Expedia 2007 Annual Report Download - page 99

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November 2008. For the years ended December 31, 2007, 2006 and 2005, we recorded rental expense of
$33.2 million, $29.7 million and $26.0 million.
The following table presents our estimated future minimum rental payments under operating leases with
noncancelable lease terms that expire after December 31, 2007, in thousands:
Year Ending December 31,
2008 ............................................................... $ 31,033
2009 ............................................................... 31,727
2010 ............................................................... 29,572
2011 ............................................................... 28,261
2012 ............................................................... 27,332
2013 and thereafter ..................................................... 97,265
$245,190
Legal Proceedings
In the ordinary course of business, we are a party to various lawsuits. In the opinion of management, we
do not expect these lawsuits to have a material impact on the liquidity, results of operations, or financial
condition of Expedia. We also evaluate other potential contingent matters, including value-added tax, federal
excise tax, transient occupancy or accommodation tax and similar matters. We do not believe that the
aggregate amount of liability that could be reasonably possible with respect to these matters would have a
material adverse effect on our financial results.
Securities Related Class Action Litigations. While we are not a party to the securities litigation filed
against IAC, under the terms of our Separation Agreement with IAC, we have generally agreed to bear a
portion of the costs and liabilities, if any, associated with any securities law litigation relating to conduct prior
to the Spin-Off of the businesses or entities that comprise Expedia following the Spin-Off. This case arises out
of IAC’s August 4, 2004, announcement of its earnings for the second quarter of 2004.
Litigation relating to the IAC/Hotels.com merger agreement announced April 10, 2003, is pending in
Delaware. The principal claim in these actions is that the defendants breached their fiduciary duty to the
plaintiffs by entering into or approving the merger agreement.
Litigation Relating to Hotel Occupancy Taxes. Lawsuits have been filed by thirty-nine cities and
counties involving hotel occupancy taxes. In addition, there have been five consumer lawsuits filed relating to
taxes and fees. The municipality and consumer lawsuits are in various stages ranging from responding to the
complaint to discovery. We continue to defend these lawsuits vigorously. To date, thirteen of the municipality
lawsuits have been dismissed. Most of these dismissals have been without prejudice and, generally, allow the
municipality to seek administrative remedies prior to pursuing further litigation. Four dismissals (Pitt County,
North Carolina, Findlay, Ohio, Columbus and Dayton, Ohio and City of Orange, Texas) were based on a
finding that the defendants were not subject to the local hotel occupancy tax ordinance. As a result of this
litigation and other attempts by certain jurisdictions to levy such taxes, we have established a reserve for the
potential settlement of issues related to hotel occupancy taxes in the amount of $19.0 million and $17.5 million
at December 31, 2007 and 2006, respectively. Our reserve is based on our best estimate and the ultimate
resolution of these issues may be greater or less than the liabilities recorded.
F-33
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)