TripAdvisor 2015 Annual Report Download - page 48

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borrowingcapacityavailableforlettersofcreditand$40millionforborrowingsonsame-daynotice.AsofDecember31,2015,wehadissued$2millionof
outstandinglettersofcreditunderthe2015CreditFacility.
Wemayvoluntarilyrepayanyoutstandingborrowingunderthe2015CreditFacilityatanytimewithoutpremiumorpenalty,otherthancustomarybreakage
costswithrespecttoEurocurrencyloans.Certainwholly-owneddomesticsubsidiariesoftheCompanyhaveagreedtoguaranteetheCompany’sobligationsunder
the2015CreditFacility.
The2015CreditFacilitycontainsanumberofcovenantsthat,amongotherthings,restrictourabilityto:incuradditionalindebtedness,createliens,enter
intosaleandleasebacktransactions,engageinmergersorconsolidations,sellortransferassets,paydividendsanddistributions,makeinvestments,loansor
advances,prepaycertainsubordinatedindebtedness,makecertainacquisitions,engageincertaintransactionswithaffiliates,amendmaterialagreementsgoverning
certainsubordinatedindebtedness,andchangeourfiscalyear.The2015CreditFacilityalsorequiresustomaintainamaximumleverageratioandcontainscertain
customaryaffirmativecovenantsandeventsofdefault,includingachangeofcontrol.Ifaneventofdefaultoccurs,thelendersunderthe2015CreditFacilitywill
beentitledtotakevariousactions,includingtheaccelerationofallamountsdueunder2015CreditFacility.AsofDecember31,2015,weareincompliancewith
allofourdebtcovenants.
Chinese Credit Facilities
Inadditiontoourborrowingsunderthe2015CreditFacility,wemaintainourChineseCreditFacilities.AsofDecember31,2015and2014,wehad$1
millionand$38millionofshorttermborrowingsoutstanding,respectively.
OurChinesesubsidiaryisenteredintoa$30million,one-yearrevolvingcreditfacilitywithBankofAmerica(the“ChineseCreditFacility—BOA”)thatis
currentlysubjecttoreviewonaperiodicbasiswithnospecificexpirationperiod.OurChineseCreditFacility—BOAcurrentlybearsinterestbasedata100%ofthe
People’sBankofChina’sbaserate,whichwas4.35%asofDecember31,2015.DuringtheyearendedDecember31,2015,theCompanymadea$22million
repaymentofouroutstandingborrowingsonourChineseCreditFacilities-BOA.AsofDecember31,2015,wehad$1millionofoutstandingborrowingsfromthe
ChineseCreditFacility—BOA.
Inaddition,ourChinesesubsidiaryisenteredintoaRMB125,000,000(approximately$20million)one-yearrevolvingcreditfacilitywithJ.P.Morgan
ChaseBank(“ChineseCreditFacility-JPM”).OurChineseCreditFacility—JPMcurrentlybearsinterestbasedata100%ofthePeople’sBankofChina’sbase
rate,whichwas4.35%asofDecember31,2015.DuringtheyearendedDecember31,2015,theCompanymadea$19millionrepaymentofouroutstanding
borrowingsonourChineseCreditFacilities-JPM.AsofDecember31,2015,therearenooutstandingborrowingsunderourChineseCreditFacility–JPM.
Office Lease Commitments
InJune2013,TripAdvisorLLC(“TALLC”),ourindirect,whollyownedsubsidiary,enteredintoalease,foranewcorporateheadquarters(the“Lease”).
PursuanttotheLease,thelandlordbuiltanapproximately280,000squarefootrentalbuildinginNeedham,Massachusetts(the“Premises”),andleasedthe
PremisestoTALLCasournewcorporateheadquartersforaninitialtermof15yearsand7monthsorthroughDecember2030.TALLCalsohasanoptionto
extendthetermoftheLeasefortwoconsecutivetermsoffiveyearseach.
Becausewewereinvolvedintheconstructionprojectandwereresponsibleforpayingaportionofthecostsofnormalfinishworkandstructuralelements
ofthePremises,theCompanywasdeemedforaccountingpurposestobetheownerofthePremisesduringtheconstructionperiodunderbuildtosuitlease
accountingguidanceunderGAAP.Therefore,theCompanyrecordedprojectconstructioncostsduringtheconstructionperiodincurredbythelandlordasa
construction-in-progressassetandarelatedconstructionfinancingobligationonourconsolidatedbalancesheets.TheamountsthattheCompanyhaspaidor
incurredfornormaltenantimprovementsandstructuralimprovementshadalsobeenrecordedtotheconstruction-in-progressasset.
Uponcompletionofconstructionatendofthesecondquarterof2015,weevaluatedtheconstruction-in-progressassetandconstructionfinancing
obligationforde-recognitionunderthecriteriafor“sale-leaseback”treatmentunderGAAP.Weconcludedthatwehaveformsofcontinuedeconomicinvolvement
inthefacility,andthereforedidnotmeettheprovisionsforsale-leasebackaccounting.ThisdeterminationwasbasedontheCompany'scontinuinginvolvement
withthepropertyintheformofnon-recoursefinancingtothelessor.Therefore,theLeasehasbeenaccountedforasafinancingobligation.Accordingly,webegan
depreciatingthebuildingassetoveritsestimatedusefullifeandincurringinterestexpenserelatedtothefinancingobligationimputedusingtheeffectiveinterest
ratemethod.WewillbifurcateourleasepaymentspursuanttothePremisesinto:(i)aportionthatisallocatedtothebuilding(areductiontothefinancing
obligation)and;(ii)aportionthatisallocatedtothelandonwhichthebuildingwasconstructed.Theportionoftheleaseobligationsallocatedtothelandistreated
asanoperatingleasethatcommencedin2013.Thefinancing
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