is related to our capital and financing leases and our long-term debt. Interest expense was $39 million, $34 million, and $71 million in 2010, 2009, and 2008. The decline in 2009 primarily relates to principal reductions of long term debt of $319 million. 

Our long-term liabilities were $1.6 billion and $1.2 billion at December 31, 2010 and 2009. See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 5—Long-Term Liabilities.” 

Other Income (Expense), Net 

Other income (expense), net was $79 million, $29 million, and $47 million during 2010, 2009, and 2008. The primary component of other income (expense), net, is related to foreign-currency gain on intercompany balances. 

Income Taxes 

We recorded a provision for income taxes of $352 million, $253 million, and $247 million in 2010, 2009, and 2008. The effective tax rate in 2010, 2009 and 2008 was lower than the 35% U.S. federal statutory rate primarily due to earnings of our subsidiaries outside of the U.S. in jurisdictions where our effective tax rate is lower than in the U.S. 

Our effective tax rate is subject to significant variation due to several factors, including variability in accurately predicting our taxable income, the taxable jurisdictions to which it relates, business acquisitions and investments, and foreign currencies. We have current tax benefits and net operating losses relating to excess stock-based compensation deductions that are being utilized to reduce our U.S. taxable income. We used substantially all of our federal net operating loss carryforwards in 2010 and have available federal tax credits of $227 million. As a result of new U.S. legislation that became effective in December 2010, we are able to accelerate our depreciation deductions for qualifying property acquired in the fourth quarter of 2010. This accelerated depreciation deduction will continue for qualifying property acquired in 2011. 

Equity–Method Investment Activity, Net of Tax 

Equity–method investment activity, net of tax, was $7 million, $(6) million, and $(9) million in 2010, 2009, and 2008. The increase in equity-method investment activity in 2010 compared to 2009 is primarily due to the recognition of a non-cash gain on a previously held equity position in a company that was acquired in 2010. 

Non-GAAP Financial Measures 

Regulation G, Conditions for Use of Non-GAAP Financial Measures , and other SEC regulations define and prescribe the conditions for use of certain non-GAAP financial information. Our measures of “Free cash flow,” operating expenses with and without stock-based compensation, and the effect of exchange rates on our consolidated statement of operations, meet the definition of non-GAAP financial measures. 

Free cash flow is used in addition to and in conjunction with results presented in accordance with GAAP and free cash flow should not be relied upon to the exclusion of GAAP financial measures. 

Free cash flow, which we reconcile to “Net cash provided by (used in) operating activities,” is cash flow from operations reduced by “Purchases of fixed assets, including internal-use software and website development.” We use free cash flow, and ratios based on