TripAdvisor 2013 Annual Report Download - page 86

Interest Income
Interest income primarily consists of interest earned and amortization of discounts and premiums on our
marketable securities.
Interest Expense
Interest expense primarily consists of interest incurred, commitment fees and debt issuance cost
amortization related to our Credit Agreement and Chinese Credit Facilities.
Cash, Cash Equivalents and Marketable Securities
Our cash equivalents consist of highly liquid investments with maturities of 90 days or less at the date of
purchase. Our marketable debt and equity securities have been classified and accounted for as available-for-sale.
We determine the appropriate classification of our investments at the time of purchase and reevaluate the
designations at each balance sheet date. We invest in highly-rated securities, and our investment policy limits the
amount of credit exposure to any one issuer, industry group and currency. The policy requires investments to be
investment grade, with the primary objective of minimizing the potential risk of principal loss and providing
liquidity of investments sufficient to meet our operating and capital spending requirements and debt repayments.
We classify our marketable debt securities as either short-term or long-term based on each instrument’s
underlying contractual maturity date and as to whether and when we intend to sell a particular security prior to its
maturity date. Marketable debt securities with maturities greater than 90 days at the date of purchase and
12 months or less remaining at the balance sheet date will be classified as short-term and marketable debt
securities with maturities greater than 12 months from the balance sheet date will generally be classified as long-
term. We classify our marketable equity securities, limited to money market funds and mutual funds, as either
short-term or long-term based on the nature of each security and its availability for use in current operations. Our
marketable debt and equity securities are carried at fair value, with the unrealized gains and losses, net of taxes,
reported in accumulated other comprehensive income (loss) as a component of shareholders’ equity. Fair values
are determined for each individual security in the investment portfolio.
Realized gains and losses on the sale of securities are determined by specific identification of each
security’s cost basis. We may sell certain of our marketable securities prior to their stated maturities for strategic
reasons including, but not limited to, anticipation of credit deterioration and liquidity and duration management.
The weighted average maturity of our total invested cash shall not exceed 18 months, and no security shall have a
final maturity date greater than three years.
We continually review our available for sale securities to determine whether a decline in fair value below
the carrying value is other than temporary. When evaluating an investment for other-than-temporary impairment,
we review factors such as the length of time and extent to which fair value has been below its cost basis, the
financial condition of the issuer and any changes thereto, and our intent to sell, or whether it is more likely than
not it will be required to sell the investment before recovery of the investment’s cost basis. Once a decline in fair
value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the
investment is established. If we do not intend to sell the debt security, but it is probable that we will not collect
all amounts due, then only the impairment due to the credit risk would be recognized in earnings and the
remaining amount of the impairment would be recognized in accumulated other comprehensive loss within
stockholders’ equity.
Cash consists of cash deposits held in global financial institutions.
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