Expedia 2010 Annual Report Download - page 58
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Interest Income and Expense
Year ended December 31, % Change
2010 2009 2008 2010 vs 2009 2009 vs 2008
($ in millions)
Interest income .......................... $ 7 $ 6 $30 15% (80%)
Interest expense ......................... (101) (84) (72) 20% 17%
Interest income increased in 2010, compared to 2009, primarily due to higher average cash and investment
balances. Interest expense increased in 2010, compared to 2009, primarily resulting from additional interest on
the $750 million senior unsecured notes issued in August 2010.
Interest income decreased in 2009, compared to 2008, primarily due to lower average interest rates. Interest
expense increased in 2009, compared to 2008, primarily resulting from interest on the $400 million senior
unsecured notes issued in June 2008, partially offset by lower interest expense related to our revolving credit
facility.
At December 31, 2010, 2009 and 2008, our long-term indebtedness totaled $1.645 billion, $895 million, and
$1.545 billion.
Other, net
Other, net is comprised of the following:
Year ended December 31, % Change
2010 2009 2008 2010 vs 2009 2009 vs 2008
($ in millions)
Foreign exchange rate losses, net .......... $(18) $(30) $(47) (41%) (37%)
Noncontrolling investment basis
adjustment ......................... — (5) — (100%) N/A
Other ................................ 1 — 3 N/A (110%)
Total other, net .................... $(17) $(35) $(44) (51%) (20%)
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 $21 million, included in foreign exchange rate losses, net.
Provision for Income Taxes
Year ended December 31, % Change
2010 2009 2008 2010 vs 2009 2009 vs 2008
($ in millions)
Provision for income taxes ............... $195 $154 $ 6 26% N/A
Effective tax rate ...................... 31.4% 33.7% (0.2)%
In 2010, our effective tax rate was lower than the 35% federal statutory rate primarily due to an increase in
earnings in jurisdictions outside the United States, where our effective rate is lower, and a reversal of accruals for
uncertain tax positions resulting from the conclusion of 2005 to 2007 IRS audits, which reversal was partially
offset by state income taxes and accruals on continuing uncertain tax positions. The change in the effective rate
for 2010 compared to the 2009 rate was primarily due to an increase in earnings in jurisdictions outside the
United States and a reversal of accruals for uncertain tax positions resulting from the conclusion of 2005 to 2007
IRS audits, partially offset by a 2009 deduction relating to the closure of a foreign subsidiary that did not recur in
2010.
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
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