Expedia 2009 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2009 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

Restructuring Charges
During 2009, in conjunction with the reorganization of our business around our global brands, and the
resulting centralization of locations and brand management, marketing and administrative personnel as well as
certain customer operations centers, we recognized $34 million in restructuring charges. These charges were
primarily related to employee severance and related benefits. Restructuring charges related to the brand
reorganization were substantially completed by the end of 2009. For additional information, see Note 12 —
Restructuring Charges in the notes to the consolidated financial statements.
Impairment of Goodwill, Intangible and Other Long-lived Assets
In 2008, we recorded impairments of approximately $3 billion of long-term assets, which consisted of
$2.8 billion of goodwill, $223 million of intangible assets and $11 million related to capitalized software.
Impaired intangible assets consisted of certain of our indefinite-lived trade names. For additional information
about our impairments, see Note 5 — Goodwill and Intangible Assets, Net in the notes to consolidated financial
statements.
We recorded no such impairments in 2009.
Operating Income (Loss)
Year ended December 31, % Change
2009 2008 2007 2009 vs 2008 2008 vs 2007
($ in millions)
Operating income (loss) ................ $571 $(2,429) $ 529 N/A N/A
% of revenue ......................... 19.3% (82.7)% 19.9%
In 2009, the change to operating income was due to the prior year impairment of long-term assets of
approximately $3 billion. In addition, selling and marketing expense and cost of revenue decreased compared to
the increase in revenue, partially offset by the San Francisco occupancy tax assessments, restructuring charges
and class action settlement legal reserve as well as growth in technology and content and general and
administrative expenses at rates in excess of revenue growth.
In 2008, the recording of a significant operating loss and the resulting year-over-year decline was due to the
impairment of long-term assets of approximately $3 billion.
Interest Income and Expense
Year ended December 31, % Change
2009 2008 2007 2009 vs 2008 2008 vs 2007
($ in millions)
Interest income ....................... $ 6 $30 $39 (80)% (23)%
Interest expense ...................... (84) (72) (53) 17% 36%
Interest income decreased in 2009 and 2008 primarily due to lower average interest rates.
Interest expense increased in 2009 and 2008 primarily resulting from interest on the $400 million senior
unsecured notes issued in June 2008. The increase in 2009 was partially offset by lower interest expense related
to our revolving credit facility. At December 31, 2009, 2008 and 2007, our long-term indebtedness totaled $895
million, $1.545 billion and $1.085 billion.
52