Company utilizes a qualitative assessment for determining whether step one of the goodwill impairment analysis is necessary. The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. In evaluating goodwill on a qualitative basis the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of our reporting units. The Company considers whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods. As part of the analysis, the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current and prior years for other purposes. If a step one test is considered necessary based on the qualitative factors, the Company compares the estimated fair value of a reporting unit to its carrying value. Developing estimates of fair value requires significant judgments, including making assumptions about appropriate discount rates, perpetual growth rates, relevant comparable market multiples, public trading prices and the amount and timing of expected future cash flows. The cash flows employed in TripCo's valuation analysis are based on management's best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years. There is no assurance that actual results in the future will approximate these forecasts. For those reporting units whose carrying value exceeds the fair value, a second test is required to measure the impairment loss (the "Step 2 Test"). In the Step 2 Test, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit with any residual value being allocated to goodwill. The difference between such allocated amount and the carrying value of the goodwill is recorded as an impairment charge. The accounting guidance also permits entities to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If the qualitative assessment supports that it is more likely than not that the carrying value of the Company’s indefinite-lived intangible assets, other than goodwill, exceeds its fair value, then a quantitative assessment is performed. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. See note 6 for discussion of goodwill impairments. Websites and Internal Use Software Development Costs Certain costs incurred during the application development stage related to the development of websites and internal use software are capitalized and included in other intangibles. Capitalized costs include internal and external costs, if direct and incremental, and deemed by management to be significant. Costs related to the planning and post-implementation phases of software and website development are expensed as these costs are incurred. Maintenance and enhancement costs (including those costs in the post-implementation stages) are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the website or software resulting in added functionality, in which case the costs are capitalized. Impairment of Long-lived Assets The Company periodically reviews the carrying amounts of its property and equipment and its intangible assets (other than goodwill and indefinite-lived intangibles) to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable. If the carrying amount of the asset group is greater than the expected undiscounted cash flows to be generated by such asset group, including its ultimate disposition, an impairment adjustment is to be recognized. Such adjustment is measured by the amount that the carrying value of such asset groups exceeds their fair value. The Company generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows using an appropriate discount rate. Considerable management judgment is necessary to estimate the fair value of asset groups. Accordingly, actual results could vary significantly from such estimates. Asset groups to be disposed of are carried at the lower of their financial statement carrying amount or fair value less costs to sell. Noncontrolling Interests Noncontrolling interest relates to the equity ownership interest in TripAdvisor that the Company does not own. The Company reports noncontrolling interests of consolidated companies within equity in the consolidated balance sheets and the amount of net income attributable to the parent and to the noncontrolling interest is presented in the consolidated statements of operations. Also, changes in ownership interests in consolidated companies in which the Company maintains a controlling interest are recorded in equity. Foreign Currency Translation and Transaction Gains and Losses The functional currency of the Company is the United States (“U.S.”) dollar. The functional currency of the Company’s foreign operations generally is the applicable local currency for each foreign subsidiary. Assets and liabilities of foreign subsidiaries are translated at the spot rate in effect at the applicable reporting date, and the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period. The resulting unrealized cumulative translation adjustment, net of applicable income taxes, is recorded as a component of accumulated other comprehensive earnings (loss) in equity. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses which are reflected in the accompanying consolidated statements of operations and comprehensive earnings (loss) as unrealized (based on the applicable period-end exchange rate) or realized upon settlement of the transactions. Accordingly, we have recorded foreign exchange losses of $4 million, $3 million and $10 million for the years ended December 31, 2016, 2015 and 2014, respectively, in other, net on our consolidated statements of operations. These amounts include gains and losses, realized and unrealized, on foreign currency forward contracts. Revenue Recognition Revenue is recognized from the sale of goods and advertising services rendered when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. Deferred revenue, which primarily relates to subscription-based and commission based arrangements, is recorded when payments are received in advance of TripAdvisor’s performance as required by the underlying agreements. Click-based advertising and transaction revenue . Revenue is derived primarily from click-through fees charged to TripAdvisor’s travel partners for traveler leads sent to the travel partners’ website. TripAdvisor records revenue from click-through fees after the traveler makes the click-through to the travel partners’ websites. TripAdvisor’s instant booking transaction model revenue is comprised of commissions earned on all valid instant booking reservations. In a transaction model, instant booking commission revenue is recorded at the time a traveler books a hotel transaction on TripAdvisor’s site where TripAdvisor does not assume cancellation risk. In transactions in which TripAdvisor assumes cancellation risk, it records revenue in the month in which the traveler’s stay at a hotel occurs. TripAdvisor has no post-booking service obligations for instant booking transactions. Display-based and subscription-based advertising . TripAdvisor recognizes display advertising revenue ratably over the advertising period or upon delivery of advertising impressions, depending on the terms of the advertising contract. Subscription-based revenue is recognized ratably over the related contractual period over which service is delivered. Attractions . TripAdvisor works with local operators, or merchant partners, to provide travelers with access to tours and activities in popular destinations worldwide, earning a commission for such service. TripAdvisor receives cash from the consumer at the time of booking of the destination activity and records these amounts, net of commissions, as deferred merchant payables on its consolidated balance sheets. Commission revenue is recorded as deferred revenue at the time of booking and later recognized when the consumer has completed the destination activity. TripAdvisor pays the destination activity operators after the travelers’ use. In transactions where TripAdvisor is not the merchant of record, it invoices and receives commissions directly from its merchant partners and records commission revenue when the consumer has completed the destination activity. Restaurants. TripAdvisor recognizes reservation revenue (or per seated diner fees) on a transaction-by-transaction basis as diners are seated by its restaurant customers. Subscription-based revenue is recognized ratably over the related contractual period over which the service is delivered. Vacation Rentals. TripAdvisor generates revenue from customers for online advertising services related to the listing of their properties for rent primarily on either a subscription basis over a fixed-term, or on a commission basis for transactions that are booked on TripAdvisor’s platform. Payments for term-based subscriptions received in advance of services being rendered are recorded as deferred revenue and recognized ratably to revenue on a straight-line basis over the listing period. TripAdvisor’s commission revenue is primarily generated on its free-to-list option, in lieu of a pre-paid subscription fee. When a commissionable transaction is booked on TripAdvisor’s platform, it receives cash from the traveler that includes both commission, which is recorded as deferred revenue, and the amount due to the property owner, which is recorded to deferred merchant payables on TripAdvisor’s consolidated balance sheet. TripAdvisor pays the amount due to the property owner and recognizes its commission revenue at the time of the traveler’s stay. Additional revenue is derived on a pay-per-lead basis, as TripAdvisor provides leads for rental properties to property managers. Pay-per-lead revenue is billed and recognized in the period when the leads are delivered to the property managers. Other Revenue. Retail revenue is recognized at the time of delivery to customers. An allowance for returned merchandise is provided as a percentage of sales based on historical experience. The total reduction in sales due to returns was approximately $1 million, $3 million, and $2 million for each of the years ended December 31, 2016, 2015 and 2014, respectively. Shipping revenue is included in net sales and the related costs of shipping are included in operating expense. Sales tax collected from customers on retail sales is recorded on a net basis and is not included in revenue. Operating Expense Operating expenses consist primarily of certain technology and content expenses, including personnel and overhead expenses which include salaries, benefits and bonuses for salaried employees and contractors engaged in the design, development, testing content support and maintenance of TripAdvisor’s websites and mobile apps. Operating expense also includes to a lesser extent costs of services which are expenses that are closely correlated or directly related to service revenue generated, including advertising fees, flight search fees, credit card fees and data center costs. Other costs include licensing, maintenance expense, computer supplies, telecom costs, content translation costs and consulting costs. General and Administrative General and administrative expenses consist primarily of personnel and related overhead costs, including executive leadership, finance, legal and human resource functions as well as professional service fees and other fees including audit, legal, tax and accounting, and other costs including bad debt expense and charitable contributions. Selling and Marketing Selling and marketing expenses primarily consist of direct costs, including traffic generation costs from search engine marketing, or SEM, and other online traffic acquisition costs, syndication costs and affiliate program commissions, social media costs, brand advertising, television and other offline advertising and public relations. In addition, our indirect sales and marketing expense consists of personnel and overhead expenses, including salaries, commissions, benefits, and bonuses for sales, sales support, customer support and marketing employees. The Company incurs advertising expense consisting of traffic generation costs from search engines, affiliate program commissions, display advertising, other online and offline advertising expense, and promotions and public relations to promote our brands. Costs associated with advertisements are expensed in the period in which the advertisement takes place. Advertising expense was $544 million, $519 million and $357 million for each of the years ended December 31, 2016, 2015 and 2014, respectively. Stock-Based Compensation As more fully described in note 9, TripCo grants to its directors, employees and employees of its subsidiaries restricted stock and options (collectively, “Awards”) to purchase shares of TripCo common stock. TripCo measures the cost of employee services received in exchange for an Award of equity instruments (such as stock options and restricted stock) based on the grant-date fair value of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). TripCo measures the cost of employee services received in exchange for an Award of liability instruments (such as stock appreciation rights that will be settled in cash) based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date. Certain outstanding awards that were previously granted by Liberty were assumed by TripCo upon the completion of the TripCo Spin-Off. Additionally, TripAdvisor is a consolidated company and has issued stock-based compensation to its employees related to its common stock. The consolidated statements of operations include stock-based compensation related to TripCo Awards, TripAdvisor equity, and Liberty Awards already held by BuySeasons employees. Included in the accompanying consolidated statements of operations are the following amounts of stock-based compensation for the years ended December 31, 2016, 2015 and 2014 (amounts in millions): December 31, 2016 2015 2014 Operating expense $ Selling, general and administrative $ During the years ended December 31, 2016, 2015 and 2014, we capitalized $12 million, $8 million and $8 million, respectively, of stock-based compensation expense as internal-use software and website development costs. In March 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance which simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016, with early application permitted. The Company adopted this guidance in the third quarter of 2016. In accordance with the new guidance, excess tax benefits and tax deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures. In addition, pursuant to the new guidance, excess tax benefits are classified as an operating activity on the consolidated statements of cash flows. The recognition of excess tax benefits and deficiencies are applied prospectively from January 1, 2016. For adjustments to compensation cost based on actual forfeitures, the Company has recorded an immaterial cumulative-effect adjustment to retained earnings as of January 1, 2016, which is included in other on the consolidated statements of equity. The presentation changes for excess tax benefits have been applied retrospectively in the consolidated statements of cash flows, resulting in $31 million and $20 million of excess tax benefits for the years ended December 31, 2015 and 2014, respectively, reclassified from cash flows from financing activities to cash flows from operating activities. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying value amounts and income tax bases of assets and liabilities and the expected benefits of utilizing net operating loss and tax credit carryforwards. The deferred tax assets and liabilities are calculated using enacted tax rates in effect for each taxing jurisdiction in which the Company operates for the year in which those temporary differences are expected to be recovered or settled. Net deferred tax assets are then reduced by a valuation allowance if the Company believes it more likely than not that such net deferred tax assets will not be realized. We consider all relevant factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings experience by jurisdiction, expectations of future taxable income, and the carryforward periods available to us for tax reporting purposes, as well as assessing available tax planning strategies. The effect on deferred tax assets and liabilities of an enacted change in tax rates is recognized in income in the period that includes the enactment date. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law, tax sharing agreements or variances between our actual and anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could materially vary from these estimates. When the tax law requires interest to be paid on an underpayment of income taxes, the Company recognizes interest expense from the first period the interest would begin accruing according to the relevant tax law. Such interest expense is included in income tax expense in the accompanying consolidated statements of operations. Any accrual of penalties related to underpayment of income taxes on uncertain tax positions is included in income tax (expense) benefit in the accompanying consolidated statements of operations. We recognize in our consolidated financial statements the impact of a tax position, if that position is more likely than not to be sustained upon an examination, based on the technical merits of the position. Deferred Merchant Payables TripAdvisor receives cash from travelers at the time of booking related to its vacation rental, attractions and transaction-based businesses and it records these amounts, net of commissions, on its consolidated balance sheets as deferred merchant payables. TripAdvisor pays the hotel, attraction provider or vacation rental owner after the travelers’ use and subsequent billing from the hotel, attraction provider or vacation rental owner. Therefore, it receives cash from the traveler prior to paying the hotel, attraction provider or vacation rental owner, and this operating cycle represents a working capital source or use of cash to TripAdvisor. As long as these businesses grow, TripAdvisor expects that changes in working capital related to these transactions, depending on timing of payments and seasonality, will continue to impact operating cash flows. TripAdvisor’s deferred merchant payables balance was $128 million and $105 million for the years ended December 31, 2016 and 2015, respectively. Certain Risks and Concentrations The TripAdvisor business is subject to certain risks and concentrations including dependence on relationships with its customers. TripAdvisor is highly dependent on advertising relationships with Expedia and Priceline, which each accounted for more than 10% of TripAdvisor’s consolidated revenue and combined accounted for approximately 46%, 46% and 46% of its total revenue for the years ended December 31, 2016, 2015 and 2014, respectively. Contingent Liabilities Periodically, we review the status of all significant outstanding matters to assess any potential financial exposure. When (i) it is probable that an asset has been impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss in our consolidated statements of operations. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the financial statements. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base accruals made on the best information available at the time which can be highly subjective. The final outcome of these matters could vary significantly from the amounts included in the accompanying consolidated financial statements. Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss), cumulative foreign currency translation adjustments, and unrealized gains and losses on available-for-sale securities, net of tax. Earnings (Loss) per Common Share (EPS) Basic earnings (loss) per common share (“EPS”) is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Excluded from EPS for the years ended December 31, 2016, 2015 and 2014 are 2 million, less than a million and less than a million potential common shares, respectively, because their inclusion would be antidilutive. The Company issued 73,685,924 common shares, which is the aggregate number of shares of Series A and Series B common stock outstanding upon the completion of the TripCo Spin-Off on August 27, 2014. Years ended December 31, 2016 2015 2014 number of shares in millions Basic EPS Potentially dilutive shares — — — Diluted EPS Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) recoverability and recognition of goodwill, intangible and long-lived assets, (ii) accounting for income taxes and (iii) stock-based compensation to be its most significant estimates. Reclassifications Certain prior period amounts have been reclassified for comparability with the current year presentation. Recently Adopted Accounting Pronouncements In August 2014, the FASB issued new accounting guidance which requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. The Company adopted this guidance during the year ended December 31, 2016. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures. In September 2015, the FASB issued new accounting guidance which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts that would have been recorded in |
Supplemental Disclosures to Con
Supplemental Disclosures to Consolidated Statements of Cash Flows | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Disclosures to Consolidated Statements of Cash Flow | |
Supplemental Disclosures to Consolidated Statements of Cash Flow | (3) Supplemental Disclosures to Consolidated Statements of Cash Flows Years ended December 31, 2016 2015 2014 amounts in millions Acquisitions and other investments, net of cash acquired: Intangibles not subject to amortization $ Intangibles subject to amortization Fair value of other assets acquired Net liabilities assumed — Deferred tax assets (liabilities) — Other — — Acquisitions and other investments, net of cash acquired $ Cash paid for interest $ Cash paid for income taxes $ |
TripAdvisor, Inc. Acquisitions
TripAdvisor, Inc. Acquisitions and Dispositions | 12 Months Ended |
Dec. 31, 2016 | |
TripAdvisor, Inc. Acquisitions | |
TripAdvisor, Inc. Transactions | (4) TripAdvisor Acquisitions and Dispositions Acquisitions During the year ended December 31, 2016, TripAdvisor completed five acquisitions for a total purchase price of $34 million. TripAdvisor paid net cash consideration of $28 million, which is net of $4 million of cash acquired, and includes $2 million in future holdback payments, which TripAdvisor currently plans to settle in its common stock. The total cash consideration is subject to adjustment based on final working capital adjustment calculations and certain indemnification obligations for general representations and warranties of the acquired company stockholders. The cash consideration was paid primarily from the U.S. TripAdvisor acquired 100% of the outstanding capital stock of the following companies: Tous Au Restaurant, a leading restaurant event week brand in France; HouseTrip, a European-based vacation rental website; Citymaps, a social mapping platform; Sneat, a provider of a mobile reservation platform for restaurants in France; and Couverts, a provider of an online and mobile reservations platform for restaurants in the Netherlands. The purchase price allocations of TripAdvisor’s 2016 acquisitions are 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 in the period the adjustment is determined. The primary area of the purchase price allocation which is not yet finalized is related to income tax-related balances for Citymaps. Acquired goodwill related to TripAdvisor’s 2016 acquisitions is not deductible for tax purposes. Pro-forma results of operations for these acquisitions have not been presented as the financial impact to our consolidated financial statements, both individually and in the aggregate, would not be materially different from historical results. The following table presents the initial purchase price allocations recorded on our consolidated balance sheet for all 2016 acquisitions (in millions): Goodwill $ Intangible assets Net liabilities assumed Total purchase price consideration $ Intangible assets acquired during 2016 included trade names of $4 million, customer lists and supplier relationships of $4 million, subscriber relationships of $5 million, and technology and other of $12 million. The overall weighted-average life of the intangible assets acquired in the purchase of these businesses during 2016 was 6 years, and will be amortized on a straight-line basis over their estimated useful lives. During the year ended December 31, 2015, TripAdvisor completed three acquisitions for a total purchase price consideration of $28 million and paid in cash. The cash consideration was paid primarily from TripAdvisor’s international subsidiaries. TripAdvisor acquired 100% of the outstanding capital stock of the following companies: ZeTrip, a personal journal app that helps users log activities, including places they have visited and photos they have taken, purchased in January 2015; BestTables, a provider of an online and mobile reservations platform for restaurants in Portugal and Brazil, purchased in March 2015; and Dimmi, a provider of an online and mobile reservations platform for restaurants in Australia, purchased in May 2015. The following table presents the purchase price allocations recorded on our consolidated balance sheet for all 2015 acquisitions (in millions): Goodwill $ Intangible assets Net tangible assets Deferred tax liabilities, net Total purchase price consideration $ Intangible assets acquired during 2015 included trade names of $2 million, customer lists and supplier relationships of $7 million, and technology and other of $3 million. The overall weighted average life of the intangible assets acquired in the purchase of these businesses during 2015 was approximately 6 years, and will be amortized on a straight-line basis over their estimated useful lives. Approximately $1 million, $1 million and $4 million of acquisition-related costs were expensed as incurred during the years ended December 31, 2016, 2015 and 2014, respectively, and are included in general and administrative expenses in the consolidated statements of operations. Dispositions In August 2015, TripAdvisor sold its 100% interest in a Chinese subsidiary to an unrelated third party for $28 million in cash consideration. Accordingly, TripAdvisor deconsolidated $11 million of assets (which included $3 million of cash sold) and $4 million of liabilities from its consolidated balance sheets and recognized a $20 million gain on sale in other, net on the consolidated statements of operations. |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value | 12 Months Ended |
Dec. 31, 2016 | |
Assets and Liabilities Measured at Fair Value | |
Assets and Liabilities Measured at Fair Value | (5) Assets and Liabilities Measured at Fair Value For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3. The Company’s assets and liabilities measured at fair value are as follows: December 31, 2016 December 31, 2015 Quoted prices Significant Quoted prices Significant in active other in active other markets for observable markets for observable identical assets inputs identical assets inputs Description Total (Level 1) (Level 2) Total (Level 1) (Level 2) amounts in millions Cash equivalents $ — Marketable securities $ — — Available-for-sale securities $ — — Variable postpaid forward $ — NA NA NA On June 6, 2016, TripCo entered into a variable postpaid forward transaction with a financial institution with respect to 7 million TripAdvisor shares held by the Company with a forward floor price of $38.90 per share and a forward cap price of $98.96 per share. TripCo borrowed $259 million against the variable postpaid forward on June 23, 2016 (see note 7). The asset associated with this instrument is included in the other assets line item in the consolidated balance sheet as of December 31, 2016. Changes in the fair value of the variable postpaid forward are recognized in realized and unrealized gains (losses) on financial instruments in the consolidated statements of operations. The fair value of Level 2 marketable securities and available-for-sale securities were obtained from pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. The fair value of Level 2 derivative assets were derived from a Black-Scholes-Merton model using observable market data as the significant inputs. Other Financial Instruments Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, accrued and other current liabilities, current portion of debt and long-term debt. The carrying amount approximates fair value due to the short maturity of these instruments as reported on our consolidated balance sheets. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | (6) Goodwill and Other Intangible Assets Goodwill and Indefinite Lived Intangible Assets Changes in the carrying amount of goodwill are as follows (amounts in millions): Corporate TripAdvisor and Other Total Balance at January 1, 2015 $ — Acquisition (1) — Other (2) — Balance at December 31, 2015 — Acquisition (1) — Other (2) — Balance at December 31, 2016 $ — (1) Additions to goodwill relate to TripAdvisor’s acquisitions. See “Note 4 – TripAdvisor, Inc. Acquisitions and Dispositions,” for further information. (2) Other changes are primarily due to foreign currency translation on goodwill. As presented in the accompanying consolidated balance sheets, trademarks are the other significant indefinite lived intangible asset and the change from the prior year is due to the change in foreign exchange rates. Intangible Assets subject to amortization Intangible assets subject to amortization are comprised of the following: December 31, 2016 December 31, 2015 Weighted Average Gross Net Gross Net Remaining carrying Accumulated carrying carrying Accumulated carrying Useful Life amount amortization amount amount amortization amount in years amounts in millions Customer relationships Other Total Amortization of TripAdvisor intangible assets acquired during 2012 are expected to match the usage of the related assets and are being amortized on an accelerated basis as reflected in amortization expense and in the future amortization table below. Amortization expense was $198 million, $245 million and $279 million for the years ended December 31, 2016, 2015 and 2014, respectively. The estimated future amortization expense for the next five years related to intangible assets with definite lives as of December 31, 2016, assuming no subsequent impairment of the underlying assets, is as follows (amounts in millions): 2017 $ 2018 $ 2019 $ 2020 $ 2021 $ Impairments During the years ended December 31, 2015 and 2014, we recorded impairments related to BuySeasons, presented in the statements of operations, which is included in the Corporate and other segment. The impairments are primarily related to trademarks. Continued declining operating results as compared to budgeted results and certain trends required a quantitative impairment test and a determination of fair value for BuySeasons. This fair value, including the related intangibles and goodwill, was determined using projections of future operating performance and applying a combination of market multiples (market approach) and discounted cash flow (income approach) calculations (Level 3). As of December 31, 2016 the accumulated impairment losses for BuySeasons was $46 million. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt | |
Debt | (7) Debt Outstanding debt at December 31, 2016 and 2015 is summarized as follows: December 31, December 31, 2016 2015 amounts in millions TripAdvisor Credit Facilities $ TripAdvisor Chinese credit facilities TripCo margin loans TripCo variable postpaid forward NA Unamortized discount and debt issuance costs — Total consolidated TripCo debt $ Less debt classified as current Total long-term debt $ TripAdvisor Credit Facilities On June 26, 2015, TripAdvisor entered into a five year credit agreement (the “2015 Credit Facility”). The 2015 Credit Facility, among other things, provides for (i) a $1 billion unsecured revolving credit facility, (ii) an interest rate on borrowings and commitment fees based on TripAdvisor’s and its subsidiaries’ consolidated leverage ratio and (iii) uncommitted incremental revolving loan and term loan facilities, subject to compliance with a leverage covenant and other conditions. Any overdue amounts under or in respect of the revolving credit facility not paid when due shall bear interest at (i) in the case of principal, the applicable interest rate plus 2.00% per annum, (ii) in the case of interest denominated in British pound sterling or Euro, the applicable rate plus 2.00% per annum and (iii) in the case of interest denominated in U.S. Dollars, 2.00% per annum plus the Alternate Base Rate plus the interest rate spread applicable to ABR loans. TripAdvisor may borrow from the revolving credit facility in U.S. dollars, Euros and British pound sterling with a term of five years expiring June 26, 2020. There is no specific repayment date prior to the five-year maturity date for borrowings under this revolving credit facility. During the year ended December 31, 2016, TripAdvisor borrowed an additional $101 million and repaid $210 million of its outstanding borrowings on the 2015 Credit Facility. Based on TripAdvisor’s current leverage ratio, borrowings bear interest at LIBOR plus 125 basis points, or the Eurocurrency Spread. TripAdvisor is currently borrowing under a one-month interest period of 2.0% per annum, using a one-month interest period Eurocurrency Spread, which will reset periodically. Interest will be payable on a monthly basis while TripAdvisor is borrowing under the one-month interest rate period. TripAdvisor is 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. Unused revolver capacity is currently subject to a commitment fee of 20 basis points, given TripAdvisor’s current leverage ratio. The 2015 Credit Facility includes $15 million of borrowing capacity available for letters of credit and $40 million for borrowings on same-day notice. As of December 31, 2016, TripAdvisor had issued $3 million of outstanding letters of credit under the 2015 Credit Facility. TripAdvisor may voluntarily repay any outstanding borrowing under the 2015 Credit Facility at any time without premium or penalty, other than customary breakage costs with respect to Eurocurrency loans. Certain wholly-owned domestic subsidiaries of TripAdvisor have agreed to guarantee TripAdvisor’s obligations under the 2015 Credit Facility. The 2015 Credit Facility contains a number of covenants that, among other things, restrict TripAdvisor’s ability to: incur additional indebtedness, create liens, enter into sale and leaseback transactions, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions, make investments, loans or advances, prepay certain subordinated indebtedness, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements governing certain subordinated indebtedness, and change the fiscal year. The 2015 Credit Facility also requires TripAdvisor to maintain a maximum leverage ratio and contains certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the 2015 Credit Facility will be entitled to take various actions, including the acceleration of all amounts due under the 2015 Credit Facility. Additionally, the 2015 Credit Facility includes a subjective acceleration clause, which could be triggered by the lenders, if a representation, warranty or statement made by TripAdvisor proves to be incorrect in any material respect, which in turn would permit the lenders to accelerate repayment of any outstanding obligations. TripAdvisor believes that the likelihood of the lender exercising this right is remote and, as such, borrowings under this facility are classified as long-term. On September 7, 2016, TripAdvisor entered into an uncommitted facility agreement with Bank of America Merrill Lynch International Limited (the “Lender”), which provides for a $73 million unsecured revolving credit facility (the “2016 Credit Facility” and together with the 2015 Credit Facility, the “TripAdvisor Credit Facilities”) with no specific expiration date. The 2016 Credit Facility is available at the Lender’s absolute discretion and can be canceled at any time. Repayment terms for borrowings under the 2016 Credit Facility are generally one to six month periods and bear interest at LIBOR plus 112.5 basis points. TripAdvisor may borrow from the 2016 Credit Facility in U.S. dollars only and it may voluntarily repay any outstanding borrowing at any time without premium or penalty. Any overdue amounts under or in respect of the 2016 Credit Facility not paid when due shall bear interest in the case of principal at the applicable interest rate plus 1.50% per annum. In addition, TripAdvisor, LLC, a wholly-owned domestic subsidiary of TripAdvisor, has agreed to guarantee TripAdvisor’s obligations under the 2016 Credit Facility. There are no specific financial or incurrence covenants. TripAdvisor borrowed $73 million under the 2016 Credit Facility in September 2016. These funds were used for TripAdvisor’s general working capital needs, primarily for partial repayment of TripAdvisor’s long-term debt, and the liability is recorded in short-term liabilities on the consolidated balance sheet as of December 31, 2016. TripAdvisor is currently borrowing under a one-month interest period of 1.9% per annum, which will reset periodically. Interest will be payable on a monthly basis while TripAdvisor is borrowing under the one-month interest rate period. TripAdvisor Chinese Credit Facilities In addition to borrowings under the Trip Advisor Credit Facilities, TripAdvisor maintains Chinese credit facilities. As of December 31, 2016 and 2015, there were approximately $7 million and $1 million of short term borrowings outstanding, respectively. TripAdvisor’s Chinese subsidiary is party to a $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. The Chinese Credit Facility—BOA bears interest at a rate based on 100% of the People’s Bank of China’s base rate, which was 4.35% as of December 31, 2016. As of December 31, 2016, there are no outstanding borrowings under the Chinese Credit Facility—BOA. In addition, TripAdvisor’s Chinese subsidiary is party to a RMB 70,000,000 (approximately $10 million) one-year revolving credit facility with J.P. Morgan Chase Bank (the “Chinese Credit Facility—JPM”). The Chinese Credit Facility—JPM bears interest at a rate based on 100% of the People’s Bank of China’s base rate, which was 4.35% as of December 31, 2016. As of December 31, 2016, TripAdvisor had $7 million of outstanding borrowings under the Chinese Credit Facility—JPM. TripCo Margin Loans and Variable Postpaid Forward On August 21, 2014, a wholly owned subsidiary of TripCo (“TripSPV”), entered into two margin loan agreements which aggregated total borrowings of $400 million. Interest on the margin loans accrues at a rate of 3.65% plus LIBOR for six months and 3.25% thereafter. Interest on the margin loans was paid in kind and added to the principal amount on the loans. In connection with the variable postpaid forward transaction entered into on June 6, 2016, as described in note 5, TripCo borrowed $259 million against the variable postpaid forward on June 23, 2016. The term of the forward is four years. At maturity, the accreted loan amount due is approximately $272 million. The proceeds from the forward were used to repay $200 million in principal and $29 million of paid in kind interest on the margin loans with the remainder being used for general corporate purposes. On June 23, 2016, TripCo amended the terms of the margin loan agreements with respect to the remaining borrowings of $200 million. Common Stock and Class B Common Stock of TripAdvisor were pledged as collateral pursuant to these agreements. Each agreement contains language that indicates that the Company, as borrower and transferor of underlying shares as collateral, has the right to exercise all voting, consensual and other powers of ownership pertaining to the transferred shares for all purposes, provided that TripCo agrees that it will not vote the shares in any manner that would reasonably be expected to give rise to transfer or certain other restrictions. Similarly, the loan agreements indicate that no lender party shall have any voting rights with respect to the shares transferred, except to the extent that a lender party buys any shares in a sale or other disposition made pursuant to the terms of the loan agreements. The agreements also contain certain restrictions related to additional indebtedness and margin calls. The initial margin call would require the outstanding balance to be reduced to $150 million if at any time the closing price per share of TripAdvisor common stock were to fall below certain minimum values. Pursuant to the amendments, interest on the margin loans accrues at a rate of 2.0% plus LIBOR per year to be paid in kind or cash at the election of TripCo. The Company expects that interest on the loan will be paid in kind and added to the principal amount on the loan. The term of the loan is three years and the maturity date is June 21, 2019. During the year ended December 31, 2016, TripCo recorded $11 million and $2 million of non-cash interest related to the amended margin loans and variable postpaid forward, respectively. As of December 31, 2016, the values of TripAdvisor’s shares pledged as collateral pursuant to the margin loan agreements and variable postpaid forward, determined based on the trading price of the Common Stock and on an as-if converted basis for the Class B Common Stock, are as follows: Number of Shares Pledged as Collateral as of Share value as of Pledged Collateral December 31, 2016 December 31, 2016 amounts in millions Common Stock $ Class B Common Stock $ The outstanding margin loans contain various affirmative and negative covenants that restrict the activities of the borrower. The loan agreements do not include any financial covenants. Additionally, in support of the margin loan agreements, TripCo and Liberty Interactive LLC entered into a promissory note (which expires in August 2017) whereby TripCo may request, upon certain margin call thresholds, up to $200 million in funds. Proceeds from the promissory note must be used by TripSPV to offset obligations under the margin loan agreements. Fair Value Due to the primarily variable rate nature, TripCo believes that the carrying amount of its debt approximated fair value at December 31, 2016 and 2015. Debt Covenants As of December 31, 2016, each of the Company and TripAdvisor was in compliance with its respective debt covenants. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | (8) Income Taxes TripCo was included in the federal consolidated income tax return of Liberty prior to August 27, 2014. The tax provision included in these financial statements has been prepared on a stand-alone basis, as if TripCo was not part of the consolidated Liberty group for periods prior to the TripCo Spin-Off. TripAdvisor, as a consolidated subsidiary for financial statement purposes, was not included in the Liberty consolidated group tax return and is not included in the TripCo consolidated group tax return subsequent to the TripCo Spin-Off as TripCo owns less than 80% of TripAdvisor. Additionally, upon the completion of the TripCo Spin-Off, the unused stand-alone net operating losses of BuySeasons was treated as a deemed equity distribution at that date. Furthermore, the income taxes payable allocated to TripCo by Liberty as of August 27, 2014 was treated as a deemed equity contribution of $29 million from Liberty upon completion of the TripCo Spin-Off. Income tax benefit (expense) consists of: Years ended December 31, 2016 2015 2014 amounts in millions Current: Federal $ State and local Foreign $ Deferred: Federal $ State and local Foreign Income tax benefit (expense) $ The following table presents a summary of our domestic and foreign earnings from continuing operations before income taxes: Years ended December 31, 2016 2015 2014 amounts in millions Domestic $ Foreign Total $ Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of 35% as a result of the following: Years ended December 31, 2016 2015 2014 amounts in millions Computed expected tax benefits (expense) $ State and local taxes, net of federal income taxes Foreign taxes, net of foreign tax credits Change in estimated tax rate Basis difference in consolidated subsidiary Change in valuation allowance Change in unrecognized tax benefits Federal tax credits Other Income tax (expense) benefit $ During 2016, the Company had income tax benefits from earnings in foreign jurisdictions taxed at rates lower than the 35% U.S. federal tax rate, partially offset by changes in unrecognized tax benefits and changes in valuation allowance. During 2015, the Company had income tax benefits from earnings in foreign jurisdictions taxed at rates lower than the 35% U.S. federal tax rate, partially offset by the recognition of deferred tax liabilities for basis differences in the stock of a consolidated subsidiary, changes in valuation allowance, and changes in unrecognized tax benefits. Included in the income tax benefits from earnings in foreign jurisdictions is a $13 million tax benefit recorded at TripAdvisor as a result of a favorable decision in a U.S tax court case issued in July 2015 related to the treatment of stock-based compensation in intercompany cost-sharing agreements. During 2014, the Company incurred aggregate income tax expense related to an increase in its estimate of the state effective tax rate used to measure its net deferred tax liabilities, based on a change to the Company’s estimated state apportionment factors and an increase in its unrecognized tax benefits. This income tax expense was partially offset with income tax benefits for earnings in foreign jurisdictions taxed at rates lower than the 35% U.S. federal tax rate. The tax effects of temporary differences and tax attributes that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below: December 31, 2016 2015 amounts in millions Deferred tax assets: Loss carryforwards $ Stock-based compensation Lease financing obligation Other Total deferred tax assets Less: valuation allowance Net deferred tax assets Deferred tax liabilities: Intangible assets Investments Other Total deferred tax liabilities Net deferred tax liability $ During the year ended December 31, 2016, there was a $10 million increase in the Company’s valuation allowance due to additional foreign net operating losses at TripAdvisor. TripAdvisor has not provided for deferred U.S. income taxes on undistributed earnings of certain foreign consolidated companies that it intends to reinvest permanently outside the United States; the total amount of such earnings as of December 31, 2016 was $828 million. Should these earnings be distributed or treated under certain U.S. tax rules as having distributed earnings of foreign consolidated companies in the form of dividends or otherwise, TripAdvisor may be subject to U.S. income taxes. Due to complexities in tax laws and various assumptions that would have to be made, it is not practicable at this time to estimate the amount of unrecognized deferred U.S. taxes on these earnings. At December 31, 2016, the Company has a deferred tax asset of $93 million for federal, state, and foreign loss carryforwards. Of this amount, $46 million is recorded at TripAdvisor. If not utilized to reduce income tax liabilities at TripAdvisor in future periods, these loss carryforwards will expire at various times between 2017 and 2036. The remaining deferred tax asset of $47 million relates to federal and state net operating loss carryforwards recorded at TripCo. If not utilized to reduce income tax liabilities at TripCo in future periods, these net operating loss carryforwards will expire at various times between 2021 and 2036. The loss carryforwards recorded at TripAdvisor and TripCo are expected to be utilized prior to expiration, except for $5 million of state net operating losses and $28 million of foreign net operating losses (on a tax-effected basis), which based on current projections of state and foreign taxable income may expire unused. A reconciliation of unrecognized tax benefits is as follows (amounts in millions): Years ended December 31, 2016 2015 2014 Balance at beginning of year $ Additions based on tax positions related to the current year Additions for tax positions of prior years Reductions for lapse of statute of limitations — — Balance at end of year $ As of December 31, 2016, 2015 and 2014 the Company had recorded tax reserves of $105 million, $89 million and $67 million, respectively, related to unrecognized tax benefits for uncertain tax positions, which is classified as long-term and included in other long-term liabilities on the consolidated balance sheets. Prior to the acquisition of a controlling interest in TripAdvisor in December 2012, the Company did not have any unrecognized tax benefits for uncertain tax positions. If the unrecognized tax benefits were to be recognized for financial statement purposes, approximately $63 million, $53 million and $65 million for the years ended December 31, 2016, 2015 and 2014, respectively, would be reflected in the Company’s tax expense and affect its effective tax rate. The Company’s estimate of its unrecognized tax benefits related to uncertain tax positions requires a high degree of judgment. The Company does not anticipate any material changes in the next fiscal year. As of December 31, 2016 and 2015, the Company had recorded approximately $9 million and $6 million, respectively, of accrued interest and penalties related to uncertain tax positions. As of December 31, 2016, Liberty’s tax years prior to 2013 are closed for federal income tax purposes, and the IRS has completed its examination of Liberty’s 2013 and 2014 tax years and TripCo’s 2014 and 2015 tax years. TripCo’s 2016 tax year is being examined currently as part of the IRS’s Compliance Assurance Process program. Because TripCo’s ownership of TripAdvisor is less than the required 80%, TripAdvisor does not consolidate with TripCo for federal income tax purposes. Prior to December 2011, TripAdvisor was included in the consolidated federal income tax returns filed by Expedia. Expedia’s 2009, 2010 and 2011 tax years are currently being audited by the IRS. TripAdvisor and Expedia are parties to a tax sharing agreement whereby TripAdvisor is generally required to indemnify Expedia for any taxes resulting from the Expedia spin-off (and any related interest, penalties, legal and professional fees, and all costs and damages associated with related stockholder litigation or controversies) to the extent such amounts resulted from (i) any act or failure to act by TripAdvisor described in the covenants in the tax sharing agreement, (ii) any acquisition of TripAdvisor’s equity securities or assets or those of a member of its group, or (iii) any failure of the representations with respect to TripAdvisor or any member of its group to be true or any breach by TripAdvisor or any member of its group of any covenant, in each case, which is contained in the separation documents or in the documents relating to the IRS private letter ruling and/or the opinion of counsel. TripAdvisor is undergoing an audit by the IRS for the 2012 and 2013 tax years. Various states are currently examining TripAdvisor’s prior year’s state income tax returns. TripAdvisor is no longer subject to tax examinations by tax authorities for years prior to 2008. As of December 31, 2016, no material assessments have resulted for the 2012 and 2013 tax years. In January 2017, as part of Expedia’s IRS audit, TripAdvisor received Notices of Proposed Adjustment from the IRS for the 2009 and 2010 tax years. These proposed adjustments are related to certain transfer pricing arrangements with TripAdvisor’s foreign subsidiaries, and would result in an increase to TripAdvisor’s worldwide income tax expense in an estimated range of $10 million to $14 million for 2009 and 2010 after consideration of competent authority relief, exclusive of interest and penalties. TripAdvisor disagrees with the proposed adjustments and intends to defend its position through applicable administrative and, if necessary, judicial remedies. TripAdvisor’s policy is to review and update tax reserves as facts and circumstances change. Based on TripAdvisor’s interpretation of the regulations and available case law, it believes the position taken with regard to transfer pricing with its foreign subsidiaries is sustainable. In addition to the risk of additional tax for 2009 and 2010 transactions, if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, TripAdvisor would be subject to significant additional tax liabilities. |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Stock Based Compensation | |
Stock Based Compensation | (9) Stock-Based Compensation TripCo Incentive Plans In connection with the TripCo Spin-Off, the holder of an outstanding option or stock appreciation right (collectively “Award”) to purchase shares of Liberty Ventures Series A and Series B common stock on the record date (a “Liberty Ventures Award”) received an Award to purchase shares of the corresponding series of TripCo common stock and an adjustment to the exercise price and number of shares subject to the original Liberty Ventures Award (as so adjusted, an “adjusted Liberty Ventures Award”). Following the TripCo Spin-Off, employees of Liberty hold Awards in both Liberty Ventures common stock and TripCo common stock. The compensation expense relating to employees of Liberty is recorded at Liberty. Therefore, compensation expense related to Awards resulting from the TripCo Spin-Off will not be recognized in the Company’s consolidated financial statements. Except as described above, all other terms of an adjusted Liberty Ventures Award and a new TripCo Award (including, for example, the vesting terms thereof) are in all material respects, the same as those of the corresponding original Liberty Ventures Award. Pursuant to the Liberty TripAdvisor Holdings, Inc. 2014 Omnibus Incentive Plan (Amended and Restated as of March 11, 2015) (the “2014 Plan”), the Company may grant Awards in respect of a maximum of 6.7 million shares of TripCo common stock. Awards generally vest over 4-5 years and have a term of 7-10 years. TripCo issues new shares upon exercise of equity awards. TripCo - Grants During the year ended December 31, 2016 and pursuant to the 2014 Plan, TripCo granted 67 thousand options to purchase shares of Series A common stock to its non-employee directors. Such options had a weighted average grant-date fair value of $6.63 per share and cliff vest over a 1-year vesting period. There were no options to purchase shares of Series B common stock granted during the period. The Company has calculated the grant-date fair value for all of its equity classified awards and any subsequent remeasurement of its liability classified awards using the Black-Scholes-Merton Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. For grants made in 2016, 2015 and 2014, the range of expected terms was 5.7 years to 7.3 years. Since TripCo common stock has not traded on the stock market for a significant length of time, the volatility used in the calculation for Awards is based on a blend of the historical volatility of TripCo and TripAdvisor common stock and the implied volatility of publicly traded TripCo and TripAdvisor options; as the most significant asset within TripCo, the volatility of TripAdvisor was considered in the overall volatility of TripCo. For grants made in 2016, 2015 and 2014, the range of volatilities was 40.6% to 45.9%. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options. The Company recognizes the cost of an Award over the period during which the employee is required to provide service (usually the vesting period of the Award). TripCo - Outstanding Awards The following table presents the number and weighted average exercise price (“WAEP”) of Awards to purchase TripCo common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the Awards. Weighted average remaining Aggregate contractual intrinsic Series A WAEP life value in thousands in years in millions Outstanding at January 1, 2016 $ Granted $ Exercised $ Forfeited/Cancelled — $ — Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ Weighted average remaining Aggregate contractual intrinsic Series B WAEP life value in thousands in years in millions Outstanding at January 1, 2016 $ Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding at December 31, 2016 $ $ — Exercisable at December 31, 2016 — $ — — $ — As of December 31, 2016, the total unrecognized compensation cost related to unvested equity Awards was $15 million. Such amount will be recognized in the Company’s statements of operations over a weighted average period of approximately 2 years. As of December 31, 2016, TripCo reserved 2.5 million shares of Series A and Series B common stock for issuance under exercise privileges of outstanding stock Awards. TripCo - Exercises The aggregate intrinsic value of all TripCo options exercised during the years ended December 31, 2016, 2015 and 2014 was $1.2 million, $7.3 million and $10.7 million, respectively. TripCo — Restricted Stock The aggregate fair value of all restricted shares of TripCo common stock that vested during the years ended December 31, 2016, 2015 and 2014 was $1.2 million. As of December 31, 2016, the Company had approximately 16,000 unvested restricted shares of Series A TripCo common stock held by certain directors, officers and employees of the Company with a weighted average grant-date fair value of $6.19 per share. TripAdvisor Equity Grant Awards Pursuant to TripAdvisor’s Amended and Restated 2011 Stock and Annual Incentive Plan (the “2011 Incentive Plan”), TripAdvisor may grant restricted stock, restricted stock awards, restricted stock units (“RSUs”), stock options and other stock-based awards to TripAdvisor directors, officers, employees and consultants. Grants were valued using a volatility of 41.8% and the applicable risk free rate for an expected term of 4.9 years for the year ended December 31, 2016, volatility of 41.8% and the applicable risk free rate for an expected term of 5.4 years for the year ended December 31, 2015 and a volatility of 44.0% and the applicable risk free rate for an expected term of 5.8 years for the year ended December 31, 2014. Performance-based stock options and RSUs vest upon achievement of certain TripAdvisor company-based performance conditions and a requisite service period. On the date of grant, the fair value of stock options is calculated using a Black-Scholes-Merton model, which incorporates assumptions to value stock-based awards, including the risk-free rate of return, expected volatility, expected term and expected dividend yield. If, upon grant, TripAdvisor assesses the achievement of performance targets as probable, compensation expense is recorded for the awards over the estimated performance period on a straight-line basis. At each reporting period, the probability of achieving the performance targets and the performance period required to meet those targets is assessed. To the extent actual results or updated estimates differ from TripAdvisor’s estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised, or the change in estimate will be applied prospectively depending on whether the change affects the estimate of total compensation cost to be recognized or merely affects the period over which compensation cost is to be recognized. The following table presents the number, weighted average exercise price (“WAEP”) and aggregate intrinsic value of stock options to purchase TripAdvisor common stock granted under their 2011 Incentive Plan: Weighted Average Remaining Aggregate Number of Contractual Intrinsic Options WAEP Life Value in thousands in years in millions Outstanding at January 1, 2016 $ Granted $ Exercised $ Cancelled or expired $ Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ During the year ended December 31, 2016, TripAdvisor granted 1 million of service based stock options under their 2011 Incentive Plan, with a weighted average estimated grant-date fair value per option of $63.43. These stock options generally have a contractual term of ten years from the date of grant and generally vest over a four year requisite service period. As of December 31, 2016, the total number of shares available under the 2011 Incentive Plan is 15,051,221 shares. TripAdvisor related stock-based compensation for the year ended December 31, 2016 was approximately $85 million. As of December 31, 2016, the total unrecognized compensation cost related to unvested TripAdvisor stock options was approximately $48 million and will be recognized over a weighted average period of approximately 2.3 years. Restricted Stock Units RSUs are stock awards that are granted to employees entitling the holder to shares of TripAdvisor common stock as the award vests. RSUs are measured at fair value based on the number of shares granted and the quoted price of TripAdvisor common stock at the date of grant. The fair value of RSUs is amortized 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. During the year ended December 31, 2016, TripAdvisor granted 2 million service based RSUs under their 2011 Incentive Plan for which the fair value was measured based on the quoted price of TripAdvisor common stock at the date of grant. The weighted average grant date fair value for RSUs granted during 2016 was $63.71 per share. The unvested TripAdvisor RSUs had a weighted average grant date fair value of $69.35 as of December 31, 2016. As of December 31, 2016, the total unrecognized compensation cost related to 2.9 million unvested TripAdvisor RSU’s outstanding was approximately $149 million which will be recognized over the remaining vesting term of approximately 2.8 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Employee Benefit Plans | |
Employee Benefit Plans | (10) Employee Benefit Plans Consolidated companies of TripCo sponsor 401(k) plans, which provide their employees an opportunity to make contributions to a trust for investment in TripCo common stock, as well as other mutual funds. The Company’s consolidated companies make matching contributions to the plans based on a percentage of the amount contributed by employees. Employer cash contributions related to BuySeasons and TripAdvisor were $9 million, $7 million and $5 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions | |
Related Party Transactions | (11) Related Party Transactions Agreement with Chairman, President and CEO Because of the significant voting power that Gregory B. Maffei would possess upon exercise of the options granted to him on December 21, 2014 and as a result of the share exchange between Mr. Maffei and certain of our stockholders in December 2014, the Compensation Committee of the Board of Directors of TripCo (the “Board”) and members of the Board independent of Mr. Maffei determined it was appropriate to request that Mr. Maffei and TripCo enter into a standstill agreement that would cap his voting interest at 34.9%, subject to a variety of limitations and exceptions. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | (12) Commitments and Contingencies Operating Leases TripCo’s consolidated companies have contractual obligations in the form of operating leases for office and warehouse space for which the related expense is recorded on a monthly basis. Certain leases contain periodic rent escalation adjustments and renewal options. Rent expense related to such leases is recorded on a straight-line basis. Operating lease obligations expire at various dates with the latest maturity in December 2030. In June 2013, TripAdvisor entered into a lease to move its headquarters to Needham, Massachusetts in 2015. TripAdvisor was the deemed owner (for accounting purposes only) of the new building during the construction period under build to suit lease accounting. As building construction began in the fourth quarter of 2013, TripAdvisor recorded project construction costs incurred by the landlord as a construction-in-progress asset and a corresponding construction financing obligation in “Property and equipment, at cost” and “Other liabilities,” respectively, in the consolidated balance sheets. Upon completion of construction at the end of the second quarter of 2015, TripAdvisor evaluated the construction-in-progress asset and construction financing obligation for de-recognition under the criteria for “sale-leaseback” treatment under GAAP. TripAdvisor has continued economic involvement in the facility, and therefore did not meet the provisions for sale-leaseback accounting. This determination was based on TripAdvisor's continuing involvement with the property in the form of non-recourse financing to the lessor. Therefore, the lease has been accounted for as a financing obligation. Accordingly, TripAdvisor began depreciating the building asset over its estimated useful life and incurring interest expense related to the financing obligation imputed using the effective interest rate method. TripAdvisor bifurcates the lease payments into (i) a portion that is allocated to the building (a reduction to the construction financing obligation) and; (ii) a portion that is allocated to the land on which the building was constructed. The portion of the lease payments allocated to the land is treated as an operating lease that commenced in 2013. The construction financing obligation is considered a long-term finance lease obligation and is recorded to noncurrent “Other liabilities” in the consolidated balance sheets. At the end of the lease term, the carrying value of the building asset and of the remaining financing obligation are expected to be equal, at which time TripAdvisor may either surrender the leased asset as settlement of the remaining financing obligation or extend the initial term of the lease for the continued use of the asset. TripAdvisor incurred approximately $6 million and $62 million of non-cash construction costs and related obligations in connection with the capitalization of construction-in-progress and tenant improvement costs during the years ended December 31, 2015 and 2014, respectively. TripAdvisor also leases an aggregate of approximately 465,000 square feet at approximately 40 other locations across North America, Europe and Asia Pacific, primarily for its international management teams, sales offices, and subsidiary headquarters, pursuant to leases with expiration dates through June 2027. For the years ended December 31, 2016, 2015 and 2014, TripCo recorded rental expense of $21 million, $22 million and $22 million, respectively. The following table presents TripCo’s estimated future minimum rental payments under operating leases with non-cancelable lease terms, including the new TripAdvisor headquarters lease, that expire after December 31, 2016 (amounts in millions): 2017 $ 2018 2019 2020 2021 Thereafter $ Off-Balance Sheet Arrangements TripCo did not have any other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources. Litigation In the ordinary course of business, the Company and its subsidiaries are parties to legal proceedings and claims involving, among other things, arising out of our operations. These matters may relate to claims involving alleged infringement of third-party intellectual property rights, defamation, taxes, regulatory compliance and other claims. Although it is reasonably possible that the Company may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying consolidated financial statements. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Segment Information | (13) Segment Information TripCo, through its ownership interests in subsidiaries and other companies, is primarily engaged in the online commerce industries. TripCo identifies its reportable segments as (A) those consolidated companies that represent 10% or more of its consolidated annual revenue, annual adjusted operating income before depreciation and amortization (“Adjusted OIBDA”) or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of TripCo’s annual pre-tax earnings. TripCo evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, TripCo reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate. TripCo defines Adjusted OIBDA as revenue less operating expenses, and selling, general and administrative expenses (excluding stock-based compensation), adjusted for specifically identified non-recurring transactions. TripCo believes this measure is an important indicator of the operational strength and performance of its businesses, including each business’s ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, equity settled liabilities (including stock-based compensation), separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. TripCo generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices. TripCo’s operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments that are also consolidated companies are the same as those described in the Company’s summary of significant accounting policies. Performance Measures Years ended December 31, 2016 2015 2014 Adjusted Adjusted Adjusted Revenue OIBDA Revenue OIBDA Revenue OIBDA amounts in millions TripAdvisor $ Corporate and other Consolidated TripCo $ Other Information December 31, 2016 December 31, 2015 Total Capital Total Capital Assets expenditures Assets expenditures amounts in millions TripAdvisor $ Corporate and other Consolidated TripCo $ Revenue by Geographic Area December 31, 2016 2015 2014 amounts in millions United States $ United Kingdom Other countries Consolidated TripCo $ Long-lived Assets by Geographic Area December 31, 2016 2015 amounts in millions United States $ Other countries Consolidated TripCo $ The following table provides a reconciliation of consolidated Adjusted OIBDA to operating income and earnings (loss) before income taxes: Years ended December 31, 2016 2015 2014 amounts in millions Consolidated Adjusted OIBDA $ Stock settled charitable contribution (1) — — Stock-based compensation Depreciation and amortization Impairment of intangible assets — Operating income Interest expense Realized and unrealized gains (losses) on financial instruments, net Other, net Earnings (loss) before income taxes $ (1) TripAdvisor recorded an expense for the year ending December 31, 2015 in the amount of $67 million for a non-cash contribution to the TripAdvisor Charitable Foundation (the “Foundation”) which was recorded to general and administrative expense in the consolidated statements of operations. TripAdvisor settled this obligation with treasury shares based on the fair value of its common stock on the date the treasury shares were issued to the Foundation. Due to the one-time nature and use of stock to settle the obligation, the amount has been excluded from Adjusted OIBDA for the year ended December 31, 2015, as shown above. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information (Unaudited) | |
Quarterly Financial Information (Unaudited) | (14) Quarterly Financial Information (Unaudited) As discussed in note 2, during the third quarter of 2016, the Company adopted new accounting guidance that requires the recognition of excess tax benefits and tax deficiencies as income tax benefit or expense rather than as additional paid-in capital. The Company has applied the new guidance prospectively from January 1, 2016. The unaudited quarterly information for the first and second quarters of 2016 has been retrospectively adjusted to reflect the impact of the adoption of this guidance. 1 st 2 nd 3 rd 4 th Quarter Quarter Quarter Quarter amounts in millions, except per share amounts 2016: Revenue $ Operating income (loss) $ Net earnings (loss) $ Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders $ Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B Stockholders per common share $ 1 st 2 nd 3 rd 4 th Quarter Quarter Quarter Quarter amounts in millions, except per share amounts 2015: Revenue $ Operating income (loss) $ Net earnings (loss) $ Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders $ Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B Stockholders per common share $ |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash consists of cash deposits held in global financial institutions. Cash equivalents consist of highly liquid investments with maturities of three months or less at the time of acquisition. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are generally due within 30 days and are recorded net of an allowance for doubtful accounts. Such allowance aggregated $9 million and $6 million at December 31, 2016 and 2015, respectively. For accounts outstanding longer than the contractual payment terms, the Company determines an allowance by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history, a specific customer’s ability to pay its obligations to us, and the condition of the general economy and industry as a whole. |
Investments | Investments All marketable debt and equity securities held by the Company are classified as available-for-sale (“AFS”) and are carried at fair value generally based on quoted market prices. Fair values are determined for each individual security in the investment portfolio. Unrealized gains and losses, net of taxes, arising from changes in fair value are reported in accumulated other comprehensive income (loss) as a component of equity. The classification of investments is determined at the time of purchase and reevaluated at each balance sheet date. We invest in highly-rated securities, and our investment policy limits the amount of credit exposure to any one issuer, industry group and currency. The policy requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss and providing liquidity of investments sufficient to meet our operating and capital spending requirements and debt repayments. Marketable debt securities are classified as either short-term or long-term based on each instrument’s underlying contractual maturity date and as to whether and when we intend to sell a particular security prior to its maturity date. Marketable debt securities with maturities greater than 90 days at the date of purchase and 12 months or less remaining at the balance sheet date will be classified as short-term and marketable debt securities with maturities greater than 12 months from the balance sheet date will generally be classified as long-term. We classify our marketable equity securities, limited to money market funds and mutual funds, as either short-term or long-term based on the nature of each security and its availability for use in current operations. Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis. We may sell certain of our marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and liquidity and duration management. The weighted average maturity of our total invested cash shall not exceed 18 months, and no security shall have a final maturity date greater than three years. |
Derivatives | Derivative Instruments All of the Company’s derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive earnings and are recognized in the statement of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. If the derivative is not designated as a hedge, changes in the fair value of the derivative are recognized in earnings. None of the Company’s derivatives are currently designated as hedges. The fair value of certain of the Company’s derivative instruments are estimated using the Black-Scholes-Merton model. The Black-Scholes-Merton model incorporates a number of variables in determining such fair values, including expected volatility of the underlying security and an appropriate discount rate. The Company obtains volatility rates from pricing services based on the expected volatility of the underlying security over the remaining term of the derivative instrument. A discount rate is obtained at the inception of the derivative instrument and updated each reporting period, based on the Company’s estimate of the discount rate at which it could currently settle the derivative instrument. The Company considered its own credit risk as well as the credit risk of its counterparties in estimating the discount rate. Management judgment is required in estimating the Black-Scholes-Merton model variables. |
Property and Equipment | Property and Equipment Property and equipment consists of the following (amounts in millions): December 31, 2016 2015 Buildings $ Leasehold improvements Computer equipment Furniture, office equipment and other Total property and equipment $ Property and equipment is recorded at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is three to five years for computer equipment and furniture, office equipment and other. Leasehold improvements are depreciated using the straight-line method, over the shorter of the estimated useful life of the improvement or the remaining term of the lease. TripAdvisor’s building, which is considered an asset for accounting purposes, is depreciated over its estimated useful life of 40 years. |
Leases | Leases The Company, through its consolidated companies, leases facilities in several countries around the world and certain equipment under non-cancelable lease agreements. The terms of some of the lease agreements provide for rental payments on a graduated basis. Rent expense is recognized on a straight-line basis over the lease period and accrued as rent expense incurred but not paid. Any lease incentives are recognized as reductions of rental expense on a straight-line basis over the term of the lease. The lease term begins on the date we become legally obligated for the rent payments or when we take possession of the office space, whichever is earlier. We establish assets and liabilities for the estimated construction costs incurred under lease arrangements where we are considered the owner for accounting purposes only, or build-to-suit leases, to the extent we are involved in the construction of structural improvements or take construction risk prior to commencement of a lease. Upon occupancy of facilities under build-to-suit leases, we assess whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If we continue to be the deemed owner, the facilities are accounted for as financing leases. |
Intangible Assets | Intangible Assets Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment upon certain triggering events. Goodwill and other intangible assets with indefinite useful lives (collectively, "indefinite lived intangible assets") are not amortized, but instead are tested for impairment at least annually. Our annual impairment assessment of our indefinite-lived intangible assets is performed during the fourth quarter of each year. The Company utilizes a qualitative assessment for determining whether step one of the goodwill impairment analysis is necessary. The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. In evaluating goodwill on a qualitative basis the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of our reporting units. The Company considers whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods. As part of the analysis, the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current and prior years for other purposes. If a step one test is considered necessary based on the qualitative factors, the Company compares the estimated fair value of a reporting unit to its carrying value. Developing estimates of fair value requires significant judgments, including making assumptions about appropriate discount rates, perpetual growth rates, relevant comparable market multiples, public trading prices and the amount and timing of expected future cash flows. The cash flows employed in TripCo's valuation analysis are based on management's best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years. There is no assurance that actual results in the future will approximate these forecasts. For those reporting units whose carrying value exceeds the fair value, a second test is required to measure the impairment loss (the "Step 2 Test"). In the Step 2 Test, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit with any residual value being allocated to goodwill. The difference between such allocated amount and the carrying value of the goodwill is recorded as an impairment charge. The accounting guidance also permits entities to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If the qualitative assessment supports that it is more likely than not that the carrying value of the Company’s indefinite-lived intangible assets, other than goodwill, exceeds its fair value, then a quantitative assessment is performed. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. See note 6 for discussion of goodwill impairments. |
Websites and Internal Use Software Development Costs | Websites and Internal Use Software Development Costs Certain costs incurred during the application development stage related to the development of websites and internal use software are capitalized and included in other intangibles. Capitalized costs include internal and external costs, if direct and incremental, and deemed by management to be significant. Costs related to the planning and post-implementation phases of software and website development are expensed as these costs are incurred. Maintenance and enhancement costs (including those costs in the post-implementation stages) are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the website or software resulting in added functionality, in which case the costs are capitalized. |
Impairment of Long Lived Assets | Impairment of Long-lived Assets The Company periodically reviews the carrying amounts of its property and equipment and its intangible assets (other than goodwill and indefinite-lived intangibles) to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable. If the carrying amount of the asset group is greater than the expected undiscounted cash flows to be generated by such asset group, including its ultimate disposition, an impairment adjustment is to be recognized. Such adjustment is measured by the amount that the carrying value of such asset groups exceeds their fair value. The Company generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows using an appropriate discount rate. Considerable management judgment is necessary to estimate the fair value of asset groups. Accordingly, actual results could vary significantly from such estimates. Asset groups to be disposed of are carried at the lower of their financial statement carrying amount or fair value less costs to sell. |
Noncontrolling Interests | Noncontrolling Interests Noncontrolling interest relates to the equity ownership interest in TripAdvisor that the Company does not own. The Company reports noncontrolling interests of consolidated companies within equity in the consolidated balance sheets and the amount of net income attributable to the parent and to the noncontrolling interest is presented in the consolidated statements of operations. Also, changes in ownership interests in consolidated companies in which the Company maintains a controlling interest are recorded in equity. |
Foreign Currency Translation and Transaction Gains and Losses | Foreign Currency Translation and Transaction Gains and Losses The functional currency of the Company is the United States (“U.S.”) dollar. The functional currency of the Company’s foreign operations generally is the applicable local currency for each foreign subsidiary. Assets and liabilities of foreign subsidiaries are translated at the spot rate in effect at the applicable reporting date, and the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period. The resulting unrealized cumulative translation adjustment, net of applicable income taxes, is recorded as a component of accumulated other comprehensive earnings (loss) in equity. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses which are reflected in the accompanying consolidated statements of operations and comprehensive earnings (loss) as unrealized (based on the applicable period-end exchange rate) or realized upon settlement of the transactions. Accordingly, we have recorded foreign exchange losses of $4 million, $3 million and $10 million for the years ended December 31, 2016, 2015 and 2014, respectively, in other, net on our consolidated statements of operations. These amounts include gains and losses, realized and unrealized, on foreign currency forward contracts. |
Revenue Recognition | Revenue Recognition Revenue is recognized from the sale of goods and advertising services rendered when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. Deferred revenue, which primarily relates to subscription-based and commission based arrangements, is recorded when payments are received in advance of TripAdvisor’s performance as required by the underlying agreements. Click-based advertising and transaction revenue . Revenue is derived primarily from click-through fees charged to TripAdvisor’s travel partners for traveler leads sent to the travel partners’ website. TripAdvisor records revenue from click-through fees after the traveler makes the click-through to the travel partners’ websites. TripAdvisor’s instant booking transaction model revenue is comprised of commissions earned on all valid instant booking reservations. In a transaction model, instant booking commission revenue is recorded at the time a traveler books a hotel transaction on TripAdvisor’s site where TripAdvisor does not assume cancellation risk. In transactions in which TripAdvisor assumes cancellation risk, it records revenue in the month in which the traveler’s stay at a hotel occurs. TripAdvisor has no post-booking service obligations for instant booking transactions. Display-based and subscription-based advertising . TripAdvisor recognizes display advertising revenue ratably over the advertising period or upon delivery of advertising impressions, depending on the terms of the advertising contract. Subscription-based revenue is recognized ratably over the related contractual period over which service is delivered. Attractions . TripAdvisor works with local operators, or merchant partners, to provide travelers with access to tours and activities in popular destinations worldwide, earning a commission for such service. TripAdvisor receives cash from the consumer at the time of booking of the destination activity and records these amounts, net of commissions, as deferred merchant payables on its consolidated balance sheets. Commission revenue is recorded as deferred revenue at the time of booking and later recognized when the consumer has completed the destination activity. TripAdvisor pays the destination activity operators after the travelers’ use. In transactions where TripAdvisor is not the merchant of record, it invoices and receives commissions directly from its merchant partners and records commission revenue when the consumer has completed the destination activity. Restaurants. TripAdvisor recognizes reservation revenue (or per seated diner fees) on a transaction-by-transaction basis as diners are seated by its restaurant customers. Subscription-based revenue is recognized ratably over the related contractual period over which the service is delivered. Vacation Rentals. TripAdvisor generates revenue from customers for online advertising services related to the listing of their properties for rent primarily on either a subscription basis over a fixed-term, or on a commission basis for transactions that are booked on TripAdvisor’s platform. Payments for term-based subscriptions received in advance of services being rendered are recorded as deferred revenue and recognized ratably to revenue on a straight-line basis over the listing period. TripAdvisor’s commission revenue is primarily generated on its free-to-list option, in lieu of a pre-paid subscription fee. When a commissionable transaction is booked on TripAdvisor’s platform, it receives cash from the traveler that includes both commission, which is recorded as deferred revenue, and the amount due to the property owner, which is recorded to deferred merchant payables on TripAdvisor’s consolidated balance sheet. TripAdvisor pays the amount due to the property owner and recognizes its commission revenue at the time of the traveler’s stay. Additional revenue is derived on a pay-per-lead basis, as TripAdvisor provides leads for rental properties to property managers. Pay-per-lead revenue is billed and recognized in the period when the leads are delivered to the property managers. Other Revenue. Retail revenue is recognized at the time of delivery to customers. An allowance for returned merchandise is provided as a percentage of sales based on historical experience. The total reduction in sales due to returns was approximately $1 million, $3 million, and $2 million for each of the years ended December 31, 2016, 2015 and 2014, respectively. Shipping revenue is included in net sales and the related costs of shipping are included in operating expense. Sales tax collected from customers on retail sales is recorded on a net basis and is not included in revenue. |
Operating Expense | Operating Expense Operating expenses consist primarily of certain technology and content expenses, including personnel and overhead expenses which include salaries, benefits and bonuses for salaried employees and contractors engaged in the design, development, testing content support and maintenance of TripAdvisor’s websites and mobile apps. Operating expense also includes to a lesser extent costs of services which are expenses that are closely correlated or directly related to service revenue generated, including advertising fees, flight search fees, credit card fees and data center costs. Other costs include licensing, maintenance expense, computer supplies, telecom costs, content translation costs and consulting costs. |
General and Administrative | General and Administrative General and administrative expenses consist primarily of personnel and related overhead costs, including executive leadership, finance, legal and human resource functions as well as professional service fees and other fees including audit, legal, tax and accounting, and other costs including bad debt expense and charitable contributions. |
Selling and Marketing | Selling and Marketing Selling and marketing expenses primarily consist of direct costs, including traffic generation costs from search engine marketing, or SEM, and other online traffic acquisition costs, syndication costs and affiliate program commissions, social media costs, brand advertising, television and other offline advertising and public relations. In addition, our indirect sales and marketing expense consists of personnel and overhead expenses, including salaries, commissions, benefits, and bonuses for sales, sales support, customer support and marketing employees. The Company incurs advertising expense consisting of traffic generation costs from search engines, affiliate program commissions, display advertising, other online and offline advertising expense, and promotions and public relations to promote our brands. Costs associated with advertisements are expensed in the period in which the advertisement takes place. Advertising expense was $544 million, $519 million and $357 million for each of the years ended December 31, 2016, 2015 and 2014, respectively. |
Stock‑Based Compensation | Stock-Based Compensation As more fully described in note 9, TripCo grants to its directors, employees and employees of its subsidiaries restricted stock and options (collectively, “Awards”) to purchase shares of TripCo common stock. TripCo measures the cost of employee services received in exchange for an Award of equity instruments (such as stock options and restricted stock) based on the grant-date fair value of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). TripCo measures the cost of employee services received in exchange for an Award of liability instruments (such as stock appreciation rights that will be settled in cash) based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date. Certain outstanding awards that were previously granted by Liberty were assumed by TripCo upon the completion of the TripCo Spin-Off. Additionally, TripAdvisor is a consolidated company and has issued stock-based compensation to its employees related to its common stock. The consolidated statements of operations include stock-based compensation related to TripCo Awards, TripAdvisor equity, and Liberty Awards already held by BuySeasons employees. Included in the accompanying consolidated statements of operations are the following amounts of stock-based compensation for the years ended December 31, 2016, 2015 and 2014 (amounts in millions): December 31, 2016 2015 2014 Operating expense $ Selling, general and administrative $ During the years ended December 31, 2016, 2015 and 2014, we capitalized $12 million, $8 million and $8 million, respectively, of stock-based compensation expense as internal-use software and website development costs. In March 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance which simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016, with early application permitted. The Company adopted this guidance in the third quarter of 2016. In accordance with the new guidance, excess tax benefits and tax deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures. In addition, pursuant to the new guidance, excess tax benefits are classified as an operating activity on the consolidated statements of cash flows. The recognition of excess tax benefits and deficiencies are applied prospectively from January 1, 2016. For adjustments to compensation cost based on actual forfeitures, the Company has recorded an immaterial cumulative-effect adjustment to retained earnings as of January 1, 2016, which is included in other on the consolidated statements of equity. The presentation changes for excess tax benefits have been applied retrospectively in the consolidated statements of cash flows, resulting in $31 million and $20 million of excess tax benefits for the years ended December 31, 2015 and 2014, respectively, reclassified from cash flows from financing activities to cash flows from operating activities. |
Income taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying value amounts and income tax bases of assets and liabilities and the expected benefits of utilizing net operating loss and tax credit carryforwards. The deferred tax assets and liabilities are calculated using enacted tax rates in effect for each taxing jurisdiction in which the Company operates for the year in which those temporary differences are expected to be recovered or settled. Net deferred tax assets are then reduced by a valuation allowance if the Company believes it more likely than not that such net deferred tax assets will not be realized. We consider all relevant factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings experience by jurisdiction, expectations of future taxable income, and the carryforward periods available to us for tax reporting purposes, as well as assessing available tax planning strategies. The effect on deferred tax assets and liabilities of an enacted change in tax rates is recognized in income in the period that includes the enactment date. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law, tax sharing agreements or variances between our actual and anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could materially vary from these estimates. When the tax law requires interest to be paid on an underpayment of income taxes, the Company recognizes interest expense from the first period the interest would begin accruing according to the relevant tax law. Such interest expense is included in income tax expense in the accompanying consolidated statements of operations. Any accrual of penalties related to underpayment of income taxes on uncertain tax positions is included in income tax (expense) benefit in the accompanying consolidated statements of operations. We recognize in our consolidated financial statements the impact of a tax position, if that position is more likely than not to be sustained upon an examination, based on the technical merits of the position. |
Deferred Merchant Payables | Deferred Merchant Payables TripAdvisor receives cash from travelers at the time of booking related to its vacation rental, attractions and transaction-based businesses and it records these amounts, net of commissions, on its consolidated balance sheets as deferred merchant payables. TripAdvisor pays the hotel, attraction provider or vacation rental owner after the travelers’ use and subsequent billing from the hotel, attraction provider or vacation rental owner. Therefore, it receives cash from the traveler prior to paying the hotel, attraction provider or vacation rental owner, and this operating cycle represents a working capital source or use of cash to TripAdvisor. As long as these businesses grow, TripAdvisor expects that changes in working capital related to these transactions, depending on timing of payments and seasonality, will continue to impact operating cash flows. TripAdvisor’s deferred merchant payables balance was $128 million and $105 million for the years ended December 31, 2016 and 2015, respectively. |
Certain Risks and Concentrations | Certain Risks and Concentrations The TripAdvisor business is subject to certain risks and concentrations including dependence on relationships with its customers. TripAdvisor is highly dependent on advertising relationships with Expedia and Priceline, which each accounted for more than 10% of TripAdvisor’s consolidated revenue and combined accounted for approximately 46%, 46% and 46% of its total revenue for the years ended December 31, 2016, 2015 and 2014, respectively. |
Contingent Liabilities | Contingent Liabilities Periodically, we review the status of all significant outstanding matters to assess any potential financial exposure. When (i) it is probable that an asset has been impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss in our consolidated statements of operations. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the financial statements. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base accruals made on the best information available at the time which can be highly subjective. The final outcome of these matters could vary significantly from the amounts included in the accompanying consolidated financial statements. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss), cumulative foreign currency translation adjustments, and unrealized gains and losses on available-for-sale securities, net of tax. |
Earnings per Share (EPS) | Earnings (Loss) per Common Share (EPS) Basic earnings (loss) per common share (“EPS”) is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Excluded from EPS for the years ended December 31, 2016, 2015 and 2014 are 2 million, less than a million and less than a million potential common shares, respectively, because their inclusion would be antidilutive. The Company issued 73,685,924 common shares, which is the aggregate number of shares of Series A and Series B common stock outstanding upon the completion of the TripCo Spin-Off on August 27, 2014. Years ended December 31, 2016 2015 2014 number of shares in millions Basic EPS Potentially dilutive shares — — — Diluted EPS |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) recoverability and recognition of goodwill, intangible and long-lived assets, (ii) accounting for income taxes and (iii) stock-based compensation to be its most significant estimates. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified for comparability with the current year presentation. |
New Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2014, the FASB issued new accounting guidance which requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. The Company adopted this guidance during the year ended December 31, 2016. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures. In September 2015, the FASB issued new accounting guidance which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date. The Company adopted this guidance in the first quarter of 2016. The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures. |
New Accounting Pronouncements Not yet Adopted | New Accounting Pronouncements Not Yet Adopted 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. This new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued further guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a full retrospective or modified retrospective transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted only for fiscal years beginning after December 15, 2016. We have identified the Company’s various revenue streams and are working with our subsidiaries to evaluate the quantitative effects of the new guidance. The Company has not yet selected a transition method. We will continue to provide updates as to the progress of our evaluation in our quarterly reports during 2017. In February 2016, the FASB issued new guidance which revises the accounting for leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new guidance also simplifies the accounting for sale and leaseback transactions. The new standard, to be applied via a modified retrospective transition approach, is effective for the Company for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. The Company has not yet determined the effect of the standard on its ongoing financial reporting. The Company is currently working with its consolidated subsidiaries to evaluate the impact of the adoption of this new guidance on our consolidated financial statements, including identifying the population of leases, evaluating technology solutions and collecting lease data. In October 2016, the FASB issued new accounting guidance on income tax accounting associated with intra-entity transfers of assets other than inventory. This accounting update, which is part of the FASB's simplification initiative, is intended to reduce diversity in practice and the complexity of tax accounting, particularly for those transfers involving intellectual property. This new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. Upon adoption, an entity may apply the new guidance only on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements and related disclosures. In August and November 2016, the FASB issued new accounting standards which add and clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows, and add guidance on the presentation of restricted cash in the statement of cash flows, respectively. The guidance in both standards is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, including adoption in an interim period, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. Upon adoption, an entity may apply the new guidance only retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements and disclosures. The new guidance is expected to change the presentation of paid in kind interest in the period it is paid from financing to operating on the consolidated statements of cash flows. In January 2017, the FASB issued new accounting guidance which assists entities in evaluating when a set of transferred assets and activities is a business. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and will be applied prospectively to any transactions occurring within the period of adoption. Early adoption is permitted, including for interim or annual periods in which the financial statements have not been issued. The Company is currently evaluating the impact of adopting this new guidance on its financial statements and related disclosures. In January 2017, the FASB issued new accounting guidance to simplify the measurement of goodwill impairment. Under the new guidance, an entity will no longer perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured using the difference between the carrying amount and the fair value of the reporting unit. The guidance is effective for fiscal years, and interim periods within those fiscal year, beginning after December 15, 2019, with early adoption permitted for goodwill impairment tests with measurement dates after January 1, 2017. The Company is currently evaluating the effect that the updated standard will have on its financial statements and related disclosures. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Schedule of property and equipment | Property and equipment consists of the following (amounts in millions): December 31, 2016 2015 Buildings $ Leasehold improvements Computer equipment Furniture, office equipment and other Total property and equipment $ |
Schedule of stock-based compensation expense | Included in the accompanying consolidated statements of operations are the following amounts of stock-based compensation for the years ended December 31, 2016, 2015 and 2014 (amounts in millions): December 31, 2016 2015 2014 Operating expense $ Selling, general and administrative $ |
Reconciliation of Basic and Diluted Weighted Average Shares | Years ended December 31, 2016 2015 2014 number of shares in millions Basic EPS Potentially dilutive shares — — — Diluted EPS |
Supplemental Disclosures to C24
Supplemental Disclosures to Consolidated Statements of Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Disclosures to Consolidated Statements of Cash Flow | |
Schedule of supplemental cash flow | Years ended December 31, 2016 2015 2014 amounts in millions Acquisitions and other investments, net of cash acquired: Intangibles not subject to amortization $ Intangibles subject to amortization Fair value of other assets acquired Net liabilities assumed — Deferred tax assets (liabilities) — Other — — Acquisitions and other investments, net of cash acquired $ Cash paid for interest $ Cash paid for income taxes $ |
TripAdvisor, Inc. Acquisition25
TripAdvisor, Inc. Acquisitions and Dispositions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
2015 Acquisitions | |
Business Acquisition [Line Items] | |
Schedule of purchase price allocation | The following table presents the purchase price allocations recorded on our consolidated balance sheet for all 2015 acquisitions (in millions): Goodwill $ Intangible assets Net tangible assets Deferred tax liabilities, net Total purchase price consideration $ |
2016 Acquisitions | |
Business Acquisition [Line Items] | |
Schedule of purchase price allocation | The following table presents the initial purchase price allocations recorded on our consolidated balance sheet for all 2016 acquisitions (in millions): Goodwill $ Intangible assets Net liabilities assumed Total purchase price consideration $ |
Assets and Liabilities Measur26
Assets and Liabilities Measured at Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Assets and Liabilities Measured at Fair Value | |
Schedule of assets and liabilities measured at fair value | December 31, 2016 December 31, 2015 Quoted prices Significant Quoted prices Significant in active other in active other markets for observable markets for observable identical assets inputs identical assets inputs Description Total (Level 1) (Level 2) Total (Level 1) (Level 2) amounts in millions Cash equivalents $ — Marketable securities $ — — Available-for-sale securities $ — — Variable postpaid forward $ — NA NA NA |
Goodwill and Other Intangible27
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Other Intangible Assets | |
Schedule of goodwill carrying amount | Changes in the carrying amount of goodwill are as follows (amounts in millions): Corporate TripAdvisor and Other Total Balance at January 1, 2015 $ — Acquisition (1) — Other (2) — Balance at December 31, 2015 — Acquisition (1) — Other (2) — Balance at December 31, 2016 $ — (1) Additions to goodwill relate to TripAdvisor’s acquisitions. See “Note 4 – TripAdvisor, Inc. Acquisitions and Dispositions,” for further information. (2) Other changes are primarily due to foreign currency translation on goodwill. |
Schedule of intangible assets subject to amortization | December 31, 2016 December 31, 2015 Weighted Average Gross Net Gross Net Remaining carrying Accumulated carrying carrying Accumulated carrying Useful Life amount amortization amount amount amortization amount in years amounts in millions Customer relationships Other Total |
Schedule of future amortization expense | The estimated future amortization expense for the next five years related to intangible assets with definite lives as of December 31, 2016, assuming no subsequent impairment of the underlying assets, is as follows (amounts in millions): 2017 $ 2018 $ 2019 $ 2020 $ 2021 $ |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of outstanding debt | December 31, December 31, 2016 2015 amounts in millions TripAdvisor Credit Facilities $ TripAdvisor Chinese credit facilities TripCo margin loans TripCo variable postpaid forward NA Unamortized discount and debt issuance costs — Total consolidated TripCo debt $ Less debt classified as current Total long-term debt $ |
Trip Advisor | |
Value of shares pledged as collateral | Number of Shares Pledged as Collateral as of Share value as of Pledged Collateral December 31, 2016 December 31, 2016 amounts in millions Common Stock $ Class B Common Stock $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of income tax expense | Years ended December 31, 2016 2015 2014 amounts in millions Current: Federal $ State and local Foreign $ Deferred: Federal $ State and local Foreign Income tax benefit (expense) $ |
Schedule of income before income taxes | Years ended December 31, 2016 2015 2014 amounts in millions Domestic $ Foreign Total $ |
Schedule of income tax expense reconciliation to the effective tax rate | Years ended December 31, 2016 2015 2014 amounts in millions Computed expected tax benefits (expense) $ State and local taxes, net of federal income taxes Foreign taxes, net of foreign tax credits Change in estimated tax rate Basis difference in consolidated subsidiary Change in valuation allowance Change in unrecognized tax benefits Federal tax credits Other Income tax (expense) benefit $ |
Schedule of deferred tax assets and liabilities | December 31, 2016 2015 amounts in millions Deferred tax assets: Loss carryforwards $ Stock-based compensation Lease financing obligation Other Total deferred tax assets Less: valuation allowance Net deferred tax assets Deferred tax liabilities: Intangible assets Investments Other Total deferred tax liabilities Net deferred tax liability $ |
Schedule of gross unrecognized tax benefit | A reconciliation of unrecognized tax benefits is as follows (amounts in millions): Years ended December 31, 2016 2015 2014 Balance at beginning of year $ Additions based on tax positions related to the current year Additions for tax positions of prior years Reductions for lapse of statute of limitations — — Balance at end of year $ |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Amounts of stock-based compensation | Included in the accompanying consolidated statements of operations are the following amounts of stock-based compensation for the years ended December 31, 2016, 2015 and 2014 (amounts in millions): December 31, 2016 2015 2014 Operating expense $ Selling, general and administrative $ |
Series A | |
Schedule of stock-based compensation activity | Weighted average remaining Aggregate contractual intrinsic Series A WAEP life value in thousands in years in millions Outstanding at January 1, 2016 $ Granted $ Exercised $ Forfeited/Cancelled — $ — Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ |
Series B | |
Schedule of stock-based compensation activity | Weighted average remaining Aggregate contractual intrinsic Series B WAEP life value in thousands in years in millions Outstanding at January 1, 2016 $ Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding at December 31, 2016 $ $ — Exercisable at December 31, 2016 — $ — — $ — |
Trip Advisor | |
Schedule of stock-based compensation activity | Weighted Average Remaining Aggregate Number of Contractual Intrinsic Options WAEP Life Value in thousands in years in millions Outstanding at January 1, 2016 $ Granted $ Exercised $ Cancelled or expired $ Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Schedule of estimated future minimum rental payments under operating leases | The following table presents TripCo’s estimated future minimum rental payments under operating leases with non-cancelable lease terms, including the new TripAdvisor headquarters lease, that expire after December 31, 2016 (amounts in millions): 2017 $ 2018 2019 2020 2021 Thereafter $ |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Schedule of performance measures | Years ended December 31, 2016 2015 2014 Adjusted Adjusted Adjusted Revenue OIBDA Revenue OIBDA Revenue OIBDA amounts in millions TripAdvisor $ Corporate and other Consolidated TripCo $ |
Schedule of other information | December 31, 2016 December 31, 2015 Total Capital Total Capital Assets expenditures Assets expenditures amounts in millions TripAdvisor $ Corporate and other Consolidated TripCo $ |
Schedule of revenue by geographic area | December 31, 2016 2015 2014 amounts in millions United States $ United Kingdom Other countries Consolidated TripCo $ |
Schedule of long-lived assets by geographic area | December 31, 2016 2015 amounts in millions United States $ Other countries Consolidated TripCo $ |
Reconciliation of segment Adjusted OIBDA to earnings (loss) before income taxes | Years ended December 31, 2016 2015 2014 amounts in millions Consolidated Adjusted OIBDA $ Stock settled charitable contribution (1) — — Stock-based compensation Depreciation and amortization Impairment of intangible assets — Operating income Interest expense Realized and unrealized gains (losses) on financial instruments, net Other, net Earnings (loss) before income taxes $ TripAdvisor recorded an expense for the year ending December 31, 2015 in the amount of $67 million for a non-cash contribution to the TripAdvisor Charitable Foundation (the “Foundation”) which was recorded to general and administrative expense in the consolidated statements of operations. TripAdvisor settled this obligation with treasury shares based on the fair value of its common stock on the date the treasury shares were issued to the Foundation. Due to the one-time nature and use of stock to settle the obligation, the amount has been excluded from Adjusted OIBDA for the year ended December 31, 2015, as shown above. |
Quarterly Financial Informati33
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information (Unaudited) | |
Schedule of quarterly financial information | 1 st 2 nd 3 rd 4 th Quarter Quarter Quarter Quarter amounts in millions, except per share amounts 2016: Revenue $ Operating income (loss) $ Net earnings (loss) $ Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders $ Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B Stockholders per common share $ 1 st 2 nd 3 rd 4 th Quarter Quarter Quarter Quarter amounts in millions, except per share amounts 2015: Revenue $ Operating income (loss) $ Net earnings (loss) $ Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders $ Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B Stockholders per common share $ |
Basis of Presentation (Details)
Basis of Presentation (Details) | 12 Months Ended |
Dec. 31, 2016item | |
Basis of Presentation | |
Number of markets have localized versions of the website | 48 |
Number of languages for the website | 28 |
Number of travel brands | 23 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Aug. 27, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Period accounts receivable are generally due | 30 days | |||
Allowance for doubtful accounts | $ 9 | $ 6 | ||
Maximum invested cash maturity period | 18 months | |||
Maximum security maturity period | 3 years | |||
Total property and equipment | $ 225 | 216 | ||
Foreign currency exchange loss | (4) | (3) | $ (10) | |
Sales returns and allowance | 1 | 3 | 2 | |
Advertising expense | 544 | 519 | 357 | |
Stock-based compensation | 91 | 82 | 74 | |
Capitalized Stock Based Compensation | 12 | 8 | $ 8 | |
Trade and other receivables, net | $ 191 | $ 181 | ||
Earnings per Share (EPS) | ||||
Common stock shares issued | 73,685,924 | |||
Basic EPS (In Shares) | 75,000,000 | 75,000,000 | 74,000,000 | |
Diluted EPS (In Shares) | 75,000,000 | 75,000,000 | 74,000,000 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,000,000 | |||
Accounting Standards Update 2016-09 | ||||
Excess tax benefit from stock-based compensation | $ 31 | $ 20 | ||
Operating expense | ||||
Stock-based compensation | $ 40 | 32 | 32 | |
Selling, general and administrative | ||||
Stock-based compensation | 51 | 50 | $ 42 | |
Buildings | ||||
Total property and equipment | 123 | 123 | ||
Leasehold improvements | ||||
Total property and equipment | 39 | 34 | ||
Computer equipment | ||||
Total property and equipment | 39 | 38 | ||
Furniture, office equipment and other | ||||
Total property and equipment | $ 24 | $ 21 | ||
Furniture, office equipment and other | Minimum | ||||
Property estimated useful life | 3 years | |||
Furniture, office equipment and other | Maximum | ||||
Property estimated useful life | 5 years | |||
Trip Advisor | ||||
Stock-based compensation | $ 85 | |||
Trip Advisor | Revenue | Customer | Expedia and Priceline | ||||
Customer concentration (as a percent) | 46.00% | 46.00% | 46.00% | |
Trip Advisor | Accounting Standards Update 2016-09 | ||||
Deferred merchant payable | $ 128 | $ 105 | ||
Trip Advisor | Buildings | ||||
Property estimated useful life | 40 years |
Supplemental Disclosures to C36
Supplemental Disclosures to Consolidated Statements of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Acquisitions and other investments, net of cash acquired: | |||
Intangibles not subject to amortization | $ 17 | $ 17 | $ 253 |
Intangibles subject to amortization | 25 | 12 | 194 |
Fair value of other assets acquired | 9 | 2 | 25 |
Net liabilities assumed | (8) | (96) | |
Deferred tax assets (liabilities) | (2) | (40) | |
Other | (5) | ||
Acquisitions and other investments, net of cash acquired | 43 | 29 | 331 |
Cash paid for interest | 10 | 7 | 8 |
Cash paid for income taxes | $ 30 | $ 44 | $ 54 |
TripAdvisor Inc Acquisitions an
TripAdvisor Inc Acquisitions and Dispositions (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Acquisitions | |||
Goodwill | $ 3,694 | $ 3,689 | $ 3,691 |
Trip Advisor | |||
Acquisitions | |||
Goodwill | 3,694 | 3,689 | 3,691 |
Trip Advisor | 2014 Acquisitions | |||
Acquisitions | |||
Acquisition-related costs | $ 4 | ||
Trip Advisor | 2015 Acquisitions | |||
TripAdvisor, Inc. transactions | |||
Cash consideration for acquisition | $ 28 | ||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
Acquisitions | |||
Number of businesses acquired | item | 3 | ||
Acquisition-related costs | $ 1 | ||
Net assets (including acquired cash) | 1 | ||
Goodwill | 17 | ||
Intangible assets | 12 | ||
Tangible Assets | 1 | ||
Deferred tax liabilities, net | (2) | ||
Total purchase price consideration | $ 28 | ||
Definite-lived intangible assets weighted-average life | 6 years | ||
Trip Advisor | 2015 Acquisitions | Trade Names | |||
Acquisitions | |||
Intangible assets | $ 2 | ||
Trip Advisor | 2015 Acquisitions | Customer Lists and Relationships | |||
Acquisitions | |||
Intangible assets | 7 | ||
Trip Advisor | 2015 Acquisitions | Technology-Based Intangible Assets | |||
Acquisitions | |||
Intangible assets | $ 3 | ||
Trip Advisor | 2016 Acquisitions | |||
TripAdvisor, Inc. transactions | |||
Acquisition purchase price | 34 | ||
Cash consideration for acquisition | 28 | ||
Cash Acquired from Acquisition | $ 4 | ||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
Business Combination, Contingent Consideration, Liability | $ 2 | ||
Acquisitions | |||
Number of businesses acquired | item | 5 | ||
Acquisition-related costs | $ 1 | ||
Goodwill | 17 | ||
Intangible assets | 25 | ||
Net liabilities assumed | (8) | ||
Total purchase price consideration | $ 34 | ||
Definite-lived intangible assets weighted-average life | 6 years | ||
Trip Advisor | 2016 Acquisitions | Trade Names | |||
Acquisitions | |||
Intangible assets | $ 4 | ||
Trip Advisor | 2016 Acquisitions | Customer Lists and Relationships | |||
Acquisitions | |||
Intangible assets | 4 | ||
Trip Advisor | 2016 Acquisitions | Subscriber Relationships | |||
Acquisitions | |||
Intangible assets | 5 | ||
Trip Advisor | 2016 Acquisitions | Technology-Based Intangible Assets | |||
Acquisitions | |||
Intangible assets | $ 12 |
TripAdvisor, Inc. Acquisition38
TripAdvisor, Inc. Acquisitions and Dispositions (Details) - Trip Advisor - Chinese Subsidiary - Disposed of by Sale $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Sale of Stock, Percentage of Ownership before Transaction | 100.00% |
Proceeds from Sale of Other Investments | $ 28 |
Assets | 11 |
Cash | 3 |
Liabilities | 4 |
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal | $ 20 |
Assets and Liabilities Measur39
Assets and Liabilities Measured at Fair Value (Details) $ in Millions | Dec. 31, 2016USD ($) | Jun. 23, 2016USD ($) | Jun. 06, 2016$ / itemshares | Dec. 31, 2015USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | $ 118 | $ 47 | ||
Available-for-sale securities | 16 | 37 | ||
Variable postpaid forward | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Debt Instrument, Face Amount | $ 259 | |||
Forward Contracts | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative, Floor Price | $ / item | 38.90 | |||
Derivative, Cap Price | $ / item | 98.96 | |||
Forward Contracts | Variable postpaid forward | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Debt Instrument, Face Amount | $ 259 | |||
Recurring | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | 53 | 44 | ||
Marketable securities | 118 | 47 | ||
Available-for-sale securities | 16 | 37 | ||
Derivative Asset | 51 | |||
Recurring | Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | 53 | 39 | ||
Recurring | Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | 5 | |||
Marketable securities | 118 | 47 | ||
Available-for-sale securities | 16 | $ 37 | ||
Derivative Asset | $ 51 | |||
Trip Advisor | Forward Contracts | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Forward Contract Shares indexed | shares | 7,000,000 |
Goodwill and Other Intangible40
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill | |||
Goodwill, beginning balance | $ 3,689 | $ 3,691 | |
Acquisition | 17 | 17 | |
Other | (12) | (19) | |
Goodwill, ending balance | 3,694 | 3,689 | $ 3,691 |
Intangible Assets subject to amortization | |||
Gross Carrying Amount | 1,346 | 1,409 | |
Accumulated Amortization | (859) | (784) | |
Net Carrying Amount | 487 | 625 | |
Amortization expense | 198 | 245 | 279 |
Future amortization expense | |||
2,017 | 176 | ||
2,018 | 118 | ||
2,019 | 115 | ||
2,020 | 109 | ||
2,021 | $ 94 | ||
Impairments | |||
Impairment expense | 2 | 2 | |
Customer relationships | |||
Intangible Assets subject to amortization | |||
Weighted Average Remaining Useful Life | 5 years | ||
Gross Carrying Amount | $ 866 | 965 | |
Accumulated Amortization | (615) | (599) | |
Net Carrying Amount | $ 251 | 366 | |
Other | |||
Intangible Assets subject to amortization | |||
Weighted Average Remaining Useful Life | 3 years | ||
Gross Carrying Amount | $ 480 | 444 | |
Accumulated Amortization | (244) | (185) | |
Net Carrying Amount | 236 | 259 | |
Trip Advisor | |||
Goodwill | |||
Goodwill, beginning balance | 3,689 | 3,691 | |
Acquisition | 17 | 17 | |
Other | (12) | (19) | |
Goodwill, ending balance | 3,694 | $ 3,689 | $ 3,691 |
Buy Seasons | |||
Impairments | |||
Accumulated impairment | $ 46 |
Debt (Details)
Debt (Details) shares in Millions | Sep. 07, 2016USD ($) | Jun. 23, 2016USD ($) | Aug. 21, 2014USD ($)agreement | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2016USD ($)shares | Jun. 26, 2015USD ($) |
Debt Financing | ||||||||||
Total debt | $ 621,000,000 | $ 635,000,000 | ||||||||
Debt Instrument Unamortized Discount Premium And Debt Issuance Costs | (1,000,000) | |||||||||
Long-term Debt, Current Maturities | 1,000,000 | 80,000,000 | ||||||||
Total long-term debt | 620,000,000 | 555,000,000 | ||||||||
Repayments of long term debt | $ 439,000,000 | 431,000,000 | $ 43,000,000 | |||||||
Proceeds from Issuance of Debt | 440,000,000 | 291,000,000 | $ 429,000,000 | |||||||
Margin loan member | TripCo | ||||||||||
Debt Financing | ||||||||||
Total debt | 421,000,000 | 203,000,000 | ||||||||
Debt instrument, number of instruments | agreement | 2 | |||||||||
Total borrowings | $ 400,000,000 | |||||||||
Paid-in-Kind Interest | $ 11,000,000 | |||||||||
Maximum Value of Promissory Note if Margin Call Thresholds Are Triggered | 200,000,000 | |||||||||
Margin loan member | TripCo | Redemption period one | ||||||||||
Debt Financing | ||||||||||
Initial redemption period | 6 months | |||||||||
Margin loan member | LIBOR | TripCo | ||||||||||
Debt Financing | ||||||||||
Variable rate basis | LIBOR | |||||||||
Margin loan member | LIBOR | TripCo | Redemption period one | ||||||||||
Debt Financing | ||||||||||
Margin | 3.65% | |||||||||
Margin loan member | LIBOR | TripCo | Redemption period two | ||||||||||
Debt Financing | ||||||||||
Margin | 3.25% | |||||||||
Margin Loan Amendment 1 | ||||||||||
Debt Financing | ||||||||||
Total debt | $ 200,000,000 | |||||||||
Debt Instrument Term | 3 years | |||||||||
Variable rate basis | LIBOR | |||||||||
Margin | 2.00% | |||||||||
Outstanding Margin Loan Balance If Initial Margin Call Threshold is Met | $ 150,000,000 | |||||||||
Chinese credit facilities | TripAdvisor's Chinese subsidiaries | ||||||||||
Debt Financing | ||||||||||
Total debt | 1,000,000 | 7,000,000 | ||||||||
Long-term Debt, Current Maturities | 1,000,000 | 7,000,000 | ||||||||
Credit Facilities | Revolving Credit Facility | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Total debt | $ 200,000,000 | $ 164,000,000 | ||||||||
Maximum borrowing capacity | $ 1,000,000,000 | |||||||||
Debt Instrument Term | 5 years | |||||||||
Margin | 2.00% | |||||||||
Commitment fee | 0.20% | |||||||||
Interest rate | 2.00% | 2.00% | ||||||||
Repayments of long term debt | $ 210,000,000 | |||||||||
Proceeds from Issuance of Debt | $ 101,000,000 | |||||||||
Credit Facilities | Revolving Credit Facility | LIBOR | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Variable rate basis | LIBOR | |||||||||
Margin | 1.25% | |||||||||
Credit Facilities | Revolving Credit Facility | ABR | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Variable rate basis | Alternate | |||||||||
Margin | 2.00% | |||||||||
Credit Facilities | Revolving Credit Facility | Euro | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Margin | 2.00% | |||||||||
Credit Facilities | Letter of Credit | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Total debt | $ 3,000,000 | |||||||||
Maximum borrowing capacity | 15,000,000 | |||||||||
Credit Facilities | Same-day notice borrowings | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Maximum borrowing capacity | $ 40,000,000 | |||||||||
2016 Credit Facility | Revolving Credit Facility | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Maximum borrowing capacity | $ 73,000,000 | |||||||||
Interest rate | 1.90% | 1.90% | ||||||||
Proceeds from Issuance of Debt | $ 73,000,000 | |||||||||
2016 Credit Facility | Revolving Credit Facility | LIBOR | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Variable rate basis | LIBOR | |||||||||
Margin | 1.125% | |||||||||
Margin when payments are overdue | 1.50% | |||||||||
Chinese Credit Facility-BOA | People's Bank of China base rate | TripAdvisor's Chinese subsidiaries | ||||||||||
Debt Financing | ||||||||||
Maximum borrowing capacity | $ 30,000,000 | |||||||||
Chinese Credit Facility-BOA | Chinese credit facilities | ||||||||||
Debt Financing | ||||||||||
Interest rate | 4.35% | 4.35% | ||||||||
Line of Credit | $ 0 | |||||||||
Chinese Credit Facility-BOA | Chinese credit facilities | People's Bank of China base rate | TripAdvisor's Chinese subsidiaries | ||||||||||
Debt Financing | ||||||||||
Debt Instrument Term | 1 year | |||||||||
Debt instrument applicable percentage base rate | 100.00% | 100.00% | ||||||||
Chinese Credit Facility-JPM | Chinese credit facilities | ||||||||||
Debt Financing | ||||||||||
Interest rate | 4.35% | 4.35% | ||||||||
Chinese Credit Facility-JPM | Chinese credit facilities | TripAdvisor's Chinese subsidiaries | ||||||||||
Debt Financing | ||||||||||
Total debt | $ 7,000,000 | |||||||||
Chinese Credit Facility-JPM | Chinese credit facilities | People's Bank of China base rate | TripAdvisor's Chinese subsidiaries | ||||||||||
Debt Financing | ||||||||||
Maximum borrowing capacity | ¥ 70,000,000 | $ 10,000,000 | ||||||||
Debt Instrument Term | 1 year | |||||||||
Debt instrument applicable percentage base rate | 100.00% | 100.00% | ||||||||
Variable postpaid forward | ||||||||||
Debt Financing | ||||||||||
Total debt | $ 261,000,000 | |||||||||
Total borrowings | 259,000,000 | |||||||||
Variable postpaid forward | TripCo | ||||||||||
Debt Financing | ||||||||||
Paid-in-Kind Interest | $ 2,000,000 | |||||||||
Series A | Margin loan member | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Shares pledged as collateral under loan | shares | 18.2 | 18.2 | ||||||||
Share value | $ 844,000,000 | |||||||||
Series B | Margin loan member | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Shares pledged as collateral under loan | shares | 12.8 | 12.8 | ||||||||
Share value | $ 594,000,000 | |||||||||
Forward Contracts | Margin loan member | ||||||||||
Debt Financing | ||||||||||
Repayments of long term debt | 200,000,000 | |||||||||
Payment of paid-in-kind interest | $ 29,000,000 | |||||||||
Forward Contracts | Variable postpaid forward | ||||||||||
Debt Financing | ||||||||||
Derivative contract term | 4 years | |||||||||
Total borrowings | $ 259,000,000 | |||||||||
Accreted loan total at maturity | $ 272,000,000 | |||||||||
Minimum | 2016 Credit Facility | Revolving Credit Facility | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Debt Instrument Term | 1 month | |||||||||
Maximum | 2016 Credit Facility | Revolving Credit Facility | Trip Advisor | ||||||||||
Debt Financing | ||||||||||
Debt Instrument Term | 6 months |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 27, 2014 | |
Income taxes payable deemed equity contribution | $ 29 | |||
Current: | ||||
Federal | $ (33) | $ (42) | $ (77) | |
State and local | (3) | (7) | (22) | |
Foreign | (15) | (26) | (6) | |
Total current income tax expense | (51) | (75) | (105) | |
Deferred: | ||||
Federal | 30 | 52 | 55 | |
State and local | 6 | 7 | (16) | |
Foreign | 16 | 26 | 31 | |
Total deferred income tax expense | 52 | 85 | 70 | |
Income tax (expense) benefit | 1 | 10 | (35) | |
Income before income taxes | ||||
Domestic | 24 | (70) | 4 | |
Foreign | 22 | 74 | 40 | |
Total | 46 | 4 | 44 | |
Differences between provision for income taxes and income tax expense computed by applying federal rates | ||||
Computed expected tax benefits (expense) | (16) | (1) | (16) | |
State and local taxes, net of federal income taxes | (3) | 2 | (7) | |
Foreign taxes, net of foreign tax credits | 28 | 48 | 28 | |
Change in tax rate | 1 | 3 | (15) | |
Basis difference in consolidated subsidiary | 6 | (21) | (5) | |
Change in valuation allowance | (9) | (7) | (7) | |
Change in unrecognized tax benefits | (11) | (12) | (14) | |
Tax Credits | (10) | (3) | (2) | |
Other | (5) | (5) | (1) | |
Income tax (expense) benefit | 1 | 10 | $ (35) | |
Stock based compensation in intercompany cost sharing arrangements | 13 | |||
Deferred tax assets: | ||||
Net operating loss carryforwards | 93 | 89 | ||
Stock-based compensation | 57 | 56 | ||
Deferred Tax Asset Lease Financing Obligation | 33 | 33 | ||
Other | 85 | 32 | ||
Total deferred tax assets | 268 | 210 | ||
Less: valuation allowance | (33) | (23) | ||
Net deferred tax assets | 235 | 187 | ||
Deferred tax liabilities: | ||||
Intangible assets | (773) | (811) | ||
Investments | (45) | (33) | ||
Other | (76) | (62) | ||
Total deferred tax liabilities | (894) | (906) | ||
Net deferred tax liability | (659) | (719) | ||
Deferred tax balance sheet classification | ||||
Noncurrent deferred tax liability | (659) | (719) | ||
Net deferred tax liability | 659 | $ 719 | ||
Valuation allowance income tax expense affect | 10 | |||
Undistributed earnings of certain foreign combined companies | 828 | |||
Parent Company [Member] | ||||
Deferred tax assets: | ||||
Net operating loss carryforwards | 47 | |||
Trip Advisor | ||||
Deferred tax assets: | ||||
Net operating loss carryforwards | $ 46 |
Income Taxes (Details)43
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating loss carryforwards | |||
Net operating loss carryforwards | $ 93 | $ 89 | |
Unrecognized tax benefits | |||
Balance at beginning of year | 89 | 67 | $ 36 |
Additions based on tax positions related to the current year | 16 | 15 | 13 |
Additions for tax positions of prior years | 1 | 7 | 18 |
Reductions for lapse of statute of limitations | (1) | ||
Balance at end of year | 105 | 89 | 67 |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 63 | 53 | $ 65 |
Accrued interest and penalties related to uncertain tax positions | 9 | $ 6 | |
Minimum | |||
Unrecognized tax benefits | |||
Income Tax Examination, Estimate of Possible Loss | 10 | ||
Maximum | |||
Unrecognized tax benefits | |||
Income Tax Examination, Estimate of Possible Loss | 14 | ||
State | |||
Operating loss carryforwards | |||
Operating loss carryforwards not expected to be utilized | 5 | ||
Foreign | |||
Operating loss carryforwards | |||
Operating loss carryforwards not expected to be utilized | 28 | ||
Parent Company [Member] | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | 47 | ||
Trip Advisor | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | $ 46 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Additional disclosures | |||
Stock-based compensation | $ 91,000,000 | $ 82,000,000 | $ 74,000,000 |
Trip Advisor | |||
Additional disclosures | |||
Stock-based compensation | $ 85,000,000 | ||
2011 Plan | Trip Advisor | |||
Stock-Based Compensation | |||
Number of shares available for grant | 15,051,221 | ||
Fair value assumptions | |||
Expected term | 4 years 10 months 24 days | 5 years 4 months 24 days | 5 years 9 months 18 days |
Volatility rate (as a percent) | 41.80% | 41.80% | 44.00% |
2014 Plan | |||
Additional disclosures | |||
Common Stock, Capital Shares Reserved for Future Issuance | 2,500,000 | ||
Unvested value not yet recognized | $ 15,000,000 | ||
Weighted average period the unrecognized compensation cost will be recognized | 2 years | ||
Restricted Stock Units (RSUs) | 2011 Plan | Trip Advisor | |||
Additional disclosures | |||
RSUs granted (in shares) | 2,000,000 | ||
Weighted average grant date fair value, granted during period RSUs (in dollars per share) | $ 63.71 | ||
Unvested weighted average grant date fair value (in dollars per share) | $ 69.35 | ||
Unvested RSUs (in shares) | 2,900,000 | ||
Unrecognized compensation cost, unvested RSUs | $ 149,000,000 | ||
Weighted average period the unrecognized compensation cost will be recognized | 2 years 9 months 18 days | ||
Stock Options | 2011 Plan | Trip Advisor | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Options outstanding | 5,720,000 | ||
Granted | 1,064,000 | ||
Exercised | (733,000) | ||
Cancelled or expired | (233,000) | ||
Options outstanding | 5,818,000 | 5,720,000 | |
Options exercisable | 2,796,000 | ||
WAEP | |||
Weighted average exercise price, options outstanding (in dollars per share) | $ 53.71 | ||
Weighted average exercise price, options granted (in dollars per share) | 63.43 | ||
Weighted average exercise price, options exercised (in dollars per share) | 31.58 | ||
Weighted average exercise price, options forfeited/cancelled (in dollars per share) | 70.76 | ||
Weighted average exercise price, options outstanding (in dollars per share) | 57.60 | $ 53.71 | |
Weighted average exercise price, options exercisable (in dollars per share) | $ 42.95 | ||
Weighted average remaining contractual term outstanding | 5 years 6 months | ||
Weighted average remaining contractual term exercisable | 4 years 3 months 18 days | ||
Outstanding, aggregate intrinsic value | $ 25,000,000 | ||
Exercisable, aggregate intrinsic value | 24,000,000 | ||
Additional disclosures | |||
Unrecognized compensation cost, unvested options (in dollars) | $ 48,000,000 | ||
Weighted average period the unrecognized compensation cost will be recognized | 2 years 3 months 18 days | ||
Stock Options | 2014 Plan | |||
Stock-Based Compensation | |||
Maximum number of shares | 6,700,000 | ||
Fair value assumptions | |||
Volatility rate, minimum (as a percent) | 40.60% | ||
Volatility rate, maximum (as a percent) | 45.90% | ||
Dividend | $ 0 | ||
Additional disclosures | |||
Stock options exercised intrinsic value | $ 1,200,000 | $ 7,300,000 | $ 10,700,000 |
Stock Options | 2014 Plan | Series A | |||
Stock-Based Compensation | |||
Vesting period | 1 year | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Options outstanding | 720,000 | ||
Granted | 67,000 | ||
Exercised | (126,000) | ||
Options outstanding | 661,000 | 720,000 | |
Options exercisable | 580,000 | ||
WAEP | |||
Weighted average exercise price, options outstanding (in dollars per share) | $ 14.67 | ||
Weighted average exercise price, options granted (in dollars per share) | 16.15 | ||
Weighted average exercise price, options exercised (in dollars per share) | 13.73 | ||
Weighted average exercise price, options outstanding (in dollars per share) | 14.99 | $ 14.67 | |
Weighted average exercise price, options exercisable (in dollars per share) | $ 14.69 | ||
Weighted average remaining contractual term outstanding | 3 years | ||
Weighted average remaining contractual term exercisable | 2 years 6 months | ||
Outstanding, aggregate intrinsic value | $ 1,000,000 | ||
Exercisable, aggregate intrinsic value | $ 1,000,000 | ||
Additional disclosures | |||
Weighted average grant date fair value, options (in dollars per share) | $ 6.63 | ||
Stock Options | 2014 Plan | Series B | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Options outstanding | 1,797,000 | ||
Granted | 0 | ||
Options outstanding | 1,797,000 | 1,797,000 | |
WAEP | |||
Weighted average exercise price, options outstanding (in dollars per share) | $ 27.83 | ||
Weighted average exercise price, options outstanding (in dollars per share) | $ 27.83 | $ 27.83 | |
Weighted average remaining contractual term outstanding | 8 years | ||
Employee Stock Option Excluding Assumed Options | 2011 Plan | Trip Advisor | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Term of awards | 10 years | ||
WAEP | |||
Weighted average exercise price, grant date fair value (in dollars per share) | $ 63.43 | ||
Restricted Stock | 2014 Plan | |||
Additional disclosures | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $ 1,200,000 | $ 1,200,000 | $ 1,200,000 |
Restricted Stock | 2014 Plan | Series A | |||
Additional disclosures | |||
Unvested RSUs (in shares) | 16,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 6.19 | ||
Minimum | Stock Options | 2014 Plan | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Term of awards | 7 years | ||
Fair value assumptions | |||
Expected term | 5 years 8 months 12 days | ||
Maximum | Stock Options | 2014 Plan | |||
Stock-Based Compensation | |||
Vesting period | 5 years | ||
Term of awards | 10 years | ||
Fair value assumptions | |||
Expected term | 7 years 3 months 18 days |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Benefit Plans | |||
Employer cash contribution | $ 9 | $ 7 | $ 5 |
Related Party Transactions (Det
Related Party Transactions (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Chairman, Chief Executive Officer and President | |
Related Party Transaction [Line Items] | |
Standstill Agreement Cap | 34.90% |
Commitments and Contingencies47
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016USD ($)ft²location | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Operating leases | |||
Capitalization of construction-in-process costs | $ 6 | $ 62 | |
Rental expense | $ 21 | 22 | $ 22 |
Non-cash contribution to charitable foundation | 67 | ||
Trip Advisor | |||
Operating leases | |||
Non-cash contribution to charitable foundation | $ 67 | ||
Estimated future minimum rental payments | |||
2,017 | 28 | ||
2,018 | 28 | ||
2,019 | 29 | ||
2,020 | 29 | ||
2,021 | 29 | ||
Thereafter | 136 | ||
Total | $ 279 | ||
Trip Advisor | Other leased locations | |||
Operating leases | |||
Leased area (in square feet) | ft² | 465,000 | ||
Number of locations | location | 40 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segments | |||||||||||
Total revenues | $ 339 | $ 434 | $ 398 | $ 361 | $ 345 | $ 432 | $ 414 | $ 374 | $ 1,532 | $ 1,565 | $ 1,329 |
Adjusted OIBDA | 336 | 434 | 442 | ||||||||
Total assets | 7,282 | 7,285 | 7,282 | 7,285 | |||||||
Capital expenditures | 73 | 112 | |||||||||
Long-Lived Assets | 176 | 180 | 176 | 180 | |||||||
United States | |||||||||||
Segments | |||||||||||
Total revenues | 850 | 807 | 670 | ||||||||
Long-Lived Assets | 158 | 150 | 158 | 150 | |||||||
United Kingdom | |||||||||||
Segments | |||||||||||
Total revenues | 210 | 215 | 191 | ||||||||
Other countries | |||||||||||
Segments | |||||||||||
Total revenues | 472 | 543 | 468 | ||||||||
Long-Lived Assets | 18 | 30 | 18 | 30 | |||||||
Trip Advisor | Operating Segments | |||||||||||
Segments | |||||||||||
Total revenues | 1,480 | 1,492 | 1,246 | ||||||||
Adjusted OIBDA | 352 | 464 | 468 | ||||||||
Total assets | 7,171 | 7,235 | 7,171 | 7,235 | |||||||
Capital expenditures | 72 | 109 | |||||||||
Corporate and Other | Corporate, Non-Segment | |||||||||||
Segments | |||||||||||
Total revenues | 52 | 73 | 83 | ||||||||
Adjusted OIBDA | (16) | (30) | $ (26) | ||||||||
Total assets | $ 111 | $ 50 | 111 | 50 | |||||||
Capital expenditures | $ 1 | $ 3 |
Segment Information (Details)49
Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Information | |||||||||||
Consolidated segment Adjusted OIBDA | $ 336 | $ 434 | $ 442 | ||||||||
Stock settled charitable contribution | 67 | ||||||||||
Stock-based compensation | (91) | (82) | (74) | ||||||||
Depreciation And amortization | (222) | (268) | (298) | ||||||||
Impairment of intangible assets | (2) | (2) | |||||||||
Operating Income (Loss) | $ (24) | $ 31 | $ 14 | $ 2 | $ (83) | $ 35 | $ 25 | $ 38 | 23 | 15 | 68 |
Interest expense | (25) | (28) | (13) | ||||||||
Unrealized Gain (Loss) on Securities | 53 | 2 | 1 | ||||||||
Other, net | (5) | 15 | (12) | ||||||||
Earnings (loss) before income taxes | $ 46 | $ 4 | $ 44 |
Quarterly Financial Informati50
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information (Unaudited) | |||||||||||
Revenue | $ 339 | $ 434 | $ 398 | $ 361 | $ 345 | $ 432 | $ 414 | $ 374 | $ 1,532 | $ 1,565 | $ 1,329 |
Operating income (loss) | (24) | 31 | 14 | 2 | (83) | 35 | 25 | 38 | 23 | 15 | 68 |
Net earnings (loss) | 19 | 26 | 7 | (5) | (45) | 29 | 13 | 17 | 47 | 14 | 9 |
Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A, Series B and Series C stockholders | $ 35 | $ (1) | $ (2) | $ (11) | $ (23) | $ (3) | $ (7) | $ (7) | $ 21 | $ (40) | $ (22) |
Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A, Series B and Series C stockholders per common share | $ 0.47 | $ (0.01) | $ (0.03) | $ (0.15) | $ (0.31) | $ (0.04) | $ (0.09) | $ (0.09) | $ 0.28 | $ (0.53) | $ (0.30) |
Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A, Series B and Series C Stockholders per common share | $ 0.47 | $ (0.01) | $ (0.03) | $ (0.15) | $ (0.31) | $ (0.04) | $ (0.09) | $ (0.09) | $ 0.28 | $ (0.53) | $ (0.30) |