Priceline 2010 Annual Report Download - page 173

99
A substantial amount of the Company’s goodwill relates to its acquisition of Booking.com. In addition, the
acquisition of TravelJigsaw Holdings Limited in May 2010 increased goodwill by $105.3 million (refer to Note 13)
and contingent purchase price consideration recorded in December 2010 related to the acquisition of priceline.com
Mauritius Company Limited (formerly known as Agoda) in 2007 increased goodwill by $60.1 million (refer to Note
16).
As of September 30, 2010, the Company performed its annual goodwill impairment testing using standard
valuation techniques. The estimated fair value of Booking.com, as well as the Company’s other reporting units,
substantially exceeded their respective carrying values. Since the annual impairment test, there have been no events
or changes in circumstances to indicate a potential impairment.
10. OTHER ASSETS
Other assets at December 31, 2010 and 2009 consist of the following (in thousands):
2010 2009
Deferred debt issuance costs $ 9,576 $ 2,235
Long-term investments 394 359
Other 4,448 1,790
Total $ 14,418 $ 4,384
Deferred debt issuance costs arose from(i) the Company’s issuance, in March 2010, of the $575.0 million
aggregate principal amount of 1.25% Convertible Senior Notes due 2015 (the “2015 Notes”); (ii) a $175 million
revolving credit facility in September 2007; (iii) the Company’s issuance, in September 2006, of $172.5 million
aggregate principal amount of 2011 Notes; and (iv) the Company’s issuance, in September 2006, of $172.5 million
aggregate principal amount of 2013 Notes. Deferred debt issuance costs are being amortized using the effective
interest rate method over the term of approximately five years, except for the 2013 Notes, which are amortized over
their term of seven years. The period of amortization for the Company’s debt issue costs was determined at
inception of the related debt agreements to be the stated maturity date or the first stated put date, if earlier.
Unamortized debt issuance costs written off to interest expense in the years ended December 31, 2010 and 2009
related to early conversion of convertible debt amounted to $1.4 million and $1.2 million, respectively.
Long-term investments amounting to $0.4 million at both December 31, 2010 and 2009 were comprised of
corporate notes with a maturity date greater than one year.
Other assets, consisting primarily of supplier and other security deposits, increased by $2.7 million during
the year ended December 31, 2010. This increase is principally related to the other assets acquired with the
acquisition of TravelJigsaw Holdings Limited in May 2010 (see Note 13 for further information on this acquisition).
11. DEBT
Revolving Credit Facility
In September 2007, the Company entered into a $175.0 million five-year committed revolving credit
facility with a group of lenders, which is secured, subject to certain exceptions, by a first-priority security interest on
substantially all of the Company’s assets and related intangible assets located in the United States. In addition, the
Company’s obligations under the revolving credit facility are guaranteed by substantially all of the assets and related
intangible assets of the Company’s material direct and indirect domestic and foreign subsidiaries. Borrowings under
the revolving credit facility will bear interest, at the Company’s option, at a rate per annum equal to the greater of (a)
JPMorgan Chase Bank, National Association’s prime lending rate and (b) the federal funds rate plus ½ of 1%, plus
an applicable margin ranging from 0.25% to 0.75%; or at an adjusted LIBOR for the interest period in effect for
such borrowing plus an applicable margin ranging from 1.25% to 1.75%. Undrawn balances available under the
revolving credit facility are subject to commitment fees at the applicable rate ranging from 0.25% to 0.375%.
The revolving credit facility provides for the issuance of up to $50.0 million of letters of credit as well as
borrowings on same-day notice, referred to as swingline loans, which are available in U.S. dollars, Euros, Pounds
Sterling and any other foreign currency agreed to by the lenders. The proceeds of loans made under the facility will
be used for working capital and general corporate purposes. As of December 31, 2010 and 2009, there were no