Expedia 2005 Annual Report Download - page 10

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contribution from IAC of a joint ownership interest in an airplane, with a value of $17.4 million,
(4) recorded a non-cash contribution of media time, with a value of $17.1 million, (5) recorded derivative
liabilities for the stock warrants and Ask Jeeves Convertible Subordinated Notes (""Ask Jeeves Notes'')
with a fair value of $101.6 million, (6) recorded a modification of stock-based compensation awards of
$5.4 million, and (7) recapitalized the invested equity balance with common stock, Class B common stock
and preferred stock, whereby holders of IAC stock received shares of Expedia stock based on a formula.
For additional information about the Spin-Off, see Note 1, Organization and Basis of Presentation, in the
notes to consolidated financial statements.
Equity Ownership and Voting Control
As of February 28, 2006, there were approximately 323,069,100 shares of Expedia common stock,
25,599,998 shares of Expedia Class B common stock and 846 shares of Expedia preferred stock
outstanding. Liberty Media Corporation (""Liberty'') through companies owned by Liberty and companies
owned jointly by Liberty and Barry Diller, Chairman and Senior Executive of Expedia, beneficially owned
approximately 18% of Expedia's outstanding common stock and 100% of Expedia's outstanding Class B
common stock. As of such date, Mr. Diller (through companies owned jointly by Liberty and Mr. Diller,
his own holdings and holdings of Liberty, over which Mr. Diller generally has voting control pursuant to an
irrevocable proxy granted by Liberty under the Stockholders Agreement described below) controlled
approximately 53% of the outstanding total voting power of Expedia.
Subject to the Stockholders Agreement, dated as of August 9, 2005, between Liberty and Mr. Diller,
Mr. Diller is effectively able to control the outcome of nearly all matters submitted to a vote or for the
consent of Expedia's stockholders (other than with respect to the election by the Expedia common
stockholders of 25% of the members of Expedia's Board of Directors and certain matters as to which a
separate class vote of the holders of Expedia common stock or Expedia preferred stock is required under
Delaware law). In addition, pursuant to the Governance Agreement, dated as of August 9, 2005, among
Expedia, Liberty and Mr. Diller, each of Mr. Diller and Liberty generally has the right to consent to
certain significant corporate actions in the event that Expedia's ratio of total debt to EBITDA, as defined
therein, equals or exceeds four to one over a continuous 12-month period.
Portfolio of Brands
We leverage our portfolio of brands to target the broadest range of travelers looking for different
travel options. Our brands provide a wide selection of travel products and services, from simple, discounted
travel to more complex, luxury travel. Our products primarily consist of air, hotel, car rental, destination
services and cruise.
Expedia. Our Expedia-branded websites make a large variety of travel products and services
available directly to travelers through our U.S.-based website, www.expedia.com, as well as through
localized versions of our website in Australia, Canada, France, Germany, Italy, the Netherlands and the
United Kingdom (""U.K.''). Expedia-branded websites also serve as the travel channel on MSN.com,
Microsoft Corporation's (""Microsoft'') online services network in the United States, as well as certain
international MSN sites. Expedia-branded websites target many different types of consumers, from
families booking a summer vacation to individual travelers arranging a quick weekend getaway. Travelers
can search for, compare information about (including pricing and availability) and book travel products
and services on Expedia-branded websites, including airline tickets, lodging, car rentals, cruises and many
destination services, such as attractions and tours, from a large number of suppliers, on a stand-alone or
package basis.
Hotels.com. Our Hotels.com website makes available a large variety of lodging options to travelers,
who can plan, shop for and book lodging accommodations, from traditional hotels to vacation rentals.
Hotels.com seeks to provide travelers with premium content and service through our U.S.-based website,
www.hotels.com (as well as localized versions in the Americas, Europe, Asia Pacific and South Africa),
our vacation rentals website at www.vacationspot.com and our call centers. Through Hotels.com, we are
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