Expedia 2005 Annual Report Download

Download and view the complete annual report

Please find the complete 2005 Expedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 98

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98

5

Table of contents

  • Page 1
    5

  • Page 2

  • Page 3
    ...marketing campaigns touting the virtues and rewards of "booking direct' to online travel agencies other than Expedia continuing to expand their product and service offerings, improving their customers' experience and investing in marketing and technology. And for added soberness, 2006 is going to be...

  • Page 4
    We have a great past, a very challenging present, and a future that is not yet in evidence Ì the kind of environment that demands strategic clarity and exceptional execution, and I'm convinced both are in hand. Sincerely, Barry Diller Ì Chairman & Senior Executive May, 2006

  • Page 5
    ...accelerating growth; aggressively growing TripAdvisor, the premier global information and advice destination on the web and now the world's second most visited travel website; nearly doubling Hotwire's profitability; and placing our high end Classic Vacations on the growth path again, expanding into...

  • Page 6
    ..., scale our business, and fundamentally integrate what have been disparate operations at Expedia, Hotels.com and Hotwire. The development of these capabilities will require considerable management attention, technology and capital resources, including the design and delivery of a new enterprise data...

  • Page 7
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005 Commission file number: 000-51447 EXPEDIA, INC. (Exact name of registrant as specified ...

  • Page 8
    ... Other Information Part III Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions Principal Accountant Fees and Services Item...

  • Page 9
    ... used by a broad range of leisure and corporate travelers and offline retail travel agents. We make available, on a stand-alone and package basis, travel products and services provided by numerous airlines, lodging properties, car rental companies, destination service providers, cruise lines...

  • Page 10
    ... 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...

  • Page 11
    ...and services. Hotwire.com. Our discount travel website, Hotwire.com, makes available airline tickets, hotel rooms, rental cars, cruises and vacation packages. Hotwire.com's approach matches the price-sensitive travelers willing to be flexible to save money with suppliers who have excess seats, rooms...

  • Page 12
    ... of higher-end travel packages. Our Hotels.com site and its international versions target travelers with premium content about lodging properties, and generally appeal to travelers with shorter booking windows who prefer to drive to their destination. We believe our appeal to suppliers is enhanced...

  • Page 13
    ... air and hotel products to car rental, destination services, cruise and other offerings. Leverage our Scale in Technology and Operations. The travel brands comprising Expedia, Inc. have invested over $3 billion dollars in technology, operations, brand building, supplier integration and relationships...

  • Page 14
    ...and Agency Business Models We make travel products and services available on a stand-alone and package basis, primarily through two business models: the merchant model and the agency model. Under the merchant model, we facilitate the booking of hotel rooms, airline seats, car rentals and destination...

  • Page 15
    ... partners, including a number of leading travel companies, pursuant to which we pay a commission for bookings originated from their websites. Affiliate partners can make travel products and services available through an Expedia-branded website, a co-branded website or their own private label website...

  • Page 16
    ..., supplier direct channels offer advantages to travelers, such as loyalty programs or lower transaction fees. Our websites feature travel products and services from numerous travel suppliers (as opposed to a single supplier). We face competition from airlines, hotels, rental car companies, cruise...

  • Page 17
    ... or furnished to, the SEC. Code of Ethics. We posted our code of business conduct and ethics, which applies to all employees, including all executive officers and senior financial officers and directors, on our corporate website at www.expediainc.com. Our code of business conduct and ethics complies...

  • Page 18
    ... our business, financial condition and results of operations. A portion of our agency revenue is derived from compensation paid by travel suppliers and GDS partners for bookings made through our websites. We generally negotiate these commissions and fees with our travel suppliers and GDS partners...

  • Page 19
    ... priced travel products and services that we are able to offer, which could adversely affect our business, financial condition and results of operations. Travel suppliers are increasingly seeking to lower their travel distribution costs by promoting direct online bookings through their own websites...

  • Page 20
    .... Expedia is composed of multiple business units that were unaffiliated companies prior to being acquired by IAC. These multiple business units use disparate systems, processes and personnel to support operations, including bookings and fulfillment, accounting and budgeting, tax filings, vendor...

  • Page 21
    ... and redundancy in our information systems may affect our businesses. A fundamental requirement for online commerce and communications is the secure transmission of confidential information, such as credit card numbers or other personal information, over public networks. Our security measures may be...

  • Page 22
    ... growth of our product and service offerings and customer base. Such expansion increases the complexity of our business and places a significant strain on our management, operations, technical performance, financial resources, and internal financial control and reporting functions. There can be no...

  • Page 23
    ... in interest rates; ‚ conditions or trends in the online travel and e-commerce industries; ‚ fluctuations in the stock market in general and market prices for internet-related companies in particular; ‚ general economic conditions; ‚ new services, innovations, and strategic developments by...

  • Page 24
    ..., such as selling the company or substantially all of the assets of the company, issuing equity securities to satisfy financing needs, acquiring businesses or assets with equity securities. Under the tax sharing agreement with IAC, there are restrictions on our ability to take actions that could...

  • Page 25
    ... or value-added taxes, the results could have an adverse affect on our businesses, financial condition and results of operations. Our international opportunities and investments involve risks relating to travel patterns, practices, Internet-based commerce, regulations and exchange rate fluctuations...

  • Page 26
    ... of China restrict foreign investment in the air-ticketing, travel agency, internet content provision and advertising businesses. Such laws and regulations require that we establish effective control through a series of agreements with eLong's affiliated Chinese entities and could restrict...

  • Page 27
    ...dates through December 2010. We also lease approximately 280,000 square feet of office space for our international operations in various cities and locations in Australia, Belgium, Canada, China, France, Germany, Italy, Japan, Mexico, the Netherlands, Spain and the United Kingdom, pursuant to leases...

  • Page 28
    ...support of the motions. Both motions to dismiss remain pending. Expedia believes that the claims in the class action and derivative suits lack merit and that the claims will be vigorously defended. Litigation Relating to the IAC/Hotels.com Merger Agreement A putative class action on behalf of Hotels...

  • Page 29
    ...by the selling defendants on their sales of Hotels.com stock during a specified period. On March 7, 2005, the district court issued orders staying the case until further notice and directing that the case be administratively closed pending a decision in the appeal of the Taubenfeld action. On August...

  • Page 30
    ...17, 2005, a purported class action was filed in California state court against a number of internet travel companies, including Expedia, Hotels.com, Priceline.com and Orbitz. See Ronald Bush et al. v. CheapTickets, Inc. et al., No. BC329021 (Superior Court, Los Angeles County). The complaint alleges...

  • Page 31
    ... a second amended complaint. City of Philadelphia, Pennsylvania Litigation. On July 12, 2005, the city of Philadelphia filed an action in Pennsylvania state court against a number of internet travel companies, including Hotels.com, Hotwire and Expedia. City of Philadelphia v. Hotels.com, et al., No...

  • Page 32
    ... the complaint. Pitt County, North Carolina Litigation. On December 1, 2005, Pitt County, North Carolina filed a purported state wide class action in state court against a number of internet travel companies, including Hotels.com, Hotwire and Expedia. Pitt County, et al. v. Hotels.com, L.P. et...

  • Page 33
    ...our business model and other factors that the Board of Directors may deem relevant. In addition, the Credit Agreement limits our ability to pay cash dividends under certain circumstances. Unregistered Sales of Equity Securities During the quarter ended December 31, 2005, we did not issue or sell any...

  • Page 34
    ...change in Hotels.com business, Hotels.com started reporting its merchant hotel business revenue net of the amount payable to the hotel property. Hotels.com reported its merchant hotel business revenue on a gross basis prior to January 1, 2004. For additional information about our revenue recognition...

  • Page 35
    ... used by a broad range of leisure and corporate travelers and offline retail travel agents. We make available, on a stand-alone and package basis, travel products and services provided by numerous airlines, lodging properties, car rental companies, destination service providers, cruise lines...

  • Page 36
    ... packages. Our Hotels.com site and its international versions target travelers with premium content about lodging properties, and generally appeal to travelers with shorter booking windows who prefer to drive to their destination. Innovate on behalf of travelers and supplier partners. We have a long...

  • Page 37
    .... Actual revenue could be greater or lower than the amounts estimated due to changes in hotel billing practices or changes in traveler behavior. Historically adjustments related to this account have not been material. Recoverability of Goodwill and Indefinite and Definite Long-Lived Intangible...

  • Page 38
    ...units. We believe the weighted use of discounted cash flows and market approach is the best method for determining the fair value of our reporting units because: ‚ It excludes the impact of short-term volatility, ‚ It includes all information available to management, which is generally more than...

  • Page 39
    ... use or occupancy of hotel accommodations. Hotel operators generally collect and remit these taxes to the various tax authorities. Consistent with this practice, when a customer books a room through one of our travel services, the hotel charges taxes based on the room rate paid to the hotel, we pay...

  • Page 40
    ...the online travel industry and our business acquisitions. Gross bookings include the total price due from travelers, including taxes, fees and other charges, and are generally not reduced for cancellations and traveler refunds. 2005 Year Ended December 31, 2004 ($ in thousands) 2003 % Change 2005 vs...

  • Page 41
    ... lower discounting of merchant air tickets, as the industry experienced high load factors. Other revenue, which includes car rental, destination services and cruise, increased by 57% in 2005 compared to 2004, primarily due to acquisitions and growth in the car rental business. International revenue...

  • Page 42
    ...merchant fees, (2) reserves and related payments for product and services purchased with fraudulent credit cards and other chargebacks, (3) fees paid to our fulfillment vendors for issuing airline tickets and related traveler services, (4) costs for the operations of our data center and call centers...

  • Page 43
    ..., tax and accounting. In 2005, the increase in general and administrative expense was primarily due to acquisitions, an increase in our use of professional services and costs to build our executive teams and supporting staff levels largely in connection with being a stand-alone public company. In...

  • Page 44
    ...-down related to the packaging technology used by Hotels.com as a result of adopting Expedia.com's packaging technology. Given the increasing complexity of our business, geographic expansion, initiatives in corporate travel, increased supplier integration, service-oriented architecture improvements...

  • Page 45
    ... primarily due to the termination of Hotels.com's distribution agreement with Travelocity in 2003. Operating Income Year Ended December 31, 2005 2004 2003 ($ in thousands) % Change 2005 vs 2004 2004 vs 2003 Operating income of revenue (as reported of revenue (on a comparable net basis $397,052...

  • Page 46
    ... a $4.7 million write-down relating to packaging technology by Hotels.com in 2003. Operating Income Before Amortization (""OIBA'') Year Ended December 31, 2005 2004 2003 ($ in thousands) % Change 2005 vs 2004 2004 vs 2003 OIBA of revenue (as reported of revenue (on a comparable net basis $627...

  • Page 47
    ... into management decision making at Expedia, as OIBA is our primary internal metric for evaluating the performance of our businesses. OIBA has certain limitations in that it does not take into account the impact to Expedia, Inc.'s statements of income of certain expenses, including stock-based...

  • Page 48
    ...2004 vs 2003 Write-off of long-term investment of revenue (as reported of revenue (on a comparable net basis) ÏÏ $23,426 $Ì $Ì 1% 0% 0% 1% 0% 0% N/A N/A In 2005, we received information regarding the deteriorating financial condition of our long-term investment in a leisure travel company...

  • Page 49
    ... deferred merchant bookings. We pay our suppliers related to these bookings approximately one week after completing the transaction for air travel and, for all other merchant bookings, after the travelers' use and the subsequent billing from the supplier. Therefore, especially for the hotel business...

  • Page 50
    ... consist of standby LOCs and guarantees. We use our standby LOCs to secure payment for hotel room transactions to particular hotel properties. The outstanding balance of our standby LOCs directly reduces the amount available to us from our revolving credit facility. In addition, we provide...

  • Page 51
    packaged travel services sold within that country. This country holds all travel agents and tour companies to the same standard. The following table presents our material contractual obligations and commercial commitments as of December 31, 2005: Total Less Than 1 Year By Period 1 to 3 to 3 Years 5 ...

  • Page 52
    ..., interest rates, governmental actions and other factors. These changes, if material, could cause us to adjust our financing and operating strategies. As foreign currency exchange rates fluctuate, translation of the income statements of our international businesses into U.S. dollars affects year...

  • Page 53
    ... to address the issues identified through this review. As part of this ongoing process to improve our internal controls over financial reporting, we have taken the following actions: (a) Hiring a new financial management team, including our Chief Financial Officer, Chief Accounting Officer, Vice...

  • Page 54
    ...dated as of August 9, 2005(3) Stockholder Equity Warrant Agreement for Warrants to Purchase up to 11,450,182 Shares of Common Stock, by and between Expedia, Inc. and Mellon Investor Services LLC, dated as of August 9, 2005(3) Optionholder Equity Warrant Agreement for Warrants to Purchase up to 1,558...

  • Page 55
    ... 2005(5) Expedia, Inc. Executive Deferred Compensation Plan, effective as of August 9, 2005(7) Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation, Expedia, Inc., a Washington corporation, Travelscape, Inc., a Nevada corporation, Hotels.com, a Delaware corporation...

  • Page 56
    ...File No. 333-127324) filed on August 9, 2005. (5) Incorporated by reference to Expedia, Inc.'s Quarterly Report on Form 10-Q for the quarter ending September 30, 2005. (6) Incorporated by reference to Expedia, Inc.'s Registration Statement on Form S-4 (File No. 333-124303-01), filed on June 17, 2005...

  • Page 57
    ... by the undersigned hereunto duly authorized. March 30, 2006 Expedia, Inc. By: /s/ DARA KHOSROWSHAHI Dara Khosrowshahi Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant...

  • Page 58
    ... to Consolidated Financial Statements, Schedules and Exhibits Consolidated Financial Statements Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Changes in Stockholders' Equity and...

  • Page 59
    ... opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used...

  • Page 60
    ... opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used...

  • Page 61
    ... (In thousands, except per share data) 2005 Year Ended December 31, 2004 2003 Revenue Cost of revenue Gross profit Operating expenses: Selling and marketing General and administrative Technology and content Amortization of intangible assets Stock-based compensation Amortization of non-cash...

  • Page 62
    ..., merchant 515,561 $ 429,739 Accounts payable, trade 127,260 98,666 Short-term borrowings 230,755 Ì Deferred merchant bookings 406,948 361,199 Deferred revenue 7,068 5,353 Income taxes payable 43,405 421 Deferred income taxes, net 3,178 Ì Other current liabilities 104,050 86,801 Total...

  • Page 63
    ...INCOME (In thousands, except share data) Invested Equity 3,159 Preferred Stock Shares Amount Common Stock Shares Amount Class B Common Stock Shares Amount Additional Paid-In Capital Accumulated Other Treasury Retained Comprehensive Stock Earnings Income Total $ 2,055,756 111,407 (3,861) (120...

  • Page 64
    ... treasury stock 98,492) (Distribution to) contribution from IAC/InterActiveCorp, net (52,844) 103,807 628,681 Principal payments on long-term obligations 2,860) Ì Other, net 4,393) 8,692 (1,216) Net cash provided by financing activities 106,507 107,320 585,748 Effect of exchange rate changes on...

  • Page 65
    ... a diversified portfolio of brands including: Expedia-branded websites, Hotels.com, Hotwire.com, our private label programs (Worldwide Travel Exchange and Interactive Affiliate Network), Classic Vacations, Expedia Corporate Travel (""ECT''), eLong, Inc. (""eLong'') and TripAdvisor. We refer to...

  • Page 66
    ... travel products and services. For example, traditional leisure travel bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and holiday travel. The number of bookings decreases in the fourth quarter. Because revenue in the merchant business...

  • Page 67
    ...Recognition We offer travel products and services on a stand-alone and package basis primarily through two business models: the merchant model and the agency model. Under the merchant model, we facilitate the booking of hotel rooms, airline seats, car rentals and destination services from our travel...

  • Page 68
    .... We record agency revenue on air transactions when the traveler books the transaction, as we have no significant post-delivery obligations. We record agency revenue on hotel reservations, cruise and car rental reservations either on an accrual basis for payments from a commission clearinghouse, or...

  • Page 69
    ... during the application development stage related to the development of internal-use software. We expense costs incurred related to the planning and post-implementation phases of development as incurred. We compute depreciation using the straight-line method over the estimated useful lives of the...

  • Page 70
    ...of our travel services, the hotel charges the customer taxes based on the room rate paid to the hotel, we pay the hotel those taxes invoiced by the hotel and we recover an equivalent amount from the customer. We do not collect or remit occupancy taxes on the portion of the customer payment we retain...

  • Page 71
    ...We report the change in the fair value of derivative instruments that do not qualify for hedge accounting treatment in other income or expense in our consolidated statements of income. We do not hold or issue financial instruments for speculative or trading purposes. For additional information about...

  • Page 72
    ... Concentrations Our business is subject to certain risks and concentrations including dependence on relationships with travel suppliers, primarily airlines and hotels, dependence on third party technology providers, exposure to risks associated with online commerce security and credit card fraud. We...

  • Page 73
    ...Statements Ì (Continued) relationships with six major airlines in the United States. We also depend on global distribution system partners and third party service providers for certain fulfillment services. Financial instruments, which potentially subject us to concentration of credit risk, consist...

  • Page 74
    ... 31, 2003 As As As As Reported Reclassified Reported Reclassified (In thousands) Revenue Cost of revenue Gross profit Operating expenses: Selling and marketing General and administrative Technology and content Amortization of intangibles Stock-based compensation Amortization of non-cash...

  • Page 75
    .... We discuss the significant business acquisitions below. eLong TripAdvisor Eqencia Hotwire.com (In millions) Expedia.com Hotels.com Fair value of net tangible assets acquired Intangible assets: Supplier relationships Customer relationships Affiliate agreements Technology Other Tradename and...

  • Page 76
    ... 91.4% of the ownership of Egencia (renamed ECT-Europe), an online corporate travel agency in France, for an aggregate purchase price of $65.7 million. Hotwire.com In November 2003, we completed our acquisition of Hotwire.com, a discount travel website for $666.7 million in cash, plus the assumption...

  • Page 77
    ... software development costs of $38.6 million, $24.0 million and $12.9 million. NOTE 7 Ì Long-Term Investment and Other Assets Write-off of Long-Term Investment In 2005, we received information regarding the deteriorating financial condition of our long-term investment in a leisure travel company...

  • Page 78
    ... a publicly-traded Cayman Island company, whose principal business is the operation of an internet-based travel business in the People's Republic of China, for approximately $59.0 million in cash, which we accounted for under the equity method. Concurrent with this investment, eLong issued a warrant...

  • Page 79
    ... 31, 2004 Accumulated Amortization (In thousands) Weighted Average Life (Years) Cost Net Cost Net Distribution agreements Supplier relationship ÏÏÏ Technology Customer lists Affiliate agreements ÏÏÏ Domain names Other Total $177,426 211,670 187,540 25,163 33,049 10,871 47,364 $693...

  • Page 80
    ...16,789 $263,531 Total NOTE 9 Ì Short-term Borrowings In July 2005, we entered into a $1.0 billion five-year unsecured revolving credit facility with a group of lenders, which was effective as of the Spin-Off. Certain Expedia subsidiaries have unconditionally guaranteed Expedia, Inc.'s obligation...

  • Page 81
    ... the Spin-Off, when holders of IAC's Ask Jeeves Notes convert their notes, they will receive shares of both IAC and Expedia common stock, Under the terms of the Spin-Off, we are obligated to issue shares of our common stock to IAC for delivery to the holders of the Ask Jeeves Notes, or receive cash...

  • Page 82
    ... fluctuates based on changes in the price of our common stock. NOTE 11 Ì Employee Benefit Plans Our U.S. employees are generally eligible to participate in a retirement and savings plan that qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute up...

  • Page 83
    ... stock warrants are vested. Each stock warrant is exercisable for a certain number of shares of our common stock or a fraction thereof. As of December 31, 2005, we had approximately 11.5 million shares of common stock reserved for new stock-based awards under the 2005 Stock and Annual Incentive Plan...

  • Page 84
    ... $79.39 $13.01 Evaluation of Estimated Equity Award Forfeitures In 2005, we changed the estimated forfeiture rates we use in the determination of our stock-based compensation expense; this change was a result of an assessment that included an analysis of the actual number of equity awards that had...

  • Page 85
    ... periods presented, we have computed current and deferred tax expense using our stand-alone effective tax rate. As of December 31, 2005, our current income tax payable represents amounts that we will pay to the Internal Revenue Service and other tax authorities based on our taxable income after the...

  • Page 86
    ... as follows: December 31, 2005 2004 (In thousands) Deferred tax assets: Provision for accrued expenses Deferred revenue Net operating loss and tax credit carryforwards Capitalized R&D expenditures Stock-based compensation Investment impairment Other Total deferred tax assets Less valuation...

  • Page 87
    ...one vote per share and Class B common stock carries 10 votes per share. Holders of common stock, voting as a single, separate class are entitled to elect 25% of the total number of directors. Class B common stockholders may, at any time, convert their shares into common stock, on a one for one share...

  • Page 88
    ... shares of preferred stock automatically convert into common stock. NOTE 15 Ì Earnings Per Share Basic Earnings Per Share For the year ended December 31, 2005, we computed basic earnings per share using the number of shares of common stock and Class B common stock outstanding immediately following...

  • Page 89
    ... the total amount of packaged travel sold be bonded. Our LOCs consist of standby LOCs, underwritten by a group of lenders, which we primarily issue to certain hotel properties to secure our payment for hotel room transactions. There were no claims made against any standby LOCs during the year ended...

  • Page 90
    ... the defendants breached their fiduciary duty to the plaintiffs by entering into or approving the merger agreement. Hotels.com is also a party to a securities class action and a shareholder derivative suit relating to Hotels.com's guidance for the fourth quarter of 2002. The principal claim in these...

  • Page 91
    ... call option value for TripAdvisor is approximately $16.0 million as of December 31, 2005. NOTE 17 Ì Related Party Transactions Expenses Allocated from IAC Prior to Spin-Off, our operating expenses include allocations from IAC for accounting, treasury, legal, tax, corporate support, human resource...

  • Page 92
    ... owner of more than 5% of our outstanding common stock, including an agreement that maintains our presence as the provider of travel shopping services on MSN.com and several international MSN websites and, in 2004 and 2003, a data center services agreement. Total fees we paid with respect to these...

  • Page 93
    ...Italy, Japan, Mexico, the Netherlands, Spain and the United Kingdom and other international territories. The following table presents the revenue and long-lived assets by geographic area, the United States and all other countries, for the years ended December 31, 2005, 2004 and 2003. 2005 Year Ended...

  • Page 94
    ... the use of fraudulent credit cards ""charged-back'' due to payment disputes and cancellation fees. The following table presents the changes in the valuation and qualifying accounts. Description Balance of Beginning of Period Charges to Earnings Charges to Other Accounts Deductions Balance at End of...

  • Page 95
    .... 2005 Stock and Annual Incentive Plan(4) Summary of Expedia, Inc. Non-Employee Director Compensation Arrangements(2) Governance Agreement, by and among Expedia, Inc., Liberty Media and Barry Diller, dated as of August 9, 2005(5) Stockholders Agreement, by and between Liberty Media Corporation and...

  • Page 96
    ... 32.3 Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation, Expedia, Inc., a Washington corporation, Travelscape, Inc., a Nevada corporation, Hotels.com, a Delaware corporation and Hotwire, Inc., a Delaware corporation, as Borrowers; the Lenders party thereto; Bank...

  • Page 97

  • Page 98
    5