TripAdvisor 2014 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2014 TripAdvisor annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 172

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172

54
statements of operations and have recorded foreign exchange losses of $10 million, $0 million and $3 million for the years ended
December 31, 2014, 2013 and 2012, respectively, in other, net on our consolidated statements of operations.
We currently manage our exposure to foreign currency risk through internally established policies and procedures. To the extent
practicable, we minimize our foreign currency exposures by maintaining natural hedges between our current assets and current
liabilities in similarly denominated foreign currencies, as well as, using derivative financial instruments. We use foreign exchange
derivative contracts to manage certain short-term foreign currency risk to try and reduce the effects of fluctuating foreign currency
exchange rates on our cash flows denominated in foreign currencies.
Our objective is to hedge only those currency exposures that can be confidently identified and quantified and that may result in
significant impacts to our cash or the consolidated statement of operations. Our policy does not allow speculation in derivative
instruments for profit or execution of derivative instrument contracts for which there are no underlying exposures. We do not use
financial instruments for trading purposes and are not a party to any leveraged derivatives.
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 contracts not designated as hedging contracts with a
notional value of $20 million and $5 million, respectively. These contracts are all short-term in nature. The fair value of these
derivatives at both December 31, 2014 and 2013, were not material and are recorded in accrued expenses and other current liabilities
on our consolidated balance sheets. For the years ended December 31, 2014 and 2013, expense related to our derivatives contracts was
recorded to other, net on our consolidated statements of operations and was not material. A hypothetical 10% change of the foreign
exchange rates relative to the U.S. Dollar, with all other variables held constant, would not have a material impact on the fair value of
our outstanding derivatives as of December 31, 2014 and 2013. Refer to “Note 5— Financial Instruments” in the notes to the
consolidated financial statements for further detail on our derivative instruments.
As we increase our operations in international markets, our exposure to potentially volatile movements in foreign currency
exchange rates increases. The economic impact to us of foreign currency exchange rate movements is linked to variability in real
growth, inflation, interest rates, governmental actions and other factors. These changes, if material, could cause us to adjust our
foreign currency risk strategies.