Expedia 2013 Annual Report Download - page 66

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Legal reserves, occupancy tax and other consists of increases in our reserves for court decisions and the
potential and final settlement of issues related to hotel occupancy taxes, expenses recognized related to monies
paid in advance of occupancy and other tax proceedings (“pay-to-play”) as well as certain other legal reserves.
During 2013, we recognized $64 million for amounts paid or expected to be paid in advance of litigation
primarily related to penalties and interest in connection with Hawaii’s general excise tax litigation. During 2012,
we recognized $110 million related to monies expected to be paid in advance of litigation related to Hawaii’s
general excise tax litigation. For additional information, see Note 16 — Commitments and Contingencies in the
notes to the consolidated financial statements.
Acquisition-related and other
During 2013, we recorded approximately $57 million of stock-based compensation to acquisition-related
and other expense in connection with the trivago acquisition as well as $10 million related to the upfront
consideration paid to settle a portion of an employee compensation plan of trivago. For additional information,
see Note 3 – Acquisitions in the notes to the consolidated financial statements.
Operating Income
Year ended December 31, % Change
2013 2012 2011 2013 vs 2012 2012 vs 2011
($ in millions)
Operating income $366 $ 432 $ 480 (15%) (10%)
% of revenue 7.7% 10.7% 13.9%
In 2013, operating income decreased primarily due to increased costs and expenses in excess of revenue as
described above, partially offset by the growth in revenue and lower charges related to the Hawaii excise tax
litigation.
In 2012, operating income decreased primarily due to increased costs and expenses in excess of revenue as
described above, including the Hawaii tax assessments in 2012, partially offset by the growth in revenue.
Interest Income and Expense
Year ended December 31, % Change
2013 2012 2011 2013 vs 2012 2012 vs 2011
($ in millions)
Interest income $ 25 $ 26 $ 20 (6%) 31%
Interest expense (87) (88) (91) (0%) (3%)
Interest income decreased slightly in 2013 primarily due to lower average cash, cash equivalent and
investment balances. Interest income increased in 2012 primarily due to higher average cash, cash equivalent and
investment balances and, to a lesser extent, higher rates of return on those balances.
Other, Net
Other, net is comprised of the following:
Year ended December 31, % Change
2013 2012 2011 2013 vs 2012 2012 vs 2011
($ in millions)
Foreign exchange rate losses, net $(1) $(16) $(8) (97%) 91%
Equity gains (losses) of unconsolidated affiliates, and other (2) (4) 1 (43%) (387%)
Total other, net $(3) $(20) $(7) (86%) 188%
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