Expedia 2008 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 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

values of our debt. In performing the reconciliation we may, depending on the volatility of the market value of
our stock price, use either the stock price on the valuation date or the average stock price over a range of
dates around that date and consider such other quantitative and qualitative factors we consider relevant, which
may change depending on the date for which the assessment is made. This assessment resulted in the
recognition in the fourth quarter of 2008 of a loss on impairment of long-term assets of approximately
$3 billion, which consists of $2.8 billion of goodwill and $223 million of indefinite-lived trade names. A
deferred tax benefit of $189 million was recognized as a result of these charges.
We determined that the adverse change in the business climate discussed above was also an indicator
requiring the testing of our long-lived assets for recoverability and performed this test as of December 1,
2008. We tested the long-lived assets of our reporting units for recoverability based on a comparison of the
respective aggregate values of their undiscounted cash flows to the respective carrying values. The results of
the evaluation indicated that the carrying values of the related assets were recoverable. In addition to the above
impairment analysis, during the fourth quarter of 2008, we wrote off $11 million related to capitalized
software costs based on the abandonment of the related project.
As a result of continued adverse conditions in the markets in which we operate, we will continue to
monitor goodwill and long-lived intangible assets, as well as long-lived tangible assets, for possible future
impairment. We cannot assure that these assets will not be further impaired in future periods.
The following table presents our goodwill and intangible assets as of December 31, 2008 and 2007:
2008 2007
December 31,
(In thousands)
Goodwill ................................................ $3,538,569 $6,006,338
Intangible assets with indefinite lives ........................... 689,541 867,246
Intangible assets with definite lives, net ......................... 143,878 103,511
$4,371,988 $6,977,095
Our indefinite-lived intangible assets relate principally to trade names and trademarks acquired in various
acquisitions. Of the $223 million impairment charge in the fourth quarter of 2008, $128 million related to
trade names in our North America segment, $73 million in our Europe segment and $22 million in our Asia
Pacific segment. In the third quarter of 2006, based on lower than expected year-to-date revenue growth, we
determined that our indefinite-lived trade name intangible asset related to Hotwire, part of our North America
segment, was impaired based on a valuation of that asset and recognized an impairment charge of $47 million.
F-20
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)