Expedia 2006 Annual Report Download - page 93

The following table presents our estimated future minimum rental payments under operating leases with
noncancelable lease terms that expire after December 31, 2006:
Year Ending December 31, (In thousands)
2007 ............................................................. $26,492
2008 ............................................................. 22,167
2009 ............................................................. 17,236
2010 ............................................................. 8,182
2011 ............................................................. 6,084
2012 and thereafter .................................................. 7,794
$87,955
Legal Proceedings
In the ordinary course of business, we are a party to various lawsuits. In the opinion of management, we
do not expect these lawsuits to have a material impact on the liquidity, results of operations, or financial
condition of Expedia. We also evaluate other potential contingent matters, including value-added tax, federal
excise tax, transient occupancy or accommodation tax and similar matters. We do not believe that the
aggregate amount of liability that could be reasonably possible with respect to these matters would have a
material adverse affect on our financial results.
Securities Related Class Action Litigations. While we are not a party to the securities litigation filed
against IAC, under the terms of our Separation Agreement with IAC, we have generally agreed to bear a
portion of the costs and liabilities, if any, associated with any securities law litigation relating to conduct prior
to the Spin-Off of the businesses or entities that comprise Expedia following the Spin-Off. This case arises out
of IAC’s August 4, 2004, announcement of its earnings for the second quarter of 2004.
Litigation relating to the IAC/Hotels.com merger agreement announced April 10, 2003, is pending in
Delaware. The principal claim in these actions is that the defendants breached their fiduciary duty to the
plaintiffs by entering into or approving the merger agreement.
Hotels.com is also a party to a securities class action and a shareholder derivative suit relating to
Hotels.com’s guidance for the fourth quarter of 2002. The principal claim in these actions is that the
defendants violated federal securities laws by making misstatements of material facts, failing to disclose
material information, and trading in the company’s securities while in possession of material, non-public
information. In 2004, the court dismissed virtually all of the plaintiffs’ claims with prejudice in the securities
class action. In the shareholder derivative suit, on March 7, 2005, the district court issued orders staying the
case until further notice and directing that the case be administratively closed pending a decision in the appeal
of the action discussed above. The case remains administratively closed.
Litigation Relating to Hotel Occupancy Taxes. Expedia and certain of its businesses are parties to
consumer and municipality litigation involving hotel occupancy taxes.
NOTE 15 — Related Party Transactions
Expenses Allocated from IAC
Prior to Spin-Off, our operating expenses include allocations from IAC for accounting, treasury, legal,
tax, corporate support, human resource functions and internal audit. Expenses allocated from IAC were
$5.0 million for the period from January 1, 2005 to August 8, 2005, and $7.5 million for the year ended
December 31, 2004. We recorded the expense allocation from IAC in general and administrative expense in
our consolidated statements of income.
F-33
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)