TripAdvisor 2015 Annual Report Download - page 94

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Legal Proceedings
Intheordinarycourseofbusiness,weandoursubsidiariesarepartiestoregulatoryandlegalmattersarisingoutofouroperations.Thesemattersmay
involveclaimsinvolvingallegedinfringementofthird-partyintellectualpropertyrights(includingpatentinfringement),defamation,taxes,regulatorycompliance
privacyissuesandotherclaims.Periodically,wereviewthestatusofallsignificantoutstandingmatterstoassessanypotentialfinancialexposure.When(i)itis
probablethatanassethasbeenimpairedoraliabilityhasbeenincurredand(ii)theamountofthelosscanbereasonablyestimated,werecordtheestimatedlossin
ourconsolidatedfinancialstatementsofoperations.Weprovidedisclosuresinthenotestotheconsolidatedfinancialstatementsforlosscontingenciesthatdonot
meetbothoftheseconditionsifthereisareasonableprobabilitythatalossmayhavebeenincurredandwhethersuchlossisreasonablyestimable.Webase
accrualsmadeonthebestinformationavailableatthetimewhichcanbehighlysubjective.Althoughoccasionaladversedecisionsorsettlementsmayoccur,the
Companydoesnotbelievethatthefinaldispositionofanyofthesematterswillhaveamaterialadverseeffectonthebusiness.However,thefinaloutcomeofthese
matterscouldvarysignificantlyfromourestimates.Finally,theremaybeclaimsoractionspendingorthreatenedagainstusofwhichwearecurrentlynotaware
andtheultimatedispositionofwhichcouldhaveamaterialadverseeffectonus.
Income Taxes
WearealsounderauditbytheIRSandvariousotherdomesticandforeigntaxauthoritieswithregardstoincometaxmatters.Wehavereservedfor
potentialadjustmentstoourprovisionforincometaxesthatmayresultfromexaminationsby,oranynegotiatedagreementswith,thesetaxauthorities.Although
webelieveourtaxestimatesarereasonable,thefinaldeterminationofauditscouldbemateriallydifferentfromourhistoricalincometaxprovisionsandaccruals.
Theresultsofanauditcouldhaveamaterialeffectonourfinancialposition,resultsofoperations,orcashflowsintheperiodforwhichthatdeterminationismade.
Additionally,weearnanincreasingportionofourincome,andaccumulateagreaterportionofcashflows,inforeignjurisdictionswhichweconsider
indefinitelyreinvested.Anyrepatriationoffundscurrentlyheldinforeignjurisdictionsmayresultinhighereffectivetaxratesandincrementalcashtaxpayments.
Inaddition,therehavebeenproposalstoamendU.S.taxlawsthatwouldsignificantlyimpactthemannerinwhichU.S.companiesaretaxedonforeignearnings.
Althoughwecannotpredictwhetherorinwhatformanylegislationwillpass,ifenacted,itcouldhaveamaterialadverseimpactonourU.S.taxexpenseandcash
flows.See“Note9—Income Taxes ”aboveforfurtherinformationonpotentialcontingenciessurroundingincometaxes.
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NOTE 13: EMPLOYEE BENEFIT PLANS
Retirement Savings Plan
TheTripAdvisorRetirementSavingsPlan(the“401(k)Plan”),qualifiesunderSection401(k)oftheInternalRevenueCode.The401(k)Planallows
participatingemployees,mostofourU.S.employees,tomakecontributionsofaspecifiedpercentageoftheireligiblecompensation.Participatingemployeesmay
contributeupto50%oftheireligiblesalaryonapre-taxbasis,butnotmorethanstatutorylimits.Employee-participantsage50andovermayalsocontributean
additionalamountoftheirsalaryonapre-taxtaxbasisuptotheIRSCatch-UpProvisionLimit,orcatch-upcontributions.Employeesmayalsocontributeintothe
401(k)Planonanafter-taxbasisuptoanannualmaximumof10%.The401(k)Planhasanautomaticenrollmentfeatureat6%pre-tax.Wematch50%ofthefirst
6%ofemployeecontributionstotheplanforamaximumemployercontributionof3%ofaparticipant’seligibleearnings.The“catchupcontributions”,arenot
eligibleforemployermatchingcontributions.Thematchingcontributionsportionofanemployee’saccount,vestsaftertwoyearsofservice.ThePlanalsopermits
certainafter-taxRoth401(k)contributions.Additionally,attheendofthe401(k)Planyear,wemakeadiscretionarymatchingcontributiontoeligibleparticipants.
Thisadditionaldiscretionarymatchingemployercontributionreferredtoas“trueup”islimitedtomatchonlycontributionsupto3%ofeligiblecompensation.
Wealsohavevariousdefinedcontributionplansforourinternationalemployees.Ourcontributiontothe401(k)Planandourinternationaldefined
contributionplanswas$7million,$5million,and$5millionfortheyearsendedDecember31,2015,2014and2013,respectively,andrecordedtoour
consolidatedstatementsofoperations,respectively,forthoseyears.
TripAdvisor, Inc. Deferred Compensation Plan for Non-Employee Directors
TheCompanyalsohasaDeferredCompensationPlanforNon-EmployeeDirectors(the“Plan”).UnderthePlan,eligibledirectorswhodefertheirdirectors’
feesmayelecttohavesuchdeferredfees(i)appliedtothepurchaseofshareunits,representingthenumberofsharesofourcommonstockthatcouldhavebeen
purchasedonthedatesuchfeeswouldotherwisebepayable,or(ii)creditedtoacashfund.Thecashfundwillbecreditedwithinterestatanannualrateequalto
theweightedaverageprimeorbaselendingrateofafinancialinstitutionselectedinaccordancewiththetermsofthePlanandapplicablelaw.Uponterminationof
serviceasadirectorofTripAdvisor,adirectorwillreceive(i)withrespecttoshareunits,suchnumberofsharesofourcommonstockastheshareunitsrepresent,
and(ii)withrespecttothecashfund,acashpayment.Paymentsuponterminationwillbemadeineitheronelumpsumoruptofiveannualinstallments,aselected
bytheeligibledirectoratthetimeofthedeferralelection.
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