Orbitz 2012 Annual Report Download - page 65

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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
65
Trademarks and trade names, which are not subject to amortization, totaled $90.8 million and $108.2 million as of
December 31, 2012 and 2011.
Impairment of Goodwill and Trademarks and Trade Names
2012
As of the year ended December 31, 2012, we performed our annual impairment test of goodwill, trademarks and trade
names.
We estimated the fair value of our reporting units to which goodwill is allocated using generally accepted valuation
methodologies, including market and income based approaches, and relevant data available through and as of December 31,
2012. We used the income based approach to estimate the fair value of our reporting units that had goodwill balances and used
the market approach to corroborate these estimates. We considered the market approach from a reasonableness standpoint by
comparing the multiples of guideline companies with the implied multiples from the income based approach, and we also
considered our market capitalization to assess reasonableness of the income based approach valuations. The key assumptions
used in determining the estimated fair value of our reporting units were the terminal growth rates, forecasted cash flows and the
discount rates.
As of December 31, 2012 we used an income based valuation approach to separately estimate the fair values of all of our
trademarks and trade names and compared those estimates to the respective carrying values. The key assumptions used in
determining the estimated fair value of our trademarks and trade names were the terminal growth rates, forecasted revenues,
assumed royalty rates and discount rates. Significant judgment was required to select these inputs based on observed market
data.
In connection with our annual impairment test as of December 31, 2012, and as a result of lower than expected
performance and future cash flows for the Americas reporting unit, we recorded a non-cash impairment charge of $319.5
million during the year ended December 31, 2012, of which $301.9 million was related to the goodwill of the Americas
reporting unit and $17.6 million was related to the trademarks and trade names associated with Orbitz and CheapTickets. These
charges were included in impairment of goodwill and intangible assets in our consolidated statements of operations.
2011
During the year ended December 31, 2011, we performed our annual impairment test of goodwill and trademark and
trade names as of October 1, 2011 and December 31, 2011.
We estimated the fair value of our reporting units to which goodwill is allocated using generally accepted valuation
methodologies, including market and income based approaches, and relevant data available through and as of October 1, 2011.
We used the income based approach to estimate the fair value of our reporting units that had goodwill balances and used the
market approach to corroborate these estimates. We considered the market approach from a reasonableness standpoint by
comparing the multiples of guideline companies with the implied multiples from the income based approach, and we also
considered our market capitalization to assess reasonableness of the income based approach valuations. The key assumptions
used in determining the estimated fair value of our reporting units were the terminal growth rates, forecasted cash flows and the
discount rates.
We used an income based valuation approach to separately estimate the fair values of all of our trademarks and trade
names as of October 1, 2011 and compared those estimates to the respective carrying values. The key assumptions used in
determining the estimated fair value of our trademarks and trade names were the terminal growth rates, forecasted revenues,
assumed royalty rates and discount rates. Significant judgment was required to select these inputs based on observed market
data.
In connection with our annual impairment test as of October 1, 2011, and as a result of lower than expected performance
and future cash flows for Orbitz and HotelClub, we recorded a non-cash impairment charge of $49.9 million during the year
ended December 31, 2011, of which $29.8 million was related to the goodwill of HotelClub and $20.1 million was related to
the trademarks and trade names associated with Orbitz and HotelClub. These charges were included in impairment of goodwill
and intangible assets in our consolidated statements of operations.