TripAdvisor 2014 Annual Report Download

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2014 Annual Report
and
Notice of 2015 Annual Meeting and
Proxy Statement

Table of contents

  • Page 1
    2014 Annual Report and Notice of 2015 Annual Meeting and Proxy Statement

  • Page 2

  • Page 3
    ... tour in Barcelona, you'll be able to check availability, see prices, and complete your booking, all on TripAdvisor. Restaurants: In May we acquired LaFourchette (French for "The Fork") - the leading mobile restaurant reservation business in Europe - which helps restaurant owners manage tables and...

  • Page 4
    ... bookings, and revenue. We ended the year with more than 650,000 vacation rental listings, driven by our free-to-list business. In 2015, we expect to see a continued shift towards transactions, and we are focused on listings growth, owner engagement, user awareness, and product enhancements to drive...

  • Page 5
    In closing, 2014 was an exciting year. I would like to thank TripAdvisor's users, partners, employees and shareholders for their continued support. Happy Travels, Stephen Kaufer Co-founder, President and Chief Executive Officer TripAdvisor, Inc.

  • Page 6

  • Page 7
    2014 Annual Report on Form 10-K

  • Page 8

  • Page 9
    ...937 based on the closing price on The NASDAQ Global Select Market on such date. For the purpose of the foregoing calculation only, all directors and executive officers of the registrant are assumed to be affiliates of the registrant. Class Outstanding Shares at February 6, 2015 Common Stock, $0.001...

  • Page 10
    ...Financial Data...Management's Discussion and Analysis of Financial Condition and Results of Operations ... Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...Item 8. Item 9. Financial Statements and Supplementary Data ...Changes in and Disagreements with Accountants on Accounting...

  • Page 11
    ... of new information, future events or otherwise. Investors should also refer to our quarterly reports on Form 10-Q for future periods and current reports on Form 8-K as we file them with the U.S. Securities and Exchange Commission, or the SEC, and to other materials we may furnish to the public from...

  • Page 12
    ... world. A leading online and mobile reservation platform for restaurants with an extensive network of restaurant partners in Europe. Travel metasearch engine, much like TripAdvisor, operating in China. A Spanish-based vacation rental site, featuring properties listed globally and the world's largest...

  • Page 13
    ... the world. Travel-oriented community website featuring user-contributed travel guides for locations worldwide. 2014 Highlights Following are some business highlights for fiscal 2014: x We reached more than 200 million reviews and opinions on more than 4.5 million places to stay, places to eat and...

  • Page 14
    ... partners' booking sites and contextually-relevant branded and unbranded text links. Our click-based advertising partners are predominantly online travel agencies, or OTAs, and direct suppliers in the hotel, airline and cruise product categories. Click-based advertising is generally priced on a cost...

  • Page 15
    ... subscribers to list, for a contracted period of time, a website URL, email address and phone number on our TripAdvisor-branded websites, as well as to post special offers for travelers. In addition, we earn revenue from making hotel room nights available for booking on our transaction-based sites...

  • Page 16
    ... and tablet platforms. During 2014 we introduced Instant Booking, to our mobile users. This product feature allows travelers to complete a hotel reservation, powered by our OTA and hotelier partners, while remaining on the TripAdvisor mobile app. We continue to integrate this feature onto desktop...

  • Page 17
    ... as TripAdvisor-branded travel awards, certificates, stickers and badges and television advertising. Online advertising channels we have used in the past to amplify our brand include, but are not limited to: customer relationship management email campaigns, or CRM; social networks; organic search...

  • Page 18
    ... technologies. We make significant investments in product and feature development, data management, personalization technologies, scalable infrastructures, networking, data warehousing, and search engine technologies. The TripAdvisor-branded websites are powered primarily using Java programming...

  • Page 19
    ... developing online commerce and facilitating internet traffic are creating inroads into online travel. Competition from these parties could cause us to lose advertising customers or shares of advertising expenditures. For example, Google has launched "Hotel Finder", a search tool that enables users...

  • Page 20
    ... from services related to hotels, including click-based and display-based advertising revenue from making hotel room nights, airline reservations, and cruise reservations available for price comparison and booking, as well as subscription-based products such as Business Listings, transaction-based...

  • Page 21
    ... available for rental and connect with travelers using a subscription-based fee structure or a free-to-list, commission per booking based option. Our vacation rental inventory currently includes full home rentals, condos, villas, beach rentals, cabins, cottages, and many other accommodation types...

  • Page 22
    ... current advertisers will fulfill their obligations under existing contracts, continue to advertise beyond the terms of existing contracts or enter into any additional contracts with us. Click-based advertising accounts for the majority of our advertising revenue. Any changes we make to our business...

  • Page 23
    ... with respect to online advertising in general, or TripAdvisor traffic in particular, they might reduce the prices they are willing to pay for our advertising products, which would have an adverse effect on our business, financial condition and results of operations. Growth in the use of devices...

  • Page 24
    ... major hotel companies launched an online hotel reservation service with a stated goal of driving consumers directly to their brand websites thereby reducing the share receive by online travel agents. They may also attempt to improve their competitive position by offering lower room rates, better...

  • Page 25
    ... affect our business. Certain key metrics, such as the number of our active users, unique visitors, total traffic and number of reviews and opinions, are calculated, in some cases, using internal company data and, in other cases, relying on data from third parties. While these numbers are based on...

  • Page 26
    ... make our websites and smartphone and tablet computing applications useful for travelers. Our competitors are continually developing innovations in online travel-related services and features. As a result, we are continually working to improve our business model and user experience in order to drive...

  • Page 27
    ... and expenses in integrating the operations, products, technology, privacy protection systems, information systems or personnel of the acquired company; Costs associated with litigation or other claims relating to the acquired company; Impairment of relationships with employees, suppliers and...

  • Page 28
    ...continue to grow, we must effectively integrate, develop and motivate a large number of new employees, including employees in international markets, while maintaining the beneficial aspects of our company culture. If we do not manage the growth of our business and operations effectively, the quality...

  • Page 29
    ... We operate in a number of jurisdictions outside of the United States and intend to continue to expand our international operations. To achieve widespread acceptance in new countries and markets, we must continue to tailor our services and business model to the unique circumstances of such countries...

  • Page 30
    ...the promulgation of new laws, rules and regulations applicable to us and our business, including those relating to the Internet and online commerce, Internet advertising, consumer protection and privacy. Unfavorable changes could decrease demand for products and services, limit marketing methods and...

  • Page 31
    ... over the Internet, online editorial and usergenerated content, user privacy, behavioral targeting and online advertising, taxation, liability for third-party activities and the quality of products and services. Our current business partner arrangements with third parties, including Facebook, could...

  • Page 32
    ... of personally identifiable information or other user data, may result in governmental enforcement actions, litigation or public statements that could harm our reputation and cause our customers and members to lose trust in us, which could have an adverse effect on our business, brand, market share...

  • Page 33
    ... of our websites unavailable for short periods of time as well as unauthorized access of our systems and data. We have acquired a number of companies over the years and may continue to do so in the future. While we make significant efforts to address any information technology security issues...

  • Page 34
    ...General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more difficult for stockholders or potential acquirers...

  • Page 35
    ... 40 other locations across North America, Europe and Asia Pacific, including New York, Boston, London, and Beijing, pursuant to leases with expiration dates through November 2024. These leases are primarily for our sales offices, subsidiary headquarters, and international management teams. Item...

  • Page 36
    ... Equity Securities Market Information Our common stock is quoted on NASDAQ under the ticker symbol "TRIP." On February 6, 2015, the closing price of our common stock reported on NASDAQ was $68.58 per share. Our Class B common stock is not listed and there is no established public trading market for...

  • Page 37
    ...indicative of future price performance. Data for the S&P 500 Index, the NASDAQ Composite Index, and the RDG Internet Composite Index assume reinvestment of dividends. We have never paid dividends on our common stock. COMPARISON OF 3 YEAR CUMULATIVE TOTAL RETURN* Among TripAdvisor, Inc., the S&P 500...

  • Page 38
    ... during the year ended December 31, 2014. In February 2013, we announced that our Board of Directors authorized the repurchase of $250 million of our shares of common stock under a share repurchase program. We have in the past, and intend to use in the future, available cash from operations to fund...

  • Page 39
    ...financial information pertaining to the periods preceding December 21, 2011 have been presented on a combined basis and reflect the results of TripAdvisor that were ultimately transferred to us as part of the Spin-Off.  2014 Year Ended December 31, 2013 2012 2011 (in millions, except per share data...

  • Page 40
    ...growth, including Instant Booking, international expansion and innovations in the mobile user experience. We are also investing in display-based advertising, Business Listings, Vacation Rentals, Restaurants and Attractions. As the largest online travel website, we are an attractive marketing channel...

  • Page 41
    ... hotel shoppers as a key indicator of revenue growth. We use the term "hotel shoppers" to refer to visitors who view either a listing of hotels in a city or a specific hotel page. The number of hotel shoppers tends to vary based on seasonality of the travel industry and general economic conditions...

  • Page 42
    ... strategic growth opportunities, allowing us to attract new consumers and develop unique and effective advertising solutions. Consumers are increasingly using online social media channels, such as Facebook and Twitter, as a means to communicate and exchange information, including travel information...

  • Page 43
    ... mobile development efforts is Instant Booking, which we integrated into our smartphone sessions in 2014. This product feature allows travelers to complete a hotel reservation, powered by our OTA and hotelier partners, while remaining on the TripAdvisor mobile app. Continued Reliance on Click-Based...

  • Page 44
    ... Selected Financial Data (in millions, except per share data) Year ended December 31, 2013 2012 % Change 2014 vs. 2013 2013 vs. 2012 2014 Revenue...$ Costs and expenses: Cost of revenue (exclusive of amortization) (1) ...Selling and marketing (2) ...Technology and content (2) ...General and...

  • Page 45
    ... of internal use software and website development; (4) amortization of intangible assets; (5) stock-based compensation; and (6) non-recurring expenses. Adjusted EBITDA is the primary metric by which management evaluates the performance of its business and on which internal budgets are based. In...

  • Page 46
    ...and Vacation Rentals products, as well as revenue generated by the businesses we acquired during 2014 of $43 million. 2013 vs. 2012 Revenue increased $182 million during the year ended December 31, 2013 when compared to the same period in 2012, primarily due to an increase in click-based advertising...

  • Page 47
    ... when compared to the same period in 2013. This was driven by growth in Vacation Rentals, primarily due to our free-to-list commission-based booking model, as well as by incremental revenue, primarily related to our 2014 acquisitions of Lafourchette and Viator. Adjusted EBITDA in our Other segment...

  • Page 48
    ... and growth in international hotel shoppers. Consolidated Expenses Cost of Revenue Cost of revenue consists of expenses that are directly related or closely correlated to revenue generation, including direct costs, such as ad serving fees, flight search fees, transaction fees and data center costs...

  • Page 49
    ... increased data center costs, driven by higher site traffic; increased merchant credit card and transaction fees, driven by additional transaction costs from our recent business acquisitions and free-to-list growth in our Vacation Rental business; and customer support costs. In total, our restaurant...

  • Page 50
    ... to support business growth, including international expansion, enhanced site features, extending our products onto smartphone and tablet platforms, and development of our hotel metasearch product, as well as an increase in stock based compensation and additional personnel costs related to employees...

  • Page 51
    ...on purchased definite lived intangibles related to our 2014 business acquisitions. Refer to "Note 3- Acquisition" in the notes to our consolidated financial statements for additional information on our acquisitions. 2013 vs. 2012 Amortization of intangible assets did not materially change during the...

  • Page 52
    ... the Singapore Economic Development Board in 2011. Our effective tax rate is partially offset by state income taxes, non-deductible stock compensation and accruals on uncertain tax positions. The United Kingdom statutory tax rate is set to decrease from 21% to 20% effective April 1, 2015, which will...

  • Page 53
    ... treasury management and global cash deployment. Additionally, during the third quarter of 2013, Massachusetts enacted a statute that changed how sales are apportioned from being a cost of performance measure to market based sourcing, which resulted in a lower overall state effective tax rate...

  • Page 54
    ...are borrowing under the one-month interest rate period. The current interest rates are based on current assumptions, leverage and LIBOR rates and do not take into account that rates will reset periodically. A 25 basis point change in the interest rate on the current Term Loan balance would result in...

  • Page 55
    ...in 2013. We also lease an aggregate of approximately 470,000 square feet at approximately 40 other locations across North America, Europe and Asia Pacific, in cities such as, New York, Boston, London, and Beijing, primarily for our sales offices, subsidiary headquarters, and international management...

  • Page 56
    ... ongoing working capital requirements, capital expenditures, business growth initiatives, meet our long term debt obligations and other financial commitments, fund our new corporate lease obligations, share repurchases and fund any potential acquisitions for at least the next twelve months. However...

  • Page 57
    ... to the introduction in the third quarter of 2013 of the net share settlement of the majority of our stock options and an increase in payments of minimum withholding taxes related to net share settlement of equity awards of $19 million in 2014. 2013 vs. 2012 Operating Activities For the year ended...

  • Page 58
    ... financial statements. A discussion of information about the nature and rationale for our critical accounting estimates is below. Business Combination Valuations and Recoverability of Goodwill, Indefinite and Definite-Lived Intangible Assets Goodwill. We account for acquired businesses using...

  • Page 59
    ... to access capital, (c) changes in the online travel industry, (d) changes in the level of competition, (e) comparison of our current financial performance to historical and budgeted results, and (f) changes in excess market capitalization over book value based on our current common stock price and...

  • Page 60
    ... for further information on income taxes. Stock-Based Compensation Stock Options The exercise price for all stock options granted by us to date has been equal to the market price of the underlying shares of common stock at the date of grant. In this regard, when making stock option awards, our...

  • Page 61
    ... 4- Stock Based Awards and Other Equity Instruments" in the notes to our consolidated financial statements for further information on current year equity award activity. Websites and Internal Use Software Development Costs We capitalize certain costs incurred during the application development stage...

  • Page 62
    ... the service is delivered. Vacation Rentals. We generate revenue from customers for online advertising listing services related to the listing of their properties for rent on a subscription basis, over a fixed-term, or on a free-to-list option. Payments for term-based paid subscriptions received...

  • Page 63
    ... from changes in interest rates for the years ended December 31, 2014, 2013 or 2012. Foreign Currency Exchange Rates We conduct business in certain international markets, primarily the European Union, the United Kingdom, Singapore, Australia and China. Because we operate in international markets, we...

  • Page 64
    .... Our current derivative contracts principally address foreign exchange fluctuation risk for the Euro versus the U.S. Dollar. We account for our derivative instruments as either assets or liabilities and carry them at fair value. As of December 31, 2014 and 2013, we had outstanding forward currency...

  • Page 65
    ... Data Index to Financial Statements and Supplementary Data: Report of Independent Registered Public Accounting Firm - KPMG, LLP...Report of Independent Registered Public Accounting Firm - Ernst & Young, LLP ...Consolidated Statements of Operations for the years ended December 31, 2014, 2013...

  • Page 66
    ..., in accordance with the standards of the Public Company Accounting Oversight Board (United States), TripAdvisor, Inc.'s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of...

  • Page 67
    ... 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United...

  • Page 68
    TRIPADVISOR, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year ended December 31, 2013 2014 2012 Revenue (Note 2) ...Costs and expenses: Cost of revenue (1) ...Selling and marketing (2) ...Technology and content (2) ...General and administrative (2) ......

  • Page 69
    TRIPADVISOR, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) 2014 Year ended December 31, 2013 2012 Net income ...$ Other comprehensive income (loss): Foreign currency translation adjustments (1) ...Total other comprehensive (loss) income ...Comprehensive income ...Less: ...

  • Page 70
    ... BALANCE SHEETS (in millions, except share and per share data) December 31, 2014 December 31, 2013 ASSETS Current assets: Cash and cash equivalents (Note 5) ...Short-term marketable securities (Note 5) ...Accounts receivable, net of allowance for doubtful accounts of $7 and $3 at December 31...

  • Page 71
    ... stock related to exercise of options and vesting of RSUs...Repurchase of common stock ...Tax benefits on equity awards, net ...Minimum withholding taxes on net share settlements of equity awards ...Stock-based compensation ...Balance as of December 31, 2013...Net income attributable to TripAdvisor...

  • Page 72
    ...internal-use software and website development ...Stock-based compensation expense ...Amortization of intangible assets ...Amortization of deferred financing costs ...Amortization of discounts and premiums on marketable securities, net...Deferred tax (benefit) expense...Excess tax benefits from stock...

  • Page 73
    ... of our voting power. Description of Business TripAdvisor is an online travel company, empowering users to plan and book the perfect trip. TripAdvisor's travel research platform aggregates reviews and opinions of members about accommodations, destinations, activities and attractions, and restaurants...

  • Page 74
    ... of three operating segments, which include our Vacation Rentals, Restaurants and Attractions businesses. Our operating segments are determined based on how our chief operating decision maker manages our business, regularly assesses information and evaluates performance for operating decision...

  • Page 75
    ...We pay the customer or property owner after the travelers' stay. Cost of Revenue Cost of revenue consists of expenses that are directly related or closely correlated to revenue generation, including direct costs, such as ad serving fees, flight search fees, transaction fees and data center costs. In...

  • Page 76
    ... General and administrative expense consists primarily of personnel and related overhead costs, including executive leadership, finance, legal and human resource functions and stock-based compensation as well as professional service fees and other fees including audit, legal, tax and accounting...

  • Page 77
    ... Our goal in managing our foreign exchange risk is to reduce, to the extent practicable, our potential exposure to the changes that exchange rates might have on our earnings, cash flows and financial position. We do not use derivatives for trading or speculative purposes. We account for our...

  • Page 78
    ... outstanding longer than the contractual payment terms as past due. We determine our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history, a specific customer's ability to pay its obligations to us, and the condition...

  • Page 79
    ... to access capital, (c) changes in the online travel industry, (d) changes in the level of competition, (e) comparison of our current financial performance to historical and budgeted results, and (f) changes in excess market capitalization over book value based on our current common stock price and...

  • Page 80
    ... to access capital, (c) changes in the online travel industry, (d) changes in the level of competition, (e) comparison of our current financial performance to historical and budgeted results, (f) changes in excess market capitalization over book value based on our current common stock price and...

  • Page 81
    ... estimated grant-date fair value of stock options is calculated using a Black-Scholes Merton option-pricing model ("BlackScholes model"). The Black-Scholes model incorporates assumptions to value stock-based awards, which includes the risk-free rate of return, expected volatility, expected term and...

  • Page 82
    ... booking related to our vacation rental, attractions and transaction-based businesses and we record these amounts, net of commissions, on our consolidated balance sheets as deferred merchant payables. We pay the hotel, destination activity operators or vacation rental owners after the travelers' use...

  • Page 83
    ...that we would issue upon the assumed exercise of outstanding common equivalent shares related to stock options and the vesting of restricted stock units using the treasury stock method, and (iii) if dilutive, performance based awards based on the number of shares that would be issuable as of the end...

  • Page 84
    ..., such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods. These totals do not include 155,000 performance based options and 44,000 performance based RSUs representing the right to acquire 199,000 shares of common stock for...

  • Page 85
    ... impact on our consolidated financial statements and related disclosures. NOTE 3: ACQUISITIONS We acquired a number of businesses during the years ended December 31, 2014, 2013 and 2012. These business combinations were accounted for as purchases of businesses under the acquisition method. The...

  • Page 86
    companies; Vacation Home Rentals, a U.S.-based vacation rental website featuring more than 14,000 properties around the world purchased in May 2014; London-based Tripbod, a travel community that helps connect travelers to local experts purchased in May 2014; Lafourchette, a provider of an online and...

  • Page 87
    ...to stock-based awards, primarily stock options and RSUs, on our consolidated statements of operations during the periods presented: Year ended December 31, 2013 (in millions) 2014 2012 Selling and marketing ...$ Technology and content...General and administrative ...Total stock-based compensation...

  • Page 88
    ... other stock-based awards to our directors, officers, employees and consultants. The summary of the material terms of the 2011 Incentive Plan is qualified in its entirety by the full text of the 2011 Incentive Plan previously filed. As of December 31, 2014, the total number of shares available for...

  • Page 89
    ...value of stock option grants under the 2011 Plan and Viator Plan has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for the periods presented: December 31, 2013 2014 2012 Risk free interest rate ...Expected term (in...

  • Page 90
    ... our cash and available-for-sale securities' amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short and long-term marketable securities as of December 31, 2014 and December 31, 2013 (in millions...

  • Page 91
    ... and other current liabilities on our consolidated balance sheets. We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active...

  • Page 92
    ... to "Note 12 - Commitments and Contingencies," for additional information on our future corporate headquarters lease. As of December 31, 2014 and 2013, our recorded capitalized software and website development costs, net of accumulated amortization, were $61 million and $46 million, respectively...

  • Page 93
    ... of changes in foreign exchange rates to goodwill. See "Note 16-Segments and Geographic Information" for information on our reporting segment changes in the fourth quarter of 2014. Intangible assets, which were acquired in business combinations and recorded at fair value on the date of purchase...

  • Page 94
    ...29 27 24 42 184 The Term Loan and any loans under the Revolving Credit Facility bear interest by reference to a base rate or a Eurocurrency rate, in either case plus an applicable margin based on our leverage ratio. We are also required to pay a quarterly commitment fee, on the average daily unused...

  • Page 95
    Total outstanding borrowings under the Credit Agreement consist of the following: December 31, December 31, 2014 2013 (in millions) Short-Term Debt: Term Loan ...Total Short-Term Borrowings ...Long-Term Debt: Term Loan ...Total Long-Term Borrowings... $ $ $ $ 40 $ 40 $ 260 $ 260 $ 40 40 300 300 ...

  • Page 96
    ... (12) (1) (4) (17) 96 $ 48 $ 9 17 74 6 1 (2 ) 5 79 $ 56 6 30 92 (3) - (2) (5) 87 As of December 31, 2014, our current income tax receivable and income tax payable balances represent amounts that we will receive and pay, respectively, to the Internal Revenue Service and other tax authorities. 86

  • Page 97
    ... 31, 2014 and 2013 are as follows: December 31, 2013 (in millions) 2014 Deferred tax assets: Stock-based compensation ...Net operating loss carryforwards ...Provision for accrued expenses ...Deferred rent...Build-to-suit lease ...Foreign advertising spend ...Other ...Total deferred tax assets...

  • Page 98
    ... the Singapore Economic Development Board accepted our application to receive a tax incentive under the International Headquarters Award. This incentive provides for a reduced tax rate on qualifying income of 5% as compared to Singapore's statutory tax rate of 17% and is conditional upon our meeting...

  • Page 99
    ... the Premises to TA LLC as TripAdvisor's new corporate headquarters for an initial term of 15 years and 7 months. If the landlord fails to deliver the Premises according to the schedule, subject to certain conditions, TA LLC may be entitled to additional free rent, or in extreme cases, a right to...

  • Page 100
    ... in 2013. Additional United States and International Locations We also lease an aggregate of approximately 470,000 square feet at approximately 40 other locations across North America, Europe and Asia Pacific, in cities such as, New York, Boston, London, and Beijing, primarily for our sales offices...

  • Page 101
    ... prime or base lending rate of a financial institution selected in accordance with the terms of the Plan and applicable law. Upon termination of service as a director of TripAdvisor, a director will receive (i) with respect to share units, such number of shares of our common stock as the share units...

  • Page 102
    ...2013, our Board of Directors authorized the repurchase of $250 million of our shares of common stock under a share repurchase program. We intend to use available cash and future cash from operations to fund repurchases under the share repurchase program. The repurchase program has no expiration date...

  • Page 103
    ... Annual Report on Form 10K as Exhibit 10.2. Refer to "Note 9- Income Taxes" above for information regarding the status of completed and ongoing IRS audits of our consolidated income tax returns with Expedia to date. Relationship between Liberty Interactive Corporation, Liberty TripAdvisor Holdings...

  • Page 104
    ... from services related to hotels, including click-based and display-based advertising revenue from making hotel room nights, airline reservations, and cruise reservations available for price comparison and booking, as well as subscription-based products such as Business Listings, transaction-based...

  • Page 105
    ... (6) (30) (14) (87) 195 Includes amortization of internal use software and website development costs. We define OIBA as net income (loss) plus: (1) provision for income taxes; (2) other income (expense), net; (3) stock-based compensation; (4) amortization of intangible assets; and (5) non-recurring...

  • Page 106
    ... through click-based advertising and, to a lesser extent, display-based advertising. In addition, we earn revenue from a combination of subscription-based and transactionbased offerings, including: Business Listings; subscription and commission-based offerings from our Vacation Rentals products...

  • Page 107
    ...our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Under the supervision and with the participation of the Company's management, including the Chief Executive Officer and President and the Chief Financial Officer...

  • Page 108
    ... 3% of total revenue, respectively, of the Company's consolidated financial statement amounts as of and for the year ended December 31,2014. Pursuant to Exchange Act Rule 13a-15(d) or 15d-15(d), management has concluded that, as of December 31,2014, our internal control over financial reporting was...

  • Page 109
    ..., 2014. Our audit of internal control over financial reporting of TripAdvisor, Inc. also excluded an evaluation of the internal control over financial reporting of Lafourchette and Viator. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United...

  • Page 110
    ... by reference to our 2015 Proxy Statement, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of our fiscal year ended December 31, 2014. Item 14. Principal Accounting Fees and Services The information required under this item...

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    PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following is filed as part of this Annual Report on Form 10-K: 1. Consolidated Financial Statements: The consolidated financial statements and report of independent registered public accounting firms required by this item are included...

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    ... 13 or 15(d) of Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRIPADVISOR, INC. By: /s/ STEPHEN KAUFER Stephen Kaufer Chief Executive Officer and President POWER OF ATTORNEY We, the undersigned...

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    ... International) Form of Restricted Stock Unit Agreement (Non-Employee Directors) Form of Restricted Stock Unit Agreement (Performance Based) Corporate Headquarters Lease with Normandy Gap-V Needham Building 3, LLC, as landlord, dated as of June 20, 2013 Guaranty dated June 20, 2013 by TripAdvisor...

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    ... Agreement between TripAdvisor LLC and Stephen Kaufer, effective as of February 11, 2014 10.22 Viator, Inc. 2010 Stock Incentive Plan 16.1 Letter of Ernst & Young, LLP dated February 11, 2014 21.1 Subsidiaries of the Registrant 23.1 Consent of KPMG, LLP, Independent Registered Public Accounting Firm...

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    Notice of 2015 Annual Meeting and Proxy Statement

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    ...the envelope provided. If you attend the Annual Meeting, you may vote in person even if you have previously returned your proxy card or have voted via the Internet or by telephone. Your vote is very important to us. Please review the instructions for each voting option described in the Notice and in...

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    ... over the Internet, beginning on April 28, 2015, to the holders of record and beneficial owners of our capital stock as of the close of business on the record date. Only stockholders and persons holding proxies from stockholders may attend the Annual Meeting. If your shares are registered in your...

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    ...Independent Registered Public Accounting Firm...Proposal 3: Advisory Vote on Compensation of Named Executive Officers ...Audit Committee Report ...Compensation Discussion and Analysis ...Executive Compensation ...Director Compensation ...Security Ownership of Certain Beneficial Owners and Management...

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    ... the close of business on April 20, 2015 as the record date for determining the holders of TripAdvisor common stock entitled to notice of and to vote at the Annual Meeting. On the record date, 130,707,574 shares of common stock and 12,799,999 shares of Class B common stock were outstanding and...

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    ... on whether you are a: x x Registered stockholder: Your shares are represented by certificates or book entries in your name on the records of the TripAdvisor's stock transfer agent and you have the right to vote those shares directly; or Beneficial stockholder: You hold your shares "in street name...

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    ... of Internet Availability of Proxy Materials and proxy card to submit a new proxy by telephone or via the Internet. Registered holders may also request a new proxy card by calling 1-800-579-1639. Other Business The Board of Directors does not presently intend to bring any business before the Annual...

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    ..., Rascoff and Shean as directors requires the affirmative vote of a plurality of the total number of votes cast by the holders of shares of TripAdvisor common stock and Class B common stock, present in person or represented by proxy, voting together as a single class. Election of Messrs. Miller...

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    ... and Chief Financial Officer of Microsoft Corporation. Mr. Maffei also currently serves as a director of the following companies: Starz, Sirius XM Holdings Inc., Live Nation Entertainment, Inc., Charter Communications, Inc. and Zillow Group, Inc. Mr. Maffei holds an M.B.A. from Harvard Business...

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    ... in 2011. He has been a general partner of Spark Capital since May 2014. He is also a director of several private Internet companies. Mr. Philips served as the Chief Executive Officer of Photon Group Limited, a holding company listed on the Australian Securities Exchange, from June 2010 to January...

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    ... Chief Financial Officer of Sony Corporation of America and, since July 2005, as Executive Vice President and Chief Strategy Officer, Sony Entertainment. Prior to joining Sony, Mr. Wiesenthal was Managing Director at Credit Suisse First Boston and head of the firm's Entertainment and Digital Media...

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    ... of internal legal positions at IAC and its subsidiaries. Previously, Mr. Kalvert held a business development position at Bolt Media Inc., a privately-held online social networking and e-commerce company, and was an associate at Debevoise & Plimpton, LLP, a New York law firm. Mr. Kalvert holds an...

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    ... continued growth of TripAdvisor and its operating businesses. We believe that it is in the best interests of our stockholders for the Board of Directors to make a determination regarding the separation or combination of these roles each time it elects a new Chairman or Chief Executive Officer based...

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    ... oversight through direct decision-making authority with respect to significant matters and the oversight of management by the Board of Directors and its committees. The President and Chief Executive Officer, the Senior Vice President, Chief Financial Officer, Chief Accounting Officer and Treasurer...

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    ... among others, the Chief Financial Officer, General Counsel, the Vice President of Tax and the Corporate Controller as well as from representatives of internal audit, the company's compliance committee and our auditors. The Audit Committee makes regular reports to the Board of Directors. In addition...

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    ...-Board Communication" or "Stockholder-Director Communication." All such letters must identify the author as a stockholder, provide evidence of the sender's stock ownership and clearly state whether the intended recipients are all members of the Board of Directors or certain specified directors...

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    ... registered public accounting firm effective immediately upon TripAdvisor's filing of its Annual Report on Form 10-K for the year ended December 31, 2013 (the "Annual Report"). The Annual Report was filed with the SEC on February 11, 2014. The reports of E&Y on TripAdvisor's consolidated financial...

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    ... registered public accounting firm for the year ended December 31, 2013. The following table sets forth aggregate fees for professional services rendered by KPMG and E&Y for the years ended December 31, 2014 and 2013, respectively. 2014 2013 Audit Fees(1) ...$ Tax Fees(2)...Other Fees ...Total Fees...

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    ...are provided with an opportunity to cast an advisory vote on the compensation of our named executive officers, or NEOs. Our Board of Directors, with the Compensation Committee and senior management, are committed to designing an effective compensation program and values the views of our stockholders...

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    ... effective system of internal control over financial reporting. TripAdvisor's independent registered public accounting firm is engaged to audit and express opinions on the conformity of our financial statements to generally accepted accounting principles and applicable rules and regulations, and the...

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    ... 11% of the world's monthly unique visitors in online travel at the end of 2014, we remain the largest travel website in the world. TripAdvisor reached nearly 175 million mobile app downloads, up 110% year over year - including downloads of TripAdvisor, TripAdvisor City Guides, JetSetter, GateGuru...

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    ... program. Mr. Kaufer, our President and Chief Executive Officer, annually reviews the performance of TripAdvisor and each named executive officer with the Compensation Committees and makes recommendations with respect to the appropriate base salary, annual cash bonus and grants of equity awards...

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    ...levels on a case-by-case basis, taking into account all relevant factors. The following chart illustrates the composition of the target total direct compensation for the Chief Executive Officer and for the other named executive officers between base salary, short term and long term compensation. All...

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    ..., prior experience, individual compensation history and salary levels of other executives within TripAdvisor and similarly situated executives at comparable companies. Base salary is typically reviewed annually, at which time management makes recommendations to the Compensation Committees...

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    ... market data for executive officers with in our peer group in comparable positions. Ms. Seidenberg's salary was set in August 2014 when TripAdvisor acquired Viator and her employment commenced. Only her annualized 2014 base salary is included in the table below. Annual Salary Increase Name 2013...

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    ...account any Share Change or Corporate Transaction (each as defined in the TripAdvisor 2011 Stock and Annual Incentive Plan, as amended (the "2011 Plan")). x In general, these performance goals reflect the minimally acceptable Company performance that must be achieved for cash bonuses to be awarded...

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    ... equity compensation utilization by peer companies, general economic conditions, and competitive compensation market data regarding award values. For specific awards to our named executive officers, management makes recommendations to the Section 16 Committee based on a variety of factors including...

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    ..., TripAdvisor assumed Ms. Seidenberg's Viator stock options covering a total of 24,943 shares that were not exchanged for cash in connection with the transaction, details of which can be found in the Outstanding Equity Awards at Fiscal Year End table. Grant Date Fair Value Number of Stock Options...

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    ... travel that is arranged using one of the TripAdvisor Media Group family of products and provides all employees, including our named executive officers, an annual holiday bonus in the form of a gift card as well as a tax gross-up payment on the value of the gift card. Compensation Program Policies...

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    ...Pandora Media, Inc. priceline.com Incorporated Shutterfly, Inc. VistaPrint N.V. The 2014 peer group remains unchanged from the peer group approved by the Compensation Committees in August, 2013. When available, management and the Compensation Committees consider competitive market compensation paid...

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    ...'s equity award grant in August 2013. For a description and quantification of change in control payments and benefits for our named executive officers, please see the section below entitled "Potential Payments Upon Termination of Change in Control." Severance In March 2014, TripAdvisor, entered...

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    ... executive officers in 2014. On February 5, 2015, the Board of Directors determined that for the fiscal year ended December 31, 2014, Mr. Dermot and Ms. Seidenberg were "executive officers" for purposes of Rule 3b-7 promulgated under the Exchange Act. Stock Awards ($)(2) Option Awards ($)(2) All...

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    ... provides information regarding the plan-based awards granted to our named executive officers in 2014. All Other Stock Awards: Number of Shares of Stock or Units(#) All Other Option Awards: Number of Securities Underlying Options(#) Exercise Price or Base Price of Option Awards ($/Sh) Grant Date...

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    ... the date of modification. Outstanding Equity Awards at Fiscal Year-End The following table provides information regarding the holdings of stock options and RSUs by our named executive officers as of December 31, 2014. The market value of the RSUs is based on the closing price of TripAdvisor common...

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    ... were awarded by Viator pursuant to the Viator 2010 Stock Incentive Plan which was assumed by TripAdvisor. The shares of common stock subject to these options became exercisable in four equal annual installments commencing on the first anniversary of the grant date. The shares underlying this option...

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    ... the market price of TripAdvisor's common stock at exercise and the exercise price of the options. The amounts reported in this column represent the gross number of shares acquired upon the vesting of RSUs without taking into account any shares that may have been withheld to satisfy applicable tax...

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    ...x x TripAdvisor will pay Mr. Kaufer (or his estate) his base salary through the end of the month in which the termination occurs; any outstanding unvested equity awards that vest less frequently than annually shall be treated as though such awards vested annually; and any unvested stock options held...

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    ... to be restricted from competing with TripAdvisor or any of its subsidiaries or affiliates or soliciting their employees, consultants, independent contractors, customers, suppliers or business partners, among others, during the term of his employment and through the period ending 18 months after the...

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    ... 2013. Effective March 31, 2014, TripAdvisor, LLC entered into a new employment agreement with Ms. Bradley, with a two-year term and on substantially the same terms as the expired employment agreement and those described above for Mr. Kalvert. On April 2, 2015, Ms. Bradley informed TripAdvisor...

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    ..., suppliers or business partners, among others, through the longer of (i) the completion of the term of the employment agreement and (ii) nine months after the termination of employment. Barrie Seidenberg Offer Letter Effective August 8, 2014, TripAdvisor, LLC entered into an offer letter with Ms...

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    ... the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership of the Company existed prior to the Business Combination and (C) at least a majority of the members of the board of directors (or equivalent governing body, if applicable) of...

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    ... with a Change in Control. The amounts shown in the table assume that the triggering event was effective as of December 31, 2014 and that the price of TripAdvisor common stock on which certain of the calculations are based was the closing price of $74.66 per share on the NASDAQ Stock Market on...

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    ...31, 2014 regarding shares of common stock that may be issued under TripAdvisor's equity compensation plans consisting of the 2011 Plan, the Viator Inc. 2010 Stock Incentive Plan, and the NonEmployee Director Deferred Compensation Plan. Equity Compensation Plan Information Number of securities Number...

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    ...been purchased on the date such fees would otherwise be payable or (ii) credited to a cash fund. If any dividends are paid on TripAdvisor common stock, dividend equivalents will be credited on the share units. The cash fund will be credited with deemed interest at an annual rate equal to the average...

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    ... annual cash retainer amounts for services in 2014, including fees with respect to which directors elected to defer and credit towards the purchase of share units representing shares of TripAdvisor common stock pursuant to the Company's Non-Employee Director Deferred Compensation Plan. Stock awards...

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    ... directors, as a group. In each case, except as otherwise indicated in the footnotes to the table, the shares are owned directly by the named owners, with sole voting and dispositive power. Unless otherwise indicated, beneficial owners listed in the table may be contacted at TripAdvisor's corporate...

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    ...common stock outstanding on April 20, 2015. Common Stock Shares % Class B Common Stock Shares % Percent (%) of Votes (All Classes) Beneficial Owner 5% Beneficial Owners Liberty TripAdvisor Holdings, Inc...12300 Liberty Boulevard Englewood, CO 80112 BlackRock, Inc...55 East 52nd Street New York, NY...

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    ...of April 20, 2015. Section 16(a) Beneficial Ownership Reporting Compliance Pursuant to Section 16(a) of the Exchange Act, TripAdvisor officers and directors and persons who beneficially own more than 10% of a registered class of TripAdvisor's equity securities are required to file initial statements...

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    ...27, 2014 LTRIP became a separate, publicly traded company and 100% of Liberty's interest in TripAdvisor was held by LTRIP. As a result of these transactions, as of the record date, LTRIP beneficially owned 18,159,752 shares of our common stock and 12,799,999 shares of our Class B common stock, which...

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    WHERE YOU CAN FIND MORE INFORMATION AND INCORPORATION BY REFERENCE TripAdvisor files annual, quarterly and current reports, proxy statements and other information with the SEC. TripAdvisor's filings are available to the public over the Internet at the SEC's website at http://www.sec.gov. You may ...

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    ...Global Product Barbara Messing Chief Marketing Officer Bryan Saltzburg General Manager, New Initiatives Corporate and Stockholder Information Headquarters TripAdvisor, Inc. 141 Needham Street Newton, Massachusetts 02464 Exchange Listing and Ticker Symbol NASDAQ Global Select Market, "TRIP" Annual...

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