Delaware | 001-37429 | 20-2705720 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
23.1 | Consent of Independent Auditors, Deloitte & Touche LLP. | |
99.1 | Item 8 of Part II to Orbitz’s Annual Report on Form 10-K for the year ended December 31, 2014, revised only to reflect certain condensed consolidating financial information of subsidiary guarantors and non-guarantors. | |
99.2 | Item 1 of Part I to Orbitz’s Quarterly Report on Form 10-Q for the six months ended June 30, 2015, revised only to reflect certain condensed consolidating financial information of subsidiary guarantors and non-guarantors. | |
101 | The following materials from Orbitz’s Annual Report on Form 10-K for the year ended December 31, 2014 and Orbitz’s Quarterly Report on Form 10-Q for the six months ended June 30, 2015, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Cash Flows, and (v) Condensed Notes to Consolidated Financial Statement. |
Date: September 20, 2016 | EXPEDIA, INC. | |||||
By: | /s/ Mark D. Okerstrom | |||||
Mark D. Okerstrom | ||||||
Chief Financial Officer |
Exhibit No. | Description | |
23.1 | Consent of Independent Auditors, Deloitte & Touche LLP. | |
99.1 | Item 8 of Part II to Orbitz’s Annual Report on Form 10-K for the year ended December 31, 2014, revised only to reflect certain condensed consolidating financial information of subsidiary guarantors and non-guarantors. | |
99.2 | Item 1 of Part I to Orbitz’s Quarterly Report on Form 10-Q for the six months ended June 30, 2015, revised only to reflect certain condensed consolidating financial information of subsidiary guarantors and non-guarantors. | |
101 | The following materials from Orbitz’s Annual Report on Form 10-K for the year ended December 31, 2014 and Orbitz’s Quarterly Report on Form 10-Q for the six months ended June 30, 2015, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Cash Flows, and (v) Condensed Notes to Consolidated Financial Statement. |
Year Ended December 31, | |||
2014 | |||
Net revenue | $ | 932,007 | |
Cost and expenses: | |||
Cost of revenue | 179,774 | ||
Selling, general and administrative | 278,202 | ||
Marketing | 334,472 | ||
Depreciation and amortization | 57,549 | ||
Impairment of goodwill and intangible assets | — | ||
Impairment of property and equipment and other assets | — | ||
Total operating expenses | 849,997 | ||
Operating income/(loss) | 82,010 | ||
Other expense: | |||
Net interest expense | (35,212 | ) | |
Other expense | (2,237 | ) | |
Total other expense | (37,449 | ) | |
Income/(loss) before income taxes | 44,561 | ||
Provision/(benefit) for income taxes | 27,281 | ||
Net income/(loss) | $ | 17,280 | |
Net income/(loss) per share - basic: | |||
Net income/(loss) per share | $ | 0.16 | |
Weighted-average shares outstanding | 110,537,992 | ||
Net income/(loss) per share - diluted: | |||
Net income/(loss) per share | $ | 0.15 | |
Weighted-average shares outstanding | 114,344,440 | ||
Year Ended December 31, | |||
2014 | |||
Net income/(loss) | $ | 17,280 | |
Other comprehensive income/(loss): | |||
Currency translation adjustment | 6,650 | ||
Unrealized gain/(loss) on floating to fixed interest rate swaps (net of tax of $0) | — | ||
Other comprehensive income/(loss) | 6,650 | ||
Comprehensive income/(loss) | $ | 23,930 |
December 31, 2014 | |||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ | 188,482 | |
Accounts receivable (net of allowance for doubtful accounts of $1,541) | 117,440 | ||
Prepaid expenses | 10,039 | ||
Due from Travelport, net | 15,511 | ||
Other current assets | 17,560 | ||
Total current assets | 349,032 | ||
Property and equipment (net of accumulated depreciation of $302,031) | 111,832 | ||
Goodwill | 351,098 | ||
Trademarks and trade names | 89,890 | ||
Other intangible assets, net | 1,300 | ||
Deferred income taxes, non-current | 135,807 | ||
Restricted cash | 97,810 | ||
Other non-current assets | 39,200 | ||
Total Assets | $ | 1,175,969 | |
Liabilities and Shareholders’ Equity | |||
Current liabilities: | |||
Accounts payable | $ | 13,954 | |
Accrued merchant payable | 366,062 | ||
Accrued expenses | 158,754 | ||
Deferred income | 40,816 | ||
Term loan, current | 25,871 | ||
Other current liabilities | 1,544 | ||
Total current liabilities | 607,001 | ||
Term loan, non-current | 421,879 | ||
Tax sharing liability | 61,289 | ||
Other non-current liabilities | 14,702 | ||
Total Liabilities | 1,104,871 | ||
Commitments and contingencies (see Note 9) | |||
Shareholders’ Equity: | |||
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding | — | ||
Common stock, $0.01 par value, 140,000,000 shares authorized, 110,758,513 shares issued | 1,107 | ||
Treasury stock, at cost, 25,237 shares held | (52 | ) | |
Additional paid-in capital | 1,060,636 | ||
Accumulated deficit | (1,000,259 | ) | |
Accumulated other comprehensive income | 9,666 | ||
Total Shareholders’ Equity | 71,098 | ||
Total Liabilities and Shareholders’ Equity | $ | 1,175,969 |
Year Ended December 31, | |||
2014 | |||
Operating activities: | |||
Net income/(loss) | $ | 17,280 | |
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 57,549 | ||
Amortization of unfavorable contract liability | (325 | ) | |
Non-cash net interest expense | 11,193 | ||
Deferred income taxes | 25,234 | ||
Stock compensation | 12,196 | ||
Changes in assets and liabilities: | |||
Accounts receivable | (38,588 | ) | |
Due from Travelport, net | (3,285 | ) | |
Accounts payable, accrued expenses and other current liabilities | 16,489 | ||
Accrued merchant payable | 34,636 | ||
Deferred income | 1,238 | ||
Other | 15,882 | ||
Net cash provided by operating activities | 149,499 | ||
Investing activities: | |||
Property and equipment additions | (51,131 | ) | |
Acquisitions, net of cash acquired | (10,000 | ) | |
Changes in restricted cash | 17,344 | ||
Net cash used in investing activities | (43,787 | ) | |
Financing activities: | |||
Payments on and retirement of term loans | (445,500 | ) | |
Issuance of long-term debt, net of issuance costs | 443,256 | ||
Employee tax withholdings related to net share settlements of equity-based awards | (7,217 | ) | |
Proceeds from exercise of employee stock options | 467 | ||
Payments on tax sharing liability | (14,375 | ) | |
Net cash used in financing activities | (23,369 | ) | |
Effects of changes in exchange rates on cash and cash equivalents | (11,246 | ) | |
Net increase/(decrease) in cash and cash equivalents | 71,097 | ||
Cash and cash equivalents at beginning of year | 117,385 | ||
Cash and cash equivalents at end of year | $ | 188,482 | |
Year Ended December 31, | |||
2014 | |||
Supplemental disclosure of cash flow information: | |||
Income tax payments, net | $ | 3,231 | |
Cash interest payments | $ | 24,394 | |
Non-cash investing activity: | |||
Capital expenditures incurred not yet paid | $ | 3,281 |
Accumulated Other Comprehensive Income/(Loss) | ||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid in Capital | Accumulated Deficit | Interest Rate Swaps | Foreign Currency Translation | Total Shareholders’ Equity/ (Deficit) | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||
Balance at January 1, 2014 | 108,397,627 | $ | 1,084 | (25,237 | ) | $ | (52 | ) | $ | 1,055,213 | $ | (1,017,539 | ) | $ | — | $ | 3,016 | $ | 41,722 | |||||||||||||||
Net income | — | — | — | — | — | 17,280 | — | — | 17,280 | |||||||||||||||||||||||||
Amortization of equity-based compensation awards granted to employees, net of shares withheld to satisfy employee tax withholding obligations upon vesting | — | — | — | — | 4,979 | — | — | — | 4,979 | |||||||||||||||||||||||||
Common shares issued upon vesting of restricted stock units | 1,721,681 | 17 | — | — | (17 | ) | — | — | — | — | ||||||||||||||||||||||||
Common shares issued upon lapse of restrictions on deferred stock units | 550,320 | 5 | — | — | (5 | ) | — | — | — | — | ||||||||||||||||||||||||
Common shares issued upon exercise of stock options | 88,885 | 1 | — | — | 466 | — | — | — | 467 | |||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | 6,650 | 6,650 | |||||||||||||||||||||||||
Balance at December 31, 2014 | 110,758,513 | $ | 1,107 | (25,237 | ) | $ | (52 | ) | $ | 1,060,636 | $ | (1,000,259 | ) | $ | — | $ | 9,666 | $ | 71,098 |
1. | Organization and Basis of Presentation |
2. | Summary of Significant Accounting Policies |
Asset Category | Estimated Useful Life | |
Leasehold improvements | Shorter of asset’s useful life or non-cancellable lease term | |
Capitalized software | 3 - 10 years | |
Furniture, fixtures and equipment | 3 - 7 years |
Amount | ||||
Purchase Price | (in thousands) | |||
Consideration | ||||
Cash paid | $ | 10,000 | ||
Allocation of Purchase Price | ||||
Property and equipment (software) | $ | 3,510 | ||
Finite-lived intangible assets - Customer relationships | 1,560 | |||
Unfavorable contracts | (780 | ) | ||
Goodwill | 5,710 | |||
Fair value of net assets acquired | $ | 10,000 |
4. | Property and Equipment, Net |
December 31, 2014 | |||
(in thousands) | |||
Capitalized software | $ | 321,460 | |
Furniture, fixtures and equipment | 59,344 | ||
Leasehold improvements | 13,882 | ||
Construction in progress | 19,177 | ||
Gross property and equipment | 413,863 | ||
Less: accumulated depreciation | (302,031 | ) | |
Property and equipment, net | $ | 111,832 |
5. | Goodwill and Intangible Assets |
Amount | |||
(in thousands) | |||
Balance at January 1, 2014, net of accumulated impairment of $832,626 | $ | 345,388 | |
Acquisition | 5,710 | ||
Balance at December 31, 2014, net of accumulated impairment of $832,626 | $ | 351,098 |
Amount | |||
(in thousands) | |||
Balance at January 1, 2014 | $ | 89 | |
Intangible assets acquired (a) | 1,560 | ||
Amortization expense | (349 | ) | |
Balance at December 31, 2014 | $ | 1,300 |
December 31, 2014 | ||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
(in thousands) | ||||||||||||
Finite-Lived Intangible Assets: | ||||||||||||
Customer relationships | $ | 1,560 | $ | (260 | ) | $ | 1,300 | |||||
Vendor relationships | 4,293 | (4,293 | ) | — | ||||||||
Total finite-lived intangible assets | $ | 5,853 | $ | (4,553 | ) | $ | 1,300 |
Year | (in thousands) | ||
2015 | $ | 312 | |
2016 | 312 | ||
2017 | 312 | ||
2018 | 312 | ||
2019 | 52 | ||
Total | $ | 1,300 |
December 31, 2014 | |||
(in thousands) | |||
Advertising and marketing | $ | 45,475 | |
Employee costs | 26,921 | ||
Tax sharing liability (see Note 8) | 17,093 | ||
Customer service costs | 13,564 | ||
Contract exit costs (a) | 11,629 | ||
Customer incentive costs | 11,545 | ||
Professional fees | 7,723 | ||
Airline rebates | 6,644 | ||
Customer refunds | 5,767 | ||
Technology costs | 4,727 | ||
Other | 7,666 | ||
Total accrued expenses | $ | 158,754 |
(a) | In connection with the early termination of an agreement with Trilegiant Corporation (now Affinion Group) in 2007, we accrued termination payments for the period from January 1, 2008 to December 31, 2016. At December 31, 2014, the liability’s carrying value of $11.7 million was included in our Consolidated Balance Sheet, $11.6 million of which was included in Accrued expenses and $0.1 million of which was included in Other non-current liabilities at December 31, 2014. |
7. | Term Loan and Revolving Credit Facility |
Amount | |||
(in thousands) | |||
Balance at January 1, 2014 (current and non-current) | $ | 443,250 | |
Scheduled principal payments of the term loan under the Credit Agreement | (3,375 | ) | |
Repayment of term loan under the Credit Agreement | (439,875 | ) | |
Balance per Credit Agreement | $ | — | |
Proceeds from issuance of Term Loan pursuant to the Second Amendment | $ | 450,000 | |
Scheduled principal payments of Term Loan | (2,250 | ) | |
Balance at December 31, 2014 (current and non-current) | $ | 447,750 |
Year | (in thousands) | ||
2015 | $ | 25,871 | |
2016 | — | ||
2017 | — | ||
2018 | — | ||
2019 | — | ||
Thereafter | 421,879 | ||
Total | $ | 447,750 |
8. | Tax Sharing Liability |
Amount | |||
(in thousands) | |||
Balance at January 1, 2014 (current and non-current) | $ | 80,191 | |
Accretion of interest expense and tax rate changes (a) | 12,566 | ||
Cash payments | (14,375 | ) | |
Balance at December 31, 2014 (current and non-current) | $ | 78,382 |
Year | (in thousands) | ||
2015 | $ | 18,224 | |
2016 | 27,355 | ||
2017 | 39,873 | ||
2018 | 10,719 | ||
Total | $ | 96,171 |
9. | Commitments and Contingencies |
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Operating leases (a) | $ | 5,787 | $ | 5,071 | $ | 4,958 | $ | 4,804 | $ | 4,033 | $ | 9,395 | $ | 34,048 | ||||||||||||||
GDS contracts (b) | 15,000 | 16,120 | 12,370 | 16,120 | 1,120 | — | 60,730 | |||||||||||||||||||||
Other service and licensing contracts | 7,141 | 5,134 | — | — | — | — | 12,275 | |||||||||||||||||||||
Total | $ | 27,928 | $ | 26,325 | $ | 17,328 | $ | 20,924 | $ | 5,153 | $ | 9,395 | $ | 107,053 |
(a) | These operating leases are primarily for facilities and equipment and represent non-cancellable leases. Certain leases contain periodic rent escalation adjustments and renewal options. Our operating leases expire at various dates, with the latest maturing in 2023. For the year ended December 31, 2014, we recorded rent expense in the amount of $7.3 million. As a result of a subleasing arrangement that we have entered into, we are expecting approximately $1.0 million in sublease income through 2017. |
(b) | In February 2014, the Company announced that it has entered into an agreement with Travelport for the provision of GDS services (“New Travelport GDS Service Agreement”). Beginning January 1, 2015, the Company will no longer be subject to exclusivity obligations. Under the New Travelport GDS Service Agreement beginning in 2015, we are obligated to provide certain levels of volume over the contract period and may be subject to pay shortfall payments in certain cases if we fail to meet volume commitments. The agreement terminates on December 31, 2018. |
December 31, 2014 | |||||||
Letters of Credit and Other Credit Support | Restricted Cash | ||||||
(in thousands) | |||||||
Multi-currency letter of credit facility | $ | 2,892 | $ | 3,176 | |||
Uncommitted letter of credit facilities and surety bonds | 98,406 | 94,634 | |||||
Total | $ | 101,298 | $ | 97,810 |
10. | Income Taxes |
Year Ended December 31, | |||
2014 | |||
(in thousands) | |||
U.S. | $ | 67,093 | |
Non-U.S. | (22,532 | ) | |
Income/(loss) before income taxes | $ | 44,561 |
Year Ended December 31, | |||
2014 | |||
(in thousands) | |||
Current | |||
U.S. federal and state | $ | 272 | |
Non-U.S. | 1,775 | ||
Total current | 2,047 | ||
Deferred | |||
U.S. federal and state | 22,910 | ||
Non-U.S. | 2,324 | ||
Total deferred | 25,234 | ||
Provision/(benefit) for income taxes | $ | 27,281 |
Year Ended December 31, | ||
2014 | ||
Federal statutory rate | 35.0 | % |
State and local income taxes, net of federal benefit | 0.2 | |
Taxes at differing rates | 7.6 | |
Change in valuation allowance | 19.1 | |
Goodwill impairment charges | — | |
Reserve for uncertain tax positions | 0.3 | |
Other | (1.0 | ) |
Effective income tax rate | 61.2 | % |
December 31, 2014 | |||
(in thousands) | |||
Current deferred income tax assets/(liabilities): | |||
Accrued liabilities and deferred income | $ | 2,185 | |
Provision for bad debts | 314 | ||
Prepaid expenses | (2,069 | ) | |
Tax sharing liability | 6,295 | ||
Reserve accounts | 4,283 | ||
Valuation allowance | (509 | ) | |
Current net deferred income tax assets (a) | $ | 10,499 | |
Non-current deferred income tax assets/(liabilities): | |||
U.S. net operating loss carryforwards | $ | 46,431 | |
Non-U.S. net operating loss carryforwards | 93,244 | ||
Accrued liabilities and deferred income | 6,995 | ||
Depreciation and amortization | 66,462 | ||
Tax sharing liability | 22,571 | ||
Other | 8,818 | ||
Valuation allowance | (108,714 | ) | |
Non-current net deferred income tax assets | $ | 135,807 |
(a) | The current portion of the deferred income tax asset at December 31, 2014 is included in Other current assets in our Consolidated Balance Sheet. |
Year Ended December 31, | |||
2014 | |||
(in thousands) | |||
Balance at January 1, | $ | 3,569 | |
Increase as a result of tax positions taken during the prior year | — | ||
Decrease as a result of tax positions taken during the prior year | (209 | ) | |
Impact of foreign currency translation | (12 | ) | |
Balance at December 31, | $ | 3,348 |
11. | Equity-Based Compensation |
Restricted Stock Units | Weighted-Average Grant Date Fair Value (per share) | ||||||
Unvested at January 1, 2014 | 4,857,840 | $ | 3.73 | ||||
Granted | 2,175,112 | $ | 8.86 | ||||
Vested (a) | (1,682,289 | ) | $ | 3.72 | |||
Forfeited | (690,830 | ) | $ | 4.79 | |||
Unvested at December 31, 2014 | 4,659,833 | $ | 5.97 |
(a) | We issued 1,159,060 shares of common stock in connection with the vesting of restricted stock units during the year ended December 31, 2014, which is net of the number of shares retained (but not issued) by us in satisfaction of minimum tax withholding obligations associated with the vesting. |
Performance-Based Restricted Stock Units | Weighted-Average Grant Date Fair Value (per share) | ||||||
Unvested at January 1, 2014 | 3,089,250 | $ | 2.99 | ||||
Granted (a) | 410,445 | $ | 12.64 | ||||
Vested | (904,093 | ) | $ | 2.98 | |||
Forfeited | (344,001 | ) | $ | 5.67 | |||
Unvested at December 31, 2014 | 2,251,601 | $ | 4.35 |
a. | We granted 136,815 performance-based restricted stock units with a fair value per share of $9.72 and 273,630 market-based restricted stock units with a fair value per share of between $11.89 and $16.32 (“PSUs”) in March 2014 to certain of our executive officers. The PSUs entitle the executives to receive one share of our common stock for each PSU earned, subject to the satisfaction of the performance and market conditions. Each metric will be equally weighted, with the ability to earn between 25% to 200% of target based on a straight-line interpolation of the criteria. The performance-based condition requires that the Company attain certain performance metrics for the three-year period ended December 31, 2016 and the market-based conditions require that the Company achieve a certain absolute shareholder return and a certain relative shareholder return at the conclusion of the three-year measurement period. If the minimum performance criteria are not met, each PSU will be forfeited. If the minimum conditions are met, the PSUs earned will cliff vest on the third anniversary of the grant date. The fair value of the PSUs subject to market-based conditions was measured using a Monte Carlo simulation for sampling random outcomes. |
Shares | Weighted-Average Exercise Price (per share) | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | ||||||||||
Outstanding at January 1, 2014 | 1,227,719 | $ | 4.84 | ||||||||||
Exercised | (88,885 | ) | $ | 5.25 | |||||||||
Cancelled | (7,143 | ) | $ | 6.28 | |||||||||
Outstanding at December 31, 2014 | 1,131,691 | $ | 4.80 | 1.7 | $ | 3,888 | |||||||
Exercisable at December 31, 2014 | 1,131,691 | $ | 4.80 | 1.7 | $ | 3,888 |
Deferred Stock Units | Weighted-Average Grant Date Fair Value (per share) | ||||||
Outstanding at January 1, 2014 | 923,306 | $ | 4.41 | ||||
Granted | 120,563 | $ | 7.94 | ||||
Distributed | (550,357 | ) | $ | 5.10 | |||
Outstanding at December 31, 2014 | 493,512 | $ | 4.50 |
12. | Derivative Financial Instruments |
Notional Amount | Effective Date | Maturity Date | Fixed Interest Rate Paid | Variable Interest Rate Received | ||||
$100.0 million | August 29, 2014 | August 31, 2016 | 1.11% | One-month LIBOR | ||||
$100.0 million | August 29, 2014 | August 31, 2016 | 1.15% | One-month LIBOR |
Fair Value Measurement as of | |||||
Balance Sheet Location | December 31, 2014 | ||||
(in thousands) | |||||
Interest rate swaps not designated as hedging instruments | Other non-current liabilities | $ | 1,723 |
Gain in Other Comprehensive Income/(Loss) | (Loss) Reclassified from Accumulated OCI into Interest Expense (Effective Portion) | Gain/(Loss) Recognized in Income (Ineffective Portion and the Amount Excluded from Effectiveness Testing) | |||||||||
2014 | 2014 | 2014 | |||||||||
(in thousands) | |||||||||||
Interest rate swaps | $ | — | $ | — | $ | — |
Fair Value Measurements as of | |||||
Balance Sheet Location | December 31, 2014 | ||||
(in thousands) | |||||
Asset Derivatives: | |||||
Foreign currency hedges | Other current assets | $ | 4,275 | ||
Liability Derivatives: | |||||
Foreign currency hedges | Other current liabilities | $ | — |
Year Ended December 31, | |||
2014 | |||
(in thousands) | |||
Foreign currency hedges (a) | $ | 6,813 |
(a) | We recorded transaction gains/(losses) associated with the re-measurement and settlement of our foreign denominated assets and liabilities of $(12.9) million, the year ended December 31, 2014. These transaction gains and losses were included in Selling, general and administrative expense in our Consolidated Statement of Operations. The net impact of these transaction gains and losses, together with the gains/(losses) incurred on our foreign currency hedges, were losses of $6.1 million for the year ended December 31, 2014. |
Gross Amount of Recognized Liabilities | Gross Amount Offset in the Consolidated Balance Sheet | Net Amount of Liabilities Presented in the Consolidated Balance Sheet | |||||||||
(in thousands) | |||||||||||
December 31, 2014 | $ | 2,947 | $ | (5,499 | ) | $ | (2,552 | ) |
14. | Net Income/(Loss) per Share |
Year Ended December 31, | ||
Weighted-Average Shares Outstanding | 2014 | |
Basic | 110,537,992 | |
Diluted effect of: | ||
Restricted stock units | 1,367,392 | |
Performance-based restricted stock units | 1,969,674 | |
Stock options | 469,382 | |
Diluted | 114,344,440 |
Year Ended December 31, | ||
Antidilutive Equity Awards | 2014 | |
Restricted stock units | 704,809 | |
Performance-based restricted stock units | 239,725 | |
Stock options | — | |
Total | 944,534 |
15. | Related Party Transactions |
Year Ended December 31, | |||
2014 | |||
(in thousands) | |||
Net revenue (a) | $ | 54,969 | |
Cost of revenue | 59 | ||
Marketing expense | 58 |
(a) | Net revenue includes incentive revenue for segments processed through Galileo and Worldspan, both of which are subsidiaries of Travelport. |
16. | Fair Value Measurements |
Fair Value Measurements as of | |||||||||||||||
December 31, 2014 | |||||||||||||||
Total | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
(in thousands) | |||||||||||||||
Assets: | |||||||||||||||
Foreign currency derivative assets | $ | 4,275 | $ | 4,275 | $ | — | $ | — | |||||||
Liabilities: | |||||||||||||||
Foreign currency derivative liabilities | $ | — | $ | — | $ | — | $ | — | |||||||
Interest rate swap liabilities | $ | 1,723 | $ | — | $ | 1,723 | $ | — |
17. | Segment Information |
Year Ended December 31, | ||||
2014 | ||||
(in thousands) | ||||
Net revenue | ||||
United States | $ | 674,079 | ||
All other countries | 257,928 | |||
Total | $ | 932,007 |
December 31, 2014 | ||||
(in thousands) | ||||
Long-lived assets | ||||
United States | $ | 106,816 | ||
All other countries | 5,016 | |||
Total | $ | 111,832 |
18. | Subsequent Events |
19. | Quarterly Financial Data (Unaudited) |
Three Months Ended | ||||||||||||||||
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Net revenue | $ | 220,564 | $ | 253,135 | $ | 248,053 | $ | 210,255 | ||||||||
Cost and expenses | 198,582 | 227,510 | 224,547 | 199,358 | ||||||||||||
Operating income | 21,982 | 25,625 | 23,506 | 10,897 | ||||||||||||
Net income/(loss) | 7,296 | 9,037 | 6,881 | (5,934 | ) | |||||||||||
Basic net income/(loss) per share | $0.07 | $0.08 | $0.06 | $(0.05) | ||||||||||||
Diluted net income/(loss) per share | $0.06 | $0.08 | $0.06 | $(0.05) |
20. | Guarantor and Non-Guarantor Supplemental Financial Information |
Guarantor | Non-Guarantor | Eliminations | Consolidated | ||||||||||||
Net revenue | $ | 696,621 | $ | 235,386 | $ | — | $ | 932,007 | |||||||
Cost and expenses: | |||||||||||||||
Cost of revenue | 141,449 | 38,325 | — | 179,774 | |||||||||||
Selling, general and administrative | 182,987 | 95,215 | — | 278,202 | |||||||||||
Marketing | 218,628 | 115,844 | — | 334,472 | |||||||||||
Depreciation and amortization | 55,357 | 2,192 | — | 57,549 | |||||||||||
Total operating expenses | 598,421 | 251,576 | — | 849,997 | |||||||||||
Operating income / (loss) | 98,200 | (16,190 | ) | — | 82,010 | ||||||||||
Other expense: | |||||||||||||||
Net interest expense | (28,902 | ) | (6,310 | ) | — | (35,212 | ) | ||||||||
Other expense | (2,237 | ) | — | — | (2,237 | ) | |||||||||
Total other expense | (31,139 | ) | (6,310 | ) | — | (37,449 | ) | ||||||||
Income / (loss) before income taxes | 67,061 | (22,500 | ) | — | 44,561 | ||||||||||
Provision / (benefit) for income taxes | 23,170 | 4,111 | — | 27,281 | |||||||||||
Equity in losses of consolidated subsidiaries | (26,611 | ) | — | 26,611 | — | ||||||||||
Net income (loss) | $ | 17,280 | $ | (26,611 | ) | $ | 26,611 | $ | 17,280 | ||||||
Comprehensive income (loss) attributable to Orbitz Worldwide, Inc. | $ | 23,930 | $ | (19,961 | ) | $ | 19,961 | $ | 23,930 |
Guarantor | Non-Guarantor | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 87,889 | $ | 100,593 | $ | — | $ | 188,482 | |||||||
Accounts receivable, net | 81,463 | 35,977 | — | 117,440 | |||||||||||
Prepaid expenses | 7,120 | 2,919 | — | 10,039 | |||||||||||
Due from Travelport, net | 13,490 | 2,021 | — | 15,511 | |||||||||||
Other current assets | 15,940 | 1,620 | — | 17,560 | |||||||||||
Total current assets | 205,902 | 143,130 | — | 349,032 | |||||||||||
Property and equipment, net | 106,816 | 5,016 | — | 111,832 | |||||||||||
Goodwill | 351,098 | — | — | 351,098 | |||||||||||
Trademarks and trade names | 83,065 | 6,825 | — | 89,890 | |||||||||||
Other intangible assets, net | 1,300 | — | — | 1,300 | |||||||||||
Intercompany receivable, non-current | 168,178 | — | (168,178 | ) | — | ||||||||||
Deferred income taxes, non-current | 132,220 | 3,587 | — | 135,807 | |||||||||||
Restricted cash | 69,246 | 28,564 | — | 97,810 | |||||||||||
Other non-current assets | 38,235 | 965 | — | 39,200 | |||||||||||
Total Assets | $ | 1,156,060 | $ | 188,087 | $ | (168,178 | ) | $ | 1,175,969 | ||||||
Liabilities and Shareholders' Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 11,606 | $ | 2,348 | $ | — | $ | 13,954 | |||||||
Accrued merchant payable | 331,120 | 34,942 | — | 366,062 | |||||||||||
Accrued expenses | 130,024 | 28,730 | — | 158,754 | |||||||||||
Deferred income | 28,841 | 11,975 | — | 40,816 | |||||||||||
Term loan, current | 25,871 | — | — | 25,871 | |||||||||||
Other current liabilities | 799 | 745 | — | 1,544 | |||||||||||
Total current liabilities | 528,261 | 78,740 | — | 607,001 | |||||||||||
Term loan, non-current | 421,879 | — | — | 421,879 | |||||||||||
Intercompany liabilities, non-current | — | 168,178 | (168,178 | ) | — | ||||||||||
Commitment to fund | 59,463 | — | (59,463 | ) | — | ||||||||||
Tax sharing liability | 61,289 | — | — | 61,289 | |||||||||||
Other non-current liabilities | 14,070 | 632 | — | 14,702 | |||||||||||
Total Liabilities | 1,084,962 | 247,550 | (227,641 | ) | 1,104,871 | ||||||||||
Total Shareholders' Equity | 71,098 | (59,463 | ) | 59,463 | 71,098 | ||||||||||
Total Liabilities and Shareholders' Equity | $ | 1,156,060 | $ | 188,087 | $ | (168,178 | ) | $ | 1,175,969 |
Guarantor | Non-Guarantor | Eliminations | Consolidated | ||||||||||||
Operating activities: | |||||||||||||||
Net cash provided by (used in) operating activities | $ | 162,976 | $ | (13,477 | ) | $ | — | $ | 149,499 | ||||||
Investing activities: | |||||||||||||||
Property and equipment additions | (48,297 | ) | (2,834 | ) | — | (51,131 | ) | ||||||||
Acquisitions, net of cash acquired | (10,000 | ) | — | — | (10,000 | ) | |||||||||
Changes in restricted cash | 2,140 | 15,204 | — | 17,344 | |||||||||||
Contributions from (distributions to) related party, net | (49,188 | ) | — | 49,188 | — | ||||||||||
Net cash used in (provided by) investing activities | (105,345 | ) | 12,370 | 49,188 | (43,787 | ) | |||||||||
Financing activities: | |||||||||||||||
Payments on and retirements of term loans | (445,500 | ) | — | — | (445,500 | ) | |||||||||
Issuance of long-term debt, net of issuance costs | 443,256 | — | — | 443,256 | |||||||||||
Employee tax withholdings related to net share | |||||||||||||||
settlements of equity-based awards | (7,217 | ) | — | — | (7,217 | ) | |||||||||
Proceeds from exercise of employee stock options | 467 | — | — | 467 | |||||||||||
Payments on tax sharing liability | (14,375 | ) | — | — | (14,375 | ) | |||||||||
Contributions from (distributions to) related party, net | — | 49,188 | (49,188 | ) | — | ||||||||||
Net cash used in (provided by) financing activities | (23,369 | ) | 49,188 | (49,188 | ) | (23,369 | ) | ||||||||
Effects of changes in exchange rates on cash and cash equivalents | — | (11,246 | ) | — | (11,246 | ) | |||||||||
Net increase in cash and cash equivalents | 34,262 | 36,835 | — | 71,097 | |||||||||||
Cash and cash equivalents at beginning of period | 53,627 | 63,758 | — | 117,385 | |||||||||||
Cash and cash equivalents at end of period | $ | 87,889 | $ | 100,593 | $ | — | $ | 188,482 |
Three Months Ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net revenue | $ | 239,597 | $ | 248,053 | $ | 459,802 | $ | 458,308 | |||||||
Cost and expenses: | |||||||||||||||
Cost of revenue | 63,897 | 47,638 | 136,380 | 90,383 | |||||||||||
Selling, general and administrative | 72,562 | 72,018 | 143,211 | 138,260 | |||||||||||
Marketing | 82,520 | 89,604 | 158,245 | 166,382 | |||||||||||
Depreciation and amortization | 13,958 | 15,287 | 28,478 | 28,880 | |||||||||||
Total operating expenses | 232,937 | 224,547 | 466,314 | 423,905 | |||||||||||
Operating income/(loss) | 6,660 | 23,506 | (6,512 | ) | 34,403 | ||||||||||
Other expense: | |||||||||||||||
Net interest expense | (7,467 | ) | (8,595 | ) | (15,877 | ) | (18,172 | ) | |||||||
Other expense | — | (2,236 | ) | — | (2,236 | ) | |||||||||
Total other expense | (7,467 | ) | (10,831 | ) | (15,877 | ) | (20,408 | ) | |||||||
Income/(loss) before income taxes | (807 | ) | 12,675 | (22,389 | ) | 13,995 | |||||||||
Provision for income taxes | 3,444 | 5,794 | 2,801 | 13,048 | |||||||||||
Net income/(loss) | $ | (4,251 | ) | $ | 6,881 | $ | (25,190 | ) | $ | 947 | |||||
Net income/(loss) per share - basic: | |||||||||||||||
Net income/(loss) per share | $ | (0.04 | ) | $ | 0.06 | $ | (0.22 | ) | $ | 0.01 | |||||
Weighted-average shares outstanding | 112,418,132 | 110,218,036 | 112,007,027 | 109,907,641 | |||||||||||
Net income/(loss) per share - diluted: | |||||||||||||||
Net income/(loss) per share | $ | (0.04 | ) | $ | 0.06 | $ | (0.22 | ) | $ | 0.01 | |||||
Weighted-average shares outstanding | 112,418,132 | 115,079,178 | 112,007,027 | 114,474,084 |
Three Months Ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income/(loss) | $ | (4,251 | ) | $ | 6,881 | $ | (25,190 | ) | $ | 947 | |||||
Other comprehensive income/(loss): | |||||||||||||||
Currency translation adjustment | (4,120 | ) | (5,239 | ) | 3,079 | (8,793 | ) | ||||||||
Other comprehensive income/(loss) | (4,120 | ) | (5,239 | ) | 3,079 | (8,793 | ) | ||||||||
Comprehensive income/(loss) | $ | (8,371 | ) | $ | 1,642 | $ | (22,111 | ) | $ | (7,846 | ) |
June 30, 2015 | December 31, 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 304,798 | $ | 188,482 | |||
Accounts receivable (net of allowance for doubtful accounts of $1,401 and $1,541, respectively) | 161,340 | 132,951 | |||||
Prepaid expenses | 10,806 | 10,039 | |||||
Other current assets | 34,092 | 17,560 | |||||
Total current assets | 511,036 | 349,032 | |||||
Property and equipment (net of accumulated depreciation of $307,433 and $302,031, respectively) | 110,135 | 111,832 | |||||
Goodwill | 351,098 | 351,098 | |||||
Trademarks and trade names | 89,762 | 89,890 | |||||
Other intangible assets, net | 1,144 | 1,300 | |||||
Deferred income taxes, non-current | 135,095 | 135,807 | |||||
Restricted cash | 92,544 | 97,810 | |||||
Other non-current assets | 12,453 | 39,200 | |||||
Total Assets | $ | 1,303,267 | $ | 1,175,969 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 20,237 | $ | 13,954 | |||
Accrued merchant payable | 504,385 | 366,062 | |||||
Accrued expenses | 165,608 | 158,754 | |||||
Deferred income | 57,334 | 40,816 | |||||
Term loan, current | 24,100 | 25,871 | |||||
Other current liabilities | 5,970 | 1,544 | |||||
Total current liabilities | 777,634 | 607,001 | |||||
Term loan, non-current | 405,499 | 421,879 | |||||
Tax sharing liability | 55,415 | 61,289 | |||||
Other non-current liabilities | 14,733 | 14,702 | |||||
Total Liabilities | 1,253,281 | 1,104,871 | |||||
Commitments and contingencies (see Note 5) | |||||||
Shareholders’ Equity: | |||||||
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, $0.01 par value, 140,000,000 shares authorized, 112,660,845 and 110,758,513 shares issued, respectively | 1,126 | 1,107 | |||||
Treasury stock, at cost, 25,237 shares held | (52 | ) | (52 | ) | |||
Additional paid-in capital | 1,061,616 | 1,060,636 | |||||
Accumulated deficit | (1,025,449 | ) | (1,000,259 | ) | |||
Accumulated other comprehensive income | 12,745 | 9,666 | |||||
Total Shareholders’ Equity | 49,986 | 71,098 | |||||
Total Liabilities and Shareholders’ Equity | $ | 1,303,267 | $ | 1,175,969 |
Six months ended June 30, | |||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net income/(loss) | $ | (25,190 | ) | $ | 947 | ||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 28,478 | 28,880 | |||||
Non-cash net interest expense | 4,532 | 5,237 | |||||
Deferred income taxes | 2,271 | 11,556 | |||||
Stock compensation | 7,416 | 6,803 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (29,759 | ) | (63,438 | ) | |||
Accounts payable, accrued expenses and other current liabilities | 15,857 | 24,168 | |||||
Accrued merchant payable | 139,588 | 175,944 | |||||
Deferred income | 16,787 | 21,920 | |||||
Other | 14,716 | (5,893 | ) | ||||
Net cash provided by operating activities | 174,696 | 206,124 | |||||
Investing activities: | |||||||
Property and equipment additions | (29,312 | ) | (21,168 | ) | |||
Acquisitions, net of cash acquired | — | (10,000 | ) | ||||
Changes in restricted cash | 5,116 | (17,748 | ) | ||||
Net cash used in investing activities | (24,196 | ) | (48,916 | ) | |||
Financing activities: | |||||||
Payments on and retirement of term loans | (18,151 | ) | (443,250 | ) | |||
Issuance of long-term debt, net of issuance costs | — | 443,256 | |||||
Employee tax withholdings related to net share settlements of equity-based awards | (8,452 | ) | (6,747 | ) | |||
Proceeds from exercise of employee stock options | 2,140 | 143 | |||||
Payments on tax sharing liability | (8,921 | ) | (4,616 | ) | |||
Net cash used in financing activities | (33,384 | ) | (11,214 | ) | |||
Effects of changes in exchange rates on cash and cash equivalents | (800 | ) | 1,288 | ||||
Net increase in cash and cash equivalents | 116,316 | 147,282 | |||||
Cash and cash equivalents at beginning of period | 188,482 | 117,385 | |||||
Cash and cash equivalents at end of period | $ | 304,798 | $ | 264,667 | |||
Supplemental disclosure of cash flow information: | |||||||
Income tax payments, net | $ | 1,686 | $ | 1,889 | |||
Cash interest payments | $ | 11,553 | $ | 13,104 | |||
Non-cash investing activity: | |||||||
Capital expenditures incurred not yet paid | $ | 2,570 | $ | 3,811 |
1. | Organization and Basis of Presentation |
2. | Summary of Significant Accounting Policies |
3. | Term Loan and Revolving Credit Facility |
Amount | |||
(in thousands) | |||
Balance at January 1, 2015 (current and non-current) | $ | 447,750 | |
Prepayment from excess cash flow (1) | (18,151 | ) | |
Balance at June 30, 2015 (current and non-current) | $ | 429,599 |
Year | (in thousands) | ||
2015 | — | ||
2016 | — | ||
2017 | — | ||
2018 | — | ||
2019 | 4,349 | ||
Thereafter | 425,250 | ||
Total | $ | 429,599 |
4. | Tax Sharing Liability |
Amount | |||
(in thousands) | |||
Balance at January 1, 2015 (current and non-current) | $ | 78,382 | |
Accretion of interest expense | 3,841 | ||
Cash payments | (8,921 | ) | |
Balance at June 30, 2015 (current and non-current) | $ | 73,302 |
(a) | We accreted interest expense related to the tax sharing liability of $1.7 million and $2.3 million for the three months ended June 30, 2015 and 2014, respectively, and $3.8 million and $4.9 million for the six months ended June 30, 2015 and 2014, respectively. |
5. | Commitments and Contingencies |
• | Certain taxing authorities have not issued assessments, but have requested information to conduct an audit and/or have requested that the Company register to pay local hotel occupancy taxes. This group of taxing authorities includes 43 cities in California; the following cities in Colorado: Broomfield, Colorado Springs, Durango, Frisco, Glendale, Glenwood Springs, Golden, Grand Junction, Greeley, Greenwood Village, Lafayette, Lakewood, Littleton, Loveland, Silverthorne and Steamboat Springs; Arlington, Texas; Brunswick and Stanly, North Carolina; the following counties in Utah: Davis, Summit, Salt Lake and Weber; the Arizona Department of Revenue; the Ohio Department of Taxation; Paradise Valley, Arizona; various Alabama Municipalities; the Louisiana Department of Revenue; and the Vermont Department of Taxation. |
• | The following taxing authorities have issued assessments which are not final and are subject to further review by such taxing authorities: the Colorado Department of Revenue; the City of Aurora, Colorado; the Maryland Comptroller; the Texas Comptroller; the City of Portland, Oregon, and Multnomah County, Oregon; and Lake County, Indiana. These assessments range from $0.02 million to approximately $5.8 million, and total approximately $10.5 million. |
• | Assessments or declaratory rulings that are administratively final and subject to judicial review have been issued by the cities of San Francisco, Los Angeles, and San Diego, California; the city of Denver, Colorado; the counties of Miami-Dade, Broward and Osceola, Florida; the Indiana Department of Revenue; and the Hawaii Department of Taxation for merchant car reservations for the years 2002-2012, and merchant hotel reservations for the years 2012 and 2013. These assessments and declaratory rulings range from $0.2 million to approximately $16.9 million, and total approximately $47.5 million. Trial courts rejected the assessments in San Francisco and San Diego, California and Broward County, Florida. The Colorado Court of Appeals reversed the assessments against the OTCs in the City of Denver case. The final assessments by the county of Osceola, Florida, the county of Miami-Dade, Florida, the Indiana Department of Revenue, and Hawaii Department of Taxation for merchant car reservations for the years 2002-2012 and merchant hotel reservations for 2012-2013 have not yet been judicially reviewed. |
June 30, 2015 | December 31, 2014 | ||||||||||||||
Letters of Credit and Other Credit Support | Restricted Cash | Letters of Credit and Other Credit Support | Restricted Cash | ||||||||||||
(in thousands) | |||||||||||||||
Multi-currency letter of credit facility | $ | — | $ | — | $ | 2,892 | $ | 3,176 | |||||||
Uncommitted letter of credit facilities and surety bonds | 96,053 | 92,544 | 98,406 | 94,634 | |||||||||||
Total | $ | 96,053 | $ | 92,544 | $ | 101,298 | $ | 97,810 |
6. | Equity-Based Compensation |
7. | Derivative Financial Instruments |
Notional Amount | Effective Date | Maturity Date | Fixed Interest Rate Paid | Variable Interest Rate Received | ||||
$100.0 million | August 29, 2014 | August 31, 2016 | 1.11% | One-month LIBOR | ||||
$100.0 million | August 29, 2014 | August 31, 2016 | 1.15% | One-month LIBOR |
Fair Value Measurements as of | |||||||||
Balance Sheet Location | June 30, 2015 | December 31, 2014 | |||||||
(in thousands) | |||||||||
Interest rate swaps not designated as hedging instruments | Other non-current liabilities | $ | 1,608 | $ | 1,723 |
Fair Value Measurements as of | |||||||||
Balance Sheet Location | June 30, 2015 | December 31, 2014 | |||||||
(in thousands) | |||||||||
Asset Derivatives: | |||||||||
Foreign currency hedges | Other current assets | $ | — | $ | 4,275 | ||||
Liability Derivatives: | |||||||||
Foreign currency hedges | Other current liabilities | $ | 3,993 | $ | — |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Foreign currency hedges (a) | $ | (6,884 | ) | $ | (5,236 | ) | $ | (3,068 | ) | $ | (10,105 | ) |
(a) | We recorded transaction gains associated with the re-measurement and settlement of our foreign denominated assets and liabilities of $5.0 million and $4.1 million for the three months ended June 30, 2015 and 2014, respectively, and $0.4 million and $6.9 million for the six months ended June 30, 2015 and 2014, respectively. These transaction gains were included in Selling, general and administrative expense in our Condensed Consolidated Statements of Operations. The net impact of these transaction gains, together with the losses incurred on our foreign currency hedges, were losses of $1.8 million and $1.1 million for the three months ended June 30, 2015 and 2014, respectively, and $2.7 million and $3.2 million for the six months ended June 30, 2015 and 2014, respectively. |
Gross Amounts of Recognized Liabilities | Gross Asset Recognized as an Offset | Net Liabilities (Assets)Included in the Condensed Consolidated Balance Sheets | |||||||||
(in thousands) | |||||||||||
June 30, 2015 | $ | 6,746 | $ | (1,145 | ) | $ | 5,601 | ||||
December 31, 2014 | $ | 2,947 | $ | (5,499 | ) | $ | (2,552 | ) |
8. | Accumulated Other Comprehensive Income/(Loss) |
Currency Translation Adjustment | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Balance at April 1, | $ | 16,865 | $ | (538 | ) | ||
Other comprehensive income/(loss) before reclassifications | (4,120 | ) | (5,239 | ) | |||
Net current-period other comprehensive income/(loss) | (4,120 | ) | (5,239 | ) | |||
Balance at June 30, | $ | 12,745 | $ | (5,777 | ) |
Currency Translation Adjustment | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Balance at January 1, | $ | 9,666 | $ | 3,016 | |||
Other comprehensive income/(loss) before reclassifications | 3,079 | (8,793 | ) | ||||
Net current-period other comprehensive income/(loss) | 3,079 | (8,793 | ) | ||||
Balance at June 30, | $ | 12,745 | $ | (5,777 | ) |
9. | Net Income/(Loss) per Share |
Three Months Ended June 30, | Six months ended June 30, | ||||||||||
Weighted-Average Shares Outstanding | 2015 | 2014 | 2015 | 2014 | |||||||
Basic | 112,418,132 | 110,218,036 | 112,007,027 | 109,907,641 | |||||||
Diluted effect of: | |||||||||||
Restricted stock units | — | 2,318,956 | — | 1,852,820 | |||||||
Performance-based restricted stock units | — | 2,095,044 | — | 2,255,755 | |||||||
Stock options | — | 447,142 | — | 457,868 | |||||||
Diluted | 112,418,132 | 115,079,178 | 112,007,027 | 114,474,084 |
Three Months Ended June 30, | Six months ended June 30, | ||||||||||
Antidilutive Equity Awards | 2015 | 2014 | 2015 | 2014 | |||||||
Restricted stock units | 4,288,652 | 936,427 | 4,141,535 | 618,421 | |||||||
Performance-based restricted stock units | 1,798,277 | 410,445 | 1,933,003 | 269,851 | |||||||
Stock options | 787,017 | — | 919,260 | — | |||||||
Total | 6,873,946 | 1,346,872 | 6,993,798 | 888,272 |
10. | Fair Value Measurements |
Fair Value Measurements as of | |||||||||||||||||||||||||||||||
June 30, 2015 | December 31, 2014 | ||||||||||||||||||||||||||||||
Total | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Foreign currency derivative assets | $ | — | $ | — | $ | — | $ | — | $ | 4,275 | $ | 4,275 | $ | — | $ | — | |||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Foreign currency derivative liabilities | $ | 3,993 | $ | 3,993 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Interest rate swap liabilities | $ | 1,608 | $ | — | $ | 1,608 | $ | — | $ | 1,723 | $ | — | $ | 1,723 | $ | — |
11. | Income Taxes |
13. | Guarantor and Non-Guarantor Supplemental Financial Information |
Guarantor | Non-Guarantor | Eliminations | Consolidated | ||||||||||||
Net revenue | $ | 365,089 | $ | 94,713 | $ | — | $ | 459,802 | |||||||
Cost and expenses: | |||||||||||||||
Cost of revenue | 102,389 | 33,991 | — | 136,380 | |||||||||||
Selling, general and administrative | 102,262 | 40,949 | — | 143,211 | |||||||||||
Marketing | 111,836 | 46,409 | — | 158,245 | |||||||||||
Depreciation and amortization | 27,489 | 989 | — | 28,478 | |||||||||||
Total operating expenses | 343,976 | 122,338 | — | 466,314 | |||||||||||
Operating income / (loss) | 21,113 | (27,625 | ) | — | (6,512 | ) | |||||||||
Other expense: | |||||||||||||||
Net interest expense | (13,926 | ) | (1,951 | ) | — | (15,877 | ) | ||||||||
Total other expense | (13,926 | ) | (1,951 | ) | — | (15,877 | ) | ||||||||
Income / (loss) before income taxes | 7,187 | (29,576 | ) | — | (22,389 | ) | |||||||||
Provision / (benefit) for income taxes | 2,763 | 38 | — | 2,801 | |||||||||||
Equity in losses of consolidated subsidiaries | (29,614 | ) | — | 29,614 | — | ||||||||||
Net income (loss) | $ | (25,190 | ) | $ | (29,614 | ) | $ | 29,614 | $ | (25,190 | ) | ||||
Comprehensive income (loss) attributable to Orbitz Worldwide, Inc. | $ | (22,111 | ) | $ | (26,535 | ) | $ | 26,535 | $ | (22,111 | ) |
Guarantor | Non-Guarantor | Eliminations | Consolidated | ||||||||||||
Net revenue | $ | 338,829 | $ | 119,479 | $ | — | $ | 458,308 | |||||||
Cost and expenses: | |||||||||||||||
Cost of revenue | 69,118 | 21,265 | — | 90,383 | |||||||||||
Selling, general and administrative | 91,867 | 46,393 | — | 138,260 | |||||||||||
Marketing | 106,115 | 60,267 | — | 166,382 | |||||||||||
Depreciation and amortization | 27,719 | 1,161 | — | 28,880 | |||||||||||
Total operating expenses | 294,819 | 129,086 | — | 423,905 | |||||||||||
Operating income / (loss) | 44,010 | (9,607 | ) | — | 34,403 | ||||||||||
Other expense | |||||||||||||||
Net interest expense | (13,847 | ) | (4,325 | ) | — | (18,172 | ) | ||||||||
Other expense | (2,236 | ) | — | — | (2,236 | ) | |||||||||
Total other expense | (16,083 | ) | (4,325 | ) | — | (20,408 | ) | ||||||||
Income / (loss) before income taxes | 27,927 | (13,932 | ) | — | 13,995 | ||||||||||
Provision / (benefit) for income taxes | 13,036 | 12 | — | 13,048 | |||||||||||
Equity in losses of consolidated subsidiaries | (13,944 | ) | — | 13,944 | — | ||||||||||
Net income (loss) | $ | 947 | $ | (13,944 | ) | $ | 13,944 | $ | 947 | ||||||
Comprehensive income (loss) attributable to Orbitz Worldwide, Inc. | $ | (7,846 | ) | $ | (22,737 | ) | $ | 22,737 | $ | (7,846 | ) |
Guarantor | Non-Guarantor | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 214,340 | $ | 90,458 | $ | — | $ | 304,798 | |||||||
Accounts receivable, net | 118,216 | 43,124 | — | 161,340 | |||||||||||
Prepaid expenses | 8,720 | 2,086 | — | 10,806 | |||||||||||
Other current assets | 32,920 | 1,347 | (175 | ) | 34,092 | ||||||||||
Total current assets | 374,196 | 137,015 | (175 | ) | 511,036 | ||||||||||
Property and equipment, net | 105,495 | 4,640 | — | 110,135 | |||||||||||
Goodwill | 351,098 | — | — | 351,098 | |||||||||||
Trademarks and trade names | 83,065 | 6,697 | — | 89,762 | |||||||||||
Other intangible assets, net | 1,144 | — | — | 1,144 | |||||||||||
Intercompany receivable, non-current | 36,749 | — | (36,749 | ) | — | ||||||||||
Deferred income taxes, non-current | 131,474 | 3,621 | — | 135,095 | |||||||||||
Restricted cash | 65,206 | 27,338 | — | 92,544 | |||||||||||
Investment in subsidiaries | 40,319 | — | (40,319 | ) | — | ||||||||||
Other non-current assets | 11,927 | 526 | — | 12,453 | |||||||||||
Total Assets | $ | 1,200,673 | $ | 179,837 | $ | (77,243 | ) | $ | 1,303,267 | ||||||
Liabilities and Shareholders' Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 15,919 | $ | 4,318 | $ | — | $ | 20,237 | |||||||
Accrued merchant payable | 457,541 | 46,844 | — | 504,385 | |||||||||||
Accrued expenses | 132,006 | 33,602 | — | 165,608 | |||||||||||
Deferred income | 39,939 | 17,395 | — | 57,334 | |||||||||||
Term loan, current | 24,100 | — | — | 24,100 | |||||||||||
Other current liabilities | 6,145 | — | (175 | ) | 5,970 | ||||||||||
Total current liabilities | 675,650 | 102,159 | (175 | ) | 777,634 | ||||||||||
Term loan, non-current | 405,499 | — | — | 405,499 | |||||||||||
Intercompany liabilities, non-current | — | 36,749 | (36,749 | ) | — | ||||||||||
Tax sharing liability | 55,415 | — | — | 55,415 | |||||||||||
Other non-current liabilities | 14,123 | 610 | — | 14,733 | |||||||||||
Total Liabilities | 1,150,687 | 139,518 | (36,924 | ) | 1,253,281 | ||||||||||
Total Shareholders' Equity | 49,986 | 40,319 | (40,319 | ) | 49,986 | ||||||||||
Total Liabilities and Shareholders' Equity | $ | 1,200,673 | $ | 179,837 | $ | (77,243 | ) | $ | 1,303,267 |
Guarantor | Non-Guarantor | Eliminations | Consolidated | ||||||||||||
Operating activities: | |||||||||||||||
Net cash provided by operating activities | $ | 116,046 | $ | 58,650 | $ | — | $ | 174,696 | |||||||
Investing activities: | |||||||||||||||
Property and equipment additions | (28,522 | ) | (790 | ) | — | (29,312 | ) | ||||||||
Changes in restricted cash | 4,040 | 1,076 | — | 5,116 | |||||||||||
Contributions from (distributions to) related party, net | 68,271 | — | (68,271 | ) | — | ||||||||||
Net cash provided by used in (provided by) investing activities | 43,789 | 286 | (68,271 | ) | (24,196 | ) | |||||||||
Financing activities: | |||||||||||||||
Payments on and retirements of term loans | (18,151 | ) | — | — | (18,151 | ) | |||||||||
Employee tax withholdings related to net share | |||||||||||||||
settlements of equity-based awards | (8,452 | ) | — | — | (8,452 | ) | |||||||||
Proceeds from exercise of employee stock options | 2,140 | — | — | 2,140 | |||||||||||
Payments on tax sharing liability | (8,921 | ) | — | — | (8,921 | ) | |||||||||
Contributions from (distributions to) related party, net | — | (68,271 | ) | 68,271 | — | ||||||||||
Net cash provided by used in (provided by) financing activities | (33,384 | ) | (68,271 | ) | 68,271 | (33,384 | ) | ||||||||
Effects of changes in exchange rates on cash and cash equivalents | — | (800 | ) | — | (800 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | 126,451 | (10,135 | ) | — | 116,316 | ||||||||||
Cash and cash equivalents at beginning of period | 87,889 | 100,593 | — | 188,482 | |||||||||||
Cash and cash equivalents at end of period | $ | 214,340 | $ | 90,458 | $ | — | $ | 304,798 |
Guarantor | Non-Guarantor | Eliminations | Consolidated | ||||||||||||
Operating activities: | |||||||||||||||
Net cash provided by (used in) operating activities | $ | 208,217 | $ | (2,093 | ) | $ | — | $ | 206,124 | ||||||
Investing activities: | |||||||||||||||
Property and equipment additions | (20,594 | ) | (574 | ) | — | (21,168 | ) | ||||||||
Acquisitions, net of cash acquired | (10,000 | ) | — | — | (10,000 | ) | |||||||||
Changes in restricted cash | (15,828 | ) | (1,920 | ) | — | (17,748 | ) | ||||||||
Contributions from (distributions to) related party, net | (52,356 | ) | — | 52,356 | |||||||||||
Net cash provided by (used in) investing activities | (98,778 | ) | (2,494 | ) | 52,356 | (48,916 | ) | ||||||||
Financing activities: | |||||||||||||||
Payments on and retirements of term loans | (443,250 | ) | — | — | (443,250 | ) | |||||||||
Issuance of long-term debt, net of issuance costs | 443,256 | — | — | 443,256 | |||||||||||
Employee tax withholdings related to net share | |||||||||||||||
settlements of equity-based awards | (6,747 | ) | — | — | (6,747 | ) | |||||||||
Proceeds from exercise of employee stock options | 143 | — | — | 143 | |||||||||||
Payments on tax sharing liability | (4,616 | ) | — | — | (4,616 | ) | |||||||||
Contributions from (distributions to) related party, net | — | 52,356 | (52,356 | ) | — | ||||||||||
Net cash provided by (used in) financing activities | (11,214 | ) | 52,356 | (52,356 | ) | (11,214 | ) | ||||||||
Effects of changes in exchange rates on cash and cash equivalents | — | 1,288 | — | 1,288 | |||||||||||
Net increase in cash and cash equivalents | 98,225 | 49,057 | — | 147,282 | |||||||||||
Cash and cash equivalents at beginning of period | 53,627 | 63,758 | — | 117,385 | |||||||||||
Cash and cash equivalents at end of period | $ | 151,852 | $ | 112,815 | $ | — | $ | 264,667 |
Document and Entity Information |
6 Months Ended |
---|---|
Jun. 30, 2015 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | EXPEDIA, INC. |
Entity Central Index Key | 0001324424 |
Document Type | 8-K |
Document Period End Date | Jun. 30, 2015 |
Amendment Flag | false |
Condensed Consolidated Statements of Operations - Orbitz $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2014
USD ($)
$ / shares
shares
| |
Net revenue | $ 932,007 |
Cost and expenses: | |
Cost of revenue | 179,774 |
Selling, general and administrative | 278,202 |
Marketing | 334,472 |
Depreciation and amortization | 57,549 |
Impairment of goodwill and intangible assets | 0 |
Impairment of property and equipment and other assets | 0 |
Total operating expenses | 849,997 |
Operating income/(loss) | 82,010 |
Other income/(expense): | |
Net interest expense | (35,212) |
Other income/(expense) | (2,237) |
Total other expense | (37,449) |
Income/(loss) before income taxes | 44,561 |
Provision/(benefit) for income taxes | 27,281 |
Net income/(loss) | $ 17,280 |
Net income/(loss) per share - basic: | |
Net income/(loss) per share | $ / shares | $ 0.16 |
Weighted-average shares outstanding | shares | 110,537,992 |
Net income/(loss) per share - diluted: | |
Net income/(loss) per share | $ / shares | $ 0.15 |
Weighted-average shares outstanding, diluted | shares | 114,344,440 |
Condensed Consolidated Statements of Comprehensive Income - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Net income/(loss) | $ (4,251) | $ 7,296 | $ 9,037 | $ 6,881 | $ (5,934) | $ (25,190) | $ 947 | $ 17,280 |
Other comprehensive income/(loss): | ||||||||
Currency translation adjustment | (5,239) | (8,793) | 6,650 | |||||
Unrealized gain/(loss) on floating to fixed interest rate swaps (net of tax of $0, $2,558, and $0) | 0 | |||||||
Other comprehensive income/(loss) | (4,120) | (5,239) | 3,079 | (8,793) | 6,650 | |||
Comprehensive income/(loss) | $ (8,371) | $ 1,642 | $ (22,111) | $ (7,846) | $ 23,930 |
Condensed Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Orbitz | |||||
Other Comprehensive Income, Income Tax Impact | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Balance Sheets (Parenthetical) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Allowance for doubtful accounts | $ 1,522 | $ 1,541 |
Accumulated depreciation | $ 374,003 | $ 302,031 |
Preferred stock, par value | $ 0.00 | $ 0.01 |
Preferred stock, shares authorized | 0 | 100 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.00 | $ 0.01 |
Common stock, shares authorized | 0 | 140,000,000 |
Common stock, shares issued | 0 | 110,758,513 |
Treasury stock, shares held | 0 | 25,237 |
Accumulated Other Comprehensive Income Loss Tax | $ 0 | $ 0 |
Condensed Consolidated Statements of Cash Flows (Parenthetical) - Orbitz - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Income Taxes Paid, Net | $ 1,686 | $ 1,889 | $ 3,231 |
Interest Paid, Net | 11,553 | 13,104 | 24,394 |
Capital expenditures incurred but not yet paid | $ 2,570 | $ 3,811 | $ 3,281 |
Organization and Basis of Presentation |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
|
Orbitz | ||
Entity Information [Line Items] | ||
Organization and Basis of Presentation | Organization and Basis of Presentation Description of the Business Orbitz, Inc. was established in early 2000 by American Airlines, Inc., Continental Airlines, Inc., Delta Air Lines, Inc., Northwest Airlines, Inc. and United Air Lines, Inc. (the “Founding Airlines”). In November 2004, Orbitz was acquired by Cendant Corporation (“Cendant”), whose online travel distribution businesses included the HotelClub and RatesToGo brands (collectively referred to as “HotelClub”) and the CheapTickets brand. In February 2005, Cendant acquired ebookers Limited, an international online travel brand which currently has operations in 8 countries throughout Europe (“ebookers”). Orbitz Worldwide, Inc. was incorporated in Delaware on June 18, 2007 and was formed to be the parent company of the business-to-consumer travel businesses of Travelport, including Orbitz.com, ebookers and HotelClub and the related subsidiaries and affiliates of those businesses. We are the registrant as a result of the completion of the initial public offering (the “IPO”) of 34.4 million shares of our common stock on July 25, 2007. On April 15, 2013, following the completion of the Travelport refinancing plan, Orbitz Worldwide, Inc. is no longer a “controlled company” as defined in Section 303A of the New York Stock Exchange listing rules. We are a global online travel company (“OTC”) that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products and services including hotels, flights, vacation packages, car rentals, cruises, rail tickets, travel insurance, destination services and event tickets. We provide our customers an easy-to-use booking experience across a wide variety of devices. Our global brand portfolio includes Orbitz.com and CheapTickets in the United States; ebookers in Europe; and HotelClub, which focuses on the Asia Pacific region. We also own and operate Orbitz for Business, which is a corporate travel management company, and the Orbitz Partner Network, which delivers private label travel solutions to a broad range of partners. On February 12, 2015, Orbitz Worldwide, Inc., Expedia, Inc. (“Expedia”), and Xeta, Inc., an indirect wholly owned subsidiary of Expedia (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides, subject to the terms and conditions set forth therein, that Merger Sub will be merged with and into the Company (the “Merger”) among other things and, with the Company surviving the Merger as an indirect wholly owned subsidiary of Expedia. At the effective time of the Merger (the “Effective Time”), each share of common stock of the Company outstanding immediately prior to the Effective Time (other than any shares owned by the Company, Expedia, Merger Sub or Merger Sub’s direct parent or any dissenting shares) will be automatically converted into the right to receive $12.00 in cash, without interest. The Board of Directors of the Company by a unanimous vote of directors present approved the Merger Agreement and the transactions contemplated thereby, including the Merger. On May 27, 2015, the Company’s shareholders voted to approve the Merger Agreement and the transactions contemplated thereby, including the Merger. Because the Company’s shareholders have approved the Merger, the Company’s Board of Directors may no longer effect a Change of Board Recommendation (as defined in the Merger Agreement) in connection with its fiduciary duties to the shareholders. The closing of the Merger is subject to various customary conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other regulatory clearances, the absence of any governmental order prohibiting the consummation of the transactions contemplated by the Merger Agreement, the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain materiality qualifications) and compliance with the covenants and agreements in the Merger Agreement in all material respects. The Merger Agreement entered into on February 12, 2015, contains certain termination rights, and if the Merger Agreement is terminated as a result of the failure to obtain competition law approvals or a legal prohibition related to competition law matters, a termination fee of $115.0 million will be payable by Expedia to the Company, subject to certain limitations. In addition, subject to certain exceptions and limitations, if all conditions to closing other than obtaining regulatory clearances and conditions that by their nature are to be satisfied at the closing have been satisfied as of August 12, 2015, either the Company or Expedia may extend the termination date of the Merger Agreement until November 12, 2015. As of the date of this report, all conditions to the closing of the Merger other than obtaining all regulatory clearances and conditions that by their nature are to be satisfied at the closing have been satisfied. If neither party elects to extend the termination date on August 12, then either party may terminate the agreement. On March 25, 2015, each of Orbitz and Expedia received a request for additional information or materials from the U.S. Department of Justice (the “DOJ”) in connection with the DOJ pending review of the proposed merger. Reclassifications Certain prior year amounts in the Condensed Consolidated Financial Statements have been reclassified to conform with the current year presentation. Basis of Presentation The accompanying Condensed Consolidated Financial Statements present the accounts of Orbitz.com, ebookers and HotelClub and the related subsidiaries and affiliates of those businesses, collectively doing business as Orbitz Worldwide, Inc. As mentioned above, the Company entered into an agreement on February 12, 2015, that, if consummated, would result in the Company becoming an indirect wholly-owned subsidiary of Expedia, Inc. The accompanying Condensed Consolidated Financial Statements do not reflect any effects that would result if the agreement is consummated. |
Basis of Presentation Description of the Business Orbitz, Inc. was established in early 2000 by American Airlines, Inc., Continental Airlines, Inc., Delta Air Lines, Inc., Northwest Airlines, Inc. and United Air Lines, Inc. (the “Founding Airlines”). In November 2004, Orbitz was acquired by Cendant Corporation (“Cendant”), whose online travel distribution businesses included the HotelClub and RatesToGo brands (collectively referred to as “HotelClub”) and the CheapTickets brand. In February 2005, Cendant acquired ebookers Limited, an international online travel brand which currently has operations in 8 countries throughout Europe (“ebookers”). On August 23, 2006, Travelport Limited (“Travelport”), which consisted of Cendant’s travel distribution services businesses, including the businesses that currently comprise Orbitz Worldwide, Inc., was acquired by affiliates of The Blackstone Group and Technology Crossover Ventures. Orbitz Worldwide, Inc. was incorporated in Delaware on June 18, 2007 and was formed to be the parent company of the business-to-consumer travel businesses of Travelport, including Orbitz.com, ebookers and HotelClub and the related subsidiaries and affiliates of those businesses. We are the registrant as a result of the completion of the initial public offering (the “IPO”) of 34.4 million shares of our common stock on July 25, 2007. On April 15, 2013, following the completion of the Travelport refinancing plan, Orbitz Worldwide, Inc. is no longer a “controlled company” as defined in Section 303A of the New York Stock Exchange listing rules. In the second quarter and early third quarter of 2014, Travelport sold approximately 47.7 million shares, and after its secondary stock offering on July 22, 2014, is no longer considered a related party. At December 31, 2014, Travelport and the investment funds that indirectly owned Travelport, beneficially owned approximately 1% of our outstanding common stock. We are a global online travel company (“OTC”) that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products and services including hotels, flights, vacation packages, car rentals, cruises, rail tickets, travel insurance, destination services and event tickets. We provide our customers an easy-to-use booking experience across a wide variety of devices. Our global brand portfolio includes Orbitz.com and CheapTickets in the United States; ebookers in Europe; and HotelClub, which focuses on the Asia Pacific region. We also own and operate Orbitz for Business, which is a corporate travel management company, and the Orbitz Partner Network, which delivers private label travel solutions to a broad range of partners. Basis of Presentation The accompanying consolidated financial statements present the accounts of Orbitz.com, ebookers and HotelClub and the related subsidiaries and affiliates of those businesses, collectively doing business as Orbitz Worldwide, Inc. These entities became wholly-owned subsidiaries of ours as part of an intercompany restructuring that was completed on July 18, 2007 in connection with the IPO. Prior to the IPO, these entities had operated as indirect, wholly-owned subsidiaries of Travelport. As further discussed in Note 18 - “Subsequent Events”, the Company entered into an agreement on February 12, 2015, that, if consummated, would result in the Company becoming an indirect wholly-owned subsidiary of Expedia, Inc. The accompanying consolidated financial statements do not reflect any effects that would result if the agreement is consummated. |
Significant Accounting Policies |
6 Months Ended | 12 Months Ended | ||||||||||||||||||
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Jun. 30, 2015 |
Dec. 31, 2014 |
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Orbitz | ||||||||||||||||||||
Entity Information [Line Items] | ||||||||||||||||||||
Significant Accounting Policies [Text Block] | Summary of Significant Accounting Policies Our significant accounting policies are discussed in Note 2 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014 and our critical accounting estimates in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2014. Use of Estimates The preparation of our consolidated financial statements and related notes in conformity with GAAP requires us to make certain estimates and assumptions. Our estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to matters that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. Our significant estimates include elements of revenue recognition, the realization of deferred tax assets, amounts that may be due under the tax sharing agreement, the reserve for fraudulent transactions, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, costs to be capitalized as well as the useful life of capitalized software, and contingent liabilities, including taxes related to hotel occupancy. Actual amounts may differ from these estimates. During the six months ended June 30, 2015, the Company experienced a significant increase in fraudulent transaction expense. While we have taken extensive actions to reduce such transactions, there is no guarantee that we will be successful in further reducing fraudulent transactions in the future or that the losses from such transactions will be reduced to a rate experienced prior to 2015. We utilize recent loss experience, including reported debit memo information and expected delays and processing times to estimate our reserve for fraudulent transaction expense. It is possible that changes in the frequency of losses or lag times or changes in the effectiveness of our counter-measures could cause actual losses from fraudulent transactions to differ materially from our estimates. |
Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). All intercompany balances and transactions have been eliminated in the consolidated financial statements. Use of Estimates The preparation of our consolidated financial statements and related notes in conformity with GAAP requires us to make certain estimates and assumptions. Our estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to matters that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. Our significant estimates include elements of revenue recognition, the realization of deferred tax assets, amounts that may be due under the tax sharing agreement, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, costs to be capitalized as well as the useful life of capitalized software, and contingent liabilities, including taxes related to hotel occupancy. Actual amounts may differ from these estimates. Foreign Currency Translation Balance sheet accounts of our operations outside of the United States are translated from foreign currencies into U.S. dollars at the exchange rates as of the Consolidated Balance Sheet dates. Revenues and expenses are translated at average exchange rates during the period. Foreign currency translation gains or losses are included in accumulated other comprehensive income (loss) in shareholders’ equity. Gains and losses resulting from foreign currency transactions, which are denominated in currencies other than the entity’s functional currency, are included in our Consolidated Statement of Operations. Revenue Recognition We recognize revenue when it is earned and realizable, when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. We have two primary types of contractual arrangements with our vendors, which we refer to herein as the “merchant” and “retail” models. Under both the merchant and retail models, we record revenue earned net of all amounts paid to our suppliers. We provide customers the ability to book air travel, hotels, car rentals and other travel products and services through our various websites. These travel products and services are made available to our customers for booking on a stand-alone basis or as part of a vacation package. Under the merchant model, we generate revenue for our services based on the difference between the total amount the customer pays for the travel product and the negotiated net rate plus estimated taxes that the supplier charges us for that product. Customers generally pay us for reservations at the time of booking. Initially, we record these customer receipts as accrued merchant payables and either deferred income or net revenue, depending on the travel product. In the merchant model we do not take on credit risk with the customer since we are paid via a credit card, debit card or certain other electronic payment processors (collectively “Payment Processors”), while the cardholder’s Payment Processors collects funds from the customer. However we are subject to charge-backs and fraud risk, which we monitor closely; we have the ability to determine the price; we are not responsible for the actual delivery of the flight, hotel room or car rental; we take no inventory risk; we have no ability to determine or change the products or services delivered; and the customer chooses the supplier. Transaction related taxes are recorded net of any amounts received from customers. Under the merchant model we receive payment for a reservation from a customer via the Payment Processors. The Payment Processors transmit payment for the reservation within one to two days of the booking date. The Payment Processors take on the risk of collecting funds from the customer. We are subject to fraud because we may be charged by the Payment Processors for fraudulent charges after we remit funds to the supplier. In other instances, the customer may be dissatisfied with some aspect of their travel and contest the charges with the Payment Processors, which could result in a charge-back. We recognize net revenue under the merchant model when we have no further obligations to the customer. For merchant air transactions, this is at the time of booking. For merchant hotel transactions and merchant car transactions, net revenue is recognized at the time of check-in or customer pick-up, respectively. The timing of revenue recognition is different for merchant air travel because our primary service to the customer is fulfilled at the time of booking. We accrue for the cost of merchant hotel and merchant car transactions based on amounts we expect to be invoiced by suppliers. If we do not receive an invoice within a certain period of time, generally within six months, or the invoice received is less than the accrued amount, we reverse a portion of the accrued cost when we determine it is not probable that we will be required to pay the supplier, based on our historical experience and contract terms. This results in an increase in net revenue and a decrease to the accrued merchant payable. Under the retail model, we pass reservations booked by our customers to the travel supplier for a commission. In the retail model: we do not take on credit risk with the customer; we are not the primary obligor with the customer; we have no latitude in determining pricing; we take no inventory risk; we have no ability to determine or change the products or services delivered; and the customer chooses the supplier. We recognize net revenue under the retail model when the reservation is made, secured by a customer with a credit card and we have no further obligations to the customer. For air transactions, this is at the time of booking. For hotel transactions and car transactions, net revenue is recognized at the time of check-in or customer pick-up, respectively, net of an allowance for cancelled reservations. The timing of recognition is different for retail hotel and retail car transactions than for retail air travel because unlike air travel where the reservation is secured by a customer’s Payment Processors at booking, car rental bookings and hotel bookings are not secured by a customer’s credit card until the pick-up date and check-in date, respectively. Allowances for cancelled reservations primarily relate to cancellations that do not occur through our websites, but instead occur directly through the supplier of the travel product. The amount of the allowance is determined based on our historical experience. The majority of commissions earned under the retail model are based upon contractual agreements. Vacation packages offer customers the ability to book a combination of travel products. For example, travel products booked in a vacation package may include a combination of air travel, hotel and car rental reservations. We recognize net revenue for the entire package when the customer uses the reservation, which generally occurs on the same day for each travel product included in the vacation package. Under both the merchant and retail models, we may, depending upon the brand and the travel product, charge our customers a service fee for booking their travel reservation. We recognize revenue for service fees at the time we recognize the net revenue for the corresponding travel product. We also may receive override commissions from suppliers if we meet certain contractual volume thresholds. These commissions are recognized when the amount of the commissions becomes fixed or determinable, which is generally upon notification by the respective travel supplier. We utilize global distribution systems (“GDS”) services from various providers. Under our GDS service agreements, we earn revenue in the form of an incentive payment for air, car and hotel segments that are processed through a GDS. Revenue is recognized for these incentive payments at the time the travel reservation is processed through the GDS, which is generally at the time of booking. The Company issues credits in the form of points related to its loyalty programs. The value of points earned by loyalty program members is included in accrued liabilities and recorded as a reduction of revenue at the time the points are earned, based on the percentage of points that are projected to be redeemed. We also generate other revenue, which is primarily composed of revenue from advertising, including sponsoring links on our websites, and travel insurance. Advertising revenue is derived primarily from the delivery of advertisements on our websites and is recognized either at the time of display of each individual advertisement, or ratably over the advertising delivery period, depending on the terms of the advertising contract. Revenues generated from sponsoring links are recognized upon notification from the alliance partner that a transaction has occurred. Travel insurance revenue is recognized when the reservation is made, secured by a customer with a credit card and we have no further obligations to the customer, which for travel insurance is at the time of booking. Cost of Revenue Cost of revenue is primarily composed of direct costs incurred to generate revenue, including costs to operate our customer service call centers, credit card processing fees and other costs, which include customer refunds and charge-backs, connectivity and other processing costs. These costs are generally variable in nature and are primarily driven by transaction volume. Marketing Expense Marketing expense is primarily composed of online marketing costs, such as search and banner advertising and affiliate commissions, and offline marketing costs, such as television, radio and print advertising. Online advertising expense is recognized based on the terms of the individual agreements, based on the ratio of actual impressions to contracted impressions, pay-per-click, or on a straight-line basis over the term of the contract. Offline marketing expense is recognized in the period in which it is incurred. Our online marketing costs are significantly greater than our offline marketing costs. Income Taxes Our provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the combined federal and state or foreign effective tax rates that are applicable to us in a given year. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, we believe it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. The realization of the deferred tax assets, net of a valuation allowance, is primarily dependent on estimated future taxable income. A change in our estimate of future taxable income may require an increase or decrease to the valuation allowance. Derivative Financial Instruments We measure derivatives at fair value and recognize them in our Consolidated Balance Sheet as assets or liabilities, depending on our rights or obligations under the applicable derivative contract. For our derivatives designated as fair value hedges, if any, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings. For our derivatives designated as cash flow hedges, the effective portions of changes in fair value of the derivative are reported in other comprehensive income and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging instruments, and ineffective portions of hedges, are recognized in earnings in the current period. We manage interest rate exposure by utilizing interest rate swaps to achieve a desired mix of fixed and variable rate debt. As of December 31, 2014, we have two interest rate swaps outstanding that effectively convert $200.0 million of the term loan from a variable to a fixed interest rate (see Note 12 - Derivative Financial Instruments). We pay a fixed interest rate on the notional amount and in exchange receive a variable interest rate based on the one-month LIBOR rate. We have entered into foreign currency contracts to manage exposure to changes in foreign currencies associated with receivables, payables and intercompany transactions. These foreign currency contracts did not qualify for hedge accounting treatment. As a result, the changes in fair values of the foreign currency contracts were recorded in selling, general and administrative expense in our Consolidated Statement of Operations. We do not enter into derivative instruments for speculative or trading purposes. We require that the hedges or derivative financial instruments be effective in managing the interest rate risk or foreign currency risk exposure that they are designated to hedge. Hedges that qualify for hedge accounting are formally designated as such at the inception of the contract. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, resulting in some ineffectiveness, the change in the fair value of the derivative instrument will be included in earnings. Additionally, any derivative instrument used for risk management that becomes ineffective is marked-to-market each period. We believe that our credit risk has been mitigated by entering into these agreements with major financial institutions. Net interest differentials to be paid or received under our interest rate swaps are included in interest expense as incurred or earned. Concentration of Credit Risk Our cash and cash equivalents and foreign exchange contracts are potentially subject to concentration of credit risk. We maintain cash and cash equivalent balances with financial institutions that are in excess of Federal Deposit Insurance Corporation insurance limits or that are deposited in foreign institutions. Additionally, we employ forward foreign exchange contracts to hedge our exposure to foreign currency fluctuations. At the maturity of these forward contracts, the counterparties are obligated to pay settlement values. Cash and Cash Equivalents We consider cash and highly liquid investments, such as money market funds, with an original maturity of three months or less to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates or equals fair value due to their short-term nature. Allowance for Doubtful Accounts Our accounts receivable are reflected in our Consolidated Balance Sheet net of an allowance for doubtful accounts. We provide for estimated bad debts based on our assessment of our ability to realize receivables, considering historical collection experience, the general economic environment and specific customer information. When we determine that a receivable may not be collectible, bad debt is recognized. Bad debt expense is recorded in selling, general and administrative expense in our Consolidated Statement of Operations. We recorded bad debt expense of $0.8 million for the year ended December 31, 2014. Property and Equipment, Net Property and equipment is recorded at cost, net of accumulated depreciation. We depreciate property and equipment over their estimated useful lives using the straight-line method. The estimated useful lives by asset category are:
We capitalize the costs of software developed for internal use when the preliminary project stage of the application has been completed and it is probable that the project will be completed and used to perform the function intended. Depreciation commences when the software is placed into service. We evaluate the recoverability of the carrying value of our long-lived assets, including property and equipment and finite-lived intangible assets, when circumstances indicate that the carrying value of those assets may not be fully recoverable. This analysis is performed by comparing the carrying values of the assets to the expected undiscounted future cash flows to be generated from these assets, including estimated sales proceeds when appropriate. If this analysis indicates that the carrying value of an asset is not recoverable, the carrying value is reduced to fair value through an impairment charge in our Consolidated Statement of Operations. Annually, we write off the cost and accumulated depreciation of any assets that are no longer in service. Goodwill, Trademarks and Other Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of the underlying assets acquired and liabilities assumed in the acquisition of a business. We assign goodwill to reporting units that are expected to benefit from the business combination as of the acquisition date. Goodwill is not subject to amortization. Our indefinite-lived intangible assets include our trademarks and trade names, which are not subject to amortization. Our finite-lived intangible assets primarily include our customer and vendor relationships and are amortized over their estimated useful lives, generally 4 to 8 years, using the straight-line method. Our intangible assets relate to the acquisition of entities accounted for using the purchase method of accounting and are estimated by management based on the fair value of assets acquired. We assess the carrying value of goodwill and other indefinite-lived intangible assets for impairment annually or more frequently whenever events occur and circumstances change indicating potential impairment. We perform our annual impairment testing of goodwill and other indefinite-lived intangible assets as of December 31. We assess goodwill for possible impairment using a two-step process. The first step identifies if there is potential goodwill impairment. If the step one analysis indicates that impairment may exist, a step two analysis is performed to measure the amount of the goodwill impairment, if any. Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced to fair value through an impairment charge in our Consolidated Statement of Operations. For purposes of goodwill impairment testing, we estimate the fair value of our reporting units to which goodwill is allocated using generally accepted valuation methodologies, including market and income based approaches, and relevant data available through and as of the testing date. The market approach is a valuation method in which fair value is estimated based on observed prices in actual transactions and on asking prices for similar assets. Under the market approach, the valuation process is essentially that of comparison and correlation between the subject asset and other similar assets. The income approach is a method in which fair value is estimated based on the cash flows that an asset could be expected to generate over its useful life, including residual value cash flows. These cash flows are then discounted to their present value equivalents using a rate of return that accounts for the relative risk of not realizing the estimated annual cash flows and for the time value of money. Variations of the income approach are used to estimate certain of the intangible asset fair values. We assess our trademarks and trade names for impairment by comparing their carrying values to their estimated fair values. Impairment exists when the estimated fair value of the trademark or trade name is less than its carrying value. If impairment exists, then the carrying value is reduced to fair value through an impairment charge in our Consolidated Statement of Operations. We use an income based valuation approach to estimate fair values of the relevant trademarks and trade names. Restricted Cash In order to collateralize letters of credit and similar instruments, as well as for other general business purposes, we have funds deposited as restricted cash. Tax Sharing Liability We have a liability included in our Consolidated Balance Sheet that relates to a tax sharing agreement between Orbitz and the Founding Airlines. The agreement governs the allocation of tax benefits resulting from a taxable exchange that took place in connection with the Orbitz initial public offering in December 2003 (the “Orbitz IPO”). As a result of this taxable exchange, the Founding Airlines incurred a taxable gain. The taxable exchange caused Orbitz to have additional future tax deductions for depreciation and amortization due to the increased tax basis of its assets. The additional tax deductions for depreciation and amortization may reduce the amount of taxes we are required to pay in future years. For each tax period during the term of the tax sharing agreement, we are obligated to pay the Founding Airlines a significant percentage of the amount of the tax benefit realized as a result of the taxable exchange. The tax sharing agreement commenced upon consummation of the Orbitz IPO and continues until all tax benefits have been utilized. We use discounted cash flows in calculating and recognizing the tax sharing liability. We review the calculation of the tax sharing liability on a quarterly basis and make revisions to our estimated timing of payments when appropriate. We also assess whether there are any significant changes, such as changes in the amount of payments and tax rates that could materially affect the present value of the tax sharing liability. Although the expected gross remaining payments that may be due under this agreement were $96.2 million as of December 31, 2014, the timing and amount of payments may change. Any changes in timing of payments are recognized prospectively as accretions to the tax sharing liability in our Consolidated Balance Sheet and non-cash interest expense in our Consolidated Statement of Operations. Any changes in the estimated amount of payments, including changes to tax rates, are recognized in Selling, general and administrative expense in our Consolidated Statement of Operations. Equity-Based Compensation We measure equity-based compensation cost at fair value and recognize the corresponding compensation expense over the service period during which awards are expected to vest. Performance-based compensation is amortized on a graded basis over the requisite service period of each vesting tranche. We include equity-based compensation in Selling, general and administrative expense in our Consolidated Statement of Operations. The fair value of restricted stock and restricted stock units is determined based on the average of the high and low price of our common stock on the date of grant. The fair value of stock options is determined on the date of grant using the Black-Scholes valuation model. The fair value of the restricted stock subject to market-based conditions is determined on the date of grant using a Monte Carlo simulation for sampling random outcomes. The amount of equity-based compensation expense recorded each period is net of estimated forfeitures based on historical forfeiture rates. Hotel Occupancy Taxes Some states and localities impose a tax on the use or occupancy of hotel accommodations (“hotel occupancy tax”). Generally, hotels collect hotel occupancy tax based on the amount of money they receive for renting their hotel rooms and remit the tax to the appropriate taxing authorities. Using the travel services our websites offer, customers are able to make hotel room reservations. While applicable tax laws vary among different taxing jurisdictions, we generally believe that these laws do not require us to collect and remit hotel occupancy tax on the compensation that we receive for our travel services. Some tax authorities have initiated lawsuits or administrative proceedings asserting that we are required to collect and remit hotel occupancy tax on the amount of money we receive from customers for facilitating their reservations and are more frequently addressing the taxability of fees by online travel companies through new legislation. The ultimate resolution of these lawsuits and proceedings in all jurisdictions cannot be determined at this time. We establish an accrual for legal proceedings (tax or otherwise) when we determine that a loss is both probable and can be reasonably estimated. See Note 9 - Commitments and Contingencies. Recently Issued Accounting Pronouncements In May 2014, the FASB issued a new financial accounting standard on revenue from contracts with customers, ASU No. 2014-09, “Revenue from Contracts with Customers”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern”. ASU 2014-15 provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and sets rules for how this information should be disclosed in the financial statements. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-15 to have an impact on its consolidated financial condition and results of operations. |
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Acquisitions | 3. Acquisitions On February 19, 2014, the Company entered into an asset sale and purchase agreement with Travelocity.com LP (“Travelocity”) for certain assets and contracts of the Travelocity Partner Network (“TPN”), which provides private label travel technology solutions for bank loyalty programs and online commerce sites. On February 28, 2014, the Company closed the transaction for cash consideration of $10.0 million with the potential for additional consideration of up to $10.0 million payable if post-acquisition revenue targets for 2014 and 2015 are achieved in excess of agreed amounts (“Earn-Out”). The companies also entered into a transition services agreement, under which Travelocity will provide the Company various services and support, which expires no later than 24 months from the contract date. The Company may, at its sole discretion, terminate one or more of the services under the agreement with 15 days’ notice to Travelocity at which time the parties will have no further obligation with respect to such terminated services. It has been determined that the transition services agreement is unfavorable as compared with market conditions as of the purchase date and a net unfavorable contract liability of approximately $0.8 million has been established, of which $0.5 million remains at December 31, 2014. Transaction costs were incurred in connection with this acquisition of approximately $0.8 million for the year ended December 31, 2014, and are included in Selling, general and administrative expenses in our Consolidated Statement of Operations. The acquisition was accounted for pursuant to ASC 805, Business Combinations, which requires the acquired assets and liabilities to be recorded at fair value as of the acquisition date. The Company generally used the income approach to estimate fair values. Cash flows utilized in the valuation were discounted to their present value using a rate of return that includes the relative risk of cash flows and the time value of money. The fair value of the estimated Earn-Out was calculated based on various levels of revenue thresholds for each year and by assigning an expected probability of reaching each level and the corresponding payment. The Company does not expect that any Earn-Out will be payable. The following table summarizes the purchase price and the allocation of the purchase price:
The amounts of TPN’s revenue and pre-tax loss included in the Consolidated Statement of Operations for the year ended December 31, 2014 were $51.9 million and $7.8 million, respectively. The revenue and earnings of the combined entity had the acquisition date been January 1, 2014 and January 1, 2013 are not available as the related business was not reported separately from that of Travelocity. Our acquired finite-lived customer relationship assets will be amortized over their estimated useful lives of 5 years, using a straight-line basis. The property and equipment will be amortized over their estimated useful lives of 1.5 years. |
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Property and Equipment, Net | Property and Equipment, Net Property and equipment, net, consisted of the following:
We recorded depreciation expense related to property and equipment in the amount of $57.2 million, for the year ended December 31, 2014. There were no assets subject to capital leases at December 31, 2014. In 2014, we evaluated property and equipment that has become fully depreciated (see Note 2 - Summary of Significant Accounting Policies) and wrote-off $85.1 million of fully depreciated assets that were no longer in service. |
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Goodwill and Intangible Assets | Goodwill and Intangible Assets The changes in the carrying amount of goodwill during the year ended December 31, 2014 was as follows:
Trademarks and trade names, which are not subject to amortization, totaled $89.9 million as of December 31, 2014. Impairment of Goodwill and Trademarks and Trade Names We estimate the fair value of our reporting units to which goodwill is allocated using generally accepted valuation methodologies, including market and income based approaches, and relevant data available through and as of December 31. We use the income based approach to estimate the fair value of our reporting units that have goodwill balances and use the market approach to corroborate these estimates. We considered the market approach from a reasonableness standpoint by comparing the multiples of guideline companies with the implied multiples from the income based approach, and we also consider our market capitalization to assess reasonableness of the income based approach valuations. The key assumptions we use in determining the estimated fair value of our reporting units are the terminal growth rates, forecasted cash flows and the discount rates. At December 31 we used an income based valuation approach to separately estimate the fair values of all of our trademarks and trade names and compared those estimates to the respective carrying values. The key assumptions we use in determining the estimated fair value of our trademarks and trade names are the terminal growth rates, forecasted revenues, assumed royalty rates and discount rates. Significant judgment is required to select these inputs based on observed market data. There were no impairment charges in 2014. Finite-Lived Intangibles The changes in the carrying amounts of finite-lived intangible assets during the year ended December 31, 2014 were as follows:
(a) Intangible assets acquired in 2014 relate to our purchase of certain TPN assets. See Note 3 - Acquisitions. Finite-lived intangible assets consisted of the following:
For the year ended December 31, 2014, we recorded amortization expense related to finite-lived intangible assets in the amount of $0.3 million. This amount was included in depreciation and amortization expense in our Consolidated Statement of Operations. The table below shows the estimated amortization expense related to our finite-lived intangible assets over their remaining useful lives:
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Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following:
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Term Loan and Revolving Credit Facility | Term Loan and Revolving Credit Facility Our $530.0 million senior secured credit facility (the “Credit Agreement”) consists of a $450.0 million term loan (the “Term Loan”) maturing April 15, 2021 and a five year $80.0 million revolving credit facility maturing April 15, 2019 (the “Revolver”). Term Loan The Term Loan bears interest at a variable rate, at our option, of the Eurocurrency Rate plus a margin of 3.50% per annum, or the Base Rate plus 2.50% per annum. The Eurocurrency Rate is equal to the LIBOR rate as determined by the British Bankers Association (adjusted for any applicable statutory reserves as defined in the Credit Agreement) and with respect to the Term Loan shall not be less than 1.00% per annum. The Base Rate for any day is equal to the greater of (a) the Fed Funds Rate in effect plus 0.5%, (b) the Credit Suisse AG prime rate and (c) the one-month Eurocurrency Rate plus 1.00%. The principal amount of the Term Loan is payable in quarterly installments of $1.125 million, with the final installment of the remaining outstanding balance due at the applicable maturity date with respect to such Term Loan. In addition, we are required, subject to certain exceptions, to make payments on the Term Loan (a) annually in the first quarter of each fiscal year in an amount of 50% (which percentage will be reduced to 25% and 0% subject to achieving certain first lien leverage ratios) of the prior year’s excess cash flow, as defined in the Credit Agreement, (b) in an amount of 100% of net cash proceeds from asset sales subject to certain reinvestment rights, and (c) in an amount of 100% of net cash proceeds of any issuance of debt other than debt permitted to be incurred under the Credit Agreement. Due to the excess cash flow payment we made in March of this year, we are not required to make any quarterly installment payments on the Term Loan until 2019. The change in the Term Loan during the six months ended June 30, 2015 was as follows:
(1) Some lenders exercised the right to reject their pro rata share of the prepayment. Based on our current financial projections for the year ending December 31, 2015, we estimate that we will be required to make a $24.1 million prepayment from excess cash flow in the first quarter of 2016. The amount of prepayment required is subject to change based on actual results, which could differ materially from our financial projections as of June 30, 2015. Prepayments from excess cash flow are applied to the scheduled quarterly Term Loan principal payments in order of maturity. The potential amount of prepayment from excess cash flow that will be required beyond the first quarter of 2016 is not reasonably estimable as of June 30, 2015. At June 30, 2015, $200.0 million of the Term Loan had a fixed interest rate as a result of interest rate swaps and $229.6 million had a variable rate based on LIBOR, resulting in a blended interest rate of 4.94%, excluding the impact of the amortization of debt issuance costs (see Note 7 - Derivative Financial Instruments). The table below shows the aggregate maturities of the Term Loan over the remaining term of the Credit Agreement, excluding any mandatory prepayments from excess cash flow that could be required under the Term Loan in future periods.
Revolver The Revolver provides for borrowings and letters of credit up to $80.0 million, through which we are allowed to issue up to $55.0 million in letters of credit. The Revolver bears interest at a variable rate, at our option, of the Eurocurrency Rate plus a margin of 3.00% per annum or the Base Rate plus a margin of 2.00% per annum. We pay a letter of credit fee in the amount of the Eurocurrency Rate on all outstanding letters of credit and we incur a facility fee of 0.50% per annum on all loans, letters of credit and any unused amounts on the Revolver. At June 30, 2015 there were no outstanding borrowings or letters of credit issued under the Revolver. Credit Agreement Terms The Term Loan and Revolver are both secured by substantially all of our domestic subsidiaries’ tangible and intangible assets, including a pledge of 100% of the outstanding capital stock or other equity interests of substantially all of our direct and indirect domestic subsidiaries and 65% of the capital stock or other equity interests of certain of our foreign subsidiaries, subject to certain exceptions. The Term Loan and Revolver are also guaranteed by substantially all of our domestic subsidiaries. The Credit Agreement contains various customary restrictive covenants that limit our ability to, among other things: incur additional indebtedness or enter into guarantees; enter into sale/leaseback transactions; make investments, loans or acquisitions; grant or incur liens on our assets; sell our assets; engage in mergers, consolidations, liquidations or dissolutions; engage in transactions with affiliates; and make restricted payments. The Credit Agreement requires us not to exceed a maximum first lien leverage ratio, as defined in the Credit Agreement, of 5.00 to 1. |
Term Loan and Revolving Credit Facility On April 15, 2014, we entered into an amendment (the “Second Amendment”) to the $515.0 million senior secured credit agreement entered into on March 25, 2013, as refinanced and amended on May 24, 2013 (the “Credit Agreement”), composed of a 7-year, $450.0 million term loan maturing April 15, 2021 (the “Term Loan”) and a 5-year $80.0 million revolving credit facility maturing April 15, 2019 (the “Revolver”). The proceeds of the Term Loan were used to repay approximately $439.9 million of term loans outstanding under the Credit Agreement, pay certain fees and expenses incurred with the Second Amendment and for general corporate purposes. The term loans under the Credit Agreement, which were repaid, had original principal amounts of $100.0 million maturing September 25, 2017 and $350.0 million maturing March 25, 2019. Interest rates on these tranches were the Eurocurrency Rate plus 3.50% per annum, or the Base Rate plus 2.50% per annum and the Eurocurrency Rate plus 4.75% per annum or the Base Rate plus 3.75% per annum, respectively. Following the Second Amendment, the $530.0 million senior secured credit facility (the “Amended Credit Agreement”) consists of the Term Loan and the Revolver. Among other things, the Second Amendment reduced the financial maintenance covenants, increased certain baskets and added certain exceptions under certain negative covenants in the Credit Agreement. Term Loan The Term Loan bears interest at a variable rate, at our option, of the Eurocurrency Rate plus a margin of 3.50% per annum, or the Base Rate plus 2.50% per annum. The Eurocurrency Rate is equal to the LIBOR rate as determined by the British Bankers Association (adjusted for any applicable statutory reserves as defined in the Amended Credit Agreement) and with respect to the Term Loan shall not be less than 1.00% per annum. The Base Rate for any day is equal to the greater of (a) the Fed Funds Rate in effect plus 0.5%, (b) the Credit Suisse AG prime rate and (c) the one-month Eurocurrency Rate plus 1.00%. The principal amount of the Term Loan is payable in quarterly installments of $1.125 million beginning September 30, 2014, with the final installment of the remaining outstanding balance due at the applicable maturity date with respect to such Term Loan. In addition, we are required, subject to certain exceptions, to make payments on the Term Loan (a) annually in the first quarter of each fiscal year in an amount of 50% (which percentage will be reduced to 25% and 0% subject to achieving certain first lien leverage ratios) of the prior year’s excess cash flow, as defined in the Amended Credit Agreement, (b) in an amount of 100% of net cash proceeds from asset sales subject to certain reinvestment rights, and (c) in an amount of 100% of net cash proceeds of any issuance of debt other than debt permitted to be incurred under the Amended Credit Agreement. Based on our excess cash flow for the year ended December 31, 2014, we are required to make a $25.9 million prepayment in the first quarter of 2015. Prepayments from excess cash flow are applied, in order of maturity, to the scheduled quarterly Term Loan payments. As a result, we will not be required to make any scheduled principal payments on the Term Loan until 2020. The changes in term loans during the year ended December 31, 2014 were as follows:
At December 31, 2014, $200.0 million of the Term Loan had a fixed interest rate as a result of interest rate swaps and $247.8 million had a variable rate based on LIBOR, resulting in a blended interest rate of 4.94%, excluding the impact of the amortization of debt issuance costs (see Note 12 - Derivative Financial Instruments). The table below shows the aggregate maturities of the Term Loans over the remaining term of the Amended Credit Agreement, excluding any mandatory prepayments that could be required under the Term Loan beyond the first quarter of 2015. The potential amount of prepayment from excess cash flow that will be required beyond the first quarter of 2015 is not reasonably estimable as of December 31, 2014.
Revolver The Revolver provides for borrowings and letters of credit up to $80.0 million, through which we are allowed to issue up to $55.0 million in letters of credit. The Revolver bears interest at a variable rate, at our option, of the Eurocurrency Rate plus a margin of 3.00% per annum or the Base Rate plus a margin of 2.00% per annum. We pay a letter of credit fee in the amount of the Eurocurrency Rate on all outstanding letters of credit and we incur a facility fee of 0.50% per annum on all loans, letters of credit and any unused amounts on the Revolver. At December 31, 2014 there were no outstanding borrowings or letters of credit issued under the Revolver. Amended Credit Agreement Terms The Term Loan and Revolver are both secured by substantially all of our domestic subsidiaries’ tangible and intangible assets, including a pledge of 100% of the outstanding capital stock or other equity interests of substantially all of our direct and indirect domestic subsidiaries and 65% of the capital stock or other equity interests of certain of our foreign subsidiaries, subject to certain exceptions. The Term Loan and Revolver are also guaranteed by substantially all of our domestic subsidiaries. The Amended Credit Agreement contains various customary restrictive covenants that limit our ability to, among other things: incur additional indebtedness or enter into guarantees; enter into sale/leaseback transactions; make investments, loans or acquisitions; grant or incur liens on our assets; sell our assets; engage in mergers, consolidations, liquidations or dissolutions; engage in transactions with affiliates; and make restricted payments. The Amended Credit Agreement requires us not to exceed a maximum first lien leverage ratio, as defined in the Amended Credit Agreement, of 5.00 to 1. As of December 31, 2014, we were in compliance with the financial covenants of the Amended Credit Agreement. We incurred an aggregate of $6.7 million of debt issuance costs to obtain the Amended Credit Agreement in April 2014 and due to the nature and terms of the Second Amendment, the entire amount was capitalized and is included in Other non-current assets in the Consolidated Balance Sheet. The capitalized debt issuance costs will be amortized to interest expense over the contractual terms of the Term Loan and Revolver. Due to the extinguishment of the term loan of the Credit Agreement, unamortized debt issuance costs of $2.2 million related to the Credit Agreement were expensed during the year ended December 31, 2014, and included in Other expense in the Consolidated Statement of Operations. |
Tax Sharing Liability |
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Tax Sharing Liability | Tax Sharing Liability We have a liability included in our Condensed Consolidated Balance Sheets that relates to a tax sharing agreement between Orbitz and the Founding Airlines. As of June 30, 2015, the estimated remaining payments that may be due under this agreement were approximately $87.3 million. We estimated that the net present value of our obligation to pay tax benefits to the Founding Airlines was $73.3 million and $78.4 million at June 30, 2015 and December 31, 2014, respectively. The change in the tax sharing liability for the six months ended June 30, 2015 was as follows:
Based upon the estimated timing of future payments we expect to make, the current portion of the tax sharing liability of $17.9 million and $17.1 million was included in Accrued expenses in our Condensed Consolidated Balance Sheets at June 30, 2015 and December 31, 2014, respectively. The long-term portion of the tax sharing liability of $55.4 million and $61.3 million was reflected as Tax sharing liability in our Condensed Consolidated Balance Sheets at June 30, 2015 and December 31, 2014, respectively. |
Tax Sharing Liability We have a liability included in our Consolidated Balance Sheet that relates to a tax sharing agreement between Orbitz and the Founding Airlines. The agreement governs the allocation of tax benefits resulting from a taxable exchange that took place in connection with the Orbitz IPO in December 2003. As a result of this taxable exchange, the Founding Airlines incurred a taxable gain. The taxable exchange caused Orbitz to have additional future tax deductions for depreciation and amortization due to the increased tax basis of its assets. The additional tax deductions for depreciation and amortization may reduce the amount of taxes we are required to pay in future years. For each tax period while the tax sharing agreement is in effect, we are obligated to pay the Founding Airlines a significant percentage of the amount of the tax benefit realized as a result of the taxable exchange. The tax sharing agreement commenced upon consummation of the Orbitz IPO and continues until all tax benefits have been utilized. As of December 31, 2014, the estimated remaining payments that may be due under this agreement were approximately $96.2 million. We estimated that the net present value of our obligation to pay tax benefits to the Founding Airlines was $78.4 million at December 31, 2014. This estimate was based upon certain assumptions, including our future taxable income, the tax rate, the timing of tax payments, current and projected market conditions, and the applicable discount rate, all of which we believe are reasonable. These assumptions are inherently uncertain, however, and actual amounts may differ from these estimates. The changes in the tax sharing liability for the year ended December 31, 2014 were as follows:
(a) We accreted interest expense related to the tax sharing liability of $10.1 million for the year ended December 31, 2014. Due to a tax rate change in one of our tax jurisdictions, the net present value of the amount we expect to pay to the Founding Airlines increased by approximately $2.5 million during the year ended December 31, 2014, and the related charge is recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. Based upon the estimated timing of future payments we expect to make, the current portion of the tax sharing liability of $17.1 million was included in Accrued expenses in our Consolidated Balance Sheet at December 31, 2014. The long-term portion of the tax sharing liability of $61.3 million was reflected as the tax sharing liability in our Consolidated Balance Sheet at December 31, 2014. Our estimated payments under the tax sharing agreement are as follows:
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Commitments and Contingencies |
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Commitments and Contingencies | Commitments and Contingencies Our contractual obligations as of June 30, 2015 did not materially change from the amounts set forth in our 2014 Annual Report on Form 10-K. Company Litigation We are involved in various claims, legal proceedings and governmental inquiries related to contract disputes, business practices, intellectual property and other shareholder, commercial, employment and tax matters. We believe that we have meritorious defenses, and we are vigorously defending against these claims, proceedings and inquiries. As of June 30, 2015 and December 31, 2014, we had accruals of $2.7 million and $4.3 million related to various legal proceedings, respectively. Litigation is inherently unpredictable and, although we believe we have valid defenses in these matters, unfavorable resolutions could occur. Below, we have provided relevant information on these matters. We are party to various cases brought by municipalities and other state and local governmental entities in the U.S. involving hotel occupancy or related taxes and our merchant hotel business model for hotel and car rental reservations. Most of the cases were brought simultaneously against other OTCs, including Expedia, Travelocity and Priceline. Certain of these cases are class actions, some of which have been confirmed on a state-wide basis and some which are purported. The cases allege, among other things, that we violated the jurisdictions’ hotel occupancy tax ordinances, as well as related sales and use taxes. While not identical in their allegations, the cases generally assert similar claims, including violations of local or state occupancy tax ordinances, failure to pay sales or use tax, and in some cases, violations of consumer protection ordinances, conversion, unjust enrichment, imposition of a constructive trust, demand for a legal or equitable accounting, injunctive relief, declaratory judgment, and civil conspiracy. The plaintiffs seek relief in a variety of forms, including: declaratory judgment, full accounting of monies owed, imposition of a constructive trust, compensatory and punitive damages, disgorgement, restitution, interest, penalties and costs, attorneys’ fees, and where a class action has been claimed, an order certifying the action as a class action. An adverse ruling in one or more of these cases could require us to pay tax retroactively and prospectively and possibly pay interest, penalties and fines. The proliferation of additional cases could result in substantial additional defense costs. We have also been contacted by several municipalities or other taxing bodies concerning our possible obligations with respect to state or local hotel occupancy or related taxes. Some of these municipalities have issued notices of audit but have not issued assessments; others have issued assessments that are not administratively final; and some have issued assessments that are administratively final and are currently subject to judicial review. In addition to these matters, certain taxing authorities have filed suit against the OTCs without issuing audit notices or assessments.
On March 17, 2015, the Hawaii Supreme Court issued a ruling that addressed final assessments that had been issued by the Hawaii Department of Taxation for merchant hotel reservation for the years 2002 through 2011 that collectively amounted to $58.8 million against Orbitz for General Excise Tax (“GET”) and Transient Accommodations Taxes (“TAT”). In 2013, the Hawaii Tax Court of Appeals (the “Tax Court”) held the OTCs liable for GET on the gross amounts of merchant hotel reservations that they facilitated during this time period, and required Orbitz to pay approximately $26.0 million into a contested litigation fund, pending the outcome of the appeal to the Hawaii Supreme Court. In its March 17, 2015 ruling, the Hawaii Supreme Court affirmed in part and vacated in part the rulings of the Tax Court. The Hawaii Supreme Court affirmed the Tax Court’s ruling that the OTCs are not subject to Hawaii TAT. The Hawaii Supreme Court also affirmed the Tax Court’s ruling that the OTCs are liable for GET, and that the OTCs are subject to penalties and interest on those amounts. However, the Hawaii Supreme Court vacated the Tax Court’s ruling that OTCs are liable for GET on the gross amounts of the merchant model hotel reservations they facilitate, and instead ruled the OTCs are liable only on their markup and service fees. The Hawaii Supreme Court remanded this case to the Tax Court to calculate damages consistent with the Hawaii Supreme Court’s decision. On July 20, 2015, the Tax Court heard argument on issues relating to calculation of damages and the amounts of the OTCs’ refunds for amounts paid into the contested litigation fund to satisfy the judgment relating to the 2002-2011 assessments. The Tax Court held that Hawaii must refund all undisputed amounts to the OTCs. For the Orbitz entities, the amount of the refund that is not disputed is $21.1 million (of the $26 million that Orbitz originally paid). Under the Tax Court’s order, Hawaii must refund that amount within 30 days of the entry of judgment, which we expect will occur shortly. The Court did not issue a final determination on the legal and factual issues that will determine whether and to what extent Orbitz will be refunded additional amounts. Orbitz believes that it is entitled to an additional refund of approximately $1.3 million; Hawaii disputes that it owes this amount. At the time Orbitz made the $26 million payment to Hawaii’s contested litigation fund, it recorded an asset of $22 million. In light of the Tax Court’s recent rulings, Orbitz has not made any adjustments to these amounts. The Hawaii Department of Taxation has issued three sets of assessments that have not yet been finally resolved. These are assessments on merchant hotel reservations for 2012 in the amount of $16.9 million; on merchant hotel and car rental reservations for 2013 in the amount of $14.6 million; and for merchant car rental reservations for the 2002-2012 time period in the amounts of $3.4 million against each of the Orbitz entities. (Based on Hawaii’s past merchant model hotel assessments, Orbitz believes that Hawaii’s rental car assessments represent an aggregate of $3.4 million total against the Orbitz entities for the time period). We anticipate that the Hawaii Supreme Court’s March 17, 2015 ruling will substantially reduce Orbitz’s potential liability for these assessments. On July 23, 2015, the District of Columbia Court of Appeals issued a decision in which it held that the OTCs are subject to the District of Columbia’s sales tax. The Court determined that the OTCs are liable for sales tax going to back to the time that they began facilitating merchant model hotel reservations at hotels located in Washington D.C. The Court of Appeals also held that the OTCs are not liable for sales tax on the tax recovery charge. Although Orbitz is evaluating the possibility of seeking rehearing in this case, it believes that loss is probable as a result of this decision, and has expensed the entire amount of the $3.8 million judgment that it paid in March 2014. This judgment represents the sales tax and interest attributable to Orbitz.com’s hotel reservations through December 31, 2011. Previously, Orbitz had not expensed approximately $3.7 million of the judgment, on the expectation that it would prevail for the portion attributable to any period before July 2011, when the District of Columbia amended its sales tax law. After all appeals have been exhausted, Orbitz anticipates that it will need to make a catch up payment to bring itself current through the current date. That amount has not yet been determined, but Orbitz has accrued $0.9 million, which represents its estimate of its liability for this time period. In July 2011, related to the City of San Antonio hotel occupancy tax case, the United States District Court for the Western District of Texas issued its findings of fact and conclusions of law in which it held the defendant OTCs, including Orbitz, liable for hotel occupancy taxes on markup, fees and breakage revenue, and also imposed penalties and interest. On April 4, 2013, the court entered judgment against Orbitz in the amount of approximately $4.3 million and post-judgment motions are still pending. The OTCs, including Orbitz, intend to appeal once the pending motions are ruled upon by the court. Because we do not believe a loss is probable given the numerous issues that exist on appeal, we have not accrued any liability related to this case. On July 29, 2015, Orbitz settled a lawsuit that Trilegiant filed against it in the Supreme Court of New York. The lawsuit alleged that Orbitz was obligated to make a series of termination payments arising out of a promotion agreement that Orbitz terminated in 2007. Orbitz agreed to settle the matter for $13.6 million, which was consistent with the accrual we previously established for this matter. We cannot estimate our aggregate range of loss in the cases for which we have not recorded an accrual, except to the extent taxing authorities have issued assessments against us. Although we believe it is unlikely that an adverse outcome will result from these proceedings, an adverse outcome could be material to us with respect to earnings or cash flows in any given reporting period. Financing Arrangements We are required to issue letters of credit and similar instruments to support certain suppliers, commercial agreements, leases and non-U.S. regulatory and governmental agencies primarily to satisfy consumer protection requirements. We believe we have access to sufficient letter of credit availability to meet our short- and long-term requirements through a combination of the restricted cash balance currently used to cash collateralize letters of credit or similar instruments, cash from our balance sheet which can be used to support letters of credit and similar instruments and our $80.0 million revolving credit facility through which we are allowed to issue up to $55.0 million in letters of credit. The following table shows the amount of letters of credit and similar instruments outstanding by facility, as well as the amounts of our restricted cash balances:
Total letter of credit fees were less than $0.1 million for both the three months ended June 30, 2015 and 2014, and $0.1 million and $0.2 million for the six months ended June 30, 2015 and 2014, respectively. Continuity Incentives In conjunction with the Merger, the Company has offered key employees a continuity incentive for continuing employment through the closing date and beyond. The incentives will be paid 50% on the closing date of the Merger and 50% will be paid 180 days after the closing date of the transaction (or upon involuntary termination, if applicable). The incentives will not be paid if the transaction is not consummated and therefore the Company has not recorded any liability related to the incentives. |
Commitments and Contingencies The following table summarizes the timing of our commitments as of December 31, 2014:
In February 2014, the Company entered into an agreement with Amadeus IT Group, S.A. to provide GDS services. This contract requires the Company to meet certain minimum annual booking requirements beginning in 2016 through the end of the contract at December 31, 2019. In addition to the commitments shown above, we are required to make principal payments on the Term Loan (see Note 7 - Term Loan and Revolving Credit Facility). We also expect to make approximately $96.2 million of payments in connection with the tax sharing agreement with the Founding Airlines (see Note 8 - Tax Sharing Liability). Also excluded from the above table are $3.3 million of liabilities for uncertain tax positions for which the period of settlement is not currently determinable. Company Litigation We are involved in various claims, legal proceedings and governmental inquiries related to contract disputes, business practices, intellectual property and other commercial, employment and tax matters. We believe that we have meritorious defenses, and we are vigorously defending against these claims, proceedings and inquiries. As of December 31, 2014, we had accruals of $4.3 million related to various legal proceedings. Litigation is inherently unpredictable and, although we believe we have valid defenses in these matters, unfavorable resolutions could occur. Below, we have provided relevant information on these matters. We are party to various cases brought by municipalities and other state and local governmental entities in the U.S. concerning hotel occupancy or related taxes and our merchant model for hotel and car rental reservations. Most of the cases were brought simultaneously against other OTCs, including Expedia, Travelocity and Priceline. Certain of these cases are class actions, some of which have been confirmed on a state-wide basis and some which are purported. The cases allege, among other things, that we violated the jurisdictions’ hotel occupancy tax ordinances, as well as related sales and use taxes. While not identical in their allegations, the cases generally assert similar claims, including violations of local or state occupancy tax ordinances, failure to pay sales or use tax, and in some cases, violations of consumer protection ordinances, conversion, unjust enrichment, imposition of a constructive trust, demand for a legal or equitable accounting, injunctive relief, declaratory judgment, and civil conspiracy. The plaintiffs seek relief in a variety of forms, including: declaratory judgment, full accounting of monies owed, imposition of a constructive trust, compensatory and punitive damages, disgorgement, restitution, interest, penalties and costs, attorneys’ fees, and where a class action has been claimed, an order certifying the action as a class action. An adverse ruling in one or more of these cases could require us to pay tax retroactively and prospectively and possibly pay interest, penalties and fines. The proliferation of additional cases could result in substantial additional defense costs. We have also been contacted by several municipalities or other taxing bodies concerning our possible obligations with respect to state or local hotel occupancy or related taxes. We received tax assessments which range from $0.02 million to approximately $58.8 million, and collectively exceed approximately $116.0 million. The following taxing bodies have issued notices to the Company: 43 cities in California; the following cities in Colorado: Broomfield, Colorado Springs, Durango, Frisco, Glendale, Glenwood Springs, Golden, Grand Junction, Greeley, Greenwood Village, Lafayette, Lakewood, Littleton, Loveland, Silverthorne and Steamboat Springs; Arlington, Texas; Brunswick and Stanly, North Carolina; the following counties in Utah: Davis, Summit, Salt Lake and Weber; the Arizona Department of Revenue; the New Mexico Department of Revenue; the Ohio Department of Taxation; Paradise Valley, Arizona; St. Louis, Missouri; various Alabama Municipalities; the Louisiana Department of Revenue; the Maine Department of Revenue; and the Vermont Department of Taxation. These taxing authorities have not issued assessments, but have requested information to conduct an audit and/or have requested that the Company register to pay local hotel occupancy taxes. The following taxing authorities have issued assessments which are not final and are subject to further review by such taxing authorities: the Colorado Department of Revenue; the City of Aurora, Colorado; the Maryland Comptroller; the Texas Comptroller; the City of Portland, Oregon, and Multnomah County, Oregon; and Lake County, Indiana. These assessments range from $0.02 million to approximately $5.8 million, and total approximately $9.67 million. In addition, the Hawaii Department of Taxation has issued final assessments for merchant model hotel reservations in the amount of $16.9 million for the taxable year 2012, and for merchant model hotel reservations and rental car transactions in the amount of $14.6 million for the taxable year 2013. Additionally, on December 9, 2013, the Hawaii Department of Taxation issued final assessments for rental car transactions in the amount of $3.4 million against each of three Orbitz entities for the period of January 1, 2002, through December 31, 2012. Based on Hawaii’s past merchant model hotel assessments, Orbitz believes that Hawaii’s rental car assessments represent an aggregate of $3.4 million total against the Orbitz entities for the time period. None of the final assessments issued for the taxable years 2012 and 2013 were based on historical transaction data, and each are still subject to review by the Hawaii Tax Appeal Court. These 2012 and 2013 assessments are in addition to the $58.8 million final assessment for merchant model hotel reservations previously issued by the Hawaii Department of Taxation for 2011 and prior years, more than $30.0 million of which was rejected by the Hawaii Tax Appeal Court. Assessments or declaratory rulings that are administratively final and subject to judicial review have been issued by the cities of San Francisco, Los Angeles, and San Diego, California; the city of Denver, Colorado; the counties of Miami-Dade, Broward and Osceola, Florida; and the Indiana Department of Revenue. These assessments and declaratory rulings range from $0.2 million to approximately $3.2 million, and total approximately $10.8 million. Trial courts rejected the assessments in San Francisco, Los Angeles and San Diego, California and Broward County, Florida. The Colorado Court of Appeals reversed the assessments against the OTCs in the City of Denver case. Collectively, the amounts of the assessments and declaratory rulings not rejected or reversed (the counties of Osceola and Miami-Dade and the Indiana Department of Revenue) amount to approximately $2.0 million. The OTCs, including Orbitz, have prevailed in the large majority of hotel tax cases that have been decided to date, having obtained favorable judgments in more than two dozen cases. However, there have been certain adverse lower court decisions against Orbitz and the other OTCs that, if affirmed, could result in significant liability to the Company. First, in July 2011, related to the City of San Antonio hotel occupancy tax case, the United States District Court for the Western District of Texas issued its findings of fact and conclusions of law in which it held the defendant OTCs, including Orbitz, liable for hotel occupancy taxes on markup, fees and breakage revenue, and also imposed penalties and interest. On April 4, 2013, the court entered judgment against Orbitz in the amount of approximately $4.3 million and post-judgment motions are still pending. The OTCs, including Orbitz, intend to appeal once the pending motions are ruled upon by the court. Because we do not believe a loss is probable given the numerous issues that exist on appeal, we have not accrued any liability related to this case. Second, in September 2012, the Superior Court of the District of Columbia granted the District’s motion for partial summary judgment and denied the OTCs’ motion for summary judgment, finding the companies liable for sales tax on hotel reservations dating back to the inception of the merchant model. Although the court acknowledged that the District had amended its law in 2011, and that the sales tax law was ambiguous prior to that time, the court nonetheless found the OTCs liable for merchant model hotel reservations before that date. Because we believe that the court’s finding of liability was the result of a misapplication of the law, we do not believe a loss is probable relating to the pre-amendment case and have appealed. Accordingly, we have not accrued any liability relating to the District of Columbia case for the period prior to July 2011. On March 25, 2014, Orbitz paid a judgment of $3.8 million, which represents the sales tax attributable to Orbitz.com’s hotel reservations through December 31, 2011. This amount is subject to a refund if Orbitz prevails in its appeal. The District of Columbia Court of Appeals heard oral argument on September 30, 2014. Although the Company expects to prevail on the issue of whether it is liable for sales tax before July 2011, it is possible that we will not prevail, and if that occurs, the amount of the judgment that we have not expensed is approximately $3.7 million. Additionally, the District of Columbia has cross-appealed the Superior Court’s denial of the District’s argument that amounts charged to consumers as a tax recovery charge should have been included in the Superior Court’s damage calculation. Although we do not believe that Orbitz is likely to be liable for tax on the tax recovery charge, it is possible that the Court of Appeals could determine that it is, and if that occurs, Orbitz’s additional liability could exceed $0.95 million. Third, in January 2013, the Tax Court of Appeals in Hawaii ruled that the OTCs are subject to Hawaii’s general excise tax. The court also determined that the “splitting provision” contained in the Hawaii general excise tax statute, which limits application of the tax to only the amounts that travel agents receive for their services, does not apply to the transactions at issue. On March 19, 2013, the court issued an order in which it also imposed “failure to file” and “failure to pay” penalties on the OTCs. On August 15, 2013, the Hawaii Tax Appeal court ruled that the OTCs were required to pay interest on penalties, and entered final judgment disposing of all issues and claims of all parties. On September 11, 2013, the OTCs filed their notice of appeal. Under Hawaii law, in order to appeal, Orbitz was required to pay the total amount of the final judgment to Hawaii prior to appealing the court’s order. Accordingly, Orbitz made payments to Hawaii of $16.9 million in April 2013, and approximately $9.2 million to Hawaii in September 2013. These amounts reflected a determination of Orbitz’s liability for general excise tax (both on the amounts that it receives for its services and the amounts that the hotels receive for the rental of their rooms), interest, penalties and interest on penalties through the tax year 2011. Although Orbitz disagrees with the court’s rulings on general excise tax and has appealed them, we have recorded an expense of $4.2 million in light of the decision. The $4.2 million represents the amount Orbitz estimates it would owe if the court had correctly applied the general excise tax splitting provision on merchant reservations through December 31, 2012 and a 25% failure to file penalty imposed on that figure. Orbitz has not reserved for the remainder of the ruling because it believes that the general excise tax splitting provision plainly applies to the transactions in question, and that the award of “failure to pay” penalties is entirely unsupported by the record in the case, and that interest on penalties should not have been awarded. Although we believe that it is not probable that Orbitz ultimately will be liable for more than $4.2 million as a result of the court’s order, it is possible that Orbitz will not prevail, and if it does not, the amount of any final award of general excise tax, penalties and interest against Orbitz could exceed $26.0 million. It is also possible that the State of Hawaii could prevail in its cross-appeal on the issue of whether the transient accommodations tax applies to the OTCs’ merchant model hotel transactions. The OTCs’ appeal on the Tax Court of Appeals’ ruling on General Excise Tax, and Hawaii’s cross-appeal on the Tax Court of Appeals’ determination that the OTCs are not subject to Hawaii’s transient accommodations tax, are currently pending before the Hawaii Supreme Court. The Hawaii Supreme Court heard oral argument on both appeals on October 2, 2014. In an unrelated matter, Trilegiant Corporation filed an action for breach of contract and declaratory judgment in the Supreme Court of New York against us, alleging that we are obligated to make a series of termination payments arising out of a promotion agreement that we terminated in 2007. In 2007, we accrued the present value of the termination payments and in 2010 we ceased making termination payments due to a dispute with Trilegiant. On October 2, 2013, the Court denied Orbitz’s motion for summary judgment on one of its affirmative defenses, and on December 24, 2013, the court rejected most of our remaining defenses. On August 22, 2014, the court denied Orbitz’s remaining affirmative defenses. As of December 31, 2014, we had an accrual totaling $13.5 million, which includes $1.8 million for potential interest. The parties have a dispute as to the rate of prejudgment interest. Trilegiant has asserted an applicable rate of 9%, and as of October 2014, was seeking approximately $3.1 million in interest. Although we believe we will prevail on this issue, it is possible that the Court will determine that the higher rate of interest applies, and if it does, we estimate that we would owe approximately $3.6 million in interest. We cannot estimate our aggregate range of loss in the cases for which we have not recorded an accrual, except to the extent taxing authorities have issued assessments against us. Although we believe it is unlikely that an adverse outcome will result from these proceedings, an adverse outcome could be material to us with respect to our financial position, earnings or cash flows in any given reporting period. Surety Bonds and Bank Guarantees In the ordinary course of business, we obtain surety bonds and bank guarantees, to secure performance of certain of our obligations to third parties. At December 31, 2014, there was $7.5 million of surety bonds outstanding, of which $5.3 million was secured by cash collateral or letters of credit. At December 31, 2014, there were $25.3 million of bank guarantees outstanding. All bank guarantees were secured by restricted cash at December 31, 2014. Financing Arrangements We are required to issue letters of credit to support certain suppliers, commercial agreements, leases and non-U.S. regulatory and governmental agencies primarily to satisfy consumer protection requirements. We believe we have access to sufficient letter of credit availability to meet our short-term and long-term requirements through a combination of the restricted cash balance currently used to collateralize letters of credit or similar instruments, cash from our balance sheet which can be used to support letters of credit and similar instruments and our $80.0 million Revolver through which we are allowed to issue up to $55.0 million in letters of credit. The following table shows the amount of letters of credit and similar instruments outstanding by facility, as well as the amounts of our restricted cash balances:
Total letter of credit fees were $0.3 million, for the year ended December 31, 2014. |
Income Taxes |
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Income Taxes | Income Taxes We recorded tax expense of $3.4 million and $5.8 million for the three months ended June 30, 2015 and June 30, 2014, respectively, a decrease of $2.4 million. The tax decrease largely reflects lower U.S. based income for which the federal tax liability is deferred and lower income in certain European based subsidiaries. We recorded tax expense of $2.8 million and $13.0 million for the six months ended June 30, 2015, and June 30, 2014, respectively, a decrease of $10.2 million. The decrease was primarily due to U.S. based income for which the federal tax liability is deferred. The net deferred tax assets at June 30, 2015 and December 31, 2014 amounted to $145.0 million and $146.3 million, respectively. The substantial majority of the net deferred tax assets relate to U.S. federal taxes. We have established a liability for future income tax contingencies and liabilities, referred to as unrecognized tax benefits, of $3.3 million as of both June 30, 2015 and December 31, 2014, respectively, that management believes to be adequate. This liability represents the additional taxes that may be paid when the related items are resolved. The total amount of unrecognized benefits that, if recognized, would affect our effective tax rate was $3.3 million at both June 30, 2015 and December 31, 2014. During the next twelve months, we anticipate no reduction to this liability due to the lapsing of statutes of limitations, which would affect our effective tax rate. In computing the tax provision for both the three and six months ended June 30, 2015, we recognized an income tax provision in tax jurisdictions in which we had pre-tax income for the period and are expecting to generate pre-tax book income during the remainder of fiscal year 2015. We recognized an income tax benefit in tax jurisdictions in which we incurred pre-tax losses for the three and six months ended June 30, 2015, and are expecting to be able to realize the benefits associated with these losses during the remainder of fiscal year 2015 or expect to recognize a deferred tax asset related to such losses at December 31, 2015. Our effective tax rate differs significantly from the U.S. federal statutory rate as we have not recognized any tax benefit for losses in certain jurisdictions that we expect will not be realized and for which we have previously established a valuation allowance against the deferred tax assets. |
Income Taxes Pre-tax income/(loss) for U.S. and non-U.S. operations consisted of the following:
The provision/(benefit) for income taxes consisted of the following:
As of December 31, 2014, our U.S. federal, state and foreign income taxes receivable/(payable) was $0.0 million. The tax provision for the year ended December 31, 2014 was primarily deferred taxes on income from our U.S. operations and certain foreign subsidiaries where we have not established a valuation allowance. The 2014 tax provision was disproportionate to pre-tax book income due to the valuation allowances which still remain with respect to the majority of our non-US operations. We currently have a valuation allowance of $109.2 million against certain deferred tax assets, of which $107.3 million relates to foreign jurisdictions. We will continue to assess the level of the valuation allowance required; if sufficient positive evidence exists in future periods to support a release of some or all of the valuation allowance, such a release would likely have a material impact on our results of operations. With respect to the valuation allowance established against our non-U.S.-based deferred tax assets, a significant item of objective negative evidence evaluated in our determination was cumulative losses incurred over the three-year period ended December 31, 2014. This objective evidence limited our ability to consider other subjective evidence such as future income projections. Our effective income tax rate differs from the U.S. federal statutory rate as follows:
Current and non-current deferred income tax assets and liabilities in various jurisdictions are composed of the following:
The net deferred tax assets at December 31, 2014 amounted to $146.3 million. These net deferred tax assets largely relate to temporary tax to book differences and net operating loss carryforwards, the realization of which is, in management’s judgment, more likely than not. We have assessed the likelihood of realization based on our expectations of future taxable income, carry-forward periods available and other relevant factors. As of December 31, 2014, we had U.S. federal and state net operating loss carry-forwards of approximately $119.6 million and $109.0 million, respectively, which expire between 2021 and 2034. In addition, we had $424.6 million of non-U.S. net operating loss carry-forwards, most of which do not expire. Additionally, we had $4.4 million of U.S. federal and state income tax credit carry-forwards which expire between 2027 and 2034 and $1.1 million of U.S. federal income tax credits which have no expiration date. No provision has been made for U.S. federal or non-U.S. deferred income taxes on approximately $16.5 million of accumulated and undistributed earnings of foreign subsidiaries at December 31, 2014. A provision has not been established because it is our present intention to reinvest the undistributed earnings indefinitely in those foreign operations. The determination of the amount of unrecognized U.S. federal or non-U.S. deferred income tax liabilities for unremitted earnings at December 31, 2014 is not practicable. As of December 31, 2014, we have established a deferred income tax liability on $2.0 million of accumulated and undistributed earnings in anticipation of the liquidation of an inactive foreign subsidiary next year. We have established a liability for unrecognized tax benefits. Once established, unrecognized tax benefits are adjusted if more accurate information becomes available, or a change in circumstance or an event occurs necessitating a change to the liability. Given the inherent complexities of the business and that we are subject to taxation in a substantial number of jurisdictions, we routinely assess the likelihood of additional assessment in each of the taxing jurisdictions. The table below shows the changes in the liability for unrecognized tax benefits during the year ended December 31, 2014:
The total amount of unrecognized benefits that, if recognized, would affect our effective tax rate was $3.3 million at December 31, 2014. During the next twelve months, we anticipate no reduction to this liability due to the lapsing of statutes of limitations. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. We recognized interest and penalties of $0, during the year ended December 31, 2014. Accrued interest and penalties were $0.7 million at December 31, 2014. We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which we have unrecognized tax benefits, is audited and finally resolved. We adjust these unrecognized tax benefits, as well as the related interest and penalties, in light of changing facts and circumstances. Settlement of any particular position could require the use of cash. Favorable resolution could result in a reduction to our effective income tax rate in the period of resolution. The number of years with open tax audits varies depending on the tax jurisdiction. Our major taxing jurisdictions include the United States (federal and state), the United Kingdom (federal) and Australia (federal). With limited exceptions, we are no longer subject to income tax examinations by tax authorities for years before 2010. With respect to periods prior to the Blackstone Acquisition, we are only required to take into account income tax returns for which we or one of our subsidiaries is the primary taxpaying entity, namely separate state returns and non-U.S. returns. Uncertain tax positions related to U.S. federal and state combined and unitary income tax returns filed are only applicable in the post-acquisition accounting period. We and our domestic subsidiaries currently file a consolidated income tax return for U.S. federal income tax purposes. |
Equity-Based Compensation |
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Equity-based Compensation | Equity-Based Compensation We issue share-based awards under the Orbitz Worldwide, Inc. 2007 Equity and Incentive Plan, as amended (the “Plan”). The Plan provides for the grant of equity-based awards, including restricted stock, restricted stock units, stock options, stock appreciation rights and other equity-based awards to our directors, officers and other employees, advisors and consultants who are selected by the Compensation Committee of the Board of Directors for participation in the Plan. As of June 30, 2015, 3,518,537 shares were available for future issuance under the Plan. Restricted Stock Units We granted 805,251 restricted stock units (“RSUs”) during the six months ended June 30, 2015, with a weighted-average grant date fair value per share of $11.48. The fair value of RSUs is amortized on a straight-line basis over the requisite service period of four years. Non-Employee Directors Deferred Compensation Plan We granted 92,977 deferred stock units to our non-employee directors during the six months ended June 30, 2015 with a weighted-average grant date fair value per share of $11.36. These deferred stock units are issued as RSUs under the Plan and are immediately vested and non-forfeitable and expensed on the grant date at their fair value. Compensation Expense We recognized total equity-based compensation expense of $4.5 million and $3.9 million for the three months ended June 30, 2015 and 2014, respectively and $7.4 million and $6.8 million for the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015, a total of $21.8 million of unrecognized compensation costs related to unvested RSUs and unvested PSUs are expected to be recognized over the remaining weighted-average lives of 2.7 years. |
Equity-Based Compensation We issue share-based awards under the Orbitz Worldwide, Inc. 2007 Equity and Incentive Plan, as amended (the “Plan”). The Plan provides for the grant of equity-based awards, including restricted stock, restricted stock units, stock options, stock appreciation rights and other equity-based awards to our directors, officers and other employees, advisors and consultants who are selected by the Compensation Committee of the Board of Directors for participation in the Plan. There are 25,600,000 shares of common stock available for issuance under the Plan, subject to adjustment as provided by the Plan. As of December 31, 2014, 4,291,197 shares were available for future issuance under the plan. Restricted Stock Units The table below summarizes activity regarding unvested restricted stock units under the Plan during the year ended December 31, 2014:
The fair value of restricted stock units that vested during the year ended December 31, 2014 was $6.3 million. The weighted-average grant date fair value of restricted stock units granted during the year ended December 31, 2014, was $8.86. The fair value of restricted stock units on the date of grant is amortized on a straight-line basis over the requisite service period of four years. Performance-Based and Market-Based Restricted Stock Units The table below summarizes activity regarding unvested performance-based and market-based restricted stock units (“PSUs”) under the Plan during the year ended December 31, 2014:
As of December 31, 2014, we expect that the performance-based condition PSUs granted in 2014 will be satisfied at approximately 60% of their target level. The fair value of the market-based PSUs is being amortized on a straight-line basis over the requisite service period of each vesting tranche. The weighted-average grant date fair value of PSUs that vested during the year ended December 31, 2014, was $2.7 million. The weighted-average grant date fair value of PSUs granted during the year ended December 31, 2014 was $12.64. Stock Options The table below summarizes the stock option activity under the Plan during the year ended December 31, 2014:
The exercise price of stock options granted under the Plan is equal to the fair market value of the underlying stock on the date of grant. Stock options generally expire seven to ten years from the grant date. Stock options vest either annually over a four-year period, or 25% of the options vest after one year and the remaining awards vest ratably on a monthly basis for the three years that follow. The fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period. There were no stock options granted in 2014, 2013 or 2012. During the year ended December 31, 2014, the total fair value of options that vested during the period was $0.7 million. In addition, the intrinsic value of options exercised was $0.3 million, for the year ended December 31, 2014. Non-Employee Directors Deferred Compensation Plan We have a deferred compensation plan that enables our non-employee directors to defer the receipt of certain compensation earned in their capacity as non-employee directors. Eligible directors may elect to defer up to 100% of their annual retainer fees (which are paid by us on a quarterly basis). In addition, 100% of the annual equity granted to non-employee directors is deferred under the Plan. We grant deferred stock units (“DSUs”) annually to each participating director. The DSUs are issued as restricted stock units under the Plan and are immediately vested and non-forfeitable. The DSUs entitle the non-employee director to receive one share of our common stock for each deferred stock unit following the director’s retirement or termination of service from the Board of Directors. For all awards granted prior to 2011, the DSUs are distributed 200 days immediately following such termination date and for all awards granted in 2011 or later, the DSUs are distributed immediately at termination. The entire grant date fair value of deferred stock units is expensed on the date of grant. The table below summarizes the deferred stock unit activity under the Plan during the year ended December 31, 2014:
The weighted-average grant date fair value for deferred stock units granted during the year ended December 31, 2014 was $7.94. Compensation Expense We recognized total equity-based compensation expense of $12.2 million, for the year ended December 31, 2014, none of which has provided us with a tax benefit due to existence of net operating losses. As of December 31, 2014, a total of $20.1 million of unrecognized compensation costs related to unvested restricted stock units, unvested stock options and unvested PSUs are expected to be recognized over the remaining weighted-average period of 2.8 years. |
Derivative Financial Instruments |
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Jun. 30, 2015 |
Dec. 31, 2014 |
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Orbitz | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Financial Instruments | Derivative Financial Instruments Interest Rate Hedges At June 30, 2015, we had the following interest rate swaps outstanding that effectively converts $200.0 million of the term loan from a variable interest rate to a fixed interest rate. We will pay a fixed interest rate on the notional amount and in exchange receive a variable interest rate based on the one-month LIBOR rate. We do not use derivatives for speculative or trading purposes.
We entered into interest rate derivative contracts to protect against volatility of future cash flows of the variable interest payments related to our term loan. These derivative contracts are economic hedges and are not designated as cash flow hedges. We mark-to-market these instruments and record the changes in the fair value of these items in Net interest expense in the Company’s Condensed Consolidated Statements of Operations and recognize the unrealized gain or loss in Other non-current assets or liabilities. Unrealized losses of $1.6 million and $2.2 million were recognized at June 30, 2015 and 2014, respectively. The following table summarizes the location and fair value of derivative instruments on the Company’s Condensed Consolidated Balance Sheets.
Foreign Currency Hedges We enter into foreign currency contracts to manage our exposure to changes in exchange rates associated with foreign currency receivables, payables and intercompany transactions. We primarily hedge our foreign currency exposure to several currencies in Europe and the Australian dollar. As of June 30, 2015, we had foreign currency contracts outstanding with a total net notional amount of $170.0 million, all of which subsequently matured. The foreign currency contracts do not qualify for hedge accounting treatment; accordingly, changes in the fair value of the foreign currency contracts are reflected in net income as a component of Selling, general and administrative expense in our Condensed Consolidated Statements of Operations. The following table shows the fair value of our foreign currency hedges:
The following table shows the changes in the fair value of our foreign currency contracts, which were recorded as losses in Selling, general and administrative expense in our Condensed Consolidated Statements of Operations:
The tables below show the gross and net amounts related to derivatives eligible for offset in the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014. The gross asset amount of the derivative listed below is the maximum loss the Company would incur if the counterparties failed to meet their obligation.
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Derivative Financial Instruments Interest Rate Hedges At December 31, 2014, we had the following interest rate swaps outstanding that effectively converts $200.0 million of the term loan from a variable to a fixed interest rate. We pay a fixed interest rate on the notional amount and in exchange receive a variable interest rate based on the one-month LIBOR rate. The Company does not use derivatives for speculative or trading purposes.
We entered into interest rate derivative contracts to protect against volatility of future cash flows of the variable interest payments related to our term loan. These derivative contracts are economic hedges and are not designated as cash flow hedges. We mark-to-market instruments not designated as hedges and record the changes in the fair value of these items in Net interest expense in the Company’s Consolidated Statement of Operations and recognize the unrealized gain or loss in Other non-current assets or liabilities. An unrealized loss of $1.7 million was recognized at December 31, 2014. The following table summarizes the location and fair value of our interest rate derivative instruments on the Company’s Consolidated Balance Sheet.
Interest rate swaps previously designated as hedging instruments were terminated in conjunction with the termination of our credit agreement in March 2013. Interest rate swaps designated as hedging instruments were reflected in our Consolidated Balance Sheet at market value. The corresponding market adjustment related to the hedging instrument was recorded to Accumulated other comprehensive income (“AOCI”). The following table shows the market adjustments recorded during the year ended December 31, 2014:
Foreign Currency Hedges We enter into foreign currency contracts to manage our exposure to changes in the foreign currency associated with foreign currency receivables, payables and intercompany transactions. We primarily hedge our foreign currency exposure to the Pound sterling, Euro, Swiss Franc and the Australian dollar. As of December 31, 2014, we had foreign currency contracts outstanding with a total net notional amount of $190.3 million, all of which subsequently matured in early 2015. The foreign currency contracts do not qualify for hedge accounting treatment; accordingly, changes in the fair value of the foreign currency contracts are reflected in net income as a component of Selling, general and administrative expense in our Consolidated Statement of Operations. The following table shows the fair value of our foreign currency hedges:
The following table shows the change in the fair value of our foreign currency contracts which were recorded as a gain/(loss) in Selling, general and administrative expense:
The tables below show the gross and net information related to derivatives eligible for offset in the Consolidated Balance Sheet as of December 31, 2014. The gross asset amount of the derivative listed below is the maximum loss the Company would incur if the counterparties failed to meet their obligation.
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Employee Benefit Plans |
12 Months Ended |
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Dec. 31, 2014 | |
Orbitz | |
Entity Information [Line Items] | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | Employee Benefit Plans We sponsor a defined contribution savings plan for employees in the United States that provides certain of our eligible employees an opportunity to accumulate funds for retirement. We also sponsor similar HotelClub and ebookers defined contribution savings plans. After employees have attained one year of service, we match the contributions of participating employees on the basis specified by the plans, up to a maximum of 3% of participant compensation. We recorded total expense related to these plans in the amount of $5.3 million for the year ended December 31, 2014. |
Net Income/(Loss) per Share |
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Dec. 31, 2014 |
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Net Income per Share | Net Income/(Loss) per Share We calculate basic net income/(loss) per share by dividing the net income/(loss) for the period by the weighted-average number of shares outstanding during the period. Diluted net income/(loss) per share is calculated by dividing the net income/(loss) for the period by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares are determined by the application of the treasury stock method. The following table presents the weighted-average shares outstanding used in the calculation of net income/(loss) per share:
The following equity awards were not included in the diluted net income/(loss) per share calculation because they would have had an antidilutive effect:
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Net Income/(Loss) per Share We calculate basic net income/(loss) per share by dividing the net income/(loss) for the period by the weighted-average number of shares outstanding during the period. The weighted-average number of shares includes common shares outstanding and deferred stock units, which are immediately vested and non-forfeitable. Diluted net income/(loss) per share is calculated by dividing the net income/(loss) for the period by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares are determined by the application of the treasury stock method. The following table presents the weighted-average shares outstanding used in the calculation of net income/(loss) per share:
The following equity awards were not included in the diluted net income/(loss) per share calculation because they would have had an antidilutive effect:
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Related Party Transactions |
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Related Party Transactions | Related Party Transactions Related Party Transactions with Travelport and its Subsidiaries We had amounts due from Travelport of $15.5 million at December 31, 2014. Amounts due to or from Travelport are generally settled on a net basis. At December 31, 2013, 48% of the shares of our common stock outstanding were beneficially owned by Travelport and the investment funds that indirectly own Travelport. In the second quarter and early third quarter of 2014, Travelport sold a majority of its shares of our common stock and after its secondary common stock offering on July 22, 2014, beneficially owns less than 1% of shares of our common stock as of December 31, 2014 and is no longer considered a related party (see Note 1 - Organization and Basis of Presentation in the Notes to Consolidated Financial Statements). The following table summarizes the related party transactions with Travelport and its subsidiaries through July 22, 2014, reflected in our Consolidated Statement of Operations:
Master License Agreement We entered into a Master License Agreement with Travelport at the time of the IPO. Pursuant to this agreement, Travelport licenses certain of our intellectual property and pays us fees for related maintenance and support services. The licenses include our supplier link technology; portions of ebookers’ booking, search and vacation package technologies; certain of our products and online booking tools for corporate travel; portions of our private label vacation package technology; and our extranet supplier connectivity functionality. The Master License Agreement granted us the right to use a corporate online booking product developed by Travelport. We have entered into a value added reseller license with Travelport for this product. GDS Service Agreement In connection with the IPO, we entered into the Travelport GDS Service Agreement, which terminated in February 2014. The Travelport GDS Service Agreement was structured such that we earned incentive revenue for each air, car and hotel segment that was processed through the Travelport GDSs. This agreement required that we process a certain minimum number of segments for our domestic brands through the Travelport GDSs each year. We were not subject to these minimum volume thresholds to the extent that we processed all eligible segments through the Travelport GDS. In February 2014, the Company entered into an agreement with Travelport for the provision of GDS services, which terminated and replaced our prior Travelport GDS service agreement (the “New Travelport GDS Service Agreement”). Under the New Travelport GDS Service Agreement, Orbitz was obligated in 2014 to use only Travelport GDSs for all air and car segments booked on its domestic agencies and was subject to certain other exclusivity obligations for its segments booked in Europe and other markets as defined in the New Travelport GDS Service Agreement. The Company was required to pay a fee for each segment not booked through Travelport GDSs in 2014 subject to exclusivity obligations discussed above. However, beginning January 1, 2015, the Company is no longer subject to exclusivity obligations. Under the New Travelport GDS Service Agreement, beginning in 2015, we are obligated to provide certain levels of volume over the contract period and may be subject to pay shortfall payments in certain cases if we fail to meet volume commitments. The agreement terminates on December 31, 2018. No payments were required to be made to Travelport related to the minimum segment requirements for our domestic and European brands for the year ended December 31, 2014. Corporate Travel Agreement We provide corporate travel management services to Travelport and its subsidiaries. |
Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements The following table shows the fair value of our assets and liabilities that are required to be measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014, which are classified as Other current assets, Other current liabilities and Other non-current liabilities in our Condensed Consolidated Balance Sheets.
We value our foreign currency hedges based on the difference between the foreign currency contract rate and widely available foreign currency rates as of the measurement date. Our foreign currency hedges are short-term in nature, generally maturing within 30 days. We value our interest rate swaps using valuations that are calibrated to the initial trade prices. Using a market-based approach, subsequent valuations are based on observable inputs to the valuation model including interest rates, credit spreads and volatilities. Fair Value of Financial Instruments For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued merchant payable and accrued expenses, the carrying value approximates or equals fair value due to their short-term nature. The carrying value of the Term Loan was $429.6 million at June 30, 2015, compared with a fair value of $430.1 million. At December 31, 2014, the carrying value of the term loans as part of the Credit Agreement was $447.8 million compared with a fair value of $442.2 million. The fair values were determined based on quoted market prices, which is classified as a Level 2 measurement. |
Fair Value Measurements The following table shows the fair value of our assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2014, which are classified as Other current assets, Other current liabilities and Other non-current liabilities in our Consolidated Balance Sheet.
We value our foreign currency hedges based on the difference between the foreign currency contract rate and widely available foreign currency rates as of the measurement date. Our foreign currency hedges are short-term in nature, generally maturing within 30 days. We value our interest rate swaps using valuations that are calibrated to the initial trade prices. Using a market-based approach, subsequent valuations are based on observable inputs to the valuation model including interest rates, credit spreads and volatilities. Fair Value of Financial Instruments For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued merchant payable and accrued expenses, the carrying value approximates or equals fair value due to their short-term nature. The carrying value of the Term Loan was $447.8 million at December 31, 2014, compared with a fair value of $442.2 million. The fair value was determined based on quoted market ask prices, which is classified as a Level 2 measurement. |
Segment Information |
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Segment Reporting Disclosure [Text Block] |
We determine operating segments based on how our chief operating decision maker manages the business, including making operating decisions deciding how to allocate resources and evaluating operating performance. We operate in one segment and have one reportable segment. We maintain operations in the United States, United Kingdom, Australia, Germany, Sweden, France, Finland, Ireland, Switzerland and other international territories. The table below presents net revenue by geographic area: the United States and all other countries.
The table below presents property and equipment, net, by geographic area.
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Subsequent Events |
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Dec. 31, 2014 | |
Orbitz | |
Entity Information [Line Items] | |
Subsequent Events [Text Block] | Subsequent Events As previously announced, on February 12, 2015, the Company, Expedia, Inc., (“Expedia”), and Xeta, Inc., an indirect wholly owned subsidiary of Expedia (“Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides, subject to the terms and conditions set forth therein, that Merger Sub will be merged with and into the Company (the “Merger”) among other things and, with the Company surviving the Merger as an indirect wholly owned subsidiary of Expedia. At the effective time of the Merger (the “Effective Time”), each share of common stock of the Company outstanding immediately prior to the Effective Time (other than any shares owned by the Company, Expedia, Merger Sub or Merger Sub’s direct parent or any dissenting shares) will be automatically converted into the right to receive $12.00 in cash, without interest. The Board of Directors of the Company by a unanimous vote of directors present approved the Merger Agreement and the transactions contemplated thereby, including the Merger. The closing of the Merger is subject to the adoption of the Merger Agreement by the affirmative vote of holders of a majority of the outstanding shares of common stock of the Company. The closing of the Merger is also subject to various customary conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other regulatory clearances, the absence of any governmental order prohibiting the consummation of the transactions contemplated by the Merger Agreement, the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain materiality qualifications) and compliance with the covenants and agreements in the Merger Agreement in all material respects. The Merger Agreement contains certain termination rights, including the right of the Company to terminate the Merger Agreement to accept a superior proposal (subject to compliance with certain notice and other requirements). The Merger Agreement provides that, in connection with termination of the Merger Agreement by the Company or Expedia upon specified conditions, the Company will be required to pay to Expedia a termination fee of $57.5 million. If the Merger Agreement is terminated as a result of the failure to obtain competition law approvals or a legal prohibition related to competition law matters, a termination fee of $115.0 million will be payable by Expedia to the Company, subject to certain limitations. In addition, subject to certain exceptions and limitations, the Company or Expedia may terminate the Merger Agreement if the Merger is not consummated by August 12, 2015 (or as such date may be extended pursuant to the terms of the Merger Agreement). |
Quarterly Financial Data |
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Quarterly Financial Information [Text Block] | Quarterly Financial Data (Unaudited) The following tables present certain unaudited consolidated quarterly financial information.
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Guarantor and Non-Guarantor Supplemental Financial Information |
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Orbitz | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor and Non-Guarantor Supplemental Financial Information | Guarantor and Non-Guarantor Supplemental Financial Information On September 17, 2015, Expedia, Inc., a Delaware corporation (“ Expedia ”), Xeta, Inc., an indirect wholly owned subsidiary of Expedia (“Merger Sub”), and Orbitz Worldwide, Inc., a Delaware corporation (“Orbitz”), completed the previously announced merger (the “Merger”) contemplated by the Agreement and Plan of Merger, dated as of February 12, 2015 (the “Merger Agreement”), by and among Expedia, Merger Sub and Orbitz. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Orbitz, with Orbitz continuing as the surviving entity and as an indirect wholly owned subsidiary of Expedia. On December 8, 2015, Expedia completed its private placement of $750 million aggregate principal amount of 5.000% senior unsecured notes due February 2026 (the “Notes”). The Notes were issued pursuant to an indenture dated as of December 8, 2015 (the “Indenture”), by and among Expedia, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee. In accordance with the terms of Indenture, the Notes are guaranteed by certain of Expedia’s domestic subsidiaries, including Orbitz and certain of its 100 percent owned domestic subsidiaries. Such guarantees are full, unconditional and joint and several with the exception of certain customary automatic subsidiary release conditions. Pursuant to a registration rights agreement dated as of December 8, 2015 (the “Registration Rights Agreement”) among Expedia, Goldman, Sachs & Co., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several initial purchasers of the Notes, Expedia agreed to use commercially reasonable best efforts to (i) file an exchange offer registration statement with respect to an offer to exchange the Notes and the guarantees thereof for substantially identical Notes and guarantees that are registered under the Securities Act of 1933, as amended (the “Securities Act” and such offer, the “Exchange Offer”); (ii) cause the Exchange Offer registration statement to become effective; and (iii) consummate the Exchange Offer or, if required in lieu thereof, file a shelf registration statement and have it declared effective, in each case, within 365 days of issuance of the Notes. If Expedia fails to satisfy certain of its obligations under the Registration Rights Agreement (a “Registration Default”), it will be required to pay additional interest of 0.25% per annum to the holders of the Notes until such Registration Default is cured. In contemplation of the registration of the Notes, the Company has prepared certain condensed consolidated financial information shown below in compliance with the requirements of S-X Rule 3-10(g) to reflect Orbitz and certain of its 100 percent owned domestic subsidiaries being guarantors of the Notes. In this financial information the guarantor subsidiaries account for investments in their wholly-owned subsidiaries using the equity method. Condensed Consolidated Statement of Operations Six months ended June 30, 2015 (in thousands)
Condensed Consolidated Statement of Operations Six months ended June 30, 2014 (in thousands)
Condensed Consolidating Balance Sheet June 30, 2015 (in thousands)
Condensed Consolidated Statement of Cash Flows Six months ended June 30, 2015 (in thousands)
Condensed Consolidated Statement of Cash Flows Six months ended June 30, 2014 (in thousands)
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Guarantor and Non-Guarantor Supplemental Financial Information On September 17, 2015, Expedia, Inc., a Delaware corporation (“ Expedia ”), Xeta, Inc., an indirect wholly owned subsidiary of Expedia (“Merger Sub”), and Orbitz Worldwide, Inc., a Delaware corporation (“Orbitz”), completed the previously announced merger (the “Merger”) contemplated by the Agreement and Plan of Merger, dated as of February 12, 2015 (the “Merger Agreement”), by and among Expedia, Merger Sub and Orbitz. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Orbitz, with Orbitz continuing as the surviving entity and as an indirect wholly owned subsidiary of Expedia. On December 8, 2015, Expedia completed its private placement of $750 million aggregate principal amount of 5.000% senior unsecured notes due February 2026 (the “Notes”). The Notes were issued pursuant to an indenture dated as of December 8, 2015 (the “Indenture”), by and among Expedia, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee. In accordance with the terms of the Indenture, the Notes are guaranteed by certain of Expedia’s domestic subsidiaries, including Orbitz and certain of its 100 percent owned domestic subsidiaries. Such guarantees are full, unconditional and joint and several with the exception of certain customary automatic subsidiary release conditions. Pursuant to a registration rights agreement dated as of December 8, 2015 (the “Registration Rights Agreement”) among Expedia, Goldman, Sachs & Co., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several initial purchasers of the Notes, Expedia agreed to use commercially reasonable best efforts to (i) file an exchange offer registration statement with respect to an offer to exchange the Notes and the guarantees thereof for substantially identical Notes and guarantees that are registered under the Securities Act of 1933, as amended (the “Securities Act” and such offer, the “Exchange Offer”); (ii) cause the Exchange Offer registration statement to become effective; and (iii) consummate the Exchange Offer or, if required in lieu thereof, file a shelf registration statement and have it declared effective, in each case, within 365 days of issuance of the Notes. If Expedia fails to satisfy certain of its obligations under the Registration Rights Agreement (a “Registration Default”), it will be required to pay additional interest of 0.25% per annum to the holders of the Notes until such Registration Default is cured. In contemplation of the registration of the Notes, the Company has prepared certain condensed consolidated financial information shown below in compliance with the requirements of S-X Rule 3-10(g) to reflect Orbitz and certain of its 100 percent owned domestic subsidiaries being guarantors of the Notes. In this financial information the guarantor subsidiaries account for investments in their wholly-owned subsidiaries using the equity method. Condensed Consolidated Statement of Operations Year ended December 31, 2014 (in thousands)
Condensed Consolidating Balance Sheet December 31, 2014 (in thousands)
Condensed Consolidated Statement of Cash Flows Year ended December 31, 2014 (in thousands)
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Accumulated Other Comprehensive Income/(Loss) |
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Accumulated Other Comprehensive Income/(Loss) | Accumulated Other Comprehensive Income/(Loss) Accumulated other comprehensive income (“AOCI”) is comprised of currency translation adjustments. The change in AOCI by component for the three months ended June 30, 2015 and 2014 was as follows:
The change in AOCI by component for the six months ended June 30, 2015 and 2014 was as follows:
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Accounting Pronouncements |
6 Months Ended |
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Jun. 30, 2015 | |
Orbitz | |
Entity Information [Line Items] | |
Accounting Pronouncements | Accounting Pronouncements In May 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing arrangement”, which clarifies that the presentation of software licenses incurred in connection with cloud computing arrangements should be presented in a manner consistent with other software license agreements in the financial statements. ASU 2015-05 will become effective for public companies beginning after December 15, 2015. Early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In April 2015, the FASB issued ASU No.2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 will become effective for public companies beginning after December 15, 2015. Early adoption is permitted. Upon adoption of this standard, the Company will reclassify debt issuance costs, which are presently recorded in Other non-current assets, to a reduction of Term loan, non-current. The balance of debt issuance costs recorded in Other non-current assets as of June 30, 2015 is approximately $6.8 million. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern”. ASU 2014-15 provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and sets rules for how this information should be disclosed in the financial statements. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-15 to have an impact on its consolidated financial statements. In May 2014, the FASB issued a new financial accounting standard on revenue from contracts with customers, ASU No. 2014-09, “Revenue from Contracts with Customers”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. In July 2015, the FASB affirmed its April 2015 proposal to defer the effective date by one year. Therefore, the accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is permitted as of annual reporting periods beginning after December 15, 2016. The Company is currently assessing the impact of this ASU on its consolidated financial statements. |
Organization and Basis of Presentation (Policies) |
12 Months Ended |
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Dec. 31, 2014 | |
Orbitz | |
Entity Information [Line Items] | |
Basis of Accounting | The accompanying consolidated financial statements present the accounts of Orbitz.com, ebookers and HotelClub and the related subsidiaries and affiliates of those businesses, collectively doing business as Orbitz Worldwide, Inc. These entities became wholly-owned subsidiaries of ours as part of an intercompany restructuring that was completed on July 18, 2007 in connection with the IPO. Prior to the IPO, these entities had operated as indirect, wholly-owned subsidiaries of Travelport. |
Significant Accounting Policies (Policies) - Orbitz |
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Entity Information [Line Items] | ||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). All intercompany balances and transactions have been eliminated in the consolidated financial statements. |
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Use of Estimates | Use of Estimates The preparation of our consolidated financial statements and related notes in conformity with GAAP requires us to make certain estimates and assumptions. Our estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to matters that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. Our significant estimates include elements of revenue recognition, the realization of deferred tax assets, amounts that may be due under the tax sharing agreement, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, costs to be capitalized as well as the useful life of capitalized software, and contingent liabilities, including taxes related to hotel occupancy. Actual amounts may differ from these estimates. |
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Reclassifications | Reclassifications Certain prior year amounts in the Condensed Consolidated Financial Statements have been reclassified to conform with the current year presentation. |
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Foreign Currency Translation | Foreign Currency Translation Balance sheet accounts of our operations outside of the United States are translated from foreign currencies into U.S. dollars at the exchange rates as of the Consolidated Balance Sheet dates. Revenues and expenses are translated at average exchange rates during the period. Foreign currency translation gains or losses are included in accumulated other comprehensive income (loss) in shareholders’ equity. Gains and losses resulting from foreign currency transactions, which are denominated in currencies other than the entity’s functional currency, are included in our Consolidated Statement of Operations. |
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Earnings Per Share | We calculate basic net income/(loss) per share by dividing the net income/(loss) for the period by the weighted-average number of shares outstanding during the period. Diluted net income/(loss) per share is calculated by dividing the net income/(loss) for the period by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares are determined by the application of the treasury stock method. |
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Revenue Recognition | Revenue Recognition We recognize revenue when it is earned and realizable, when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. We have two primary types of contractual arrangements with our vendors, which we refer to herein as the “merchant” and “retail” models. Under both the merchant and retail models, we record revenue earned net of all amounts paid to our suppliers. We provide customers the ability to book air travel, hotels, car rentals and other travel products and services through our various websites. These travel products and services are made available to our customers for booking on a stand-alone basis or as part of a vacation package. Under the merchant model, we generate revenue for our services based on the difference between the total amount the customer pays for the travel product and the negotiated net rate plus estimated taxes that the supplier charges us for that product. Customers generally pay us for reservations at the time of booking. Initially, we record these customer receipts as accrued merchant payables and either deferred income or net revenue, depending on the travel product. In the merchant model we do not take on credit risk with the customer since we are paid via a credit card, debit card or certain other electronic payment processors (collectively “Payment Processors”), while the cardholder’s Payment Processors collects funds from the customer. However we are subject to charge-backs and fraud risk, which we monitor closely; we have the ability to determine the price; we are not responsible for the actual delivery of the flight, hotel room or car rental; we take no inventory risk; we have no ability to determine or change the products or services delivered; and the customer chooses the supplier. Transaction related taxes are recorded net of any amounts received from customers. Under the merchant model we receive payment for a reservation from a customer via the Payment Processors. The Payment Processors transmit payment for the reservation within one to two days of the booking date. The Payment Processors take on the risk of collecting funds from the customer. We are subject to fraud because we may be charged by the Payment Processors for fraudulent charges after we remit funds to the supplier. In other instances, the customer may be dissatisfied with some aspect of their travel and contest the charges with the Payment Processors, which could result in a charge-back. We recognize net revenue under the merchant model when we have no further obligations to the customer. For merchant air transactions, this is at the time of booking. For merchant hotel transactions and merchant car transactions, net revenue is recognized at the time of check-in or customer pick-up, respectively. The timing of revenue recognition is different for merchant air travel because our primary service to the customer is fulfilled at the time of booking. We accrue for the cost of merchant hotel and merchant car transactions based on amounts we expect to be invoiced by suppliers. If we do not receive an invoice within a certain period of time, generally within six months, or the invoice received is less than the accrued amount, we reverse a portion of the accrued cost when we determine it is not probable that we will be required to pay the supplier, based on our historical experience and contract terms. This results in an increase in net revenue and a decrease to the accrued merchant payable. Under the retail model, we pass reservations booked by our customers to the travel supplier for a commission. In the retail model: we do not take on credit risk with the customer; we are not the primary obligor with the customer; we have no latitude in determining pricing; we take no inventory risk; we have no ability to determine or change the products or services delivered; and the customer chooses the supplier. We recognize net revenue under the retail model when the reservation is made, secured by a customer with a credit card and we have no further obligations to the customer. For air transactions, this is at the time of booking. For hotel transactions and car transactions, net revenue is recognized at the time of check-in or customer pick-up, respectively, net of an allowance for cancelled reservations. The timing of recognition is different for retail hotel and retail car transactions than for retail air travel because unlike air travel where the reservation is secured by a customer’s Payment Processors at booking, car rental bookings and hotel bookings are not secured by a customer’s credit card until the pick-up date and check-in date, respectively. Allowances for cancelled reservations primarily relate to cancellations that do not occur through our websites, but instead occur directly through the supplier of the travel product. The amount of the allowance is determined based on our historical experience. The majority of commissions earned under the retail model are based upon contractual agreements. Vacation packages offer customers the ability to book a combination of travel products. For example, travel products booked in a vacation package may include a combination of air travel, hotel and car rental reservations. We recognize net revenue for the entire package when the customer uses the reservation, which generally occurs on the same day for each travel product included in the vacation package. Under both the merchant and retail models, we may, depending upon the brand and the travel product, charge our customers a service fee for booking their travel reservation. We recognize revenue for service fees at the time we recognize the net revenue for the corresponding travel product. We also may receive override commissions from suppliers if we meet certain contractual volume thresholds. These commissions are recognized when the amount of the commissions becomes fixed or determinable, which is generally upon notification by the respective travel supplier. We utilize global distribution systems (“GDS”) services from various providers. Under our GDS service agreements, we earn revenue in the form of an incentive payment for air, car and hotel segments that are processed through a GDS. Revenue is recognized for these incentive payments at the time the travel reservation is processed through the GDS, which is generally at the time of booking. The Company issues credits in the form of points related to its loyalty programs. The value of points earned by loyalty program members is included in accrued liabilities and recorded as a reduction of revenue at the time the points are earned, based on the percentage of points that are projected to be redeemed. We also generate other revenue, which is primarily composed of revenue from advertising, including sponsoring links on our websites, and travel insurance. Advertising revenue is derived primarily from the delivery of advertisements on our websites and is recognized either at the time of display of each individual advertisement, or ratably over the advertising delivery period, depending on the terms of the advertising contract. Revenues generated from sponsoring links are recognized upon notification from the alliance partner that a transaction has occurred. Travel insurance revenue is recognized when the reservation is made, secured by a customer with a credit card and we have no further obligations to the customer, which for travel insurance is at the time of booking. |
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Cost of Revenue | Cost of Revenue Cost of revenue is primarily composed of direct costs incurred to generate revenue, including costs to operate our customer service call centers, credit card processing fees and other costs, which include customer refunds and charge-backs, connectivity and other processing costs. These costs are generally variable in nature and are primarily driven by transaction volume. |
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Marketing Expense | Marketing Expense Marketing expense is primarily composed of online marketing costs, such as search and banner advertising and affiliate commissions, and offline marketing costs, such as television, radio and print advertising. Online advertising expense is recognized based on the terms of the individual agreements, based on the ratio of actual impressions to contracted impressions, pay-per-click, or on a straight-line basis over the term of the contract. Offline marketing expense is recognized in the period in which it is incurred. Our online marketing costs are significantly greater than our offline marketing costs. |
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Income Taxes | Income Taxes Our provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the combined federal and state or foreign effective tax rates that are applicable to us in a given year. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, we believe it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. The realization of the deferred tax assets, net of a valuation allowance, is primarily dependent on estimated future taxable income. A change in our estimate of future taxable income may require an increase or decrease to the valuation allowance. |
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Derivative Financial Instruments | Derivative Financial Instruments We measure derivatives at fair value and recognize them in our Consolidated Balance Sheet as assets or liabilities, depending on our rights or obligations under the applicable derivative contract. For our derivatives designated as fair value hedges, if any, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings. For our derivatives designated as cash flow hedges, the effective portions of changes in fair value of the derivative are reported in other comprehensive income and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging instruments, and ineffective portions of hedges, are recognized in earnings in the current period. We manage interest rate exposure by utilizing interest rate swaps to achieve a desired mix of fixed and variable rate debt. As of December 31, 2014, we have two interest rate swaps outstanding that effectively convert $200.0 million of the term loan from a variable to a fixed interest rate (see Note 12 - Derivative Financial Instruments). We pay a fixed interest rate on the notional amount and in exchange receive a variable interest rate based on the one-month LIBOR rate. We have entered into foreign currency contracts to manage exposure to changes in foreign currencies associated with receivables, payables and intercompany transactions. These foreign currency contracts did not qualify for hedge accounting treatment. As a result, the changes in fair values of the foreign currency contracts were recorded in selling, general and administrative expense in our Consolidated Statement of Operations. We do not enter into derivative instruments for speculative or trading purposes. We require that the hedges or derivative financial instruments be effective in managing the interest rate risk or foreign currency risk exposure that they are designated to hedge. Hedges that qualify for hedge accounting are formally designated as such at the inception of the contract. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, resulting in some ineffectiveness, the change in the fair value of the derivative instrument will be included in earnings. Additionally, any derivative instrument used for risk management that becomes ineffective is marked-to-market each period. We believe that our credit risk has been mitigated by entering into these agreements with major financial institutions. Net interest differentials to be paid or received under our interest rate swaps are included in interest expense as incurred or earned. |
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Concentration of Credit Risk | Concentration of Credit Risk Our cash and cash equivalents and foreign exchange contracts are potentially subject to concentration of credit risk. We maintain cash and cash equivalent balances with financial institutions that are in excess of Federal Deposit Insurance Corporation insurance limits or that are deposited in foreign institutions. Additionally, we employ forward foreign exchange contracts to hedge our exposure to foreign currency fluctuations. At the maturity of these forward contracts, the counterparties are obligated to pay settlement values. |
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Cash and Cash Equivalents | Cash and Cash Equivalents We consider cash and highly liquid investments, such as money market funds, with an original maturity of three months or less to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates or equals fair value due to their short-term nature. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Our accounts receivable are reflected in our Consolidated Balance Sheet net of an allowance for doubtful accounts. We provide for estimated bad debts based on our assessment of our ability to realize receivables, considering historical collection experience, the general economic environment and specific customer information. When we determine that a receivable may not be collectible, bad debt is recognized. Bad debt expense is recorded in selling, general and administrative expense in our Consolidated Statement of Operations. We recorded bad debt expense of $0.8 million for the year ended December 31, 2014. |
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Property and Equipment, Net | Property and Equipment, Net Property and equipment is recorded at cost, net of accumulated depreciation. We depreciate property and equipment over their estimated useful lives using the straight-line method. The estimated useful lives by asset category are:
We capitalize the costs of software developed for internal use when the preliminary project stage of the application has been completed and it is probable that the project will be completed and used to perform the function intended. Depreciation commences when the software is placed into service. We evaluate the recoverability of the carrying value of our long-lived assets, including property and equipment and finite-lived intangible assets, when circumstances indicate that the carrying value of those assets may not be fully recoverable. This analysis is performed by comparing the carrying values of the assets to the expected undiscounted future cash flows to be generated from these assets, including estimated sales proceeds when appropriate. If this analysis indicates that the carrying value of an asset is not recoverable, the carrying value is reduced to fair value through an impairment charge in our Consolidated Statement of Operations. Annually, we write off the cost and accumulated depreciation of any assets that are no longer in service. |
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Goodwill, Trademarks and Other Intangible Assets | Goodwill, Trademarks and Other Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of the underlying assets acquired and liabilities assumed in the acquisition of a business. We assign goodwill to reporting units that are expected to benefit from the business combination as of the acquisition date. Goodwill is not subject to amortization. Our indefinite-lived intangible assets include our trademarks and trade names, which are not subject to amortization. Our finite-lived intangible assets primarily include our customer and vendor relationships and are amortized over their estimated useful lives, generally 4 to 8 years, using the straight-line method. Our intangible assets relate to the acquisition of entities accounted for using the purchase method of accounting and are estimated by management based on the fair value of assets acquired. We assess the carrying value of goodwill and other indefinite-lived intangible assets for impairment annually or more frequently whenever events occur and circumstances change indicating potential impairment. We perform our annual impairment testing of goodwill and other indefinite-lived intangible assets as of December 31. We assess goodwill for possible impairment using a two-step process. The first step identifies if there is potential goodwill impairment. If the step one analysis indicates that impairment may exist, a step two analysis is performed to measure the amount of the goodwill impairment, if any. Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced to fair value through an impairment charge in our Consolidated Statement of Operations. For purposes of goodwill impairment testing, we estimate the fair value of our reporting units to which goodwill is allocated using generally accepted valuation methodologies, including market and income based approaches, and relevant data available through and as of the testing date. The market approach is a valuation method in which fair value is estimated based on observed prices in actual transactions and on asking prices for similar assets. Under the market approach, the valuation process is essentially that of comparison and correlation between the subject asset and other similar assets. The income approach is a method in which fair value is estimated based on the cash flows that an asset could be expected to generate over its useful life, including residual value cash flows. These cash flows are then discounted to their present value equivalents using a rate of return that accounts for the relative risk of not realizing the estimated annual cash flows and for the time value of money. Variations of the income approach are used to estimate certain of the intangible asset fair values. We assess our trademarks and trade names for impairment by comparing their carrying values to their estimated fair values. Impairment exists when the estimated fair value of the trademark or trade name is less than its carrying value. If impairment exists, then the carrying value is reduced to fair value through an impairment charge in our Consolidated Statement of Operations. We use an income based valuation approach to estimate fair values of the relevant trademarks and trade names. |
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Restricted Cash | Restricted Cash In order to collateralize letters of credit and similar instruments, as well as for other general business purposes, we have funds deposited as restricted cash. |
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Tax Sharing Liability | Tax Sharing Liability We have a liability included in our Consolidated Balance Sheet that relates to a tax sharing agreement between Orbitz and the Founding Airlines. The agreement governs the allocation of tax benefits resulting from a taxable exchange that took place in connection with the Orbitz initial public offering in December 2003 (the “Orbitz IPO”). As a result of this taxable exchange, the Founding Airlines incurred a taxable gain. The taxable exchange caused Orbitz to have additional future tax deductions for depreciation and amortization due to the increased tax basis of its assets. The additional tax deductions for depreciation and amortization may reduce the amount of taxes we are required to pay in future years. For each tax period during the term of the tax sharing agreement, we are obligated to pay the Founding Airlines a significant percentage of the amount of the tax benefit realized as a result of the taxable exchange. The tax sharing agreement commenced upon consummation of the Orbitz IPO and continues until all tax benefits have been utilized. We use discounted cash flows in calculating and recognizing the tax sharing liability. We review the calculation of the tax sharing liability on a quarterly basis and make revisions to our estimated timing of payments when appropriate. We also assess whether there are any significant changes, such as changes in the amount of payments and tax rates that could materially affect the present value of the tax sharing liability. Although the expected gross remaining payments that may be due under this agreement were $96.2 million as of December 31, 2014, the timing and amount of payments may change. Any changes in timing of payments are recognized prospectively as accretions to the tax sharing liability in our Consolidated Balance Sheet and non-cash interest expense in our Consolidated Statement of Operations. Any changes in the estimated amount of payments, including changes to tax rates, are recognized in Selling, general and administrative expense in our Consolidated Statement of Operations. |
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Equity-Based Compensation | Equity-Based Compensation We measure equity-based compensation cost at fair value and recognize the corresponding compensation expense over the service period during which awards are expected to vest. Performance-based compensation is amortized on a graded basis over the requisite service period of each vesting tranche. We include equity-based compensation in Selling, general and administrative expense in our Consolidated Statement of Operations. The fair value of restricted stock and restricted stock units is determined based on the average of the high and low price of our common stock on the date of grant. The fair value of stock options is determined on the date of grant using the Black-Scholes valuation model. The fair value of the restricted stock subject to market-based conditions is determined on the date of grant using a Monte Carlo simulation for sampling random outcomes. The amount of equity-based compensation expense recorded each period is net of estimated forfeitures based on historical forfeiture rates. |
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Hotel Occupancy Taxes | Hotel Occupancy Taxes Some states and localities impose a tax on the use or occupancy of hotel accommodations (“hotel occupancy tax”). Generally, hotels collect hotel occupancy tax based on the amount of money they receive for renting their hotel rooms and remit the tax to the appropriate taxing authorities. Using the travel services our websites offer, customers are able to make hotel room reservations. While applicable tax laws vary among different taxing jurisdictions, we generally believe that these laws do not require us to collect and remit hotel occupancy tax on the compensation that we receive for our travel services. Some tax authorities have initiated lawsuits or administrative proceedings asserting that we are required to collect and remit hotel occupancy tax on the amount of money we receive from customers for facilitating their reservations and are more frequently addressing the taxability of fees by online travel companies through new legislation. The ultimate resolution of these lawsuits and proceedings in all jurisdictions cannot be determined at this time. We establish an accrual for legal proceedings (tax or otherwise) when we determine that a loss is both probable and can be reasonably estimated. See Note 9 - Commitments and Contingencies. |
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Basis of Accounting | Basis of Presentation The accompanying Condensed Consolidated Financial Statements present the accounts of Orbitz.com, ebookers and HotelClub and the related subsidiaries and affiliates of those businesses, collectively doing business as Orbitz Worldwide, Inc. As mentioned above, the Company entered into an agreement on February 12, 2015, that, if consummated, would result in the Company becoming an indirect wholly-owned subsidiary of Expedia, Inc. The accompanying Condensed Consolidated Financial Statements do not reflect any effects that would result if the agreement is consummated. |
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Recently Issued Accounting Pronouncements | Accounting Pronouncements In May 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing arrangement”, which clarifies that the presentation of software licenses incurred in connection with cloud computing arrangements should be presented in a manner consistent with other software license agreements in the financial statements. ASU 2015-05 will become effective for public companies beginning after December 15, 2015. Early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In April 2015, the FASB issued ASU No.2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 will become effective for public companies beginning after December 15, 2015. Early adoption is permitted. Upon adoption of this standard, the Company will reclassify debt issuance costs, which are presently recorded in Other non-current assets, to a reduction of Term loan, non-current. The balance of debt issuance costs recorded in Other non-current assets as of June 30, 2015 is approximately $6.8 million. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern”. ASU 2014-15 provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and sets rules for how this information should be disclosed in the financial statements. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-15 to have an impact on its consolidated financial statements. In May 2014, the FASB issued a new financial accounting standard on revenue from contracts with customers, ASU No. 2014-09, “Revenue from Contracts with Customers”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. In July 2015, the FASB affirmed its April 2015 proposal to defer the effective date by one year. Therefore, the accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is permitted as of annual reporting periods beginning after December 15, 2016. The Company is currently assessing the impact of this ASU on its consolidated financial statements. |
Recently Issued Accounting Pronouncements In May 2014, the FASB issued a new financial accounting standard on revenue from contracts with customers, ASU No. 2014-09, “Revenue from Contracts with Customers”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern”. ASU 2014-15 provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and sets rules for how this information should be disclosed in the financial statements. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-15 to have an impact on its consolidated financial condition and results of operations. |
Acquisitions (Tables) |
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Acquisitions, Preliminary Purchase Price and Preliminary Allocation | The following table summarizes the purchase price and the allocation of the purchase price:
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Property and Equipment, Net (Tables) |
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Property, Plant and Equipment | Property and equipment, net, consisted of the following:
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Goodwill and Intangible Assets (Tables) - Orbitz |
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Schedule of Goodwill | The changes in the carrying amount of goodwill during the year ended December 31, 2014 was as follows:
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Schedule of Finite-Lived Intangible Assets | The changes in the carrying amounts of finite-lived intangible assets during the year ended December 31, 2014 were as follows:
(a) Intangible assets acquired in 2014 relate to our purchase of certain TPN assets. See Note 3 - Acquisitions. |
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Schedule of Acquired Finite-Lived Intangible Assets by Major Class | Finite-lived intangible assets consisted of the following:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The table below shows the estimated amortization expense related to our finite-lived intangible assets over their remaining useful lives:
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Accrued Expenses (Tables) |
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Schedule of Accrued Liabilities | Accrued expenses consisted of the following:
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Term Loan and Revolving Credit Facility (Tables) - Orbitz |
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Schedule of Maturities of Long-term Debt | The table below shows the aggregate maturities of the Term Loan over the remaining term of the Credit Agreement, excluding any mandatory prepayments from excess cash flow that could be required under the Term Loan in future periods.
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The table below shows the aggregate maturities of the Term Loans over the remaining term of the Amended Credit Agreement, excluding any mandatory prepayments that could be required under the Term Loan beyond the first quarter of 2015. The potential amount of prepayment from excess cash flow that will be required beyond the first quarter of 2015 is not reasonably estimable as of December 31, 2014.
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Schedule of Long-term Debt Instruments | The change in the Term Loan during the six months ended June 30, 2015 was as follows:
(1) Some lenders exercised the right to reject their pro rata share of the prepayment. |
The changes in term loans during the year ended December 31, 2014 were as follows:
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Tax Sharing Liability (Tables) - Orbitz |
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Entity Information [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax Sharing Liability | The change in the tax sharing liability for the six months ended June 30, 2015 was as follows:
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The changes in the tax sharing liability for the year ended December 31, 2014 were as follows:
(a) We accreted interest expense related to the tax sharing liability of $10.1 million for the year ended December 31, 2014. Due to a tax rate change in one of our tax jurisdictions, the net present value of the amount we expect to pay to the Founding Airlines increased by approximately $2.5 million during the year ended December 31, 2014, and the related charge is recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. |
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Tax Sharing Liability Payments | Our estimated payments under the tax sharing agreement are as follows:
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Commitments and Contingencies (Tables) - Orbitz |
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Jun. 30, 2015 |
Dec. 31, 2014 |
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Entity Information [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligation, Fiscal Year Maturity Schedule | The following table summarizes the timing of our commitments as of December 31, 2014:
In February 2014, the Company entered into an agreement with Amadeus IT Group, S.A. to provide GDS services. This contract requires the Company to meet certain minimum annual booking requirements beginning in 2016 through the end of the contract at December 31, 2019. |
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Other Commitments, Letters of Credit and Restricted Cash | The following table shows the amount of letters of credit and similar instruments outstanding by facility, as well as the amounts of our restricted cash balances:
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Schedule of Restricted Cash and Cash Equivalents | The following table shows the amount of letters of credit and similar instruments outstanding by facility, as well as the amounts of our restricted cash balances:
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Income Taxes (Tables) - Orbitz |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign | Pre-tax income/(loss) for U.S. and non-U.S. operations consisted of the following:
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Schedule of Components of Income Tax Expense (Benefit) | The provision/(benefit) for income taxes consisted of the following:
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Schedule of Deferred Tax Assets and Liabilities | Current and non-current deferred income tax assets and liabilities in various jurisdictions are composed of the following:
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Summary of Income Tax Contingencies | The table below shows the changes in the liability for unrecognized tax benefits during the year ended December 31, 2014:
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Equity-Based Compensation (Tables) - Orbitz |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block] | The table below summarizes activity regarding unvested restricted stock units under the Plan during the year ended December 31, 2014:
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Schedule of Nonvested Performance-based Units Activity [Table Text Block] | The table below summarizes activity regarding unvested performance-based and market-based restricted stock units (“PSUs”) under the Plan during the year ended December 31, 2014:
As of December 31, 2014, we expect that the performance-based condition PSUs granted in 2014 will be satisfied at approximately 60% of their target level. The fair value of the market-based PSUs is being amortized on a straight-line basis over the requisite service period of each vesting tranche. The weighted-average grant date fair value of PSUs that vested during the year ended December 31, 2014, was $2.7 million. The weighted-average grant date fair value of PSUs granted during the year ended December 31, 2014 was $12.64. |
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | The table below summarizes the stock option activity under the Plan during the year ended December 31, 2014:
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Schedule of Share-based Compensation, Nonemployee Director Stock Award Plan, Activity [Table Text Block] | The table below summarizes the deferred stock unit activity under the Plan during the year ended December 31, 2014:
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Net Income/(Loss) per Share (Tables) - Orbitz |
6 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2015 |
Dec. 31, 2014 |
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Schedule of Weighted Average Number of Shares | The following table presents the weighted-average shares outstanding used in the calculation of net income/(loss) per share:
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The following table presents the weighted-average shares outstanding used in the calculation of net income/(loss) per share:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following equity awards were not included in the diluted net income/(loss) per share calculation because they would have had an antidilutive effect:
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The following equity awards were not included in the diluted net income/(loss) per share calculation because they would have had an antidilutive effect:
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Segment Information (Tables) - Orbitz |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||
Entity Information [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The table below presents net revenue by geographic area: the United States and all other countries.
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Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country | The table below presents property and equipment, net, by geographic area.
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Quarterly Financial Data (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Entity Information [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information [Table Text Block] | The following tables present certain unaudited consolidated quarterly financial information.
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Guarantor and Non-Guarantor Supplemental Financial Information (Tables) - Orbitz |
6 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2015 |
Dec. 31, 2014 |
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Entity Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Statement | Condensed Consolidated Statement of Operations Six months ended June 30, 2015 (in thousands)
Condensed Consolidated Statement of Operations Six months ended June 30, 2014 (in thousands)
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Condensed Consolidated Statement of Operations Year ended December 31, 2014 (in thousands)
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Balance Sheet | Condensed Consolidating Balance Sheet June 30, 2015 (in thousands)
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Condensed Consolidating Balance Sheet December 31, 2014 (in thousands)
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Cash Flow Statement | Condensed Consolidated Statement of Cash Flows Six months ended June 30, 2014 (in thousands)
Condensed Consolidated Statement of Cash Flows Six months ended June 30, 2015 (in thousands)
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Condensed Consolidated Statement of Cash Flows Year ended December 31, 2014 (in thousands)
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Derivative Financial Instruments (Tables) - Orbitz |
6 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2015 |
Dec. 31, 2014 |
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Entity Information [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions |
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At December 31, 2014, we had the following interest rate swaps outstanding that effectively converts $200.0 million of the term loan from a variable to a fixed interest rate. We pay a fixed interest rate on the notional amount and in exchange receive a variable interest rate based on the one-month LIBOR rate. The Company does not use derivatives for speculative or trading purposes.
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Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The following table summarizes the location and fair value of derivative instruments on the Company’s Condensed Consolidated Balance Sheets.
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The following table summarizes the location and fair value of our interest rate derivative instruments on the Company’s Consolidated Balance Sheet.
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The following table shows the market adjustments recorded during the year ended December 31, 2014:
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Schedule of the Changes in the Fair Value of Foreign Currency Contracts | The following table shows the fair value of our foreign currency hedges:
The following table shows the changes in the fair value of our foreign currency contracts, which were recorded as losses in Selling, general and administrative expense in our Condensed Consolidated Statements of Operations:
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The following table shows the fair value of our foreign currency hedges:
The following table shows the change in the fair value of our foreign currency contracts which were recorded as a gain/(loss) in Selling, general and administrative expense:
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Schedule of Offsetting Assets and Liabilities | The tables below show the gross and net amounts related to derivatives eligible for offset in the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014. The gross asset amount of the derivative listed below is the maximum loss the Company would incur if the counterparties failed to meet their obligation.
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The tables below show the gross and net information related to derivatives eligible for offset in the Consolidated Balance Sheet as of December 31, 2014. The gross asset amount of the derivative listed below is the maximum loss the Company would incur if the counterparties failed to meet their obligation.
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Accumulated Other Comprehensive Income/(Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Entity Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The change in AOCI by component for the three months ended June 30, 2015 and 2014 was as follows:
The change in AOCI by component for the six months ended June 30, 2015 and 2014 was as follows:
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Related Party Transactions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||
Orbitz | |||||||||||||||||||||||||||||||||||||
Entity Information [Line Items] | |||||||||||||||||||||||||||||||||||||
Related Party Transactions Parent | The following table summarizes the related party transactions with Travelport and its subsidiaries through July 22, 2014, reflected in our Consolidated Statement of Operations:
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Fair Value Measurements (Tables) |
6 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2015 |
Dec. 31, 2014 |
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Entity Information [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table shows the fair value of our assets and liabilities that are required to be measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014, which are classified as Other current assets, Other current liabilities and Other non-current liabilities in our Condensed Consolidated Balance Sheets.
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The following table shows the fair value of our assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2014, which are classified as Other current assets, Other current liabilities and Other non-current liabilities in our Consolidated Balance Sheet.
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Organization and Basis of Presentation Narrative (Details) shares in Millions |
Jun. 30, 2015
Countries
|
Dec. 31, 2014
Countries
|
Dec. 31, 2014 |
Dec. 31, 2014
Rate
|
Jul. 22, 2014
shares
|
Dec. 31, 2013
Rate
|
Jul. 25, 2007
shares
|
---|---|---|---|---|---|---|---|
Orbitz | |||||||
Description of Business [Line Items] | |||||||
Number of Countries in which Entity Operates | Countries | 8 | ||||||
Shares beneficially owned [Line Items] | |||||||
Initial Public Offering Shares Issued | shares | 34.4 | ||||||
Shares beneficially owned by parent, percentage | 1.00% | 48.00% | 1.00% | 48.00% | |||
Ebookers [Member] | |||||||
Description of Business [Line Items] | |||||||
Number of Countries in which Entity Operates | Countries | 8 | ||||||
Travelport [Member] | |||||||
Shares beneficially owned [Line Items] | |||||||
Common Stock Shares Sold | shares | 47.7 | ||||||
Shares beneficially owned by parent, percentage | Rate | 1.00% |
Organization and Basis of Presentation Narrative 2 (Details) - Orbitz $ / shares in Units, shares in Millions, $ in Millions |
Feb. 12, 2015
USD ($)
$ / shares
|
Jul. 25, 2007
shares
|
Jun. 30, 2015
Countries
|
Dec. 31, 2014 |
Dec. 31, 2014
Rate
|
Dec. 31, 2013
Rate
|
---|---|---|---|---|---|---|
Shares beneficially owned [Line Items] | ||||||
Number of Countries in which Entity Operates | Countries | 8 | |||||
Shares beneficially owned by parent, percentage | 1.00% | 48.00% | 1.00% | 48.00% | ||
Conversion of stock, amount converted, per share | $ / shares | $ 12.00 | |||||
Termination fee, if competition law matters not met | $ | $ 115.0 | |||||
IPO | ||||||
Shares beneficially owned [Line Items] | ||||||
Sale of stock, number of shares issued | shares | 34.4 |
Significant Accounting Policies (Details) - Orbitz - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2014 |
Jun. 30, 2015 |
|
Property, Plant and Equipment [Line Items] | ||
Provision for Doubtful Accounts | $ 800 | |
Tax sharing liability, remaining payments | 96,171 | $ 87,300 |
Notional amount | $ 190,300 | 170,000 |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 4 years | |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 8 years | |
Interest Rate Swap [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Notional amount | $ 200,000 | $ 200,000 |
Summary of Significant Accounting Policies Intangible Assets (Details) - Orbitz |
12 Months Ended |
---|---|
Dec. 31, 2014 | |
Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 4 years |
Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 8 years |
Acquisitions - Preliminary Purchase Price and Preliminary Allocation Table (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Feb. 19, 2014 |
Dec. 31, 2014 |
|
Orbitz | ||
Preliminary allocation of Purchase Price | ||
Goodwill, Acquired During Period | $ 5,710 | |
Travelocity Partner Network [Member] | ||
Preliminary Purchase Price | ||
Cash paid | $ 10,000 | |
Preliminary allocation of Purchase Price | ||
Property and equipment (software) | 3,510 | |
Finite-lived intangible assets - Customer relationships | 1,560 | |
Unfavorable Contracts | (780) | $ (500) |
Goodwill, Acquired During Period | 5,710 | |
Fair value of net assets acquired | $ 10,000 |
Property and Equipment, Net Table (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Capitalized software | $ 321,460 | |
Furniture, fixtures and equipment | 59,344 | |
Leasehold improvements | 13,882 | |
Construction in progress | 19,177 | |
Gross property and equipment | 413,863 | |
Less: Accumulated depreciation | $ (374,003) | (302,031) |
Property and equipment, net | $ 110,135 | $ 111,832 |
Property and Equipment, Net Narrative (Details) - Orbitz - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2014 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 57.2 | |
Property, plant and equipment, written-off | $ 85.1 |
Goodwill and Intangible Assets Rollforward Table (Details) - Orbitz - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2014 |
Jun. 30, 2015 |
Dec. 31, 2013 |
|
Entity Information [Line Items] | |||
Goodwill | $ 351,098 | $ 351,098 | $ 345,388 |
Goodwill, Acquired During Period | 5,710 | ||
Goodwill, Accumulated Impairment | $ 832,626 | $ 832,626 |
Goodwill and Intangible Assets Narrative (Details) - Orbitz - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2014 |
Jun. 30, 2015 |
|
Goodwill [Line Items] | ||
Trademarks and trade names | $ 89,890 | $ 89,762 |
Amortization of Intangible Assets | $ 349 |
Goodwill and Intangible Assets Carrying Amount of Finite Lived Intangible Assets Table (Details) - Orbitz - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2014 |
Jun. 30, 2015 |
Dec. 31, 2013 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Net | $ 1,300 | $ 1,144 | $ 89 |
Finite-lived Intangible Assets Acquired | 1,560 | ||
Amortization of Intangible Assets | $ (349) |
Goodwill and Intangible Assets Finite Lived Intangible Assets Table (Details) - Orbitz - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2014 |
Jun. 30, 2015 |
Dec. 31, 2013 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Gross | $ 5,853 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (4,553) | ||
Other intangible assets, net | 1,300 | $ 1,144 | $ 89 |
Amortization of Intangible Assets | 349 | ||
Customer Relationships [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Gross | 1,560 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (260) | ||
Other intangible assets, net | 1,300 | ||
Vendor Relationships and Other [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Gross | 4,293 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (4,293) | ||
Other intangible assets, net | $ 0 |
Goodwill and Intangible Assets Finite Lived Intangible Assets Estimated Amortization Table (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | $ 312 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 312 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 312 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 312 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 52 | ||
Finite-Lived Intangible Assets, Net | $ 1,144 | $ 1,300 | $ 89 |
Accrued Expenses Table (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Entity Information [Line Items] | ||
Advertising and marketing | $ 45,475 | |
Employee costs | 26,921 | |
Tax sharing liability | $ 17,900 | 17,093 |
Customer service costs | 13,564 | |
Contract exit costs | 11,629 | |
Customer incentive costs | 11,545 | |
Professional fees | 7,723 | |
Airline rebates | 6,644 | |
Customer refunds | 5,767 | |
Technology costs | 4,727 | |
Other | 7,666 | |
Total accrued expenses | $ 165,608 | $ 158,754 |
Accrued Expenses Narrative (Details) - Orbitz $ in Thousands |
Dec. 31, 2014
USD ($)
|
---|---|
Entity Information [Line Items] | |
Contract exit costs, total | $ 11,700 |
Contract exit costs, current | 11,629 |
Contract exit costs, non-current | $ 100 |
Term Loan and Revolving Credit Facility Table (Details) - Orbitz - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
|
Debt Instrument [Roll Forward] | ||
Beginning balance | $ 447,750 | |
Ending balance | 429,599 | $ 447,750 |
2013 Credit Agreement [Member] | ||
Debt Instrument [Line Items] | ||
Scheduled principal payments on term loans | (3,375) | |
Debt Instrument [Roll Forward] | ||
Beginning balance | 0 | 443,250 |
Repayments of Long-term Debt | (439,875) | |
Ending balance | 0 | |
Term Loans [Member] | ||
Debt Instrument [Line Items] | ||
Scheduled principal payments on term loans | (2,250) | |
Proceeds from Issuance of Debt | 450,000 | |
Debt Instrument [Roll Forward] | ||
Beginning balance | 447,750 | |
Repayments of Long-term Debt | (18,151) | |
Ending balance | $ 429,599 | $ 447,750 |
Tax Sharing Liability Table (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Tax Sharing Liability [Roll Forward] | |||||
Tax sharing liability, total | $ 78,382 | $ 80,191 | $ 80,191 | ||
Accretion of interest expense | $ 1,700 | $ 2,300 | 3,800 | 4,900 | 10,100 |
Payments on tax sharing liability | (8,921) | $ (4,616) | (14,375) | ||
Accretion of interest expense and tax rate changes | 3,841 | 12,566 | |||
Tax sharing liability, total | $ 73,302 | $ 73,302 | $ 78,382 |
Tax Sharing Liability Estimated Payments (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Entity Information [Line Items] | ||
Tax sharing liability, current | $ 17,900 | $ 17,093 |
Tax Sharing Liability Estimated Payment In Next Twelve Months | 18,224 | |
Tax Sharing Liability Estimated Payment In Year Two | 27,355 | |
Tax Sharing Liability Estimated Payment In Year Three | 39,873 | |
Tax Sharing Liability Estimated Payment In Year Four | 10,719 | |
Tax sharing liability, remaining payments | 87,300 | 96,171 |
Tax sharing liability, non current | $ 55,415 | $ 61,289 |
Commitments and Contingencies Narrative (Details) - Orbitz - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2014 |
Jun. 30, 2015 |
Dec. 31, 2013 |
|
Entity Information [Line Items] | |||
Operating Leases, Rent Expense, Net | $ 7,300 | ||
Operating Leases, Future Minimum Sublease Rentals | 1,000 | ||
Tax sharing liability, remaining payments | 96,171 | $ 87,300 | |
Unrecognized tax benefits | 3,348 | $ 3,300 | $ 3,569 |
Surety Bonds Outstanding | 7,500 | ||
Surety Bonds Outstanding Secured by Letters of Credit | 5,300 | ||
Bank Guarantees Outstanding | $ 25,300 |
Commitments and Contingencies Letters of Credit and Restricted Cash Table (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Letters of Credit [Line Items] | ||
Letters of Credit and Similar Instruments | $ 96,053 | $ 101,298 |
Restricted cash | 92,544 | 97,810 |
Issued Under LOC Facility [Member] | ||
Letters of Credit [Line Items] | ||
Letters of Credit Outstanding, Amount | 0 | 2,892 |
Restricted cash | 0 | 3,176 |
Uncommitted Letter of Credit Facilities and Surety Bonds [Member] | ||
Letters of Credit [Line Items] | ||
Letters of Credit Outstanding, Amount | 96,053 | 98,406 |
Restricted cash | $ 92,544 | $ 94,634 |
Income Taxes Pre-Tax Income Loss Table (Details) - Orbitz - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Entity Information [Line Items] | |||
Income/(loss) before income taxes, U.S. | $ 67,093 | ||
Income/(loss) before income taxes, Non-U.S. | (22,532) | ||
Income/(loss) before income taxes | $ (22,389) | $ 13,995 | $ 44,561 |
Income Taxes Provision Benefit Table (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Entity Information [Line Items] | |||||
Current Federal And State Tax Expense (Benefit) | $ 272 | ||||
Current Foreign Tax Expense (Benefit) | 1,775 | ||||
Current Income Tax Expense (Benefit) | 2,047 | ||||
Deferred Federal And State Tax Expense (Benefit) | 22,910 | ||||
Deferred Foreign Income Tax Expense (Benefit) | 2,324 | ||||
Deferred income taxes | 25,234 | ||||
Provision for income taxes | $ 3,444 | $ 5,794 | $ 2,801 | $ 13,048 | $ 27,281 |
Income Taxes Effective Rate Reconciliation Table (Details) - Orbitz |
12 Months Ended |
---|---|
Dec. 31, 2014
Rate
| |
Entity Information [Line Items] | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate | 35.00% |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes | 0.20% |
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential | 7.60% |
Effective Income Tax Rate Reconciliation, Change in Valuation Allowance | 19.10% |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Goodwill Impairment Charges | 0.00% |
Effective Income Tax Rate Reconciliation, Uncertain Tax Positions | 0.30% |
Effective Income Tax Rate Reconciliation, Other Adjustments | (1.00%) |
Effective Income Tax Rate, Continuing Operations | 61.20% |
Income Taxes Unrecognized Tax Benefits Table (Details) - Orbitz $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2014
USD ($)
| |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Unrecognized Tax Benefits | $ 3,569 |
Unrecognized Tax Benefits, Increases Resulting from Prior Period Tax Positions | 0 |
Unrecognized Tax Benefits, Decreases Resulting from Prior Period Tax Positions | (209) |
Unrecognized Tax Benefits, Decrease Resulting from Foreign Currency Translation | (12) |
Unrecognized Tax Benefits | $ 3,348 |
Equity-Based Compensation Compensation Expense Narrative (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||
Stock compensation expense | $ 4,500 | $ 3,900 | $ 7,416 | $ 6,803 | $ 12,196 |
Unrecognized compensation cost, total | $ 21,800 | $ 21,800 | $ 20,100 | ||
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition | 2 years 8 months | 2 years 10 months |
Equity-Based Compensation Non-Employee Directors Deferred Compensation Plan (Details) - Orbitz - Deferred Stock Units [Member] |
12 Months Ended |
---|---|
Dec. 31, 2014
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Deferred Compensation Arrangement Deferral Percentage | 100.00% |
Number of shares executive receive per share of PSU earned | 1 |
Deferred Compensation Arrangement Period Before Distribution of Units After Termination | 200 days |
Derivative Financial Instruments Interest Rate Swaps Outstanding Table (Details) - Orbitz - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2014 |
Jun. 30, 2015 |
|
Derivative [Line Items] | ||
Notional amount | $ 190.3 | $ 170.0 |
Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Notional amount | 200.0 | $ 200.0 |
1.11% Interest Rate Paid [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 100.0 | |
Effective Date | Aug. 29, 2014 | |
Maturity Date | Aug. 31, 2016 | |
Variable Interest Rate Received | One-month LIBOR | |
Fixed Interest Rate Paid | 1.11% | |
1.15% Interest Rate Paid [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 100.0 | |
Effective Date | Aug. 29, 2014 | |
Maturity Date | Aug. 31, 2016 | |
Variable Interest Rate Received | One-month LIBOR | |
Fixed Interest Rate Paid | 1.15% |
Derivative Financial Instruments Swaps Balances Table (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative Liability | $ 6,746 | $ 2,947 |
Interest Rate Swap [Member] | Other Non-Current Liabilities [Member] | Fair Value, Measurements, Recurring [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability | $ 1,608 | $ 1,723 |
Derivative Financial Instruments Swaps Activity Table (Details) - Orbitz - Interest Rate Swap [Member] $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2014
USD ($)
| |
Derivative Instruments, Gain (Loss) [Line Items] | |
Gain in Other Comprehensive Income | $ 0 |
(Loss) Reclassified from Accumulated OCI into Interest Expense (Effective Portion) | 0 |
Gain/(Loss) Recognized in Income (Ineffective Portion and the Amount Excluded from Effectiveness Testing) | $ 0 |
Derivative Financial Instruments Derivatives Eligible for Offset Table (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Entity Information [Line Items] | ||
Derivative Liability | $ 6,746 | $ 2,947 |
Derivative Asset | (1,145) | (5,499) |
Derivative Assets (Liabilities), at Fair Value, Net | $ 5,601 | $ (2,552) |
Employee Benefit Plans (Details) - Orbitz $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2014
USD ($)
Rate
| |
Defined Contribution Plan Disclosure [Line Items] | |
Defined Contribution Plan, Cost Recognized | $ | $ 5.3 |
Maximum [Member] | |
Defined Contribution Plan Disclosure [Line Items] | |
Defined Contribution Plan, Employer Matching Contribution Percentage | Rate | 3.00% |
Net Income/(Loss) per Share Antidilutive Securities (Details) - Orbitz - shares |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive Equity Awards | 6,873,946 | 1,346,872 | 6,993,798 | 888,272 | 944,534 |
Restricted Stock Units (RSUs) [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive Equity Awards | 4,288,652 | 936,427 | 4,141,535 | 618,421 | 704,809 |
Performance Based Restricted Stock Units [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive Equity Awards | 1,798,277 | 410,445 | 1,933,003 | 269,851 | 239,725 |
Stock Options [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive Equity Awards | 787,017 | 919,260 | 0 |
Related Party Transactions Balances (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Related Party Transaction [Line Items] | ||
Accounts receivable | $ 161,340 | $ 117,440 |
Accounts payable | 20,237 | 13,954 |
Accrued merchant payable | 504,385 | 366,062 |
Accrued expenses | $ 165,608 | $ 158,754 |
Related Party Transactions Narrative (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
Dec. 31, 2014 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|---|---|
Related Party Transaction [Line Items] | |||||
Due from Travelport, net | $ 15,511 | ||||
Shares beneficially owned by parent, percentage | 1.00% | 48.00% | 1.00% | 48.00% |
Fair Value Measurements Fair Value Measurements Nonrecurring Measurements (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill | $ 351,098 | $ 351,098 | $ 345,388 |
Trademarks and trade names | 89,762 | 89,890 | |
Other intangible assets, net | $ 1,144 | 1,300 | $ 89 |
Customer Relationships [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Other intangible assets, net | $ 1,300 |
Segment Information (Details) - Orbitz - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2014 |
Jun. 30, 2015 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 932,007 | |
Long-lived assets | 111,832 | $ 110,135 |
UNITED STATES | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 674,079 | |
Long-lived assets | 106,816 | |
All Other Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 257,928 | |
Long-lived assets | $ 5,016 |
Subsequent Events (Details) - Orbitz - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2014 |
Feb. 12, 2015 |
|
Subsequent Event [Line Items] | ||
Potential Contract Exit Termination Payments Owed | $ 115.0 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Sale of Stock, Price Per Share | $ 12.00 | |
Expedia, Inc. [Member] | ||
Subsequent Event [Line Items] | ||
Potential Contract Exit Termination Payments Owed | $ 57.5 |
Quarterly Financial Data Table (Details) - Orbitz - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Entity Information [Line Items] | ||||||||
Net revenue | $ 239,597 | $ 220,564 | $ 253,135 | $ 248,053 | $ 210,255 | $ 459,802 | $ 458,308 | $ 932,007 |
Costs and Expenses | 232,937 | 198,582 | 227,510 | 224,547 | 199,358 | 466,314 | 423,905 | 849,997 |
Operating Income | 6,660 | 21,982 | 25,625 | 23,506 | 10,897 | (6,512) | 34,403 | 82,010 |
Net income/(loss) | $ (4,251) | $ 7,296 | $ 9,037 | $ 6,881 | $ (5,934) | $ (25,190) | $ 947 | $ 17,280 |
Net income/(loss) per share | $ (0.04) | $ 0.07 | $ 0.08 | $ 0.06 | $ (0.05) | $ (0.22) | $ 0.01 | $ 0.16 |
Net income/(loss) per share | $ (0.04) | $ 0.06 | $ 0.08 | $ 0.06 | $ (0.05) | $ (0.22) | $ 0.01 | $ 0.15 |
Quarterly Financial Data Narrative (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2014
USD ($)
| |
Orbitz | |
Entity Information [Line Items] | |
Impairment of goodwill and intangible assets | $ 0 |
Guarantor and Non-Guarantor Supplemental Financial Information (Details) - Orbitz - Unsecured Debt - 5.000% Senior Unsecured Notes |
Dec. 08, 2015
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Debt, face amount | $ 750,000,000 |
Stated rate | 5.00% |
Registration default, additional interest payable | 0.25% |
Revolver Narrative (Details) - Orbitz - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
|
Line of Credit Facility [Line Items] | ||
Revolver, maximum borrowing capacity | $ 80.0 | |
Letters of credit, maximum issuance capacity | $ 55.0 | |
Line of Credit Facility Fee | 0.50% | 0.50% |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolver, maximum borrowing capacity | $ 80.0 | |
Revolving Credit Facility [Member] | Eurocurrency Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Term loan, basis spread on variable rate | 3.00% | |
Revolving Credit Facility [Member] | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Term loan, basis spread on variable rate | 2.00% |
Term Loan Rollforward (Details) - Orbitz $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2015
USD ($)
| |
Debt Instrument [Roll Forward] | |
Beginning balance | $ 447,750 |
Ending balance | 429,599 |
Term Loans [Member] | |
Debt Instrument [Roll Forward] | |
Beginning balance | 447,750 |
Repayments of Long-term Debt | (18,151) |
Ending balance | $ 429,599 |
Term Loan Maturity Table (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Entity Information [Line Items] | ||
2015 | $ 25,871 | |
2015 | $ 0 | |
2016 | 0 | 0 |
2017 | 0 | 0 |
2018 | 0 | 0 |
2019 | 4,349 | 0 |
Thereafter | 425,250 | 421,879 |
Debt, Long-term and Short-term, Combined Amount | $ 429,599 | $ 447,750 |
Tax Sharing Liability Narrative (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
Jan. 01, 2015 |
Dec. 31, 2013 |
|
Entity Information [Line Items] | |||||||
Tax sharing liability, remaining payments | $ 87,300 | $ 87,300 | $ 96,171 | ||||
Tax sharing liability, total | 73,302 | 73,302 | 78,382 | $ 78,382 | $ 80,191 | ||
Accretion of interest expense | 1,700 | $ 2,300 | 3,800 | $ 4,900 | 10,100 | ||
Tax sharing liability effect of tax rate change | 2,500 | ||||||
Tax sharing liability, current | 17,900 | 17,900 | 17,093 | ||||
Tax sharing liability, non current | $ 55,415 | $ 55,415 | $ 61,289 |
Commitments and Contingencies Letters of Credit Narrative (Details) - Orbitz - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
Mar. 25, 2013 |
|
Letters of Credit [Line Items] | |||||
Letters of Credit Fees | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.3 | |
Revolver, maximum borrowing capacity | $ 515.0 | ||||
Revolver, maximum borrowing capacity | 80.0 | 80.0 | |||
Line Of Credit Facility Letters of Credit Maximum | 55.0 | 55.0 | 55.0 | ||
Revolving Credit Facility [Member] | |||||
Letters of Credit [Line Items] | |||||
Revolver, maximum borrowing capacity | $ 80.0 | $ 80.0 | |||
Revolver, maximum borrowing capacity | $ 80.0 | $ 80.0 |
Commitments and Contingencies Letters of Credit Table (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Letters of Credit [Line Items] | ||
Letters of Credit and Similar Instruments | $ 96,053 | $ 101,298 |
Restricted cash | 92,544 | 97,810 |
Issued Under LOC Facility [Member] | ||
Letters of Credit [Line Items] | ||
Letters of Credit Outstanding, Amount | 0 | 2,892 |
Restricted cash | 0 | 3,176 |
Uncommitted Letter of Credit Facilities and Surety Bonds [Member] | ||
Letters of Credit [Line Items] | ||
Letters of Credit Outstanding, Amount | 96,053 | 98,406 |
Restricted cash | $ 92,544 | $ 94,634 |
Equity-Based Compensation Shares Granted (Details) - Orbitz - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock available for issuance, future issuance | 3,518,537 | 3,518,537 | 4,291,197 | ||
Stock compensation expense | $ 4,500 | $ 3,900 | $ 7,416 | $ 6,803 | $ 12,196 |
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock units granted | 805,251 | 2,175,112 | |||
Weighted average grant date fair value | $ 11.48 | $ 8.86 | |||
Award vesting period | 4 years | 4 years | |||
Deferred Stock Units [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock units granted | 92,977 | 120,563 | |||
Weighted average grant date fair value | $ 11.36 | $ 7.94 | |||
Number of shares executive receive per share of PSU earned | 1 |
Equity-Based Compensation Compensation Expense (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||
Stock compensation expense | $ 4,500 | $ 3,900 | $ 7,416 | $ 6,803 | $ 12,196 |
Unrecognized compensation cost, total | $ 21,800 | $ 21,800 | $ 20,100 | ||
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition | 2 years 8 months | 2 years 10 months |
Derivative Financial Instruments Narrative (Details) - Orbitz - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Derivative [Line Items] | |||||
Foreign Currency Transaction Gain (Loss), before Tax | $ (5.0) | $ (4.1) | $ (0.4) | $ (6.9) | $ (12.9) |
Notional amount | 170.0 | 170.0 | 190.3 | ||
Unrealized gain (loss) on derivatives | (1.6) | $ (2.2) | 1.7 | ||
Interest Rate Swap [Member] | |||||
Derivative [Line Items] | |||||
Notional amount | $ 200.0 | $ 200.0 | $ 200.0 |
Derivative Financial Instruments Interest Rate Swaps Outstanding (Details) - Orbitz - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
|
Derivative [Line Items] | ||
Notional amount | $ 170.0 | $ 190.3 |
Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Notional amount | 200.0 | $ 200.0 |
Interest Rate Swap [Member] | 1.11% Interest Paid [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 100.0 | |
Effective Date | Aug. 29, 2014 | |
Maturity Date | Aug. 31, 2016 | |
Interest Rate Swap [Member] | 1.15% Interest Rate Paid [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 100.0 | |
Effective Date | Aug. 29, 2014 | |
Maturity Date | Aug. 31, 2016 | |
Interest Rate Swap [Member] | LIBOR | 1.11% Interest Paid [Member] | ||
Derivative [Line Items] | ||
Fixed Interest Rate Paid | 1.11% | |
Interest Rate Swap [Member] | LIBOR | 1.15% Interest Rate Paid [Member] | ||
Derivative [Line Items] | ||
Fixed Interest Rate Paid | 1.15% |
Derivative Financial Instruments Swaps Balances (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative Liability | $ 6,746 | $ 2,947 |
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap [Member] | Other non current liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability | 1,608 | 1,723 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Swap [Member] | Other non current liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability | $ 1,608 | $ 1,723 |
Derivative Financial Instruments Swaps Activity (Details) - Orbitz - Interest Rate Swap [Member] $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2014
USD ($)
| |
Derivative Instruments, Gain (Loss) [Line Items] | |
Gain in Other Comprehensive Income | $ 0 |
(Loss) Reclassified from AOCI into Interest Expense (Effective Portion) | 0 |
Gain/(Loss) Recognized in Income (Ineffective Portion and the Amount Excluded from Effectiveness Testing) | $ 0 |
Derivative Financial Instruments Hedges Activity (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Derivative [Line Items] | |||||
Foreign currency transaction gain/(loss) | $ 5,000 | $ 4,100 | $ 400 | $ 6,900 | $ 12,900 |
Net foreign currency hedge and transaction gain/(loss) | 1,800 | 1,100 | 2,700 | 3,200 | 6,100 |
Not Designated as Hedging Instrument [Member] | Foreign currency hedges [Member] | |||||
Derivative [Line Items] | |||||
Foreign currency hedges gain/(loss) | $ (6,884) | $ (5,236) | $ (3,068) | $ (10,105) | $ 6,813 |
Derivative Financial Instruments Derivatives Eligible for Offset (Details) - Orbitz - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Entity Information [Line Items] | ||
Derivative Liability | $ 6,746 | $ 2,947 |
Derivative Asset | 1,145 | 5,499 |
Derivative Assets (Liabilities), at Fair Value, Net | $ 5,601 | $ (2,552) |
AOCI Rollforward (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Accumulated Other Comprehensive Income Loss [Roll Forward] | |||||
Accumulated other comprehensive income/(loss), net of tax | $ 9,666 | ||||
Other comprehensive income/(loss) before reclassifications | $ (4,120) | $ (5,239) | 3,079 | $ (8,793) | $ 6,650 |
Accumulated other comprehensive income/(loss), net of tax | 12,745 | 12,745 | 9,666 | ||
Accumulated Translation Adjustment [Member] | |||||
Accumulated Other Comprehensive Income Loss [Roll Forward] | |||||
Accumulated other comprehensive income/(loss), net of tax | 16,865 | (538) | 9,666 | 3,016 | 3,016 |
Other comprehensive income/(loss) before reclassifications | (5,239) | (8,793) | |||
Other comprehensive income/(loss), net of tax | (4,120) | (5,239) | 3,079 | (8,793) | |
Accumulated other comprehensive income/(loss), net of tax | $ 12,745 | $ (5,777) | $ 12,745 | $ (5,777) | $ 9,666 |
Accumulated Other Comprehensive Income/(Loss) Reclassifications out of ACOI (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Net interest expense | $ (7,467) | $ (8,595) | $ (15,877) | $ (18,172) | $ (35,212) | |||
Provision (benefit) for income taxes | (3,444) | (5,794) | (2,801) | (13,048) | (27,281) | |||
Net income/(loss) | $ (4,251) | $ 7,296 | $ 9,037 | $ 6,881 | $ (5,934) | $ (25,190) | $ 947 | $ 17,280 |
Related Party Transactions Activity (Details) - Orbitz - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|||
Related Party Transaction [Line Items] | ||||||||||
Net revenue | $ 239,597 | $ 220,564 | $ 253,135 | $ 248,053 | $ 210,255 | $ 459,802 | $ 458,308 | $ 932,007 | ||
Cost of revenue | 63,897 | 47,638 | 136,380 | 90,383 | 179,774 | |||||
Selling, general and administrative | 72,562 | 72,018 | 143,211 | 138,260 | 278,202 | |||||
Marketing expense | 82,520 | 89,604 | 158,245 | 166,382 | 334,472 | |||||
Net interest expense | $ 7,467 | $ 8,595 | $ 15,877 | $ 18,172 | 35,212 | |||||
Travelport [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Net revenue | [1] | 54,969 | ||||||||
Cost of revenue | 59 | |||||||||
Marketing expense | $ 58 | |||||||||
|
Income Taxes Narratives (Details) - Orbitz - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Entity Information [Line Items] | ||||||
Provision for income taxes | $ 3,444,000 | $ 5,794,000 | $ 2,801,000 | $ 13,048,000 | $ 27,281,000 | |
Decrease in income tax expense (benefit) | 2,400,000 | 10,200,000 | ||||
Deferred Tax Assets, Net of Valuation Allowance | 145,000,000 | 145,000,000 | 146,300,000 | |||
Unrecognized tax benefits | 3,300,000 | 3,300,000 | 3,348,000 | $ 3,569,000 | ||
Unrecognized tax benefits, would impact effective tax rate | $ 3,300,000 | 3,300,000 | $ 3,300,000 | |||
Unrecognized tax benefits, reduction resulting from lapse of applicable statute of limitations | $ 0 |
Accounting Pronouncements Accounting Changes and Error Corrections (Details) $ in Millions |
Jun. 30, 2015
USD ($)
|
---|---|
Orbitz | Other Non-current Assets | Accounting Standards Update 2015-03 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Debt issuance costs | $ 6.8 |
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