Orbitz 2014 Annual Report Download - page 37

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Selling, General and Administrative
Our selling, general and administrative expense is composed of wages and benefits, contract labor costs, network
communications, systems maintenance and equipment costs and other costs, which include professional fees, foreign currency
transaction and hedging expense and other administrative costs.
Years Ended
December 31, Increase/ (Decrease) Years Ended December 31, Increase/ (Decrease)
2014 2013 $ % 2013 2012 $ %
Selling, general and
administrative: (in thousands) (in thousands)
Wages and benefits (a) . . . . . . . . . . . . . . . . $ 166,404 $ 168,709 $ (2,305) (1)% $ 168,709 $ 142,531 $ 26,178 18 %
Contract labor (a) . . . . . . . . . . . . . . . . . . . . 22,398 21,586 812 4 % 21,586 26,329 (4,743) (18)%
Network communications, systems
maintenance and equipment . . . . . . . . . 28,331 27,283 1,048 4 % 27,283 28,619 (1,336) (5)%
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,069 62,840 (1,771) (3)% 62,840 62,774 66 — %
Total selling, general, and
administrative . . . . . . . . . . . . . . . . $ 278,202 $ 280,418 $ (2,216) (1)% $ 280,418 $ 260,253 $ 20,165 8 %
(a) The amounts presented above for wages and benefits and contract labor are net of amounts capitalized related to
software development.
Selling, general and administrative expense decreased $2.2 million (a $2.1 million decrease excluding the impact of
foreign currency fluctuations), including an increase of $15.0 million related to TPN, for the year ended December 31, 2014,
compared with the year ended December 31, 2013. This decrease was driven primarily by a $7.0 million decrease in
professional fees due primarily to litigation related expenses and a $2.3 million decrease in wages and benefits, partially offset
by a $2.5 million increase in the fair value of the tax sharing liability attributable to a change in the expected tax rate (see Note
8 -Tax Sharing of the Notes to Consolidated Financial Statements), higher travel costs of $1.6 million, and higher network
communications, systems maintenance and equipment costs of $1.0 million and increases in foreign currency expense and
facilities expense. Wages and benefits decreased due largely to lower incentive-based compensation of $6.4 million, lower
severance expense of $2.0 million, higher capitalized wages and benefits of $2.8 million and lower taxes and commissions.
These amounts were partially offset by higher salary and wages of $9.6 million, primarily due to TPN, and other employee
benefits.
Selling, general and administrative expense increased $20.2 million (a $21.1 million increase excluding the impact of
foreign currency fluctuations) for the year ended December 31, 2013, compared with the year ended December 31, 2012. The
increase in expense was primarily driven by a $26.2 million increase in wages and benefits and the absence of an insurance
reimbursement of $5.0 million received in 2012 for costs previously incurred to defend our hotel tax cases. The increase in
selling, general, and administrative expense was partially offset by a $4.7 million decrease in contract labor costs, a $2.2
million decrease in legal fees, a $1.5 million decrease in employee travel expense, a $1.3 million decrease in network
communications costs, and a decrease in other professional fees. Wages and benefits increased due largely to higher incentive-
based compensation of $17.8 million, higher stock-based compensation of $3.7 million and lower capitalized wages and
benefits of $3.5 million. In addition, lower wages of $6.2 million were largely offset by higher payroll taxes of $2.4 million,
higher severance of $2.3 million and higher sales commissions of $1.1 million.