Expedia 2009 Annual Report Download - page 91

Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)
noncontrolling interest basis will be recorded to the noncontrolling interest, classified in other long-term
liabilities, and as charges or credits to retained earnings (or additional paid-in capital in the absence of retained
earnings). During 2009, we recorded $8 million related to the change in fair value of redeemable noncontrolling
interests. The fair value was determined based on various valuation techniques, including market comparables
and discounted cash flow projections (Level 3 inputs).
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. 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. The December 31, 2007 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. Based on the 2007 and 2008 annual results of the acquiree, we ultimately
paid the total additional achievable purchase price of $100 million, $93 million of which was paid in 2008 and $7
million of which was paid in 2009.
During 2007, we also acquired a 50% ownership interest in a travel company for $26 million in cash. We
included this investment in long-term investments and other assets and accounted for it under the equity-method.
In 2009, we acquired an additional interest for $3 million in cash, which was included within the 2009 total
purchase price above, and resulted in a 60% majority ownership interest and our consolidation of this entity. In
conjunction with our acquisition of additional interest, we remeasured our previously held equity interest to fair
value and recognized a loss of $5 million in other, net during the period. The fair value of the 40%
noncontrolling interest in the company was estimated to be $15 million at the time of acquisition. Both fair value
assessments were determined based on various valuation techniques, including market comparables and
discounted cash flow projections (Level 3 inputs). Our 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, during the first quarter of 2011 and 2013. As the noncontrolling
interest is redeemable at the option of the minority holders, we classified the balance as an other long-term
liability.
NOTE 4 — Property and Equipment, Net
Our property and equipment consists of the following:
December 31,
2009 2008
(In thousands)
Capitalized software development ................................. $355,088 $ 286,935
Computer equipment ........................................... 100,451 103,866
Furniture and other equipment .................................... 65,098 57,423
Leasehold improvements ........................................ 68,832 64,620
589,469 512,844
Less: accumulated depreciation ................................... (372,050) (292,650)
Projects in progress ............................................. 19,401 27,760
Property and equipment, net ...................................... $236,820 $ 247,954
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