Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 31, 2019 | Jun. 29, 2018 | |
Entity Registrant Name | Liberty TripAdvisor Holdings, Inc. | ||
Entity Central Index Key | 1,606,745 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
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 Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 1.1 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Series A | |||
Entity Common Stock, Shares Outstanding | 72,146,903 | ||
Series B | |||
Entity Common Stock, Shares Outstanding | 2,929,777 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 672 | $ 695 |
Accounts receivable and contract assets, net of allowance for doubtful accounts of $21 million and $16 million, respectively | 212 | 230 |
Other current assets | 48 | 120 |
Total current assets | 932 | 1,045 |
Property and equipment, at cost | 234 | 226 |
Accumulated depreciation | (80) | (61) |
Property and equipment, net | 154 | 165 |
Intangible assets not subject to amortization (note 6): | ||
Goodwill | 2,443 | 2,445 |
Trademarks | 1,266 | 1,272 |
Intangible assets not subject to amortization | 3,709 | 3,717 |
Intangible assets subject to amortization, net (note 6) | 311 | 382 |
Other assets, at cost, net of accumulated amortization | 118 | 175 |
Total assets | 5,224 | 5,484 |
Current liabilities: | ||
Deferred merchant and other payables | 179 | 164 |
Accrued liabilities | 144 | 135 |
Current portion of debt (note 7) | 220 | 7 |
Deferred revenue | 63 | 60 |
Other current liabilities | 7 | 6 |
Total current liabilities | 613 | 372 |
Long-term debt (note 7) | 267 | 704 |
Deferred income tax liabilities (note 8) | 325 | 332 |
Other liabilities | 283 | 323 |
Total liabilities | 1,488 | 1,731 |
Equity | ||
Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued. | ||
Additional paid-in capital | 231 | 250 |
Accumulated other comprehensive earnings (loss), net of taxes | (29) | (23) |
Retained earnings | 133 | 196 |
Total stockholders' equity | 336 | 424 |
Noncontrolling interests in equity of subsidiaries | 3,400 | 3,329 |
Total equity | 3,736 | 3,753 |
Commitments and contingencies (note 12) | ||
Total liabilities and equity | 5,224 | 5,484 |
Series A | ||
Equity | ||
Common stock value | $ 1 | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts receivables and contract assets, allowance for doubtful accounts | $ 21 | $ 16 |
Preferred Stock | ||
Equity: | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 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 | 72,146,903 | 72,127,285 |
Common stock, shares outstanding | 72,146,903 | 72,127,285 |
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 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Total revenues | $ 1,615 | $ 1,569 | $ 1,532 |
Operating costs and expenses: | |||
Operating expense, including stock-based compensation (note 2 and 9) | 361 | 329 | 369 |
Selling, general and administrative, including stock-based compensation (note 2 and 9) | 966 | 1,021 | 918 |
Depreciation and amortization | 160 | 213 | 222 |
Impairment of intangible assets (note 6) | 1,798 | ||
Total operating costs and expenses | 1,487 | 3,361 | 1,509 |
Operating income | 128 | (1,792) | 23 |
Other income (expense): | |||
Interest expense | (26) | (25) | (25) |
Realized and unrealized gains (losses) on financial instruments, net | (59) | 24 | 53 |
Gain (loss) on dispositions, net (note 1) | (18) | ||
Other, net | 5 | 1 | (5) |
Total other income (expense) | (80) | (18) | 23 |
Earnings (loss) before income taxes | 48 | (1,810) | 46 |
Income tax (expense) benefit (note 8) | (57) | 229 | 1 |
Net earnings (loss) | (9) | (1,581) | 47 |
Less net earnings (loss) attributable to the noncontrolling interests | 55 | (1,184) | 26 |
Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders | $ (64) | $ (397) | $ 21 |
Basic net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 2): | $ (0.86) | $ (5.29) | $ 0.28 |
Diluted net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 2): | $ (0.86) | $ (5.29) | $ 0.28 |
Service revenue | |||
Total revenues | $ 1,615 | $ 1,556 | $ 1,480 |
Other revenue | |||
Total revenues | $ 13 | $ 52 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Earnings (Loss) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive Earnings (Loss) | |||
Net earnings (loss) | $ (9) | $ (1,581) | $ 47 |
Other comprehensive earnings (loss), net of taxes: | |||
Foreign currency translation adjustments | (28) | 59 | (52) |
Other comprehensive earnings (loss) | (28) | 59 | (52) |
Comprehensive earnings (loss) | (37) | (1,522) | (5) |
Less comprehensive earnings (loss) attributable to the noncontrolling interests | 33 | (1,138) | (15) |
Comprehensive earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders | $ (70) | $ (384) | $ 10 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Net earnings (loss) | $ (9) | $ (1,581) | $ 47 |
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 160 | 213 | 222 |
Stock-based compensation | 123 | 103 | 91 |
(Gains) losses on dispositions, net (note 4) | 18 | ||
Impairment of intangible assets (note 6) | 1,798 | ||
Realized and unrealized (gains) losses on financial instruments, net | 59 | (24) | (53) |
Deferred income tax expense (benefit) | (8) | (329) | (52) |
Non-cash interest | 15 | 11 | 13 |
Other noncash charges (credits), net | (5) | (4) | (12) |
Changes in operating assets and liabilities | |||
Current and other assets | 38 | (71) | (24) |
Payables and other liabilities | 27 | 85 | 69 |
Net cash provided (used) by operating activities | 400 | 219 | 301 |
Cash flows from investing activities: | |||
Capital expended for property and equipment, including internal-use software and website development | (61) | (65) | (73) |
Acquisitions and other investments, net of cash acquired (note 3) | (24) | (43) | |
Purchases of short term investments and other marketable securities | (16) | (63) | (166) |
Sales and maturities of short term investments and other marketable securities | 64 | 133 | 116 |
Other investing activities, net | (12) | (6) | 2 |
Net cash provided (used) by investing activities | (49) | (1) | (164) |
Cash flows from financing activities: | |||
Borrowings of debt | 7 | 435 | 440 |
Repayments of debt | (245) | (369) | (439) |
Shares repurchased by subsidiary | (100) | (250) | (105) |
Payment of withholding taxes on net share settlements of equity awards | (26) | (17) | (15) |
Shares issued by subsidiary | 6 | 3 | 7 |
Option exercises | 1 | 2 | |
Other financing activities, net | (2) | ||
Net cash provided (used) by financing activities | (358) | (199) | (110) |
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | (16) | 17 | (17) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (23) | 36 | 10 |
Cash, cash equivalents and restricted cash at beginning of period | 695 | 659 | 649 |
Cash, cash equivalents and restricted cash at end of period | $ 672 | $ 695 | $ 659 |
Consolidated Statement of Equit
Consolidated Statement of Equity - USD ($) $ in Millions | Series ACommon Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interest | Total |
Balance at beginning 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-based compensation | 26 | 77 | 103 | |||
Issuance of common stock upon exercise of stock options | 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, net | 1 | 1 | ||||
Balance at end of the period at Dec. 31, 2016 | 1 | 245 | (36) | 593 | 4,621 | 5,424 |
Net earnings (loss) | (397) | (1,184) | (1,581) | |||
Other comprehensive earnings (loss) | 13 | 46 | 59 | |||
Stock-based compensation | 30 | 85 | 115 | |||
Issuance of common stock upon exercise of stock options | 1 | 1 | ||||
Withholding taxes on net share settlements of stock based compensation | (17) | (17) | ||||
Shares issued by subsidiary | (7) | 10 | 3 | |||
Shares repurchased by subsidiary | (2) | (248) | (250) | |||
Other, net | (1) | (1) | ||||
Balance at end of the period at Dec. 31, 2017 | 1 | 250 | (23) | 196 | 3,329 | 3,753 |
Net earnings (loss) | (64) | 55 | (9) | |||
Other comprehensive earnings (loss) | (6) | (22) | (28) | |||
Stock-based compensation | 35 | 101 | 136 | |||
Withholding taxes on net share settlements of stock based compensation | (26) | (26) | ||||
Shares issued by subsidiary | (8) | 14 | 6 | |||
Shares repurchased by subsidiary | (20) | (80) | (100) | |||
Balance at end of the period at Dec. 31, 2018 | $ 1 | $ 231 | $ (29) | 133 | 3,400 | 3,736 |
Cumulative effect of accounting change | $ 1 | $ 3 | $ 4 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
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”) (subsequently renamed Qurate Retail, Inc. (“Qurate Retail”)) 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 does not have any operations outside of its controlling interest in its subsidiary TripAdvisor, Inc. (“TripAdvisor”) and its former wholly owned subsidiary, BuySeasons, Inc. (“BuySeasons”). TripCo sold its ownership in BuySeasons effective June 30, 2017. BuySeasons included the retail businesses of BuyCostumes.com and Celebrate Express (“BuySeasons”), and both TripAdvisor and BuySeasons operated as stand-alone operating entities. Both TripAdvisor and historically, 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 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. The results of BuySeasons are included in the accompanying consolidated financial results of TripCo until June 30, 2017. These financial statements refer to the consolidation 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. Additionally, certain prior period amounts have been reclassified for comparability with the current period presentation. Description of Business TripAdvisor is an online travel company and its mission is to help people around the world to plan, book and experience the perfect trip. TripAdvisor seeks to achieve its mission by providing consumers and travel partners a global platform with rich consumer-generated content, price comparison tools and online reservation and related services for destinations, travel activities and experiences, and restaurants. TripAdvisor, by and through its subsidiaries, owns and operates a portfolio of leading online travel brands. Its flagship brand, TripAdvisor, is the world’s largest travel site based on average monthly unique visitors. TripAdvisor-branded websites include www.tripadvisor.com in the United States and localized versions of the website in 48 markets and 28 languages worldwide. TripAdvisor also enables consumers to compare prices and/or book a number of these travel experiences on either a TripAdvisor website or mobile application (“app”), or on the website or mobile app of one of its travel partners. In addition to the flagship TripAdvisor brand, TripAdvisor manages and operates other travel media brands, connected by the common goal of providing consumers the most comprehensive travel-planning and trip-taking resources in the travel industry. TripAdvisor derives the majority of its revenue from its Hotel businesses, which includes TripAdvisor-branded click-based and transaction revenue, TripAdvisor-branded display-based advertising and subscription revenue and other hotel revenue. The remainder of TripAdvisor’s revenue is generated through its Non-Hotel businesses, which includes its experiences, restaurants and 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. BuySeasons was sold on June 30, 2017. Spin-Off of TripCo from Qurate Retail 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 tax-free TripCo Spin-Off was accounted for at historical cost due to the pro rata nature of the distribution to shareholders of Liberty Ventures common stock. Following the TripCo Spin-Off, Qurate Retail 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 Qurate Retail 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 Qurate Retail 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 Qurate Retail and TripCo and other agreements related to tax matters. Pursuant to the tax sharing agreement, TripCo has agreed to indemnify Qurate Retail, 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, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies Cash and Cash Equivalents Cash equivalents consist of highly liquid investments, including money market funds and marketable debt securities, with maturities of three months or less at the time of acquisition. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recognized when the right to consideration becomes unconditional and are recorded net of an allowance for doubtful accounts. Such allowance aggregated $21 million and $16 million at December 31, 2018 and 2017, respectively. Our customer invoices are generally due 30 days from the time of invoicing. 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 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 a cash equivalent, 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, 2018 2017 Buildings $ 123 122 Leasehold improvements 41 39 Computer equipment and purchased software 52 46 Furniture, office equipment and other 18 19 Total property and equipment $ 234 226 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. See note 12 for additional information related to TripAdvisor’s building. 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. In January 2017, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance to simplify the measurement of goodwill impairment. Under the new guidance, an entity no longer performs a hypothetical purchase price allocation to measure goodwill impairment. Instead, a goodwill impairment is measured using the difference between the carrying value and the fair value of the reporting unit. The Company early adopted this guidance during the fourth quarter of 2017. 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 quantitative goodwill impairment test. The accounting guidance also allows entities the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative impairment test. The entity may resume performing the qualitative assessment in any subsequent period. 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 was 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 year and prior year for other purposes. If, based on the qualitative analysis, it is more likely than not that an impairment exists, the Company performs the quantitative impairment test. The quantitative goodwill impairment test 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 analyses, where applicable, are based on management's best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years. There can be no assurance that actual results will approximate these forecasts. 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, other than goodwill, is impaired. The accounting guidance also allows entities the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to the quantitative impairment test. The entity may resume performing the qualitative assessment in any subsequent period. 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 and trademark 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 intangible assets subject to amortization. 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 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 currency exchange losses of $6 million, gains of $1 million and losses of $4 million for the years ended December 31, 2018, 2017 and 2016, respectively, in other, net on our consolidated statements of operations. These amounts include gains and losses, realized and unrealized, on foreign currency forward exchange contracts. Revenue Recognition In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers, or ASC 606, Revenue from Contracts with Customers (“ASC 606”), which replaced numerous requirements in GAAP, and provides companies with a single model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This guidance also requires additional disclosures 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 addition, the FASB has also issued several amendments to the standard, which clarifies certain aspects of the guidance, including principal versus agent considerations and identifying performance obligations. In the first quarter of 2018, the Company adopted ASC 606 under the modified retrospective method for all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the previous accounting policies under the historical revenue guidance, or ASC 605, Revenue Recognition . As a result of the adoption of ASC 606, certain revenue streams, such as hotel instant booking revenue, recorded under the consumption model, which was previously recorded upon completion of the traveler stay, is now recognized upon booking. The amount of the recognized transaction price for the commission is recorded as revenue, net of the impact of estimated cancellations. TripAdvisor also recorded an adjustment to capitalize certain costs to obtain contracts for existing arrangements as of the implementation date. TripAdvisor expects the adoption of this new revenue standard will not have a material impact, either on an annual or quarterly basis, to its consolidated financial statements on an ongoing basis. Its systems and internal controls were not significantly impacted as a result of the accounting changes and TripAdvisor has made the necessary changes to its accounting policies and internal processes to support the new revenue recognition standard, including the related disclosures. TripAdvisor recognized the cumulative effect of initial application of ASC 606 as an adjustment to the opening balance of retained earnings. TripAdvisor recorded a net increase in opening retained earnings of $4 million as of January 1, 2018 due to the cumulative impact of adoption of the new revenue guidance, resulting in a $1 million increase in TripCo’s opening retained earnings and $3 million increase in TripCo’s noncontrolling interest in equity of subsidiaries as of January 1, 2018. All other accounts were not materially impacted. Revenue Recognition under ASC 606 TripAdvisor generates all of its revenue from contracts with customers. It recognizes revenue when it satisfies a performance obligation by transferring control of the promised services to a customer in an amount that reflects the consideration that it expects to receive in exchange for those services. When TripAdvisor acts as an agent in the transaction under ASC 606, it recognizes revenue for only its commission on the arrangement. TripAdvisor determines revenue recognition through the following steps: (1) Identification of the contract, or contracts, with a customer (2) Identification of the performance obligations in the contract (3) Determination of the transaction price (4) Allocation of the transaction price to the performance obligations in the contract (5) Recognition of revenue when, or as, TripAdvisor satisfies a performance obligation At contract inception, TripAdvisor assesses the services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a service (or bundle of services) that is distinct. To identify the performance obligations, TripAdvisor considers all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. TripAdvisor has provided qualitative information about its performance obligations for its principal revenue streams discussed below. There was no significant revenue recognized in the year ended December 31, 2018 related to performance obligations satisfied in prior periods. TripAdvisor has applied a practical expedient and does not disclose the value of unsatisfied performance obligations that have an original expected duration of less than one year, and TripAdvisor does not have any material unsatisfied performance obligations over one year. The value related to TripAdvisor’s remaining or partially satisfied performance obligations relates to subscription services that are satisfied over time or services that are recognized at a point in time, but not yet achieved. The timing of services, invoicing and payments are discussed in more detail below and do not include a significant financing component. TripAdvisor’s customer invoices are generally due 30 days from the time of invoicing. TripAdvisor recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. Although the substantial majority of its contract costs have an amortization period of less than one year, TripAdvisor has determined contract costs arising from certain sales incentives have an amortization period in excess of one year given the high likelihood of contract renewal. Sales incentives are not paid upon renewal of these contracts and therefore are not commensurate with the initial sales incentive costs. Total capitalized costs to obtain a contract were approximately $2 million as of December 31, 2018. These contract costs are amortized on a straight-line basis over the estimated customer life, which is based on historical customer retention rates. Amortization expense recorded to selling, general and administrative expense during year ended December 31, 2018 was not material. TripAdvisor assesses such assets for impairment when events or circumstances indicate that the carrying amount may not be recoverable. The recognition of revenue may require the application of judgment related to the determination of the performance obligations, the timing of when the performance obligations are satisfied and other areas. The determination of TripAdvisor’s performance obligations does not require significant judgment given that it generally does not provide multiple services to a customer in a transaction, and the point in which control is transferred to the customer is readily determinable. In instances where TripAdvisor recognizes revenue over time, it generally has either a subscription service that is recognized over time on a straight-line basis using the time-elapsed output method, or based on other output measures that provide a faithful depiction of the transfer of TripAdvisor’s services. When an estimate for cancellations is included in the transaction price, the estimate is based on historical cancellation rates. There have been no significant adjustments to TripAdvisor’s cancellation estimates and the cancellation estimates are not material. Taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue–producing transaction, that are collected by TripAdvisor from a customer, are reported on a net basis, or in other words, excluded from revenue on its consolidated financial statements, which is consistent with prior periods. The application of TripAdvisor’s revenue recognition policies and a description of the principal activities from which it generates revenue, are presented below. Hotels TripAdvisor-branded Click-based Advertising and Transaction Revenue . TripAdvisor’s largest source of Hotel revenue is generated from click-based advertising on TripAdvisor-branded websites, which is primarily comprised of contextually-relevant booking links to its travel partners’ sites. TripAdvisor’s click-based travel partners are predominantly online travel agencies, or “OTAs”, and direct suppliers in the hotel category. Click-based advertising is generally priced on a cost-per-click, or “CPC,” basis, with payments from travel partners determined by the number of travelers who click on a link multiplied by the CPC rate for each specific click. CPC rates that travel partners pay are determined in a dynamic, competitive auction process, also known as TripAdvisor’s metasearch auction. TripAdvisor records click-based advertising revenue as the click occurs and traveler leads are sent to the travel partner websites as the performance obligation is fulfilled at that time. Click-based revenue is generally billed to travel partners on a monthly basis consistent with the timing of the service. Transaction revenue is generated from TripAdvisor’s hotel instant booking feature, which enables hotel shoppers to book directly with a travel partner, with the latter serving as the merchant of record for the transaction, without leaving TripAdvisor’s website. TripAdvisor earns a commission from its travel partners for each consumer that completes a hotel reservation on TripAdvisor’s website; based on a pre-determined commission rate. TripAdvisor’s hotel instant booking revenue includes (i) arrangements where commissions are billable on all instant booking hotel reservations; and (ii) arrangements where the commission is billable only upon the completion of the traveler’s stay resulting from the reservation. The travel partner provides the service to the traveler and TripAdvisor acts as an agent under ASC 606. TripAdvisor’s performance obligation in both arrangements is complete at the time of the booking and the commission earned is recognized upon booking, as TripAdvisor has no post-booking service obligations. The amount of revenue recognized for commissions which are billable contingent upon a traveler stay requires an estimate of the impact of cancellations using historical cancellation rates. Contract assets are recognized at the time of booking for commissions that are billable at the time of stay. TripAdvisor-branded Display-based Advertising and Subscription Revenue . Travel partners can promote their brands in a contextually-relevant manner through a variety of display-based advertising placements on TripAdvisor websites. TripAdvisor’s display-based advertising clients are predominantly direct suppliers of hotels, airlines and cruises, as well as destination marketing organizations. TripAdvisor also sells display-based advertising to OTAs and other travel related businesses, as well as advertisers from non-travel categories. Display-based advertising is sold predominantly on a cost per thousand impressions basis. The performance obligation in TripAdvisor’s display based advertising business is to display a number of advertising impressions on TripAdvisor’s websites and TripAdvisor recognizes revenue for impressions as they are delivered. Services are generally billed monthly. TripAdvisor has applied the practical expedient to measure progress toward completion, as it has the right to invoice the customer in an amount that directly corresponds with the value to the customer of TripAdvisor’s performance to date, which is measured based on impressions delivered. In addition, TripAdvisor offers subscription-based advertising to hoteliers, owners of B&Bs and other specialty lodging properties. TripAdvisor’s performance obligation is generally to enable subscribers to advertise their businesses on TripAdvisor’s website, as well as manage and promote their website URL, email address, phone number, special offers and other information related to their business. Subscription advertising services are predominantly sold for a flat fee, for a contracted period of time of one year or less and revenue is recognized on a straight-line basis over the period of the subscription service as efforts are expended evenly throughout the contract period. Subscription advertising services are generally billed in advance of service. When prepayments are received, TripAdvisor recognizes deferred revenue for the amount of prepayment in excess of revenue recognized until the performance obligation is satisfied. Other Hotel Revenue. TripAdvisor’s other hotel revenue primarily includes revenue from non-TripAdvisor-branded websites, such as www.bookingbuddy.com, www.cruisecritic.com, and www.onetime.com and www.smartertravel.com, which primarily includes click-based advertising and display-based advertising revenue. The performance obligations, timing of customer payments for these brands and methods of recognizing revenue are generally consistent with click-based advertising or display-based advertising revenue, as described above. Non-Hotel TripAdvisor provides information and services for consumers to research, book and experience activities and attractions in popular travel destinations both through Viator, its dedicated Experiences business, and on its TripAdvisor website and applications. TripAdvisor also powers travel activities and experiences booking capabilities to consumers for affiliate partners, including some of the world’s top airlines, hotel chains and online and offline travel agencies. TripAdvisor works with local tour or travel activities/experiences operators (“the supplier”) to provide consumers with access to book tours, activities and experiences (“the activity”) in popular destinations worldwide. TripAdvisor generates commissions for each booking transaction facilitated through its online reservation system. TripAdvisor provides post-booking service to the consumer until the time of the activity, which is the completion of the performance obligation. Revenue is recognized at the time that the activity occurs. TripAdvisor does not control the activity before the supplier provides the activity to its consumers and therefore acts as agent for nearly all of these transactions under ASC 606. TripAdvisor generally collects payment from the consumer at the time of booking that includes both TripAdvisor’s commission revenue and the amount due to the supplier. TripAdvisor’s commission revenue is recorded as deferred revenue until revenue is recognized, and the amount due to the supplier is recorded to deferred merchant payables on the consolidated balance sheet, until payment is made to the supplier after the completion of the activity. To a lesser extent, TripAdvisor earns commissions from third-party merchant partners, who display and promote TripAdvisor’s supplier activities on their websites to generate bookings. In these transactions, where TripAdvisor is not the merchant of record, TripAdvisor generally invoices and receives commissions directly from the third-party merchant partners. TripAdvisor’s performance obligation is to allow the third-party merchant partners to display and promote its supplier activities on their website and TripAdvisor earns a commission when consumers book and complete an activity. TripAdvisor does not control the service and act as an agent for these transactions under ASC 606. TripAdvisor’s performance obligation is complete and revenue is recognized at the time of the booking, as TripAdvisor has no post-booking obligations. TripAdvisor recognizes this revenue net of an estimate of the impact of cancellations using historical cancellation rates. Contract assets are recognized for commissions that are billable contingent upon completion of the activity. TripAdvisor also provides information and services for consumers to research and book restaurants in popular travel destinations through its dedicated restaurant reservations business, TheFork, and on TripAdvisor’s website and applications. TheFork is an online restaurant booking platform operating on a number of websites (including www.lafourchette.com, www.eltenedor.com and www.iens.nl), with a network of restaurant partners located primarily across Europe and Australia. TripAdvisor’s bookable restaurants are available on www.thefork.com and on TripAdvisor-branded websites and mobile apps. TripAdvisor primarily generates transaction fees (or per seated diner fees) that are paid by restaurants for diners seated primarily from bookings through TheFork’s online reservation system. The transaction fee is recognized as revenue after the reservation is fulfilled, or as diners are seated by restaurant customers. Revenue is billed monthly when the transaction fees are payable, which is at the time the diner is seated. To a lesser extent, TripAdvisor also generates subscription fees for subscription-based advertising to restaurants, access to certain online reservation management services and marketing analytic tools provided by TheFork and TripAdvisor. As the performance obligation is to provide restaurants with access to these services over the subscription perio |
Supplemental Disclosures to Con
Supplemental Disclosures to Consolidated Statements of Cash Flows | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 amounts in millions Acquisitions and other investments, net of cash acquired: Intangibles not subject to amortization $ 12 — 17 Intangibles subject to amortization 14 — 25 Fair value of other assets acquired — — 9 Net liabilities assumed — — (8) Deferred tax assets (liabilities) (2) — — Acquisitions and other investments, net of cash acquired $ 24 — 43 Cash paid for interest $ 8 13 10 Cash paid for income taxes $ 53 62 30 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. This new guidance requires entities to show changes in cash, cash equivalents and restricted cash on a combined basis in the statement of cash flows. In addition, this accounting guidance requires a reconciliation of the total cash, cash equivalent and restricted cash in the statement of cash flows to the related captions in the balance sheet if cash, cash equivalents and restricted cash are presented in more than one line item in the balance sheet. The Company adopted this guidance in the first quarter of 2018 and applied it retrospectively to all prior periods presented in the financial statements as required under the new guidance. The Company does not currently have material amounts described as restricted cash; however, the Company’s consolidated statement of cash flows for the year ended December 31, 2016 has been recast to present $5 million of restricted cash as beginning of period cash and cash equivalents. This amount was included in other current assets as of December 31, 2016. |
Acquisitions and Dispositions
Acquisitions and Dispositions | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions and Dispositions | |
Acquisitions and Dispositions | (4) Acquisitions and Dispositions Acquisitions During the year ended December 31, 2018, TripAdvisor acquired one business for a purchase price and net cash consideration of $23 million. During the year ended December 31, 2016, TripAdvisor completed five acquisitions of certain businesses for a total purchase price of $34 million. TripAdvisor paid net cash consideration of $29 million, which is net of $4 million of cash acquired, and includes $1 million in future holdback payments, which TripAdvisor currently expects to settle with its common stock. The following table presents the purchase price allocations recorded on our consolidated balance sheet for the 2018 and 2016 acquisitions (in millions): Years ended December 31, 2018 2017 2016 amounts in millions Goodwill $ 11 — 17 Intangible assets 14 — 25 Deferred tax liabilities, net (2) — — Net liabilities assumed — — (8) Total purchase price consideration $ 23 — 34 Intangible assets acquired during 2018 were comprised of supplier relationships of $6 million and technology and other of $8 million. The overall weighted-average life of the intangible assets acquired in the purchase of this business was 8 years, and will be amortized on a straight-line basis over the estimated useful lives from acquisition date. 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 from acquisition date. Dispositions On June 30, 2017, TripCo sold BuySeasons. The sale resulted in an $18 million loss, which is included in gain (loss) on dispositions, net in the accompanying consolidated statement of operations. BuySeasons is not presented as a discontinued operation as the sale did not represent a strategic shift that had a major effect on TripCo’s operations and financial results. Included in other revenue in the accompanying consolidated statements of operations is $13 million and $52 million for the years ended December 31, 2017 and 2016, respectively, related to BuySeasons. Included in net earnings (loss) in the accompanying consolidated statements of operations are losses of $2 million and $8 million for the years ended December 31, 2017 and 2016, respectively, related to BuySeasons. |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 December 31, 2017 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 $ 145 140 5 32 23 9 Marketable securities $ 15 — 15 35 — 35 Variable postpaid forward $ 20 — 20 — 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 sheets. 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 cash equivalents and marketable securities were obtained from pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Marketable securities are included in other current assets in the accompanying consolidated balance sheets. 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. With the exception of debt, the carrying amount approximates fair value due to the short maturity of these instruments as reported on our consolidated balance sheets. The carrying value of our debt bears interest at a variable rate and therefore is also considered to approximate fair value. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
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, 2017 $ 3,694 — 3,694 Impairment (1) (1,271) — (1,271) Other (2) 22 — 22 Balance at December 31, 2017 2,445 — 2,445 Acquisition (3) 11 — 11 Other (2) (13) — (13) Balance at December 31, 2018 $ 2,443 — 2,443 (1) See discussion of impairment below. (2) Other changes are primarily due to foreign currency translation on goodwill. (3) Additions to goodwill relate to TripAdvisor’s acquisitions (see note 4). As presented in the accompanying consolidated balance sheets, trademarks are the other significant indefinite lived intangible asset. See the disclosure below for information related to the 2017 impairment of the Company’s trademarks. Other fluctuations in the trademark balance from the prior year were 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, 2018 December 31, 2017 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 3 885 (761) 124 908 (735) 173 Other 4 588 (401) 187 542 (333) 209 Total 1,473 (1,162) 311 1,450 (1,068) 382 Intangible assets are being amortized on an accelerated basis as reflected in amortization expense and in the future amortization table below. Amortization expense was $137 million, $188 million and $198 million for the years ended December 31, 2018, 2017 and 2016, respectively. The estimated future amortization expense for the next five years related to intangible assets with definite lives as of December 31, 2018, assuming no subsequent impairment of the underlying assets, is as follows (amounts in millions): 2019 $ 91 2020 $ 86 2021 $ 70 2022 $ 28 2023 $ 27 Impairments Due to certain marketplace factors impacting TripAdvisor’s operating results, which led to a decline in TripAdvisor’s stock price, impairment losses of $527 million and $1,271 million were recorded during the year ended December 31, 2017 related to trademarks and goodwill, respectively, related to the hotel reporting unit. The fair value of the trademarks was determined using the relief from royalty method. The fair values of the reporting units were determined using a combination of market multiples (market approach) and discounted cash flow (income approach) calculations (Level 3). As of December 31, 2018, accumulated goodwill impairment losses for TripAdvisor totaled $1,271 million. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt | |
Debt | (7) Debt Outstanding debt at December 31, 2018 and 2017 is summarized as follows: December 31, December 31, 2018 2017 amounts in millions TripAdvisor Credit Facilities $ — 230 TripAdvisor Chinese credit facilities — 7 TripCo margin loans 220 210 TripCo variable postpaid forward 267 264 Total consolidated TripCo debt $ 487 711 Less debt classified as current (220) (7) Total long-term debt $ 267 704 TripAdvisor Credit Facilities In June 2015, TripAdvisor entered into a five year credit agreement with a group of lenders which, among other things, provided for a $1 billion unsecured revolving credit facility (the “2015 Credit Facility”) and immediately borrowed $290 million. In May 2017, the 2015 Credit Facility was amended to, among other things, (i) increase the aggregate amount of revolving loan commitments available from $1.0 billion to $1.2 billion; and (ii) extend the maturity date of the 2015 Credit Facility from June 26, 2020 to May 12, 2022 (the “First Amendment”). Borrowings under the 2015 Credit Facility generally bear interest, at TripAdvisor’s option, at a rate per annum equal to either (i) the Eurocurrency Borrowing rate, or the adjusted LIBOR for the interest period in effect for such borrowing; plus an applicable margin ranging from 1.25% to 2.00% (“Eurocurrency Spread”), based on TripAdvisor’s leverage ratio; or (ii) the Alternate Base Rate (“ABR”) Borrowing, which is the greatest of (a) the Prime Rate in effect on such day, (b) the New York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum and (c) the Adjusted LIBOR (or LIBOR multiplied by the Statutory Reserve Rate) for an interest period of one month plus 1.00%; in addition to an applicable margin ranging from 0.25% to 1.00% (“ABR Spread”), based on TripAdvisor’s leverage ratio. TripAdvisor may borrow from the 2015 Credit Facility in U.S. dollars, Euros and British pound. During the year ended December 31, 2018, TripAdvisor repaid all of its outstanding borrowings, or approximately $230 million, under the 2015 Credit Facility. This repayment was primarily made from a one-time cash repatriation of $325 million of foreign earnings to the U.S. during the year ended December 31, 2018. During the year ended December 31, 2017, TripAdvisor borrowed $435 million and repaid $296 million of its outstanding borrowings under the 2015 Credit Facility. These net borrowings during the year were primarily used to repurchase shares of TripAdvisor’s outstanding common stock under its repurchase program. During the year ended December 31, 2016, TripAdvisor borrowed $101 million and repaid $210 million of its outstanding borrowings on the 2015 Credit Facility. As of December 31, 2018, TripAdvisor had no outstanding borrowings and approximately $1.2 billion of borrowing capacity under the 2015 Credit Facility. As of December 31, 2017, TripAdvisor had $230 million of outstanding borrowings under a one-month interest rate period or a weighted average rate of 2.74% per annum. TripAdvisor is also required to pay a quarterly commitment fee, at an applicable rate ranging from 0.15% to 0.30%, on the daily unused portion of the 2015 Credit Facility for each fiscal quarter and additional fees in connection with the issuance of letters of credit. As of December 31, 2018, TripAdvisor’s unused revolver capacity was subject to a commitment fee of 0.15%, given TripAdvisor’s leverage ratio. The 2015 Credit Facility includes $15 million of borrowing capacity available for letters of credit and $40 million for Swingline borrowings on same-day notice. 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 its 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. TripAdvisor was party to an uncommitted facility agreement which provided 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. TripAdvisor initially borrowed $73 million from this uncommitted credit facility during the year ended December 31, 2016, which was used for general working capital needs, primarily for partial repayment of the 2015 Credit Facility, and repaid the full amount during the year ended December 31, 2017. As of December 31, 2017, there were no outstanding borrowings under the 2016 Credit Facility. In June 2018, TripAdvisor terminated the 2016 Credit Facility. TripAdvisor Chinese Credit Facilities In addition to borrowings under the Trip Advisor Credit Facilities, TripAdvisor maintains two credit facilities in China (jointly, the “Chinese Credit Facilities”). TripAdvisor’s Chinese subsidiary is a 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. Borrowings under the Chinese Credit Facility—BOA generally bear interest at a rate based on the People’s Bank of China benchmark, including certain adjustments which may be made in accordance with market conditions at the time of borrowing. As of December 31, 2018, there were 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”). Borrowings under the Chinese Credit Facility—JPM generally bear interest at a rate based on the People’s Bank of China benchmark, including certain adjustments which may be made in accordance with market conditions at the time of borrowing. During the year ended December 31, 2018, TripAdvisor repaid all outstanding borrowings, and as of December 31, 2018, there were no outstanding borrowings under the Chinese Credit Facility-JPM. As of December 31, 2017, TripAdvisor had $7 million of outstanding borrowings from the Chinese Credit Facility—JPM at a weighted average rate of 5.00%. 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% plus LIBOR 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 a certain minimum value. Pursuant to the amendments, interest on the margin loans accrued at a rate of 2.0% plus LIBOR. On November 7, 2017, pursuant to another amendment to the margin loan agreements, the interest rate on the margin loans increased to 2.4% plus LIBOR per year. The interest can 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. Accordingly, the loans are classified as current as of December 31, 2018. During the year ended December 31, 2018, TripCo recorded $10 million and $3 million of non-cash interest related to the amended margin loans and variable postpaid forward, respectively. As of December 31, 2018, 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, 2018 December 31, 2018 amounts in millions Common Stock 18.2 $ 982 Class B Common Stock 12.8 $ 690 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. Fair Value Due to the primarily variable rate nature, TripCo believes that the carrying amount of its debt approximated fair value at December 31, 2018 and 2017. Debt Covenants As of December 31, 2018, each of the Company and TripAdvisor was in compliance with its respective debt covenants. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | (8) Income Taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) bonus depreciation that allows for full expensing of qualified property; (3) creating a new limitation on deductible interest expense; (4) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (5) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (6) limitations on the deductibility of certain executive compensation; and (7) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years. Additional requirements of the Tax Act include a tax on global low-tax income (“GILTI”) and deductions related to foreign derived intangible income. The SEC issued guidance on accounting for the tax effects of the Tax Act. The Company reflected the income tax effects of those aspects of the Tax Act for which the accounting was known as of December 31, 2017 and made immaterial revisions to such amounts during the allowed one year measurement period. The Company elected to account for GILTI as a period cost, and therefore included GILTI expense in the effective income tax rate calculation. As of December 31, 2018, the Company has completed its analysis of the tax effects of the Tax Act. The corporate tax rate reduction was applied to our inventory of deferred tax assets and deferred tax liabilities, which resulted in the net tax benefit in the period ending December 31, 2017. Additionally, we are subject to the one-time transition tax on certain unrepatriated earnings on previously untaxed accumulated and current earnings and profits. Income tax benefit (expense) consists of: Years ended December 31, 2018 2017 2016 amounts in millions Current: Federal $ (39) (92) (33) State and local (12) (2) (3) Foreign (14) (6) (15) $ (65) (100) (51) Deferred: Federal $ 14 288 30 State and local (5) 30 6 Foreign (1) 11 16 8 329 52 Income tax benefit (expense) $ (57) 229 1 The following table presents a summary of our domestic and foreign earnings from continuing operations before income taxes: Years ended December 31, 2018 2017 2016 amounts in millions Domestic $ 3 (1,720) 24 Foreign 45 (90) 22 Total $ 48 (1,810) 46 Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of 21% for the year ended December 31, 2018 and 35% for both of the years ended December 31, 2017 and 2016 as a result of the following: Years ended December 31, 2018 2017 2016 amounts in millions Computed expected tax benefits (expense) $ (10) 634 (16) State and local taxes, net of federal income taxes (14) 17 (3) Foreign taxes, net of foreign tax credits 11 2 28 Transition tax — (67) — Change in tax rate due to Tax Act — 139 — Basis difference in consolidated subsidiary (17) (8) 6 Change in valuation allowance (4) (27) (9) Change in unrecognized tax benefits (12) (11) (11) Federal tax credits 9 8 10 Stock-based compensation (8) (12) (2) Impairment of nondeductible goodwill — (445) — Other (12) (1) (2) Income tax (expense) benefit $ (57) 229 1 During 2018, the Company recognized additional tax expense related to the recognition of deferred tax liabilities for basis differences in the stock of a consolidated subsidiary and changes in unrecognized tax benefits. These expense items were partially offset by a net income tax benefit from earnings in foreign jurisdictions taxed at rates other than the 21% U.S. federal tax rate. During 2017, the Company recognized an impairment loss on its goodwill that is not deductible for tax purposes. In connection with the initial analysis of the impact of the Tax Act, the Company estimated a one-time increase in tax expense of $67 million on the deemed repatriation of undistributed earnings of non-U.S. shareholders as a result of the Tax Act. In addition, the Company recorded a discrete net tax benefit of $139 million in the period ending December 31, 2017. This net benefit primarily consists of a net benefit for the corporate rate reduction. During 2016, the Company had income tax benefits from earnings in foreign jurisdictions taxed at rates other than the 35% U.S. federal tax rate, partially offset by changes in unrecognized tax benefits and changes in valuation allowance. 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, 2018 2017 amounts in millions Deferred tax assets: Loss carryforwards $ 77 99 Stock-based compensation 48 40 Lease financing obligation 22 22 Other 78 60 Total deferred tax assets 225 221 Less: valuation allowance (60) (64) Net deferred tax assets 165 157 Deferred tax liabilities: Intangible assets (387) (392) Investments (41) (38) Other (62) (59) Total deferred tax liabilities (490) (489) Net deferred tax liability $ (325) (332) During the year ended December 31, 2018, there was $4 million decrease in the Company’s valuation allowance that affected tax expense. Cumulative undistributed earnings of TripAdvisor’s foreign subsidiaries totaled approximately $651 million as of December 31, 2018. During the year ended December 31, 2018, TripAdvisor made a one-time repatriation of $325 million of foreign earnings to the U.S. primarily to repay remaining outstanding debt under the 2015 Credit Facility. TripAdvisor intends to indefinitely reinvest the remaining foreign undistributed earnings of $651 million, although it will continue to evaluate the impact of the Tax Act on capital deployment within and outside the U.S. Should TripAdvisor distribute, or be treated under certain U.S. tax rules as having distributed, the earnings of foreign subsidiaries in the form of dividends or otherwise, TripAdvisor may be subject to U.S. income taxes or tax benefits. The amount of any unrecognized deferred income tax on this temporary difference is not material. At December 31, 2018, the Company has a deferred tax asset of $77 million for federal, state, and foreign loss carryforwards. Of this amount, $38 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 2019 and 2037. The remaining deferred tax asset of $39 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 2019 and 2037. The loss carryforwards recorded at TripAdvisor and TripCo are expected to be utilized prior to expiration, except for $57 million of foreign net operating losses (on a tax-effected basis), which based on current projections of foreign taxable income may expire unused. A reconciliation of unrecognized tax benefits is as follows (amounts in millions): Years ended December 31, 2018 2017 2016 Balance at beginning of year $ 123 105 89 Additions based on tax positions related to the current year 11 17 16 Additions for tax positions of prior years 2 1 1 Reductions for lapse of statute of limitations — — (1) Balance at end of year $ 136 123 105 As of December 31, 2018, 2017 and 2016, the Company had recorded tax reserves of $136 million, $123 million and $105 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 $87 million, $78 million and $63 million for the years ended December 31, 2018, 2017 and 2016, 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, 2018 and 2017, the Company had recorded approximately $20 million and $13 million, respectively, of accrued interest and penalties related to uncertain tax positions. As of December 31, 2018, TripCo’s tax years prior to 2015 are closed for federal income tax purposes, and the Internal Revenue Service (“IRS”) has completed its examination of TripCo’s 2015, 2016 and 2017 tax years. TripCo’s 2018 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 short-period 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 short-period 2011, 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 2009. As of December 31, 2018, 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, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | (9) Stock-Based Compensation TripCo Incentive Plans 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 1-5 years and have a term of 7-10 years. TripCo issues new shares upon exercise of equity awards. TripCo - Grants During the years ended December 31, 2018, 2017 and 2016, TripCo granted 59 thousand, 105 thousand and 67 thousand options, respectively, to purchase shares of Series A common stock to its non-employee directors. Such options had a weighted average grant-date fair value (“GDFV”) of $8.83, $4.11 and $6.63 per share, respectively, and cliff vest over a 1-year vesting period. There were no options to purchase shares of Series B common stock granted and no exercises, forfeitures or cancellations of Series B common stock during the year ended December 31, 2018. The Company has calculated the GDFV 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 2018, 2017 and 2016, the range of expected terms was 4.8 years to 5.7 years. The volatility used in the calculation for Awards is based on the historical volatility of TripCo common stock and the implied volatility of publicly traded TripCo options. For grants made in 2018, 2017 and 2016, the range of volatilities was 40.6% to 49.5%. 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 tables present 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, 2018 681 $ 14.68 Granted 59 $ 19.51 Exercised (21) $ 12.67 Forfeited/Cancelled (149) $ 14.13 Outstanding at December 31, 2018 570 $ 15.40 3.2 $ 1 Exercisable at December 31, 2018 509 $ 14.87 2.8 $ 1 Weighted average remaining Aggregate contractual intrinsic Series B WAEP life value in thousands in years in millions Outstanding at January 1, 2018 1,797 $ 27.83 Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding at December 31, 2018 1,797 $ 27.83 6.0 $ — Exercisable at December 31, 2018 899 $ 27.83 6.0 $ — As of December 31, 2018, the total unrecognized compensation cost related to unvested equity Awards was $5 million. Such amount will be recognized in the Company’s statements of operations over a weighted average period of approximately 1 year. As of December 31, 2018, TripCo reserved 2.4 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, 2018, 2017 and 2016 was $117 thousand, $478 thousand and $1.2 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, 2018, 2017 and 2016 was $9 thousand, $13 thousand and $284 thousand, respectively. As of December 31, 2018, the Company had approximately 20 thousand unvested restricted shares of Series A TripCo common stock held by certain directors, officers and employees of the Company with a weighted average GDFV of $9.42 per share. TripAdvisor Equity Grant Awards On June 21, 2018, TripAdvisor’s stockholders approved the 2018 Stock and Annual Incentive Plan (the “2018 Plan”) primarily for the purpose of providing sufficient reserves of shares of TripAdvisor’s common stock to ensure its ability to continue to provide new hires, employees and management with equity incentives. The number of shares reserved and available for issuance under the 2018 Plan is 6,000,000 plus the number of shares available for issuance (and not subject to outstanding awards) under the Amended and Restated 2011 Stock and Annual Incentive Plan (the “2011 Plan”), as of the effective date of the 2018 Plan. Both plans provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), and other stock-based awards to TripAdvisor’s directors, officers, employees and consultants, although no additional awards will be granted pursuant to the 2011 Plan. Grants were valued using a volatility of 41.9% and the applicable risk free rate for an expected term of 5.5 years for the year ended December 31, 2018, volatility of 42.1% and the applicable risk free rate for an expected term of 6.1 years for the year ended December 31, 2017 and 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. 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, WAEP and aggregate intrinsic value of stock options to purchase TripAdvisor common stock granted under their 2011 Plan and 2018 Plan: Weighted Average Remaining Aggregate Number of Contractual Intrinsic Options WAEP Life Value in thousands in years in millions Outstanding at January 1, 2018 6,853 $ 52.78 Granted 762 $ 43.53 Exercised (1,162) $ 37.26 Cancelled or expired (412) $ 61.46 Outstanding at December 31, 2018 6,041 $ 54.00 6.5 $ 47 Exercisable at December 31, 2018 3,217 $ 61.85 4.7 $ 15 The weighted average GDFV of service based stock options under their 2011 Plan and 2018 Plan was $18.11 for the year ended December 31, 2018. These stock options generally have a term of ten years from the date of grant and typically vest equally over a four year requisite service period. As of December 31, 2018, the total number of shares reserved for future stock-based awards under the 2018 Plan is approximately 13.5 million shares. TripAdvisor related stock-based compensation for the year ended December 31, 2018 was approximately $118 million. As of December 31, 2018, the total unrecognized compensation cost related to unvested TripAdvisor stock options was approximately $37 million and will be recognized over a weighted average period of approximately 2.8 years. Restricted Stock Units and Market-based 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 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 GDFV of the award that is vested at that date. Market-based restricted stock units (“MSUs”) vest upon achievement of specified levels of market conditions. The fair value of the MSUs is estimated at the date of grant using a Monte-Carlo simulation model. The probabilities of the actual number of market-based performance units expected to vest and resultant actual number of shares of common stock expected to be awarded are reflected in the grant date fair values; therefore, the compensation expense for these awards will be recognized assuming the requisite service period is rendered and are not adjusted based on the actual number of awards that ultimately vest. During the year ended December 31, 2018, TripAdvisor granted approximately 3 million of primarily service-based RSUs and market-based MSUs under the 2018 Plan and the 2011 Plan. The RSUs’ fair value was measured based on the quoted price of TripAdvisor common stock at the date of grant. As the MSUs provide for vesting based upon TripAdvisor’s total shareholder return, or “TSR,” performance, the potential outcomes of future stock prices and TSR of TripAdvisor and the Nasdaq Composite Total Return Index, was used to calculate the GDFV of these awards. The weighted average GDFV for RSUs and MSUs granted during 2018 was $43.38 per share. As of December 31, 2018, the total unrecognized compensation cost related to 7 million unvested TripAdvisor RSUs and MSUs outstanding was approximately $225 million which will be recognized over the remaining vesting term of approximately 2.6 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefit Plans | |
Employee Benefit Plans | (10) Employee Benefit Plans TripAdvisor and BuySeasons 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 $13 million, $9 million and $9 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 | |
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 lease costs allocated to the land are recognized as rent expense on a straight-line basis over the term of the lease and are recorded in general and administrative expense in the consolidated statements of operations. The construction financing obligation is considered a long-term finance lease obligation and is recorded to noncurrent “Other liabilities” in the consolidated balance sheets. Excluding TripAdvisor’s corporate headquarters lease, discussed above, TripAdvisor also leases an aggregate of approximately 450,000 square feet at approximately 40 other locations across North America, Europe and Asia Pacific, in cities such as New York, Boston, London, Sydney, Barcelona, Paris and Beijing, primarily for its sales offices, subsidiary headquarters, and international management teams, pursuant to leases with various expiration dates, with the latest expiring in June 2027. See note 2 for information on the potential impact of new lease accounting guidance on TripAdvisor’s property leases which the Company will adopt on January 1, 2019. For the years ended December 31, 2018, 2017 and 2016, TripCo recorded rental expense of $17 million, $19 million and $21 million, respectively. The following table presents TripCo’s estimated future minimum rental payments under operating leases with non-cancelable lease terms, including TripAdvisor’s headquarters lease, that expire after December 31, 2018 (amounts in millions): 2019 $ 25 2020 25 2021 24 2022 24 2023 19 Thereafter 76 $ 193 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 arising out of our operations. These matters may relate to claims involving patent and intellectual property rights (including alleged infringement of third-party intellectual property rights), tax matters (including value-added, excise, transient occupancy and accommodation taxes), regulatory compliance (including competition and consumer matters), 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, 2018 | |
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. For the year ended December 31, 2018, TripCo has identified the following consolidated company as its reportable segment: · TripAdvisor - an online travel research company, empowering consumers to plan and maximize their travel experience. 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, 2018 2017 2016 Adjusted Adjusted Adjusted Revenue OIBDA Revenue OIBDA Revenue OIBDA amounts in millions TripAdvisor $ 1,615 422 1,556 331 1,480 352 Corporate and other — (6) 13 (9) 52 (16) Consolidated TripCo $ 1,615 416 1,569 322 1,532 336 Other Information December 31, 2018 December 31, 2017 Total Capital Total Capital Assets expenditures Assets expenditures amounts in millions TripAdvisor $ 5,187 61 5,387 64 Corporate and other 37 — 97 1 Consolidated TripCo $ 5,224 61 5,484 65 Revenue by Geographic Area During the fourth quarter of 2018, the Company revised the basis in which it measures geographic revenue information to the physical location of the TripAdvisor subsidiary which generates the revenue, which is consistent with the measurement of long-lived physical assets, or property and equipment, net. All prior periods have been reclassified to conform to the current period presentation. These reclassifications had no effect on our consolidated financial statements. December 31, 2018 2017 2016 amounts in millions United States $ 835 815 770 United Kingdom 508 530 564 Other countries 272 224 198 Consolidated TripCo $ 1,615 1,569 1,532 Long-lived Assets by Geographic Area December 31, 2018 2017 amounts in millions United States $ 137 147 Other countries 17 18 Consolidated TripCo $ 154 165 The following table provides a reconciliation of consolidated Adjusted OIBDA to operating income and earnings (loss) before income taxes: Years ended December 31, 2018 2017 2016 amounts in millions Consolidated Adjusted OIBDA $ 416 322 336 Legal settlement (5) — — Stock-based compensation (123) (103) (91) Depreciation and amortization (160) (213) (222) Impairment of intangible assets — (1,798) — Operating income 128 (1,792) 23 Interest expense (26) (25) (25) Realized and unrealized gains (losses) on financial instruments, net (59) 24 53 Gain (loss) on dispositions, net — (18) — Other, net 5 1 (5) Earnings (loss) before income taxes $ 48 (1,810) 46 |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information (Unaudited) | |
Quarterly Financial Information (Unaudited) | (14) Quarterly Financial Information (Unaudited) 1 st 2 nd 3 rd 4 th Quarter Quarter Quarter Quarter amounts in millions, except per share amounts 2018: Revenue $ 378 433 458 346 Operating income (loss) $ 9 34 76 9 Net earnings (loss) $ (35) (22) 57 (9) Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders $ (31) (39) 14 (8) Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ (0.41) (0.52) 0.19 (0.11) Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ (0.41) (0.52) 0.19 (0.11) 1 st 2 nd 3 rd 4 th Quarter Quarter Quarter Quarter amounts in millions, except per share amounts 2017: Revenue $ 378 431 439 321 Operating income (loss) $ (7) 13 16 (1,814) Net earnings (loss) $ (9) (7) (7) (1,558) Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders $ (3) (12) (13) (369) Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ (0.04) (0.16) (0.17) (4.92) Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ (0.04) (0.16) (0.17) (4.92) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents consist of highly liquid investments, including money market funds and marketable debt securities, 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 recognized when the right to consideration becomes unconditional and are recorded net of an allowance for doubtful accounts. Such allowance aggregated $21 million and $16 million at December 31, 2018 and 2017, respectively. Our customer invoices are generally due 30 days from the time of invoicing. 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 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 a cash equivalent, 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 Instruments | 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, 2018 2017 Buildings $ 123 122 Leasehold improvements 41 39 Computer equipment and purchased software 52 46 Furniture, office equipment and other 18 19 Total property and equipment $ 234 226 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. See note 12 for additional information related to TripAdvisor’s building. |
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. In January 2017, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance to simplify the measurement of goodwill impairment. Under the new guidance, an entity no longer performs a hypothetical purchase price allocation to measure goodwill impairment. Instead, a goodwill impairment is measured using the difference between the carrying value and the fair value of the reporting unit. The Company early adopted this guidance during the fourth quarter of 2017. 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 quantitative goodwill impairment test. The accounting guidance also allows entities the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative impairment test. The entity may resume performing the qualitative assessment in any subsequent period. 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 was 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 year and prior year for other purposes. If, based on the qualitative analysis, it is more likely than not that an impairment exists, the Company performs the quantitative impairment test. The quantitative goodwill impairment test 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 analyses, where applicable, are based on management's best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years. There can be no assurance that actual results will approximate these forecasts. 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, other than goodwill, is impaired. The accounting guidance also allows entities the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to the quantitative impairment test. The entity may resume performing the qualitative assessment in any subsequent period. 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 and trademark 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 intangible assets subject to amortization. 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 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 currency exchange losses of $6 million, gains of $1 million and losses of $4 million for the years ended December 31, 2018, 2017 and 2016, respectively, in other, net on our consolidated statements of operations. These amounts include gains and losses, realized and unrealized, on foreign currency forward exchange contracts. |
Revenue Recognition | Revenue Recognition In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers, or ASC 606, Revenue from Contracts with Customers (“ASC 606”), which replaced numerous requirements in GAAP, and provides companies with a single model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This guidance also requires additional disclosures 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 addition, the FASB has also issued several amendments to the standard, which clarifies certain aspects of the guidance, including principal versus agent considerations and identifying performance obligations. In the first quarter of 2018, the Company adopted ASC 606 under the modified retrospective method for all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the previous accounting policies under the historical revenue guidance, or ASC 605, Revenue Recognition . As a result of the adoption of ASC 606, certain revenue streams, such as hotel instant booking revenue, recorded under the consumption model, which was previously recorded upon completion of the traveler stay, is now recognized upon booking. The amount of the recognized transaction price for the commission is recorded as revenue, net of the impact of estimated cancellations. TripAdvisor also recorded an adjustment to capitalize certain costs to obtain contracts for existing arrangements as of the implementation date. TripAdvisor expects the adoption of this new revenue standard will not have a material impact, either on an annual or quarterly basis, to its consolidated financial statements on an ongoing basis. Its systems and internal controls were not significantly impacted as a result of the accounting changes and TripAdvisor has made the necessary changes to its accounting policies and internal processes to support the new revenue recognition standard, including the related disclosures. TripAdvisor recognized the cumulative effect of initial application of ASC 606 as an adjustment to the opening balance of retained earnings. TripAdvisor recorded a net increase in opening retained earnings of $4 million as of January 1, 2018 due to the cumulative impact of adoption of the new revenue guidance, resulting in a $1 million increase in TripCo’s opening retained earnings and $3 million increase in TripCo’s noncontrolling interest in equity of subsidiaries as of January 1, 2018. All other accounts were not materially impacted. Revenue Recognition under ASC 606 TripAdvisor generates all of its revenue from contracts with customers. It recognizes revenue when it satisfies a performance obligation by transferring control of the promised services to a customer in an amount that reflects the consideration that it expects to receive in exchange for those services. When TripAdvisor acts as an agent in the transaction under ASC 606, it recognizes revenue for only its commission on the arrangement. TripAdvisor determines revenue recognition through the following steps: (1) Identification of the contract, or contracts, with a customer (2) Identification of the performance obligations in the contract (3) Determination of the transaction price (4) Allocation of the transaction price to the performance obligations in the contract (5) Recognition of revenue when, or as, TripAdvisor satisfies a performance obligation At contract inception, TripAdvisor assesses the services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a service (or bundle of services) that is distinct. To identify the performance obligations, TripAdvisor considers all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. TripAdvisor has provided qualitative information about its performance obligations for its principal revenue streams discussed below. There was no significant revenue recognized in the year ended December 31, 2018 related to performance obligations satisfied in prior periods. TripAdvisor has applied a practical expedient and does not disclose the value of unsatisfied performance obligations that have an original expected duration of less than one year, and TripAdvisor does not have any material unsatisfied performance obligations over one year. The value related to TripAdvisor’s remaining or partially satisfied performance obligations relates to subscription services that are satisfied over time or services that are recognized at a point in time, but not yet achieved. The timing of services, invoicing and payments are discussed in more detail below and do not include a significant financing component. TripAdvisor’s customer invoices are generally due 30 days from the time of invoicing. TripAdvisor recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. Although the substantial majority of its contract costs have an amortization period of less than one year, TripAdvisor has determined contract costs arising from certain sales incentives have an amortization period in excess of one year given the high likelihood of contract renewal. Sales incentives are not paid upon renewal of these contracts and therefore are not commensurate with the initial sales incentive costs. Total capitalized costs to obtain a contract were approximately $2 million as of December 31, 2018. These contract costs are amortized on a straight-line basis over the estimated customer life, which is based on historical customer retention rates. Amortization expense recorded to selling, general and administrative expense during year ended December 31, 2018 was not material. TripAdvisor assesses such assets for impairment when events or circumstances indicate that the carrying amount may not be recoverable. The recognition of revenue may require the application of judgment related to the determination of the performance obligations, the timing of when the performance obligations are satisfied and other areas. The determination of TripAdvisor’s performance obligations does not require significant judgment given that it generally does not provide multiple services to a customer in a transaction, and the point in which control is transferred to the customer is readily determinable. In instances where TripAdvisor recognizes revenue over time, it generally has either a subscription service that is recognized over time on a straight-line basis using the time-elapsed output method, or based on other output measures that provide a faithful depiction of the transfer of TripAdvisor’s services. When an estimate for cancellations is included in the transaction price, the estimate is based on historical cancellation rates. There have been no significant adjustments to TripAdvisor’s cancellation estimates and the cancellation estimates are not material. Taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue–producing transaction, that are collected by TripAdvisor from a customer, are reported on a net basis, or in other words, excluded from revenue on its consolidated financial statements, which is consistent with prior periods. The application of TripAdvisor’s revenue recognition policies and a description of the principal activities from which it generates revenue, are presented below. Hotels TripAdvisor-branded Click-based Advertising and Transaction Revenue . TripAdvisor’s largest source of Hotel revenue is generated from click-based advertising on TripAdvisor-branded websites, which is primarily comprised of contextually-relevant booking links to its travel partners’ sites. TripAdvisor’s click-based travel partners are predominantly online travel agencies, or “OTAs”, and direct suppliers in the hotel category. Click-based advertising is generally priced on a cost-per-click, or “CPC,” basis, with payments from travel partners determined by the number of travelers who click on a link multiplied by the CPC rate for each specific click. CPC rates that travel partners pay are determined in a dynamic, competitive auction process, also known as TripAdvisor’s metasearch auction. TripAdvisor records click-based advertising revenue as the click occurs and traveler leads are sent to the travel partner websites as the performance obligation is fulfilled at that time. Click-based revenue is generally billed to travel partners on a monthly basis consistent with the timing of the service. Transaction revenue is generated from TripAdvisor’s hotel instant booking feature, which enables hotel shoppers to book directly with a travel partner, with the latter serving as the merchant of record for the transaction, without leaving TripAdvisor’s website. TripAdvisor earns a commission from its travel partners for each consumer that completes a hotel reservation on TripAdvisor’s website; based on a pre-determined commission rate. TripAdvisor’s hotel instant booking revenue includes (i) arrangements where commissions are billable on all instant booking hotel reservations; and (ii) arrangements where the commission is billable only upon the completion of the traveler’s stay resulting from the reservation. The travel partner provides the service to the traveler and TripAdvisor acts as an agent under ASC 606. TripAdvisor’s performance obligation in both arrangements is complete at the time of the booking and the commission earned is recognized upon booking, as TripAdvisor has no post-booking service obligations. The amount of revenue recognized for commissions which are billable contingent upon a traveler stay requires an estimate of the impact of cancellations using historical cancellation rates. Contract assets are recognized at the time of booking for commissions that are billable at the time of stay. TripAdvisor-branded Display-based Advertising and Subscription Revenue . Travel partners can promote their brands in a contextually-relevant manner through a variety of display-based advertising placements on TripAdvisor websites. TripAdvisor’s display-based advertising clients are predominantly direct suppliers of hotels, airlines and cruises, as well as destination marketing organizations. TripAdvisor also sells display-based advertising to OTAs and other travel related businesses, as well as advertisers from non-travel categories. Display-based advertising is sold predominantly on a cost per thousand impressions basis. The performance obligation in TripAdvisor’s display based advertising business is to display a number of advertising impressions on TripAdvisor’s websites and TripAdvisor recognizes revenue for impressions as they are delivered. Services are generally billed monthly. TripAdvisor has applied the practical expedient to measure progress toward completion, as it has the right to invoice the customer in an amount that directly corresponds with the value to the customer of TripAdvisor’s performance to date, which is measured based on impressions delivered. In addition, TripAdvisor offers subscription-based advertising to hoteliers, owners of B&Bs and other specialty lodging properties. TripAdvisor’s performance obligation is generally to enable subscribers to advertise their businesses on TripAdvisor’s website, as well as manage and promote their website URL, email address, phone number, special offers and other information related to their business. Subscription advertising services are predominantly sold for a flat fee, for a contracted period of time of one year or less and revenue is recognized on a straight-line basis over the period of the subscription service as efforts are expended evenly throughout the contract period. Subscription advertising services are generally billed in advance of service. When prepayments are received, TripAdvisor recognizes deferred revenue for the amount of prepayment in excess of revenue recognized until the performance obligation is satisfied. Other Hotel Revenue. TripAdvisor’s other hotel revenue primarily includes revenue from non-TripAdvisor-branded websites, such as www.bookingbuddy.com, www.cruisecritic.com, and www.onetime.com and www.smartertravel.com, which primarily includes click-based advertising and display-based advertising revenue. The performance obligations, timing of customer payments for these brands and methods of recognizing revenue are generally consistent with click-based advertising or display-based advertising revenue, as described above. Non-Hotel TripAdvisor provides information and services for consumers to research, book and experience activities and attractions in popular travel destinations both through Viator, its dedicated Experiences business, and on its TripAdvisor website and applications. TripAdvisor also powers travel activities and experiences booking capabilities to consumers for affiliate partners, including some of the world’s top airlines, hotel chains and online and offline travel agencies. TripAdvisor works with local tour or travel activities/experiences operators (“the supplier”) to provide consumers with access to book tours, activities and experiences (“the activity”) in popular destinations worldwide. TripAdvisor generates commissions for each booking transaction facilitated through its online reservation system. TripAdvisor provides post-booking service to the consumer until the time of the activity, which is the completion of the performance obligation. Revenue is recognized at the time that the activity occurs. TripAdvisor does not control the activity before the supplier provides the activity to its consumers and therefore acts as agent for nearly all of these transactions under ASC 606. TripAdvisor generally collects payment from the consumer at the time of booking that includes both TripAdvisor’s commission revenue and the amount due to the supplier. TripAdvisor’s commission revenue is recorded as deferred revenue until revenue is recognized, and the amount due to the supplier is recorded to deferred merchant payables on the consolidated balance sheet, until payment is made to the supplier after the completion of the activity. To a lesser extent, TripAdvisor earns commissions from third-party merchant partners, who display and promote TripAdvisor’s supplier activities on their websites to generate bookings. In these transactions, where TripAdvisor is not the merchant of record, TripAdvisor generally invoices and receives commissions directly from the third-party merchant partners. TripAdvisor’s performance obligation is to allow the third-party merchant partners to display and promote its supplier activities on their website and TripAdvisor earns a commission when consumers book and complete an activity. TripAdvisor does not control the service and act as an agent for these transactions under ASC 606. TripAdvisor’s performance obligation is complete and revenue is recognized at the time of the booking, as TripAdvisor has no post-booking obligations. TripAdvisor recognizes this revenue net of an estimate of the impact of cancellations using historical cancellation rates. Contract assets are recognized for commissions that are billable contingent upon completion of the activity. TripAdvisor also provides information and services for consumers to research and book restaurants in popular travel destinations through its dedicated restaurant reservations business, TheFork, and on TripAdvisor’s website and applications. TheFork is an online restaurant booking platform operating on a number of websites (including www.lafourchette.com, www.eltenedor.com and www.iens.nl), with a network of restaurant partners located primarily across Europe and Australia. TripAdvisor’s bookable restaurants are available on www.thefork.com and on TripAdvisor-branded websites and mobile apps. TripAdvisor primarily generates transaction fees (or per seated diner fees) that are paid by restaurants for diners seated primarily from bookings through TheFork’s online reservation system. The transaction fee is recognized as revenue after the reservation is fulfilled, or as diners are seated by restaurant customers. Revenue is billed monthly when the transaction fees are payable, which is at the time the diner is seated. To a lesser extent, TripAdvisor also generates subscription fees for subscription-based advertising to restaurants, access to certain online reservation management services and marketing analytic tools provided by TheFork and TripAdvisor. As the performance obligation is to provide restaurants with access to these services over the subscription period, subscription fee revenue is recognized over the period of the subscription service on a straight-line basis as efforts are expended evenly throughout the contract period. Subscription fees are generally billable in advance of service. When prepayments are received, TripAdvisor recognizes deferred revenue for the amount of prepayment in excess of revenue recognized until the performance obligation is satisfied. TripAdvisor’s Rentals businesses generate revenue primarily by offering individual property owners and managers the ability to list their properties on TripAdvisor’s websites and mobile apps thereby connecting homeowners with travelers through a free-to-list, commission-based option or, to a lesser extent, by an annual subscription-based fee structure. These properties are listed on www.flipkey.com, www.holidaylettings.co.uk, www.housetrip.com, www.niumba.com, and www.vacationhomerentals.com, and on TripAdvisor-branded websites and mobile apps. TripAdvisor earns commissions associated with rental transactions through its free-to-list model from both the traveler and the property owner or manager. TripAdvisor provides post-booking service to the travelers, property owners and managers until the time the rental commences, which is the time the performance obligation is completed. Revenue from transaction fees is recognized at the time that the rental commences. TripAdvisor acts as an agent under ASC 606, in the transactions, as TripAdvisor does not control any properties before the property owner provides the accommodation to the traveler and does not have inventory risk. TripAdvisor generally collects payment from the traveler at the time of booking that includes TripAdvisor’s commissions, which is recorded as deferred revenue until revenue is recognized, and the amount due to the property owner, which is recorded in deferred merchant payables on the consolidated balance sheet, until payment is made to the property owner after the completion of the rental. Payments for term-based subscription fees related to online advertising services for the listing of rental properties, are generally due in advance. As the performance obligation is the listing service provided to the property owner or manager over the subscription period, revenue is recognized over the period of the subscription service on a straight-line basis as efforts are expended evenly throughout the contract period. TripAdvisor recognizes deferred revenue for the amount of prepayment in excess of revenue recognized until the performance obligation is satisfied. Practical Expedients and Exemptions TripAdvisor expenses costs to obtain a contract as incurred, such as sales incentives, when the amortization period would have been one year or less. TripAdvisor does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed. Impact of Adoption of ASC 606 The impact of the new guidance was not meaningful as of and for the year ended December 31, 2018 for the consolidated statement of operations, consolidated balance sheet and consolidated statement of cash flows, respectively. Disaggregation of Revenue TripAdvisor disaggregates revenue from contracts with customers into major products/revenue sources. TripAdvisor has determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. A reconciliation of disaggregated revenue to total hotel and non-hotel revenue is also included below. Year ended December 31, 2018 Major products/revenue sources: (in millions) TripAdvisor-branded click-based advertising and transaction revenue $ TripAdvisor-branded display-based advertising and subscription revenue Other hotel revenue Total Hotel Revenue (1) 1,157 Non-Hotel Revenue (1) Total Revenue $ 1,615 (1) TripAdvisor’s revenue is recognized primarily at a point in time for both Hotel and Non-Hotel revenue. Contract Balances The following table provides information about the opening and closing balances of accounts receivables and contract assets from contracts with customers (in millions): December 31, December 31, 2018 2017 Accounts receivable $ 205 Contract assets 7 — Total $ Accounts receivable are recognized when the right to consideration becomes unconditional. Contract assets are rights to consideration in exchange for services that TripAdvisor has transferred to a customer when that right is conditional on something other than the passage of time, such as commission payments that are contingent upon the completion of the service by the principal in the transaction. Contract liabilities generally include payments received in advance of performance under the contract, and are realized as revenue as the performance obligation to the customer is satisfied, which TripAdvisor presents as deferred revenue on its consolidated balance sheets. As of January 1, 2018, TripAdvisor had $59 million recorded as deferred revenue on its consolidated balance sheet, of which $57 million was recognized in revenue and $2 million was refunded due to cancellations by travelers during the year ended December 31, 2018. The difference between the opening and closing balances of TripAdvisor’s deferred revenue primarily results from the timing differences between when TripAdvisor receives customer payments and the time in which TripAdvisor satisfies its performance obligations. The difference between the opening and closing balances of TripAdvisor’s contract assets primarily results from the timing difference between when TripAdvisor satisfies its performance obligations and the time when the principal completes the service in the transaction. There were no significant changes in contract assets or deferred revenue during the year ended December 31, 2018 related to business combinations, impairments, cumulative catch-ups or other material adjustments. |
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 credit card and other booking transaction payment fees, data center costs, costs associated with prepaid tour tickets, ad serving fees, flight search fees and other transactions. 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 personnel engaged in 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 non-income taxes, such as sales, use and other non-income related taxes. |
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, promotions 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. TripAdvisor incurs advertising expense consisting of traffic generation costs from SEM and other online traffic costs, affiliate program commissions, display advertising, social media, other online and offline (primarily television) advertising expense, and promotions and public relations to promote its brands. Costs associated with communicating the advertisements are expensed in the period in which the advertisement takes place. Production costs associated with advertisements are expensed in the period in which the advertisement first takes place. |
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 equity classified Award (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 a liability classified Award 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 Qurate Retail 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 and TripAdvisor equity. Included in the accompanying consolidated statements of operations are the following amounts of stock-based compensation for the years ended December 31, 2018, 2017 and 2016 (amounts in millions): December 31, 2018 2017 2016 Operating expense $ 52 40 40 Selling, general and administrative 71 63 51 $ 123 103 91 During the years ended December 31, 2018, 2017 and 2016, TripAdvisor capitalized $13 million, $13 million and $12 million, respectively, of stock-based compensation expense as internal-use software and website development costs. In May 2017, the FASB issued new accounting guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, an entity will not apply modification accounting to a share-based payment award if the award’s fair value (or calculated value or intrinsic value, if those measurement methods are used), the award’s vesting conditions, and the award’s classification as an equity or liability instrument are the same immediately before and after the change. The guidance also states that an entity is not required to estimate the value of the award immediately before and after the change if the change does not affect any of the inputs to the model used to value the award. The Company adopted this guidance prospectively in the first quarter of 2018. The Company believes the new guidance will likely result in fewer changes to the terms of an award being accounted for as modifications. |
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 income 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) benefit 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. 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 Company adopted this new guidance in the first quarter of 2018 on a modified retrospective basis. Accordingly, the Company recognized the cumulative effect of initial application of this new guidance as an adjustment to the opening balance of retained earnings, which was not material to its consolidated financial statements. |
Deferred Merchant Payables | Deferred Merchant Payables In TripAdvisor’s Rentals free-to-list model and its Experiences businesses, TripAdvisor receives cash from travelers at the time of booking and it records these amounts, net of commissions, on its consolidated balance sheets as deferred merchant payables. TripAdvisor pays the suppliers, or the vacation rental owners and tour providers, respectively, after the travelers’ use. Therefore, it receives cash from the traveler prior to paying the suppliers and this operating cycle represents a working capital source or use of cash to TripAdvisor. TripAdvisor’s deferred merchant payables balance was $164 million and $156 million for the years ended December 31, 2018 and 2017, respectively. |
Certain Risks and Concentrations | Certain Risks and Concentrations The TripAdvisor business is subject to certain risks and concentrations, including concentrations related to dependence on relationships with its customers. For the years ended December 31, 2018, 2017 and 2016, TripAdvisor’s two most significant travel partners, Expedia (and its subsidiaries) and Booking Holdings Inc. (and its subsidiaries), each accounted for more than 10% of TripAdvisor’s consolidated revenue and combined accounted for approximately 37%, 43% and 46%, respectively, of its total revenue. |
Contingent Liabilities | Contingent Liabilities Periodically, the Company reviews 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. The Company provides 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 consolidated financial statements. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. Accruals are based 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 (Loss) per Common 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, 2018, 2017 and 2016 are 2 million, 2 million and 2 million potential common shares, respectively, because their inclusion would be antidilutive. Years ended December 31, 2018 2017 2016 number of shares in millions Basic EPS 74 75 75 Potentially dilutive shares — — — Diluted EPS 74 75 75 |
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 and (ii) accounting for income taxes to be its most significant estimates. |
New Accounting Pronouncements Not yet Adopted | New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued new guidance related to accounting for leases. The new standard amends the existing standards for lease accounting and includes the requirement for lessee recognition of right-of-use (ROU) assets and lease liabilities on the balance sheet for all leases with a term longer than 12 months, which will be initially measured at the present value of the future lease payments over the lease term. Under the new guidance, leases will be classified as either finance or operating leases, with classification affecting the pattern and presentation of expenses and cash flows on the consolidated financial statements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. In July 2018, the FASB issued additional guidance on the accounting for leases which provides companies with an additional transition method, which allows companies to recognize a cumulative-effect adjustment to the opening balance of retained earnings as of the date of adoption. Under this transition method, previously presented years’ financial positions and financial results would not be adjusted. The Company will adopt the new standard on January 1, 2019 and use the effective date as the date of initial application based on the modified retrospective approach, without adjusting the comparative periods presented. Consequentially, the Company will not update its consolidated financial statements or provide any disclosures required under the new standard for dates and periods prior to January 1, 2019. The new guidance provides a number of optional practical expedients and exemptions available upon adoption and for ongoing accounting. The Company plans to elect the following practical expedients: 1) the “practical expedients package of three”, which allows us at transition to continue to maintain prior accounting conclusions under the existing guidance for leases as of the adoption date, such as whether any expired or existing contracts contain leases, the classification of leases, and the accounting treatment for initial direct costs; thereby not being required to reassess these positions upon adoption of the new standard; 2) the “short-term lease recognition exemption”, which allows us to forego recognition of ROU assets and lease liabilities on our consolidated balance sheet for leases with a lease term of twelve months or less and which also do not include an option to renew the lease term that we are reasonably certain to exercise; 3) elect by asset class as an accounting policy, to combine lease and non-lease components as a single component and subsequently account for the combined single component as the lease component; and 4) apply the portfolio approach to similar types of leases where the Company does not reasonably expect the outcome to differ materially from applying the new guidance to individual leases. In anticipation of adoption, TripAdvisor has updated its accounting policies to reflect the new accounting rules within the new guidance and has completed the implementation of its lease accounting software to support the accounting process, financial reporting and the new financial disclosure requirements. TripAdvisor expects to implement certain new internal controls surrounding its lease accounting process upon the adoption of the new guidance. The Company currently expects the primary effects of adoption of this new guidance to be as follows: · Office space leases. TripAdvisor’s office space leases, except for its corporate headquarters lease, are operating leases which will be recognized as ROU assets and corresponding lease liabilities on the consolidated balance sheet under the new guidance. TripAdvisor expects to recognize ROU assets ranging from $70 million to $80 million and lease liabilities of approximately $85 million to $95 million based on the present value of the remaining rental payments for office space leases as of January 1, 2019. The difference in the ROU asset and the lease liability is the result of balances already recognized related to deferred and prepaid rent balances. In addition, TripAdvisor does not expect its short-term lease costs, variable lease costs, primarily from rental payments that are adjusted periodically for inflation, and its initial direct costs to be material to the consolidated financial statements. · Corporate headquarters lease . TripAdvisor is deemed the owner for accounting purposes of its corporate headquarters building under existing GAAP. See note 12 for additional information on the accounting under existing GAAP for TripAdvisor’s corporate headquarters lease. Upon adoption of the new guidance, TripAdvisor expects to derecognize amounts in property and equipment, net and other long-term liabilities on the consolidated balance sheet as of December 31, 2018 of approximately $62 million and $70 million, respectively, with the difference recorded to the opening balance of retained earnings as of the adoption date. TripAdvisor expects its corporate headquarters lease to be classified and accounted for as a finance lease under the new guidance as of January 1, 2019. Accordingly, TripAdvisor expects to then recognize an ROU asset ranging from $105 million to $120 million and a lease liability of approximately $85 million to $95 million based on the initial measurement of the present value of the remaining lease payments over the remaining lease term. The difference between the ROU asset and lease liability relates to a net prepaid rent balance. The Company does not anticipate the income tax impact to be material to its consolidated financial statements from the adoption of this guidance. It also does not expect the adoption of this new guidance will have a material impact, either on an annual or quarterly basis, to the consolidated statement of operations and consolidated statement of cash flows on a go-forward basis. The Company expects to expand financial disclosure concerning leasing activity, including qualitative and quantitative disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of property and equipment | Property and equipment consists of the following (amounts in millions): December 31, 2018 2017 Buildings $ 123 122 Leasehold improvements 41 39 Computer equipment and purchased software 52 46 Furniture, office equipment and other 18 19 Total property and equipment $ 234 226 |
Schedule of disaggregation of revenue | Year ended December 31, 2018 Major products/revenue sources: (in millions) TripAdvisor-branded click-based advertising and transaction revenue $ TripAdvisor-branded display-based advertising and subscription revenue Other hotel revenue Total Hotel Revenue (1) 1,157 Non-Hotel Revenue (1) Total Revenue $ 1,615 (1) TripAdvisor’s revenue is recognized primarily at a point in time for both Hotel and Non-Hotel revenue. |
Schedule of contract balances | The following table provides information about the opening and closing balances of accounts receivables and contract assets from contracts with customers (in millions): December 31, December 31, 2018 2017 Accounts receivable $ 205 Contract assets 7 — Total $ |
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, 2018, 2017 and 2016 (amounts in millions): December 31, 2018 2017 2016 Operating expense $ 52 40 40 Selling, general and administrative 71 63 51 $ 123 103 91 |
Reconciliation of Basic and Diluted Weighted Average Shares | Years ended December 31, 2018 2017 2016 number of shares in millions Basic EPS 74 75 75 Potentially dilutive shares — — — Diluted EPS 74 75 75 |
Supplemental Disclosures to C_2
Supplemental Disclosures to Consolidated Statements of Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Supplemental Disclosures to Consolidated Statements of Cash Flow | |
Schedule of supplemental cash flow | Years ended December 31, 2018 2017 2016 amounts in millions Acquisitions and other investments, net of cash acquired: Intangibles not subject to amortization $ 12 — 17 Intangibles subject to amortization 14 — 25 Fair value of other assets acquired — — 9 Net liabilities assumed — — (8) Deferred tax assets (liabilities) (2) — — Acquisitions and other investments, net of cash acquired $ 24 — 43 Cash paid for interest $ 8 13 10 Cash paid for income taxes $ 53 62 30 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions and Dispositions | |
Schedule of purchase price allocations | The following table presents the purchase price allocations recorded on our consolidated balance sheet for the 2018 and 2016 acquisitions (in millions): Years ended December 31, 2018 2017 2016 amounts in millions Goodwill $ 11 — 17 Intangible assets 14 — 25 Deferred tax liabilities, net (2) — — Net liabilities assumed — — (8) Total purchase price consideration $ 23 — 34 |
Assets and Liabilities Measur_2
Assets and Liabilities Measured at Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Assets and Liabilities Measured at Fair Value | |
Schedule of assets and liabilities measured at fair value | December 31, 2018 December 31, 2017 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 $ 145 140 5 32 23 9 Marketable securities $ 15 — 15 35 — 35 Variable postpaid forward $ 20 — 20 — |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Other Intangible Assets | |
Schedule of changes in the carrying amount of goodwill | Changes in the carrying amount of goodwill are as follows (amounts in millions): Corporate TripAdvisor and Other Total Balance at January 1, 2017 $ 3,694 — 3,694 Impairment (1) (1,271) — (1,271) Other (2) 22 — 22 Balance at December 31, 2017 2,445 — 2,445 Acquisition (3) 11 — 11 Other (2) (13) — (13) Balance at December 31, 2018 $ 2,443 — 2,443 (1) See discussion of impairment below. (2) Other changes are primarily due to foreign currency translation on goodwill. (3) Additions to goodwill relate to TripAdvisor’s acquisitions (see note 4). |
Schedule of intangible assets subject to amortization | December 31, 2018 December 31, 2017 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 3 885 (761) 124 908 (735) 173 Other 4 588 (401) 187 542 (333) 209 Total 1,473 (1,162) 311 1,450 (1,068) 382 |
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, 2018, assuming no subsequent impairment of the underlying assets, is as follows (amounts in millions): 2019 $ 91 2020 $ 86 2021 $ 70 2022 $ 28 2023 $ 27 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of outstanding debt | December 31, December 31, 2018 2017 amounts in millions TripAdvisor Credit Facilities $ — 230 TripAdvisor Chinese credit facilities — 7 TripCo margin loans 220 210 TripCo variable postpaid forward 267 264 Total consolidated TripCo debt $ 487 711 Less debt classified as current (220) (7) Total long-term debt $ 267 704 |
TripAdvisor | |
Value of shares pledged as collateral | Number of Shares Pledged as Collateral as of Share value as of Pledged Collateral December 31, 2018 December 31, 2018 amounts in millions Common Stock 18.2 $ 982 Class B Common Stock 12.8 $ 690 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of income tax benefit (expense) | Years ended December 31, 2018 2017 2016 amounts in millions Current: Federal $ (39) (92) (33) State and local (12) (2) (3) Foreign (14) (6) (15) $ (65) (100) (51) Deferred: Federal $ 14 288 30 State and local (5) 30 6 Foreign (1) 11 16 8 329 52 Income tax benefit (expense) $ (57) 229 1 |
Schedule of income before income taxes | Years ended December 31, 2018 2017 2016 amounts in millions Domestic $ 3 (1,720) 24 Foreign 45 (90) 22 Total $ 48 (1,810) 46 |
Schedule of income tax benefit (expense) reconciliation to the effective tax rate | Years ended December 31, 2018 2017 2016 amounts in millions Computed expected tax benefits (expense) $ (10) 634 (16) State and local taxes, net of federal income taxes (14) 17 (3) Foreign taxes, net of foreign tax credits 11 2 28 Transition tax — (67) — Change in tax rate due to Tax Act — 139 — Basis difference in consolidated subsidiary (17) (8) 6 Change in valuation allowance (4) (27) (9) Change in unrecognized tax benefits (12) (11) (11) Federal tax credits 9 8 10 Stock-based compensation (8) (12) (2) Impairment of nondeductible goodwill — (445) — Other (12) (1) (2) Income tax (expense) benefit $ (57) 229 1 |
Schedule of deferred income tax assets and liabilities | December 31, 2018 2017 amounts in millions Deferred tax assets: Loss carryforwards $ 77 99 Stock-based compensation 48 40 Lease financing obligation 22 22 Other 78 60 Total deferred tax assets 225 221 Less: valuation allowance (60) (64) Net deferred tax assets 165 157 Deferred tax liabilities: Intangible assets (387) (392) Investments (41) (38) Other (62) (59) Total deferred tax liabilities (490) (489) Net deferred tax liability $ (325) (332) |
Schedule of reconciliation of unrecognized tax benefits | A reconciliation of unrecognized tax benefits is as follows (amounts in millions): Years ended December 31, 2018 2017 2016 Balance at beginning of year $ 123 105 89 Additions based on tax positions related to the current year 11 17 16 Additions for tax positions of prior years 2 1 1 Reductions for lapse of statute of limitations — — (1) Balance at end of year $ 136 123 105 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 681 $ 14.68 Granted 59 $ 19.51 Exercised (21) $ 12.67 Forfeited/Cancelled (149) $ 14.13 Outstanding at December 31, 2018 570 $ 15.40 3.2 $ 1 Exercisable at December 31, 2018 509 $ 14.87 2.8 $ 1 |
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, 2018 1,797 $ 27.83 Granted — $ — Exercised — $ — Forfeited/Cancelled — $ — Outstanding at December 31, 2018 1,797 $ 27.83 6.0 $ — Exercisable at December 31, 2018 899 $ 27.83 6.0 $ — |
TripAdvisor | |
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, 2018 6,853 $ 52.78 Granted 762 $ 43.53 Exercised (1,162) $ 37.26 Cancelled or expired (412) $ 61.46 Outstanding at December 31, 2018 6,041 $ 54.00 6.5 $ 47 Exercisable at December 31, 2018 3,217 $ 61.85 4.7 $ 15 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 TripAdvisor’s headquarters lease, that expire after December 31, 2018 (amounts in millions): 2019 $ 25 2020 25 2021 24 2022 24 2023 19 Thereafter 76 $ 193 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Schedule of performance measures | Years ended December 31, 2018 2017 2016 Adjusted Adjusted Adjusted Revenue OIBDA Revenue OIBDA Revenue OIBDA amounts in millions TripAdvisor $ 1,615 422 1,556 331 1,480 352 Corporate and other — (6) 13 (9) 52 (16) Consolidated TripCo $ 1,615 416 1,569 322 1,532 336 |
Schedule of other information | December 31, 2018 December 31, 2017 Total Capital Total Capital Assets expenditures Assets expenditures amounts in millions TripAdvisor $ 5,187 61 5,387 64 Corporate and other 37 — 97 1 Consolidated TripCo $ 5,224 61 5,484 65 |
Schedule of revenue by geographic area | December 31, 2018 2017 2016 amounts in millions United States $ 835 815 770 United Kingdom 508 530 564 Other countries 272 224 198 Consolidated TripCo $ 1,615 1,569 1,532 |
Schedule of long-lived assets by geographic area | December 31, 2018 2017 amounts in millions United States $ 137 147 Other countries 17 18 Consolidated TripCo $ 154 165 |
Reconciliation of consolidated Adjusted OIBDA to operating income and earnings (loss) before income taxes | Years ended December 31, 2018 2017 2016 amounts in millions Consolidated Adjusted OIBDA $ 416 322 336 Legal settlement (5) — — Stock-based compensation (123) (103) (91) Depreciation and amortization (160) (213) (222) Impairment of intangible assets — (1,798) — Operating income 128 (1,792) 23 Interest expense (26) (25) (25) Realized and unrealized gains (losses) on financial instruments, net (59) 24 53 Gain (loss) on dispositions, net — (18) — Other, net 5 1 (5) Earnings (loss) before income taxes $ 48 (1,810) 46 |
Quarterly Financial Informati_2
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 2018: Revenue $ 378 433 458 346 Operating income (loss) $ 9 34 76 9 Net earnings (loss) $ (35) (22) 57 (9) Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders $ (31) (39) 14 (8) Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ (0.41) (0.52) 0.19 (0.11) Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ (0.41) (0.52) 0.19 (0.11) 1 st 2 nd 3 rd 4 th Quarter Quarter Quarter Quarter amounts in millions, except per share amounts 2017: Revenue $ 378 431 439 321 Operating income (loss) $ (7) 13 16 (1,814) Net earnings (loss) $ (9) (7) (7) (1,558) Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders $ (3) (12) (13) (369) Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ (0.04) (0.16) (0.17) (4.92) Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share $ (0.04) (0.16) (0.17) (4.92) |
Basis of Presentation - Descrip
Basis of Presentation - Description of Business (Details) | Dec. 31, 2018item |
Basis of Presentation | |
Number of markets have localized versions of the website | 48 |
Number of languages for the website | 28 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for doubtful accounts | $ 21 | $ 16 | |
Customer invoices due | 30 days | ||
Maximum invested cash maturity period | 18 months | ||
Maximum security maturity period | 3 years | ||
Total property and equipment | $ 234 | 226 | |
Foreign currency exchange gain (loss) | (6) | 1 | $ (4) |
Buildings | |||
Total property and equipment | 123 | 122 | |
Leasehold improvements | |||
Total property and equipment | 41 | 39 | |
Computer equipment and purchased software | |||
Total property and equipment | 52 | 46 | |
Furniture, office equipment and other | |||
Total property and equipment | $ 18 | $ 19 | |
Furniture, office equipment and other | Minimum | |||
Property estimated useful life | 3 years | ||
Furniture, office equipment and other | Maximum | |||
Property estimated useful life | 5 years | ||
TripAdvisor | |||
Customer invoices due | 30 days | ||
TripAdvisor | Buildings | |||
Property estimated useful life | 40 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Impact of Adoption of ASC 606 (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Retained earnings | $ 133 | $ 196 | |
Noncontrolling interests in equity of subsidiaries | $ 3,400 | $ 3,329 | |
Customer invoices due | 30 days | ||
Impact of Accounting ASC 606 | ASU 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Retained earnings | $ 1 | ||
Noncontrolling interests in equity of subsidiaries | 3 | ||
TripAdvisor | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Capitalized contract costs | $ 2 | ||
Customer invoices due | 30 days | ||
Maximum subscription advertising service contact period | 1 year | ||
Practical expedient, incremental costs | true | ||
Practical expedient, remaining performance obligation | true | ||
TripAdvisor | Impact of Accounting ASC 606 | ASU 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Retained earnings | $ 4 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - TripAdvisor $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 1,615 |
Hotel | |
Disaggregation of Revenue [Line Items] | |
Revenue | 1,157 |
TripAdvisor-branded click-based Advertising and Transaction Revenue | |
Disaggregation of Revenue [Line Items] | |
Revenue | 722 |
TripAdvisor-branded display-based Advertising and Subscription Revenue | |
Disaggregation of Revenue [Line Items] | |
Revenue | 308 |
Other Hotel Revenue | |
Disaggregation of Revenue [Line Items] | |
Revenue | 127 |
Non-Hotel | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 458 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Accounts receivable | $ 205 | $ 230 | |
Contract assets | 7 | ||
Total | 212 | $ 230 | |
TripAdvisor | |||
Deferred revenue | $ 59 | ||
Contract with customer revenue recognized | 57 | ||
Reversal of revenue recognized due to cancellation by travelers | $ 2 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Stock-Based Compensation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | $ 123 | $ 103 | $ 91 |
Operating expense | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | 52 | 40 | 40 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | 71 | 63 | 51 |
TripAdvisor | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation | 118 | ||
Capitalized Stock Based Compensation | $ 13 | $ 13 | $ 12 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Deferred Merchant Payables, Certain Risks and Concentrations, Earnings (Loss) per Common Share (Details) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)itemshares | Dec. 31, 2017USD ($)itemshares | Dec. 31, 2016itemshares | |
Earnings (Loss) Per Common Share (EPS) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2 | 2 | 2 |
Basic EPS (In Shares) | 74 | 75 | 75 |
Diluted EPS (In Shares) | 74 | 75 | 75 |
TripAdvisor | |||
Product Information [Line Items] | |||
Deferred merchant payable | $ | $ 164 | $ 156 | |
Number of most significant travel partners | item | 2 | 2 | 2 |
TripAdvisor | Expedia and Booking Holdings Inc. | Customer | Revenue | |||
Product Information [Line Items] | |||
Customer concentration (as a percent) | 37.00% | 43.00% | 46.00% |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Property and equipment, at cost | $ 234 | $ 226 | |
Other long term liabilities | $ 283 | $ 323 | |
TripAdvisor | ASU 2016-02 | Forecast | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Property and equipment, at cost | $ (62) | ||
Other long term liabilities | (70) | ||
TripAdvisor | ASU 2016-02 | Forecast | Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
ROU assets | 70 | ||
Operating Lease, Liability | 85 | ||
Finance lease, ROU asset | 105 | ||
Finance lease liability | 85 | ||
TripAdvisor | ASU 2016-02 | Forecast | Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
ROU assets | 80 | ||
Operating Lease, Liability | 95 | ||
Finance lease, ROU asset | 120 | ||
Finance lease liability | $ 95 |
Supplemental Disclosures to C_3
Supplemental Disclosures to Consolidated Statements of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Acquisitions and other investments, net of cash acquired: | |||
Intangibles not subject to amortization | $ 12 | $ 17 | |
Intangibles subject to amortization | 14 | 25 | |
Fair value of other assets acquired | 9 | ||
Net liabilities assumed | (8) | ||
Deferred tax assets (liabilities) | (2) | ||
Acquisitions and other investments, net of cash acquired | 24 | 43 | |
Cash paid for interest | 8 | $ 13 | 10 |
Cash paid for income taxes | $ 53 | $ 62 | $ 30 |
Supplemental Disclosures to C_4
Supplemental Disclosures to Consolidated Statements of Cash Flows - Recasting Restricted Cash (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cash, cash equivalents and restricted cash | $ 672,000,000 | $ 695,000,000 | $ 659,000,000 | $ 649,000,000 |
Restatement Adjustment | ASU 2016-18 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cash, cash equivalents and restricted cash | $ 5,000,000 |
Acquisitions and Dispositions_2
Acquisitions and Dispositions (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)item | Dec. 31, 2016USD ($)item | Dec. 31, 2017USD ($) | |
Acquisitions | |||
Goodwill | $ 2,443 | $ 3,694 | $ 2,445 |
TripAdvisor | 2018 Acquisitions | |||
TripAdvisor, Inc. transactions | |||
Cash consideration for acquisition | $ 23 | ||
Acquisitions | |||
Number of businesses acquired | item | 1 | ||
Goodwill | $ 11 | ||
Intangible assets | 14 | ||
Deferred tax liabilities, net | (2) | ||
Total purchase price consideration | $ 23 | ||
Definite-lived intangible assets weighted-average life | 8 years | ||
TripAdvisor | 2018 Acquisitions | Customer relationships | |||
Acquisitions | |||
Intangible assets | $ 6 | ||
TripAdvisor | 2018 Acquisitions | Technology-Based Intangible Assets | |||
Acquisitions | |||
Intangible assets | $ 8 | ||
TripAdvisor | 2016 Acquisitions | |||
TripAdvisor, Inc. transactions | |||
Acquisition purchase price | 34 | ||
Cash consideration for acquisition | 29 | ||
Cash Acquired from Acquisition | 4 | ||
Business Combination, Contingent Consideration, Liability | $ 1 | ||
Acquisitions | |||
Number of businesses acquired | item | 5 | ||
Goodwill | $ 17 | ||
Intangible assets | 25 | ||
Net liabilities assumed | (8) | ||
Total purchase price consideration | $ 34 | ||
Definite-lived intangible assets weighted-average life | 6 years | ||
TripAdvisor | 2016 Acquisitions | Trade Names | |||
Acquisitions | |||
Intangible assets | $ 4 | ||
TripAdvisor | 2016 Acquisitions | Customer Lists and Relationships | |||
Acquisitions | |||
Intangible assets | 4 | ||
TripAdvisor | 2016 Acquisitions | Subscriber Relationships | |||
Acquisitions | |||
Intangible assets | 5 | ||
TripAdvisor | 2016 Acquisitions | Technology-Based Intangible Assets | |||
Acquisitions | |||
Intangible assets | $ 12 |
Acquisitions and Dispositions_3
Acquisitions and Dispositions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Gain (Loss) on Dispositions, Net | $ (18) | |
Buy Seasons | Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Gain (Loss) on Dispositions, Net | (18) | |
Disposal Group, Including Discontinued Operation, Revenue | 13 | $ 52 |
Disposal Group Net Earnings Loss | $ (2) | $ (8) |
Assets and Liabilities Measur_3
Assets and Liabilities Measured at Fair Value (Details) shares in Millions | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 23, 2016USD ($) | Jun. 06, 2016$ / itemshares |
Variable postpaid forward | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Debt Instrument, Face Amount | $ 259,000,000 | |||
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 | $ 259,000,000 | |||
TripAdvisor | Forward Contracts | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Forward Contract Shares indexed | shares | 7 | |||
Recurring | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | $ 145,000,000 | $ 32,000,000 | ||
Marketable securities | 15,000,000 | 35,000,000 | ||
Recurring | Variable postpaid forward | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative Asset | 20,000,000 | 75,000,000 | ||
Recurring | Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | 140,000,000 | 23,000,000 | ||
Recurring | Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | 5,000,000 | 9,000,000 | ||
Marketable securities | 15,000,000 | 35,000,000 | ||
Recurring | Level 2 | Variable postpaid forward | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative Asset | $ 20,000,000 | $ 75,000,000 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill | |||
Goodwill, beginning balance | $ 2,445,000,000 | $ 3,694,000,000 | |
Acquisition | 11,000,000 | ||
Impairment | (1,271,000,000) | ||
Other | (13,000,000) | 22,000,000 | |
Goodwill, ending balance | 2,443,000,000 | 2,445,000,000 | $ 3,694,000,000 |
Intangible Assets subject to amortization | |||
Gross carrying amount | 1,473,000,000 | 1,450,000,000 | |
Accumulated amortization | (1,162,000,000) | (1,068,000,000) | |
Net carrying amount | 311,000,000 | 382,000,000 | |
Amortization expense | 137,000,000 | 188,000,000 | 198,000,000 |
Future amortization expense | |||
2,019 | 91,000,000 | ||
2,020 | 86,000,000 | ||
2,021 | 70,000,000 | ||
2,022 | 28,000,000 | ||
2,023 | $ 27,000,000 | ||
Impairments | |||
Impairment expense | 1,798,000,000 | ||
Customer relationships | |||
Intangible Assets subject to amortization | |||
Weighted Average Remaining Useful Life | 3 years | ||
Gross carrying amount | $ 885,000,000 | 908,000,000 | |
Accumulated amortization | (761,000,000) | (735,000,000) | |
Net carrying amount | $ 124,000,000 | 173,000,000 | |
Other | |||
Intangible Assets subject to amortization | |||
Weighted Average Remaining Useful Life | 4 years | ||
Gross carrying amount | $ 588,000,000 | 542,000,000 | |
Accumulated amortization | (401,000,000) | (333,000,000) | |
Net carrying amount | 187,000,000 | 209,000,000 | |
TripAdvisor | |||
Goodwill | |||
Goodwill, beginning balance | 2,445,000,000 | 3,694,000,000 | |
Acquisition | 11,000,000 | ||
Impairment | (1,271,000,000) | ||
Other | (13,000,000) | 22,000,000 | |
Goodwill, ending balance | 2,443,000,000 | 2,445,000,000 | $ 3,694,000,000 |
Impairments | |||
Goodwill, Impaired, Accumulated Impairment Loss | $ 1,271,000,000 | ||
TripAdvisor | Trademarks | |||
Impairments | |||
Impairment of Intangible Assets (Excluding Goodwill) | $ 527,000,000 |
Debt (Details)
Debt (Details) shares in Millions | Nov. 07, 2017 | Jun. 23, 2016USD ($) | Aug. 21, 2014USD ($)agreement | Jun. 30, 2015USD ($) | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2018USD ($)shares | May 31, 2017USD ($) | Sep. 07, 2016USD ($) | Jun. 26, 2015USD ($) |
Debt Financing | ||||||||||||
Total debt | $ 711,000,000 | $ 487,000,000 | ||||||||||
Less: debt classified as current | (7,000,000) | (220,000,000) | ||||||||||
Total long-term debt | 704,000,000 | 267,000,000 | ||||||||||
Repayments of long term debt | $ 245,000,000 | 369,000,000 | $ 439,000,000 | |||||||||
Borrowings of debt | 7,000,000 | 435,000,000 | 440,000,000 | |||||||||
TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Foreign Earnings Repatriated | $ 325,000,000 | |||||||||||
TripAdvisor's Chinese subsidiaries | ||||||||||||
Debt Financing | ||||||||||||
Number of credit facilities | item | 2 | |||||||||||
Revolving Credit Facility | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Repayments of long term debt | $ 230,000,000 | |||||||||||
Margin loan member | ||||||||||||
Debt Financing | ||||||||||||
Total debt | 210,000,000 | 220,000,000 | ||||||||||
Paid-in-Kind Interest | $ 10,000,000 | |||||||||||
Margin loan member | TripSPV | ||||||||||||
Debt Financing | ||||||||||||
Debt instrument, number of instruments | agreement | 2 | |||||||||||
Total borrowings | $ 400,000,000 | |||||||||||
Margin loan member | TripSPV | Redemption period one | ||||||||||||
Debt Financing | ||||||||||||
Initial redemption period | 6 months | |||||||||||
Margin loan member | LIBOR | TripSPV | ||||||||||||
Debt Financing | ||||||||||||
Variable rate basis | LIBOR | |||||||||||
Margin loan member | LIBOR | TripSPV | Redemption period one | ||||||||||||
Debt Financing | ||||||||||||
Margin | 3.65% | |||||||||||
Margin loan member | LIBOR | TripSPV | 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 | |||||||||||
Margin Loan Amendment 2 | ||||||||||||
Debt Financing | ||||||||||||
Margin | 2.40% | |||||||||||
Chinese Credit facilities | TripAdvisor's Chinese subsidiaries | ||||||||||||
Debt Financing | ||||||||||||
Total debt | 7,000,000 | |||||||||||
2015 Credit Facilities | Revolving Credit Facility | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Total debt | $ 230,000,000 | |||||||||||
Maximum borrowing capacity | $ 1,200,000,000 | $ 1,000,000,000 | ||||||||||
Debt Instrument Term | 5 years | |||||||||||
Variable rate basis | LIBOR | |||||||||||
Commitment fee | 0.15% | |||||||||||
Interest rate | 2.74% | |||||||||||
Repayments of long term debt | $ 296,000,000 | 210,000,000 | ||||||||||
Borrowings of debt | $ 290,000,000 | 435,000,000 | 101,000,000 | |||||||||
Remaining borrowing capacity | 1,200,000,000 | |||||||||||
2015 Credit Facilities | Revolving Credit Facility | ABR | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Variable rate basis | ABR | |||||||||||
2015 Credit Facilities | Revolving Credit Facility | Prime Rate | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Variable rate basis | Prime Rate | |||||||||||
2015 Credit Facilities | Revolving Credit Facility | New York Fed Bank Rate | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Variable rate basis | New York Fed Bank Rate | |||||||||||
Margin | 0.50% | |||||||||||
2015 Credit Facilities | Revolving Credit Facility | Adjusted LIBOR | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Variable rate basis | Adjusted LIBOR | |||||||||||
Margin | 1.00% | |||||||||||
2015 Credit Facilities | Revolving Credit Facility | Eurocurrency spread | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Variable rate basis | Eurocurrency | |||||||||||
2015 Credit Facilities | Letter of Credit | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Maximum borrowing capacity | 15,000,000 | |||||||||||
2015 Credit Facilities | Same-day notice borrowings | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Maximum borrowing capacity | 40,000,000 | |||||||||||
2016 Credit Facility | Revolving Credit Facility | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Total debt | 0 | |||||||||||
Maximum borrowing capacity | $ 73,000,000 | |||||||||||
Repayments of long term debt | $ 73,000,000 | |||||||||||
Borrowings of debt | $ 73,000,000 | |||||||||||
Chinese Credit Facility-BOA | TripAdvisor's Chinese subsidiaries | ||||||||||||
Debt Financing | ||||||||||||
Total debt | 0 | |||||||||||
Chinese Credit Facility-BOA | Chinese Credit facilities | People's Bank of China base rate | TripAdvisor's Chinese subsidiaries | ||||||||||||
Debt Financing | ||||||||||||
Maximum borrowing capacity | 30,000,000 | |||||||||||
Debt Instrument Term | 1 year | |||||||||||
Chinese Credit Facility-JPM | Chinese Credit facilities | TripAdvisor's Chinese subsidiaries | ||||||||||||
Debt Financing | ||||||||||||
Interest rate | 5.00% | |||||||||||
Chinese Credit Facility-JPM | Chinese Credit facilities | People's Bank of China base rate | TripAdvisor's Chinese subsidiaries | ||||||||||||
Debt Financing | ||||||||||||
Total debt | $ 7,000,000 | 0 | ||||||||||
Maximum borrowing capacity | ¥ 70,000,000 | 10,000,000 | ||||||||||
Debt Instrument Term | 1 year | |||||||||||
Variable postpaid forward | ||||||||||||
Debt Financing | ||||||||||||
Total debt | $ 264,000,000 | $ 267,000,000 | ||||||||||
Total borrowings | 259,000,000 | |||||||||||
Paid-in-Kind Interest | $ 3,000,000 | |||||||||||
Series A | Margin loan member | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Shares pledged as collateral under loan | shares | 18.2 | 18.2 | ||||||||||
Share value | $ 982,000,000 | |||||||||||
Series B | Margin loan member | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Shares pledged as collateral under loan | shares | 12.8 | 12.8 | ||||||||||
Share value | $ 690,000,000 | |||||||||||
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 | 2015 Credit Facilities | Revolving Credit Facility | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Commitment fee | 0.15% | |||||||||||
Minimum | 2015 Credit Facilities | Revolving Credit Facility | ABR | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Margin | 0.25% | |||||||||||
Minimum | 2015 Credit Facilities | Revolving Credit Facility | Eurocurrency spread | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Margin | 1.25% | |||||||||||
Maximum | 2015 Credit Facilities | Revolving Credit Facility | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Commitment fee | 0.30% | |||||||||||
Maximum | 2015 Credit Facilities | Revolving Credit Facility | ABR | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Margin | 1.00% | |||||||||||
Maximum | 2015 Credit Facilities | Revolving Credit Facility | Eurocurrency spread | TripAdvisor | ||||||||||||
Debt Financing | ||||||||||||
Margin | 2.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effect of Tax Cuts and Jobs Act of 2017 Accounting Incomplete, Provisional [Abstract] | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | 35.00% |
Transition tax payment period | 8 years | ||
Current: | |||
Federal | $ (39) | $ (92) | $ (33) |
State and local | (12) | (2) | (3) |
Foreign | (14) | (6) | (15) |
Total current income tax expense | (65) | (100) | (51) |
Deferred: | |||
Federal | 14 | 288 | 30 |
State and local | (5) | 30 | 6 |
Foreign | (1) | 11 | 16 |
Total deferred income tax expense | 8 | 329 | 52 |
Income tax (expense) benefit (note 8) | (57) | 229 | 1 |
Income before income taxes | |||
Domestic | 3 | (1,720) | 24 |
Foreign | 45 | (90) | 22 |
Earnings (loss) before income taxes | 48 | (1,810) | 46 |
Differences between provision for income taxes and income tax expense computed by applying federal rates | |||
Computed expected tax benefits (expense) | (10) | 634 | (16) |
State and local taxes, net of federal income taxes | (14) | 17 | (3) |
Foreign taxes, net of foreign tax credits | 11 | 2 | 28 |
Transition tax | (67) | ||
Change in tax rate due to Tax Act | 139 | ||
Basis difference in consolidated subsidiary | (17) | (8) | 6 |
Change in valuation allowance | (4) | (27) | (9) |
Change in unrecognized tax benefits | (12) | (11) | (11) |
Federal tax credits | 9 | 8 | 10 |
Stock-based compensation | (8) | (12) | (2) |
Impairment of nondeductible goodwill | (445) | ||
Other | (12) | (1) | (2) |
Income tax (expense) benefit (note 8) | (57) | 229 | $ 1 |
One-time transition tax for accumulated foreign earnings | 67 | ||
Net tax benefit due to corporate rate reduction | (139) | ||
Deferred tax assets: | |||
Loss carryforwards | 77 | 99 | |
Stock-based compensation | 48 | 40 | |
Lease financing obligation | 22 | 22 | |
Other | 78 | 60 | |
Total deferred tax assets | 225 | 221 | |
Less: valuation allowance | (60) | (64) | |
Net deferred tax assets | 165 | 157 | |
Deferred tax liabilities: | |||
Intangible assets | (387) | (392) | |
Investments | (41) | (38) | |
Other | (62) | (59) | |
Total deferred tax liabilities | (490) | (489) | |
Net deferred tax liability | (325) | (332) | |
Deferred tax balance sheet classification | |||
Noncurrent deferred tax liability | (325) | (332) | |
Net deferred tax liability | 325 | $ 332 | |
Valuation allowance income tax expense affect | 4 | ||
TripCo | |||
Deferred tax assets: | |||
Loss carryforwards | 39 | ||
TripAdvisor | |||
Deferred tax assets: | |||
Loss carryforwards | 38 | ||
Deferred tax balance sheet classification | |||
Undistributed earnings of certain foreign combined companies | 651 | ||
Foreign Earnings Repatriated | 325 | ||
Remaining undistributed foreign earnings indefinitely reinvested | $ 651 |
Income Taxes (Details)_2
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating loss carryforwards | |||
Loss carryforwards | $ 77 | $ 99 | |
Unrecognized tax benefits | |||
Balance at beginning of year | 123 | 105 | $ 89 |
Additions based on tax positions related to the current year | 11 | 17 | 16 |
Additions for tax positions of prior years | 2 | 1 | 1 |
Reductions for lapse of statute of limitations | (1) | ||
Balance at end of year | 136 | 123 | 105 |
Unrecognized tax benefit that would impact effective rate | 87 | 78 | $ 63 |
Accrued interest and penalties related to uncertain tax positions | 20 | $ 13 | |
Minimum | |||
Unrecognized tax benefits | |||
Income Tax Examination, Estimate of Possible Loss | 10 | ||
Maximum | |||
Unrecognized tax benefits | |||
Income Tax Examination, Estimate of Possible Loss | 14 | ||
Foreign | |||
Operating loss carryforwards | |||
Operating loss carryforwards not expected to be utilized | 57 | ||
TripAdvisor | |||
Operating loss carryforwards | |||
Loss carryforwards | $ 38 |
Stock-Based Compensation - Trip
Stock-Based Compensation - TripCo Outstanding Awards (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 21, 2018 | |
Stock-Based Compensation | ||||
Allocated Share-based Compensation Expense | $ 123,000,000 | $ 103,000,000 | $ 91,000,000 | |
TripAdvisor | ||||
Stock-Based Compensation | ||||
Allocated Share-based Compensation Expense | 118,000,000 | |||
2011 Plan | TripAdvisor | ||||
Fair value assumptions | ||||
Expected term | 6 years 1 month 6 days | 4 years 10 months 24 days | ||
Volatility rate (as a percent) | 42.10% | 41.80% | ||
2014 Plan | ||||
Additional disclosures | ||||
Unvested value not yet recognized | $ 5,000,000 | |||
Weighted average period the unrecognized compensation cost will be recognized | 1 year | |||
Common Stock, Capital Shares Reserved for Future Issuance | 2,400,000 | |||
2018 Plan | TripAdvisor | ||||
Stock-Based Compensation | ||||
Number of shares available for grant | 13,500,000 | 6,000,000 | ||
2011 and 2018 Plans | TripAdvisor | ||||
Fair value assumptions | ||||
Expected term | 5 years 6 months | |||
Volatility rate (as a percent) | 41.90% | |||
Additional disclosures | ||||
Weighted average exercise price, grant date fair value (in dollars per share) | $ 18.11 | |||
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% | 40.60% | 40.60% | |
Volatility rate, maximum (as a percent) | 49.50% | 49.50% | 49.50% | |
Dividend | $ 0 | |||
Additional disclosures | ||||
Stock options exercised intrinsic value | $ 117,000 | $ 478,000 | $ 1,200,000 | |
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 | 681,000 | |||
Granted | 59,000 | 105,000 | 67,000 | |
Exercised | (21,000) | |||
Cancelled or expired | (149,000) | |||
Options outstanding | 570,000 | 681,000 | ||
Options exercisable | 509,000 | |||
WAEP | ||||
Weighted average grant date fair value, options (in dollars per share) | $ 8.83 | $ 4.11 | $ 6.63 | |
Weighted average exercise price, options outstanding (in dollars per share) | 14.68 | |||
Weighted average exercise price, options granted (in dollars per share) | 19.51 | |||
Weighted average exercise price, options exercised (in dollars per share) | 12.67 | |||
Weighted average exercise price, options forfeited/cancelled (in dollars per share) | 14.13 | |||
Weighted average exercise price, options outstanding (in dollars per share) | 15.40 | $ 14.68 | ||
Weighted average exercise price, options exercisable (in dollars per share) | $ 14.87 | |||
Weighted average remaining contractual term outstanding | 3 years 2 months 12 days | |||
Weighted average remaining contractual term exercisable | 2 years 9 months 18 days | |||
Outstanding, aggregate intrinsic value | $ 1,000,000 | |||
Exercisable, aggregate intrinsic value | $ 1,000,000 | |||
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 | |||
Exercised | 0 | |||
Cancelled or expired | 0 | |||
Options outstanding | 1,797,000 | 1,797,000 | ||
Options exercisable | 899,000 | |||
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 exercise price, options exercisable (in dollars per share) | $ 27.83 | |||
Weighted average remaining contractual term outstanding | 6 years | |||
Weighted average remaining contractual term exercisable | 6 years | |||
Stock Options | 2011 and 2018 Plans | TripAdvisor | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Options outstanding | 6,853,000 | |||
Granted | 762,000 | |||
Exercised | (1,162,000) | |||
Cancelled or expired | (412,000) | |||
Options outstanding | 6,041,000 | 6,853,000 | ||
Options exercisable | 3,217,000 | |||
WAEP | ||||
Weighted average exercise price, options outstanding (in dollars per share) | $ 52.78 | |||
Weighted average exercise price, options granted (in dollars per share) | 43.53 | |||
Weighted average exercise price, options exercised (in dollars per share) | 37.26 | |||
Weighted average exercise price, options forfeited/cancelled (in dollars per share) | 61.46 | |||
Weighted average exercise price, options outstanding (in dollars per share) | 54 | $ 52.78 | ||
Weighted average exercise price, options exercisable (in dollars per share) | $ 61.85 | |||
Weighted average remaining contractual term outstanding | 6 years 6 months | |||
Weighted average remaining contractual term exercisable | 4 years 8 months 12 days | |||
Outstanding, aggregate intrinsic value | $ 47,000,000 | |||
Exercisable, aggregate intrinsic value | $ 15,000,000 | |||
Additional disclosures | ||||
Weighted average period the unrecognized compensation cost will be recognized | 2 years 9 months 18 days | |||
Unrecognized compensation cost, unvested options (in dollars) | $ 37,000,000 | |||
RSUs and MSUs | 2011 and 2018 Plans | TripAdvisor | ||||
Additional disclosures | ||||
Weighted average period the unrecognized compensation cost will be recognized | 2 years 7 months 6 days | |||
Weighted average grant date fair value, granted during period RSUs and MSUs (in dollars per share) | $ 43.38 | |||
RSUs and MSUs granted (in shares) | 3,000,000 | |||
Unrecognized compensation cost, unvested RSUs and MSUs | $ 225,000,000 | |||
Unvested RSUs and MSUs (in shares) | 7,000,000 | |||
Employee Stock Option Excluding Assumed Options | 2011 and 2018 Plans | TripAdvisor | ||||
Stock-Based Compensation | ||||
Vesting period | 4 years | |||
Term of awards | 10 years | |||
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 | $ 9,000 | $ 13,000 | $ 284,000 | |
Restricted Stock | 2014 Plan | Series A | ||||
Additional disclosures | ||||
Unvested RSUs and MSUs (in shares) | 20,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 9.42 | |||
Minimum | Stock Options | 2014 Plan | ||||
Stock-Based Compensation | ||||
Vesting period | 1 year | |||
Term of awards | 7 years | |||
Fair value assumptions | ||||
Expected term | 4 years 9 months 18 days | 4 years 9 months 18 days | 4 years 9 months 18 days | |
Maximum | Stock Options | 2014 Plan | ||||
Stock-Based Compensation | ||||
Vesting period | 5 years | |||
Term of awards | 10 years | |||
Fair value assumptions | ||||
Expected term | 5 years 8 months 12 days | 5 years 8 months 12 days | 5 years 8 months 12 days |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Benefit Plans | |||
Employer cash contributions | $ 13 | $ 9 | $ 9 |
Related Party Transactions (Det
Related Party Transactions (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Chairman, Chief Executive Officer and President | |
Related Party Transaction [Line Items] | |
Standstill Agreement Cap | 34.90% |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)ft²location | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Operating leases | |||
Rental expense | $ 17 | $ 19 | $ 21 |
Estimated future minimum rental payments | |||
2,019 | 25 | ||
2,020 | 25 | ||
2,021 | 24 | ||
2,022 | 24 | ||
2,023 | 19 | ||
Thereafter | 76 | ||
Total | $ 193 | ||
TripAdvisor | Other leased locations | |||
Operating leases | |||
Leased area (in square feet) | ft² | 450,000 | ||
Number of locations | location | 40 |
Segment Information - Performan
Segment Information - Performance Measures and Other Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segments | |||||||||||
Total revenues | $ 346 | $ 458 | $ 433 | $ 378 | $ 321 | $ 439 | $ 431 | $ 378 | $ 1,615 | $ 1,569 | $ 1,532 |
Adjusted OIBDA | 416 | 322 | 336 | ||||||||
Total Assets | 5,224 | 5,484 | 5,224 | 5,484 | |||||||
Capital expenditures | 61 | 65 | |||||||||
Long-lived assets | 154 | 165 | 154 | 165 | |||||||
United States | |||||||||||
Segments | |||||||||||
Total revenues | 835 | 815 | 770 | ||||||||
Long-lived assets | 137 | 147 | 137 | 147 | |||||||
United Kingdom | |||||||||||
Segments | |||||||||||
Total revenues | 508 | 530 | 564 | ||||||||
Other Countries | |||||||||||
Segments | |||||||||||
Total revenues | 272 | 224 | 198 | ||||||||
Long-lived assets | 17 | 18 | 17 | 18 | |||||||
TripAdvisor | |||||||||||
Segments | |||||||||||
Total revenues | 1,615 | 1,556 | 1,480 | ||||||||
Adjusted OIBDA | 422 | 331 | 352 | ||||||||
Total Assets | 5,187 | 5,387 | 5,187 | 5,387 | |||||||
Capital expenditures | 61 | 64 | |||||||||
Corporate and other | |||||||||||
Segments | |||||||||||
Total revenues | 13 | 52 | |||||||||
Adjusted OIBDA | (6) | (9) | $ (16) | ||||||||
Total Assets | $ 37 | $ 97 | $ 37 | 97 | |||||||
Capital expenditures | $ 1 |
Segment Information - Adjusted
Segment Information - Adjusted OIBDA (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation | |||||||||||
Consolidated Adjusted OIBDA | $ 416 | $ 322 | $ 336 | ||||||||
Legal settlement | (5) | ||||||||||
Stock-based compensation | (123) | (103) | (91) | ||||||||
Depreciation and amortization | (160) | (213) | (222) | ||||||||
Impairment of intangible assets | (1,798) | ||||||||||
Operating income | $ 9 | $ 76 | $ 34 | $ 9 | $ (1,814) | $ 16 | $ 13 | $ (7) | 128 | (1,792) | 23 |
Interest expense | (26) | (25) | (25) | ||||||||
Realized and unrealized gains (losses) on financial instruments, net | (59) | 24 | 53 | ||||||||
Gain (loss) on dispositions, net | (18) | ||||||||||
Other, net | 5 | 1 | (5) | ||||||||
Earnings (loss) before income taxes | 48 | $ (1,810) | $ 46 | ||||||||
TripAdvisor | |||||||||||
Reconciliation | |||||||||||
Stock-based compensation | $ (118) |
Quarterly Financial Informati_3
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information (Unaudited) | |||||||||||
Revenue | $ 346 | $ 458 | $ 433 | $ 378 | $ 321 | $ 439 | $ 431 | $ 378 | $ 1,615 | $ 1,569 | $ 1,532 |
Operating income (loss) | 9 | 76 | 34 | 9 | (1,814) | 16 | 13 | (7) | 128 | (1,792) | 23 |
Net earnings (loss) | (9) | 57 | (22) | (35) | (1,558) | (7) | (7) | (9) | (9) | (1,581) | 47 |
Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders | $ (8) | $ 14 | $ (39) | $ (31) | $ (369) | $ (13) | $ (12) | $ (3) | $ (64) | $ (397) | $ 21 |
Basic earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share | $ (0.11) | $ 0.19 | $ (0.52) | $ (0.41) | $ (4.92) | $ (0.17) | $ (0.16) | $ (0.04) | $ (0.86) | $ (5.29) | $ 0.28 |
Diluted earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. Series A and Series B stockholders per common share | $ (0.11) | $ 0.19 | $ (0.52) | $ (0.41) | $ (4.92) | $ (0.17) | $ (0.16) | $ (0.04) | $ (0.86) | $ (5.29) | $ 0.28 |