Expedia 2012 Annual Report Download - page 66

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Interest income increased in 2012 primarily due to higher average cash, cash equivalent and investment
balances and, to a lesser extent, higher rates of return on those balances. Interest income increased in 2011
primarily due to higher average rates of return as well as higher average cash, cash equivalents and investment
balances.
Interest expense increased in 2011 compared to 2010 primarily resulting from additional interest on the
$750 million senior unsecured notes issued in August 2010.
Other, Net
Other, net is comprised of the following:
Year ended December 31, % Change
2012 2011 2010 2012 vs 2011 2011 vs 2010
($ in millions)
Foreign exchange rate losses, net $(16) $(8) $ (16) 91% (48%)
Equity gains (losses) of unconsolidated affiliates, and other (4) 1 — (387%) N/A
Total other, net $(20) $(7) $ (16) 188% (55%)
Provision for Income Taxes
Year ended December 31, % Change
2012 2011 2010 2012 vs 2011 2011 vs 2010
($ in millions)
Provision for income taxes $ 47 $ 76 $ 120 (38%) (37%)
Effective tax rate 13.4% 18.8% 28.3%
In 2012, our effective tax rate was lower than the 35% federal statutory rate primarily due to earnings in
jurisdictions outside the United States, primarily Switzerland, where our effective rate is lower, as well as the
release of a valuation allowance related to foreign deferred tax assets. The change in the effective rate for 2012
compared to 2011 primarily related to an increase in earnings as a percentage of total earnings in jurisdictions
outside the United States as well the release of the valuation allowance.
In 2011, our effective tax rate was lower than the 35% federal statutory rate and the 2010 effective tax rate
primarily due to an increase in earnings in jurisdictions outside the United States.
In 2010, our effective tax rate was lower than the 35% federal statutory rate primarily due to 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, which reversal was partially offset by state income taxes and accruals on
continuing uncertain tax positions.
Discontinued Operations, Net of Taxes
During 2012, we incurred a loss from early extinguishment of our 8.5% senior notes due 2016 (the “8.5%
Notes”) resulting directly from the spin-off of TripAdvisor. The pre-tax loss was approximately $38 million (or
$24 million net of tax), which included an early redemption premium of $33 million and the write-off of $5
million of unamortized debt issuance and discount costs. This loss was recorded within discontinued operations
in the first quarter of 2012, as that was the period in which the 8.5% Notes were legally extinguished.
Discontinued operations also include the results of operations of TripAdvisor for all periods through
spin-off on December 20, 2011. In addition, discontinued operations include non-recurring expenses of $14
60