Expedia 2007 Annual Report Download - page 88

In addition, as of December 31, 2007, we had $21.1 million of cash held by counterparties as collateral
for our cross-currency swaps, which is classified in long-term investments and other assets on our consolidated
balance sheet.
Stock Warrants
In connection with prior transactions, IAC assumed a number of stock warrants that were adjusted to
become exercisable into IAC common stock and subsequent to the Spin-Off, also in our common stock. As of
December 31, 2007, there are approximately 42,700 of these stock warrants outstanding with expiration dates
through May 2010. Each stock warrant represents the right to receive the number of shares of IAC common
stock and Expedia common stock that the stock warrant holder would have received had the holder exercised
the stock warrant immediately prior to the Spin-Off. Under the terms of the Spin-Off between IAC and
Expedia, we assumed the obligation to deliver our common stock to the stock warrant holders upon exercise
and will receive a portion of the proceeds from exercise. This obligation represents a derivative instrument that
we record at fair value on our consolidated balance sheets with any changes in value recorded in our
consolidated statements of income in Other, net. The estimated fair value of this liability fluctuates based on
changes in the price of our common stock.
NOTE 8 — Employee Benefit Plans
Our U.S. employees are generally eligible to participate in a retirement and savings plan that qualifies
under Section 401(k) of the Internal Revenue Code. Participating employees may contribute up to 16% of their
pretax salary, but not more than statutory limits. We contribute fifty cents for each dollar a participant
contributes in this plan, with a maximum contribution of 3% of a participant’s earnings. Our contribution vests
with the employee after the employee completes two years of service. Participating employees have the option
to invest in our common stock, but there is no requirement for participating employees to invest their
contribution or our matching contribution in our common stock. We also have various defined contribution
plans for our international employees. Our contributions to these benefit plans were $9.2 million, $8.0 million
and $6.0 million for the years ended December 31, 2007, 2006 and 2005.
NOTE 9 — Stock-Based Awards and Other Equity Instruments
Pursuant to the 2005 Expedia, Inc. Stock and Annual Incentive Plan, we may grant restricted stock,
restricted stock awards (“RSA”), RSUs, stock options and other stock-based awards to directors, officers,
employees and consultants. As of December 31, 2007, we had approximately 4.3 million shares of common
stock reserved for new stock-based awards under the 2005 Stock and Annual Incentive Plan. We issue new
shares to satisfy the exercise or release of stock-based awards.
As described below in “Modification of Stock-Based Compensation Awards,” certain stock options,
restricted stock, RSUs and other equity based awards granted to our employees, officers, directors and
consultants by IAC prior to the Spin-Off were converted into awards based on our common stock in
connection with the Spin-Off. For the period from January 1, 2005 to August 8, 2005, IAC allocated to us
stock-based compensation expense that was attributable to our employees.
RSUs, which are stock awards that are granted to employees entitling the holder to shares of our common
stock as the award vests, are our primary form of stock-based award. We record RSUs that will settle in cash
as a liability and we remeasure them to fair value at the end of each reporting period. These awards that settle
in cash and the resulting liability are insignificant. Our RSUs generally vest over five years, but may accelerate
in certain circumstances, including certain changes in control.
F-22
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)