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Expedia, Inc.
Notes to Consolidated Financial Statements Ì (Continued)
In March 2005, the Securities and Exchange Commission issued SAB 107, which provides additional
guidance related to the implementation of SFAS 123(R), including guidance regarding valuation methods
and related assumptions, and classification of compensation expense and income tax effects of share-based
payment arrangements.
We adopted SFAS 123(R) and related guidance on January 1, 2006, and we do not expect it to have
a material effect on our results of operations or financial position.
Accounting Changes and Error Corrections
In May 2005, the FASB issued SFAS No. 154, ""Accounting Changes and Error Corrections,''
(""SFAS 154''), which changes the requirements for the accounting for and reporting of a change in
accounting principle. SFAS 154 will require companies to account for and apply changes in accounting
principles retrospectively to prior periods' financial statements, instead of recording a cumulative effect
adjustment within the period of the change, unless it is impracticable to determine the effects of the
change to each period presented. SFAS 154 is effective for accounting changes and corrections made in
fiscal years beginning after December 15, 2005. We adopted SFAS 154 on January 1, 2006, and we do not
expect it to have a material impact on our financial position, results of operations or cash flows.
NOTE 5 Ì Business Acquisitions
On August 9, 2005, we completed the Spin-Off of the Expedia Businesses, all of which had been
acquired by IAC, either directly or through its subsidiaries. We have included these entities in our
historical combined financial statements from the dates of their respective acquisitions. We discuss the
significant business acquisitions below.
eLong TripAdvisor Eqencia Hotwire.com Expedia.com Hotels.com
(In millions)
Fair value of net tangible assets
acquiredÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 79.0 $ 21.4 $ 3.8 $ 12.4 $ Ì(A) $ Ì(A)
Intangible assets:
Supplier relationships ÏÏÏÏÏÏÏÏÏÏÏÏ 3.5 Ì 1.3 28.5 67.3 63.4
Customer relationships ÏÏÏÏÏÏÏÏÏÏÏ 3.0 2.5 13.4 1.3 7.5 0.3
Affiliate agreementsÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Ì 114.1 Ì
Technology ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Ì 78.8 Ì
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.4 22.1 2.9 7.0 Ì 40.2
Tradename and trademarks ÏÏÏÏÏÏÏÏÏ 14.5 30.3 0.5 90.0 531.3 115.7
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 77.9 163.0 42.1 533.0 2,737.0 683.3
Net proceeds from warrant exercise ÏÏ 53.7 Ì Ì Ì Ì Ì
Deferred tax assets (liabilities) ÏÏÏÏÏÏ (7.4) (20.0) 1.7 (5.5) (293.3) (80.6)
Minority interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (55.0) Ì Ì Ì 326.7 357.0
Net Purchase Price ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $170.6 $219.3 $65.7 $666.7 $3,569.4 $1,179.3
Weighted average life of intangible
assets (in years)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.9 2.9 8.1 4.1 5.0 6.5
(A) We acquired a majority ownership interest in these entities prior to 2003; as such there was no
significant amount of step-up in basis of net tangible assets when we acquired the remaining shares of
these companies in 2003.
F-18