Expedia 2009 Annual Report Download - page 59

Other, net
Other, net is comprised of the following:
Year ended December 31, % Change
2009 2008 2007 2009 vs 2008 2008 vs 2007
($ in millions)
Foreign exchange rate losses, net ..... $(30) $(47) $(22) (37)% 114%
Noncontrolling investment basis
adjustment .................... (5) — — N/A N/A
Gain (loss) on derivative instruments
assumed at Spin-Off ............. — 5 (6) (101)% (180)%
Federal excise tax refunds .......... — — 12 N/A (100)%
Other ........................... — (2) (3) (84)% (43)%
Total other, net ................. $(35) $(44) $(19) (20)% 137%
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 losses, net.
In 2007, we recognized a $12 million gain related to federal excise tax refunds from the Internal Revenue
Service.
Provision for Income Taxes
Year ended December 31, % Change
2009 2008 2007 2009 vs 2008 2008 vs 2007
($ in millions)
Provision for income taxes .......... $154 $ 6 $203 N/A (97)%
Effective tax rate ................. 33.7% (0.2)% 40.9%
In 2009, our effective tax rate was lower than the 35% federal statutory rate primarily due to a fourth quarter
deduction relating to the closure of a foreign subsidiary, partially offset by state income taxes. The change in the
2009 effective rate compared to the 2008 rate was primarily due to the impairment of goodwill in 2008, 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%, and our 2009 effective rate was lower than
this rate primarily due to the deduction relating to the closure of a foreign subsidiary and, to a lesser extent, lower
accruals related to uncertain tax positions. We expect our effective tax rate to benefit in 2010 and beyond based
on changes in our business structure combined with the relative growth in our international business.
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.
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 $688 million and $758 million at December 31, 2009 and 2008,
including $148 million and $145 million of cash and short-term investment balances of majority-owned
subsidiaries; and our revolving credit facility.
53