TripAdvisor 2015 Annual Report Download - page 92
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ThefollowingtablesummarizesourmaterialcommitmentsandobligationsasofDecember31,2015:
By Period
Total
Less than
1 year 1 to 3 years 3 to 5 years
More than
5 years
(in millions)
Propertyleases,netofsubleaseincome(1) $ 250 $ 22 $ 45 $ 44 $ 139
Expectedinterestpaymentson2015CreditFacility(2) 15 3 7 5 —
Total(3) $ 265 $ 25 $ 52 $ 49 $ 139
(1) Estimatedfutureminimumrentalpaymentsunderoperatingleaseswithnon-cancelableleaseterms,includingourcorporateheadquartersleaseinNeedham,
MA.
(2) Theamountsincludedasexpectedinterestpaymentsonthe2015CreditFacilityinthistablearebasedonthecurrenteffectiveinterestrateandoutstanding
borrowingsasofDecember31,2015,but,couldchangesignificantlyinthefuture.Amountsassumethatourexistingdebtisrepaidatexpirationdateanddo
notassumeadditionalborrowingsorrefinancingsofexistingdebt.Referto“Note8—Debt ”foradditionalinformationonour2015CreditFacility.
(3) Excludedfromthetablewas$87millionofunrecognizedtaxbenefits,includingaccruedinterest,thatwehaverecordedinotherlong-termliabilitiesonour
consolidatedbalancesheetforwhichwecannotmakeareasonablyreliableestimateoftheamountandperiodofpayment.Wedonotanticipateanymaterial
changesinthenextyear.
Office Lease Commitments
Wehavecontractualobligationsintheformofoperatingleasesforofficespaceforwhichwerecordtherelatedexpenseonamonthlybasis.Certainleases
containperiodicrentescalationadjustmentsandrenewaloptions.Rentexpenserelatedtosuchleasesisrecordedonastraight-linebasis.Operatinglease
obligationsexpireatvariousdateswiththelatestmaturityinDecember2030.FortheyearsendedDecember31,2015,2014and2013,werecordedrentalexpense
of$19million,$17millionand$11million,respectively.
Corporate Headquarters Lease
InJune2013,TripAdvisorLLC(“TALLC”),ourindirect,whollyownedsubsidiary,enteredintoalease,foranewcorporateheadquarters(the“Lease”).
PursuanttotheLease,thelandlordbuiltanapproximately280,000squarefootrentalbuildinginNeedham,Massachusetts(the“Premises”),andleasedthe
PremisestoTALLCasournewcorporateheadquartersforaninitialtermof15yearsand7monthsorthroughDecember2030.TALLCalsohasanoptionto
extendthetermoftheLeasefortwoconsecutivetermsoffiveyearseach.
Becausewewereinvolvedintheconstructionprojectandwereresponsibleforpayingaportionofthecostsofnormalfinishworkandstructuralelements
ofthePremises,theCompanywasdeemedforaccountingpurposestobetheownerofthePremisesduringtheconstructionperiodunderbuildtosuitlease
accountingguidanceunderGAAP.Therefore,theCompanyrecordedprojectconstructioncostsduringtheconstructionperiodincurredbythelandlordasa
construction-in-progressassetandarelatedconstructionfinancingobligationonourconsolidatedbalancesheets.TheamountsthattheCompanyhaspaidor
incurredfornormaltenantimprovementsandstructuralimprovementshadalsobeenrecordedtotheconstruction-in-progressasset.
Uponcompletionofconstructionatendofthesecondquarterof2015,weevaluatedtheconstruction-in-progressassetandconstructionfinancing
obligationforde-recognitionunderthecriteriafor“sale-leaseback”treatmentunderGAAP.Weconcludedthatwehaveformsofcontinuedeconomicinvolvement
inthefacility,andthereforedidnotmeettheprovisionsforsale-leasebackaccounting.ThisdeterminationwasbasedontheCompany'scontinuinginvolvement
withthepropertyintheformofnon-recoursefinancingtothelessor.Therefore,theLeasehasbeenaccountedforasafinancingobligation.Accordingly,webegan
depreciatingthebuildingassetoveritsestimatedusefullifeandincurringinterestexpenserelatedtothefinancingobligationimputedusingtheeffectiveinterest
ratemethod.WewillbifurcateourleasepaymentspursuanttothePremisesinto:(i)aportionthatisallocatedtothebuilding(areductiontothefinancing
obligation)and;(ii)aportionthatisallocatedtothelandonwhichthebuildingwasconstructed.Theportionoftheleaseobligationsallocatedtothelandistreated
asanoperatingleasethatcommencedin2013.Thefinancingobligationisconsideredalong-termfinanceleaseobligationandisrecordedtolong-termliabilities
onourconsolidatedbalancesheet.Attheendoftheleaseterm,thecarryingvalueofthebuildingassetandtheremainingfinancingobligationareexpectedtobe
equal,atwhichtimewemayeithersurrendertheleasedassetassettlementoftheremainingfinancingobligationorextendtheinitialtermoftheleaseforthe
continueduseoftheasset.In2015,theCompanyrecorded$4millionininterestexpense,$2millionindepreciationexpenseand$1millioninrentexpenserelated
tothePremises.
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