Liberty TripAdvisor Holdings, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Segment Information

Segment Information

12 Months Ended

Dec. 31, 2017

(13) Segment Information

TripCo, through its ownership interests in subsidiaries and other companies, is primarily engaged in the online commerce industries. TripCo identifies its reportable segments as (A) those consolidated companies that represent 10% or more of its consolidated annual revenue, annual adjusted operating income before depreciation and amortization (“Adjusted OIBDA”) or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of TripCo’s annual pre-tax earnings.

TripCo evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, TripCo reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.

TripCo defines Adjusted OIBDA as revenue less operating expenses, and selling, general and administrative expenses (excluding stock-based compensation), adjusted for specifically identified non-recurring transactions. TripCo believes this measure is an important indicator of the operational strength and performance of its businesses, including each business’s ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, equity settled liabilities (including stock-based compensation), separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. TripCo generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the year ended December 31, 2017, TripCo has identified the following consolidated company as its reportable segment:

TripAdvisor - an online travel research company, empowering users to plan and maximize their travel experience.

TripCo’s operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments that are also consolidated companies are the same as those described in the Company’s summary of significant accounting policies.

Performance Measures


	Years ended December 31,
	2017			2016		2015
			Adjusted		Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA	Revenue	OIBDA
	amounts in millions
TripAdvisor	$	1,556	331	1,480	352	1,492	464
Corporate and other		13	(9)	52	(16)	73	(30)
Consolidated TripCo	$	1,569	322	1,532	336	1,565	434

Other Information


	December 31, 2017			December 31, 2016
	Total		Capital	Total	Capital
	Assets		expenditures	Assets	expenditures
	amounts in millions
TripAdvisor	$	5,387	64	7,171	72
Corporate and other		97	1	111	1
Consolidated TripCo	$	5,484	65	7,282	73

Revenue by Geographic Area


	December 31,
	2017		2016	2015
	amounts in millions
United States	$	890	850	807
United Kingdom		209	210	215
Other countries		470	472	543
Consolidated TripCo	$	1,569	1,532	1,565

Long-lived Assets by Geographic Area


	December 31,
	2017		2016
	amounts in millions
United States	$	147	158
Other countries		18	18
Consolidated TripCo	$	165	176

The following table provides a reconciliation of consolidated Adjusted OIBDA to operating income and earnings (loss) before income taxes:


	Years ended December 31,
	2017		2016	2015
	amounts in millions
Consolidated Adjusted OIBDA	$	322	336	434
Stock settled charitable contribution (1)		—	—	(67)
Stock-based compensation		(103)	(91)	(82)
Depreciation and amortization		(213)	(222)	(268)
Impairment of intangible assets		(1,798)	—	(2)
Operating income		(1,792)	23	15
Interest expense		(25)	(25)	(28)
Realized and unrealized gains (losses) on financial instruments, net		24	53	2
Gain (loss) on dispositions, net		(18)	—	19
Other, net		1	(5)	(4)
Earnings (loss) before income taxes	$	(1,810)	46	4

(1)

TripAdvisor recorded an expense for the year ending December 31, 2015 in the amount of $67 million for a non-cash contribution to the TripAdvisor Charitable Foundation (the “Foundation”) which was recorded to general and administrative expense in the consolidated statements of operations. TripAdvisor settled this obligation with treasury shares based on the fair value of its common stock on the date the treasury shares were issued to the Foundation. Due to the one-time nature and use of stock to settle the obligation, the amount has been excluded from Adjusted OIBDA for the year ended December 31, 2015, as shown above.