Expedia 2006 Annual Report Download - page 95

included in accounts payable, other, totaled $1.1 million as of December 31, 2006, and $3.6 million as of
December 31, 2005.
Other Transactions with IAC
In the fourth quarter of 2006, eLong sold one of its businesses to a subsidiary of IAC for a sale price of
$14.6 million of which we received $13.2 million in cash in 2006.
Agreements with Microsoft Corporation
We have various agreements with Microsoft, which is the beneficial 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, a data center services
agreement. Total fees we paid with respect to these agreements were $26.5 million, $20.0 million and
$12.6 million for the years ended December 31, 2006, 2005 and 2004.
Prior to November 1999, Microsoft owned 100% of our outstanding common stock. Concurrent with our
separation from them, we entered into a tax allocation agreement whereby we must pay Microsoft for a
portion of the tax savings resulting from the exercise of certain stock options when we realize the tax savings
on our tax return. We recorded $36.3 million in other long-term liabilities on our consolidated balance sheets
as of December 31, 2005 related to this agreement. As of December 31, 2006, we realized $6.0 million of tax
savings on our tax return, and remitted an equivalent amount to Microsoft during the fourth quarter of 2006.
As of December 31, 2006, we reclassified the remaining $30.3 million to other current liabilities from other
long-term liabilities, which we anticipate paying by the end of 2007.
NOTE 16 — Segment Information
In the first quarter of 2006, we began reporting two segments: North America and Europe. The change
from a single reportable segment is a result of the reorganization of our business. We determined our segments
based on how our chief operating decision makers manage our business, make operating decisions and evaluate
operating performance. Our primary operating metric for evaluating segment performance is “Operating
Income Before Amortization” (defined below), which includes allocations of certain expenses, primarily cost
of revenue and facilities, to the segments. We base the allocations primarily on transaction volumes and other
usage metrics; this methodology is periodically evaluated and may change. We do not allocate certain expenses
to reportable segments such as partner services, product development, accounting, human resources and legal.
We include these expenses in Corporate and Other.
Our North America segment provides a full range of travel services to customers in the United States,
Canada and Mexico. This segment operates through a variety of brands including Expedia, Hotels.com,
Hotwire.com TripAdvisor and Classic Vacations. Our Europe segment provides travel services primarily
through localized Expedia websites in the United Kingdom, Denmark, France, Germany, Italy, the Netherlands,
Norway and Sweden, as well as localized versions of Hotels.com in various European countries.
Corporate and Other includes ECT, Expedia Asia Pacific and unallocated corporate functions and
expenses. ECT provides travel products and services to corporate customers in North America and Europe.
Expedia Asia Pacific provides online travel information and reservation services primarily in Australia, the
People’s Republic of China and Japan, whose site launched in November 2006. In addition, we record
amortization of intangible assets and any related impairment, as well as stock-based compensation expense in
Corporate and Other.
F-35
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)