Expedia 2007 Annual Report Download - page 98

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collected from customers for airline ticket sales by one of our subsidiaries in the third quarter of 2001 through
the third quarter of 2004, plus accrued interest thereon. We recorded $2.6 million to revenue as that amount
relates to taxes remitted on airline ticket sales subsequent to our acquisition of the subsidiary. We recorded
$12.1 million to other, net for taxes remitted on airline ticket sales prior to the acquisition and total interest
earned on all underlying tax remittances.
Write-off of Long-term Investment
In 2005, we received information regarding the deteriorating financial condition of our long-term
investment in a leisure travel company and we determined that it was not likely we would recover any of our
investment because the decline in its value was determined to be other-than-temporary. As a result, we
recorded a loss related to this impairment of $23.4 million in write-off of long-term investment in our
consolidated statements of income. In 2006, we sold our investment for de minimis consideration.
NOTE 14 — Commitments and Contingencies
Letters of Credit, Purchase Obligations and Guarantees
We have commitments and obligations that include purchase obligations, guarantees and LOCs, which
could potentially require our payment in the event of demands by third parties or contingent events. The
following table presents these commitments and obligations as of December 31, 2007:
Total
Less than
1 Year 1 to 3 Years 3 to 5 Years
More than
5 Years
By Period
(In thousands)
Purchase obligations ............ $ 32,307 $ 26,437 $5,870 $— $—
Guarantees ................... 106,668 106,358 310 — —
Letters of credit................ 52,339 51,716 623 — —
$191,314 $184,511 $6,803 $— $—
Our purchase obligations represent the minimum obligations we have under agreements with certain of
our vendors. 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.
We have guarantees primarily related to a specific country aviation authority for the potential non-
delivery, by us, of packaged travel sold in that country. The authority also requires that a portion of the total
amount of packaged travel sold be bonded.
Our LOCs consist of stand-by LOCs, underwritten by a group of lenders, which we primarily issue to
certain hotel properties to secure our payment for hotel room transactions. The contractual expiration dates of
these LOCs are shown in the table above. There were no claims made against any stand-by LOCs during the
years ended December 31, 2007, 2006 and 2005.
Lease Commitments
We have contractual obligations in the form of operating leases for office space and related office
equipment for which we record the related expense on a monthly basis. Certain leases contain periodic rent
escalation adjustments and renewal options. Rent expense related to such leases is recorded on a straight-line
basis. Operating lease obligations expire at various dates with the latest maturity in 2018. In June 2007, we
entered into a ten-year lease for approximately 348,000 square feet of office space for our new headquarters
located in Bellevue, Washington. We expect the term and cash payments related to this lease to begin in
F-32
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)