Business Context and Reporting Period
Company: Expedia, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 7, 2007
Event: Entry into a Material Definitive Agreement (Third Amendment to Credit Agreement).
Key Financial Metrics and Debt Covenants
This filing details amendments to debt covenants rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
- Minimum Consolidated Net Worth Test: Reduced to $3.5 billion. Commencing with the fiscal quarter beginning October 1, 2007, this test may include 50% of Consolidated Net Income under specified circumstances.
- Leverage Ratio: Restricted Payments are permitted if the Leverage Ratio does not exceed 3.0 to 1.0 (pro forma) as of the end of the most recently completed fiscal quarter.
- Credit Agreement Date: Original agreement dated July 8, 2005, with prior amendments in December 2006.
Material Changes Versus Prior Period
The filing represents a material change to the terms of the Company's existing Credit Agreement:
- Covenant Relaxation: The minimum consolidated net worth requirement has been lowered.
- Flexibility for Restricted Payments: The amendment explicitly permits certain Restricted Payments (e.g., dividends, share repurchases) provided the Leverage Ratio remains at or below 3.0 to 1.0 and no Default exists.
Guidance, Outlook, and Risks
Management Commentary: The filing contains no forward-looking guidance, revenue outlook, or management commentary regarding business operations. The text is strictly legal in nature, summarizing the amendment terms.
Risks and Contingencies: The ability to make Restricted Payments is contingent upon the Company not being in Default or Event of Default under the Credit Agreement and maintaining the specified Leverage Ratio.
Important Facts for Investor Verification
- Verify the Company's current Consolidated Net Worth against the new $3.5 billion threshold.
- Confirm the Company's current Leverage Ratio to assess capacity for future Restricted Payments under the 3.0 to 1.0 limit.
- Review the full text of Exhibit 10.1 (Third Amendment) for specific definitions of "Restricted Payments" and "specified circumstances" regarding the net income calculation.
- Note that this filing does not provide updated revenue, earnings, or cash flow data; refer to the most recent 10-Q or 10-K for operational metrics.