Expedia 2008 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2008 Expedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

results from each transaction closing date forward; their effect on consolidated revenue and operating loss
during 2008 was not significant.
In one of these 2008 transactions, we acquired a 74% controlling interest with certain rights whereby we
may acquire, and the minority shareholders may sell to us, the additional shares of the company at fair value
at various times through 2011. In another of these 2008 transactions, we acquired an 86% controlling interest
with certain rights whereby we may acquire, and the minority shareholders may sell to us, the additional
shares of the company at fair value, or at an adjusted fair value at our option, during a 30-day period
beginning October 1, 2012. Future changes in fair value of the shares for which the minority holders may sell
to us above the initial minority interest basis will be recorded to the minority interest and as charges or credits
to retained earnings (deficit).
In 2007, we acquired three travel-related companies. The purchase price of these and other acquisition
related costs totaled $152 million, $60 million of which we paid in cash and $92 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 represented $92 million of $100 million total additional purchase price
that could be achieved based on the annual results of 2007 or 2008, or the two periods combined. During
2008, we paid $93 million of the additional purchase price based on the annual results of 2007. In addition,
we accrued the remaining $7 million based on the annual results of 2008 to be paid in 2009 and this amount
was included within the 2008 total purchase price above. As a result of these acquisitions, we recorded
$126 million in goodwill and $18 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 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 beginning in the first quarter of 2009 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 or at any time and from time to time thereafter, 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. The revolving operating line of credit had $2 million drawn against it and no amounts were drawn
against the credit facility as of December 31, 2008.
In 2006, we purchased the remaining 4.9% minority ownership in TripAdvisor for $18 million in cash.
F-18
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)