TripAdvisor 2014 Annual Report Download - page 99

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NOTE 11: OTHER LONG-TERM LIABILITIES
Other long-term liabilities consisted of the following for the periods presented:
December 31,
2014
December 31,
2013
(in millions)
Unrecognized tax benefits (1) ................................................... $ 68 $ 38
Construction liabilities (2) ........................................................ 67 8
Other (3) .................................................................................... 19 6
Total other long-term liabilities ................................................ $ 154 $ 52
(1) See “Note 9—Income Taxes” for additional information on our unrecognized tax benefits. Amount includes accrued interest
related to this liability.
(2) We capitalize construction in progress and record a corresponding long-term liability for build-to-suit lease agreements where
we are considered the owner during the construction period for accounting purposes only. Refer to “Note 12 – Commitments
and Contingencies,” for additional information on our future corporate headquarters lease.
(3) Amounts primarily consist of long term deferred rent balances related to operating leases for office space.
NOTE 12: COMMITMENTS AND CONTINGENCIES
We have material commitments and obligations that include office space leases and expected interest on long-term debt, which
are not accrued on the consolidated balance sheet at December 31, 2014 but we expect to require future cash outflows.
Office Lease Commitments
We have contractual obligations in the form of operating leases for office space for which we record the related expense on a
monthly basis. Certain leases contain periodic rent escalation adjustments and renewal options. Rent expense related to such leases is
recorded on a straight-line basis. Operating lease obligations expire at various dates with the latest maturity in December 2030. For the
years ended December 31, 2014, 2013 and 2012, we recorded rental expense of $17 million, $11 million and $8 million, respectively.
We currently lease approximately 119,000 square feet for our corporate headquarters in Newton, Massachusetts, pursuant to a
lease with an expiration date of April 2015. We are in the process of negotiating an extension of this lease until mid-2015.
Transition to New Corporate Headquarters
In June 2013, TripAdvisor LLC (“TA LLC”), our indirect, wholly owned subsidiary, entered into a lease (the “Lease”), for a
new corporate headquarters. Pursuant to the Lease, the landlord will build an approximately 280,000 square foot rental building in
Needham, Massachusetts (the “Premises”), and thereafter lease 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 terminate the Lease. Under the Lease, TA
LLC is required to pay an initial base rent of $33.00 per square foot per year, increasing to $34.50 per square foot by the final year of
the initial term, as well as all real estate taxes and other building operating costs. TA LLC also has an option to extend the term of the
Lease for two consecutive terms of five years each.
The aggregate future minimum lease payments are $143 million and are currently scheduled to be paid, beginning in November
2015, as follows: $1 million for 2015, $9 million for 2016, $9 million for 2017, $9 million for 2018, $9 million for 2019 and
$106 million for 2020 and thereafter. The Lease has escalating rental payments and initial periods of free rent. TA LLC was also
obligated to deliver a letter of credit to the Landlord in the amount of $1 million as security deposit, which amount is subject to
increase under certain circumstances. TA LLC also has an option to extend the term of the Lease for two consecutive terms of five
years each. Subject to certain conditions, TA LLC has certain rights under the Lease, including rights of first offer to lease additional
space or to purchase the Premises if the Landlord elects to sell. In connection with the Lease, TripAdvisor entered into a Guaranty (the
“Guaranty”), pursuant to which TripAdvisor provides full payment and performance guaranty for all of TA LLC’s obligations under
the Lease.