Expedia 2006 Annual Report Download - page 47

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difficulty in predicting certain items that affect net income, such as tax rates, stock price and interest rates, we
are unable to provide a reconciliation to net income on a forward-looking basis without unreasonable efforts.
Reconciliation of OIBA to Operating Income and Net Income
The following table presents a reconciliation of OIBA to operating income and net income for the years
ended December 31, 2006, 2005 and 2004:
2006 2005 2004
Year Ended December 31,
(In thousands)
OIBA.......................................... $599,018 $ 627,441 $ 553,692
Amortization of intangible assets...................... (110,766) (126,067) (125,091)
Impairment of intangible asset ....................... (47,000) — —
Stock-based compensation .......................... (80,285) (91,725) (171,400)
Amortization of non-cash distribution and marketing ....... (9,638) (12,597) (16,728)
Operating Income ................................. 351,329 397,052 240,473
Interest income, net ............................... 14,799 48,673 38,356
Write-off of long-term investment ..................... — (23,426) —
Other, net ....................................... 18,770 (8,428) (9,286)
Provision for income taxes .......................... (139,451) (185,977) (106,371)
Minority interest in (income) loss of consolidated
subsidiaries, net ................................ (513) 836 301
Net Income ..................................... $244,934 $ 228,730 $ 163,473
Interest Income
2006 2005 2004 2006 vs 2005 2005 vs 2004
Year Ended December 31, % Change
($ in thousands)
Interest income from
IAC/InterActiveCorp ............ $ — $40,089 $30,851 (100)% 30%
Other interest income ............. 32,065 10,690 7,666 200% 39%
Prior to the Spin-Off, the intercompany receivable balances were subject to a cash management
arrangement with IAC. Since we extinguished our intercompany receivable balances with IAC at Spin-Off with
a non-cash distribution to IAC, we no longer receive interest income from IAC. The increase in interest
income in 2005 compared to 2004 was due to the growth in our intercompany receivable balances with IAC,
as well as an increase in the interest rates earned on these balances.
Other interest income increased in 2006 compared to 2005 primarily due to higher cash balances, which
resulted from operating cash flow and the $500.0 million senior unsecured notes (the “Notes”) that we issued
in August 2006.
Interest Expense
2006 2005 2004 2006 vs 2005 2005 vs 2004
Year Ended December 31, % Change
($ in thousands)
Interest expense................... $(17,266) $(2,106) $(161) 720% 1,208%
In 2006, interest expense increased compared to 2005 due to interest expense related to the Notes. We
expect interest expense to continue to increase for 2007 as a result of the Notes.
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