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Legal Reserves, Occupancy Tax and Other
Year ended December 31, % Change
2014 2013 2012 2014 vs 2013 2013 vs 2012
($ in millions)
Legal reserves, occupancy tax and other $42 $78 $117 (47%) (33%)
Legal reserves, occupancy tax and other consists of increases in our reserves for court decisions and the
potential and final settlement of issues related to hotel occupancy taxes, expenses recognized related to monies
paid in advance of occupancy and other tax proceedings (“pay-to-play”) as well as certain other legal reserves.
During 2014, we recognized approximately $25.5 million related to monies paid in advance of litigation in
the San Francisco occupancy tax proceedings. During 2013, we recognized $64 million for amounts paid or
expected to be paid in advance of litigation primarily related to penalties and interest in connection with Hawaii’s
general excise tax litigation. During 2012, we recognized $110 million related to monies expected to be paid in
advance of litigation related to Hawaii’s general excise tax litigation. For additional information, see Note 17 —
Commitments and Contingencies in the notes to the consolidated financial statements.
Restructuring and Related Reorganization Charges
In conjunction with the migration of technology platforms and centralization of technology, supply and
other operations primarily related to acquisition integration including Wotif Group, we recognized $26 million in
restructuring charges during the fourth quarter ended December 31, 2014. These charges were primarily related
to severance and related benefits as well as an Australian stamp duty tax that is payable to certain Australian
jurisdictions related to business restructuring events. We expect an additional $10 million to $15 million of
restructuring charges, most of which we expect to occur in the first half of 2015. For additional information, see
Note 15 — Restructuring and Related Reorganization Charges in the notes to the consolidated financial
statements.
Acquisition-related and other
During 2013, we recorded approximately $57 million of stock-based compensation to acquisition-related
and other expense in connection with the trivago acquisition as well as $10 million related to the upfront
consideration paid to settle a portion of an employee compensation plan of trivago. For additional information,
see Note 3 — Acquisitions in the notes to the consolidated financial statements.
Operating Income
Year ended December 31, % Change
2014 2013 2012 2014 vs 2013 2013 vs 2012
($ in millions)
Operating income $518 $366 $ 432 41% (15%)
% of revenue 9.0% 7.7% 10.7%
In 2014, operating income increased due to the growth in revenue, acquisition-related and other expenses in
2013 that did not recur and lower legal reserve, occupancy tax and other charges in the current year, partially
offset by restructuring and related reorganization charges in 2014.
In 2013, operating income decreased primarily due to increased costs and expense in excess of revenue as
described above, partially offset by the growth in revenue and lower charges related to the Hawaii excise tax
litigation.
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