Orbitz 2014 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2014 Orbitz annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

38
Marketing
Our marketing expense is primarily composed of online marketing costs, such as search engine marketing and travel
research; offline marketing costs, such as television, radio and print advertising; and commissions to affiliates, including
distribution partners. Our online marketing spending is significantly greater than our offline marketing spending.
Marketing expense increased $42.0 million, or 14%, including an increase of $17.3 million related to TPN, for the year
ended December 31, 2014, compared with the year ended December 31, 2013. Excluding the impact of foreign currency
fluctuations, marketing expense increased $42.1 million for the year ended December 31, 2014, compared with the year ended
December 31, 2013. The increase in marketing expense was due largely to the TPN acquisition, the growth of our private label
distribution channel and higher online marketing spend at our consumer sites.
Marketing expense increased $39.5 million (a $39.9 million increase excluding the impact of foreign currency
fluctuations) for the year ended December 31, 2013, compared with the year ended December 31, 2012, due largely to the
growth of our private label distribution channel which increased affiliate commissions by $23.5 million and increased search
engine and other online marketing of $32.7 million, partially offset by lower offline marketing spend of $16.7 million.
Depreciation and Amortization
Depreciation and amortization expense increased $2.4 million (a $2.5 million increase excluding the impact of foreign
currency fluctuations), driven primarily by $2.2 million related to TPN, for the year ended December 31, 2014, compared with
the year ended December 31, 2013.
Depreciation and amortization expense decreased $1.9 million (a $1.8 million decrease excluding the impact of foreign
currency fluctuations) for the year ended December 31, 2013, compared with the year ended December 31, 2012. The decrease
in depreciation and amortization expense was due primarily to certain fixed and other assets that were written off in 2012 and
in the first quarter of 2013 (see “Impairment” discussion below).
Impairment
As of December 31, 2014 and December 31, 2013, we performed our annual impairment test for goodwill and
intangible assets and determined that no impairment existed as of those dates.
As a result of our decision during the first quarter of 2013 to exit the Away Network business, we recorded a $2.6
million non-cash charge for the year ended December 31, 2013 to impair property and equipment associated with that business.
For the year ended December 31, 2012, in connection with our annual impairment test for goodwill and intangible
assets, and as a result of lower than expected performance and a decline in expected future cash flows for the Americas
reporting unit, we recorded a non-cash impairment charge of $321.2 million, of which $301.9 million related to goodwill, $17.6
million related to trademarks and trade names associated with Orbitz and CheapTickets and $1.6 million related to finite-lived
intangible assets. (See Note 5 - Goodwill and Intangible Assets of the Notes to Consolidated Financial Statements).