TripAdvisor 2011 Annual Report Download - page 99

Table of Contents
a $19 million payable, respectively. In addition to the revenue and expense relationships described above, the change in the payable/receivable
balance was also affected by our transfer of domestic cash receipts to Expedia during the periods offset by Expedia’s funding of our payroll and
income tax payments as well as certain acquisitions. In connection with the Spin-Off, all domestic intercompany receivables/payables with
Expedia were extinguished.
As discussed in “Note 1— Organization and Basis of Presentation ” above, we transferred approximately $406 million in cash to Expedia
in the form of a dividend, prior to completion of the Spin-Off. Per the Separation Agreement we were to retain $165 million in cash on hand
immediately following the Spin-off and the agreement also provides for a subsequent reconciliation process to ensure the appropriate amount
was retained. The completion of this reconciliation resulted in us recording an additional receivable from Expedia of $7 million at December 31,
2011.
We were a guarantor of Expedia’s credit facility and outstanding senior notes. These guarantees were full, unconditional, joint and several,
and were released upon Spin-Off.
Relationship Between Expedia and TripAdvisor 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; the Tax Sharing
Agreement, the Employee Matters agreement, the Transition Services Agreement, and commercial agreements, which are discussed in the
section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The various commercial
agreements, including click-based advertising agreements, content sharing agreements and display-based and other advertising agreements, have
terms of up to one year.
The full texts 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.
Liberty and Barry Diller
Relationship Between Liberty and Barry Diller After the Spin
-Off
On December 20, 2011, in connection with the Spin-Off, we entered into a governance agreement (the “Governance Agreement”) with
Liberty Interactive Corporation (“Liberty”) and Barry Diller, the Chairman of our Board of Directors and our Senior Executive. The summary of
the material terms of the Governance Agreement are discussed above in the section entitled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and are qualified in their entirety by the full text of the Governance Agreement, which is
incorporated by reference on this Annual Report on Form 10-K as Exhibit 10.1. On December 20, 2011, in connection with the Spin-
Off, Liberty
and Mr. Diller also entered into a stockholders agreement.
Liberty and Mr. Diller beneficially own 28,510,177 shares of our Common Stock (assuming the exercise of options to purchase
2,000,000 shares of Common Stock and 19,530 shares of Common Stock issuable upon settlement of RSUs that become exercisable by
Mr. Diller or vest within 60 days of December 30, 2011) and 12,799,999 shares of Class B Common Stock, which shares constitute 23.2% of the
outstanding shares of Common Stock and 100% of the outstanding shares of Class B Common Stock.
Assuming the conversion of all of the Liberty and Barry Diller’s shares of Class B Common Stock into Common Stock, Liberty and
Mr. Diller would beneficially own 30.5% of the outstanding Common Stock (calculated in accordance with Rule 13d-3). Because each share of
Class B Common Stock generally is entitled to ten votes per share and each share of Common Stock is entitled to one vote per share Liberty and
Mr. Diller may be deemed to beneficially own equity securities representing approximately 62.4% of our voting power.
95