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 ~~September 30, 2017~~March 31, 2019

☐ 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: (720) 875‑5200

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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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 ☐ (Do not check if a smaller reporting company)		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 ~~October 31, 2017~~April 30, 2019 was:

Series A

Series B

Liberty TripAdvisor Holdings, Inc. common stock

72,126,628

2,929,777


	Series A	Series B
Liberty TripAdvisor Holdings, Inc. common stock	72,146,830	2,929,777

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 ~~Statement~~Statements of Equity (unaudited)		I-8
LIBERTY TRIPADVISOR HOLDINGS, INC. Notes to Condensed Consolidated Financial Statements (unaudited)		~~I-9~~I-10


	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	~~I-22~~I-25
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	I-32
	Item 4. Controls and Procedures	~~I-32~~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-1
	Item 6. Exhibits	II-2


SIGNATURES		II-3

I-2

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(unaudited)


	September 30,		December 31,	March 31,		December 31,
	2017		2016	2019		2018
	amounts in millions			amounts in millions
Assets
Current assets:
Cash and cash equivalents	$	773	654	$	787	672
Trade and other receivables, net of allowance for doubtful accounts of $15 million and $9 million, respectively		254	191
Short term marketable securities (note 4)		13	118
Accounts receivable and contract assets, net of allowance for doubtful accounts of $23 million and $21 million, respectively					236	212
Other current assets		25	47		77	48
Total current assets		1,065	1,010		1,100	932
Investments in available-for-sale securities (note 4)		6	16
Property and equipment, at cost		228	225
Accumulated depreciation		(59)	(49)
		169	176
Property and equipment, net					157	154
Intangible assets not subject to amortization:
Goodwill		3,714	3,694		2,441	2,443
Trademarks		1,797	1,782		1,268	1,266
		5,511	5,476		3,709	3,709
Intangible assets subject to amortization, net		410	487		293	311
Other assets, at cost, net of accumulated amortization		132	117		195	118
Total assets	$	7,293	7,282	$	5,454	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)


	September 30,		December 31,	March 31,		December 31,
	2017		2016	2019		2018
	amounts in millions			amounts in millions
Liabilities and Equity
Current liabilities:
Deferred merchant and other payables	$	218	146	$	274	179
Accrued liabilities		128	132		127	144
Current portion of debt (note 5)		7	80		222	220
Deferred revenue		65	64		101	63
Other current liabilities		4	13		30	7
Total current liabilities		422	435		754	613
Long-term debt (note 5)		736	555		268	267
Deferred income tax liabilities		629	659		332	325
Other liabilities		229	209		337	283
Total liabilities		2,016	1,858		1,691	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 72,126,456 shares at September 30, 2017 and 72,046,485 at December 31, 2016		1	1
Series B common stock, $.01 par value. Authorized shares 7,500,000; issued and outstanding 2,929,777 shares at September 30, 2017 and 2,929,777 shares at December 31, 2016		—	—
Series C common stock, $.01 par value. Authorized shares 200,000,000; no shares issued.		—	—
Series A common stock, $.01 par value. Authorized 200,000,000 shares; issued and outstanding 72,147,009 shares at March 31, 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 March 31, 2019 and December 31, 2018					—	—
Series C common stock, $.01 par value. Authorized 200,000,000 shares; no shares issued.					—	—
Additional paid-in capital		244	245		216	231
Accumulated other comprehensive earnings (loss), net of taxes		(24)	(36)		(29)	(29)
Retained earnings		565	593		132	133
Total stockholders' equity		786	803		320	336
Noncontrolling interests in equity of subsidiaries		4,491	4,621		3,443	3,400
Total equity		5,277	5,424		3,763	3,736
Commitments and contingencies (note 6)
Commitments and contingencies (note 7)
Total liabilities and equity	$	7,293	7,282	$	5,454	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			Nine months ended		Three months ended
	September 30,			September 30,		March 31,
	2017		2016	2017	2016	2019		2018
	amounts in millions, except					amounts in millions, except
	per share amounts					per share amounts
Service revenue	$	439	421	1,235	1,164
Other revenue		—	13	13	29
Total revenue, net		439	434	1,248	1,193	$	376	378
Operating costs and expenses:
Operating expense, including stock-based compensation (note 2)		80	95	256	274		94	87
Selling, general and administrative, including stock-based compensation (note 2)		293	252	809	706		224	243
Depreciation and amortization		50	56	161	166		42	39
		423	403	1,226	1,146		360	369
Operating income (loss)		16	31	22	47		16	9
Other income (expense):
Interest expense		(6)	(5)	(18)	(20)		(5)	(6)
Realized and unrealized gain (losses) on financial instruments, net		(9)	(1)	10	5
Gain (loss) on dispositions, net (note 1)		—	—	(18)	—
Realized and unrealized gains (losses) on financial instruments, net							1	(23)
Other, net		(1)	—	2	(1)		4	1
		(16)	(6)	(24)	(16)		—	(28)
Earnings (loss) before income taxes		—	25	(2)	31		16	(19)
Income tax (expense) benefit		(7)	1	(21)	(3)		(5)	(16)
Net earnings (loss)		(7)	26	(23)	28		11	(35)
Less net earnings (loss) attributable to noncontrolling interests		6	27	5	42		13	(4)
Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders	$	(13)	(1)	(28)	(14)	$	(2)	(31)

Basic net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 3):	$	(0.17)	(0.01)	(0.37)	(0.19)	$	(0.03)	(0.41)
Diluted net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 3):	$	(0.17)	(0.01)	(0.37)	(0.19)	$	(0.03)	(0.41)

See accompanying notes to condensed consolidated financial statements.

I-5

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)


	Three months ended			Nine months ended		Three months ended
	September 30,			September 30,		March 31,
	2017		2016	2017	2016	2019		2018
	amounts in millions					amounts in millions
Net earnings (loss)	$	(7)	26	(23)	28	$	11	(35)
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments		17	(3)	52	(16)		1	15
Other comprehensive earnings (loss)		17	(3)	52	(16)		1	15
Comprehensive earnings (loss)		10	23	29	12		12	(20)
Less comprehensive earnings (loss) attributable to the noncontrolling interests		19	26	45	29		14	8
Comprehensive earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders	$	(9)	(3)	(16)	(17)	$	(2)	(28)

See accompanying notes to condensed consolidated financial statements.

I-6

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Nine months ended			Three months ended
	September 30,			March 31,
	2017		2016	2019		2018
	amounts in millions			amounts in millions
Cash flows from operating activities:
Net earnings (loss)	$	(23)	28	$	11	(35)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities
Depreciation and amortization		161	166		42	39
Stock-based compensation		77	68		30	30
(Gain) loss on dispositions, net		18	—
Realized and unrealized (gains) losses on financial instruments, net					(1)	23
Deferred income tax expense (benefit)		(32)	(39)		6	(1)
Other noncash charges (credits), net		(2)	(4)		6	1
Changes in operating assets and liabilities
Current and other assets		(62)	(57)		(22)	(45)
Payables and other liabilities		66	95		109	161
Net cash provided (used) by operating activities		203	257		181	173
Cash flows from investing activities:
Capital expenditures, including internal-use software and website development		(51)	(58)
Cash paid for acquisitions, net of cash acquired		—	(23)
Capital expended for property and equipment, including internal-use software and website development					(17)	(15)
Purchases of short term investments and other marketable securities		(16)	(145)		(40)	(1)
Sales and maturities of short term investments and other marketable securities		130	84		15	44
Other investing activities, net		(2)	1
Net cash provided (used) by investing activities		61	(141)		(42)	28
Cash flows from financing activities:
Borrowings of debt		415	344		—	5
Repayments of debt		(314)	(419)		—	(235)
Shares repurchased by subsidiary					—	(4)
Payment of withholding taxes on net share settlements of equity awards		(15)	(13)		(23)	(12)
Option exercises		1	1
Shares issued by subsidiary		3	6
Shares repurchased by subsidiary		(250)	(21)
Other financing activities, net		(2)	—		(1)	—
Net cash provided (used) by financing activities		(162)	(102)		(24)	(246)
Effect of foreign currency exchange rates on cash		17	(6)
Net increase (decrease) in cash and cash equivalents		119	8
Cash and cash equivalents at beginning of period		654	644
Cash and cash equivalents at end of period	$	773	652
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash					—	6
Net increase (decrease) in cash, cash equivalents and restricted cash					115	(39)
Cash, cash equivalents and restricted cash at beginning of period					672	695
Cash, cash equivalents and restricted cash at end of period				$	787	656

See accompanying notes to condensed consolidated financial statements.

I-7

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statement of Equity

~~Nine~~Three months ended ~~September 30, 2017~~March 31, 2019

(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)		—	—	—	—	—	—	(2)	13	11
Other comprehensive earnings (loss)		—	—	—	—	—	—	—	1	1
Stock-based compensation		—	—	—	—	9	—	—	24	33
Withholding taxes on net share settlements of stock-based compensation		—	—	—	—	(23)	—	—	—	(23)
Shares issued by subsidiary		—	—	—	—	(2)	—	—	2	—
Cumulative effect of accounting change (note 6)		—	—	—	—	—	—	1	2	3
Other, net		—	—	—	—	1	—	—	1	2
Balance at March 31, 2019	$	—	1	—	—	216	(29)	132	3,443	3,763

See accompanying notes to condensed consolidated financial statements.

I-8

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, 2017

$
—

1

—

—

245

(36)

593

4,621

5,424

Net earnings (loss)

—

—

—

—

—

—

(28)

5

(23)

Other comprehensive earnings (loss)

—

—

—

—

—

12

—

40

52

Stock compensation

—

—

—

—

22

—

—

64

86

Issuance of common stock upon exercise of stock options

—

—

—

—

1

—

—

—

1

Withholding taxes on net share settlements of stock-based compensation

—

—

—

—

(15)

—

—

—

(15)

Shares issued by subsidiary

—

—

—

—

(6)

—

—

9

3

Shares repurchased by subsidiary

—

—

—

—

(2)

—

—

(248)

(250)

Other

—

—

—

—

(1)

—

—

—

(1)

Balance at September 30, 2017

$
—

1

—

—

244

(24)

565

4,491

5,277

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statement of Equity

Three months ended March 31, 2018

(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)		—	—	—	—	—	—	(31)	(4)	(35)
Other comprehensive earnings (loss)		—	—	—	—	—	3	—	12	15
Stock-based compensation		—	—	—	—	8	—	—	25	33
Withholding taxes on net share settlements of stock-based compensation		—	—	—	—	(12)	—	—	—	(12)
Shares issued by subsidiary		—	—	—	—	(4)	—	—	4	—
Shares repurchased by subsidiary		—	—	—	—	(2)	—	—	(8)	(10)
Cumulative effect of accounting change		—	—	—	—	—	—	1	3	4
Balance at March 31, 2018	$	—	1	—	—	240	(20)	166	3,361	3,748

See accompanying notes to condensed consolidated financial statements.

~~I-8~~I-9

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

~~(unaudited)~~

(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 ~~“Trip~~“TripCo Spin‑Off”). TripCo ~~holds~~does not have any operations outside of its controlling interest in its subsidiary TripAdvisor, Inc. (“TripAdvisor”) and ~~held~~ its former wholly owned subsidiary, BuySeasons, Inc. (“BuySeasons”) ~~until~~, which was sold on June 30, 2017. The Trip Spin-Off was completed on August 27, 2014 and effected as a pro‑rata dividend of shares of TripCo to the stockholders of Series A and Series B Liberty Ventures common stock of Liberty. The Trip Spin-Off was accounted for at historical cost due to the pro rata nature of the distribution to stockholders of Liberty Ventures common stock. TripAdvisor’s financial performance tends to be seasonally highest in the second and third quarters of a given year, ~~as these are key periods for leisure travel research and trip-taking,~~ which includes the seasonal peak in consumer demand, traveler hotel and ~~vacation~~ rental stays, and ~~tours~~travel activities and ~~attractions~~experiences taken, compared to the first and fourth quarters, which represent seasonal low points.

On June 30, 2017, TripCo sold BuySeasons. The sale resulted in an $18 million loss, which is included in Gain (loss) on dispositions, net in the accompanying condensed consolidated statement of operations. BuySeasons is not presented as a discontinued operation as the sale did not represent a strategic shift that had a major effect on TripCo’s operations and financial results. Included in Other revenue in the accompanying condensed consolidated statements of operations is $13 million for the three months ended September 30, 2016, and $13 million and $29 million for the nine months ended September 30, 2017 and 2016, respectively, related to BuySeasons. Included in Net earnings (loss) in the accompanying condensed consolidated statements of operations are losses of $2 million for the three months ended September 30, 2016, and losses of $1 million and $7 million for the nine months ended September 30, 2017 and 2016, respectively, related to BuySeasons. Included in Total assets in the accompanying condensed consolidated balance sheets as of December 31, 2016 is $23 million related to BuySeasons.

The accompanying (a) condensed consolidated balance sheet as of December 31, ~~2016,~~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, ~~2016~~2018 as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~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 ~~and (iii) stock‑based compensation~~ to be its most significant estimates.

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance also requires additional

~~I-9~~

~~Table of Contents~~

~~LIBERTY TRIPADVISOR HOLDINGS, INC.~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(unaudited)~~

disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued additional guidance, which clarifies principal versus agent considerations, and in April 2016, the FASB issued further guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a full retrospective or modified retrospective transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted only for fiscal years beginning after December 15, 2016. The Company plans to adopt this new guidance under the modified retrospective method on January 1, 2018.

TripAdvisor has made significant progress toward completing its evaluation of the potential changes from adopting this new guidance. To date, TripAdvisor has evaluated the majority of its revenue streams and, based on preliminary analysis, expects the new revenue guidance will change the timing of revenue recognition for its instant booking revenue recorded under the consumption model. Upon adoption, instant booking revenue will be recognized at the transaction booking date for a hotel accommodation rather than upon completion of the stay by the traveler, which is how instant booking revenue is currently recorded. TripAdvisor does not currently expect this timing change to have a material impact to its financial statements, either on an annual or quarterly basis. ~~In addition, the new guidance is expected to result in immaterial changes in the timing of certain other revenue streams. TripAdvisor~~ currently does not expect any major reengineering required to its accounting systems or to its internal controls related to the above accounting changes or related to the additional disclosure requirements required by the standard. However, while TripAdvisor has made significant progress, and is in the implementation phase of this project, it is still evaluating less material revenue streams, and, in addition, its costs incurred to obtain or fulfill a contract. We will continue to update our assessment of the effect that the new revenue guidance will have on our consolidated financial statements, disclosures and related controls, and will disclose any material effects, if any, when known.

In February 2016, the FASB issued new guidance which revises the accounting for leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new guidance also simplifies the accounting for sale and leaseback transactions. The new standard, to be applied via a modified retrospective transition approach, is effective for the Company for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. The Company anticipates adopting this new guidance on January 1, 2019. The Company has not yet determined the effect of the standard on its ongoing financial reporting. The Company is currently working with TripAdvisor to evaluate the impact of the adoption of this new guidance on our consolidated financial statements, including identifying the population of leases, updating accounting policies, implementing technology solutions and collecting lease data. We will continue to provide updates of our assessment of the effect that this new lease guidance will have on our consolidated financial statements, disclosures, systems and related controls, and will disclose any material effects, if any, when known.

In August and November 2016, the FASB issued new accounting standards which add and clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows, and add guidance on the presentation of restricted cash in the statement of cash flows, respectively. The guidance in both standards is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, including adoption in an interim period, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. Upon adoption, an entity may apply the new guidance only retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements and disclosures. The new guidance is expected to change the presentation of paid in kind interest in the period it is paid from financing to operating on the consolidated statements of cash flows.

~~I-10~~

~~Table of Contents~~

~~LIBERTY TRIPADVISOR HOLDINGS, INC.~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(unaudited)~~

In October 2016, the FASB issued new accounting guidance on income tax accounting associated with intra-entity transfers of assets other than inventory. This accounting update, which is part of the FASB's simplification initiative, is intended to reduce diversity in practice and the complexity of tax accounting, particularly for those transfers involving intellectual property. This new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. Upon adoption, an entity may apply the new guidance only on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company plans to adopt this guidance on January 1, 2018 and does not expect this new guidance to have a material impact on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued new accounting guidance, which assists entities in evaluating when a set of transferred assets and activities is a business. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and will be applied prospectively to any transactions occurring within the period of adoption. Early adoption is permitted, including for interim or annual periods in which the financial statements have not been issued. The Company is currently evaluating the impact of adopting this new guidance on its financial statements and related disclosures.

In January 2017, the FASB issued new accounting guidance to simplify the measurement of goodwill impairment. Under the new guidance, an entity will no longer perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured using the difference between the carrying amount and the fair value of the reporting unit. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for goodwill impairment tests with measurement dates after January 1, 2017. The Company is currently evaluating the effect that the updated standard will have on its financial statements and related disclosures.

In May 2017, the FASB issued new accounting guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, an entity will not apply modification accounting to a share-based payment award if the award’s fair value (or calculated value or intrinsic value, if those measurement methods are used), the award’s vesting conditions, and the award’s classification as an equity or liability instrument are the same immediately before and after the change. The guidance also states that an entity is not required to estimate the value of the award immediately before and after the change if the change does not affect any of the inputs to the model used to value the award. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and will be applied prospectively to awards modified on or after the adoption date. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact of adopting this new guidance on its financial statements and related disclosures.

Spin‑Off of TripCo from Liberty

Following the ~~Trip~~TripCo Spin‑Off, ~~Liberty~~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 ~~Trip~~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 ~~Trip~~TripCo Spin‑Off and to provide for an orderly transition.

~~I-11~~

~~Table of Contents~~

~~LIBERTY TRIPADVISOR HOLDINGS, INC.~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(unaudited)~~

The reorganization agreement provides for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the ~~Trip~~TripCo Spin‑Off, certain conditions to the ~~Trip~~TripCo Spin‑Off and provisions governing the relationship between TripCo and ~~Liberty~~Qurate Retail with respect to and resulting from the ~~Trip~~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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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 ~~Liberty~~Qurate Retail and TripCo and other agreements related to tax matters. Pursuant to the tax sharing agreement, TripCo has agreed to indemnify ~~Liberty,~~Qurate Retail, subject to certain limited exceptions, for losses and taxes resulting from the ~~Trip~~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 ~~Trip~~TripCo Spin-Off).

Under these agreements, approximately $1 million was reimbursable to Liberty Media for both of the three ~~month periods~~months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 and approximately $2 million was reimbursable to Liberty for both of the nine month periods ended September 30, 2017 and 2016.~~2018.

(2) Stock-Based Compensation

TripCo Incentive Plans

TripCo has granted to certain of its directors and employees options to purchase shares of TripCo common stock (“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. ~~Since TripCo common stock has not traded on the stock market for a significant length of time, the~~The volatility used in the calculation for Awards is based on ~~a blend of~~ the historical volatility of TripCo ~~and TripAdvisor~~ common stock and the implied volatility of publicly traded TripCo ~~and TripAdvisor options; as the most significant asset within TripCo, the volatility of TripAdvisor common stock was considered in the overall volatility of TripCo’s common stock.~~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.

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~~Table of Contents~~

~~LIBERTY TRIPADVISOR HOLDINGS, INC.~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(unaudited)~~

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			Nine months ended		Three months ended
	September 30,			September 30,		March 31,
	2017		2016	2017	2016	2019		2018
	amounts in millions					amounts in millions
Operating expense	$	11	11	31	32	$	12	12
Selling, general and administrative expense		16	13	46	36		18	18
	$	27	24	77	68	$	30	30

Stock-based compensation expense related to TripAdvisor was ~~$26~~$27 million and ~~$22~~$29 million for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively, and $72 million and $64 million for the nine months ended September 30, 2017 and 2016,~~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 ~~table presents~~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						Weighted
				average						average
				remaining	Aggregate					remaining	Aggregate
				contractual	intrinsic					contractual	intrinsic
	Series A	WAEP		life	value		Series A	WAEP		life	value
	in thousands			in years	in millions		in thousands			in years	in millions
Outstanding at January 1, 2017	661	$	14.99
Outstanding at January 1, 2019							570	$	15.40
Granted	—	$	—				—	$	—
Exercised	(80)	$	10.27				—	$	—
Forfeited/Cancelled	(2)	$	28.58				—	$	—
Outstanding at September 30, 2017	579	$	15.61	2.3	$	—
Exercisable at September 30, 2017	505	$	15.44	1.8	$	—
Outstanding at March 31, 2019							570	$	15.40	3.0	$	1
Exercisable at March 31, 2019							509	$	14.87	2.5	$	1


				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 March 31, 2019	1,824	$	27.63	5.8	$	—
Exercisable at March 31, 2019	899	$	27.83	5.7	$	—

During the three months ended March 31, 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 ~~nine~~three months ended ~~September 30, 2017. There was no activity during the period related to the outstanding TripCo Series B options.~~March 31, 2019.

As of ~~September 30, 2017~~March 31, 2019, the total unrecognized compensation cost related to unvested Awards was approximately $114 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately ~~2 years.~~one year.

As of ~~September 30, 2017,~~March 31, 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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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements ~~(continued)~~

~~(unaudited)~~(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						Weighted
				average						average
	TripAdvisor			remaining	Aggregate		TripAdvisor			remaining	Aggregate
	stock			contractual	intrinsic		stock			contractual	intrinsic
	options	WAEP		life	value		options	WAEP		life	value
	in thousands			in years	in millions		in thousands			in years	in millions
Outstanding at January 1, 2017	5,818	$	57.60
Outstanding at January 1, 2019							6,041	$	54.00
Granted	1,529	$	42.81				537	$	54.16
Exercised	(488)	$	29.49				(109)	$	42.66
Cancelled or expired	(572)	$	68.82				(83)	$	72.11
Outstanding at September 30, 2017	6,287	$	55.16	6.4	$	7
Exercisable at September 30, 2017	3,337	$	52.51	4.7	$	7
Outstanding at March 31, 2019							6,386	$	53.97	6.5	$	37
Exercisable at March 31, 2019							3,453	$	60.63	4.8	$	14

The weighted average ~~grant date fair value~~GDFV of options granted was ~~$17.16~~$22.32 for the ~~nine~~three months ended ~~September 30, 2017.~~ March 31, 2019.

As of ~~September 30, 2017,~~March 31, 2019, the total unrecognized compensation cost related to unvested TripAdvisor stock options was approximately ~~$49~~$44 million and will be recognized over a weighted average period of approximately ~~2.4~~3.0 years. The total intrinsic value of stock options exercised was $1 million and $3 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 was $8 million and $23 million,~~2018, respectively.

Additionally, during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, TripAdvisor granted ~~4,241~~2,391 thousand of primarily service-based restricted stock units (“RSUs”) and market-based restricted stock units (“MSUs”) under ~~its Amended and Restated 2011~~the 2018 Stock and Annual Incentive ~~Plan for which the~~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 ~~grant date fair value~~GDFV for RSUs and MSUs granted during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 was ~~$42.65~~$54.21 per share. As of ~~September 30, 2017,~~March 31, 2019, the total unrecognized compensation cost related to TripAdvisor RSUs and MSUs was approximately ~~$229~~$320 million and will be recognized over a weighted average period of approximately 3.0 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 ~~of the periods presented. Excluded from EPS for both the three and nine months ended September 30, 2017 are 2 million~~

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements ~~(continued)~~

~~(unaudited)~~(Unaudited)

~~potential common shares, because their inclusion would be antidilutive.~~of the periods presented. Excluded from EPS for both the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2019 and 2018 are 2 million potential common shares, because their inclusion would be antidilutive.


	Liberty TripAdvisor Holdings Common Stock				Liberty TripAdvisor Holdings Common Stock
	Three months ended		Nine months ended		Three months ended
	September 30,		September 30,		March 31,
	2017	2016	2017	2016	2019	2018
	number of shares in millions				number of shares in millions
Basic WASO	75	75	75	75	75	75
Potentially dilutive shares	—	—	—	—	—	—
Diluted WASO	75	75	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:


	September 30, 2017				December 31, 2016			March 31, 2019				December 31, 2018
			Quoted prices	Significant		Quoted prices	Significant			Quoted prices	Significant		Quoted prices	Significant
			in active	other		in active	other			in active	other		in active	other
			markets for	observable		markets for	observable			markets for	observable		markets for	observable
			identical assets	inputs		identical assets	inputs			identical assets	inputs		identical assets	inputs
Description	Total		(Level 1)	(Level 2)	Total	(Level 1)	(Level 2)	Total		(Level 1)	(Level 2)	Total	(Level 1)	(Level 2)
	amounts in millions							amounts in millions
Cash equivalents	$	26	25	1	53	53	—	$	99	79	20	145	140	5
Marketable securities	$	13	—	13	118	—	118	$	40	—	40	15	—	15
Available-for-sale securities	$	6	—	6	16	—	16
Variable postpaid forward	$	61	—	61	51	—	51	$	21	—	21	20	—	20

On June 6, 2016, TripCo entered into a variable postpaid forward transaction with a financial institution with respect to 7 million shares of TripAdvisor common stock held by the Company with a forward floor price of $38.90 per share and a forward cap price of $98.96 per share. TripCo borrowed $259 million against the variable postpaid forward on June 23, 2016 (see note 5). The asset associated with this instrument is included in the ~~Other~~other assets, at cost, net of accumulated amortization ~~line item on the face of~~in the accompanying condensed consolidated balance sheets.

The fair value of Level 2 cash equivalents ~~marketable securities~~ and ~~available‑for‑sale~~marketable securities were obtained from pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Marketable securities are included in other current assets and other assets in the accompanying condensed consolidated balance sheets. The fair value of Level 2 derivative assets were derived from a Black-Scholes-Merton model using observable market data as the significant inputs.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements ~~(continued)~~

~~(unaudited)~~(Unaudited)

Other Financial Instruments

Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, accrued and other current liabilities, current portion of debt and long-term debt. With the exception of debt, the carrying amount approximates fair value due to the short maturity of these instruments as reported on our condensed consolidated balance sheets. The carrying value of our debt bears interest at a variable rate and therefore is also considered to approximate fair value.

(5) Debt

Outstanding debt at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 is summarized as follows:


	September 30,		December 31,	March 31,		December 31,
	2017		2016	2019		2018
	amounts in millions			amounts in millions
TripAdvisor Credit Facilities		265	164
TripAdvisor Chinese credit facilities		7	7
TripCo margin loans		208	203	$	222	220
TripCo variable postpaid forward		263	261		268	267
TripAdvisor Credit Facilities					—	—
Total consolidated TripCo debt	$	743	635	$	490	487
Less debt classified as current		(7)	(80)
Debt classified as current					(222)	(220)
Total long-term debt	$	736	555	$	268	267

~~TripAdvisor Credit Facilities~~

On June 26, 2015, TripAdvisor entered into a five year credit agreement, which among other things, provides for a $1 billion unsecured revolving credit facility (the “2015 Credit Facility”). On May 12, 2017, the 2015 Credit Facility was amended to, among other things, (i) increase the aggregate amount of revolving loan commitments available from $1.0 billion to $1.2 billion; and (ii) extend the maturity date of the 2015 Credit Facility from June 26, 2020 to May 12, 2022. Borrowings under the 2015 Credit Facility generally bear interest, at TripAdvisor’s option, at a rate per annum equal to either (i) the Eurocurrency Borrowing rate, or the adjusted LIBOR for the interest period in effect for such borrowing; plus an applicable margin ranging from 1.25% to 2.00% (“Eurocurrency Spread”), based on TripAdvisor’s leverage ratio; or (ii) the Alternate Base Rate (“ABR”) Borrowing, which is the greatest of (a) the Prime Rate in effect on such day, (b) the New York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum and (c) the Adjusted LIBOR (or LIBOR multiplied by the Statutory Reserve Rate) for an interest period of one month plus 1.00%; in addition to an applicable margin ranging from 0.25% to 1.00% (“ABR Spread”), based on TripAdvisor’s leverage ratio. TripAdvisor may borrow from the revolving credit facility in U.S. dollars, Euros and British pound sterling.

There is no specific repayment date prior to the maturity date for borrowings under the 2015 Credit Facility. During the nine months ended September 30, 2017, TripAdvisor borrowed an additional $415 million and repaid $241 million of outstanding borrowings under the 2015 Credit Facility. As of September 30, 2017, based on TripAdvisor’s leverage ratio, borrowings bear interest at LIBOR plus an applicable margin of 1.25%, or the Eurocurrency Spread. TripAdvisor is currently borrowing under a one-month interest rate period or a weighted average rate of 2.50% per annum as of September 30, 2017, using a one-month interest period Eurocurrency Spread, which will reset periodically. Interest will be payable on a monthly basis while TripAdvisor is borrowing under the one-month interest rate period.

TripAdvisor is also required to pay a quarterly commitment fee, at an applicable rate ranging from 0.15% to 0.30%, on the daily unused portion of the 2015 Credit Facility for each fiscal quarter and additional fees in connection with the

~~I-16~~

~~Table of Contents~~

~~LIBERTY TRIPADVISOR HOLDINGS, INC.~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(unaudited)~~

issuance of letters of credit. As of September 30, 2017, TripAdvisor’s unused revolver capacity is subject to a commitment fee of 0.15%, given TripAdvisor’s leverage ratio. The 2015 Credit Facility includes $15 million of borrowing capacity available for letters of credit and $40 million for Swing Line borrowings on same-day notice. As of September 30, 2017, TripAdvisor had issued $3 million of outstanding letters of credit under the 2015 Credit Facility.

TripAdvisor may voluntarily repay any outstanding borrowing under the 2015 Credit Facility at any time without premium or penalty, other than customary breakage costs with respect to Eurocurrency loans. Certain wholly-owned domestic subsidiaries of TripAdvisor have agreed to guarantee TripAdvisor’s obligations under the 2015 Credit Facility.

The 2015 Credit Facility contains a number of covenants that, among other things, restrict TripAdvisor’s ability to: incur additional indebtedness, create liens, enter into sale and leaseback transactions, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions, make investments, loans or advances, prepay certain subordinated indebtedness, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements governing certain subordinated indebtedness, and change TripAdvisor’s fiscal year. The 2015 Credit Facility also requires TripAdvisor to maintain a maximum leverage ratio and contains certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the 2015 Credit Facility will be entitled to take various actions, including the acceleration of all amounts due under the 2015 Credit Facility. Additionally, the 2015 Credit Facility includes a subjective acceleration clause, which could be triggered by the lenders if a representation, warranty or statement made by TripAdvisor proves to be incorrect in any material respect, which in turn would permit the lenders to accelerate repayment of any outstanding obligations. TripAdvisor believes that the likelihood of the lender exercising this right is remote and, as such, borrowings under this facility are classified as long-term debt.

On September 7, 2016, TripAdvisor entered into an uncommitted facility agreement with Bank of America Merrill Lynch International Limited (the “Lender”), which provides for a $73 million unsecured revolving credit facility (the “2016 Credit Facility” and together with the 2015 Credit Facility, the “TripAdvisor Credit Facilities”) with no specific expiration date. The 2016 Credit Facility is available at the Lender’s absolute discretion and can be canceled at any time. Repayment terms for borrowings under the 2016 Credit Facility are generally one to six month periods or such other periods as the parties may mutually agree and bear interest at LIBOR plus 112.5 basis points. TripAdvisor may borrow from the 2016 Credit Facility in U.S. dollars only and it may voluntarily repay any outstanding borrowing at any time without premium or penalty. Any overdue amounts under or in respect of the 2016 Credit Facility not paid when due shall bear interest in the case of principal at the applicable interest rate plus 1.50% per annum. In addition, TripAdvisor, LLC, a wholly-owned domestic subsidiary of TripAdvisor, has agreed to guarantee TripAdvisor’s obligations under the 2016 Credit Facility. There are no specific financial or incurrence covenants.

~~TripAdvisor repaid all outstanding borrowings on the 2016 Credit Facility during the first three months of 2017, and, as of September 30, 2017, had no outstanding borrowings.~~

~~TripAdvisor Chinese Credit Facilities~~

TripAdvisor’s Chinese subsidiary is party to a $30 million, one-year revolving credit facility with Bank of America (the “Chinese Credit Facility—BOA”) that is currently subject to review on a periodic basis with no specific expiration period. Borrowings under the Chinese Credit Facility—BOA currently bear interest at a rate based on the People’s Bank of China benchmark, including certain adjustments which may be made in accordance with the market condition at the time of borrowing.

In addition, TripAdvisor’s Chinese subsidiary is party to a RMB 70,000,000 (approximately $10 million) one-year revolving credit facility with J.P. Morgan Chase Bank (the “Chinese Credit Facility—JPM”). Borrowings under the Chinese Credit Facility—JPM generally bear interest at a rate based on the People’s Bank of China benchmark, including

~~I-17~~

~~Table of Contents~~

~~LIBERTY TRIPADVISOR HOLDINGS, INC.~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(unaudited)~~

certain adjustments which may be made in accordance with the market condition at the time of borrowing. As of September 30, 2017 and December 31, 2016, TripAdvisor had $7 million of outstanding borrowings under the Chinese Credit Facility—JPM at a weighted average rate of 4.35%.

TripCo Margin Loans and Variable Postpaid Forward

On August 21, 2014, a wholly owned subsidiary of TripCo (“TripSPV”) entered into two margin loan agreements, which aggregated total borrowings of $400 million. Interest on the margin loans accrued at a rate of ~~3.65%~~3.25% plus LIBOR ~~for six months and 3.25% thereafter.~~per year. Interest on the margin loans was paid in kind and added to the principal amount on the loans.

In connection with the variable postpaid forward transaction entered into on June 6, 2016, as described in note 4, TripCo borrowed $259 million against the variable postpaid forward on June 23, 2016. The term of the ~~variable postpaid~~ forward is four years. At maturity, the accreted loan amount due is approximately $272 million. The proceeds from the ~~variable postpaid~~ forward were used to repay $200 million in principal and $29 million of paid in kind interest on the margin loans with the remainder being used for general corporate purposes.

On June 23, 2016, TripCo amended the terms of the margin loan agreements with respect to the remaining borrowings of $200 million. Common Stock and Class B Common Stock of TripAdvisor were pledged as collateral pursuant to these agreements. Each agreement contains language that indicates that the Company, as borrower and transferor of underlying shares as collateral, has the right to exercise all voting, consensual and other powers of ownership pertaining to the transferred shares for all purposes, provided that TripCo agrees that it will not vote the shares in any manner that would reasonably be expected to give rise to transfer or certain other restrictions. Similarly, the loan agreements indicate that no lender party shall have any voting rights with respect to the shares transferred, except to the extent that a lender party buys any shares in a sale or other disposition made pursuant to the terms of the loan agreements. The agreements also contain certain restrictions related to additional indebtedness and margin calls. The initial margin call would require the outstanding balance to be reduced to $150 million if at any time the closing price per share of TripAdvisor common stock were to fall below a certain minimum ~~values. Pursuant~~value. On November 7, 2017, pursuant to another amendment to the ~~amendments,~~margin loan agreements, interest on the margin loans ~~accrues~~accrued at a rate of ~~2.0%~~2.4% plus LIBOR per ~~year to~~year. The interest can be paid in kind or cash at the election of TripCo. The Company expects that interest on the loan will be paid in kind and added to the principal amount

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

on the loan. The term of the loan is three years and the maturity date is June 21, 2019. Accordingly, the loans are classified as current as of March 31, 2019.

~~For~~During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, TripCo recorded $5$3 million and $2$1 million of non-cash interest related to the amended margin loans and variable postpaid forward, respectively.

As of ~~September 30, 2017,~~March 31, 2019, the values of TripAdvisor’s shares pledged as collateral pursuant to the margin loan agreements and variable postpaid forward, determined based on the trading price of the Common Stock and on an as-if converted basis for the Class B Common Stock, are as follows:


	Number of Shares			Number of Shares
	Pledged as			Pledged as
	Collateral as of	Share value as of			Collateral as of		Share value as of
Pledged Collateral	September 30, 2017	September 30, 2017			March 31, 2019		March 31, 2019
	amounts in millions			amounts in millions
Common Stock	18.2	$	736	18.2		$	934
Class B Common Stock	12.8	$	519	12.8		$	659

The outstanding margin loans contain various affirmative and negative covenants that restrict the activities of the borrower. The loan agreements do not include any financial covenants.

TripAdvisor Credit Facilities

TripAdvisor is party to a credit agreement, with a group of lenders, which, among other things, provides for a $1.2 billion unsecured revolving credit facility (the “2015 Credit Facility”) with a maturity date of May 12, 2022. Borrowings under the 2015 Credit Facility generally bear interest, at TripAdvisor’s option, at a rate per annum equal to either (i) the Eurocurrency Borrowing rate, or the adjusted LIBOR for the interest period in effect for such borrowing; plus an applicable margin ranging from 1.25% to 2.00%, based on TripAdvisor’s leverage ratio; or (ii) the Alternate Base Rate Borrowing, which is the greatest of (a) the Prime Rate in effect on such day, (b) the New York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum and (c) the Adjusted LIBOR (or LIBOR multiplied by the Statutory Reserve Rate) for an interest period of one month plus 1.00%; in addition to an applicable margin ranging from 0.25% to 1.00%, based on TripAdvisor’s leverage ratio. TripAdvisor may borrow from the 2015 Credit Facility in U.S. dollars, Euros and British pound sterling. In addition, TripAdvisor’s 2015 Credit Facility includes $15 million of borrowing capacity available for letters of credit and $40 million for Swing Line borrowings on same-day notice. As of March 31, 2019, TripAdvisor had issued $3 million of outstanding letters of credit under the 2015 Credit Facility. TripAdvisor is also required to pay a quarterly commitment fee, at an applicable rate ranging from 0.15% to 0.30%, on the daily unused portion of the revolving credit facility for each fiscal quarter and additional fees in connection with the issuance of letters of credit. As of March 31, 2019, TripAdvisor’s unused revolver capacity was subject to a commitment fee of 0.15%, given TripAdvisor’s leverage ratio.

As of both March 31, 2019 and December 31, 2018, TripAdvisor had no outstanding borrowings under the 2015 Credit Facility. During the three months ended March 31, 2018, TripAdvisor made a net repayment of $230 million on the 2015 Credit Facility. These net repayments were primarily made from a one-time cash repatriation of $325 million of foreign earnings to the United States during the first quarter of 2018. For both the three months ended March 31, 2019 and 2018, TripAdvisor recorded total interest expense and commitment fees on the 2015 Credit Facility of $1 million to interest expense on its condensed consolidated statement of operations. All unpaid interest and commitment fee amounts as of March 31, 2019 and December 31, 2018 were not material.

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

There is no specific repayment date prior to the maturity date for any borrowings under this credit agreement. TripAdvisor may voluntarily repay any outstanding borrowing under the 2015 Credit Facility at any time without premium or penalty, other than customary breakage costs with respect to Eurocurrency loans. Additionally, TripAdvisor believes that the likelihood of the lender exercising any subjective acceleration rights, which would permit the lenders to accelerate repayment of any outstanding borrowings, is remote. As such, TripAdvisor classifies any borrowings under this facility as long-term debt. The 2015 Credit Facility contains a number of covenants that, among other things, restrict TripAdvisor’s ability to: incur additional indebtedness, create liens, enter into sale and leaseback transactions, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions, make investments, loans or advances, prepay certain subordinated indebtedness, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements governing certain subordinated indebtedness, and change its fiscal year. The 2015 Credit Facility also requires TripAdvisor to maintain a maximum leverage ratio and contains certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the 2015 Credit Facility will be entitled to take various actions, including the acceleration of all amounts due under the 2015 Credit Facility.

TripAdvisor also maintains two credit facilities in China (jointly, the “TripAdvisor Chinese Credit Facilities”) as of March 31, 2019. TripAdvisor’s Chinese subsidiary is party to a $30 million, one-year revolving credit facility with Bank of America that is currently subject to review on a periodic basis with no specific expiration period. TripAdvisor is also party to a RMB 70,000,000 (approximately $10 million) one-year revolving credit facility with J.P. Morgan Chase Bank. TripAdvisor’s Chinese Credit Facilities generally bear interest at a rate based on the People’s Bank of China benchmark, including certain adjustments which may be made in accordance with market conditions at the time of borrowing. As of March 31, 2019 and December 31, 2018, there were no outstanding borrowings under the TripAdvisor Chinese Credit Facilities.

Debt Covenants

As of March 31, 2019, each of the Company and TripAdvisor was in compliance with its respective debt covenants.

(6) Leases

In February 2016 and subsequently, the Financial Accounting Standards Board (“FASB”) issued new guidance which revises the accounting for leases (“ASC 842”). Under the new guidance, entities that lease assets are required to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases regardless of whether they are classified as finance or operating leases. In addition, new disclosures are required to meet the objective of enabling users of the financial statements to better understand the amount, timing, and uncertainty of cash flows arising from leases. We adopted this guidance on January 1, 2019 and elected the optional transition method that allowed for a cumulative-effect adjustment in the period of adoption. Results for reporting periods beginning after January 1, 2019 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported under the accounting standards in effect for those periods.

We elected the following practical expedients that are available in transition upon the adoption of ASC 842 and for ongoing accounting policy: 1) the “practical expedients package of three”, which allows us to not reassess the following: a) whether any expired or existing contracts are or contain a lease as of the adoption date, b) the lease classification of any expired or existing leases as of the adoption date; and c) the accounting treatment for initial direct costs for existing leases as of the adoption date; 2) the “short-term lease recognition exemption”, which allows entities to forego recognition of right-of-use (“ROU”) assets and lease liabilities for leases with a lease term of twelve months or less and which also do not include an option to renew the lease term that the entity is reasonably certain to exercise; 3) elect by asset class as an accounting policy, to combine lease and non-lease components as a single component and subsequently account for the combined single component as the lease component; and 4) apply the portfolio approach to similar types of leases where

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

the Company does not reasonably expect the outcome to differ materially from applying the new guidance to individual leases.

TripAdvisor’s lease contracts contain both lease and non-lease components. TripAdvisor accounts separately for the lease and non-lease components of office space leases and certain other leases, such as data center leases. However, for certain categories of equipment leases, such as network equipment and others, TripAdvisor accounts for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases that have similar characteristics, TripAdvisor applies a portfolio approach to effectively account for operating lease ROU assets and lease liabilities, hence TripAdvisor does not expect the outcome to differ materially from applying the new guidance to individual leases.

The adoption of ASC 842 did not have a material impact to our consolidated statement of operations and statement of cash flows during the three months ended March 31, 2019. The effect of the adoption on our unaudited condensed consolidated balance sheet as of January 1, 2019 for the adoption of ASC 842 is as follows:


	Balance at December 31, 2018		Adjustments due to ASC 842	Balance at January 1, 2019
	in millions
Assets:
Other current assets	$	48	(3)	45
Property and equipment, net	$	154	8	162
Other assets, at cost, net of accumulated amortization	$	118	73	191

Liabilities:
Accrued liabilities	$	144	21	165
Deferred income tax liabilities	$	325	1	326
Other liabilities	$	283	53	336
Retained earnings	$	133	1	134
Noncontrolling interests in equity of subsidiaries	$	3,400	2	3,402

Operating Leases

TripAdvisor leases office space in a number of countries around the world under non-cancelable lease agreements. TripAdvisor’s office space leases, exclusive of its Corporate Headquarters Lease, are operating leases. Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date, or the date the lessor makes the leased asset available for use, based on the present value of the lease payments over the lease term using TripAdvisor’s estimated incremental borrowing rate.

TripAdvisor’s office space operating leases expire at various dates with the latest maturity in June 2027. Certain leases include options to extend the lease term for up to 5 years and/or terminate the leases within 1 year, which TripAdvisor includes in the lease terms if it is reasonably certain to exercise these options.

Finance Lease

In June 2013, TripAdvisor entered into its Corporate Headquarters Lease and pursuant to that lease, the landlord built an approximately 280,000 square foot rental building in Needham, Massachusetts (the “Premises”) and leased the Premises to TripAdvisor as its new corporate headquarters for an initial term of 15 years and 7 months or through December 2030. TripAdvisor also has an option to extend the term of the Corporate Headquarters Lease for two consecutive terms of five years each. As required under the transition guidance in ASC 842, TripAdvisor assessed the lease classification for its

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements ~~(continued)~~

~~(unaudited)~~(Unaudited)

Corporate Headquarters Lease and concluded it should be classified and accounted for as a finance lease upon adoption on January 1, 2019. Accordingly, on January 1, 2019, TripAdvisor derecognized the previous assets and liabilities associated with the Corporate Headquarters Lease’s previous build-to-suit designation, with the exception of prepaid rent, as discussed below, and recognized an ROU asset and a finance lease liability of $114 million and $88 million, respectively, on its condensed consolidated balance sheet. The difference between the ROU asset and lease liability consists of net assets and liabilities of $26 million, primarily related to structural improvements paid by TripAdvisor, net of tenant incentives and accumulated amortization, which is classified as net prepaid rent under the new guidance.

Finance lease ROU assets and finance lease liabilities commencing after January 1, 2019 are recognized similar to an operating lease, at the lease commencement date or the date the lessor makes the leased asset available for use. Finance lease ROU assets are generally amortized on a straight-line basis over the lease term, and the carrying amount of the finance lease liabilities are (1) accreted to reflect interest using the incremental borrowing rate if the rate implicit in the lease is not readily determinable, and (2) reduced to reflect lease payments made during the period. Amortization expense for finance lease ROU assets and interest accretion on finance lease liabilities are recorded to depreciation and interest expense, respectively, in the condensed consolidated statements of operations.

The components of lease expense during the three months ended March 31, 2019 were as follows:


	Three months ended
	March 31, 2019
	in millions
Operating lease cost (1)	$	6
Finance lease cost:
Amortization of right-of-use assets (2)		2
Interest on lease liabilities (3)		1
Total finance lease cost	$	3
Sublease income (1)		(1)
Total lease cost, net	$	8

(1)

Included in operating expense, including stock-based compensation in the condensed consolidated statement of operations.

(2)

Included in depreciation expense in the condensed consolidated statement of operations.

(3)

Included in interest expense in the condensed consolidated statement of operations.

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~Debt Covenants~~Supplemental balance sheet information related to leases is as follows:


		March 31,
		2019
		in millions
Operating leases:
Operating lease right-of-use assets (1)	$	73

Current operating lease liabilities (2)	$	18
Operating lease liabilities (3)		67
Total operating lease liabilities	$	85

Finance Lease:
Finance lease right-of-use assets (4)	$	112

Current finance lease liabilities (2)	$	5
Finance lease liabilities (3)		82
Total finance lease liabilities	$	87

(1)

Included in other assets, at cost, net of accumulated amortization in the condensed consolidated balance sheet.

(2)

Included in other current liabilities in the condensed consolidated balance sheet.

(3)

Included in other liabilities in the condensed consolidated balance sheet.

(4)

Included in property and equipment, net in the condensed consolidated balance sheet.

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Additional information related to leases during the three months ended March 31, 2019 is as follows:


	Three months ended
	March 31, 2019
	in millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	7
Operating cash flows from finance lease	$	1
Financing cash flows from finance lease	$	1
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	91
Finance lease	$	88


	As of March 31, 2019
Weighted-average remaining lease term
Operating leases		4.8 years
Finance lease		11.8 years
Weighted-average discount rate
Operating leases		4.46%
Finance lease		4.49%

Future lease payments under non-cancellable leases as of March 31, 2019 were as follows:


		Operating Leases	Finance Lease
		in millions
Remainder of 2019	$	17	6
2020		21	9
2021		19	10
2022		17	10
2023		11	10
Thereafter		9	67
Total future lease payments	$	94	112
Less: imputed interest		(9)	(25)
Total	$	85	87

As of ~~September 30, 2017, each of the Company~~March 31, 2019, we did not have any additional operating or finance leases that have not yet commenced but that create significant rights and ~~TripAdvisor was in compliance with its respective debt covenants.~~obligations for us.

~~(6)~~(7) Commitments and Contingencies

Litigation

In the ordinary course of business, the Company and its subsidiaries are parties to legal proceedings and claims arising out of our operations. These matters may relate to claims involving alleged infringement of third‑party intellectual property rights, defamation, taxes, regulatory compliance and other claims. Although it is reasonably possible that the Company may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements.

~~(7)~~(8) Segment Information

TripCo, through its ownership interests in ~~subsidiaries and other companies,~~TripAdvisor, is primarily engaged in the online commerce industries. TripCo identifies its reportable segments as (A) those ~~consolidated companies~~operating segments that represent 10% or more of its consolidated annual revenue, annual adjusted operating income before depreciation and amortization (“Adjusted ~~OIBDA~~OIBDA”) or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of TripCo’s annual pre‑tax earnings.

During the first quarter of 2019, as part of a continuous review of our business, we realigned our reportable segment information which our chief operating decision maker, or CODM, regularly assesses to evaluate performance for operating decision-making purposes, including evaluation and allocation of resources.

The revised segment reporting structure includes the following reportable segments: (1) Hotels, Media & Platform; and (2) Experiences & Dining. All prior period segment disclosure information has been reclassified to conform to the current reporting structure in this Form 10-Q. These reclassifications had no effect on our condensed consolidated financial statements in any period.

TripCo evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, and revenue or sales per customer equivalent. In addition, TripCo reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.

Beginning in the first quarter of 2019, we have identified the following as reportable segments:

Hotels, Media & Platform – includes the following revenue sources: (1) TripAdvisor-branded hotels revenue – primarily consisting of TripAdvisor-branded hotel metasearch auction-based revenue, transaction revenue from TripAdvisor’s hotel instant booking feature, subscription-based advertising revenue and media advertising placements revenue; and (2) TripAdvisor-branded display and platform revenue – consisting of TripAdvisor-branded display-based revenue. All direct general and administrative costs are included in the applicable business, however, all corporate general and administrative costs are included in the Hotels, Media & Platform reportable segment. In addition, the Hotels, Media & Platform reportable segment includes all TripAdvisor-related brand advertising expenses (primarily television advertising) and technical infrastructure and other costs supporting the TripAdvisor platform.

Experiences & Dining – TripAdvisor provides information and services for consumers to research, book and experience activities and attractions in popular travel destinations both through Viator, TripAdvisor’s dedicated Experiences business, and on TripAdvisor’s website and mobile apps. TripAdvisor generates commissions for each booking transaction it facilitates through its online reservation system. TripAdvisor also provides information and services for consumers to research and book restaurants in popular travel destinations through its dedicated reservations business, TheFork, and on TripAdvisor websites and mobile apps.

TripAdvisor’s accounting policies are the same as those described in the Company’s Summary of Significant Accounting Policies included in the Annual Report on Form 10-K for the year ended December 31, 2018.

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Performance Measures

TripAdvisor disaggregates revenue from contracts with customers into major products/revenue sources. TripAdvisor has determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenue is recognized primarily at a point in time for all reported segments.


	Three months ended
	March 31,
	2019		2018
	(in millions)
Hotels, Media & Platform
TripAdvisor-branded hotels	$	216	217
TripAdvisor-branded display and platform		38	36
Total Hotels, Media & Platform		254	253

Experiences & Dining		80	62
Corporate and other		42	63
Total Revenue	$	376	378

The following table provides information about the opening and closing balances of accounts receivable and contract assets from contracts with customers (in millions):


	March 31,		December 31,
	2019		2018
Accounts receivable	$	227	205
Contract assets		9	7
Total	$	236	212

Accounts receivable are recognized when the right to consideration becomes unconditional. Contract assets are rights to consideration in exchange for services that TripAdvisor has transferred to a customer when that right is conditional on something other than the passage of time, such as commission payments that are contingent upon the completion of the service by the principal in the transaction. Contract liabilities generally include payments received in advance of performance under the contract, and are realized as revenue as the performance obligation to the customer is satisfied, which TripAdvisor presents as deferred revenue on its consolidated balance sheets. As of January 1, 2019 and 2018, TripAdvisor had $63 million and $59 million, respectively, recorded as deferred revenue on its condensed consolidated balance sheet, of which $34 million and $32 million was recognized in revenue during the three months ended March 31, 2019 and 2018, respectively. The difference between the opening and closing balances of TripAdvisor’s deferred revenue primarily results from the timing differences between when TripAdvisor receives customer payments and the time in which TripAdvisor satisfies its performance obligations. The difference between the opening and closing balances of TripAdvisor’s contract assets primarily results from the timing difference between when TripAdvisor satisfies its performance obligations and the time when the principal completes the service in the transaction. There were no significant changes in contract assets or deferred revenue during the three months ended March 31, 2019 and 2018 related to business combinations, impairments, cumulative catch-ups or other material adjustments.

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

TripCo defines Adjusted OIBDA as revenue less ~~cost of goods sold,~~ operating expenses, and selling, general and administrative expenses (excluding stock‑based compensation)., adjusted for specifically identified non-recurring transactions. TripCo believes this measure is an important indicator of the operational strength and performance of its businesses, including each business’s ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results, and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, equity settled liabilities (including stock‑based ~~compensation,~~compensation), separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. TripCo generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

~~For the nine months ended September 30, 2017, TripCo has identified the following consolidated company~~Adjusted OIBDA is summarized as ~~its reportable segment:~~follows:

~~TripAdvisor - an online travel research company, empowering users to plan and maximize their travel experience.~~


	Three months ended
	March 31,
	2019		2018
	amounts in millions
Hotels, Media & Platforms	$	105	77
Experiences & Dining		(24)	(4)
Corporate and other		7	5
Consolidated TripCo	$	88	78

~~TripCo’s~~In addition, we do not report assets, capital expenditures and related depreciation expense by segment as our CODM does not use this information to evaluate operating ~~segments are strategic business units that offer different products and services. They are managed separately because each~~segments. Accordingly, we do not regularly provide such information by segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments are the same as those described in the Company’s Summary of Significant Accounting Policies included in the Annual Report on Form 10-K for the year ended December 31, 2016.

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~~Table of Contents~~

~~LIBERTY TRIPADVISOR HOLDINGS, INC.~~

~~Notes~~ to ~~Condensed Consolidated Financial Statements (continued)~~

~~(unaudited)~~

~~Performance Measures~~

Three months ended September 30,

2017

2016

Adjusted

Adjusted

Revenue

OIBDA

Revenue

OIBDA

amounts in millions

TripAdvisor

$
439

95

421

114

Corporate and other

—

(2)

13

(3)

Consolidated TripCo

$
439

93

434

111

Nine months ended September 30,

2017

2016

Adjusted

Adjusted

Revenue

OIBDA

Revenue

OIBDA

amounts in millions

TripAdvisor

$
1,235

269

1,164

294

Corporate and other

13

(9)

29

(13)

Consolidated TripCo

$
1,248

260

1,193

281

~~Other Information~~

September 30, 2017

Total

Capital

assets

expenditures

amounts in millions

TripAdvisor

$
7,209

50

Corporate and other

84

1

Consolidated TripCo

$
7,293

51

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~~Table of Contents~~

~~LIBERTY TRIPADVISOR HOLDINGS, INC.~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(unaudited)~~

our CODM.

The following table provides a reconciliation of Consolidated segment Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:


	Three months			Nine months		Three months ended
	ended September 30,			ended September 30,		March 31,
	2017		2016	2017	2016	2019		2018
	amounts in millions					amounts in millions
Consolidated segment Adjusted OIBDA	$	93	111	260	281	$	88	78
Stock-based compensation		(27)	(24)	(77)	(68)		(30)	(30)
Depreciation and amortization		(50)	(56)	(161)	(166)		(42)	(39)
Operating income (loss)		16	31	22	47		16	9
Interest expense		(6)	(5)	(18)	(20)		(5)	(6)
Realized and unrealized gain (losses) on financial instruments, net		(9)	(1)	10	5		1	(23)
Gain (loss) on dispositions, net		—	—	(18)	—
Other, net		(1)	—	2	(1)		4	1
Earnings (loss) before income taxes	$	—	25	(2)	31	$	16	(19)

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

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business ~~product~~ and marketing strategies; ~~new service offerings;~~ the recoverability of our goodwill and other long-lived assets; our projected sources and uses of cash; fluctuations in interest rates and foreign exchange rates; and the anticipated ~~non-material~~ impact of certain contingent liabilities related to ~~legal and~~ tax ~~proceedings~~rules and other matters arising in the ordinary course of business. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but such statements necessarily involve risks and uncertainties and there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:

customer demand for products and services and the ability of our ~~company~~subsidiary to adapt to changes in demand;

competitor responses to products and services;

the levels and quality of online traffic to ~~our~~TripAdvisor, Inc.’s (“TripAdvisor”) businesses’ websites and the ability to convert visitors into contributors or consumers;

the expansion of social integration and member acquisition efforts with social media;

the impact of changes in search engine algorithms and dynamics or search engine disintermediation;

uncertainties inherent in the development and integration of new business lines and business strategies;

our future financial performance, including availability, terms and deployment of capital;

our ability to successfully integrate and recognize anticipated efficiencies and benefits from the businesses we acquire;

impairment of goodwill or other intangible assets such as trademarks or other intellectual property arising from acquisitions;

the ability of suppliers and vendors to deliver ~~products,~~ equipment, software and services;

availability of qualified personnel;

changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission and adverse outcomes from regulatory proceedings;

changes in ~~our~~ business ~~models, including the rollout of TripAdvisor, Inc.’s (“TripAdvisor”) instant booking feature;~~models;

changes in the nature of key strategic relationships with partners ~~distributors, suppliers~~ and vendors;

domestic and international economic and business conditions and industry trends, including the impact of “Brexit” and those conditions and trends which result in declines or disruptions in the travel industry;

consumer spending levels, including the availability and amount of individual consumer debt;

costs related to the maintenance and enhancement of brand awareness;

advertising spending levels;

rapid technological changes;

failure to protect the security of personal information about customers and users, subjecting us to potentially costly government enforcement actions or private litigation and reputational damage;

the regulatory and competitive environment of the industries in which we operate;

fluctuations in foreign currency exchange rates; and

threatened terrorist attacks, political unrest in international markets and ongoing military action around the world.

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For additional risk factors, please see Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, as well as Part ~~II,~~II. Item 1A1A. Risk Factors of ~~our~~this Quarterly Report on Form ~~10-Q for the quarter ended June 30, 2017.~~10-Q. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.

The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with our accompanying condensed consolidated financial statements and the notes thereto.

See note 1 to the accompanying condensed consolidated financial statements for an overview of new accounting standards that we have adopted or that we plan to adopt that have had or may have an impact on our financial statements.

Overview

The accompanying financial statements and the other information herein refer to ~~the consolidation of~~Liberty TripAdvisor ~~and BuySeasons,~~Holdings, Inc. ~~(“BuySeasons”)~~ as “TripCo,” “Consolidated TripCo,” the “Company,” “us,” “we” and “our” unless the context otherwise requires. We own an approximate 22% economic interest and ~~58%~~57% voting interest in TripAdvisor as of ~~September 30, 2017.~~March 31, 2019. All significant intercompany accounts and transactions have been eliminated in the accompanying condensed consolidated financial statements.

~~On June 30, 2017, TripCo sold BuySeasons.~~During the first quarter of 2019, as part of a continuous review of our business, we realigned the reportable segment information which our chief operating decision maker, or CODM, regularly assesses to evaluate performance for operating decision-making purposes, including evaluation and allocation of resources. The ~~sale resulted~~revised segment reporting structure includes the following reportable segments: (1) Hotels, Media & Platform; and (2) Experiences & Dining. All prior period segment disclosure information has been reclassified to conform to the current reporting structure in ~~an $18 million loss, which is included in Gain (loss)~~this Form 10-Q. These reclassifications had no effect on ~~dispositions, net in the accompanying~~our condensed consolidated ~~statement of operations. BuySeasons is not presented as a discontinued operation as the sale did not represent a strategic shift that had a major effect on TripCo’s operations and~~ financial ~~results.~~

~~Our “Corporate and other” category includes our former interest~~statements in ~~BuySeasons and corporate expenses.~~any period.

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Results of Operations—Consolidated—~~September 30, 2017~~March 31, 2019 and ~~2016~~2018

General. We provide in the tables below information regarding our consolidated Operating Results and Other Income and Expense, as well as information regarding the contribution to those items from our principal reportable segment. The “Corporate and other” category consists of those assets or businesses which we do not disclose separately. For a more detailed discussion and analysis of the financial results of the principal reporting segment, see “Results of Operations—TripAdvisor” below.Expense.

Three months ended

Nine months ended

September 30,

September 30,

2017

2016

2017

2016

amounts in millions

Revenue










TripAdvisor

$
439

421

1,235

1,164

Corporate and other

—

13

13

29

Consolidated TripCo

$
439

434

1,248

1,193

Operating Income (Loss)

TripAdvisor

$
19

36

36

65

Corporate and other

(3)

(5)

(14)

(18)

Consolidated TripCo

$
16

31

22

47

Adjusted OIBDA

TripAdvisor

$
95

114

269

294

Corporate and other

(2)

(3)

(9)

(13)

Consolidated TripCo

$
93

111

260

281


	Three months ended
	March 31,
	2019		2018
	amounts in millions
Revenue
Hotels, Media & Platforms	$	254	253
Experiences & Dining		80	62
Corporate and other		42	63
Total revenue		376	378
Operating expense		82	75
SG&A		206	225
Stock-based compensation		30	30
Depreciation and amortization		42	39
Operating income		16	9
Other income (expense):
Interest expense		(5)	(6)
Realized and unrealized gains (losses) on financial instruments, net		1	(23)
Other, net		4	1
		—	(28)
Earnings (loss) before income taxes		16	(19)
Income tax (expense) benefit		(5)	(16)
Net earnings (loss)	$	11	(35)

Adjusted OIBDA	$	88	78

~~Revenue.~~ ~~Our consolidated~~Revenue

TripAdvisor’s Hotels, Media & Platforms revenue increased ~~$5 million and $55~~$1 million during the three ~~and nine~~ months ended ~~September 30, 2017, respectively, as~~March 31, 2019, when compared to the ~~corresponding periods~~same period in the prior ~~year,~~year. The increase in Hotels, Media & Platforms revenue is detailed as follows:


	Three months ended
	March 31,
	2019		2018
	amounts in millions
TripAdvisor-branded hotels	$	216	217
TripAdvisor-branded display and platform		38	36
Total Hotels, Media & Platform	$	254	253

TripAdvisor-branded hotels revenue includes hotel metasearch auction as well as other click-based and subscription-based advertising services that are offered to travel partners. TripAdvisor’s travel partners are predominately online travel agencies and hoteliers. For the three months ended March 31, 2019 and 2018, 85% and 86%, respectively, of TripAdvisor’s Hotels, Media & Platform revenue was derived from TripAdvisor-branded hotels revenue. TripAdvisor-branded hotels revenue decreased $1 million during the three months ended March 31, 2019, when compared to the same period in 2018, primarily due to ~~increases~~lower international demand in TripAdvisor’s hotel metasearch, partially offset by an increase from hotel-related media advertising placements that enable hotels to enhance their visibility on TripAdvisor hotel pages.

Revenue per hotel shopper increased during the three months ended March 31, 2019, which was offset by a decline in average monthly unique hotel shoppers of approximately the same proportion during the three months ended March 31, 2019, when compared to the same period in 2018. Revenue per hotel shopper grew primarily due to product enhancements

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and higher-quality hotel shopper leads sent to travel partners, partially offset by a greater percentage of hotel shoppers visiting TripAdvisor-branded websites and apps on mobile phones, which TripAdvisor continued to experience during the first quarter of 2019. The decrease in average monthly unique hotel shoppers was primarily due to TripAdvisor’s continued reduction of direct marketing spend on TripAdvisor’s least-profitable paid online marketing campaigns, partially offset by the aforementioned general trend of an increasing number of hotel shoppers visiting on mobile phones.

Subscription-based advertising revenue was relatively flat during the three months ended March 31, 2019, when compared to the same period in 2018.

TripAdvisor-branded display-based advertising revenue increased by $2 million or 6%, during the three months ended March 31, 2019, when compared to the same period in 2018, primarily due to an increase in pricing, partially offset by a decrease in impressions sold and the general trend of an increasing percentage of traffic visiting TripAdvisor’s websites and apps on mobile phones, which yield smaller impression opportunities due to the smaller screen size.

Experiences & Dining segment revenue increased by $18 million or 29% during the three months ended March 31, 2019, when compared to the same period in 2018, primarily driven by growth in Experiences and ~~$71 million at~~Restaurants bookings and Restaurants click-based media advertising placement revenue, partially offset, to a lesser extent, by unfavorable foreign currency fluctuation impacts, when compared to the same period in 2018.

Experiences revenue growth was driven by increased demand on free and paid traffic sources, overall bookings growth, including TripAdvisor-sourced bookings growth and mobile bookings growth, and bookable supply growth. Another contributing factor is the improved shopping experience enabled by the investment in TripAdvisor’s new supplier platform launched in the fourth quarter of 2018, which has increased the efficiency with which suppliers can participate and market their bookable experiences, thereby offering consumers a greater selection of travel activities and experiences. Restaurants growth was driven by seated diner growth, mobile bookings growth, user experience improvements, increases in the bookable supply of restaurant listings as well as increased bookings sourced on TripAdvisor, ~~respectively.~~ and click-based media advertising placement revenue growth.

Corporate and other revenue, which primarily includes click-based advertising and display-based advertising revenue from rentals, flights/cruise and non-TripAdvisor branded websites, such as www.smartertravel.com, www.bookingbuddy.com, www.cruisecritic.com and www.onetime.com, decreased ~~$13~~by $21 million ~~and $16 million for~~or 33% during the three ~~and nine~~ months ended ~~September 30, 2017, respectively, as~~March 31, 2019, when compared to the ~~corresponding~~same period in 2018. This was primarily driven by the elimination of some marginal and unprofitable revenue within these offerings, as well as strategic resource re-allocation of investment across other areas of TripAdvisor’s business and continued competition in the Rentals offering.

Operating expense

The most significant driver of operating expense is technology and content costs, which increased $6 million during the three months ended March 31, 2019, when compared to the same period in 2018. The increases were primarily due to increased personnel and overhead costs to support the business growth of TripAdvisor’s Experiences & Dining businesses, partially offset by a decrease in personnel and overhead costs in TripAdvisor’s other businesses, as a result of strategic personnel re-allocation across TripAdvisor’s businesses.

Selling, general and administrative

The most significant driver of selling, general and administrative expense is selling and marking costs, which consist of direct selling and marketing costs and indirect costs, such as personnel and overhead. Selling and marketing costs decreased $19 million during the three months ended March 31, 2019, when compared to the same periods in 2018, primarily due to an overall decrease in search engine marketing and other online traffic acquisition costs, specifically in TripAdvisor’s Hotels, Media & Platform and other businesses, partially offset by increased search engine marketing and other online traffic acquisition costs in TripAdvisor’s Experiences & Dining businesses due to strategic acceleration of investment in these businesses, as well as, to a lesser extent, an overall increase in TripAdvisor’s television advertising campaign spend of $6 million during the ~~prior year. On June 30, 2017, TripCo sold BuySeasons, the only consolidated subsidiary in Corporate and other. See “Results~~three months ended March 31, 2019.

I-28

Table of ~~Operations—TripAdvisor” below for a more complete discussion of the results of operations of TripAdvisor.~~Contents

Operating Income (Loss). Our consolidated operating ~~income decreased~~results increased by ~~$15~~$7 million ~~and $25 million for~~during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019, as compared to the corresponding ~~periods~~period in the prior year. ~~The decrease for~~Operating income was impacted by the ~~three~~above explanations, combined with an increase in depreciation and ~~nine months ended September 30, 2017 is~~amortization expense of $3 million due to ~~decreases in operating results at TripAdvisor. See “Results of Operations—TripAdvisor” below for a more complete discussion~~increased amortization related to capitalized software and website development costs and incremental amortization related the adoption of the ~~results of operations of TripAdvisor.~~new leasing standard.

Adjusted OIBDA. We define Adjusted OIBDA as revenue less ~~cost of goods sold,~~ operating expenses and selling, general and administrative (“SG&A”) expenses (excluding stock-based compensation), adjusted for specifically identified non-recurring transactions. Our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our ~~businesses~~business and make decisions about ~~allocating resources among~~ our ~~businesses.~~resources. We believe this is an important indicator of the operational strength and performance of our businesses, including each business’s ability to service debt and fund capital expenditures. In addition, this measure allows us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes such costs as depreciation and amortization, stock‑based compensation ~~separately reported litigation settlements~~ and restructuring and impairment charges that are included in the measurement of operating income pursuant to ~~GAAP.~~U.S. generally accepted accounting principles (“GAAP”). Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. See note 78 to the accompanying condensed consolidated

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financial statements for a reconciliation of Adjusted OIBDA to operating income (loss) and earnings (loss) before income taxes.


	Three months ended
	March 31,
	2019		2018
	amounts in millions
Adjusted OIBDA
Hotels, Media & Platforms	$	105	77
Experiences & Dining		(24)	(4)
Corporate and other		7	5
Consolidated TripCo	$	88	78

Consolidated Adjusted OIBDA ~~decreased $18 million and decreased $21~~increased $10 million during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019, as compared to the corresponding ~~periods~~period in the prior year. ~~These changes were~~Hotels, Media & Platforms Adjusted OIBDA increased $28 million during the three months ended March 31, 2019 as compared to the corresponding period in the prior year, primarily due to reduced direct selling and marketing expenses related to search engine marketing and other online paid traffic acquisition costs as TripAdvisor has continued to optimize and improve its marketing efficiency from online marketing campaigns, partially offset to a lesser extent by an unfavorable impact of foreign currency fluctuations, when compared to the ~~operating results~~same period in 2018.

Experiences & Dining Adjusted OIBDA decreased $20 million during the three months ended March 31, 2019, when compared to the corresponding period in the prior year, primarily due to increased people costs to drive product and supply investments, as well as marketing investments to fund long-term growth initiatives, partially offset by an increase in revenue, as noted above.

Corporate and other Adjusted OIBDA increased $2 million during the three months ended March 31, 2019, when compared to the same period in 2018. This marginal increase was primarily due to reduced costs related to marketing and operational re-alignments, partially offset by a decrease in revenue, as described above. Corporate and other Adjusted OIBDA also includes $1 million and $2 million of ~~TripAdvisor. See “Results~~TripCo level selling, general and administrative expenses for the three months ended March 31, 2019 and 2018, respectively.

I-29

Table of ~~Operations—TripAdvisor” below for a more complete discussion of the results of operations of TripAdvisor.~~Contents

Other Income and Expense

Components of Other income (expense) are presented in the table below.


	Three months ended			Nine months ended		Three months ended
	September 30,			September 30,		March 31,
	2017		2016	2017	2016	2019		2018
	amounts in millions					amounts in millions
Interest expense
TripAdvisor	$	(4)	(3)	(11)	(10)	$	(2)	(3)
Corporate and other		(2)	(2)	(7)	(10)
Corporate							(3)	(3)
Consolidated TripCo	$	(6)	(5)	(18)	(20)	$	(5)	(6)
Realized and unrealized gains (losses) on financial instruments, net
TripAdvisor	$	—	—	—	1	$	—	—
Corporate and other		(9)	(1)	10	4
Consolidated TripCo	$	(9)	(1)	10	5
Gain (loss) on dispositions, net
TripAdvisor	$	—	—	—	—
Corporate and other		—	—	(18)	—
Corporate							1	(23)
Consolidated TripCo	$	—	—	(18)	—	$	1	(23)
Other, net
TripAdvisor	$	(1)	—	2	(1)	$	4	1
Corporate and other		—	—	—	—
Corporate							—	—
Consolidated TripCo	$	(1)	—	2	(1)	$	4	1

Interest expense. Interest expense ~~increased~~decreased $1 ~~million and decreased $2~~ million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 as compared to the corresponding periods in the prior year. Interest expense primarily consists of interest accrued, commitment fees and debt issuance cost amortization. TripAdvisor’s interest expense increased $1 million during both the three and nine months ended September 30, 2017, respectively, as compared to the corresponding periodsperiod in the prior year primarily due to ~~higher~~lower average outstanding borrowings and effective interest rates during the first nine months of 2017. Interest expense for Corporate and other remained flat and decreased $3 million for the three and nine months ended September 30, 2017, respectively, as comparedon TripAdvisor’s 2015 Credit Facility (as defined in note 5 to the ~~corresponding periods in the prior year, due to lower interest rates on outstanding borrowings.~~accompanying condensed consolidated financial statements).

Realized and unrealized gains (losses) on financial instruments, net. Realized and unrealized gains (losses) on financial instruments, net is primarily comprised of the change in the fair value of the variable postpaid forward as described in notes 4 and 5 to the accompanying condensed consolidated financial statements.

~~Gain (loss) on dispositions, net.~~ On June 30, 2017, TripCo sold BuySeasons. The sale resulted in an $18 million loss, which is included in “Gain (loss) on dispositions, net” in the accompanying condensed consolidated statement of operations.

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Other, net. Other, net ~~expense~~ increased ~~$1 million and decreased~~ $3 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 as compared to the corresponding period in the prior year, ~~periods. During the three months ended September 30, 2017, TripAdvisor recognized a loss on one of its cost-method investments,~~primarily due to an increase in interest income earned from TripAdvisor’s money market funds due to increased interest rates and investment, partially offset by ~~gains due to the fluctuation~~an increase of $1 million in net foreign ~~exchange rates. The decrease in other, net expense for the nine months ended September 30, 2017 was due to higher~~currency transaction ~~gains~~losses as a result of the fluctuation of foreign exchange rates.

Income taxes. During the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, we had earnings before income taxes of ~~zero~~$16 million and ~~$25~~losses before income taxes of $19 million, respectively, and we had income tax expense of $7$5 million and income tax benefit of $1 million, respectively. During the nine months ended September 30, 2017 and 2016, we had losses before income taxes of $2 million and earnings before income taxes of $31 million, respectively, and income tax expense of $21 million and $3$16 million, respectively. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, the Company recognized additional tax expense related to changes in ~~valuation allowance, changes in~~ unrecognized tax benefits, partially offset by the recognition of excess tax benefits related to stock-based compensation. For the three months ended March 31, 2018, the Company recognized additional tax expense related to the recognition of deferred tax liabilities for basis differences in the stock of a consolidated subsidiary, ~~and~~ the recognition of excess tax benefits and shortfalls related to stock-based ~~compensation. These expense items were partially offset by~~compensation and the tax benefit of earnings in foreign jurisdictions taxed at a rate lower than the U.S. federal tax rate and an increase in federal tax credits. For the three and nine months ended September 30, 2016, the Company recognized additional tax benefits related to earnings in foreign jurisdictions taxed at a rate lower than the U.S. federal tax rate and an increase in federal tax credits, partially offset by changes in valuation allowance, changes in unrecognized tax benefits, and recognition of ~~deferred~~additional 2017 transition tax ~~liabilities for basis differences in~~on the ~~stock~~deemed repatriation of ~~a consolidated subsidiary.~~foreign earnings.

Net earnings (loss). We had net ~~losses~~earnings of $7$11 million and net ~~earnings~~losses of ~~$26~~$35 million for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively, and net losses of $23 million and net earnings of $28 million for the nine months ended September 30, 2017 and 2016,~~2018, respectively. The change in net earnings was the result of the above described fluctuations in our revenue and expenses.

Liquidity and Capital Resources

As of ~~September 30, 2017,~~March 31, 2019, substantially all of our cash and cash equivalents ~~primarily~~ consist of cash on hand in global financial institutions, money market funds and marketable securities with maturities of 90 days or ~~less.~~less at the date of purchase.

The following are potential sources of liquidity: available cash balances, proceeds from asset sales, monetization of our investments, outstanding or anticipated debt facilities, debt and equity issuances, and dividend and interest receipts.

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As of ~~September 30, 2017,~~March 31, 2019, TripCo had a cash balance of ~~$773~~$787 million. Approximately ~~$750~~$771 million of the cash balance, at ~~September 30, 2017,~~March 31, 2019, is held at TripAdvisor. Although TripCo has a ~~58%~~57% voting interest in TripAdvisor, TripAdvisor is a separate public company with a significant non‑controlling interest, as TripCo has only ~~an approximate~~a 22% economic interest in TripAdvisor. Even though TripCo controls TripAdvisor through its voting interest and board representation, decision making with respect to using TripAdvisor’s cash balances must consider TripAdvisor’s minority holders. Accordingly, any potential distributions of cash from TripAdvisor to TripCo would generally be on a pro rata basis based on economic ownership interests. Covenants in TripAdvisor’s debt instruments also restrict the payment of dividends and cash distributions to stockholders. Approximately ~~$567~~$281 million of the TripAdvisor cash and cash equivalents balance is held by foreign subsidiaries, with the majority held in the United Kingdom.

During the three months ended March 31, 2018, TripAdvisor borrowed an additional $5 million and repaid $235 million of outstanding borrowings under the 2015 Credit Facility (as defined in note 5 to the accompanying condensed consolidated financial statements). These net repayments were primarily made from a one-time repatriation of $325 million of foreign earnings to the United States. Cumulative undistributed earnings of foreign subsidiaries that TripAdvisor ~~which is generally accessible but~~intends to indefinitely reinvest outside of the United States totaled approximately $694 million as of March 31, 2019. Should TripAdvisor distribute, or be treated under certain U.S. tax ~~consequences~~rules as having distributed, the earnings of foreign subsidiaries in the form of dividends or otherwise, TripAdvisor may ~~reduce~~be subject to U.S. income taxes. To date, TripAdvisor has permanently reinvested its foreign earnings outside of the ~~net~~United States and it currently does not intend to repatriate these earnings to fund U.S. operations. The amount of ~~cash~~any unrecognized deferred income tax on this temporary difference is not material.

As of March 31, 2019, TripAdvisor ~~is able to utilize for domestic purposes.~~ had no outstanding borrowings and approximately $1.2 billion in borrowing capacity under the 2015 Credit Facility and approximately $40 million of borrowing capacity available under the TripAdvisor Chinese Credit Facilities.

Historically, TripAdvisor’s operating cash flows have been

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~~Table of Contents~~

sufficient to fund its working capital requirements, capital expenditures and long term debt obligations and other financial commitments and are expected to be sufficient in future periods.


	Nine months ended			Three months ended
	September 30,			March 31,
	2017		2016	2019		2018
	amounts in millions			amounts in millions
Cash flow information
TripAdvisor cash provided (used) by operating activities	$	220	276	$	182	174
Corporate and other cash provided (used) by operating activities		(17)	(19)
Corporate cash provided (used) by operating activities					(1)	(1)
Net cash provided (used) by operating activities	$	203	257	$	181	173

TripAdvisor cash provided (used) by investing activities	$	64	(140)	$	(42)	28
Corporate and other cash provided (used) by investing activities		(3)	(1)
Corporate cash provided (used) by investing activities					—	—
Net cash provided (used) by investing activities	$	61	(141)	$	(42)	28

TripAdvisor cash provided (used) by financing activities	$	(163)	(133)	$	(24)	(246)
Corporate and other cash provided (used) by financing activities		1	31
Corporate cash provided (used) by financing activities					—	—
Net cash provided (used) by financing activities	$	(162)	(102)	$	(24)	(246)

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, TripCo’s primary ~~use~~uses of cash ~~was approximately $250~~were purchases of marketable securities of $40 million, payment of withholding taxes on net share ~~repurchases under TripAdvisor’s authorized share repurchase program. TripCo’s primary sources~~settlements on equity awards of $23 million, and capital expenditures incurred of $17 million. These uses of cash ~~included cash on hand,~~were funded primarily with cash provided by operations ~~approximately $99 million in net debt borrowings~~ and ~~approximately $114 million in net purchases,~~proceeds from sales and maturities of ~~short term investments and other~~ marketable ~~securities.~~securities of $15 million.

The projected use of TripCo’s corporate cash will primarily be to pay fees (not expected to exceed $4 million annually) to Liberty Media Corporation (“Liberty Media”) for providing certain services pursuant to the services agreement and the facilities sharing ~~agreements, which are not expected to exceed $4 million annually,~~agreement that TripCo entered into with Liberty Media or its subsidiaries, and to pay any other corporate

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level expenses. We anticipate that TripCo’s corporate cash balance (without other financial resources potentially available as discussed above) to be sufficient to maintain operations through a refinancing arrangement on the margin loans and the variable postpaid ~~forward.~~forward described in notes 4 and 5 to the accompanying condensed consolidated financial statements. The debt service costs of the two margin ~~loans described above~~loan agreements (the “Margin Loan Agreements”) entered into by our bankruptcy remote wholly-owned subsidiary are paid in kind ~~at the election of TripCo~~ and become outstanding principal. In addition, debt service costs accrue on the variable postpaid forward borrowing described in note 5 to the accompanying condensed consolidated financial statements. At maturity, the accreted loan amount due under the variable postpaid forward is approximately $272 million. At the maturity of the ~~margin loans,~~Margin Loan Agreements, a number of options are ~~expected to be~~ available to satisfy the ~~loans~~obligation as discussed above in potential sources of liquidity.

TripAdvisor’s available cash and marketable securities, combined with expected cash flows generated by operating activities and available cash from its credit facilities, are expected to be sufficient to fund TripAdvisor’s foreseeable working capital requirements, capital expenditures, existing business growth initiatives, debt obligations, lease commitments, and other financial ~~commitments.~~commitments through at least the next twelve months. TripAdvisor’s future capital requirements may also include capital needs for acquisitions, share repurchases, and/or other expenditures in support of its business ~~strategy; thus~~strategy, and may potentially ~~reducing its~~reduce TripAdvisor’s cash balance and/or ~~increasing~~increase its debt.

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~~Table of Contents~~

~~Results of Operations—TripAdvisor~~

~~TripAdvisor, Inc.~~ Our economic ownership interest in TripAdvisor is approximately 22% and TripCo’s results include the consolidated results of TripAdvisor and the elimination of approximately 78% of TripAdvisor’s net income (loss), including purchase accounting adjustments, through the line item for net earnings (loss) attributable to noncontrolling interests in the accompanying condensed consolidated statements of operations. TripAdvisor is a separate publicly traded company and additional information about TripAdvisor can be obtained through its website and its public filings. We believe a discussion of TripAdvisor’s standalone results promotes a better understanding of the overall results of its business. TripAdvisor’s revenue, Adjusted OIBDA and operating income on a standalone basis for the three and nine months ended September 30, 2017 and 2016 were as follows (see tables below for a reconciliation of TripAdvisor’s standalone results to those amounts reported by TripCo):

Three months ended

Nine months ended

September 30,

September 30,

2017

2016

2017

2016

amounts in millions

Revenue










Hotel

$
312

320

952

939

Non-Hotel

127

101

283

225

Total revenue

439

421

1,235

1,164

Operating expense

69

70

209

210

SG&A

275

237

757

660

Adjusted OIBDA

95

114

269

294

Stock-based compensation

26

22

72

64

Depreciation and amortization

27

26

82

74

Operating income as reported by TripAdvisor

$
42

66

115

156

~~Revenue~~

TripAdvisor’s Hotel revenue decreased $8 million and increased $13 million during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016. The increase in Hotel revenue is detailed as follows:

Three months ended

Nine months ended

September 30,

September 30,

2017

2016

2017

2016

amounts in millions

TripAdvisor-branded click-based and transaction

$
195

206

619

596

TripAdvisor-branded display-based advertising and subscription

76

73

215

214

Other hotel revenue

41

41

118

129

Total Hotel revenue

$
312

320

952

939

TripAdvisor-branded click-based and transaction revenue includes cost-per-click-based advertising revenue from its TripAdvisor-branded websites as well as transaction-based revenue from its hotel instant booking feature. For the three and nine months ended September 30, 2017, 63% and 65%, respectively, of TripAdvisor’s total Hotel segment revenue was derived from its TripAdvisor-branded click-based and transaction revenue. For the three and nine months ended September 30, 2016, 64% and 63%, respectively, of TripAdvisor’s total Hotel segment revenue was derived from its TripAdvisor-branded click-based and transaction revenue. TripAdvisor-branded click-based and transaction revenue during the three months ended September 30, 2017, decreased $11 million, when compared to the same period in 2016, primarily due to a decrease of 11% in revenue per hotel shopper, which was partially offset by an increase of 7% in average

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monthly unique hotel shoppers. TripAdvisor-branded click-based and transaction revenue during the nine months ended September 30, 2017, increased $23 million, when compared to the same period in 2016, primarily due to an increase of 9% in average monthly unique hotel shoppers during the nine months ended September 30, 2017, which was partially offset by a decrease of 4% in revenue per hotel shopper.

Revenue per hotel shopper decreased 11% during the three months ended September 30, 2017, when compared to the same period in 2016, according to TripAdvisor’s internal log files. The decrease was driven primarily by lower cost-per-clicks (“CPCs”) received in TripAdvisor’s click-based metasearch auction, as TripAdvisor observed partners increase marketing efficiency on TripAdvisor’s channel during the third quarter of 2017 resulting in lower CPC bids in all geographic areas, as well as the general trend of a greater percentage of hotel shoppers visiting TripAdvisor-branded websites and apps on mobile phones.

Revenue per hotel shopper decreased 4% during the nine months ended September 30, 2017, when compared to the same period in 2016, according to TripAdvisor’s internal log files. The decrease was driven primarily by the factors noted above, as well as by factors that primarily impacted TripAdvisor during the first six months of 2017, including dilution from product testing related to the second-quarter 2017 launch of TripAdvisor’s redesigned website and applications, foreign currency fluctuations and the timing of TripAdvisor’s instant booking feature rollout in certain non-U.S. markets during the first half of 2016, partially offset by strong growth in U.S. revenue per hotel shopper during the first six months of 2017.

TripAdvisor’s aggregate average monthly unique hotel shoppers on TripAdvisor-branded websites increased by 7% and 9% during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016, according to TripAdvisor’s internal log files. The increase in hotel shoppers for the three and nine months ended September 30, 2017 was primarily due to the success of TripAdvisor’s paid online marketing strategy, as well as the general trend of an increasing number of hotel shoppers visiting TripAdvisor’s websites and apps on mobile phones, partially offset by increased brand advertising spend related to TripAdvisor’s television campaign as part of its marketing mix, which TripAdvisor believes has a longer term return in comparison to online marketing spend.

TripAdvisor-branded display-based advertising and subscription revenue primarily consists of revenue from display-based advertising and subscription-based hotel advertising revenue. TripAdvisor-branded display-based advertising and subscription revenue increased by $3 million or 4%, during the three months ended September 30, 2017, when compared to the same period in 2016. Display-based advertising revenue increased primarily due to an increase in impressions sold, partially offset by a slight decrease in pricing and the general trend of increasing traffic visiting TripAdvisor websites and apps on mobile phones. While TripAdvisor continues to focus on new product initiatives to drive growth, the subscription revenue was flat primarily as TripAdvisor works to enhance its product offering to hoteliers and increase its sales pipeline in this business, as well as hotel industry consolidation. TripAdvisor-branded display-based advertising and subscription revenue increased slightly during the nine months ended September 30, 2017, when compared to the same period in 2016.

TripAdvisor’s other hotel revenue primarily includes revenue from non-TripAdvisor branded websites, such as bookingbuddy.com, cruisecritic.com, and onetime.com, including click-based advertising revenue, display-based advertising revenue and room reservations sold through these websites. Other hotel revenue was flat and decreased by $11 million during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016, primarily due to increased focus on return on marketing spend from paid marketing channels within this revenue stream.

TripAdvisor’s Non-Hotel segment revenue increased by $26 million or 26%, and $58 million or 26%, during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016, primarily driven by increased bookable supply, user demand, and increased bookings in TripAdvisor’s Attractions and Restaurant businesses.

TripAdvisor’s strong revenue growth in its Attractions business has been driven by the following factors: growth in bookings sourced by TripAdvisor, growth in bookable products, which leads to better consumer choice, as well as growth

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in free and paid traffic sources. Another contributing factor is the improved shopping experience from the introduction of new features, such as attractions instant booking for mobile phone, which enables users to purchase tickets and tours seamlessly without leaving the mobile app. These factors are all contributing to more consumer choice and continued revenue growth as a result of increased bookings. Similarly, in TripAdvisor’s Restaurants business, continued strong revenue growth can be attributed to increased bookings in TripAdvisor’s most established markets, growth in mobile bookings, a continually improving user experience and an increase in bookable supply of restaurant listings during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016.

~~Revenue by Geography~~

TripAdvisor’s U.S. revenue increased $20 million or 9%, during the three months ended September 30, 2017, when compared to the same period in 2016. U.S. revenue represented 56% and 53% of total revenue during the three months ended September 30, 2017 and 2016, respectively. This increase in the U.S. was due primarily to growth in TripAdvisor’s Attractions business. Revenue outside of the U.S., or non-U.S. revenue, decreased $2 million, or 1%, during the three months ended September 30, 2017, when compared to the same period in 2016. Non-U.S. revenue represented 44% and 47% of total revenue during the three months ended September 30, 2017 and 2016, respectively. The decline in TripAdvisor’s non-U.S. revenue, as a percentage of total revenue during this period was primarily due to growth in TripAdvisor’s Attractions business in the U.S. and a higher growth rate in mobile phone hotel shoppers and a higher percentage of total hotel shoppers from mobile devices in non-U.S. markets during the period.

TripAdvisor’s U.S. revenue increased $72 million or 11%, during the nine months ended September 30, 2017, when compared to the same period in 2016. U.S. revenue represented 57% and 54% of total revenue during the nine months ended September 30, 2017 and 2016, respectively. This increase was due to an increase in U.S. TripAdvisor-branded click-based and transaction revenue, driven by growth in U.S. revenue per hotel shopper during the nine months ended September 30, 2017, when compared to the same period in 2016, as well as growth in TripAdvisor’s Attractions business. Revenue outside of the U.S., or non-U.S. revenue, decreased $1 million or 0%, during the nine months ended September 30, 2017, when compared to the same period in 2016. Non-U.S. revenue represented 43% and 46% of total revenue during the nine months ended September 30, 2017 and 2016, respectively. The decline in TripAdvisor’s non-U.S. revenue, as a percentage of total revenue during these periods, was primarily driven by the factors noted above, as well as, foreign currency fluctuations and the timing of TripAdvisor’s instant booking feature rollout in certain non-U.S. markets during the first half of 2016.

~~Operating expense~~

The most significant driver of operating expense is technology and content costs which decreased $2 million during both the three and nine months ended September 30, 2017, when compared to the same periods in 2016. The decreases were primarily due to a decrease in contingent staff costs, partially offset by an increase in personnel and overhead costs to support TripAdvisor’s mobile phone and website initiatives, as well as to support business growth.

~~Selling, general and administrative~~

Selling and marketing costs consist of direct selling and marketing costs and indirect costs, such as personnel and overhead. Selling and marketing costs increased $37 million during the three months ended September 30, 2017, when compared to the same period in 2016, driven primarily by an increase of $42 million in costs incurred related to the launch of TripAdvisor’s television campaign in June of 2017, partially offset by a decrease in other advertising costs. SEM and other online traffic acquisition costs were essentially flat during the three months ended September 30, 2017, when compared to the same period in 2016, as TripAdvisor shifted marketing spend to its television campaign.

Selling and marketing costs increased $98 million during the nine months ended September 30, 2017, when compared to the same period in 2016, driven primarily by an increase of $58 million in costs incurred related to the launch of TripAdvisor’s television campaign in June of 2017, as well as an increase in SEM and other online traffic acquisition costs of $43 million, partially offset by a decrease in other advertising costs.

~~I-30~~

~~Table of Contents~~

General and administrative costs increased $1 million and decreased $1 million during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016. The increase for the three months ended September 30, 2017 was due to increases in personnel and overhead costs and professional service fees. Professional service fees and other increased $2 million during the three months ended September 30, 2017, when compared to the same period in 2016, primarily due to an increase in bad debt costs and non-income taxes, partially offset by a decrease in consulting costs. Professional service fees and other decreased $3 million during the nine months ended September 30, 2017, when compared to the same period in 2016, primarily due to a decrease in consulting costs and non-income taxes, partially offset by an increase in bad debt costs.

~~Operating income (loss)~~

Operating income, on a standalone basis, was impacted by the above explanations, combined with an increase in the amortization of capitalized software and web development costs and amortization of intangible assets acquired from recent TripAdvisor acquisitions.

The following is a reconciliation of the results as reported by TripAdvisor, used for comparison purposes as discussed above, for a greater understanding of the standalone operations of TripAdvisor, to the results reported by TripCo (amounts in millions):

Three months ended September 30, 2017

Nine months ended September 30, 2017

Purchase

Purchase

As Reported by

Accounting

As Reported by

As Reported by

Accounting

As Reported by

TripAdvisor

Adjustments

TripCo

TripAdvisor

Adjustments

TripCo

Revenue

$
439

—

439

1,235

—

1,235

Operating expense, excluding stock-based compensation

(69)

—

(69)

(209)

—

(209)

Selling, general and administrative, excluding stock-based compensation

(275)

—

(275)

(757)

—

(757)

Adjusted OIBDA

95

—

95

269

—

269

Stock-based compensation

(26)

—

(26)

(72)

—

(72)

Depreciation and amortization

(27)

(23)

(50)

(82)

(79)

(161)

Operating income (loss)

$
42

(23)

19

115

(79)

36

Three months ended September 30, 2016

Nine months ended September 30, 2016




Purchase





Purchase


As Reported by

Accounting

As Reported by

As Reported by

Accounting

As Reported by

TripAdvisor

Adjustments

TripCo

TripAdvisor

Adjustments

TripCo

Revenue

$
421

—

421

1,164

—

1,164

Operating expense, excluding stock-based compensation

(70)

—

(70)

(210)

—

(210)

Selling, general and administrative, excluding stock-based compensation

(237)

—

(237)

(660)

—

(660)

Adjusted OIBDA

114

—

114

294

—

294

Stock-based compensation

(22)

—

(22)

(64)

—

(64)

Depreciation and amortization

(26)

(30)

(56)

(74)

(91)

(165)

Operating income (loss)

$
66

(30)

36

156

(91)

65

~~I-31~~

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk in the normal course of business due to our ongoing investing and financial activities and the conduct of operations by ~~our subsidiaries~~TripAdvisor in different foreign countries. Market risk refers to the risk of loss arising from adverse changes in stock prices, interest rates and foreign currency exchange rates. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.

We are exposed to changes in interest rates primarily as a result of our borrowing and investment activities, which include investments in fixed and floating rate debt instruments and borrowings used to maintain liquidity and to fund business operations. The nature and amount of our long‑term and short‑term debt are expected to vary as a result of future requirements, market conditions and other factors. We ~~plan~~expect to manage our ~~overall~~ exposure to interest rates by maintaining what we believe is an appropriate mix of fixed and variable rate debt. We believe this ~~will protect~~best protects us from interest rate risk. We expect ~~that over time we will~~to achieve this mix by (i) issuing fixed rate debt that we believe has a low stated interest rate and significant term to maturity, ~~and~~ (ii) issuing variable rate debt with appropriate maturities and interest ~~rates.~~rates, and (iii) entering into interest rate swap arrangements when we deem appropriate. As of ~~September 30, 2017,~~March 31, 2019, our debt is comprised of the following ~~amounts of variable and fixed rate debt:~~

amounts:


	Variable rate debt				Fixed rate debt			Variable rate debt				Fixed rate debt
	Principal		Weighted avg		Principal	Weighted avg		Principal		Weighted avg		Principal	Weighted avg
	amount		interest rate		amount	interest rate		amount		interest rate		amount	interest rate
	amount in millions							amount in millions
TripAdvisor	$	272	2.5	%	—	N/A		$	—	N/A		—	N/A
TripCo debt	$	208	3.3	%	263	1.3	%	$	222	5.0	%	268	1.3	%

TripCo is exposed to foreign exchange rate fluctuations related primarily to the monetary assets and liabilities and the financial results of TripAdvisor’s foreign subsidiaries. Assets and liabilities of foreign subsidiaries for which the functional currency is the local currency are translated into U.S. dollars at period‑end exchange rates, and the statements of operations are generally translated at the average exchange rate for the period. Exchange rate fluctuations on translating foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded in accumulated other comprehensive earnings (loss) as a separate component of ~~parent’s~~stockholders’ equity. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses, which are reflected in income as unrealized (based on period‑end translations) or realized upon settlement of the transactions. Cash flows from our operations in foreign countries are translated at the average rate for the period. Accordingly, TripCo may experience economic loss and a negative impact on earnings and equity with respect to our holdings solely as a result of foreign currency exchange rate fluctuations.

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Table of Contents

Item 4. Controls and Procedures.

In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company carried out an evaluation, under the supervision and with the participation of management, including its chief executive officer and its principal accounting and financial officer (the "Executives"), of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Executives concluded that the Company's disclosure controls and procedures were effective as of ~~September 30, 2017~~March 31, 2019 to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

There has been no change in the Company's internal control over financial reporting that occurred during the three months ended ~~September 30, 2017~~March 31, 2019 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

~~I-32~~I-33

Table of Contents

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Except as discussed below, there have been no material changes in the Company’s risk factors from those disclosed in Part I, Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2018.

Declines or disruptions in the economy in general and the travel industry in particular could adversely affect TripAdvisor’s businesses and financial performance.

TripAdvisor’s businesses and financial performance are affected by the health of the global economy generally as well as the travel industry and leisure travel in particular. Sales of travel services tend to decline or grow more slowly during economic downturns and recessions when consumers engage in less discretionary spending, are concerned about unemployment or economic weakness, have reduced access to credit or experience other concerns that reduce their ability or willingness to travel. The global economy may be adversely impacted by unforeseen events beyond TripAdvisor’s control, including incidents of actual or threatened terrorism, regional hostilities or instability, unusual weather patterns, natural disasters, political instability and health concerns (including epidemics or pandemics), defaults on government debt, significant increases in fuel and energy costs, tax increases and other matters that could reduce discretionary spending, tightening of credit markets, and declines in consumer confidence. Decreased travel spending could reduce the demand for TripAdvisor’s services and have a negative impact on its business and financial performance.

In addition, the uncertainty of macro-economic factors and their impact on consumer behavior, which may differ across regions, makes it more difficult to forecast industry and consumer trends and the timing and degree of their impact on TripAdvisor’s markets and business, which in turn could adversely affect TripAdvisor’s ability to effectively manage its business and its results of operations.

For example, since the United Kingdom’s referendum to exit the European Union, known as Brexit, global markets and foreign exchange rates have experienced increased volatility, including a decline in the value of the British pound as compared to the U.S. Dollar. TripAdvisor has significant operations in both the United Kingdom and the European Union. TripAdvisor’s operations and that of its merchants are highly integrated across the United Kingdom and the European Union, and TripAdvisor is highly dependent on the free flow of labor and goods in those regions. There remains significant uncertainty about the future relationship between the United Kingdom and the European Union, including the possibility of the United Kingdom leaving the European Union without a negotiated and bilaterally approved withdrawal plan. The ongoing uncertainty and potential re-imposition of border controls and customs duties on trade between the United Kingdom and European Union nations could negatively impact TripAdvisor’s merchant and customer relationships and financial performance. In addition, uncertainty regarding the terms and timeline for Brexit could continue to adversely affect consumer confidence and spending in the United Kingdom. TripAdvisor could face new regulatory costs and challenges if the U.K. regulations diverge from those of the European Union. The ultimate effects of Brexit on TripAdvisor will depend on the timing and specific terms of any agreement the United Kingdom and the European Union reach to provide access to each other’s respective markets. Since the terms of the United Kingdom’s exit from the European Union are uncertain, TripAdvisor is unable to predict the effect Brexit will have on its business and results of operations.

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

No shares of Liberty TripAdvisor Holdings, Inc. Series A common stock were surrendered by our officers and employees to pay withholding taxes and other deductions in connection with the vesting of their restricted stock during the three months ended ~~September 30, 2017.~~

March 31, 2019.

II-1

Table of Contents

Item 6. Exhibits

(a)Exhibits

~~(a)~~

~~Exhibits~~

Listed below are the exhibits which are filed as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):


Exhibit No.		Name


10.1		Form of Amended and Restated Indemnification Agreement between the Registrant and its executive officers/directors.*
31.1		Rule 13a-14(a)/15d-14(a) Certification*
31.2		Rule 13a-14(a)/15d-14(a) Certification*
32		Section 1350 Certification**
101.INS		XBRL Instance Document*
101.SCH		XBRL Taxonomy Extension Schema Document*
101.CAL		XBRL Taxonomy Calculation Linkbase Document*
101.LAB		XBRL Taxonomy Label Linkbase Document*
101.PRE		XBRL Taxonomy Presentation Linkbase Document*
101.DEF		XBRL Taxonomy Definition Document*

* Filed herewith

** Furnished herewith

II-2

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	LIBERTY TRIPADVISOR HOLDINGS, INC.

Date: ~~November~~May 7, ~~2017~~2019	By:	/s/ GREGORY B. MAFFEI
		Gregory B. Maffei Chairman, President and Chief Executive Officer

Date: ~~November~~May 7, ~~2017~~2019	By:	/s/ BRIAN J. WENDLING
		Brian J. Wendling Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

II-3


	Three months ended September 30,
	2017			2016
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA
	amounts in millions
TripAdvisor	$	439	95	421	114
Corporate and other		—	(2)	13	(3)
Consolidated TripCo	$	439	93	434	111


	Nine months ended September 30,
	2017			2016
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA
	amounts in millions
TripAdvisor	$	1,235	269	1,164	294
Corporate and other		13	(9)	29	(13)
Consolidated TripCo	$	1,248	260	1,193	281


	Three months ended September 30, 2017				Nine months ended September 30, 2017
			Purchase			Purchase
	As Reported by		Accounting	As Reported by	As Reported by	Accounting	As Reported by
	TripAdvisor		Adjustments	TripCo	TripAdvisor	Adjustments	TripCo
Revenue	$	439	—	439	1,235	—	1,235
Operating expense, excluding stock-based compensation		(69)	—	(69)	(209)	—	(209)
Selling, general and administrative, excluding stock-based compensation		(275)	—	(275)	(757)	—	(757)
Adjusted OIBDA		95	—	95	269	—	269
Stock-based compensation		(26)	—	(26)	(72)	—	(72)
Depreciation and amortization		(27)	(23)	(50)	(82)	(79)	(161)
Operating income (loss)	$	42	(23)	19	115	(79)	36


	Three months ended September 30, 2016				Nine months ended September 30, 2016
			Purchase			Purchase
	As Reported by		Accounting	As Reported by	As Reported by	Accounting	As Reported by
	TripAdvisor		Adjustments	TripCo	TripAdvisor	Adjustments	TripCo
Revenue	$	421	—	421	1,164	—	1,164
Operating expense, excluding stock-based compensation		(70)	—	(70)	(210)	—	(210)
Selling, general and administrative, excluding stock-based compensation		(237)	—	(237)	(660)	—	(660)
Adjusted OIBDA		114	—	114	294	—	294
Stock-based compensation		(22)	—	(22)	(64)	—	(64)
Depreciation and amortization		(26)	(30)	(56)	(74)	(91)	(165)
Operating income (loss)	$	66	(30)	36	156	(91)	65