Expedia 2011 Annual Report Download - page 104

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The tax effect of cumulative temporary differences and net operating losses that give rise to our deferred tax
assets and deferred tax liabilities as of December 31, 2011 and 2010 are as follows:
December 31,
2011 2010
(In thousands)
Deferred tax assets:
Provision for accrued expenses $ 63,704 $ 42,782
Net operating loss and tax credit carryforwards 28,430 28,986
Capitalized R&D expenditures 15 3,701
Stock-based compensation 45,149 47,139
Investment impairment — 8,588
Other 23,531 13,187
Total deferred tax assets 160,829 144,383
Less valuation allowance (23,422) (37,958)
Net deferred tax assets $ 137,407 $ 106,425
Deferred tax liabilities:
Prepaid merchant bookings and prepaid expenses $ (59,333) $ (44,213)
Intangible assets (249,729) (234,258)
Investment in subsidiaries (9,603) (8,988)
Unrealized gains (13,106) (8,823)
Property and equipment (69,581) (47,829)
Other (534) (3,816)
Total deferred tax liabilities $(401,886) $(347,927)
Net deferred tax liability $(264,479) $(241,502)
At December 31, 2011, we had federal, state and foreign net operating loss carryforwards (“NOLs”) of
approximately $6 million, $34 million and $78 million. If not utilized, the federal and state NOLs will expire at
various times between 2012 and 2031, $71 million foreign NOLs can be carried forward indefinitely, and
$7 million foreign NOLs will expire at various times between 2012 and 2031.
At December 31, 2011, we had a valuation allowance of approximately $23 million related to the portion of
net operating loss carryforwards and other items for which it is more likely than not that the tax benefit will not
be realized. This amount represented a decrease of $15 million over the amount recorded as of December 31,
2010.
We have not provided deferred U.S. income taxes on undistributed earnings of certain foreign subsidiaries
that we intend to reinvest permanently outside of the United States; the total amount of such earnings as of
December 31, 2011 was $390 million. Should we distribute earnings of foreign subsidiaries in the form of
dividends or otherwise, we may be subject to U.S. income taxes. Due to complexities in tax laws and the
uncertainties related to the timing and source of any potential distribution of such funds along with other
important factors such as the amount of associated foreign tax credits, it is not practicable to estimate the amount
of unrecognized deferred U.S. taxes on these earnings.
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