Expedia 2007 Annual Report Download - page 83

subsidiaries or that deconsolidate a subsidiary. Upon adoption of SFAS 160, we will recharacterize our
minority interest as a noncontrolling interest and classify it as a component of equity in our consolidated
financial statements.
NOTE 3 — Acquisitions and Other Investments
In 2007, we acquired three travel-related companies. The purchase price of these and other acquisition
related costs totaled $151.8 million, $59.6 million of which we paid in cash and $92.2 million of which was
accrued at December 31, 2007 as a result of the financial performance of one of the acquired companies
during 2007. The accrued purchase consideration represents $92.2 million of $100 million total additional
purchase price that can be achieved based on the annual results of 2007 or 2008, or the two periods combined,
and is expected to be paid in the first half of 2008. As a result of these acquisitions, we recorded
$126.4 million in goodwill and $17.6 million of intangible assets with definite lives. The results of operations
of each of the acquired businesses have been included in our consolidated results from each transaction closing
date forward; their effect on consolidated net revenue and operating income during 2007 was not significant.
During 2007 we also acquired a 50% ownership interest in a travel company for $26.0 million in cash.
We include this investment in Long-term investments and other assets and account for it under the equity-
method. The investment agreement contains certain rights, whereby we may acquire and the investee may sell
to us the additional shares of the company, at fair value or at established multiples of future earnings at our
discretion, at various times through 2013. We have also entered into a commitment to provide the investee a
$10 million revolving operating line of credit and a credit facility for up to $20 million. As of the end of
2008, any amounts due under the credit facility are convertible, at our option, into shares of the company at a
premium to the then fair market value. Less than $1 million was drawn against the revolving operating line of
credit and no amounts were drawn against the credit facility as of December 31, 2007.
eLong. In August 2004, we purchased a 30% ownership interest in eLong, a Cayman Island company
traded on the NASDAQ under the symbol “LONG”, whose principal business is the operation of an internet-
based travel business in China, for approximately $59.0 million in cash, and were concurrently issued a
warrant to allow us to acquire additional shares, with an exercise price of approximately $6.21 per share of
common stock, or $108.0 million.
In January 2005, we exercised the warrant resulting in an aggregate purchase price of $170.6 million
including our initial investment and the exercise of the warrant and related transaction costs, resulting in a
total ownership position of 59% and voting rights of approximately 96%. From August 2004 to the warrant
exercise date the investment was accounted for under the equity method, and from the warrant exercise date
forward we have consolidated the operating results of eLong. As of December 31, 2007, our ownership interest
in eLong was 56%.
TripAdvisor. In April 2004 and July 2005, we acquired 94.1% and an additional 1%, respectively, of
TripAdvisor, a travel search engine and directory that enables consumers to research their travel and
destination place through the internet. The aggregate purchase price for our acquisition in April 2004 was
$219.3 million. In 2006, we purchased the remaining 4.9% minority ownership in TripAdvisor for $18.3 million
in cash.
F-17
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)