Expedia 2006 Annual Report Download - page 90

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Other Comprehensive Income
The following table presents the changes in the components of OCI, net of taxes:
2006 2005 2004
For the Year Ended December 31,
(In thousands)
Net Income ....................................... $244,934 $228,730 $163,473
Other Comprehensive Income (Loss)
Currency translation adjustments ...................... 14,696 (6,465) 9,437
Unrealized gains (losses) on derivatives, net of taxes:
Unrealized holding gains (losses), net of tax effect of
$4,300 in 2006, $(5,859) in 2005 and $4,774 in 2004 . . . (7,832) 9,722 (7,922)
Less: reclassification adjustment for net (gains) losses
recognized during the period, net of tax effect of
$(3,691) in 2006, $6,835 in 2005 and $(4,882) in
2004 ....................................... 6,713 (11,341) 8,101
Unrealized gains on available for sale securities, net of taxes:
Net change in unrealized gains, net of tax effect of
$(16,922) during 2004 .......................... — — 28,079
Reversal of unrealized gains on eLong warrant upon
business acquisition, net of tax effect of $16,382 in
2005 ....................................... — (27,182) —
Other comprehensive income (loss) .................. 13,577 (35,266) 37,695
Total Comprehensive Income ..................... $258,511 $193,464 $201,168
In October 2004, eLong completed an initial public offering (“IPO”) of its shares. As a result of the IPO,
our warrant became subject to the mark-to-market provisions of SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. As such, we recorded an unrealized gain of $27.2 million, net of
deferred taxes of $16.4 million, related to the warrant in other comprehensive income in 2004. We reversed
the unrealized gain in January 2005 upon exercise of our warrant.
NOTE 12 — Earnings Per Share
Basic Earnings Per Share
Basic earnings per share was calculated for the year ended December 31, 2006 using the weighted
average number of common and Class B common shares outstanding during the period excluding restricted
stock and stock held in escrow. We have 846 shares of preferred stock outstanding, the impact of which on
our earnings per share calculation is immaterial.
For the year ended December 31, 2005, we computed basic earnings per share using the number of shares
of common stock and Class B common stock outstanding immediately following the Spin-Off, as if such
shares were outstanding for the entire period prior to the Spin-Off, plus the weighted average of such shares
outstanding following the Spin-Off. For the year ended December 31, 2004, we computed basic earnings per
share using the number of shares of common stock and Class B common stock outstanding immediately
following the Spin-Off, as if such shares were outstanding for the entire period.
Diluted Earnings Per Share
For the years ended December 31, 2006 and 2005, we computed diluted earnings per share using (i) the
number of shares of common stock and Class B common stock used in the basic earnings per share calculation
F-30
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)