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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                             to

Commission File Number 001-36603

LIBERTY TRIPADVISOR HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

46-3337365
(I.R.S. Employer
Identification No.)

12300 Liberty Boulevard, Englewood, Colorado 80112

(Address, including zip code, of Registrant’s principal executive offices)

Registrant’s telephone number, including area code: (720875-5200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Series A common stock

LTRPA

The Nasdaq Stock Market LLC

Series B common stock

LTRPB

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes    No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes   No 

The number of outstanding shares of Liberty TripAdvisor Holdings, Inc. common stock as of July 31, 2019 was:

Series A

Series B

Liberty TripAdvisor Holdings, Inc. common stock

72,146,830

2,929,777

Table of Contents

Table of Contents

Part I – Financial Information

Item 1. Financial Statements

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Balance Sheets (unaudited)

I-3

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Statements of Operations (unaudited)

I-5

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)

I-6

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Statements of Cash Flows (unaudited)

I-7

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Statements of Equity (unaudited)

I-8

LIBERTY TRIPADVISOR HOLDINGS, INC. Notes to Condensed Consolidated Financial Statements (unaudited)

I-10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

I-25

Item 3. Quantitative and Qualitative Disclosures about Market Risk

I-33

Item 4. Controls and Procedures

I-33

Part II Other Information

Item 1. Legal Proceedings

II-1

Item 1A. Risk Factors

II-1

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

II-2

Item 6. Exhibits

II-2

SIGNATURES

II-3

I-2

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(unaudited)

    

June 30,

    

December 31,

 

2019

2018

 

amounts in millions

 

Assets

Current assets:

Cash and cash equivalents

$

915

 

672

Accounts receivable and contract assets, net of allowance for doubtful accounts of $22 million and $21 million, respectively

 

270

 

212

Other current assets

 

127

 

48

Total current assets

 

1,312

 

932

Property and equipment, net

 

156

 

154

Intangible assets not subject to amortization:

Goodwill

 

2,441

 

2,443

Trademarks

 

1,267

 

1,266

 

3,708

 

3,709

Intangible assets subject to amortization, net

 

280

 

311

Other assets, at cost, net of accumulated amortization

 

177

 

118

Total assets

$

5,633

 

5,224

(continued)

See accompanying notes to condensed consolidated financial statements.

I-3

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

    

June 30,

    

December 31,

 

2019

2018

 

amounts in millions

 

Liabilities and Equity

Current liabilities:

Deferred merchant and other payables

$

360

 

179

Current portion of debt (note 5)

 

269

 

220

Deferred revenue

 

98

 

63

Accrued liabilities and other current liabilities

 

183

 

151

Total current liabilities

 

910

 

613

Long-term debt (note 5)

 

224

 

267

Deferred income tax liabilities

 

338

 

325

Other liabilities

 

343

 

283

Total liabilities

 

1,815

 

1,488

Equity:

Preferred stock, $.01 par value. Authorized shares 50,000,000; no shares issued.

Series A common stock, $.01 par value. Authorized 200,000,000 shares; issued and outstanding 72,146,830 shares at June 30, 2019 and 72,146,903 at December 31, 2018

1

1

Series B common stock, $.01 par value. Authorized shares 7,500,000; issued and outstanding 2,929,777 shares at June 30, 2019 and December 31, 2018

Series C common stock, $.01 par value. Authorized 200,000,000 shares; no shares issued.

Additional paid-in capital

215

231

Accumulated other comprehensive earnings (loss), net of taxes

 

(30)

 

(29)

Retained earnings

 

135

 

133

Total stockholders' equity

 

321

 

336

Noncontrolling interests in equity of subsidiaries

 

3,497

 

3,400

Total equity

 

3,818

 

3,736

Commitments and contingencies (note 7)

Total liabilities and equity

$

5,633

 

5,224

See accompanying notes to condensed consolidated financial statements.

I-4

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(unaudited)

Three months ended

 

Six months ended

 

June 30,

 

June 30,

 

    

2019

    

2018

    

2019

    

2018

 

amounts in millions, except

 

per share amounts

 

Total revenue, net

$

422

433

798

811

Operating costs and expenses:

Operating expense, including stock-based compensation (note 2)

 

102

 

92

196

179

Selling, general and administrative, including stock-based compensation (note 2)

 

228

 

266

452

509

Depreciation and amortization

 

41

 

41

83

80

 

371

 

399

731

768

Operating income (loss)

 

51

 

34

67

43

Other income (expense):

Interest expense

 

(6)

 

(6)

(11)

(12)

Realized and unrealized gains (losses) on financial instruments, net

 

5

 

(42)

6

(65)

Other, net

 

4

 

8

1

 

3

 

(48)

3

(76)

Earnings (loss) before income taxes

 

54

 

(14)

70

(33)

Income tax (expense) benefit

 

(31)

 

(8)

(36)

(24)

Net earnings (loss)

 

23

 

(22)

34

(57)

Less net earnings (loss) attributable to noncontrolling interests

 

20

 

17

33

13

Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders

$

3

 

(39)

1

(70)

Basic net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 3):

$

0.04

(0.52)

0.01

 

(0.93)

Diluted net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 3):

$

0.04

(0.52)

0.01

 

(0.93)

See accompanying notes to condensed consolidated financial statements.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)

Three months ended

Six months ended

June 30,

June 30,

2019

2018

2019

2018

amounts in millions

Net earnings (loss)

$

23

(22)

34

(57)

Other comprehensive earnings (loss), net of taxes:

Foreign currency translation adjustments

 

(3)

(24)

(2)

(9)

Other comprehensive earnings (loss)

 

(3)

(24)

(2)

(9)

Comprehensive earnings (loss)

 

20

(46)

32

(66)

Less comprehensive earnings (loss) attributable to the noncontrolling interests

 

18

(2)

32

6

Comprehensive earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders

$

2

(44)

0

(72)

See accompanying notes to condensed consolidated financial statements.

I-6

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

Six months ended

 

June 30,

 

2019

2018

 

amounts in millions

 

Cash flows from operating activities:

    

    

    

    

Net earnings (loss)

$

34

 

(57)

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities

Depreciation and amortization

 

83

 

80

Stock-based compensation

 

63

 

63

Realized and unrealized (gains) losses on financial instruments, net

(6)

65

Deferred income tax expense (benefit)

 

12

 

(6)

Other charges (credits), net

 

2

 

(10)

Changes in operating assets and liabilities

Current and other assets

 

(62)

 

(74)

Payables and other liabilities

 

221

 

296

Net cash provided (used) by operating activities

 

347

 

357

Cash flows from investing activities:

Capital expended for property and equipment, including internal-use software and website development

 

(38)

 

(31)

Purchases of short term investments and other marketable securities

 

(69)

 

(1)

Sales and maturities of short term investments and other marketable securities

 

20

 

50

Other investing activities, net

(23)

Net cash provided (used) by investing activities

 

(87)

 

(5)

Cash flows from financing activities:

Borrowings of debt

 

114

 

7

Repayments of debt

 

(100)

 

(245)

Shares repurchased by subsidiary

(100)

Payment of withholding taxes on net share settlements of equity awards

 

(26)

 

(18)

Shares issued by subsidiary

1

3

Other financing activities, net

(4)

Net cash provided (used) by financing activities

 

(15)

 

(353)

Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash

 

(2)

 

(9)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

243

 

(10)

Cash, cash equivalents and restricted cash at beginning of period

 

672

 

695

Cash, cash equivalents and restricted cash at end of period

$

915

 

685

See accompanying notes to condensed consolidated financial statements.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statement of Equity

(unaudited)

Stockholders' equity

Accumulated

Noncontrolling

Additional

other

interest in

Preferred

Common Stock

paid-in

comprehensive

Retained

equity of

Total

Stock

Series A

Series B

Series C

capital

earnings (loss)

earnings

subsidiaries

equity

amounts in millions

 

Balance at January 1, 2019

    

$

1

    

    

    

231

    

(29)

    

133

    

3,400

    

3,736

Net earnings (loss)

 

 

1

    

33

    

34

Other comprehensive earnings (loss)

 

(1)

 

    

(1)

    

(2)

Stock-based compensation

18

 

 

    

53

    

71

Withholding taxes on net share settlements of stock-based compensation

(27)

 

 

    

    

(27)

Other, net

 

 

 

(7)

 

 

1

    

12

    

6

Balance at June 30, 2019

$

1

 

 

 

215

 

(30)

 

135

    

3,497

    

3,818

Stockholders' equity

 

Accumulated

Noncontrolling

 

Additional

other

interest in

 

Preferred

Common Stock

paid-in

comprehensive

Retained

equity of

Total

 

Stock

Series A

Series B

Series C

capital

earnings (loss)

earnings

subsidiaries

equity

 

amounts in millions

 

Balance at March 31, 2019

$

1

 

 

 

216

 

(29)

 

132

    

3,443

    

3,763

Net earnings (loss)

3

20

23

Other comprehensive earnings (loss)

(1)

(2)

(3)

Stock-based compensation

9

29

38

Withholding taxes on net share settlements of stock-based compensation

(4)

(4)

Other, net

(6)

7

1

Balance at June 30, 2019

$

1

215

(30)

135

3,497

3,818

See accompanying notes to condensed consolidated financial statements.

I-8

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statement of Equity (continued)

(unaudited)

Stockholders' equity

Accumulated

Noncontrolling

Additional

other

interest in

Preferred

Common Stock

paid-in

comprehensive

Retained

equity of

Total

Stock

Series A

Series B

Series C

capital

earnings (loss)

earnings

subsidiaries

equity

amounts in millions

Balance at January 1, 2018

    

$

1

    

    

    

250

    

(23)

    

196

    

3,329

    

3,753

Net earnings (loss)

 

 

(70)

    

13

    

(57)

Other comprehensive earnings (loss)

 

(2)

 

    

(7)

    

(9)

Stock-based compensation

18

 

 

    

52

    

70

Shares repurchased by subsidiary

(20)

(80)

(100)

Other, net

 

 

 

(24)

 

 

1

    

12

    

(11)

Balance at June 30, 2018

$

1

 

 

 

224

 

(25)

 

127

    

3,319

    

3,646

Stockholders' equity

 

Accumulated

Noncontrolling

 

Additional

other

interest in

 

Preferred

Common Stock

paid-in

comprehensive

Retained

equity of

Total

 

Stock

Series A

Series B

Series C

capital

earnings (loss)

earnings

subsidiaries

equity

 

amounts in millions

 

Balance at March 31, 2018

$

1

 

 

 

240

 

(20)

 

166

    

3,361

    

3,748

Net earnings (loss)

 

 

(39)

    

17

    

(22)

Other comprehensive earnings (loss)

 

(5)

 

    

(19)

    

(24)

Stock-based compensation

10

 

 

    

27

    

37

Shares repurchased by subsidiary

(18)

(72)

(90)

Other, net

 

 

 

(8)

 

 

    

5

    

(3)

Balance at June 30, 2018

$

1

 

 

 

224

 

(25)

 

127

    

3,319

    

3,646

See accompanying notes to condensed consolidated financial statements.

I-9

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1) Basis of Presentation

During October 2013, the Board of Directors of Liberty Interactive Corporation and its subsidiaries (“Liberty”) (subsequently renamed Qurate Retail, Inc. (“Qurate Retail”)) authorized a plan to distribute to the stockholders of Liberty’s then-outstanding Liberty Ventures common stock shares of a wholly-owned subsidiary, Liberty TripAdvisor Holdings, Inc. (“TripCo,” “Consolidated TripCo,” the “Company,” “we,” “our” or “us,” unless the context otherwise requires) (the “TripCo Spin-Off”). TripCo does not have any operations outside of its controlling interest in its subsidiary TripAdvisor, Inc. (“TripAdvisor”). TripAdvisor’s financial performance tends to be seasonally highest in the second and third quarters of a given year, which includes the seasonal peak in consumer demand, traveler hotel and rental stays, and travel activities and experiences taken, compared to the first and fourth quarters, which represent seasonal low points.

The accompanying (a) condensed consolidated balance sheet as of December 31, 2018, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with the current period presentation. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2018 as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) recognition and recoverability of goodwill, intangible and long-lived assets and (ii) accounting for income taxes to be its most significant estimates.

Spin-Off of TripCo from Liberty

Following the TripCo Spin-Off, Qurate Retail and TripCo operate as separate, publicly traded companies, and neither has any stock ownership, beneficial or otherwise, in the other. In connection with the TripCo Spin-Off, TripCo entered into certain agreements, including the reorganization agreement, the services agreement, the facilities sharing agreement and the tax sharing agreement, with Liberty and/or Liberty Media Corporation (“Liberty Media”) (or certain of their subsidiaries) in order to govern certain of the ongoing relationships between the companies after the TripCo Spin-Off and to provide for an orderly transition.

The reorganization agreement provides for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the TripCo Spin-Off, certain conditions to the TripCo Spin-Off and provisions governing the relationship between TripCo and Qurate Retail with respect to and resulting from the TripCo Spin-Off.

Pursuant to the services agreement, Liberty Media provides TripCo with general and administrative services including legal, tax, accounting, treasury and investor relations support. TripCo reimburses Liberty Media for direct, out-of-pocket expenses incurred by Liberty Media in providing these services and TripCo pays a services fee to Liberty Media under the services agreement that is subject to adjustment semi-annually, as necessary.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Under the facilities sharing agreement, TripCo shares office space with Liberty Media and related amenities at Liberty Media’s corporate headquarters in Englewood, Colorado.

The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Qurate Retail and TripCo and other agreements related to tax matters. Pursuant to the tax sharing agreement, TripCo has agreed to indemnify Qurate Retail, subject to certain limited exceptions, for losses and taxes resulting from the TripCo Spin-Off to the extent such losses or taxes result primarily from, individually or in the aggregate, the breach of certain restrictive covenants made by TripCo (applicable to actions or failures to act by TripCo and its subsidiaries following the completion of the TripCo Spin-Off).

Under these agreements, approximately $1 million was reimbursable to Liberty Media for both of the three months ended June 30, 2019 and 2018, and approximately $2 million was reimbursable to Liberty Media for both the six months ended June 30, 2019 and 2018.

(2) Stock-Based Compensation

TripCo Incentive Plans

TripCo has granted to certain of its directors and employees restricted stock units (“RSUs”) and stock options to purchase shares of TripCo common stock (collectively, “Awards”). TripCo measures the cost of employee services received in exchange for an equity classified Award based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award).

TripCo has calculated the GDFV for all of its equity classified Awards and any subsequent remeasurement of its liability classified Awards using the Black-Scholes-Merton model. TripCo estimates the expected term of the Awards based on historical exercise and forfeiture data. The volatility used in the calculation for Awards is based on the historical volatility of TripCo common stock and the implied volatility of publicly traded TripCo options. TripCo uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation, the majority of which relates to TripAdvisor as discussed below:

Three months ended

 

Six months ended

 

June 30,

 

June 30,

 

    

2019

    

2018

    

2019

    

2018

 

amounts in millions

 

Operating expense

$

15

14

27

26

Selling, general and administrative expense

 

18

 

19

36

 

37

$

33

 

33

63

 

63

Stock-based compensation expense related to TripAdvisor was $32 million and $31 million for the three months ended June 30, 2019 and 2018, respectively, and $60 million and $61 million for the six months ended June 30, 2019 and 2018, respectively.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

TripCo - Outstanding Awards

The following tables present the number and weighted average exercise price (“WAEP”) of the Awards to purchase TripCo common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining contractual life and aggregate intrinsic value of the Awards.

Weighted

average

remaining

Aggregate

contractual

intrinsic

Series A

WAEP

life

value

in thousands

in years

in millions

Outstanding at January 1, 2019

 

570

$

15.40

Granted

 

$

Exercised

 

$

Forfeited/Cancelled

 

(1)

$

28.08

Outstanding at June 30, 2019

 

569

$

15.38

 

2.8

$

Exercisable at June 30, 2019

 

510

$

14.90

 

2.4

$

    

    

    

    

    

Weighted

    

    

 

average

 

remaining

Aggregate

 

contractual

intrinsic

 

Series B

WAEP

life

value

 

in thousands

in years

in millions

 

Outstanding at January 1, 2019

 

1,797

$

27.83

 

Granted

 

27

$

14.28

 

Exercised

 

$

 

Forfeited/Cancelled

 

$

Outstanding at June 30, 2019

 

1,824

$

27.63

 

5.5

$

Exercisable at June 30, 2019

 

899

$

27.83

 

5.5

$

During the six months ended June 30, 2019, TripCo granted 27 thousand options to purchase shares of Series B TripCo common stock and 35 thousand performance-based RSUs of Series B TripCo common stock to our CEO. Such options had a GDFV of $6.41 per share. The RSUs had a GDFV of $14.17 per share at the time they were granted. The options vest on December 31, 2019, and the RSUs cliff vest in one year, subject to the satisfaction of certain performance objectives. Performance objectives, which are subjective, are considered in determining the timing and amount of the compensation expense recognized. When the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The probability of satisfying the performance objectives is assessed at the end of each reporting period.

There were no options to purchase shares of Series A common stock granted during the six months ended June 30, 2019.

As of June 30, 2019, the total unrecognized compensation cost related to unvested Awards was approximately $3 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately one year.

As of June 30, 2019, TripCo reserved 2.4 million shares of Series A and Series B common stock for issuance under exercise privileges of outstanding stock Awards.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

TripAdvisor Equity Grant Awards

The following table presents the number and WAEP of the Awards to purchase TripAdvisor common stock granted to certain officers, employees and directors of TripAdvisor.

Weighted

average

TripAdvisor

remaining

Aggregate

stock

contractual

intrinsic

options

WAEP

life

value

in thousands

in years

in millions

Outstanding at January 1, 2019

 

6,041

$

54.00

Granted

 

675

$

53.31

Exercised

 

(160)

$

42.41

Cancelled or expired

(209)

$

60.83

Outstanding at June 30, 2019

 

6,347

$

54.00

 

6.3

$

20

Exercisable at June 30, 2019

 

3,516

$

60.19

 

4.5

$

7

The weighted average GDFV of options granted was $21.80 for the six months ended June 30, 2019.

As of June 30, 2019, the total unrecognized compensation cost related to unvested TripAdvisor stock options was approximately $41 million and will be recognized over a weighted average period of approximately 2.9 years. The total intrinsic value of stock options exercised was $2 million and $6 million for the six months ended June 30, 2019 and 2018, respectively.

Additionally, during the six months ended June 30, 2019, TripAdvisor granted 2.7 million of primarily service-based restricted stock units (“RSUs”) and market-based restricted stock units (“MSUs”) under the 2018 Stock and Annual Incentive Plan. The RSUs’ fair value was measured based on the quoted price of TripAdvisor common stock at the date of grant. As the MSUs provide for vesting based upon TripAdvisor’s total shareholder return, or “TSR,” performance, the potential outcomes of future stock prices and TSR of TripAdvisor and the Nasdaq Composite Total Return Index, was used to calculate the GDFV of these awards. The weighted average GDFV for RSUs and MSUs granted during the six months ended June 30, 2019 was $53.50 per share. As of June 30, 2019, the total unrecognized compensation cost related to TripAdvisor RSUs and MSUs was approximately $292 million and will be recognized over a weighted average period of approximately 2.8 years.

(3) Earnings (Loss) Per Common Share (EPS)

Basic earnings (loss) per common share (“EPS”) is computed by dividing net earnings (loss) attributable to TripCo shareholders by the weighted average number of common shares outstanding (“WASO”) for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

of the periods presented. Excluded from EPS for both the three and six months ended June 30, 2019 and 2018 are 2 million potential common shares, because their inclusion would be antidilutive.

Liberty TripAdvisor Holdings Common Stock

Three months ended

Six months ended

June 30,

June 30,

2019

2018

2019

2018

number of shares in millions

Basic WASO

 

75

 

75

 

75

75

Potentially dilutive shares

 

 

 

Diluted WASO

 

75

 

75

 

75

75

(4) Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any material recurring assets or liabilities measured at fair value that would be considered Level 3.

The Company’s assets and liabilities measured at fair value are as follows:

June 30, 2019

December 31, 2018

 

Quoted prices

Significant

Quoted prices

Significant

 

in active

other

in active

other

 

markets for

observable