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Note 2. Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Notes) | 12 Months Ended
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Dec. 31, 2015
Accounting Policies [Abstract] |
Significant Accounting Policies [Text Block] | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES In presenting the consolidated financial statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ materially from those estimates. REVENUE RECOGNITION Real Estate Franchise Services The Company franchises its real estate brokerage franchise systems to real estate brokerage businesses that are independently owned and operated. The Company provides operational and administrative services and systems to franchisees, which include marketing programs, systems and tools that are designed to help the Company's franchisees serve their customers and attract new or retain existing independent sales associates, training and volume purchasing discounts through the Company’s preferred alliance program. Franchise revenue principally consists of royalty and marketing fees from the Company’s franchisees. The royalty received is primarily based on a percentage of the franchisee’s gross commission income. Royalty fees are accrued as the underlying franchisee revenue is earned (upon close of the homesale transaction). Annual volume incentives given to certain franchisees on royalty fees are recorded as a reduction to revenue and are accrued for in relative proportion to the recognition of the underlying gross franchise revenue. Non-standard incentives are recorded as a reduction to revenue ratably over the related performance period or from the date of issuance through the remaining life of the related franchise agreement. Franchise revenue also includes initial franchise fees and initial area development fees, which are generally non-refundable and recognized by the Company as revenue when all material services or conditions relating to the sale have been substantially performed. The Company also earns marketing fees from its franchisees and utilizes such fees to fund marketing campaigns on behalf of its franchisees. Company Owned Real Estate Brokerage Services As an owner-operator of real estate brokerages, the Company assists home buyers and sellers in listing, marketing, selling and finding homes. Real estate commissions earned by the Company’s real estate brokerage business are recorded as revenue on a gross basis upon the closing of a real estate transaction (i.e., purchase or sale of a home), which are referred to as gross commission income. The commissions the Company pays to real estate agents are recognized concurrently with associated revenues and presented as the commission and other agent-related costs line item on the accompanying Consolidated Statements of Operations. Relocation Services The Company provides relocation services to corporate and government clients for the transfer of their employees. Such services include the purchasing and/or selling of a transferee’s home, providing home equity advances to transferees (generally guaranteed by the client), expense processing, arranging household goods moving services, home finding and other related services. The Company earns revenues from fees charged to clients for the performance and/or facilitation of these services and recognizes such revenue as services are provided, except for limited instances in which the Company assumes the risk of loss on the sale of a transferring employee’s home ("at risk"). In such cases, revenues are recorded as earned with associated costs recorded within operating expenses. In the majority of relocation transactions, the gain or loss on the sale of a transferee’s home is generally borne by the client. However, there are limited instances in which the Company assumes the risk of loss. Under "at risk" contracts, the Company records the value of the home on its Consolidated Balance Sheets within the Other current assets line item at the lower of cost or net realizable value less estimated direct costs to sell. The difference between the actual purchase price and proceeds received on the sale of the home is recorded within operating expenses on the Company’s Consolidated Statements of Operations and the gain or loss was not material for any period presented. The Company also earns referral commission revenue from real estate brokers, which is recognized at the time the underlying property closes, and revenues from other third-party service providers where the Company earns a referral commission, which is recognized at the time of completion of services. Additionally, the Company generally earns interest income on the funds it advances on behalf of the transferring employee, which is recorded within other revenue (as is the corresponding interest expense on the securitization obligations) in the accompanying Consolidated Statements of Operations. Title and Settlement Services The Company provides title and closing services, which include title search procedures for title insurance policies, homesale escrow and other closing services. Title revenues, which are recorded net of amounts remitted to third-party insurance underwriters, and title and closing service fees are recorded at the time a homesale transaction or refinancing closes. The Company also owns an underwriter of title insurance. For independent title agents, the underwriter recognizes policy premium revenue on a gross basis (before deduction of agent commission) upon notice of policy issuance from the agent. For affiliated title agents, the underwriter recognizes the incremental policy premium revenue upon the effective date of the title policy as the agent commission revenue is already recognized by the affiliated title agent. CONSOLIDATION The Company consolidates any VIE for which it is the primary beneficiary with a controlling financial interest. Also, the Company consolidates an entity not deemed a VIE if its ownership, direct or indirect, exceeds 50% of the outstanding voting shares of an entity and/or it has the ability to control the financial or operating policies through its voting rights, board representation or other similar rights. For entities where the Company does not have a controlling interest (financial or operating), the investments in such entities are accounted for using the equity or cost method, as appropriate. The Company applies the equity method of accounting when it has the ability to exercise significant influence over operating and financial policies of an investee. The Company uses the cost method for all other investments. CASH AND CASH EQUIVALENTS The Company considers highly liquid investments with remaining maturities not exceeding three months at the date of purchase to be cash equivalents. RESTRICTED CASH Restricted cash primarily relates to amounts specifically designated as collateral for the repayment of outstanding borrowings under the Company’s securitization facilities. Such amounts approximated $8 million and $10 million at December 31, 2015 and 2014, respectively and are primarily included within other current assets on the Company’s Consolidated Balance Sheets. ALLOWANCE FOR DOUBTFUL ACCOUNTS The Company estimates the allowance necessary to provide for uncollectible accounts receivable. The estimate is based on historical experience, combined with a review of current developments and includes specific accounts for which payment has become unlikely. The process by which the Company calculates the allowance begins in the individual business units where specific problem accounts are identified and reserved primarily based upon the age profile of the receivables and specific payment issues. ADVERTISING EXPENSES Advertising costs are generally expensed in the period incurred. Advertising expenses, recorded within the marketing expense line item on the Company’s Consolidated Statements of Operations, were approximately $194 million, $188 million and $174 million for the years ended December 31, 2015, 2014 and 2013, respectively. DEBT ISSUANCE COSTS Debt issuance costs include costs incurred in connection with obtaining debt and extending existing debt. These financing costs are capitalized and amortized on a straight-line basis over the term of the loan and are included as a component of interest expense. In the fourth quarter of 2015, the Company early adopted Accounting Standards Update— Simplifying the Presentation of Debt Issuance Costs, requiring that debt issuance costs related to a debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The change in presentation is reflected retroactively. INCOME TAXES The Company’s provision for income taxes is determined using the asset and liability method, under which deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using currently enacted tax rates. These differences are based upon estimated differences between the book and tax basis of the assets and liabilities for the Company. Certain tax assets and liabilities of the Company may be adjusted in connection with the finalization of income tax audits. The Company’s deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, it is more likely than not that all or some portion of the recorded deferred tax balances will not be realized in future periods. Decreases to the valuation allowance are recorded as reductions to the Company’s provision for income taxes and increases to the valuation allowance result in additional provision for income taxes. In the fourth quarter of 2015, the Company early adopted Accounting Standards Update—Balance Sheet Classification of Deferred Taxes, requiring that deferred tax assets and deferred tax liabilities be presented as non-current in a classified balance sheet. This standard simplifies current guidance, which requires that deferred tax assets and deferred tax liabilities be separately presented as current and non-current in a classified balance sheet. The change in presentation is reflected retroactively. DERIVATIVE INSTRUMENTS The Company records derivatives and hedging activities on the balance sheet at their respective fair values. The Company uses foreign currency forward contracts largely to manage its exposure to changes in foreign currency exchange rates associated with its foreign currency denominated receivables and payables. The Company primarily manages its foreign currency exposure to the Euro, Swiss Franc, Canadian Dollar and British Pound. The Company has not elected to utilize hedge accounting for these forward contracts; therefore, any change in fair value is recorded in the Consolidated Statements of Operations. However, the fluctuations in the value of these forward contracts generally offset the impact of changes in the value of the underlying risk that they are intended to economically hedge. The Company also enters into interest rate swaps to manage its exposure to changes in interest rates associated with its variable rate borrowings. The Company has interest rate swaps with an aggregate notional value of $1,475 million to offset the variability in cash flows resulting from the term loan facilities as follows:
Notional Value (in millions) | Commencement Date | Expiration Date
$225 | July 2012 | February 2018
$200 | January 2013 | February 2018
$600 | August 2015 | August 2020
$450 | November 2017 | November 2022
The Company has not elected to utilize hedge accounting for these interest rate swaps; therefore, any change in fair value is recorded in the Consolidated Statements of Operations. INVESTMENTS At December 31, 2015 and 2014, the Company had various equity method investments aggregating $65 million and $61 million, respectively, which are recorded within other non-current assets on the accompanying Consolidated Balance Sheets. Included in such investments is a 49.9% interest in PHH Home Loans, a mortgage origination venture formed in 2005 created for the purpose of originating and selling mortgage loans primarily sourced through the Company’s real estate brokerage and relocation businesses. PHH Corporation ("PHH") owns the remaining percentage. The Company’s maximum exposure to loss with respect to its investment in PHH Home Loans is limited to its equity investment of $58 million at December 31, 2015. In connection with the joint venture, the Company recorded equity earnings related to its investment in PHH Home Loans of $14 million, $8 million and $24 million for the years ended December 31, 2015, 2014 and 2013, respectively. The Company received cash dividends from PHH Home Loans of $10 million, $3 million and $40 million during the years ended December 31, 2015, 2014 and 2013, respectively. The following presents the summarized financial information for PHH Home Loans:
| December 31, |  |
| 2015 |  | 2014 |  |
Balance sheet data: |  |  |  |  |
Total assets | $ | 491 |  |  | $ | 480 |  |  |
Total liabilities | 379 |  |  | 375 |  |  |
Total members’ equity | 112 |  |  | 105 |  |  |
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Statement of operations data: |  |  |  |  |
Total revenues | $ | 233 |  |  | $ | 200 |  |  | $ | 282 |
Total expenses | 205 |  |  | 185 |  |  | 235 |
Net income | 28 |  |  | 15 |  |  | 47 |
PROPERTY AND EQUIPMENT Property and equipment (including leasehold improvements) are initially recorded at cost, net of accumulated depreciation and amortization. Depreciation, recorded as a component of depreciation and amortization on the Consolidated Statements of Operations, is computed utilizing the straight-line method over the estimated useful lives of the related assets. Amortization of leasehold improvements, also recorded as a component of depreciation and amortization, is computed utilizing the straight-line method over the estimated benefit period of the related assets or the lease term, if shorter. Useful lives are 30 years for buildings, up to 20 years for leasehold improvements, and from 3 to 7 years for furniture, fixtures and equipment. The Company capitalizes the costs of software developed for internal use which commences during the development phase of the project. The Company amortizes software developed or obtained for internal use on a straight-line basis, generally from 1 to 5 years, when such software is substantially ready for use. The net carrying value of software developed or obtained for internal use was $79 million and $85 million at December 31, 2015 and 2014, respectively. IMPAIRMENT OF GOODWILL, INTANGIBLE ASSETS AND OTHER LONG-LIVED ASSETS Goodwill represents the excess of acquisition costs over the fair value of the net tangible assets and identifiable intangible assets acquired in a business combination. Indefinite-lived intangible assets primarily consist of trademarks acquired in business combinations. Goodwill and indefinite-lived assets are not amortized, but are subject to impairment testing. The aggregate carrying value of our goodwill and other indefinite-lived intangible assets was $3,618 million and $756 million, respectively, at December 31, 2015 and are subject to impairment testing annually as of October 1, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. This testing compares carrying values to fair values and, when appropriate, the carrying value is reduced to fair value. In testing goodwill, the fair value of our reporting units is estimated utilizing a discounted cash flow approach utilizing long-term cash flow forecasts and our annual operating plans adjusted for terminal value assumptions. We determine the fair value of our reporting units utilizing our best estimate of future revenues, operating expenses, cash flows, market and general economic conditions as well as assumptions that we believe marketplace participants would utilize including discount rates, cost of capital, trademark royalty rates and long-term growth rates. The trademark royalty rate was determined by reviewing similar trademark agreements with third parties. Although we believe our assumptions are reasonable, actual results may vary significantly. These impairment tests involve the use of accounting estimates and assumptions, changes in which could materially impact our financial condition or operating performance if actual results differ from such estimates and assumptions. To address this uncertainty we perform sensitivity analysis on key estimates and assumptions. Based upon the impairment analysis performed in the fourth quarter of 2015, 2014 and 2013, there was no impairment of goodwill or other indefinite-lived intangible assets for these years. Management evaluated the effect of lowering the estimated fair value for each of the reporting units by 10% and determined that no impairment of goodwill would have been recognized under this evaluation for 2015, 2014 or 2013. The Company evaluates the recoverability of its other long-lived assets, including amortizable intangible assets, if circumstances indicate an impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated from such assets. Property and equipment is evaluated separately within each business unit. If such analysis indicates that the carrying value of these assets is not recoverable, then the carrying value of such assets is reduced to fair value through a charge to the Company’s Consolidated Statements of Operations. There were no impairments relating to other long-lived assets, including amortizable intangible assets, during 2015, 2014 or 2013. SUPPLEMENTAL CASH FLOW INFORMATION Significant non-cash transactions in 2015 included $17 million in capital lease additions, which resulted in non-cash accruals to fixed assets and other long-term liabilities. Significant non-cash transactions in 2014 included $8 million in capital lease additions, which resulted in non-cash accruals to fixed assets and other long-term liabilities. Significant non-cash transactions in 2013 included non-cash issuances of common stock of $22 million pursuant to the Phantom Value Plan, net of shares withheld for taxes. In addition, during 2013, the Company recorded $6 million in tenant improvements related to the new corporate headquarters and $14 million in capital lease additions, both of which resulted in non-cash accruals to fixed assets and other long-term liabilities. STOCK-BASED COMPENSATION The Company grants stock-based awards to certain senior management, employees and directors including non-qualified stock options, restricted stock, restricted stock units and performance share units. The fair value of non-qualified stock options is estimated using the Black-Scholes option pricing model on the grant date and is recognized as expense over the service period based on the vesting requirements. The fair value of restricted stock, restricted stock units and performance share units without a market condition is measured based on the closing price of the Company's common stock on the grant date and is recognized as expense over the service period of the award, or when requisite performance metrics or milestones are probable of being achieved. The fair value of awards with a market condition are estimated using the Monte Carlo simulation method and expense is recognized on a straight-line basis over the requisite service period of the award. Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating expected volatility, expected term, risk-free rate and estimated forfeiture rates. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU")—Simplifying the Presentation of Debt Issuance Costs, requiring that debt issuance costs related to a debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Prior to the amendment, debt issuance costs were recognized as deferred charges and recorded as other assets. The amendments in this ASU are effective for the Company’s fiscal year beginning January 1, 2016 and subsequent interim periods, with earlier adoption permitted. The Company elected to early adopt this ASU in the fourth quarter of 2015. The election requires retrospective application to all prior periods presented in the financial statements and represents a change in accounting principle. Adoption of the ASU resulted in the reclassification of debt issuance costs from deferred financing costs in other assets to a reduction in the carrying amount of the related debt liability within the Company’s consolidated balance sheets. As a result of the adoption, the December 31, 2014 indebtedness table has been restated as follows:
| December 31, 2014
| Previously Reported Balance |  | Effect of Accounting Principle Adoption |  | Adjusted Balance
Senior Secured Credit Facility: |  |  |  |  |
Term Loan B Facility | $ | 1,871 |  |  | $ | 18 |  |  | $ | 1,853 |
7.625% First Lien Notes | 593 |  |  | 7 |  |  | 586 |
9.00% First and a Half Lien Notes | 196 |  |  | 2 |  |  | 194 |
3.375% Senior Notes | 500 |  |  | 3 |  |  | 497 |
4.50% Senior Notes | 450 |  |  | 21 |  |  | 429 |
5.25% Senior Notes | 300 |  |  | 4 |  |  | 296 |
Total Short Term & Long Term Debt | $ | 3,910 |  |  | $ | 55 |  |  | $ | 3,855 |
The debt issuance costs related to our revolving credit facilities, including securitization obligations, remain classified as an asset within other assets. In November 2015, the FASB issued ASU—Balance Sheet Classification of Deferred Taxes, requiring an entity to present deferred tax assets and deferred tax liabilities as non-current in its classified balance sheet. The ASU simplifies current guidance, which requires an entity to separately present deferred tax assets and deferred tax liabilities as current and non-current in its classified balance sheet. Entities are permitted to apply the amendments either prospectively or retrospectively. The ASU is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. The Company elected to early adopt this ASU in the fourth quarter of 2015 and applied its provisions retrospectively to all prior periods presented in the financial statements. The election represents a change in accounting principle. As a result of the early adoption of these two ASUs, the December 31, 2014 Consolidated Balance Sheet is restated as follows:
| December 31, 2014
|  |  | Effect of Accounting Principle Adoption |  |
| Previously Reported Balance |  | Simplifying the Presentation of Debt Issuance Costs |  | Balance Sheet Classification of Deferred Taxes |  | Adjusted Balance
ASSETS |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |
Deferred income taxes | $ | 180 |  |  | $ | — |  |  | $ | (180 | ) |  | $ | — |
Total current assets | 1,026 |  |  | — |  |  | (180 | ) |  | 846 |
Other non-current assets | 230 |  |  | (55 | ) |  | 1 |  |  | 176 |
Total assets | 7,538 |  |  | (55 | ) |  | (179 | ) |  | 7,304 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |
Long-term debt | $ | 3,891 |  |  | $ | (55 | ) |  | $ | — |  |  | $ | 3,836 |
Deferred income taxes | 350 |  |  | — |  |  | (179 | ) |  | 171 |
Total liabilities | 5,355 |  |  | (55 | ) |  | (179 | ) |  | 5,121 |
Total liabilities and equity | 7,538 |  |  | (55 | ) |  | (179 | ) |  | 7,304 |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The Company considers the applicability and impact of all Accounting Standards Updates ("ASU"). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. In May 2014, the FASB and IASB issued a converged standard on revenue recognition that will have an effect on most companies to some extent. The objective of the revenue standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and the timing of revenue recognition. The new standard, as initially released, would be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and early adoption would not be permitted. In July 2015, the FASB deferred the effective date of the new revenue standard by one year resulting in the new revenue standard being effective for fiscal years and interim periods beginning after December 15, 2017 and allowing entities to adopt one year earlier if they so elect. The new standard permits for two alternative implementation methods, the use of either (1) full retrospective application to each prior reporting period presented or (2) modified retrospective application in which the cumulative effect of initially applying the revenue standard is recognized as an adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to adopt the new standard in the first quarter of 2018 but has not yet determined the method by which the standard will be adopted. The Company is currently evaluating the impact of the standard on its consolidated financial statements but does not expect the new standard to have a material impact on the financial results of the Company as the majority of our revenue is recognized at the completion of a homesale transaction and will not be impacted by this new revenue recognition guidance.

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