Expedia 2010 Annual Report Download - page 57

In 2010, the decrease in amortization of intangible assets expense was primarily due to the completion of
amortization related to certain intangible assets, partially offset by a charge of approximately $4 million related
to changes in the estimated value of contingent purchase consideration and amortization related to new business
acquisitions. In 2009, the decrease in amortization of intangible assets expense was primarily due to the
completion of amortization related to certain technology, supplier relationship and distribution agreement
intangible assets, partially offset by amortization related to new business acquisitions. For additional information
about our acquisitions, see Note 3 — Acquisitions and Other Investments in the notes to consolidated financial
statements.
Occupancy Tax Assessments and Legal Reserves
During 2010, we recognized $3 million related to monies paid in advance of litigation in the Santa Monica
occupancy tax proceedings and a $3 million expense related to an increase in the estimated coupon redemption
rate related to the Expedia consumer class action lawsuit. During 2009, we recognized $48 million related to
monies paid in advance of litigation in the San Francisco occupancy tax proceedings and an accrual of $19
million for the estimated settlement cost of the Expedia consumer class action lawsuit. For additional
information, see Note 15 — Commitments and Contingencies in the notes to the consolidated financial
statements.
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 completed by the end of 2009. For additional information, see Note 13 — 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 $11 million related to capitalized software.
Impaired intangible assets consisted of certain of our indefinite-lived trade names. For additional information
about our impairments, see Note 6 — Goodwill and Intangible Assets, Net in the notes to consolidated financial
statements.
We recorded no such impairments in 2010 and 2009.
Operating Income (Loss)
Year ended December 31, % Change
2010 2009 2008 2010 vs 2009 2009 vs 2008
($ in millions)
Operating income (loss) ................ $732 $571 $(2,429) 28% N/A
% of revenue ......................... 21.9% 19.3% (82.7)%
In 2010, operating income increased primarily due to an increase in revenue, which was offset by a
corresponding increase to operating expenses, as well as restructuring charges recorded in 2009 that did not recur
and higher occupancy tax assessments and legal reserves recorded in 2009.
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.
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