TripAdvisor 2015 Annual Report Download - page 58

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statementsofoperationsandhaverecordedforeignexchangelossesof$6million,$11millionand$0millionfortheyearsendedDecember31,2015,2014and
2013,respectively,ininterestincomeand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.Wedonotusefinancialinstrumentsfortrading
purposesandarenotapartytoanyleveragedderivatives.
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accountforourderivativeinstrumentsaseitherassetsorliabilitiesandcarrythematfairvalue.
OurcurrentderivativecontractsprincipallyaddressforeignexchangefluctuationriskfortheEuroversustheU.S.Dollar.AsofDecember31,2015and
2014,wehadoutstandingforwardcurrencycontractsnotdesignatedashedgingcontractswithanotionalvalueof$25millionand$20million,respectively.These
contractshadmaturitiesoflessthan90days.ThefairvalueofthesederivativesatbothDecember31,2015and2014,werenotmaterial.Fortheyearsended
December31,2015and2014,gainsrelatedtoourderivativescontractswererecordedtointerestincomeandother,netonourconsolidatedstatementsofoperations
of$2millionand$1million,respectively.Ahypothetical10%changeoftheforeignexchangeratesrelativetotheU.S.Dollar,withallothervariablesheld
constant,wouldresultinanapproximatechangeoflessthan$3millioninthefairvalueofouroutstandingforwardcurrencycontractsatDecember31,2015,anda
resultingequivalentgainorlossonourconsolidatedstatementofoperations.Referto“Note5—Financial Instruments ”inthenotestotheconsolidatedfinancial
statementsinItem8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.
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