Expedia 2006 Annual Report Download - page 9

totaled $2.5 billion, by recording a non-cash distribution to IAC; (3) recorded a non-cash 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.
Equity Ownership and Voting Control
As of December 31, 2006, there were approximately 305,901,048 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 19%
of Expedia’s outstanding common stock and 100% of Expedia’s outstanding Class B common stock. As of
such date, Mr. Diller (through 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 55% of the outstanding total voting power of Expedia. Following
our repurchase of 30 million shares of our common stock on January 19, 2007, Mr. Diller controlled
approximately 58% of the outstanding voting power of Expedia.
Pursuant 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
Expedia leverages its brand portfolio to target the broadest possible range of travel suppliers and travelers
looking for 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 airline flights, hotel stays,
car rentals, destination services and cruises.
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, Denmark, France, Germany, Italy, Japan, the Netherlands, Norway,
Sweden and the United Kingdom. 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 travelers, 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 both a stand-alone and
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 through localized versions in the Americas, Europe, Asia Pacific and South Africa.
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