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EXPEDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
2006 2005 2004
Year Ended December 31,
(In thousands)
Operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 244,934 $ 228,730 $ 163,473
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,779 50,445 44,066
Amortization of intangible assets, non-cash distribution and marketing and
stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,689 230,389 313,219
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,652) 68,198 (5,295)
Unrealized (gain) loss on derivative instruments, net . . . . . . . . . . . . . . . . . . . (8,137) 6,042 —
Equity in income of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . (2,541) (1,668) (175)
Minority interest in income (loss) of consolidated subsidiaries, net . . . . . . . . . 513 (836) (301)
Write-off of long-term investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 23,426 —
Impairment of intangible asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,000 — —
Foreign exchange (gain) loss on cash and cash equivalents, net . . . . . . . . . . . . (37,182) 9,292 (10,627)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100 1,161 161
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,148) (21,833) 10,904
Prepaid merchant bookings and prepaid expenses . . . . . . . . . . . . . . . . . . . . (20,694) (22,492) 3,038
Accounts payable and other current liabilities . . . . . . . . . . . . . . . . . . . . . . 123,104 241,567 225,679
Deferred merchant bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,450 45,051 54,872
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,225 1,715 (2,463)
Other,net ............................................... — — (4,325)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 617,440 859,187 792,226
Investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (92,631) (52,315) (53,407)
Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,518) 10,547 (261,390)
Proceeds from sale of business to a related party . . . . . . . . . . . . . . . . . . . . . . 13,163 — —
Increase in long-term investments and deposits . . . . . . . . . . . . . . . . . . . . . . . (1,514) (369) (62,441)
Purchase of marketable securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (63) (5,015)
Proceeds from sale of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . — 1,000 722,646
Transfers to IAC/InterActiveCorp, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (757,206) (1,272,714)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (2,937) (85)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (113,500) (801,343) (932,406)
Financing activities:
Short-term borrowings, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (231,036) 230,735 —
Proceeds from issuance of long-term debt, net of issuance costs . . . . . . . . . . . 495,346 — —
Changes in restricted cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 4,578 (9,495) (2,319)
Proceeds from exercise of equity awards. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,258 29,060 —
Excess tax benefit on equity awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,317 — —
Withholding taxes for stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . . — (86,556) —
Treasury stock activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (295,691) — —
(Distribution to) contribution from IAC/InterActiveCorp, net. . . . . . . . . . . . . . — (52,844) 103,807
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (4,393) 5,832
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,772 106,507 107,320
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . 42,146 (8,603) (3,141)
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . 555,858 155,748 (36,001)
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . 297,416 141,668 177,669
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 853,274 $ 297,416 $ 141,668
Supplemental cash flow information
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,036 $ 251 $ —
Income tax payments (refund), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,126 10,384 (1,879)
See notes to consolidated financial statements.
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