Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information

NOTE 17 — Segment Information

We have two reportable segments: Leisure and Egencia. Our Leisure segment, which consists of the aggregation of operating segments, provides a full range of travel and advertising services to our worldwide customers through a variety of brands including: Expedia.com and Hotels.com in the United States and localized Expedia and Hotels.com websites throughout the world, Expedia Affiliate Network, Hotwire.com, Venere, eLong and Classic Vacations. Our Egencia segment provides managed travel services to corporate customers in North America, Europe, and the Asia Pacific region.

We determined our operating segments based on how our chief operating decision makers manage our business, make operating decisions and evaluate operating performance. Our primary operating metric is adjusted EBITDA. Adjusted EBITDA for our Leisure and Egencia segments includes allocations of certain expenses, primarily cost of revenue and facilities, and our Leisure segment includes the total costs of our global supply organizations as well as the realized foreign currency gains or losses related to the forward contracts hedging a component of our net merchant hotel revenue. We base the allocations primarily on transaction volumes and other usage metrics. We do not allocate certain shared expenses such as accounting, human resources, information technology and legal to our reportable segments. We include these expenses in Corporate. Our allocation methodology is periodically evaluated and may change.

Corporate also includes unallocated corporate functions and expenses. In addition, we record amortization of intangible assets and any related impairment, as well as stock-based compensation expense, restructuring charges, legal reserves, occupancy tax and other, and other items excluded from segment operating performance in Corporate. Such amounts are detailed in our segment reconciliation below.

The following tables present our segment information for the years ended December 31, 2012, 2011 and 2010. As a significant portion of our property and equipment is not allocated to our operating segments and depreciation is not included in our segment measure, we do not report the assets by segment as it would not be meaningful. We do not regularly provide such information to our chief operating decision makers.

	Year ended December 31, 2012
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	3,738,955		$	291,392		$	—		$	4,030,347
Adjusted EBITDA	$	1,073,226		$	53,207		$	(323,558	)	$	802,875
Depreciation		(74,982	)		(12,031	)		(77,234	)		(164,247	)
Amortization of intangible assets		—			—			(31,705	)		(31,705	)
Stock-based compensation		—			—			(64,596	)		(64,596	)
Legal reserves, occupancy tax and other		—			—			(117,025	)		(117,025	)
Realized loss on revenue hedges		6,422			—			—			6,422
Operating income (loss)	$	1,004,666		$	41,176		$	(614,118	)		431,724
Other expense, net											(81,667	)
Income from continuing operations before income taxes											350,057
Provision for income taxes											(47,078	)
Income from continuing operations											302,979
Discontinued operations, net of taxes											(22,539	)
Net income											280,440
Net income attributable to noncontrolling interests											(269	)
Net income attributable to Expedia, Inc.										$	280,171

	Year ended December 31, 2011
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	3,269,721		$	179,288		$	—		$	3,449,009
Adjusted EBITDA	$	982,339		$	28,789		$	(300,293	)	$	710,835
Depreciation		(56,593	)		(8,349	)		(68,067	)		(133,009	)
Amortization of intangible assets		—			—			(21,925	)		(21,925	)
Stock-based compensation		—			—			(63,847	)		(63,847	)
Legal reserves, occupancy tax and other		—			—			(20,855	)		(20,855	)
Realized loss on revenue hedges		8,410			—			—			8,410
Operating income (loss)	$	934,156		$	20,440		$	(474,987	)		479,609
Other expense, net											(77,537	)
Income from continuing operations before income taxes											402,072
Provision for income taxes											(75,731	)
Income from continuing operations											326,341
Discontinued operations, net of taxes											148,262
Net income											474,603
Net income attributable to noncontrolling interests											(2,309	)
Net income attributable to Expedia, Inc.										$	472,294

	Year ended December 31, 2010
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	2,890,611		$	143,034		$	—		$	3,033,645
Adjusted EBITDA	$	945,596		$	25,076		$	(270,190	)	$	700,482
Depreciation		(44,198	)		(7,506	)		(53,827	)		(105,531	)
Amortization of intangible assets		—			—			(22,514	)		(22,514	)
Stock-based compensation		—			—			(52,507	)		(52,507	)
Legal reserves, occupancy tax and other		—			—			(22,692	)		(22,692	)
Realized loss on revenue hedges		3,549			—			—			3,549
Operating income (loss)	$	904,947		$	17,570		$	(421,730	)		500,787
Other expense, net											(74,948	)
Income from continuing operations before income taxes											425,839
Provision for income taxes											(120,342	)
Income from continuing operations											305,497
Discontinued operations, net of taxes											120,063
Net income											425,560
Net income attributable to noncontrolling interests											(4,060	)
Net income attributable to Expedia, Inc.										$	421,500

During 2012, we changed our allocation methodology for information technology expenses, which resulted in an increase of expenses at Corporate and a corresponding decrease in expenses being allocated to our Leisure and Egencia segments. In addition, in conjunction with certain organizational changes, we reclassified expenses attributed to our supplier payment group previously captured within Leisure to Corporate. We revised prior year adjusted EBITDA by segment to conform to our current year presentation. There was no impact on consolidated adjusted EBITDA as a result of these changes.

Geographic Information

The following table presents revenue by geographic area, the United States and all other countries, based on the geographic location of our websites or points of sale for the years ended December 31, 2012, 2011 and 2010:

	Year Ended December 31,
	2012		2011		2010
	(In thousands)
Revenue
United States	$	2,226,856	$	1,955,712	$	1,849,920
All other countries		1,803,491		1,493,297		1,183,725
	$	4,030,347	$	3,449,009	$	3,033,645

The following table presents property and equipment, net for the United States and all other countries, as of December 31, 2012 and 2011:

	As of December 31,
	2012		2011
	(In thousands)
Property and equipment, net
United States	$	347,272	$	287,471
All other countries		62,101		32,811
	$	409,373	$	320,282