Expedia 2011 Annual Report Download - page 106

positions by $152 million, of which $16 million decreased our provision for income taxes, $112 million
increased additional paid-in capital and the remaining amount was primarily a decrease to deferred tax assets.
The increase in additional paid-in capital is attributable to excess tax benefits related to certain exercises of stock
options during 2005 and 2007, the cash benefits of which were recognized during those years.
We recognize interest and penalties related to our liabilities for uncertain tax positions in income tax
expense. As of December 31, 2011 and 2010, we had approximately $14 million and $13 million accrued for the
potential payment of estimated interest and penalties. During the years ended December 31, 2011, 2010 and
2009, we recognized approximately $2 million, $(11) million and $(1) million of interest (income) expense, net
of federal benefit and penalties, related to our liabilities for uncertain tax positions.
NOTE 12 — Stockholders’ Equity
All Expedia’s common stock information and related share prices included in this note have been adjusted
to reflect our one-for-two reverse stock split in December 2011.
Common Stock and Class B Common Stock
The following is a description of our common stock before and after the spin-off. The only change effected
by the spin-off in terms of our common stock was the change in par value from $0.001 to $0.0001.
Our authorized common stock consists of 1.6 billion shares of common stock with par value of $0.0001 per
share, and 400 million shares of Class B common stock with par value of $0.0001 per share. Both classes of
common stock qualify for and share equally in dividends, if declared by our Board of Directors, and generally
vote together on all matters. Common stock is entitled to one vote per share and Class B common stock is
entitled to 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 basis. Upon conversion, the Class B common stock is retired and is not
available for reissue. In the event of liquidation, dissolution, distribution of assets or winding-up of Expedia, Inc.,
the holders of both classes of common stock have equal rights to receive all the assets of Expedia, Inc. after the
rights of the holders of the preferred stock have been satisfied.
Preferred Stock
As of December 31, 2010, our preferred stock had a face value of $22.23 per share and each share was
entitled to an annual dividend of 1.99%. Each preferred stockholder was entitled to two votes per share. In
December 2011, in connection with the spin-off, we completed a preferred stock merger which resulted in each
share of Series A preferred stock converting into the right to receive cash equal to $22.23 per share plus an
amount equal to accrued and unpaid dividends and resulted in a cash payment of approximately $17,000.
Share Repurchases
In 2006, our Board of Directors authorized a share repurchase of up to 20 million outstanding shares of our
common stock. In 2010, the Executive Committee, acting on behalf of the Board of Directors, authorized an
additional repurchase of up to 20 million outstanding shares of our common stock. During 2011 and 2010, we
repurchased, through open market transactions, 10.6 million and 20.6 million shares (5.3 million and 10.3 million
on a reverse split adjusted basis) under these authorizations for a total cost of $283 million and $489 million,
excluding transaction costs, representing an average repurchase price of $26.60 and $23.71 per share ($53.20 and
$47.42 on a reverse split adjusted basis). As of December 31, 2011, 8.8 million shares remain authorized for
repurchase under the 2010 authorization. There is no fixed termination date for the repurchases.
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