Business Context and Reporting Period
This Form 8-K was filed by Expedia, Inc. on June 25, 2007. The report discloses the entry into a material definitive agreement regarding a new office lease.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. It focuses exclusively on the terms of a new lease agreement.
- Lease Term: 10 years initial term.
- Space: Approximately 348,000 square feet in Bellevue, Washington.
- Initial Base Rent: $25.85 per square foot per year.
- Final Year Base Rent: $35.85 per square foot per year.
- Additional Costs: Proportionate share of building operating costs.
Material Changes
The material change reported is the execution of a long-term lease for corporate headquarters space. The agreement includes a cancellation option if possession is not delivered by September 30, 2008, subject to certain conditions.
Outlook, Risks, and Contingencies
Extension Options: Expedia has the option to extend the lease for two consecutive terms of five years each, provided it meets specific conditions, including leasing and occupying approximately 50% of the initial premises.
Expansion Rights: The company holds rights of first offer to lease additional space within the building if the occupancy conditions are met.
Risks: The filing does not explicitly list financial risks, though the long-term commitment to rent increases represents a fixed cost obligation.
Investor Verification Checklist
- Verify the total annual rent obligation based on the 348,000 square feet and the escalating rent schedule.
- Confirm the specific conditions required to exercise the cancellation option if delivery is delayed past September 30, 2008.
- Review the definition of "proportionate share of certain building operating costs" to estimate total occupancy expenses.
- Assess the impact of the 50% occupancy requirement on the ability to secure extension options.