TripAdvisor 2012 Annual Report Download - page 69

is to be recognized. The ultimate number of shares issued and the related compensation expense recognized will
be based on a comparison of the final performance metrics to the specified targets.
Estimates of fair value are not intended to predict actual future events or the value ultimately realized by
employees who receive these awards, and subsequent events are not indicative of the reasonableness of our
original estimates of fair value. We have considered many factors when estimating expected forfeitures,
including our historical attrition rates, the employee class and historical experience. The estimate of stock awards
that will ultimately be forfeited requires significant judgment and, to the extent that actual results or updated
estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the
period such estimates are revised.
Refer to “Note 4—Stock Based Awards and Other Equity Instruments” in the notes to our consolidated and
combined financial statements for further information on current year equity award activity.
Recently Adopted Accounting Pronouncements
Testing Indefinite-lived Intangibles for Impairment
In July 2012, the FASB issued ASU 2012-02, which amends ASC Topic 350, “Intangibles—Goodwill and
Other.” The guidance amends the impairment test for indefinite lived intangible assets other than goodwill by
allowing companies to first assess qualitative factors to determine if it is more likely than not that an indefinite
lived intangible asset is impaired and whether it is necessary to perform the impairment test of comparing the
carrying amount with the recoverable amount of the indefinite lived intangible asset. This guidance is effective
for interim and annual periods beginning after September 15, 2012, however, we have decided to early adopt and
make it effective for our 2012 impairment review. Accordingly, we have adopted the presentation requirements
of ASU 2012-02 during the fourth quarter of 2012. The adoption of ASU 2012-02 did not have a material impact
on our consolidated and combined financial statements.
New Accounting Pronouncements Not Yet Adopted
Disclosure about Offsetting Assets and Liabilities
In December 2011, the FASB issued ASU 2011-11, which amends ASC Subtopic 210-20, “Offsetting.” The
guidance requires enhanced disclosures with improved information about financial instruments and derivative
instruments that are either (i) offset in accordance with current guidance or (ii) subject to an enforceable master
netting arrangement or similar agreement, irrespective of whether they are offset in accordance with current
guidance. This guidance is effective for interim and annual periods beginning after January 1, 2013. The
guidance is limited to the form and content of disclosures, and we do not anticipate that the adoption of this
guidance will have an impact on our consolidated and combined financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Management
We are exposed to certain market risks, including changes in interest rates and foreign currency exchange
rates that could adversely affect our results of operations or financial condition. We manage our exposure to
these risks through established policies and procedures and by assessing the anticipated near-term and long-term
fluctuations in interest rates and foreign currency exchange rates. Our objective is to mitigate potential income
statement, cash flow and market exposures from changes in interest and foreign exchange rates.
Interest Rates
Our current exposure to changes in interest rates relate primarily to our investment portfolio and the
outstanding principal on our Term Loan. Our interest income and expense is most sensitive to fluctuations in
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