Expedia 2015 Annual Report Download - page 67

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Operating Income
Year ended December 31, % Change
2015 2014 2013 2015 vs 2014 2014 vs 2013
($ in millions)
Operating income $414 $518 $366 (20%) 41%
% of revenue 6.2% 9.0% 7.7%
In 2015, operating income decreased due to increased costs and expenses, including growth in selling and
marketing expense in excess of revenue growth, growth in general and administrative expense in excess of
revenue growth as well as an increase in restructuring and related reorganization charges, partially offset by the
gain of $132 million related to the Hawaii pay-to-play refunds discussed above.
In 2014, operating income increased due to the growth in revenue, acquisition-related and other expenses in
2013 that did not recur and lower legal reserve, occupancy tax and other charges in 2014, partially offset by
restructuring and related reorganization charges in 2014.
Included in our consolidated operating income for 2015 are operating losses for eLong through its
disposition date of May 22, 2015 of $86 million. In the prior year periods, eLong had operating losses of $51
million for 2014 and operating losses of $29 million for 2013.
Interest Income and Expense
Year ended December 31, % Change
2015 2014 2013 2015 vs 2014 2014 vs 2013
($ in millions)
Interest income $ 17 $ 27 $ 25 (39%) 10%
Interest expense (126) (98) (87) 29% 12%
Interest income decreased in 2015 compared to 2014 primarily due to lower invested balances and lower
rates of return. Lower rates of return were due to a shift out of higher-yielding currencies due to the sale of eLong
and funding U.S. dollar denominated acquisitions, and lower market rates in certain currencies. Interest income
increased in 2014 primarily due to higher average cash, cash equivalent and investment balances.
Interest expense increased in 2015 compared to 2014 primarily as a result of additional interest on the $500
million senior unsecured notes issued in August 2014, the Euro 650 million of senior unsecured notes issued in
June 2015 as well as the $750 million senior unsecured notes issued in December 2015. Interest expense
increased in 2014 compared to 2013 primarily as a result of additional interest on the $500 million senior
unsecured notes issued in August 2014.
As of December 31, 2015, 2014 and 2013, our long-term indebtedness totaled $3.2 billion, $1.7 billion and
$1.3 billion.
Gain on Sale of Business
On May 22, 2015, we completed the sale of our 62.4% ownership stake in eLong, Inc. for approximately
$671 million (or $666 million net of costs to sell and other transaction expenses) to several purchasers, including
Ctrip.com International, Ltd. As a result of the sale, we recognized a pre-tax gain of $509 million ($395 million
after tax) during 2015 included in gain on sale of business in our consolidated statement of operations.
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