TripAdvisor 2012 Annual Report Download - page 80

TRIPADVISOR, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
On April 7, 2011, Expedia announced its plan to separate into two independent public companies in order to
better achieve certain strategic objectives of its various businesses. We refer to this transaction as the “Spin-Off.”
Non-recurring expenses incurred to affect the Spin-Off during the year ended December 31, 2011 have been
included within Spin-Off costs in the consolidated and combined statements of operations.
On December 20, 2011, following the close of trading on the NASDAQ Global Select Market
(“NASDAQ”), the Spin-Off was completed, and TripAdvisor began trading as independent public company on
December 21, 2011. Expedia effected the Spin-Off by means of a reclassification of its capital stock that resulted
in the holders of Expedia capital stock immediately prior to the time of effectiveness of the reclassification
having the right to receive a proportionate amount of TripAdvisor capital stock. A one-for-two reverse stock split
of outstanding Expedia capital stock occurred immediately prior to the Spin-Off, with cash paid in lieu of
fractional shares.
In connection with the Spin-Off, Expedia contributed or transferred all of the subsidiaries and assets relating
to Expedia’s TripAdvisor Media Group, which were comprised of the TripAdvisor Holdings, LLC combined
financial statements, to TripAdvisor and TripAdvisor or one of its subsidiaries assumed all of the liabilities
relating to Expedia’s TripAdvisor Media Group. TripAdvisor now trades on the NASDAQ under the symbol
“TRIP.”
In connection with the Spin-Off, on December 20, 2011, TripAdvisor Holdings, LLC distributed
$405.5 million in cash to Expedia in the form of a dividend. This distribution was funded through borrowings
under a credit agreement, dated as of December 20, 2011. Such credit agreement together with all exhibits,
schedules, annexes, certificates, assignments and related documents contemplated thereby is referred to herein as
the “Credit Agreement.” Refer to “Note 8—Debt” below and our debt discussion in the section entitled
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Position,
Liquidity and Capital Resources” for further information.
For information on our relationships with Expedia, Barry Diller and Liberty Interactive Corporation and
recent material transactions and change in voting control in the fourth quarter of 2012, refer to “Note 16—
Related Party Transactions” below.
Basis of Presentation
The accompanying consolidated and combined financial statements include TripAdvisor, our wholly-owned
subsidiaries, and entities we control, or in which we have a variable interest and are the primary beneficiary of
expected cash profits or losses. We refer to TripAdvisor, Inc. and our wholly-owned subsidiaries as
“TripAdvisor,” “us,” “we” and “our” in these notes to the consolidated and combined financial statements. We
record our investments in entities that we do not control, but over which we have the ability to exercise
significant influence, using the equity method. We record noncontrolling interest in our consolidated and
combined financial statements to recognize the minority ownership interest in our consolidated subsidiaries.
Noncontrolling interest in the earnings and losses of consolidated subsidiaries represents the share of net income
or loss allocated to members or partners in our consolidated entities. We have eliminated significant
intercompany transactions and accounts. The accounting for income taxes was computed for TripAdvisor on a
separate tax return basis (see “Note 9—Income Taxes” for further information). The accompanying consolidated
and combined financial statements have been prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”).
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