Orbitz 2013 Annual Report Download - page 65

ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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4. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill during the years ended December 31, 2013 and 2012 were as follows:
Amount
(in thousands)
Balance at January 1, 2012, net of accumulated impairment of $530,714 $ 647,300
Impairment (301,912)
Balance at December 31, 2012, net of accumulated impairment of $832,626 345,388
Balance at December 31, 2013, net of accumulated impairment of $832,626 $ 345,388
Trademarks and trade names, which are not subject to amortization, totaled $90.4 million and $90.8 million as of
December 31, 2013 and 2012.
Impairment of Goodwill and Trademarks and Trade Names
We estimate 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. We
use the income based approach to estimate the fair value of our reporting units that have goodwill balances and use 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 consider our
market capitalization to assess reasonableness of the income based approach valuations. The key assumptions we use in
determining the estimated fair value of our reporting units are the terminal growth rates, forecasted cash flows and the discount
rates.
At December 31 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 we use in
determining the estimated fair value of our trademarks and trade names are the terminal growth rates, forecasted revenues,
assumed royalty rates and discount rates. Significant judgment is required to select these inputs based on observed market data.
2013
As of the year ended December 31, 2013, we performed our annual impairment test of goodwill, trademarks and trade
names. In connection with our annual impairment test as of December 31, 2013, no impairment was identified as the fair value
of the reporting units exceeded the carrying value.
2012
As of the year ended December 31, 2012, we performed our annual impairment test of goodwill, trademarks and trade
names.
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