TripAdvisor 2011 Annual Report Download - page 56

Table of Contents
is more likely than not to be realized. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law,
tax sharing agreements or variances between our actual and anticipated operating results, we make certain judgments and estimates. Therefore,
actual income taxes could materially vary from these estimates.
We record liabilities to address uncertain tax positions we have taken in previously filed tax returns or that we expect to take in a future tax
return. The determination for required liabilities is based upon an analysis of each individual tax position, taking into consideration whether it is
more likely than not that our tax position, based on technical merits, will be sustained upon examination. For those positions for which we
conclude it is more likely than not it will be sustained, we recognize the largest amount of tax benefit that is greater than 50% likely of being
realized upon ultimate settlement with the taxing authority. The difference between the amount recognized and the total tax position is recorded
as a liability. The ultimate resolution of these tax positions may be greater or less than the liabilities recorded.
We have not provided for deferred U.S. income taxes on undistributed earnings of certain foreign subsidiaries that we intend to reinvest
permanently outside the United States. Should we distribute earnings of foreign subsidiaries in the form of dividends or otherwise, we may be
subject to U.S. income taxes. Due to complexities in tax laws and various assumptions that would have to be made, it is not practicable to
estimate the amount of unrecognized deferred U.S. taxes on these earnings.
Related Party Transactions
Relationship between Expedia and us After the Spin-Off
For purposes of governing certain of the ongoing relationships between us and Expedia at and after the Spin-Off, and to provide for an
orderly transition, we and Expedia have entered into various agreements, including, among others, the Separation Agreement; a tax sharing
agreement, or the Tax Sharing Agreement; an employee matters agreement, or the Employee Matters Agreement; a transition services
agreement, or the Transition Services Agreement; and various commercial agreements, which are discussed below.
The full text of the Separation Agreement, the Tax Sharing Agreement, the Employee Matters Agreement, the Transition Services
Agreement and the Master Advertising Agreement (CPC) are incorporated by reference on this Annual Report on Form 10-K as Exhibits 2.1,
10.2, 10.3, 10.4 and 10.6 (10.6 filed in redacted form pursuant to confidential treatment request), respectively.
Separation Agreement
Pursuant to the Separation Agreement, immediately prior to the Spin-Off, Expedia contributed or otherwise transferred to us all of the
subsidiaries and assets primarily related to Expedia’s TripAdvisor Media Group-related businesses. In general, Expedia effected the transfer of
TripAdvisor Media Group assets through a series of contributions of relevant Expedia subsidiaries. Similarly, we or one of our subsidiaries have
assumed all of the liabilities primarily relating to Expedia’s TripAdvisor Media Group-related businesses, immediately prior to the Spin-
Off. We
have agreed to take each TripAdvisor asset and to assume and perform each TripAdvisor liability on an “as is, where is” basis, and Expedia has
made no representations or warranties with respect to any aspect of the TripAdvisor assets or the TripAdvisor liabilities.
Other matters governed by the Separation Agreement include provision and retention of records, access to information and confidentiality,
cooperation with respect to governmental filings and third party consents, access to property, control of ongoing litigation and indemnification
arrangements relating to liabilities of each party.
Pursuant to the Separation Agreement, we and our subsidiaries have agreed to indemnify Expedia, its affiliates and their respective current
and former directors, officers and employees for any losses arising out of any breach of the Separation Agreement, the Tax Sharing Agreement,
the Employee Matters Agreement, the Transition Services agreement and any failure by us to assume and perform any of the TripAdvisor
liabilities.
52