Orbitz 2014 Annual Report Download - page 63

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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
63
2013, respectively, and are included in Selling, general and administrative expenses in our Consolidated Statements of
Operations for those periods.
The acquisition was accounted for pursuant to ASC 805, Business Combinations, which requires the acquired assets
and liabilities to be recorded at fair value as of the acquisition date. The Company generally used the income approach to
estimate fair values. Cash flows utilized in the valuation were discounted to their present value using a rate of return that
includes the relative risk of cash flows and the time value of money.
The fair value of the estimated Earn-Out was calculated based on various levels of revenue thresholds for each year
and by assigning an expected probability of reaching each level and the corresponding payment. The Company does not expect
that any Earn-Out will be payable.
The following table summarizes the purchase price and the allocation of the purchase price:
Amount
Purchase Price (in thousands)
Consideration
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000
Allocation of Purchase Price
Property and equipment (software). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,510
Finite-lived intangible assets - Customer relationships . . . . . . . . . . . . . . . . . . . 1,560
Unfavorable contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (780)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,710
Fair value of net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000
The amounts of TPN’s revenue and pre-tax loss included in the Consolidated Statements of Operations for the year
ended December 31, 2014 were $51.9 million and $7.8 million, respectively. The revenue and earnings of the combined entity
had the acquisition date been January 1, 2014 and January 1, 2013 are not available as the related business was not reported
separately from that of Travelocity.
Our acquired finite-lived customer relationship assets will be amortized over their estimated useful lives of 5 years,
using a straight-line basis. The property and equipment will be amortized over their estimated useful lives of 1.5 years.
4. Property and Equipment, Net
Property and equipment, net, consisted of the following:
December 31, 2014 December 31, 2013
(in thousands)
Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 321,460 $ 336,376
Furniture, fixtures and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,344 83,800
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,882 14,047
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,177 16,642
Gross property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413,863 450,865
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (302,031)(334,720)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 111,832 $ 116,145
We recorded depreciation expense related to property and equipment in the amount of $57.2 million, $54.4 million and
$55.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.
There were no assets subject to capital leases at December 31, 2014 or 2013.
In 2014, we evaluated property and equipment that has become fully depreciated (see Note 2 - Summary of Significant
Accounting Policies) and wrote-off $85.1 million of fully depreciated assets that were no longer in service.