Expedia 2007 Annual Report Download - page 55

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Senior Executive in exchange for surrendering a portion of his vested shares to treasury or to be cancelled and
distributions to IAC of $52.8 million.
During the third quarter of 2006, we issued $500.0 million Notes for net proceeds of $495.3 million. The
Notes are due August 2018 and bear a fixed interest rate of 7.456% with interest payable semi-annually in
February and August of each year, which began in February 2007. The Notes are repayable in whole or in part
on August 15, 2013, at the option of the Note holders, and are redeemable in whole or in part at any time at
our option. As of December 31, 2007, we were in compliance with all related covenants.
The effect of foreign exchange on our cash balances denominated in foreign currency in 2007 showed a
net decrease of $20.6 million. Our foreign currency cash balances continued to benefit from foreign currency
appreciation, but to a lesser extent than 2006 due to a different mix of currencies held and relatively less
appreciation in certain of the primary foreign currencies in which we transact. The effect of foreign exchange
on our cash balances denominated in foreign currency in 2006 showed a net increase of $50.7 million from
2005 due to the benefit of foreign currency appreciation during that time period versus our reporting currency,
as well as the increase in our foreign denominated cash balances.
We currently have authorization, for which there is no fixed termination date, from our Board of Directors
to repurchase up to 20 million outstanding shares of our common stock; no such repurchases have been made
under this authorization.
We also have a shelf registration statement filed with the SEC under which Expedia, Inc. may offer from
time to time debt securities, guarantees of debt securities, preferred stock, common stock or warrants. The
shelf registration statement expires on October 15, 2010.
In our opinion, available cash, funds from operations and available borrowings will provide sufficient
capital resources to meet our foreseeable liquidity needs.
Contractual Obligations and Commercial Commitments
Our contractual obligations and commercial commitments are as follows:
• Our Notes include interest payments through maturity in 2018 based on the stated fixed rate of 7.456%.
• As we expect borrowings under our credit facility to vary, only repayment of principal outstanding at
December 31, 2007 is included. Interest expense and fees related to our credit facility were
$13.8 million in 2007.
• We have obligations related to the Ask Jeeves Notes. As a result of the Spin-Off, when holders of
IAC’s Ask Jeeves Notes convert their notes, they will receive shares of both IAC and Expedia common
stock. Under the terms of the Spin-Off, we are obligated to issue shares of our common stock to IAC
for delivery to the holders of the Ask Jeeves Notes, or pay cash in equal value, in lieu of issuing such
shares, at our option. The Ask Jeeves Notes are due June 1, 2008; upon maturity of these notes, our
obligation to satisfy demands for conversion ceases.
• The operating leases are for office space and related office equipment. We account for these leases on a
monthly basis. Certain leases contain periodic rent escalation adjustments and renewal options.
Operating lease obligations expire at various dates with the latest maturity in 2018.
• Our purchase obligations represent the minimum obligations we have under agreements with certain of
our vendors and marketing partners. These minimum obligations are less than our projected use for
those periods. Payments may be more than the minimum obligations based on actual use. In addition, if
certain obligations are met by our counterparties, our obligations will increase.
• Guarantees and LOCs are commitments that represent funding responsibilities that may require our
performance in the event of third-party demands or contingent events. These commitments consist of
stand-by LOCs and guarantees. We use our stand-by LOCs to secure payment for hotel room
transactions to particular hotel properties. The outstanding balance of our stand-by LOCs directly
reduces the amount available to us from our revolving credit facility. In addition, we provide a
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