Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity

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

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, if any, have been satisfied.

Preferred Stock

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. As of December 31, 2012 and 2011, we have no preferred stock outstanding.

Share Repurchases

During 2012, 2010, and 2006, our Board of Directors, or the Executive Committee, acting on behalf of the Board of Directors, authorized a repurchase of up to 20 million outstanding shares of our common stock during each of the respective years for a total of 60 million shares. Shares repurchased under the authorized programs were as follows:

	Year ended December 31,
	2012		2011(1)		2010(2)
Number of shares repurchased		10.7 million		10.6 million		20.6 million
Average price per share	$	37.15	$	26.60	$	23.71
Total cost of repurchases (in millions)(3)	$	397	$	283	$	489

(1) On a reverse split adjusted basis the number of shares repurchased was 5.3 million for $53.20 per share.

(2) On a reverse split adjusted basis the number of shares repurchased was 10.3 million for $47.42 per share.

(3) Amount excludes transaction costs.

As of December 31, 2012, 18.1 million shares remain authorized for repurchase under the 2012 authorization with no fixed termination date for the repurchases.

Dividends on our Common Stock

In 2012, 2011 and 2010, the Executive Committee, acting on behalf of the Board of Directors, declared the following dividends, which have been adjusted for the one-for-two reverse stock split in December 2011:

			Dividend Per  Share				Total Amount (in thousands)
	Declaration Date				Record Date				Payment Date
Year ended December 31, 2012:
		February 9, 2012	$	0.09		March 12, 2012	$	12,204		March 30, 2012
		April 25, 2012		0.09		May 30, 2012		12,205		June 19, 2012
		July 25, 2012		0.13		August 28, 2012		18,061		September 18, 2012
		October 24, 2012		0.13		November 16, 2012		17,658		December 7, 2012
		December 7, 2012		0.52		December 17, 2012		70,295		December 28, 2012
Year ended December 31, 2011:
		February 9, 2011	$	0.14		March 11, 2011	$	19,352		March 31, 2011
		April 27, 2011		0.14		May 27, 2011		19,232		June 17, 2011
		July 26, 2011		0.14		August 26, 2011		19,148		September 16, 2011
		October 26, 2011		0.14		November 18, 2011		18,818		December 9, 2011
Year ended December 31, 2010:
		February 10, 2010	$	0.14		March 11, 2010	$	20,220		March 31, 2010
		April 27, 2010		0.14		May 27, 2010		19,902		June 17, 2010
		July 26, 2010		0.14		August 26, 2010		19,703		September 16, 2010
		October 25, 2010		0.14		November 18, 2010		19,251		December 9, 2010

In addition, on February 4, 2013, the Executive Committee, acting on behalf of the Board of Directors, declared a quarterly cash dividend of $0.13 per share of outstanding common stock payable on March 28, 2013 to the stockholders of record as of the close of business on March 11, 2013. Future declarations of dividends are subject to final determination by our Board of Directors.

Spin-off Adjustment to Additional Paid-in Capital

As a result of the spin-off of TripAdvisor, during 2011, we recorded a net reduction of $648 million to additional paid-in capital which included, (1) a reduction to net equity for the spin-date balance of TripAdvisor’s net assets, which were contributed to TripAdvisor, Inc. upon spin-off pursuant to the separation agreement, (2) an increase to net equity related to the reclassification of TripAdvisor’s intercompany receivable from Expedia, which was extinguished on the spin-date pursuant to the separation agreement and (3) a reduction to net equity for the portion of Expedia’s TripAdvisor Media Group reporting unit goodwill that exceeded the historical cost of TripAdvisor’s goodwill in accordance with applicable accounting guidance. The details of these adjustments are as follows (in thousands):

TripAdvisor Invested Equity as of December 20, 2011	$	521,792
Reclassification of TripAdvisor’s intercompany receivable from Expedia, which was extinguished in connection with the spin-off		(191,349	)
Adjustments to Expedia’s TripAdvisor Media Group reporting unit goodwill required to effect the spin-off		317,085
Reduction to additional paid-in capital related to spin-off	$	647,528

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss), net of tax for 2012 and 2011 is primarily comprised of accumulated foreign currency translation adjustments.

Other Comprehensive Income (Loss)

The following table presents the changes in the components of other comprehensive income (loss), net of tax:

	For the Year Ended December 31,
	2012			2011			2010
	(In thousands)
Net income	$	280,440		$	474,603		$	425,560
Other comprehensive income (loss)
Currency translation adjustments and other		17,564			(1,161	)		(11,996	)
Unrealized gains (losses) on available for sale securities, net of taxes (1)		1,098			(79	)		329
Comprehensive income		299,102			473,363			413,893
Less: Comprehensive income attributable to noncontrolling interests		(1,559	)		(9,616	)		(4,575	)
Comprehensive income attributable to Expedia, Inc.	$	297,543		$	463,747		$	409,318

(1) Net gains (losses) recognized and reclassified during 2012, 2011 and 2010 were immaterial.

Noncontrolling Interests

In the second quarter of 2011, we acquired newly issued shares of eLong for $41 million and, at the same time, Tencent Holdings Limited also acquired approximately 16% of the outstanding shares of eLong for $84 million. In the fourth quarter of 2011, we acquired additional shares of eLong from external third parties for $93 million.

In 2011, including the eLong transactions discussed above, we acquired additional net interests in certain majority owned subsidiaries for $22 million in cash. In 2010, we acquired additional interests in certain majority owned subsidiaries, including eLong, for $78 million in cash.

Amounts paid in excess of the respective noncontrolling interests were recorded to additional paid-in capital. The following table shows the effects of the changes in noncontrolling interest on our equity for the respective periods, in thousands:

	2012		2011			2010
Net income attributable to Expedia, Inc.	$	280,171	$	472,294		$	421,500
Transfers (to) from the noncontrolling interest due to:
Net increase in Expedia, Inc.’s paid-in capital for newly issued eLong shares (1)		2,077		25,957			—
Net decrease in Expedia, Inc.’s paid-in capital for purchase of outstanding shares of eLong		—		(59,070	)		(19,161	)
Net transfers from noncontrolling interest		2,077		(33,113	)		(19,161	)
Change from net income attributable to Expedia, Inc. and transfers from noncontrolling interest	$	282,248	$	439,181		$	402,339

(1) Primarily due to our acquisition of 5.4 million newly issued shares of eLong and, at the same time, Tencent Holdings Limited acquisition of 11.1 million newly issued shares of eLong in the second quarter of 2011.

As of December 31, 2012 and 2011, our ownership interest in eLong was approximately 67%.