Expedia 2012 Annual Report Download - page 107

The approximate fair value of 7.456% Notes was approximately $598 million and $563 million as of
December 31, 2012 and 2011, and the approximate fair value of 5.95% Notes was approximately $832 million
and $760 million as of December 31, 2012 and 2011. These fair values were based on quoted market prices in
less active markets (Level 2 inputs).
Credit Facility
Expedia, Inc. maintains a $1 billion unsecured revolving credit facility with a group of lenders, which is
unconditionally guaranteed by certain domestic Expedia subsidiaries that are the same as under the Notes and
expires in November 2017. The revolving credit facility was originally entered into in February 2010 and
subsequently amended, including a November 2012 amendment which, among other things, increased the
aggregate commitments under the facility from $750 million to $1 billion, extended the maturity date of the
facility to November 2017, reduced the commitment fee on undrawn amounts thereunder and increased the
maximum permissible leverage ratio. As of December 31, 2012 and December 31, 2011, we had no revolving
credit facility borrowings outstanding. The facility bears interest based on the Company’s credit ratings, with
drawn amounts bearing interest at LIBOR plus 150 basis points and the commitment fee on undrawn amounts at
20 basis points as of December 31, 2012. The facility contains covenants including maximum leverage and
minimum interest coverage ratios.
The amount of stand-by letters of credit (“LOC”) issued under the facility reduces the credit amount
available. As of December 31, 2012, and December 31, 2011, there was $25 million and $22 million of
outstanding stand-by LOCs issued under the facility.
NOTE 9 — 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 $22 million, $18 million and $12 million
for the years ended December 31, 2012, 2011 and 2010.
NOTE 10 — Stock-Based Awards and Other Equity Instruments
Pursuant to the Amended and Restated Expedia, Inc. 2005 Stock and Annual Incentive Plan, we may grant
restricted stock, restricted stock awards, RSUs, stock options and other stock-based awards to directors, officers,
employees and consultants. As of December 31, 2012, we had approximately 7 million shares of common stock
reserved for new stock-based awards under the 2005 Stock and Annual Incentive Plan. We issue new shares to
satisfy the exercise or release of stock-based awards.
Modification of Stock-Based Awards. In connection with the spin-off, existing Expedia stock-based awards,
which included RSUs, stock options and warrants, were primarily converted as follows:
• each vested stock option to purchase shares of Expedia common stock converted into an option to
purchase shares of Expedia common stock and an option to purchase shares of TripAdvisor common
stock,
• each unvested stock option to purchase shares of Expedia common stock converted into a stock option
to purchase shares of common stock of the applicable company for which the employee was employed
following the spin-off,
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