Expedia 2008 Annual Report Download - page 57

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issuance in August 2006 and a $500 million draw on our revolving credit facility in August 2007 to fund a
portion of the tender offer completed in the third quarter of 2007. At December 31, 2008, 2007 and 2006, our
long-term indebtedness totaled $1.545 billion, $1.085 billion and $500 million.
Other, net
Other, net is comprised of the following:
2008 2007 2006
Year Ended December 31,
(In thousands)
Foreign exchange rate gains (losses), net ................... $(47,129) $(22,047) $10,367
Equity in gain (loss) of unconsolidated affiliates.............. (979) (2,614) 2,541
Gain (loss) on derivative instruments assumed at Spin-Off ...... 4,600 (5,748) 8,137
Federal excise tax refunds .............................. — 12,058 —
Other ............................................. (670) (256) (2,275)
Total other, net .................................... $(44,178) $(18,607) $18,770
In 2008, in connection with the closing of an acquisition and the related holding of euros to economically
hedge the purchase price, we recognized a net loss of $21 million, included in foreign exchange rate gains
(losses), net.
In 2007, we recognized a $12 million gain related to federal excise tax refunds from the Internal Revenue
Service.
Provision for Income Taxes
2008 2007 2006 2008 vs 2007 2007 vs 2006
% ChangeYear Ended December 31,
($ in thousands)
Provision for income taxes ........ $5,966 $203,114 $139,451 (97)% 46%
Effective tax rate ............... (0.2)% 40.9% 36.2%
In 2008, our effective tax rate differed from the 35% statutory rate and the 2007 effective rate due to the
impairment of goodwill, of which a substantial portion was not deductible for income tax purposes. Absent the
impairment of goodwill and intangible assets, our 2008 effective tax rate would have been 41.5%, which was
higher than the 35% statutory rate primarily due to state income taxes and accruals related to uncertain tax
positions and higher than our 2007 rate primarily due to higher accruals related to uncertain tax positions.
In 2007, our effective tax rate was higher than the 35% statutory rate primarily due to state income taxes,
taxes related to our foreign operations and non-deductible losses related to our derivative liabilities. The 2007
effective rate increased as compared to 2006 primarily due to higher state taxes, including increases to state
tax rates, and non-deductible losses related to our derivative liabilities compared with a gain in 2006.
In 2006, our effective tax rate was higher than the 35% statutory rate primarily due to state income taxes
and valuation allowance on certain foreign losses, partially offset by non-taxable gains related to our derivative
liabilities.
Financial Position, Liquidity and Capital Resources
Our principal sources of liquidity are cash flows generated from operations; our cash and cash equivalents
and short-term investment balances which were $758 million and $617 million at December 31, 2008 and
2007, which included $140 million and $158 million of cash and short-term investments at eLong, whose
results are consolidated into our financial statements due to our controlling voting and economic ownership
position; and our $1 billion revolving credit facility, of which $292 million was available as of December 31,
2008. This represents the total $1 billion facility less $650 million of outstanding borrowings and $58 million
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