TripAdvisor 2013 Annual Report Download - page 83

TRIPADVISOR, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND BUSINESS DESCRIPTION
We refer to TripAdvisor, Inc. and our wholly-owned subsidiaries as “TripAdvisor,” “the Company,” “us,”
“we” and “our” in these notes to the consolidated and combined financial statements.
During 2011, Expedia, Inc., or 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.” 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 an 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. In connection
with the Spin-Off, Expedia contributed or transferred all of the subsidiaries and assets relating to Expedia’s
TripAdvisor Media Group to TripAdvisor and TripAdvisor assumed all of the liabilities relating to Expedia’s
TripAdvisor Media Group.
On December 11, 2012, Liberty Interactive Corporation, or Liberty, purchased an aggregate of 4,799,848
shares of common stock of TripAdvisor from Barry Diller, our former Chairman of the Board of Directors and
Senior Executive, and certain of his affiliates (the “Stock Purchase”). As a result, as of December 31, 2013,
Liberty beneficially owned 18,159,752 shares of our common stock and 12,799,999 shares of our Class B
common stock, which shares constitute 14.0% 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’s shares of Class B
common stock into common stock, Liberty would beneficially own 21.8% 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 may be deemed to
beneficially own equity securities representing approximately 56.8% of our voting power.
Our common stock trades on the NASDAQ under the trading symbol “TRIP.”
Description of Business
TripAdvisor is an online travel company, empowering users to plan and have the perfect trip. TripAdvisor’s
travel research platform aggregates reviews and opinions of members about destinations, accommodations
(hotels, B&Bs, specialty lodging and vacation rentals), restaurants and activities throughout the world through
our flagship TripAdvisor brand. TripAdvisor-branded websites include tripadvisor.com in the United States and
localized versions of the website in 33 countries, including in China under the brand daodao.com. Beyond travel-
related content, TripAdvisor websites also include links to the websites of our travel advertisers allowing
travelers to directly book their travel arrangements. In addition to the flagship TripAdvisor brand, we manage
and operate 20 other travel brands, connected by the common goal of providing comprehensive travel planning
resources across the travel sector. We derive substantially all of our revenue from advertising, primarily through
click-based advertising and display-based advertising sales. In addition, we earn revenue through a combination
of subscription-based offerings from our Business Listings and Vacation Rental products, transaction revenue
from making hotel room nights available for booking on our transactional sites, and other revenue including
licensing our content to third-parties. We have one operating and reportable segment: TripAdvisor. The segment
is determined based on how our chief operating decision maker manages our business, makes operating decisions
and evaluates operating performance.
Seasonality
Expenditures by travel advertisers tend to be seasonal. Traditionally, our strongest quarter has been the third
quarter, which is a key travel research period, with the weakest quarter being the fourth quarter. However,
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