Expedia 2015 Annual Report Download - page 108

(2) Acquired definite-lived intangible assets primarily consist of customer relationship assets, developed
technology assets and partner relationship assets with estimated useful lives ranging from less than one to
ten years with a weighted average life of 6.03 years.
(3) Acquired indefinite-lived intangible assets primarily consist of trade names and trademarks.
The goodwill of $1.4 billion is primarily attributable to operating synergies. The goodwill has been
allocated to the Core Online Travel Agencies (“Core OTA”) segment and is not expected to be deductible for tax
purposes. Orbitz was consolidated into our financial statements starting on the acquisition date and we have
recognized a related $196 million in revenue and $163 million in operating losses, including restructuring
charges of $92 million as well as fees related to the acquisition that are not allocated to the Core OTA segment,
for 2015.
In connection with the merger, Orbitz incurred fees paid to financial advisors totaling approximately $25
million, which were contingent upon closing and were excluded from both Expedia’s consolidated statement of
operations and the pre-combination financial statements of Orbitz. In addition, Orbitz offered certain employees
a continuity incentive of approximately $30 million for continuing employment through the closing date and
beyond. The first half of the incentives were contingent and paid upon the closing of the acquisition and related
to service provided in the pre-acquisition period. The second half of the incentive is payable 180 days after the
closing (or upon involuntary termination, if applicable) and is being expensed to restructuring and related
reorganization charges over the applicable service period.
For information related to restructuring plans as a result of the merger, see Note 15 — Restructuring and
Related Reorganization Charges. For information related to claims, proceedings and inquiries related to hotel
occupancy and other taxes for Orbitz, see Note 17 — Commitments and Contingencies.
Combined Pro forma Information (Unaudited). Supplemental information on an unaudited combined pro
forma basis, as if the HomeAway and Orbitz acquisitions had been consummated on January 1, 2014, is
presented as follows, in thousands:
Years Ended December 31,
2015 2014
Revenue $7,838,863 $7,110,688
Net income attributable to Expedia, Inc. 816,634 301,331
The pro forma results are not necessarily indicative of our consolidated results of operations in future
periods or the results that actually would have been realized had the companies operated on a combined basis
during the periods presented. The pro forma results include adjustments primarily related to amortization of
acquired intangibles, depreciation of fixed assets, certain accounting policy alignments as well as direct and
incremental acquisition related costs reflected in the historical financial statements. The preliminary purchase
price allocation was used to prepare the pro forma adjustments. The final allocation could differ materially from
the preliminary allocation used in the pro forma adjustments.
Other 2015 Acquisitions. On March 10, 2015, we completed the acquisition of an additional 25% equity
interest of AAE Travel Pte. Ltd., the joint venture formed between Expedia and AirAsia Berhad in 2011, for cash
consideration of approximately $94 million. This investment increased our total ownership in the venture from
50% to 75% and resulted in the consolidation of the entity. In conjunction with the acquisition of the additional
interest, we remeasured our previously held equity interest to fair value, excluding any acquisition premium, and
recognized a gain of $77 million in other, net during the period. The fair value of the 25% noncontrolling
interest, including an acquisition premium, was estimated to be $64 million at the time of the acquisition. Both
fair values were determined based on various valuation techniques, including market comparables and discounted
cash flow projections (Level 3 inputs).
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