Expedia 2013 Annual Report Download - page 103

Download and view the complete annual report

Please find page 103 of the 2013 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 140

  • 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
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

(1) For 2012, acquired intangible assets primarily consist of customer and supplier relationship assets. In total,
the weighted average life of acquired intangible assets during 2012 and 2011 was 8.1 years and 3.7 years.
(2) Includes cash acquired of $13 million and $6 million during 2012 and 2011.
(3) As of December 31, 2011, $3 million of the total purchase price was accrued with the remainder paid in
cash during the respective years.
The results of operations of each of the acquired businesses in 2012 and 2011 have been included in our
consolidated results from each transaction closing date forward; their effect on consolidated revenue and
operating income during 2012 and 2011 was not significant.
NOTE 4 — Discontinued Operations
On December 20, 2011, we completed the spin-off of TripAdvisor, Inc., which included its flagship brand as
well as 18 other travel media brands. Accordingly, we have presented the financial condition and results of
operations of our former TripAdvisor Media Group segment in the consolidated financial statements through
December 20, 2011 as discontinued operations. Additionally, the 2012 loss incurred to extinguish our 8.5%
senior notes due 2016 (the “8.5% Notes”), a result of the spin-off, was recorded as discontinued operations. See
below for a full description of the extinguishment. Financial data for the discontinued operations for the years
ended December 31, 2012 and 2011 was as follows:
Year ended December 31,
2012 2011
Revenue $ — $620,994
Income (loss) before income taxes $ (37,568) $230,380
Provision for income taxes 15,029 (82,118)
Net income (loss) (22,539) 148,262
Net income attributable to noncontrolling interest — (114)
Net income (loss) attributable to discontinued operations $ (22,539) $148,148
Earnings (loss) per share:
Basic $ (0.17) $ 1.09
Diluted (0.16) 1.07
Shares used in computing earnings per share:
Basic 134,203 135,888
Diluted 139,929 138,702
Discontinued operations for the year ended December 31, 2011 included spin-off costs (e.g., legal and
professional fees) of $14 million. Our Leisure segment recognized approximately $207 million of sales and
marketing expense from TripAdvisor in 2011 through the spin-off date. Interest expense and amortization of debt
issuance and discount costs related to the 8.5% Notes of $35 million for the year ended December 31, 2011 were
also included within discontinued operations.
The indenture governing our $400 million aggregate principal amount of the 8.5% Notes contained certain
covenants that could have restricted implementation of the spin-off. On December 20, 2011, prior to
consummation of the spin-off, we gave “Notice of Redemption” to the bondholders, the effect of which was the
bonds became due and payable on the redemption date at the redemption price. The redemption price was equal
to 100% of the principal amount plus a make-whole premium as of, and accrued and unpaid interest to, the
redemption date. The redemption date was defined as 30 days after the Notice of Redemption was given. In order
to complete the Notice of Redemption, we were required to irrevocably deposit, with the Trustee, funds sufficient
to pay the redemption price plus accrued interest on the 8.5% Notes (approximately $451 million). The 8.5%
Notes were fully redeemed on January 19, 2012, the redemption date, for approximately $450 million. In
F-21