Expedia 2010 Annual Report Download - page 103

Lease Commitments
We have contractual obligations in the form of operating leases for office space and related office
equipment for which we record the related expense on a monthly basis. Certain leases contain periodic rent
escalation adjustments and renewal options. Rent expense related to such leases is recorded on a straight-line
basis. Operating lease obligations expire at various dates with the latest maturity in 2020. For the years ended
December 31, 2010, 2009 and 2008, we recorded rental expense of $53 million, $50 million and $49 million.
The following table presents our estimated future minimum rental payments under operating leases with
noncancelable lease terms that expire after December 31, 2010, in thousands:
Year ending December 31,
2011 .................................................................... $ 41,597
2012 .................................................................... 39,565
2013 .................................................................... 33,505
2014 .................................................................... 28,021
2015 .................................................................... 21,904
2016 and thereafter ......................................................... 53,660
$218,252
Legal Proceedings
In the ordinary course of business, we are a party to various lawsuits. Management does not expect these
lawsuits to have a material impact on the liquidity, results of operations, or financial condition of Expedia. We
also evaluate other potential contingent matters, including value-added tax, federal excise tax, transient
occupancy or accommodation tax and similar matters. We do not believe that the aggregate amount of liability
that could be reasonably possible with respect to these matters would have a material adverse effect on our
financial results.
Litigation Relating to Hotel Occupancy Taxes. Sixty-nine lawsuits have been filed by cities and counties
involving hotel occupancy taxes. These lawsuits are in various stages and we continue to defend against the
claims made in them vigorously. With respect to the principal claims in these matters, we believe that the
ordinances at issue do not apply to the services we provide, namely the facilitation of hotel reservations, and,
therefore, that we do not owe the taxes that are claimed to be owed. We believe that the ordinances at issue
generally impose occupancy and other taxes on entities that own, operate or control hotels (or similar businesses)
or furnish or provide hotel rooms or similar accommodations. To date, twenty-one of the municipality lawsuits
have been dismissed. Most of these dismissals have been without prejudice and, generally, allow the municipality
to seek administrative remedies prior to pursuing further litigation. Nine dismissals (Pitt County, North Carolina;
City of Madison, Wisconsin; City of Orange, Texas; Fayetteville, Arkansas; Houston, Texas; Louisville,
Kentucky; Township of Lyndhurst, New Jersey; Bowling Green, Kentucky; and St. Louis, Missouri) were based
on a finding that we and the other defendants were not subject to the local hotel occupancy tax ordinance or that
the local government lacked standing to pursue their claims. As a result of this litigation and other attempts by
certain jurisdictions to levy such taxes, we have established a reserve for the potential settlement of issues related
to hotel occupancy taxes, consistent with applicable accounting principles and in light of all current facts and
circumstances, in the amount of $24 million as of December 31, 2010 and $21 million as of December 31, 2009.
This reserve is based on our best estimate and the ultimate resolution of these contingencies may be greater or
less than the liabilities recorded. In addition, as of December 31, 2010, we have accrued $13 million related to
court decisions and final settlements.
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