Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information

Note 11 – 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 and six months ended June 30, 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 June 30, 2013
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	1,109,709		$	95,308		$	—		$	1,205,017
Adjusted EBITDA	$	264,853		$	17,562		$	(90,713	)	$	191,702
Depreciation		(25,507	)		(3,335	)		(22,297	)		(51,139	)
Amortization of intangible assets		—			—			(18,837	)		(18,837	)
Stock-based compensation		—			—			(16,086	)		(16,086	)
Legal reserves, occupancy tax and other		—			—			(6,246	)		(6,246	)
Realized gain on revenue hedges		(5,108	)		—			—			(5,108	)
Operating income (loss)	$	234,238		$	14,227		$	(154,179	)		94,286
Other expense, net											(6,863	)
Income from continuing operations before income taxes											87,423
Provision for income taxes											(24,408	)
Net income											63,015
Net loss attributable to noncontrolling interests											8,485
Net income attributable to Expedia, Inc.										$	71,500
	Three months ended June 30, 2012
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	964,252		$	75,728		$	—		$	1,039,980
Adjusted EBITDA	$	283,053		$	17,820		$	(77,972	)	$	222,901
Depreciation		(17,565	)		(2,739	)		(18,362	)		(38,666	)
Amortization of intangible assets		—			—			(8,631	)		(8,631	)
Stock-based compensation		—			—			(16,621	)		(16,621	)
Legal reserves, occupancy tax and other		—			—			(3,350	)		(3,350	)
Realized gain on revenue hedges		(1,192	)		—			—			(1,192	)
Operating income (loss)	$	264,296		$	15,081		$	(124,936	)		154,441
Other expense, net											(19,577	)
Income from continuing operations before income taxes											134,864
Provision for income taxes											(28,755	)
Net income											106,109
Net income attributable to noncontrolling interests											(868	)
Net income attributable to Expedia, Inc.										$	105,241

	Six months ended June 30, 2013
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	2,033,557		$	183,827		$	—		$	2,217,384
Adjusted EBITDA	$	442,951		$	29,690		$	(175,811	)	$	296,830
Depreciation		(48,568	)		(7,032	)		(44,405	)		(100,005	)
Amortization of intangible assets		—			—			(31,407	)		(31,407	)
Stock-based compensation		—			—			(91,164	)		(91,164	)
Legal reserves, occupancy tax and other		—			—			(67,804	)		(67,804	)
Acquistion-related and other		—			—			(9,829	)		(9,829	)
Realized gain on revenue hedges		(7,963	)		—			—			(7,963	)
Operating income (loss)	$	386,420		$	22,658		$	(420,420	)		(11,342	)
Other expense, net											(20,506	)
Loss from continuing operations before income taxes											(31,848	)
Provision for income taxes											(12,505	)
Net loss											(44,353	)
Net loss attributable to noncontrolling interests											11,627
Net loss attributable to Expedia, Inc.										$	(32,726	)
	Six months ended June 30, 2012
	Leisure			Egencia			Corporate			Total
	(In thousands)
Revenue	$	1,728,065		$	128,403		$	—		$	1,856,468
Adjusted EBITDA	$	454,275		$	27,722		$	(157,278	)	$	324,719
Depreciation		(33,257	)		(4,745	)		(34,978	)		(72,980	)
Amortization of intangible assets		—			—			(12,053	)		(12,053	)
Stock-based compensation		—			—			(33,572	)		(33,572	)
Legal reserves, occupancy tax and other		—			—			(3,074	)		(3,074	)
Realized loss on revenue hedges		84			—			—			84
Operating income (loss)	$	421,102		$	22,977		$	(240,955	)		203,124
Other expense, net											(41,433	)
Income from continuing operations before income taxes											161,691
Provision for income taxes											(33,995	)
Income from continuing operations											127,696
Discontinued operations, net of taxes											(23,889	)
Net income											103,807
Net income attributable to noncontrolling interests											(1,847	)
Net income attributable to Expedia, Inc.										$	101,960