Expedia 2012 Annual Report Download - page 122

addition, we reclassified sales and marketing expense related to amounts we paid to TripAdvisor prior to the
spin-off, which were previously eliminated in consolidation, to third party expenses for all periods presented. Net
amounts payable to TripAdvisor were $24 million and $14 million as of December 31, 2012 and December 31,
2011 and were primarily included in accounts payable, other on the consolidated balance sheet.
IAC/InterActiveCorp. In connection with and following the IAC spin-off in August 2005, we entered into
various commercial agreements with IAC, a related party due to common ownership. On August 20, 2008, IAC
completed its plan to separate into five publicly traded companies. With this separation, our related party
transactions with the newly constituted IAC have been immaterial and we expect this trend to continue on a
go-forward basis.
In addition, in conjunction with the IAC spin-off, we entered into a joint ownership and cost sharing
agreement with IAC, under which IAC transferred to us 50% ownership in an airplane, which is available for use
by both companies. We share equally in capital costs; operating costs are pro-rated based on actual usage. In
May 2006, the airplane was placed in service and is being depreciated over 10 years. As of December 31, 2012
and 2011, the net basis in our ownership interest was $15 million and $16 million recorded in long-term
investments and other assets. In 2012 and 2011, operating and maintenance costs paid directly to the jointly-
owned subsidiary for the airplane were nominal.
NOTE 17 — Segment Information
We have two reportable segments: Leisure and Egencia. Our Leisure segment, which consists of the
aggregation of operating segments, provides a full range of travel and advertising services to our worldwide
customers through a variety of brands including: Expedia.com and Hotels.com in the United States and localized
Expedia and Hotels.com websites throughout the world, Expedia Affiliate Network, Hotwire.com, Venere, eLong
and Classic Vacations. Our Egencia segment provides managed travel services to corporate customers in
North America, Europe, and the Asia Pacific region.
We determined our operating segments based on how our chief operating decision makers manage our
business, make operating decisions and evaluate operating performance. Our primary operating metric is adjusted
EBITDA. Adjusted EBITDA for our Leisure and Egencia segments includes allocations of certain expenses,
primarily cost of revenue and facilities, and our Leisure segment includes the total costs of our global supply
organizations as well as the realized foreign currency gains or losses related to the forward contracts hedging a
component of our net merchant hotel revenue. We base the allocations primarily on transaction volumes and
other usage metrics. We do not allocate certain shared expenses such as accounting, human resources,
information technology and legal to our reportable segments. We include these expenses in Corporate. Our
allocation methodology is periodically evaluated and may change.
Corporate also includes unallocated corporate functions and expenses. In addition, we record amortization
of intangible assets and any related impairment, as well as stock-based compensation expense, restructuring
charges, legal reserves, occupancy tax and other, and other items excluded from segment operating performance
in Corporate. Such amounts are detailed in our segment reconciliation below.
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