TripAdvisor 2013 Annual Report Download - page 112

Once the landlord completes the construction of the Premises (estimated to be May 2015), we will evaluate
the Lease in order to determine whether or not the Lease meets the criteria for “sale-leaseback” treatment. If the
Lease meets the “sale-leaseback” criteria, we will remove the asset and the related liability from its consolidated
balance sheet and treat the Lease as either an operating or capital lease based on the our assessment of the
accounting guidance.
If the Lease does not meet “sale-leaseback” criteria, we will treat the Lease as a financing obligation and
lease payments will be attributed to (1) a reduction of the principal financing obligation; (2) imputed interest
expense; and (3) land lease expense (which is considered an operating lease) representing an imputed cost to
lease the underlying land of the facility. In addition, the underlying building asset will be depreciated over the
building’s estimated useful life. And at the conclusion of the lease term, we would de-recognize both the net
book values of the asset and financing obligation. Although we will not begin making lease payments pursuant to
the Lease until November 2015, the portion of the lease obligations allocated to the land is treated for accounting
purposes as an operating lease that commenced in 2013.
Purchase Obligations
As of December 31, 2013, we had minimum non-cancelable purchase obligations with certain of our
vendors, which we expect to utilize in the ordinary course of business. The expected timing and payment
amounts are listed in the table below.
The following table summarizes our material commitments and obligations as of December 31, 2013 and
excludes amounts already recorded on the consolidated balance sheet:
By Period
Total
Less than
1 year 1 to 3 years 3 to 5 years
More than
5 years
(In thousands)
Operating leases (1) ........................... $ 85,495 $12,639 $18,987 $15,989 $ 37,880
Build to suit lease obligation (2) .................. 143,524 — 10,346 18,539 114,639
Purchase obligations ........................... 856 511 345 — —
Expected interest payments on Term Loan (3) ....... 14,450 5,525 8,925 — —
Total (4)(5)(6) ................................ $244,325 $18,675 $38,603 $34,528 $152,519
(1) Estimated future minimum rental payments under operating leases with non-cancelable lease terms.
(2) Estimated future minimum rental payments for our future corporate headquarters in Needham, MA.
(3) The amounts included as expected interest payments on the Term Loan in this table are based on the current
effective interest rate and payment terms as of December 31, 2013, but, could change significantly in the
future. Amounts assume that our existing debt is repaid at maturity and do not assume additional borrowings
or refinancings of existing debt. Refer to “Note 8—Debt” above for additional information, including
principal payments expected to be paid over the next three years, on our Term Loan.
(4) Excluded from the table was $38 million of unrecognized tax benefits, including interest and penalties, that
we have recorded in other long-term liabilities for which we cannot make a reasonably reliable estimate of
the amount and period of payment. We estimate that none of these amounts will be paid within the next
twelve months.
(5) In connection with the Spin-Off, we assumed Expedia’s obligation to fund a charitable foundation. The
Board of Directors of the charitable foundation is currently comprised of Stephen Kaufer- President and
Chief Executive Officer, Julie M.B. Bradley-Chief Financial Officer and Seth J. Kalvert- Senior Vice
President, General Counsel and Secretary. Our obligation was calculated at 2.0% of OIBA in 2013. For a
discussion regarding OIBA see “Note 16—Segment Information” in the notes to the consolidated and
combined financial statements. This future commitment has been excluded from the table above.
102