Expedia 2007 Annual Report Download - page 56

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guarantee to the aviation authority of one country to protect against potential non-delivery of our
packaged travel services sold within that country. This country holds all travel agents and tour
companies to the same standard. The letter of credit amounts in the following table represent the
amount of commitment expiration per period.
The following table presents our material contractual obligations and commercial commitments as of
December 31, 2007:
Total
Less than
1 Year 1 to 3 Years 3 to 5 Years
More than
5 Years
By Period
(In thousands)
Long-term debt .............. $ 910,080 $ 37,280 $ 74,560 $ 74,560 $723,680
Credit facility ................ 585,000 — 585,000 — —
Obligation related to Ask Jeeves
Notes .................... 14,600 14,600 — — —
Operating leases .............. 245,190 31,033 61,299 55,593 97,265
Purchase obligations ........... 32,307 26,437 5,870 — —
Guarantees .................. 106,668 106,358 310 — —
Letters of credit .............. 52,339 51,716 623 — —
FIN 48 liabilities(1) ........... 1,454 1,454 — — —
Total ...................... $1,947,638 $268,878 $727,662 $130,153 $820,945
(1) Represents unrecognized tax benefits under FIN 48, but excludes $172.1 million of such unrecognized tax
benefits for which we cannot make a reasonably reliable estimate of the amount and period of payment.
Other than the items described above, we do not have any off-balance sheet arrangements as of
December 31, 2007.
Certain Relationships and Related Party Transactions
For a discussion of certain relationships and related party transactions, see Note 15 — Related Party
Transactions, in the notes to consolidated financial statements.
Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Management
Market risk is the potential loss from adverse changes in interest rates, foreign exchange rates and market
prices. Our exposure to market risk includes our Notes, our revolving credit facility, derivative instruments,
cash and cash equivalents, accounts receivable, intercompany receivables, merchant accounts payable and
deferred merchant bookings denominated in foreign currencies. We manage our exposure to these risks through
established policies and procedures. Our objective is to mitigate potential income statement, cash flow and
market exposures from changes in interest and foreign exchange rates.
Interest Rate Risk
In August 2006, we issued $500.0 million Notes with a fixed rate of 7.456%. As a result, if market
interest rates decline, our required payments will exceed those based on market rates. The fair value of our
Notes was approximately $517 million as of December 31, 2007 based on the quoted market price. A 50 basis
point increase or decrease in interest rates would decrease or increase the fair value of our Notes by
approximately $19 million.
In July 2005, we entered into a $1.0 billion revolving credit facility. The revolving credit facility bears
interest based on market interest rates plus a spread, which is determined based on our financial leverage. The
weighted average interest rate was 5.70% as of December 31, 2007. As a result, we will be susceptible to
50