Expedia 2009 Annual Report Download - page 95

Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)
7.456% Notes, at 100% of the principal amount plus accrued interest. We may redeem the 7.456% Notes in
accordance with the terms of the agreement, in whole or in part at any time at our option.
Based on quoted market prices, the fair value of our 7.456% Notes was approximately $546 million and
$365 million as of December 31, 2009 and 2008, and the fair value of the 8.5% Notes was approximately $431
million and $280 million as of December 31, 2009 and 2008.
The 7.456% and 8.5% Notes are senior unsecured obligations guaranteed by certain domestic Expedia
subsidiaries and rank equally in right of payment with all of our existing and future unsecured and
unsubordinated obligations. For further information, see Note 19 — Guarantor and Non-Guarantor Supplemental
Financial Information. Accrued interest related to the 7.456% and 8.5% Notes was $31 million and $32 million
as of December 31, 2009 and 2008.
Credit Facility
As of December 31, 2009, Expedia, Inc. maintained a $1 billion unsecured revolving credit facility with a
group of lenders, which was unconditionally guaranteed by certain Expedia subsidiaries and was expected to
expire in August 2010. There were no amounts outstanding as of December 31, 2009. As of December 31, 2008,
the $650 million carrying amount of the borrowing approximated its fair value. The facility bore interest based
on market interest rates plus a spread, which was determined based on our financial leverage. The interest rate
was 1.34% as of December 31, 2008. During 2009, we amended our credit facility to replace a tangible net worth
covenant with a minimum interest coverage covenant, among other changes. As part of this amendment, our
leverage ratio was tightened, pricing on our borrowings increased by 200 basis points and we paid approximately
$6 million in fees. The annual fee to maintain the facility ranged from 0.4% to 0.5% on the unused portion of the
facility, or approximately $4 million to $5 million if all of the facility was unused. In addition to the minimum
interest coverage covenant, the facility also contained a leverage ratio financial covenant.
The amount of stand-by letters of credit (“LOC”) issued under the facility reduced the amount available to
us. As of December 31, 2009 and 2008, there were $42 million and $58 million of outstanding stand-by LOCs
issued under the facility.
In February 2010, we reached agreement on a new $750 million, three-year unsecured revolving credit
facility, replacing our prior credit facility. Pricing is based on the Company’s credit ratings, with drawn amounts
bearing interest at LIBOR plus 300 basis points, and undrawn amounts bearing interest at 50 basis points.
Financial covenants remain the same under the new facility. We incurred approximately $8 million in fees, which
will be amortized over the life of the credit facility. As of February 11, 2010, we had no borrowings outstanding
under the facility.
NOTE 7 — Employee Benefit Plans
Our U.S. employees are generally eligible to participate in a retirement and savings plan that qualifies under
Section 401(k) of the Internal Revenue Code. Participating employees may contribute up to 50% of their pretax
salary, but not more than statutory limits. We contribute fifty cents for each dollar a participant contributes in this
plan, with a maximum contribution of 3% of a participant’s earnings. Our contribution vests with the employee
after the employee completes two years of service. Participating employees have the option to invest in our
common stock, but there is no requirement for participating employees to invest their contribution or our
matching contribution in our common stock. We also have various defined contribution plans for our
international employees. Our contributions to these benefit plans were $11 million, $12 million and $9 million
for the years ended December 31, 2009, 2008 and 2007.
F-23