Segment Information

3 Months Ended

Mar. 31, 2013

Segment Information

Note 10 – 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, trivago 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 three months ended March 31, 2013 and 2012. 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.

	Three months ended March 31, 2013
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	923,848		$	88,519		$	—		$	1,012,367
Adjusted EBITDA	$	178,098		$	12,128		$	(85,098	)	$	105,128
Depreciation		(23,061	)		(3,697	)		(22,108	)		(48,866	)
Amortization of intangible assets		—			—			(12,570	)		(12,570	)
Stock-based compensation		—			—			(75,078	)		(75,078	)
Legal reserves, occupancy tax and other		—			—			(61,558	)		(61,558	)
Acquistion-related and other		—			—			(9,829	)		(9,829	)
Realized gain on revenue hedges		(2,855	)		—			—			(2,855	)
Operating income (loss)	$	152,182		$	8,431		$	(266,241	)		(105,628	)
Other expense, net											(13,643	)
Loss from continuing operations before income taxes											(119,271	)
Provision for income taxes											11,903
Loss from continuing operations											(107,368	)
Discontinued operations, net of taxes											—
Net loss											(107,368	)
Net loss attributable to noncontrolling interests											3,142
Net loss attributable to Expedia, Inc.										$	(104,226	)
	Three months ended March 31, 2012
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	763,813		$	52,675		$	—		$	816,488
Adjusted EBITDA	$	171,222		$	9,902		$	(79,306	)	$	101,818
Depreciation		(15,692	)		(2,006	)		(16,616	)		(34,314	)
Amortization of intangible assets		—			—			(3,422	)		(3,422	)
Stock-based compensation		—			—			(16,951	)		(16,951	)
Legal reserves, occupancy tax and other		—			—			276			276
Realized loss on revenue hedges		1,276			—			—			1,276
Operating income (loss)	$	156,806		$	7,896		$	(116,019	)		48,683
Other expense, net											(21,856	)
Income from continuing operations before income taxes											26,827
Provision for income taxes											(5,240	)
Income from continuing operations											21,587
Discontinued operations, net of taxes											(23,889	)
Net loss											(2,302	)
Net income attributable to noncontrolling interests											(979	)
Net loss attributable to Expedia, Inc.										$	(3,281	)