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As filed with the Securities and Exchange Commission on March 24, 2016

REGISTRATION NO. 333-                


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



LIBERTY EXPEDIA HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)



Delaware
(State or other jurisdiction
of incorporation or organization)
  6719
(Primary Standard Industrial
Classification code number)
  81-1838757
(I.R.S. Employer
Identification No.)

12300 Liberty Boulevard, Englewood, Colorado 80112, (720) 875-5300
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

Richard N. Baer
Liberty Expedia Holdings, Inc.
12300 Liberty Boulevard
Englewood, Colorado 80112
(720) 875-5300

(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copy to:

Renee L. Wilm
Baker Botts L.L.P.
30 Rockefeller Plaza
New York, New York 10112
(212) 408-2503



Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes effective and all other conditions to the proposed transactions described herein
have been satisfied or waived, as applicable.

           If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:    o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering.    o

           Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o



CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered

  Amount to be
Registered(1)

  Proposed Maximum
Offering Price Per
Share

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration Fee(3)

 

Series A Common Stock, par value $0.01 per share

  69,343,147   (2)   $3,271,479,642   $329,438

Series B Common Stock, par value $0.01 per share

  4,323,761   (2)        

 

(1)
The number of shares of the Registrant's proposed Series A common stock, par value $0.01 per share (LEXEA), being registered has been determined based upon the number of shares of Liberty Interactive Corporation's (Liberty Interactive) existing Series A Liberty Ventures common stock, par value $0.01 per share (LVNTA) (which is comprised of 135,023,356 LVNTA shares outstanding as of January 31, 2016 and 3,662,938 LVNTA shares issuable upon exercise, settlement or exchange of stock options and restricted stock units outstanding as of January 31, 2016), multiplied by 0.5,which is the number of shares of LEXEA that the Registrant intends to distribute to holders of LVNTA based on the distribution ratio of 0.5 of a share of LEXEA for each share of LVNTA held by them as of the record date for the distribution. The actual number of LEXEA shares offered may be less than the maximum number stated in the table. The number of shares of the Registrant's proposed Series B common stock, par value $0.01 per share (LEXEB), being registered has been determined based upon the number of shares of the Registrant's existing Series B Liberty Ventures common stock, par value $0.01 per share (LVNTB) (which is comprised of 7,092,111 LVNTB shares outstanding as of January 31, 2016 and 1,555,411 LVNTB shares issuable upon exercise, settlement or exchange of stock options and restricted stock units outstanding as of January 31, 2016), multiplied by 0.5, which is the number of shares of LEXEB that the Registrant intends to distribute to holders of LVNTB based on the distribution ratio of 0.5 of a share of LEXEB for each share of LVNTB held by them as of the record date for the distribution. The actual number of LEXEB shares distributed may be less than the maximum number stated in the table.

(2)
Calculated in accordance with Rule 457(a) under the Securities Act based on a bona fide estimate of the maximum offering price using a bona fide estimate of the market capitalization of the Registrant. The estimated market capitalization of the Registrant was calculated using the maximum closing price per share of Expedia, Inc. (Expedia) common stock, par value $0.0001 per share (EXPE), on the Nasdaq Global Select Market for the quarter ended December 31, 2015 (which was $137.31 on November 5, 2015) multiplied by 23,607,025, the number of shares of EXPE and Class B common stock, par value $0.0001 per share, of Expedia currently owned by Liberty Interactive and expected to be owned by the Registrant following the transactions described herein, plus certain adjustments to reflect the fair value of the other assets and liabilities that are expected to be held by the Registrant upon completion of the distribution.

(3)
Calculated on the basis of $100.70 per $1,000,000 of the proposed maximum aggregate offering price.



           The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


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Information in this prospectus is not complete and may be changed. We may not sell the securities offered by this prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where an offer or solicitation is not permitted.

Subject to completion, dated March 24, 2016

PROSPECTUS

LIBERTY EXPEDIA HOLDINGS, INC.
12300 Liberty Boulevard
Englewood, Colorado 80112

Series A Common Stock
(par value $0.01 per share)

Series B Common Stock
(par value $0.01 per share)

        Liberty Expedia Holdings, Inc. (SpinCo, which is also referred to in this prospectus as we, our, or the company) is currently a subsidiary of Liberty Interactive Corporation (Liberty Interactive). SpinCo's businesses, assets and liabilities consist of Liberty Interactive's 15.7% ownership interest and 52.2% voting interest in Expedia, Inc. (Expedia), Liberty Interactive's wholly owned subsidiary Bodybuilding.com, LLC (Bodybuilding), anticipated corporate level cash and cash equivalents of $50 million and $350 million in indebtedness. Liberty Interactive has determined to spin off our company by distributing (the distribution) to the holders of its Liberty Ventures common stock, as a dividend, all of our common stock. We are sending this prospectus to you in connection with that spin-off (the Spin-Off).

        Liberty Interactive currently has two tracking stocks, the QVC Group common stock and the Liberty Ventures common stock, which are intended to track and reflect the economic performance of the QVC Group and the Ventures Group, respectively, as described in more detail in this prospectus. See "The Spin-Off—Background for the Spin-Off." At present, Liberty Interactive's interest in Expedia and Bodybuilding are attributed to its Ventures Group.

        If all conditions to the Spin-Off are satisfied or waived by the board of directors of Liberty Interactive in its sole discretion, at 5:00 p.m., New York City time, on [                        ], 2016 (such date and time, the distribution date), (i) for each whole share of Liberty Interactive's Series A Liberty Ventures common stock (LVNTA) held by you as of 5:00 p.m., New York City time, on [                        ], 2016 (such date and time, the record date), you will receive 0.5 of a share of our Series A common stock, par value $0.01 per share (Series A common stock), and (ii) for each whole share of Liberty Interactive's Series B Liberty Ventures common stock (LVNTB, and together with LVNTA, the Liberty Ventures common stock) held by you on the record date, you will receive 0.5 of a share of our Series B common stock, par value $0.01 per share (Series B common stock). Cash will be paid in lieu of fractional shares of our Series A or Series B common stock. No shares of our common stock are being distributed to holders of Liberty Interactive's Series A QVC Group common stock (QVCA) or Series B QVC Group common stock (QVCB).

        No vote of Liberty Interactive's stockholders is required or is being sought to authorize or effectuate the Spin-Off. No action is required of you to receive your shares of our common stock.

        There is no current trading market for our common stock. We expect to list our Series A common stock and Series B common stock on the Nasdaq Global Select Market under the symbols "LEXEA" and "LEXEB," respectively.

        In reviewing this prospectus, you should carefully consider the matters described under the caption "Risk Factors" beginning on page 9.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or has passed upon the adequacy or accuracy of this prospectus as truthful or complete. Any representation to the contrary is a criminal offense.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

The date of this prospectus is                        , 2016.


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TABLE OF CONTENTS

SUMMARY

  1

Our Company

  1

Liberty Interactive's Corporate Structure

  2

The Spin-Off

  3

RISK FACTORS

 
9

Factors Relating to Our Corporate History and Structure

  9

Factors Relating to Our Businesses

  11

Factors Relating to the Spin-Off

  40

Factors Relating to our Common Stock and the Securities Market

  44

CAUTIONARY STATEMENTS CONCERNING FORWARD LOOKING STATEMENTS

 
48

THE SPIN-OFF

 
49

Background for the Spin-Off

  49

Reasons for the Spin-Off

  50

Interests of Certain Persons

  51

Conditions to the Spin-Off

  52

Manner of Effecting the Spin-Off

  52

Effect of the Spin-Off on Outstanding Ventures Group Incentive Awards

  53

U.S. Federal Income Tax Consequences of the Spin-Off

  54

Conduct of the Business of the Ventures Group if the Spin-Off is Not Completed

  58

Amount and Source of Funds and Financing of the Transaction; Expenses

  58

Accounting Treatment

  58

No Appraisal Rights

  58

Results of the Spin-Off

  58

Listing and Trading of our Common Stock

  59

Stock Transfer Agent and Registrar

  59

Trading Prior to the Record Date

  59

Reasons for Furnishing this Prospectus

  59

CAPITALIZATION

 
60

SELECTED FINANCIAL DATA

 
61

DESCRIPTION OF OUR BUSINESS

 
63

Overview

  63

Expedia, Inc. 

  63

Bodybuilding

  71

Regulatory Matters

  75

Competition

  77

Properties

  78

Employees

  79

Legal Proceedings

  79

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 
80

DESCRIPTION OF CERTAIN INDEBTEDNESS

 
92

MANAGEMENT

 
93

Directors

  93

Executive Officers

  95

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Directors and Executive Officers

  96

Director Independence

  97

Board Composition

  97

Committees of the Board

  97

Compensation Committee Interlocks and Insider Participation

  97

EXECUTIVE COMPENSATION

 
98

Executive Officers of SpinCo

  98

Directors

  98

Equity Incentive Plans

  98

Equity Compensation Plan Information

  99

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 
101

Security Ownership of Certain Beneficial Owners

  101

Security Ownership of Management

  101

Change of Control

  103

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 
104

Relationships Among SpinCo, the Malone Group, Diller and Expedia

  104

Relationships Between SpinCo and Liberty Interactive and/or Liberty Media

  116

DESCRIPTION OF OUR CAPITAL STOCK

 
122

Authorized Capital Stock

  122

Our Common Stock

  122

Dividend Policy

  124

Other Provisions of Our Charter and Bylaws

  125

Section 203 of the Delaware General Corporation Law

  130

Transfer Agent and Registrar

  130

LEGAL MATTERS

 
131

EXPERTS

 
131

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
131

WHERE YOU CAN FIND MORE INFORMATION

 
131

        This prospectus describes the businesses and assets of our company as though they were our businesses and assets for all historical periods described. However, our company is a newly formed entity that will not have conducted any operations prior to the Spin-Off and instead will have had such businesses and assets transferred to it prior to the Spin-Off. References in this prospectus to the historical assets, liabilities, businesses or activities of our businesses or the businesses in which we have interests are intended to refer to the historical assets, liabilities, businesses or activities as they were conducted or held by Liberty Interactive prior to the Spin-Off. Upon completion of the Spin-Off, we will be an independent publicly traded company, and Liberty Interactive will have no continuing stock ownership in our company. The historical combined financial information of our company as part of Liberty Interactive contained in this prospectus is not necessarily indicative of our future financial position, future results of operations or future cash flows, nor does it reflect what the financial position, results of operations or cash flows of our company would have been had we been operated as a stand-alone company during the periods presented.

        You should not assume that the information contained in this prospectus is accurate as of any date other than the date set forth on the cover page of this prospectus. Changes to the information contained herein may occur after that date and we do not undertake any obligation to update the information unless required to do so by law.

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SUMMARY

        The following is a summary of material information discussed in this prospectus. It is included for convenience only and should not be considered complete. You should carefully review this entire prospectus, including the risk factors, to better understand the Spin-Off and our business and financial position.

Our Company

        SpinCo is currently a wholly owned subsidiary of Liberty Interactive. Upon completion of the Spin-Off, our principal businesses, assets and liabilities will consist of Liberty Interactive's 15.7% ownership interest and 52.2% voting interest in Expedia, Liberty Interactive's wholly owned subsidiary Bodybuilding, anticipated corporate level cash and cash equivalents of $50 million and $350 million in indebtedness. Upon completion of the Spin-Off, we will be an independent publicly traded company and Liberty Interactive will not retain any ownership interest in us. In connection with the Spin-Off, we expect to enter into certain agreements, including the reorganization agreement and the tax sharing agreement, with Liberty Interactive and/or Liberty Media Corporation (Liberty Media) (or certain of their subsidiaries), pursuant to which, among other things, we and Liberty Interactive will indemnify each other against certain liabilities that may arise from our respective businesses. See "Certain Relationships and Related Party Transactions—Relationships Between SpinCo and Liberty Interactive and/or Liberty Media." Currently, Liberty Interactive's ownership of shares of Expedia's common stock, par value $0.0001 per share (EXPE), and Expedia's Class B common stock, par value $0.0001 per share (the Expedia class B common stock and together with EXPE, the Expedia Common Shares) stock is governed by a Governance Agreement with Barry Diller (Diller) and Expedia and a Stockholders Agreement with Diller, each of which will be assigned to SpinCo in connection with the Spin-Off. In connection with the Spin-Off, we have entered into a Transaction Agreement (the Transaction Agreement) with Liberty Interactive, John C. Malone (Malone), Leslie Malone (Mrs. Malone and together with Malone, the Malone Group) and Diller, as well as a letter agreement with Expedia, and, prior to the completion of the Spin-Off, we expect to enter into certain agreements with Diller and Expedia regarding the governance of us and our interest in Expedia and we expect the Malone Group to grant Diller a proxy over their SpinCo shares for up to eighteen months, each of which will become effective immediately following the completion of the Spin-Off (the proxy arrangements). See "Certain Relationships and Related Party Transactions—Relationships Among SpinCo, the Malone Group, Diller and Expedia—Proxy Arrangements." As a result of these arrangements, upon completion of the Spin-Off, Expedia will become a consolidated operating subsidiary of SpinCo.

        Expedia is an online travel company, empowering business and leisure travelers through technology with the tools and information they need to efficiently research, plan, book and experience travel. Expedia seeks to grow its business through a dynamic portfolio of travel brands, including its majority-owned subsidiaries that feature a broad supply portfolio—including more than 269,000 properties and 1.2 million live vacation rental listings in 200 countries, 400 airlines, packages, rental cars and cruises, as well as destination services and activities. Travel suppliers distribute and market products via Expedia's traditional desktop offerings, as well as through alternative distribution channels including media and social media, Expedia's private label business and its call centers in order to reach its extensive, global audience.

        Upon completion of the Spin-Off, Bodybuilding will be our wholly owned subsidiary. Bodybuilding is an internet retailer of sports and fitness products, dietary supplements and a digital media publisher featuring health-and-fitness content, workout programs, video trainers, recipes, health advice and motivational stories. The online and mobile application e-retail model combines detailed product information and real-time user reviews for more than 15,000 dietary supplements and accessories to help consumers achieve their health, fitness and appearance goals. Beyond the e-retail model, Bodybuilding's website provides the technology and tools needed for personal training, nutrition, supplement expertise and support groups.

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        When we refer to "our business" in this prospectus, we are referring to the businesses of Expedia, Bodybuilding and their respective subsidiaries and affiliates following the Spin-Off.

        We are a Delaware corporation that was incorporated on March 15, 2016. Our principal executive offices are located at 12300 Liberty Blvd., Englewood, Colorado 80112 and our main telephone number is (720) 875-5300.

Liberty Interactive's Corporate Structure

        The QVC Group common stock and Liberty Ventures common stock are intended to track and reflect the economic performance of the QVC Group and the Ventures Group, respectively. Tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. While the QVC Group and the Ventures Group have separate collections of businesses, assets and liabilities attributed to them, no group is a separate legal entity and therefore cannot own assets, issue securities or enter into legally binding agreements. Holders of tracking stocks have no direct claim to the group's stock or assets and are not represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation. The Ventures Group is comprised primarily of Liberty Interactive's operating subsidiaries Bodybuilding and Commerce Technologies, Inc. (d/b/a CommerceHub) (CommerceHub) and Liberty Interactive's interests in Expedia, FTD Companies, Inc. (FTD), Interval Leisure Group, Inc. (Interval) and LendingTree, Inc. (Lending Tree), along with investments in Time Warner Inc. (TWX) and Time Warner Cable Inc. (TWC), cash, certain liabilities related to exchangeable debentures of Liberty Interactive LLC (Liberty LLC) and certain deferred tax liabilities. The QVC Group is primarily focused on Liberty Interactive's merchandise-focused televised-shopping programs, Internet and mobile application businesses and has attributed to it Liberty Interactive's wholly owned subsidiaries QVC, Inc. (QVC) and zulily, llc (zulily), and Liberty Interactive's interest in HSN, Inc. (HSN), along with cash and certain liabilities that reside with QVC and the other attributed entities, as well as outstanding senior notes and one series of Liberty LLC's exchangeable debentures and certain deferred tax liabilities. At present, Liberty intends to pursue a plan to spin-off a newly formed company, CommerceHub, Inc., comprised of Liberty Interactive's CommerceHub business. In the event such spin-off occurs, CommerceHub will no longer be attributed to the Ventures Group. Similarly, upon completion of the Spin-Off, Liberty Interactive's entire ownership interest in Expedia and Bodybuilding will no longer be attributed to the Ventures Group.

        Pursuant to an irrevocable proxy (the Diller Proxy) granted to Diller by Liberty Interactive pursuant to the Stockholders Agreement, Diller generally controls the vote of the Expedia Common Shares beneficially owned by Liberty Interactive. In connection with the completion of the Spin-Off, Diller will irrevocably assign the Diller Proxy to SpinCo for a period of time up to 18 months following completion of the Spin-Off, subject to certain termination events as further described in this prospectus. See "Certain Relationships and Related Party Transactions—Relationships Among SpinCo, the Malone Group, Diller and Expedia—Proxy Arrangements." The voting of the Expedia Common Shares by SpinCo will be subject to certain terms contained in our restated charter, our bylaws, an amendment to the Stockholders Agreement and the Transaction Agreement.

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The Spin-Off

        The following is a brief summary of the terms of the Spin-Off. Please see "The Spin-Off" for a more detailed description of the matters described below.

Q:
What is the Spin-Off?

A:
In the Spin-Off, Liberty Interactive will distribute to the holders of its Series A Liberty Ventures common stock and Series B Liberty Ventures common stock all the shares of our common stock. Holders of Liberty Interactive's Series A QVC Group common stock and Series B QVC Group common stock will not receive shares of our common stock in the Spin-Off. Upon completion of the Spin-Off, we will be a separate company from Liberty Interactive, and Liberty Interactive will not have any ownership interest in us. You are not required to pay any consideration, give up any portion of your Series A Liberty Ventures common stock or Series B Liberty Ventures common stock or take any other action to receive shares of our common stock in the Spin-Off.

Q:
Can Liberty Interactive decide not to complete the Spin-Off?

A:
Yes. Liberty Interactive's board of directors has reserved the right, in its sole discretion, to amend, modify, delay or abandon the Spin-Off and related transactions at any time prior to the distribution date. In addition, the Spin-Off is subject to the satisfaction of certain conditions, some of which may be waived by the Liberty Interactive board of directors in its sole discretion. See "The Spin-Off—Conditions to the Spin-Off." In the event the Liberty Interactive board of directors amends, modifies, delays or abandons the Spin-Off, Liberty Interactive intends to promptly issue a press release and file a Current Report on Form 8-K to report such event.

Q:
What will I receive in the Spin-Off?

A:
Holders of LVNTA will receive a dividend of 0.5 of a share of our Series A common stock for each whole share of LVNTA held by them on the record date and holders of LVNTB will receive a dividend of 0.5 of a share of our Series B common stock for each whole share of LVNTB held by them on the record date. Cash will be paid in lieu of fractional shares of our Series A or Series B common stock.

Q:
Is the completion of the Spin-Off subject to any conditions?

A:
The completion of the Spin-Off and related transactions are subject to the satisfaction (as determined by the Liberty Interactive board of directors in its sole discretion) of the following conditions, certain of which may be waived by the Liberty Interactive board of directors in its sole discretion:

Liberty Interactive's receipt of the opinion of Skadden, Arps, Slate, Meagher & Flom LLP (Skadden Arps) to the effect that the Spin-Off will qualify as a tax-free transaction under Section 355, Section 368(a)(1)(D) and related provisions of the Internal Revenue Code of 1986, as amended (the Code), and that, for U.S. federal income tax purposes, (i) no gain or loss will be recognized by Liberty Interactive upon the distribution of our common stock in the Spin-Off, and (ii) no gain or loss will be recognized by, and no amount will be included in the income of, holders of Liberty Ventures common stock upon the receipt of shares of our common stock in the Spin-Off (except with respect to the receipt of cash in lieu of fractional shares);

the effectiveness under the Securities Act of 1933, as amended (the Securities Act), of the Registration Statement on Form S-1, of which this prospectus forms a part, and the effectiveness of the registration of the SpinCo common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act);

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    the execution of the proxy arrangements;

    the approval of the Nasdaq Stock Market LLC (Nasdaq) for the listing of the SpinCo common stock;

    the entry into a margin loan arrangement by our company and one or more of our subsidiaries in a principal amount of $350 million; and

    the receipt of any material regulatory or contractual consents or approvals that the Liberty Interactive board determines to obtain.

    The conditions set forth in the first, second, third and fourth bullet points are non-waivable. The Liberty Interactive board of directors may, however, waive the conditions set forth in the fifth and sixth bullet points. In the event the Liberty Interactive board of directors waives a material condition to the Spin-Off, Liberty Interactive intends to promptly issue a press release and file a Current Report on Form 8-K to report such event. See "The Spin-Off—Conditions to the Spin-Off."

Q:
What is being distributed in the Spin-Off?

A:
Approximately [      ] shares of our Series A common stock and [      ] shares of our Series B common stock will be distributed in the Spin-Off, based on the number of shares of LVNTA and LVNTB outstanding on [      ], 2016. The shares of our common stock to be distributed by Liberty Interactive will constitute all the issued and outstanding shares of our common stock immediately after the distribution. The exact number of shares to be distributed in the Spin-Off will not be known until the record date.

Q:
When will the Spin-Off be effective?

A:
Liberty Interactive intends to effect the Spin-Off on the distribution date, which will be at 5:00 p.m., New York City time, on [      ], 2016. At such time, holders of Liberty Ventures common stock as of the record date will receive their shares of SpinCo common stock. Following the record date and prior to the distribution date, Liberty Interactive will cause 100% of our common stock to be placed in a reserve account with Computershare Trust Company, N.A. (Computershare), as distribution agent for the Spin-Off, with instructions to distribute such shares on the distribution date.

Q:
When will Liberty Interactive announce the record date and distribution date for the Spin-Off?

A:
If all conditions to the Spin-Off are satisfied (or, as determined by the Liberty Interactive board in its sole discretion, are to be waived), Liberty Interactive will announce the record date and distribution date for the Spin-Off by press release. See "The Spin-Off—Conditions to the Spin-Off." Each holder of record of shares of Liberty Ventures common stock as of the close of business on the record date will be entitled to receive shares of our common stock on the distribution date, so long as such holder continues to hold the shares as of the distribution date. See "The Spin-Off—Trading Prior to the Record Date" below for additional information.

Q:
What transactions are occurring in connection with the Spin-Off other than those involved in the internal restructuring?

A:
In connection with the Spin-Off, a bankruptcy remote wholly owned subsidiary of SpinCo (SpinSPV) intends to borrow up to $350 million in cash in a margin loan (the Margin Loan), secured by all of the shares of EXPE owned by our company, which will be held through SpinSPV and which will be guaranteed solely by our company, from one or more third parties (the proceeds from such borrowing, the Loan Proceeds). As part of the internal restructuring, approximately

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    $300 million of the Loan Proceeds will be distributed from SpinCo to Liberty Interactive, and Liberty Interactive, within 12 months following the completion of such distribution, will use all of the distributed portion of the Loan Proceeds received from SpinCo to repurchase shares of Liberty Interactive's common stock under its share repurchase program pursuant to a special authorization by Liberty Interactive's board of directors. Liberty Interactive's board of directors will determine, in its sole discretion, the number and series of any shares of Liberty Interactive's common stock which it will repurchase under its share repurchase program, which may include shares of QVC Group common stock and/or Liberty Ventures common stock. See "Description of Certain Indebtedness."

    Costs associated with the proposed transactions will be paid by Liberty Interactive and are expected to be approximately $[      ] million. Please see "The Spin-Off—Amount and Source of Funds and Financing of the Transaction; Expenses."

Q:
What will the relationship be between SpinCo and Liberty Interactive after the Spin-Off?

A:
Upon completion of the Spin-Off, our company and Liberty Interactive will operate independently, and neither will have any ownership interest in the other. In connection with the Spin-Off, however, we and Liberty Interactive and/or Liberty Media (or certain of their subsidiaries) are entering into certain agreements in order to govern the ongoing relationships between our company and Liberty Interactive after the Spin-Off and to provide for an orderly transition. Such agreements will include (i) a reorganization agreement with Liberty Interactive to provide for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the Spin-Off, certain conditions to the Spin-Off and provisions governing the relationship between us and Liberty Interactive with respect to and resulting from the Spin-Off; (ii) a tax sharing agreement with Liberty Interactive that governs Liberty Interactive's and our respective rights, responsibilities and obligations with respect to taxes and tax benefits, the filing of tax returns, the control of audits and other tax matters; (iii) a services agreement with Liberty Media, pursuant to which, for [        ] years following the Spin-Off, Liberty Media will provide us with specified services, including insurance administration and risk management services, other services typically performed by Liberty Media's legal, investor relations, tax, accounting, and internal audit departments, and such other services as Liberty Media may obtain from its officers, employees and consultants in the management of its own operations that we may from time to time request or require; (iv) a facilities sharing agreement with a wholly owned subsidiary of Liberty Media, pursuant to which, for [        ] years following the Spin-Off, we will share office facilities with Liberty Interactive and Liberty Media; and (v) aircraft time sharing agreements with Liberty Media or one of its wholly owned subsidiaries, pursuant to which Liberty Media or its subsidiary will lease the aircraft to SpinCo and provide a fully qualified flight crew for all operations on a periodic, non-exclusive time sharing basis. See "Certain Relationships and Related Party Transactions—Relationships Between SpinCo and Liberty Interactive and/or Liberty Media."

Q:
What are the reasons for the Spin-Off?

A:
In 2012, Liberty Interactive recapitalized its common stock into two new tracking stock groups: the Interactive Group (which, in 2015, was renamed the QVC Group) and the Ventures Group, for the purpose of creating greater transparency for the assets and liabilities attributed to each group, among other reasons. For a description of the QVC Group and Ventures Group tracking stocks, see "The Spin-Off—Background for the Spin-Off." Although the public markets have responded favorably to these two tracking stocks, Liberty Interactive believes that a meaningful trading discount continues to apply to the underlying value of the businesses and assets attributed to its Ventures Group. Liberty Interactive believes that the Spin-Off will result in a higher aggregate trading value for our common stock and the Liberty Ventures common stock as compared to the

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    trading price of Liberty Ventures common stock in the absence of the Spin-Off. Our stock is expected to provide greater transparency for investors with respect to our dominant business, our investment in Expedia, which should result in greater focus and attention by the investment community on this business. The Spin-Off is also expected to enhance our ability and Liberty Interactive's ability to issue equity for strategic acquisitions and other business combinations by creating a more efficiently priced equity security for each company and to enable us and Liberty Interactive to more effectively tailor equity incentives for our respective management and employees with less dilution to public stockholders. In addition, Liberty Interactive believes that separating our company from Liberty Interactive's other businesses will help facilitate a potential combination of our company with Expedia by substantially eliminating the need for negotiations regarding the valuation of Liberty Interactive's other businesses, thereby making it more likely that a potential agreement could be reached. Liberty Interactive believes that a combination of our company with Expedia could be beneficial for our stockholders, on the one hand, and Expedia, on the other hand, by eliminating the overhang associated with the current dual-public company structure. No assurance can be given, however, that any investment, acquisition or other strategic opportunities will become available following the Spin-Off on terms that SpinCo finds favorable or at all, nor can any assurance be given that a combination of SpinCo and Expedia will ever occur.

    For a discussion of additional reasons, factors, costs and risks associated with the Spin-Off considered by the Liberty Interactive board of directors, see "The Spin-Off—Reasons for the Spin-Off."

Q:
What do I have to do to participate in the Spin-Off?

A:
Nothing. Holders of Liberty Ventures common stock on the record date for the Spin-Off are not required to pay any cash or deliver any other consideration, give up any shares of Liberty Ventures common stock or take any other action to receive the shares of our common stock distributable to them in the Spin-Off.

However, if you own shares of Liberty Ventures common stock and sell those shares prior to the record date, so that you are not the record holder of such shares on the record date, you will also be selling the shares of our common stock that would have been distributed to you in the Spin-Off with respect to the shares of Liberty Ventures common stock you sell. If you are a holder of shares of Liberty Ventures common stock on the record date, you will be entitled to receive the shares of SpinCo common stock issuable in respect of those shares only if you continue to hold them through the distribution date. See "The Spin-Off—Trading Prior to the Record Date."

Q:
Will I receive physical certificates representing shares of SpinCo common stock following the distribution?

A:
No. In the distribution, no physical certificates representing shares of SpinCo common stock will be delivered to stockholders. Instead, Liberty Interactive, with the assistance of Computershare, the distribution agent, will electronically distribute shares of SpinCo common stock in book-entry form to you or your bank or brokerage firm on your behalf. If you are a record holder of Liberty Ventures common stock on the record date and you continue to hold such shares through the distribution date, Computershare will mail you a book-entry account statement that reflects your shares of SpinCo common stock following the distribution date. If you are a beneficial owner of Liberty Ventures common stock (but not a record holder) on the record date and you continue to hold such shares through the distribution date, your bank or brokerage firm will credit your account with the shares of SpinCo common stock that you are entitled to receive on the distribution date.

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Q:
Will the number of shares of Liberty Ventures common stock or QVC Group common stock I own change as a result of the Spin-Off?

A:
No. The number of shares of any series of Liberty Interactive common stock that you own will not change as a result of the Spin-Off.

Q:
What are the U.S. federal income tax consequences of the Spin-Off?

A:
The Spin-Off is conditioned upon the receipt by Liberty Interactive of the opinion of Skadden Arps to the effect that the Spin-Off will qualify as a tax-free transaction under Section 355, Section 368(a)(1)(D) and related provisions of the Code and that, for U.S. federal income tax purposes, (i) no gain or loss will be recognized by Liberty Interactive upon the distribution of our common stock in the Spin-Off, and (ii) no gain or loss will be recognized by, and no amount will be included in the income of, holders of Liberty Ventures common stock upon the receipt of shares of our common stock in the Spin-Off (except with respect to the receipt of cash in lieu of fractional shares). The receipt of the opinion, as well as certain other conditions to the Spin-Off, may not be waived by the Liberty Interactive board of directors.

Please see "The Spin-Off—U.S. Federal Income Tax Consequences of the Spin-Off" and "Risk Factors—Factors Relating to the Spin-Off—The Spin-Off could result in a significant tax liability to Liberty Interactive and holders of Liberty Ventures common stock" and "—We may have a significant indemnity obligation to Liberty Interactive, which is not limited in amount or subject to any cap, if the Spin-Off is treated as a taxable transaction" for more information regarding the opinion of Skadden Arps and the potential tax consequences to you of the Spin-Off.

Q:
Does SpinCo intend to pay cash dividends?

A:
No. We currently intend to retain future earnings, if any, following the Spin-Off to finance the expansion of our businesses. As a result, we do not expect to pay any cash dividends in the foreseeable future. All decisions regarding the payment of dividends by our company will be made by our board of directors, from time to time, in accordance with applicable law.

Q:
Where will SpinCo common stock trade?

A:
Currently, there is no public market for our common stock. Subject to the consummation of the Spin-Off, we expect to list our Series A common stock and our Series B common stock on the Nasdaq Global Select Market under the symbols "LEXEA" and "LEXEB," respectively.

We expect that our common stock will begin trading on the first trading day following the distribution date. We cannot predict the trading prices for our common stock when such trading begins.

Q:
What costs and risks were considered by the board of directors of Liberty Interactive in determining whether to effect the Spin-Off?

A:
Liberty Interactive's board considered a number of costs and risks associated with the Spin-Off, including:

after the Spin-Off, the Liberty Ventures common stock and SpinCo common stock will have smaller market capitalizations than the current market capitalization of the Ventures Group, and their stock prices may be more volatile than the Liberty Ventures common stock trading price prior to the Spin-Off. The combined market values of the Liberty Ventures common stock and SpinCo common stock may be lower than the market value of the Liberty Ventures common stock prior to the Spin-Off;

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    the risk of being unable to achieve the benefits expected from the Spin-Off;

    the increased leverage to be incurred by SpinCo;

    the loss of synergies from operating as one company;

    the potential disruption to the businesses of Liberty Interactive;

    the substantial costs of effecting the Spin-Off, and of continued compliance with legal and other requirements applicable to two separate public reporting companies;

    the potential for having to register as an investment company under the Investment Company Act of 1940 in the future, such as in the event the proxy arrangements terminate and there is no exemption or grace period available to us at that time; and

    the potential tax liabilities that could arise from the Spin-Off.

    Liberty Interactive's board of directors concluded that the potential benefits of the Spin-Off outweighed its potential costs. The Liberty Interactive board of directors did not consider alternatives to the Spin-Off due to the nature of the particular assets and businesses to be held by SpinCo following the Spin-Off, in particular the ownership interest in Expedia. Please see "The Spin-Off—Reasons for the Spin-Off" for more information regarding the costs and risks associated with the Spin-Off.

Q:
What will happen to the listing of Liberty Interactive common stock?

A:
The Series A and Series B Liberty Ventures common stock and Series A and Series B QVC Group common stock will continue to trade on the Nasdaq Global Select Market following the Spin-Off.

Q:
Will I have appraisal rights in connection with the Spin-Off?

A:
No. Holders of Liberty Ventures common stock are not entitled to appraisal rights in connection with the Spin-Off.

Q:
Who is the transfer agent and registrar for our common stock?

A:
Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021, telephone: (866) 367-6355.

Q:
Who is the distribution agent for the Spin-Off?

A:
Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021, telephone: (866) 367-6355.

Q:
Whom can I contact for more information?

A:
If you have questions relating to the mechanics of the distribution, you should contact the distribution agent. Before the Spin-Off, if you have questions relating to the Spin-Off, you should contact the office of Investor Relations of Liberty Interactive, 12300 Liberty Blvd., Englewood, CO 80112, telephone: (720) 875-5408.

Pursuant to a services agreement to be entered into between our company and Liberty Media, Liberty Media will provide our company with investor relations assistance for a period following the Spin-Off. Accordingly, if you have questions relating to SpinCo following the Spin-Off, you should contact the office of Investor Relations of Liberty Media, 12300 Liberty Blvd., Englewood, Colorado 80112, telephone: (877) 772-1518.

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RISK FACTORS

        An investment in our common stock involves risks. You should consider carefully the risks described below together with all of the other information included in this prospectus in evaluating our company and our common stock. Any of the following risks, if realized, could have a material adverse effect on the value of our common stock. The risks described below and elsewhere in this prospectus are not the only ones that relate to our businesses, our capitalization or the Spin-Off. The risks described below are considered to be the most material. However, there may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that also could have material adverse effects on our businesses. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. If any of the events below were to occur, our businesses, prospects, financial condition, results of operations and/or cash flows could be materially adversely affected. This prospectus contains forward-looking statements that contain risks and uncertainties. Please refer to the section entitled "Cautionary Statements Concerning Forward Looking Statements" on page 48 of this prospectus in connection with your consideration of the risk factors and other important factors that may affect future results described below.

        For purposes of these risk factors, unless the context otherwise indicates, we have assumed that the Spin-Off has occurred.

Factors Relating to Our Corporate History and Structure

         The combined financial information of SpinCo included in this prospectus is not necessarily representative of SpinCo's future financial position, future results of operations or future cash flows, nor does it reflect what SpinCo's financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented.

        Because the historical combined financial information of Liberty Interactive included in this prospectus includes the results of the legacy SpinCo business and because such financial information largely reflects the historical results of Bodybuilding, it is not representative of SpinCo's future financial position, future results of operations or future cash flows, nor does it reflect what SpinCo's financial position, results of operations or cash flows would have been as a stand-alone company, pursuing independent strategies, during the periods presented, especially in light of the fact that the future results of operations will be significantly comprised of the results of Expedia.

         We are a holding company, and we could be unable in the future to obtain cash in amounts sufficient to service our financial obligations or meet our other commitments.

        Our ability to meet our financial obligations and other contractual commitments, including to make debt service payments under SpinSPV's Margin Loan and any other credit facilities that we may obtain in the future, depends upon our ability to access cash. We are a holding company, and our sources of cash include our available cash balances, net cash from the operating activities of our wholly owned subsidiary Bodybuilding, any dividends and interest we may receive from our investments (including Expedia) and proceeds from any asset sales we may undertake in the future. See "—We do not have direct access to the cash that Expedia generates from its operating activities" for more information regarding potential dividend payments. We currently have no plans with respect to any asset sales. The ability of our existing operating subsidiary Bodybuilding or Expedia, which will become an operating subsidiary of our company following the completion of the proxy arrangements, to pay dividends or to make other payments or advances to us depends on their individual operating results and any statutory, regulatory or contractual restrictions to which they may be or may become subject.

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         We do not have direct access to the cash that Expedia generates from its operating activities.

        Expedia generated approximately $1,368 million, $1,367 million, and $763 million of cash from its operations during the years ended December 31, 2015, 2014 and 2013 respectively. Expedia uses the cash it generates from its operations to fund its investing activities and to service its debt and other financing obligations. We do not have access to the cash that Expedia generates unless Expedia declares a dividend on its capital stock payable in cash, repurchases any or all of its outstanding shares of capital stock for cash (to the extent we were to participate in such repurchase) or otherwise distributes or makes payments to its stockholders, including us.

        Although during the years ended December 31, 2015, 2014 and 2013, Expedia repurchased 0.5 million shares, 7.0 million shares and 9.3 million shares, respectively, spending $45 million, $537 million and $515 million, respectively, we have not participated in these stock repurchases. Further, for the years ended December 31, 2015, 2014 and 2013, Expedia declared aggregate dividends of $0.84 per share, $0.66 per share and $0.56 per share, respectively. Although we have participated, pro rata, in these dividends, no assurance can be given that Expedia will continue to pay cash dividends at the same rate or at all.

         Our company may have future capital needs and may not be able to obtain additional financing on acceptable terms.

        In connection with the Spin-Off, we will have outstanding borrowings of $350 million under a margin loan agreement (the Margin Loan Agreement) entered into by SpinSPV, the payment of which borrowings are guaranteed solely by our company and secured by all of the shares of EXPE owned by our company. SpinSPV will hold all of the shares of EXPE owned by our company. Because our most significant asset consists of our equity interests in Expedia and the Margin Loan Agreement prohibits, with limited exceptions, the incurrence of additional indebtedness by SpinSPV, our company will be very limited in its ability to incur additional financing, and our cash reserves and limited operating cash flow may be insufficient to satisfy our financial obligations. In addition, the Margin Loan Agreement provides that, among other triggering events, if at any time the closing price per share of EXPE falls below certain minimum values, a partial repayment of the Margin Loan will be due and payable with respect to each such circumstance, together with accrued and unpaid interest and, during approximately the first 2 years of the term of the Margin Loan, a prepayment premium. If the company or SpinSPV is unable to pay such amounts, the lenders may foreclose on the pledged shares of EXPE that SpinSPV holds and any other collateral that then secures SpinSPV's obligations under the Margin Loan Agreement, which would materially adversely affect our asset composition and financial condition as well as our access to capital on a going forward basis.

         We have no operating history as a separate company upon which you can evaluate our performance.

        We do not have an operating history as a separate public company. Accordingly, there can be no assurance that our business will be successful on a long-term basis. We may not be able to grow our businesses as planned and may not be profitable.

         We may become subject to the Investment Company Act of 1940.

        We do not believe that, upon completion of the Spin-Off, we will be subject to regulation under the Investment Company Act of 1940 (the 40 Act). As a result of the proxy arrangements, Expedia will become a consolidated, operating subsidiary of our company. Following the Spin-Off, we will own a 52.2% voting interest in Expedia. Further, upon completion of the Spin-Off, we will assume Liberty Interactive's existing nomination rights under the terms of the amended and restated Governance Agreement among Expedia, Liberty Interactive and Mr. Diller (the Governance Agreement), which will allow us to nominate three of Expedia's thirteen current directors. If, at any time, our investment in

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Expedia were deemed to become passive (such as in the event that the proxy arrangements terminated and there is no exemption or grace period available to us at that time), we could become subject to regulation under the 40 Act. The proxy arrangements will terminate no later than the 18 month anniversary of the completion of the Spin-Off and upon the first to occur of certain events. For more information on the termination of the proxy arrangements, see "Certain Relationships and Related Party Transactions—Relationships Among SpinCo, the Malone Group, Diller and Expedia—Proxy Arrangements." Following the termination of the proxy arrangements, and after giving effect to any applicable grace periods, we may be required to register as an investment company, which could result in significant registration and compliance costs, could require changes to our corporate governance structure and financial reporting, and could restrict our activities going forward. In addition, if we were to become inadvertently subject to the 40 Act, any violation of the 40 Act could subject us to material adverse consequences, including potentially significant regulatory penalties and the possibility that certain of our contracts would be deemed unenforceable.

Factors Relating to Our Businesses

         Expedia operates in an increasingly competitive global environment.

        The market for the services that Expedia offers is increasingly and intensely competitive. Expedia competes with both established and emerging online and traditional sellers of travel-related services, including:

    online and traditional travel agencies, wholesalers and tour operators;

    travel suppliers, including hotels and airlines;

    large online portal and search websites;

    travel metasearch websites;

    corporate travel management service providers;

    mobile platform travel applications;

    social media websites;

    ecommerce websites and group buying websites; and

    alternative accommodation websites.

        Online and traditional travel agencies:    Expedia faces increasing competition from other online travel agencies (OTAs) in many regions, such as The Priceline Group and its subsidiaries Booking.com and Agoda.com, as well as regional competitors such as Ctrip, which in some cases may have more favorable offerings for travelers or suppliers, including pricing and supply breadth. Expedia also competes with traditional travel agencies (operating both offline and online), wholesalers and tour operators for both travelers and the acquisition and retention of supply.

        Travel suppliers:    Some of Expedia's competitors, including travel suppliers such as airlines and hotels, may offer products and services on more favorable terms to consumers who transact directly with them, including lower prices, no fees or unique access to proprietary loyalty programs, such as points and miles. Many of these competitors, such as airlines, hotel and rental car companies, have been steadily focusing on increasing online demand on their own websites and mobile applications in lieu of third-party distributors such as the various Expedia sites. For instance, some low cost airlines, which are having increasing success in the marketplace, distribute their online supply exclusively through their own websites and several large hotel chains have combined to establish a single online hotels search platform with links directly to their own websites and mobile applications. Suppliers who sell on their own websites, in some instances, offer advantages such as favorable rates, increased or

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exclusive product availability, complimentary Wi-Fi, and their own bonus miles or loyalty points, or in the case of airlines, promote hotel supply at their websites, which could make their offerings more attractive to consumers than Expedia's.

        Search engines:    Expedia also faces increasing competition from search engines including Google. To the extent that these leading search engines that have a significant presence in Expedia's key markets disintermediate online travel agencies or travel content providers by offering comprehensive travel planning, shopping or booking capabilities, or increasingly refer those leads directly to suppliers or other favored partners, increase the cost of traffic directed to Expedia's websites, or offer the ability to transact on their own website, there could be a material adverse impact on Expedia's business and financial performance. For example, in recent years search engines have increased their focus on acquiring or launching flight and hotel search products that provide increasingly comprehensive travel planning content and direct booking capabilities, comparable to OTAs. To the extent these actions have a negative effect on Expedia's search traffic or the cost of acquiring such traffic, Expedia's business and financial performance could be adversely affected.

        In addition, Expedia's websites, or websites in which Expedia holds a significant ownership position, including trivago-branded websites, compete for advertising revenue with these search engines, as well as with large internet portal sites that offer advertising opportunities for travel-related companies. Several of these competitors have significantly greater financial, technical, marketing and other resources and large client bases than Expedia. Expedia expects to face additional competition as other established and emerging companies enter the online advertising market. Competition could result in higher traffic acquisitions costs, reduced margins on Expedia's advertising services, loss of market share, reduced customer traffic to Expedia's websites and reduced advertising by travel companies on Expedia's websites.

        Travel metasearch engines:    Travel metasearch websites, including Kayak.com (a subsidiary of Priceline), trivago (a majority-owned subsidiary of Expedia), TripAdvisor, Inc. (TripAdvisor) and Qunar (a subsidiary of Ctrip), aggregate travel search results for a specific itinerary across supplier, travel agent and other websites. In addition, some metasearch sites have added or intend to add various forms of direct or assisted booking functionality to their sites in direct competition with certain of Expedia's brands. To the extent metasearch websites limit Expedia's participation within their search results, or consumers utilize the metasearch website for travel services and bookings instead of Expedia, Expedia's traffic-generating arrangements could be affected in a negative manner, or it may be required to increase its marketing costs to maintain market share, either of which could have an adverse effect on Expedia's business and results of operations. For example, during 2015 TripAdvisor continued to expand its instant book feature that allows visitors to book directly on the TripAdvisor website, which could have a negative impact on Expedia's unit volume growth in the future. In addition, as a result of Expedia's acquisition of a majority ownership interest in trivago, Expedia also now competes more directly with other metasearch engines and content aggregators for advertising revenue. To the extent that trivago's ability to aggregate travel search results for a specific itinerary across supplier, travel agent and other websites is hampered, whether due to its affiliation with Expedia or otherwise, trivago's business and results of operations could be adversely affected and the value of Expedia's investment in trivago could be negatively impacted.

        Corporate travel management service providers:    Egencia, Expedia's full-service corporate travel management company, competes with online and traditional corporate travel providers, including Carlson Wagonlit and American Express, as well as vendors of corporate travel and expense management software and services, including Concur. Some of these competitors may have more financial resources, greater name recognition, well-established client bases, differentiated business models, or a broader global presence, which may make it difficult for Expedia to retain or attract new corporate travel clients.

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        Mobile platform travel applications:    Mobile platforms, including smartphones and tablet computers, have rapidly emerged and continue to grow significantly. The emergence and improved functionality of mobile platforms has led to an increased use by consumers of standalone applications to research and book travel. If Expedia is unable to offer innovative, user-friendly, feature-rich mobile applications for its travel services, along with effective marketing and advertising, or if its mobile applications are not used by consumers, Expedia could lose market share to existing competitors or new entrants and its future growth and results of operations could be adversely affected.

        Social media websites:    Social media websites, including Facebook, continue to develop search functionality for data included within their websites and mobile applications, which may in the future develop into an alternative research and booking resource for travelers, resulting in additional competition.

        Alternative accommodations:    Airbnb and similar websites that facilitate the short-term rental of homes and apartments from owners provide an alternative to hotel rooms and vacation rental properties available through Expedia websites, including HomeAway which was acquired by Expedia on December 15, 2015. The continued growth of alternative accommodation sources could affect overall travel patterns generally and the demand for Expedia's services specifically in facilitating reservations at hotel and vacation rentals.

        Other participants in the travel industry:    Traditional consumer ecommerce websites and group buying websites have periodically undertaken efforts to expand their local offerings into the travel market by adding hotel offers to their sites. To the extent such websites continue to expand these services over time, it may create additional competition. In addition, car rideshare services, such as Uber, increasingly compete with the traditional car rental services that Expedia offers on its retail websites and to its corporate clients, which may negatively affect its car-based and corporate travel businesses.

        We cannot assure you that Expedia will be able to compete successfully against any current, emerging and future competitors or on platforms that may emerge, or provide differentiated products and services to its traveler base. Increasing competition from current and emerging competitors, the introduction of new technologies and the continued expansion of existing technologies, such as metasearch and other search engine technologies, may force Expedia to make changes to its business models, which could affect its financial performance and liquidity. In general, increased competition has resulted in and may continue to result in reduced margins, as well as loss of travelers, transactions and brand recognition.

         The industry in which Expedia operates is dynamic.

        Expedia continues to adapt its business to remain competitive, including investing in evolving channels such as metasearch and mobile, as well as offering new consumer choices, including inventory types and transactional models, and increasing supplier inventory on its existing platforms through acquisitions and partnerships. If Expedia fails to appropriately adapt to competitive or consumer preference developments, its business could be adversely affected. Expedia's attempts to adapt its current business models or practices or adopt new business models and practices in order to compete may involve significant risks and uncertainties, including distraction of management from current operations, expenses associated with the initiatives, inadequate return on investments, difficulties and expenses associated with the integration of acquired brands and their inventory onto Expedia's platforms, as well as limiting its ability to develop new site innovations. In addition, adaptations to Expedia's business may require significant investments, including changes to its financial systems and processes, which could significantly increase its costs and increase the risk of payment delays and/or non-payments of amounts owed to it from its supplier partners and customers. In addition, these new initiatives may not be successful and may harm Expedia's financial condition and operating results.

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         Expedia's business could be negatively affected by changes in search engine algorithms and dynamics or other traffic-generating arrangements.

        Expedia increasingly utilizes internet search engines such as Google, principally through the purchase of travel-related keywords, to generate a significant portion of the traffic to its websites and the websites of its affiliates. Search engines frequently update and change the logic that determines the placement and display of results of a user's search, such that the purchased or algorithmic placement of links to Expedia's websites and those of its affiliates can be negatively affected. In addition, a significant amount of traffic is directed to Expedia's websites and those of its affiliates through participation in pay-per-click and display advertising campaigns on search engines, including Google, and travel metasearch engines, including Kayak and TripAdvisor. Pricing and operating dynamics for these traffic sources can change rapidly, both technically and competitively. Moreover, a search or metasearch engine could, for competitive or other purposes, alter its search algorithms or results causing a website to place lower in search query results. If a major search engine changes its algorithms or results in a manner that negatively affects the search engine ranking, paid or unpaid, of Expedia's websites and the websites of its affiliates, or those of its third-party distribution partners, or if competitive dynamics impact the costs or effectiveness of search engine optimization, search engine marketing or other traffic-generating arrangements in a negative manner, Expedia's business and financial performance would be adversely affected, potentially to a material extent. In addition, certain metasearch companies have added or intend to add various forms of direct or assisted booking functionality to their sites. To the extent such functionality is promoted at the expense of traditional paid listings, this may reduce the amount of traffic to Expedia's websites or those of its affiliates.

         Expedia's business depends on its relationships with travel suppliers and travel distribution partners.

        An important component of Expedia's business success depends on its ability to maintain and expand relationships with travel suppliers and global distribution system (GDS) partners and owners and managers of vacation rental properties. A substantial portion of Expedia's revenue is derived from compensation negotiated with travel suppliers, in particular hotel suppliers, and GDS partners for bookings made through its websites. Each year Expedia typically negotiates or renegotiates numerous long-term hotel and airline contracts.

        No assurances can be given that Expedia's compensation, access to inventory, or access to inventory at competitive rates, will not be further reduced or eliminated in the future, or that travel suppliers will not reduce average daily rates (ADRs), attempt to implement costly direct connections, charge Expedia for or otherwise restrict access to content, increase credit card fees or fees for other services, fail to provide Expedia with accurate booking information or otherwise take actions that would increase Expedia's operating expenses. Any of these actions, or other similar actions, could reduce Expedia's revenue and margins thereby adversely affecting its business and financial performance.

         Expedia and Bodybuilding rely on the value of their brands, and the costs of maintaining and enhancing brand awareness are increasing.

        Expedia and Bodybuilding invest financial and human resources in their respective brands in order to retain and expand their customer bases. We expect that the cost of maintaining and enhancing these brands will continue to increase due to a variety of factors, including increased spending from competitors, promotional and discounting activities, the increasing costs of growing customer loyalty programs, the increasing costs of supporting multiple brands and the impact of competition among its multiple brands, expansion into geographies and products where its brands are less well known, inflation in media pricing including search engine keywords and the continued emergence and relative travel-related traffic share growth of search engines and metasearch engines. During 2015, certain online travel companies and metasearch sites continued to expand their offline and digital advertising campaigns globally, increasing competition for share of voice, and Expedia expects this activity to

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continue in the future. Expedia is also pursuing and expects to continue to pursue long-term growth opportunities, particularly in emerging markets, which have had and may continue to have a negative impact on its overall marketing efficiency. Bodybuilding's ability to maintain and enhance its brands will depend largely on its ability to continue to provide useful, reliable, trustworthy and innovative products, which it may not be able to do successfully. Bodybuilding may also introduce new products, terms of service or policies that users do not like, which may negatively affect its brand.

        Expedia's and Bodybuilding's efforts to preserve and enhance consumer awareness of their brands may not be successful, and, even if they are successful in their branding efforts, such efforts may not be cost-effective, or as efficient as they have been historically. Moreover, branding efforts with respect to some brands within the Expedia portfolio have in the past and may in the future result in marketing inefficiencies and negatively impact growth rates of other brands within its portfolio. If Expedia and Bodybuilding are unable to maintain or enhance consumer awareness of their brands and generate demand in a cost-effective manner, it would have a material adverse effect on their businesses and financial performance.

         Expedia and Bodybuilding rely on information technology to operate their businesses and maintain their competitiveness, and any failure to invest in and adapt to technological developments and industry trends could harm their businesses.

        Expedia depends on the use of sophisticated information technologies and systems, including technology and systems used for website and mobile applications, reservations, customer service, supplier connectivity, communications, procurement, payments, fraud detection and administration, while Bodybuilding relies extensively on information systems for its ecommerce business (which includes website, mobile applications, customer service, payment and fraud detection), supply chain, manufacturing operations, financial reporting, human resources and various other processes and transactions. As Expedia's and Bodybuilding's operations grow in size, scope and complexity, they must continuously improve and upgrade their systems and infrastructure to offer an increasing number of customers enhanced products, services, features and functionality, while maintaining or improving the reliability and integrity of their systems and infrastructure.

        Expedia's and Bodybuilding's future success also depends on their ability to adapt their services and infrastructure to meet rapidly evolving consumer trends and demands while continuing to improve the performance, features and reliability of their services in response to competitive service and product offerings. The emergence of alternative platforms such as smartphone and tablet computing devices and the emergence of niche competitors who may be able to optimize products, services or strategies for such platforms have, and will continue to, require new and costly investments in technology. Expedia and Bodybuilding may not be successful, or may be less successful than their current or new competitors, in developing technology that operates effectively across multiple devices and platforms and that is appealing to consumers, either of which would negatively impact their business and financial performance. New developments in other areas, such as cloud computing and software as a service provider, could also make it easier for competition to enter Expedia's markets due to lower up-front technology costs. In addition, Expedia and Bodybuilding may not be able to maintain their existing systems or replace or introduce new technologies and systems as quickly as they would like or in a cost-effective manner.

        Expedia has been engaged in a multi-year effort to migrate key portions of its consumer, affiliate, and corporate travel sites and back office application functionality to new technology platforms to enable it to improve conversion, innovate more rapidly, achieve better search engine optimization and improve its site merchandising and transaction processing capabilities, among other anticipated benefits. During the migration process the sites have in the past, and may continue in the future, to experience reduced functionality and decreases in conversion rates. Expedia is also in the early stages of a multi-year effort to increase its utilization of cloud computing services. Bodybuilding also continually

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adds software and hardware, effectively upgrading its systems and network infrastructure, as well as taking other steps to improve the efficiency of its systems. Implementations and system enhancements such as these have been in the past, and may continue to be in the future, more time consuming and expensive than originally anticipated, and the resources devoted to those efforts have adversely affected, and may continue to adversely affect, Expedia's and Bodybuilding's ability to develop new site innovations. Expedia and Bodybuilding may be unable to devote financial resources to new technologies and systems, or enhancements to existing infrastructure, technologies and systems, in the future. Overall, these implementations and systems enhancements may not achieve the desired results in a timely manner, to the extent anticipated, or at all. If any of these events occur, Expedia's and Bodybuilding's respective business and financial performance could suffer.

         Acquisitions, investments or significant commercial arrangements could result in operating and financial difficulties.

        Expedia has acquired, invested in or entered into significant commercial arrangements with a number of businesses in the past, and its future growth may depend, in part, on future acquisitions, investments or significant commercial arrangements, any of which could be material to its financial condition and results of operations. Certain financial and operational risks related to acquisitions, investments or significant commercial arrangements that may have a material impact on Expedia's business are:

    Use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions, including with regard to future payment obligations in connection with put/call rights, may limit other potential uses of Expedia's cash, including stock repurchases, dividend payments and retirement of outstanding indebtedness;

    Amortization expenses related to acquired intangible assets and other adverse accounting consequences, including changes in fair value of contingent consideration;

    Expected and unexpected costs incurred in pursuing acquisitions, including identifying and performing due diligence on potential acquisition targets that may or may not be successful, if unsuccessful could result in unexpected litigation or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes due, a loss of anticipated tax benefits or other adverse effects on Expedia's business, operating results or financial condition;

    Diversion of management's attention or other resources from Expedia's existing businesses;

    Difficulties and expenses in assimilating the operations, products, technology, privacy protection systems, information systems or personnel of the acquired company;

    Impairment of relationships with employees, suppliers, customers, vendors and affiliates of Expedia's business and the acquired business;

    The assumption of known and unknown debt and liabilities of the acquired company;

    Failure of the acquired company to achieve anticipated traffic, transactions, revenues, earnings or cash flows or to retain key management or employees;

    Failure to generate adequate returns on Expedia's acquisitions and investments, or returns in excess of alternative uses of capital;

    Failure to properly and timely integrate acquired companies and their operations, reducing Expedia's ability to achieve, among other things, anticipated returns on its acquisitions through cost savings and other synergies;

    Entrance into markets in which Expedia has no direct prior experience and increased complexity in its business;

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    Challenges relating to the structure of an investment, such as governance, accountability and decision-making conflicts, that may arise in the context of a joint venture or majority ownership investment;

    Impairment of goodwill or other intangible assets such as trademarks or other intellectual property arising from Expedia's acquisitions;

    Costs associated with litigation or other claims arising in connection with the acquired company;

    Increased or unexpected costs or delays to obtain governmental approvals for acquisitions;

    Increased competition amongst potential acquirers for acquisition targets could result in a material increase in the purchase price for such targets or otherwise limit Expedia's ability to consummate acquisitions; and

    Adverse market reaction to acquisitions or investments or failure to consummate such transactions.

        Moreover, Expedia relies heavily on the representations and warranties and related indemnities provided to it by the sellers of acquired companies, including as they relate to creation, ownership and rights in intellectual property and compliance with laws and contractual requirements. Expedia's failure to address these risks or other problems encountered in connection with past or future acquisitions and investments could cause it to fail to realize the anticipated benefits of such acquisitions or investments, incur unanticipated liabilities and harm its business generally.

        For example during 2015, Expedia expended significant resources in acquiring, investing or otherwise entering into significant commercial arrangements with a number of companies, including Orbitz Worldwide, Inc., Decolar.com, Inc. and HomeAway and certain assets of Travelocity.com LP.

        In connection with Expedia's acquisition of HomeAway, Expedia is subject is subject to legal, financial and competitive risk associated with HomeAway's transition to a primarily transaction-based business. HomeAway historically has generated revenues primarily when owners or managers of vacation rentals pay HomeAway subscription fees for the listing of their properties on the HomeAway family of sites. While subscription fees are the predominant source of revenue for HomeAway today, a minority of HomeAway's revenue is generated from a commission-based business model, where the owner or manager of the property pays HomeAway a commission on a transactional basis for each booking of the property by a traveler and the traveler pays a service fee for the use of the HomeAway platform. HomeAway has announced its intention to transition to a business model where the primary source of its revenues would be generated on a per booking basis by instituting a service fee to the traveler each time a property is booked and expanding its practice of charging a commission to the owner or manager of such property in connection with such booking. This transition involves significant additional risks and potential costs for HomeAway, including:

    Delays or unanticipated costs in implementing the transition, which may delay or negate any expected benefits;

    Supplier or traveler disruption similar to or worse than disruptions associated with previous business model and platform migrations;

    Market research that indicated higher than expected price elasticity for travelers in increasingly transparent markets such as HomeAway's market and for HomeAway's suppliers more broadly;

    Suppliers and travelers may not adopt HomeAway's new payment structures as expected or at all, or may choose to transact with competitors;

    Execution risk associated with launching a new business initiative that HomeAway did not have prior experience in;

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    Failure to implement or expand HomeAway's technology, systems and network infrastructure in light of additional payment processing and reporting complexity, or failure to do so at reasonable cost;

    Search engine optimization risks;

    Higher cost of traffic reducing cost per view effectiveness and reducing HomeAway's ability to spend at the desired return on investment;

    Increased risk of fraud; and

    Additional potential tax exposures.

        These risks could have a material adverse effect on HomeAway's business and results of operations, which in turn could have a material adverse effect on Expedia's operations and financial results.

         Expedia's and Bodybuilding's international operations involve additional risks and their exposure to these risks will increase as their businesses expand globally.

        A large portion of Expedia's revenue is derived from its international operations. Expedia operates in a number of jurisdictions outside of the United States and intends to continue to expand its international presence. As Expedia has expanded globally, its international (non-U.S.) revenue has increased from 39% in 2010 to 44% in 2015. In foreign jurisdictions, Expedia faces complex, dynamic and varied risk landscapes. As Expedia enters countries and markets that are new to it, it must tailor its services and business models to the unique circumstances of such countries and markets, which can be complex, difficult and costly and divert management and personnel resources. Laws and business practices that favor local competitors or prohibit or limit foreign ownership of certain businesses or Expedia's failure to adapt its practices, systems, processes and business models effectively to the traveler and supplier preferences of each country into which it expands, could slow its growth. For example, to compete in certain international markets Expedia has in the past, and may in the future, adopt locally-preferred payment methods, which has increased its costs and instances of fraud. Certain international markets in which Expedia operates have lower margins than more mature markets, which could have a negative impact on its overall margins as its revenues from these markets grow over time.

        Expedia also earns an increasing portion of its income, and accumulates a greater portion of its cash flow, in foreign jurisdictions. As a result, any repatriation of funds currently held by its subsidiaries in foreign jurisdictions may result in a higher effective tax rate and incremental cash tax payments.

        In addition to the risks outlined elsewhere in this section, Expedia's and Bodybuilding's international operations are also subject to a number of other risks, including:

    Currency exchange restrictions or costs and exchange rate fluctuations, and the risks and costs inherent in hedging such exposures;

    Exposure to local economic or political instability and threatened or actual acts of terrorism;

    Compliance with U.S. and Non-U.S. regulatory laws and requirements relating to anti-corruption, antitrust or competition, economic sanctions, data content and privacy, consumer protection, employment and labor laws, health and safety, ecommerce and advertising and promotions;

    Compliance with additional U.S. laws applicable to U.S. companies operating internationally;

    Differences, inconsistent interpretations and changes in U.S. and non-U.S. laws and regulations, including international and local tax laws, tariffs and trade barriers;

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    Weaker enforcement of Expedia's and Bodybuilding's contractual and intellectual property rights;

    Lower levels of credit card usage and increased payment and fraud risk;

    Longer payment cycles, and difficulties in collecting accounts receivable;

    Preferences by local populations for local providers;

    Restrictions on, or adverse tax and other consequences related to, repatriation of cash and the withdrawal of non-U.S. investments, cash balances and earnings, as well as restrictions on the ability to invest operations in certain countries;

    Financial risk arising from transactions in multiple currencies;

    Slower adoption of the internet as an advertising, broadcast and commerce medium in those markets as compared to the United States;

    Limited fulfillment and technology infrastructure;

    Inconsistent product regulation or sudden policy changes by foreign agencies or governments;

    Expedia's and Bodybuilding's ability to support new technologies, including mobile devices, that may be more prevalent in international markets;

    Difficulties in attracting and retaining qualified employees in international markets, as well as managing staffing and operations due to increased complexity, distance, time zones, language and cultural differences; and

    Uncertainty regarding liability for products, services and content, including uncertainty as a result of local laws and lack of precedent.

        The China travel market in particular is significant and has grown significantly in recent years. Prior to May 2015, Expedia conducted its operations in China primarily through its majority ownership interest in eLong, Inc., a leading online travel service provider in China. Following the sale of its eLong ownership stake in May 2015 to a group of China-based purchasers, including to a subsidiary of Ctrip International, Ltd., Expedia has conducted its business in China through localized websites and commercial arrangements with local partners, including Ctrip. There can be no guarantee that Expedia will be able to grow or even maintain market share and brand awareness in the highly dynamic and intensely competitive market in China and its failure to do so could significantly impacts its ability to grow its overall business.

         A failure to comply with current laws, rules and regulations or changes to such laws, rules and regulations and other legal uncertainties may adversely affect Expedia's and Bodybuilding's businesses, financial performance, results of operations or business growth.

        Expedia's and Bodybuilding's businesses and financial performance could be adversely affected by unfavorable changes in or interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations applicable to Expedia and Bodybuilding and their businesses, including those relating to travel and vacation rental licensing and listing requirements, the sale and advertising of substances regulated by the Food and Drug Administration (the FDA) and other government agencies, the internet and online commerce, internet advertising and price display, consumer protection, anti-corruption, anti-trust and competition, economic and trade sanctions, tax, banking, data security and privacy, as applicable. As a result, regulatory authorities could prevent or temporarily suspend Expedia or Bodybuilding from carrying on some or all of its activities or otherwise penalize Expedia or Bodybuilding if its practices were found not to comply with applicable regulatory or licensing requirements or any binding interpretation of such requirements. Unfavorable changes or

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interpretations could decrease demand for Expedia's and Bodybuilding's products and services, limit marketing methods and capabilities, affect their margins, increase costs and/or subject them to additional liabilities.

        For example, there are, and will likely continue to be, an increasing number of laws and regulations pertaining to the internet and online commerce that may relate to liability for information retrieved from or transmitted over the internet, display of certain taxes and fees, online editorial and user-generated content, user privacy, behavioral targeting and online advertising, taxation, liability for third-party activities and the quality of products and services. Furthermore, the growth and development of online commerce may prompt calls for more stringent consumer protection laws and more aggressive enforcement efforts, which may impose additional burdens on online businesses generally.

        Likewise, the SEC, Department of Justice and Office of Foreign Assets Controls (OFAC), as well as foreign regulatory authorities, have continued to increase the enforcement of economic and trade regulations and anti-corruption laws across industries. U.S. trade sanctions relate to transactions with designated foreign countries, including Cuba, Iran, Sudan and Syria, and nationals and others of those countries, as well as certain specifically targeted individuals and entities. Expedia and Bodybuilding believe that their respective activities comply with OFAC trade regulations and anti-corruption regulations, including the Foreign Corrupt Practices Act and the UK Bribery Act. As regulations continue to evolve and regulatory oversight continues to increase, Expedia and Bodybuilding cannot guarantee that their respective programs and policies will be deemed compliant by all applicable regulatory authorities. In the event their controls should fail or are found to be out of compliance for other reasons, they could be subject to monetary damages, civil and criminal money penalties, litigation and damage to their reputation and the value of their brands.

        Expedia also has been subject, and it will likely be subject in the future, to inquiries from time to time from regulatory bodies concerning compliance with consumer protection, competition, tax and travel industry-specific laws and regulations, including but not limited to investigations and legal proceedings relating to the travel industry and, in particular, parity provisions in contracts between hotels and online travel companies. The failure of Expedia's businesses to comply with these laws and regulations could result in fines and/or proceedings against it by governmental agencies and/or consumers, which if material, could adversely affect its business, financial condition and results of operations. Further, if such laws and regulations are not enforced equally against other competitors in a particular market, Expedia's compliance with such laws may put it at a competitive disadvantage vis-à-vis competitors who do not comply with such requirements. Expedia is unable at this time to predict the timing or outcome of these various investigations and lawsuits or similar future investigations or lawsuits, and their impact, if any, on its business and results of operations.

        In addition, HomeAway has been and continues to be, subject to regulatory developments that affect the vacation rental industry and the ability of companies like Expedia to list those vacation rentals online. For example, some states and local jurisdictions have adopted or are considering statutes or ordinances that prohibit property owners and managers from renting certain properties for fewer than 30 consecutive days or otherwise limit their ability to do so, and other states and local jurisdictions may adopt similar regulations. Some states and local jurisdictions also have fair housing or other laws governing whether and how properties may be rented, which they assert apply to vacation rentals. Many homeowners, condominium and neighborhood associations have adopted rules that prohibit or restrict short-term vacation rentals. In addition, many of the fundamental statutes and ordinances that impose taxes or other obligations on travel and lodging companies were established before the growth of the Internet and ecommerce, which creates a risk of these laws being used in ways not originally intended that could burden property owners and managers or otherwise harm Expedia's business.

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        The promulgation of new laws, rules and regulations, or the new interpretation of existing laws, rules and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which Expedia provides travel services could require it to change certain aspects of its business, operations and commercial relationships to ensure compliance, which could decrease demand for services, reduce revenues, increase costs and/or subject the company to additional liabilities.

        From time to time, Congress, the FDA, the Federal Trade Commission (the FTC) or other federal, state, local or foreign legislative and regulatory authorities may impose additional laws or regulations that apply to Bodybuilding, repeal laws or regulations that Bodybuilding considers favorable to it or impose more stringent interpretations of current laws or regulations. Such developments could require formulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling and advertising, additional scientific substantiation, adverse event reporting or other new requirements.

        Furthermore, Expedia's and Bodybuilding's future growth may be limited by anti-trust or competition laws. For example, Expedia's business has grown and continues to expand, and, as a consequence, increases in its size and market share may negatively affect its ability to obtain regulatory approval of proposed acquisitions, investments or significant commercial arrangements, any of which could adversely affect Expedia's ability to grow and compete.

         Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities.

        The application of various domestic and international income and non-income tax laws, rules and regulations to Expedia's historical and new products and services is subject to interpretation by the applicable taxing authorities. These taxing authorities have become more aggressive in their interpretation and/or enforcement of such laws, rules and regulations over time, as governments are increasingly focused on ways to increase revenues. This has contributed to an increase in audit activity and harsher stances by tax authorities. As such, additional taxes or other assessments may be in excess of Expedia's current tax reserves or may require Expedia to modify its business practices to reduce its exposure to additional taxes going forward, any of which could have a material adverse effect on its business, results of operations and financial condition.

        A number of taxing authorities have made inquiries, brought lawsuits and have levied assessments asserting that Expedia is required to collect and remit hotel occupancy or other taxes. Expedia is also in various stages of inquiry or audit with multiple European Union jurisdictions regarding the application of value added tax to its European Union transactions. While Expedia believes it complies with applicable tax laws, rules and regulations in the jurisdictions in which it operates, tax authorities may determine that it owes additional taxes. Expedia has in the past and may in the future be required in certain domestic and foreign jurisdictions to pay any such tax assessments prior to contesting their validity, which payments may be substantial. This requirement is commonly referred to as "pay-to-play." Payment of these amounts is not an admission that the taxpayer believes it is subject to such taxes. For example, as a pre-condition to challenging the assessments, on January 9, 2015, Expedia paid $2.3 million under protest to the city of Portland, Oregon and Multnomah County, Oregon; during 2009, Expedia paid $48 million under protest to the city of San Francisco and an additional $25.5 million under protest on May 26, 2014 in connection with additional assessments; and during 2013, Expedia paid $171 million to the state of Hawaii. The state of Hawaii has also issued additional assessments for general excise tax, penalties and interest against Expedia, Hotels.com and Hotwire, including: an assessment of $20.5 million for 2012 tax year non-commissioned hotel reservations, an assessment of $29.2 million (including a duplicative assessment) for tax years 2000 through 2012 non-commissioned travel agency services relating to rental cars, and an assessment of $28.5 million for non-commissioned travel agency services relating to hotel reservations and car rental for the tax year

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2013 and for which Expedia has requested additional support from the state of Hawaii but has not received any response to date.

        Significant judgment and estimation is required in determining Expedia's worldwide tax liabilities. In the ordinary course of Expedia's business, there are transactions and calculations, including intercompany transactions and cross-jurisdictional transfer pricing, for which the ultimate tax determination is uncertain or otherwise subject to interpretation. Tax authorities may disagree with Expedia's intercompany charges, including the amount of or basis for such charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. Although Expedia believes its tax estimates are reasonable, the final determination of tax audits could be materially different from its historical income tax provisions and accruals in which case it may be subject to additional tax liabilities, possibly including interest and penalties, which could have a material adverse effect on its cash flows, financial condition and results of operations.

         Amendments to existing tax laws, rules or regulations or enactment of new unfavorable tax laws, rules or regulations could have an adverse effect on Expedia's and Bodybuilding's businesses and financial performance.

        Many of the underlying laws, rules or regulations imposing taxes and other obligations were established before the growth of the internet and ecommerce. If the tax or other laws, rules or regulations were amended, or if new unfavorable laws, rules or regulations were enacted, particularly with respect to occupancy, sales, value-added taxes (VAT), or unclaimed property, the results could increase Expedia's and Bodybuilding's tax payments or other obligations, prospectively or retrospectively, subject them to interest and penalties, decrease the demand for their products and services if they pass on such costs to their consumers, result in increased costs to update or expand their technical or administrative infrastructure or effectively limit the scope of their business activities if they decided not to conduct business in particular jurisdictions. As a result, these changes could have an adverse effect on Expedia's and Bodybuilding's businesses or financial performance.

        Taxing authorities may also successfully assert that Bodybuilding should have collected or in the future should collect sales and use, commercial activity, VAT or similar taxes, and it could be subject to liability with respect to past or future sales. Bodybuilding does not collect sales and use, commercial activity, VAT or similar taxes in all jurisdictions in which it has sales, based on its belief that such taxes are not applicable. Several states have presented Bodybuilding with tax assessments, alleging that it is required to collect and remit sales and other similar taxes. Such tax assessments, penalties and interest or future requirements could have an adverse effect on Bodybuilding's business or financial performance.

        In addition, in the past U.S. and foreign governments have introduced proposals for tax legislation, or have adopted tax laws, that could have a significant adverse effect on Expedia's and Bodybuilding's tax rates, or increase their tax liabilities, the carrying value of deferred tax assets, or their deferred tax liabilities. For example, in October 2015, the Organization for Economic Co-Operation and Development released a final package of measures to be implemented by member nations in response to a 2013 action plan calling for a coordinated multi-jurisdictional approach to "base erosion and profit shifting" by multinational companies. Multiple member jurisdictions, including the United States, have begun implementing recommended changes such as proposed country by country reporting beginning as early as 2016. Additional multilateral changes are anticipated in upcoming years. Any changes to national or international tax laws could impact the tax treatment of Expedia's and Bodybuilding's foreign earnings and adversely affect their profitability. Expedia's and Bodybuilding's effective tax rates in the future could also be adversely affected by changes to their operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or the discontinuance of beneficial tax arrangements in certain jurisdictions.

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        Expedia and Bodybuilding continue to work with relevant authorities and legislators to clarify their obligations under existing, new and emerging tax laws and regulations.

         Expedia and Bodybuilding are involved in various legal proceedings and may experience unfavorable outcomes, which could adversely affect their businesses and financial condition.

        Expedia is involved in various legal proceedings and claims involving taxes, property, personal injury, contract, alleged infringement of third-party intellectual property rights, antitrust, consumer protection, securities laws, and other claims. Bodybuilding may be subject to intellectual property litigation and infringement claims initiated by others, other competitors or entities may assert rights in, or ownership of, its trademarks and other intellectual property rights or in marks that are similar to Bodybuilding's, and it may not be able to successfully resolve these types of conflicts to its satisfaction. These matters may involve claims for substantial amounts of money or for other relief that might necessitate changes to Expedia's or Bodybuilding's business or operations. The defense of these actions is and will likely continue to be both time consuming and expensive and their outcomes cannot be predicted with certainty. Determining reserves for pending litigation is a complex, fact-intensive process that requires significant legal judgment. It is possible that unfavorable outcomes in one or more such proceedings could result in substantial payments that could adversely affect Expedia's or Bodybuilding's business, consolidated financial position, results of operations, or cash flows in a particular period.

         Uncertainties in global economic conditions and their impact on consumer spending patterns, particularly in the travel industry and in the sports nutrition segment, could materially and adversely impact Expedia's and Bodybuilding's operating results.

        Consumers may view a substantial portion of their spending on travel and Bodybuilding's product offerings as discretionary items rather than necessities. As a result, travel expenditures and sports nutrition expenditures are sensitive to personal and business-related discretionary spending levels and tend to decline or grow more slowly during economic downturns. Decreased travel expenditures and sports nutrition expenditures could reduce the demand for Expedia's and Bodybuilding's services, respectively, thereby causing a reduction in their revenue.

        For example, during regional or global recessions, domestic and global economic conditions can deteriorate rapidly, resulting in increased unemployment and a reduction in available budgets for both business and leisure travelers, which slows spending on the services Expedia provides and has a negative impact on its revenue growth. Additionally, if individual countries or regions experience deteriorating credit and economic conditions, and/or significant fluctuations of currency values relative to other currencies such as the U.S. dollar, it can lead to a negative impact on Expedia's foreign denominated net assets, gross bookings, revenues, operating expenses, and net income as expressed in U.S. dollars. Further economic weakness and uncertainty may result in significantly decreased spending on Expedia's services by both business and leisure travelers and on Bodybuilding's products by all consumers, which may have a material adverse impact on their businesses and financial performance. Geopolitical conflicts, significant fluctuations in currency values, sovereign debt issues and macroeconomic concerns are examples of events that contribute to a somewhat uncertain economic environment, which could have a negative impact on consumer spending in the future.

        Expedia's business is also sensitive to fluctuations in hotel supply, occupancy and ADRs, decreases in airline capacity, periodically rising airline ticket prices, or the imposition of taxes or surcharges by regulatory authorities, all of which Expedia has experienced historically.

        Other factors that could negatively affect Expedia's and Bodybuilding's businesses include:

    Significant changes in oil prices;

    Levels of unemployment;

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    Home foreclosures and changes in home values;

    Continued air carrier and hotel chain consolidation;

    Reduced access to discount airfares;

    Travel-related strikes or labor unrest, bankruptcies or liquidations;

    Incidents of actual or threatened terrorism;

    Periods of political instability or geopolitical conflict in which travelers become concerned about safety issues;

    Natural disasters or events such as severe weather conditions, volcanic eruptions, hurricanes or earthquakes;

    Travel-related accidents or the grounding of aircraft due to safety concerns; and

    Health-related risks, such as the Ebola, H1N1, SARs and avian flu outbreaks.

        Such concerns could result in a protracted decrease in demand for Expedia's travel services and Bodybuilding's products and services. This decrease in demand, depending on its scope and duration, together with any future issues affecting travel and food safety, could significantly and adversely affect Expedia's and Bodybuilding's respective businesses, working capital and financial performance over the short and long-term. In addition, the disruption of the existing travel plans of a significant number of travelers upon the occurrence of certain events, such as severe weather conditions, actual or threatened terrorist activity or war, could result in the incurrence of significant additional costs and decrease Expedia's revenues leading to constrained liquidity if Expedia, as it has done historically in the case of severe weather conditions, provides relief to affected travelers by refunding the price or fees associated with airline tickets, hotel reservations and other travel products and services.

         Expedia and Bodybuilding are subject to payments-related and fraud risks.

        Expedia has agreements with companies that process customer credit and debit card transactions, the volume of which are very large and continue to grow, for the facilitation of customer bookings of travel services from Expedia's travel suppliers. These agreements allow these processing companies, under certain conditions, to hold an amount of Expedia's cash (referred to as a holdback) or require Expedia to otherwise post security equal to a portion of bookings that have been processed by that company. These processing companies may be entitled to a holdback or suspension of processing services upon the occurrence of specified events, including material adverse changes in Expedia's financial condition. An imposition of a holdback or suspension of processing services by one or more of Expedia's processing companies could materially reduce Expedia's liquidity. Moreover, there can be no assurances that the rates Expedia and Bodybuilding pay for the processing of customer credit and debit card transactions will not increase which could reduce Expedia's and Bodybuilding's revenue, thereby adversely affecting their businesses and financial performance.

        In addition, credit card networks, such as Visa, MasterCard and American Express, have adopted rules and regulations that apply to all merchants who process and accept credit cards and include the Payment Card Industry Data Security Standards (PCI DSS). Under these rules, Expedia and Bodybuilding are required to adopt and implement internal controls over the use, storage and security of card data. Expedia and Bodybuilding assess their compliance with the PCI DSS rules on a periodic basis and make necessary improvements to their internal controls. Failure to comply may subject Expedia and Bodybuilding to fines, penalties, damages and civil liability and could prevent them from processing or accepting credit cards.

        Expedia's and Bodybuilding's results of operations and financial positions have been negatively affected by their acceptance of fraudulent bookings made using credit and debit cards or fraudulently

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obtained loyalty points. Expedia and Bodybuilding are sometimes held liable for accepting fraudulent orders on their websites or other orders for which payment is subsequently disputed by their customers, both of which lead to the reversal of payments received by Expedia or Bodybuilding, as applicable, for such orders (referred to as a charge back). Accordingly, Expedia and Bodybuilding calculate and record allowances for the resulting credit and debit card charge backs. Expedia's and Bodybuilding's abilities to detect and combat fraudulent schemes, which have become increasingly common and sophisticated, may be negatively impacted by the adoption of new payment methods, the emergence and innovation of new technology platforms, including smartphones and tablet computers, and global expansion, including into markets with a history of elevated fraudulent activity. If Expedia and Bodybuilding are unable to effectively combat fraudulent orders on their websites or mobile applications or if they otherwise experience increased levels of charge backs, Expedia's and Bodybuilding's respective results of operations and financial positions could be materially adversely affected.

        In addition, when onboarding suppliers to Expedia's websites, Expedia may fail to identify falsified or stolen supplier credentials, which may result in fraudulent bookings or unauthorized access to personal or confidential information of users of its websites and mobile applications. A fraudulent supplier scheme could also result in negative publicity, damage to Expedia's reputation, and could cause users of its websites and mobile applications to lose confidence in the quality of its services. Any of these events would have a negative effect on the value of Expedia's brands, which could have an adverse impact on its financial performance.

         Expedia has foreign exchange risk.

        Expedia conducts a significant and growing portion of its business outside the United States. As a result, it faces exposure to movements in currency exchange rates, particularly those related to the British pound sterling, euro, Canadian dollar, Australian dollar, Thai baht, Brazilian real, and Nordic currencies.

        These exposures include but are not limited to re-measurement gains and losses from changes in the value of foreign denominated monetary assets and liabilities; translation gains and losses on foreign subsidiary financial results that are translated into U.S. dollars upon consolidation; fluctuations in hotel revenue due to relative currency movements from the time of booking to the time of stay; planning risk related to changes in exchange rates between the time Expedia prepares its annual and quarterly forecasts and when actual results occur; and the impact of relative exchange rate movements on cross-border travel such as from Europe to the United States and the United States to Europe.

        Depending on the size of the exposures and the relative movements of exchange rates, if Expedia chooses not to hedge or fails to hedge effectively its exposure, it could experience a material adverse effect on its financial statements and financial condition. As seen in some recent periods, in the event of severe volatility in exchange rates these exposures can increase, and the impact on Expedia's results of operations can be more pronounced. In addition, the current environment and the increasingly global nature of Expedia's business have made hedging these exposures more complex. Expedia has increased and plans to continue increasing the scope, complexity and duration of its foreign exchange risk management. Expedia makes a number of estimates in conducting hedging activities including in some cases cancellations and payments in foreign currencies. In addition, an effective exchange rate hedging program is dependent upon effective systems, accurate and reliable data sources, controls and change management procedures. In the event Expedia's estimates differ significantly from actual results or if it fails to adopt effective hedging processes, Expedia could experience greater volatility as a result of its hedging activities.

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         Expedia's stock price is highly volatile.

        The market price of Expedia's common stock is highly volatile and could continue to be subject to wide fluctuations in response to factors such as the following, some of which are beyond its control:

    Quarterly variations in its operating and financial results;

    Operating and financial results that vary from the expectations of securities analysts and investors, including failure to deliver returns on technology or emerging market marketing investments;

    Changes in expectations as to Expedia's future financial performance, including financial estimates by securities analysts and investors;

    Rating agency credit rating actions or pronouncements;

    Reaction to Expedia's earnings releases and conference calls, or presentations by executives at investor and industry conferences;

    Worldwide macro-economic conditions and fluctuations in currency exchange rates;

    Changes in Expedia's capital or governance structure;

    Changes in market valuations of other internet or online service companies;

    Changes in search industry dynamics, such as key word pricing and traffic, or other changes that negatively affect Expedia's ability to generate traffic to its websites;

    Announcements of dividends or changes in the amount or frequency of Expedia's dividends;

    Announcements of technological innovations or new services by Expedia or its competitors;

    Announcements by Expedia or its competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

    Loss of a major travel supplier, such as an airline, hotel or car rental chain;

    Changes in the status of Expedia's intellectual property rights;

    Lack of success in the expansion of Expedia's business model geographically;

    Significant claims or proceedings against Expedia or adverse developments or decisions in pending proceedings;

    Significant security breaches;

    Additions or departures of key personnel;

    Rumors or public speculation about any of the above factors; and

    Price and volume fluctuations in the stock markets in general.

        Volatility in Expedia's stock price could also make it less attractive to certain investors, and/or invite speculative trading in its common stock or debt instruments.

         Expedia may experience constraints in its liquidity and may be unable to access capital when necessary or desirable, either of which could harm its financial position.

        Expedia is accumulating a greater portion of its cash flows in foreign jurisdictions than previously and any repatriation of such funds for use in the United States, including for corporate purposes such as acquisitions, stock repurchases, dividends or debt refinancings, would likely result in additional U.S. income tax expense. In addition, Expedia has experienced, and may experience in the future, declines

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in seasonal liquidity and capital provided by its merchant hotel business, which has historically provided a meaningful portion of its operating cash flow and is dependent on several factors, including the rate of growth of Expedia's merchant hotel business and the relative growth of businesses which consume rather than generate working capital, such as its agency hotel, advertising and managed corporate travel businesses and payment terms with suppliers. Expedia also continued to see growth in both its merchant and agency hotel products. To the extent its merchant hotel business stopped growing or began to decline, it would likely result in pressure on Expedia's working capital cash balances, cash flow over time and liquidity. Moreover, Expedia expended significant resources in 2015 in acquiring and investing in a number of companies, including Orbitz, Decolar.com and HomeAway and certain assets of Travelocity and it may be obligated to expend significant additional resources in 2016 in connection with certain "put" rights associated with its majority investment in trivago, which rights are exercisable by trivago's current shareholders in 2016.

        The availability of funds depends in significant measure on capital markets and liquidity factors over which Expedia exerts no control. In light of periodic uncertainty in the capital and credit markets, Expedia can provide no assurance that sufficient financing will be available on desirable or even any terms to fund investments, acquisitions, stock repurchases, dividends, debt refinancing or extraordinary actions or that its counterparties in any such financings would honor their contractual commitments. In addition, any downgrade of Expedia's debt ratings by Standard & Poor's, Moody's Investor Service, Fitch or similar ratings agencies, increases in general interest rate levels and credit spreads or overall weakening in the credit markets could increase its cost of capital.

         System interruptions, security breaches and the lack of redundancy in Expedia's and Bodybuilding's respective information systems may harm their businesses.

        Expedia and Bodybuilding rely on information technology systems, including the Internet and third-party hosted services, to support a variety of business processes and activities and to store sensitive data, including booking and purchase transactions, intellectual property, proprietary business information and that of its suppliers and business partners, personally identifiable information of its customers and employees, and data with respect to invoicing and the collection of payments, accounting, procurement, and supply chain activities. In addition, Expedia relies on its information technology systems to process financial information and results of operations for internal reporting purposes and to comply with financial reporting, legal, and tax requirements. Bodybuilding relies extensively on information systems for its ecommerce business, supply chain, manufacturing operations, financial reporting, human resources and various other processes and transactions.

        The risk of a cybersecurity-related attack, intrusion, or disruption, including by criminal organizations, hacktivists, foreign governments, and terrorists, is persistent. Additionally, as Expedia continues to integrate its acquired companies, such as Orbitz, into its information technology systems, it may increase the risk of these system interruptions. Expedia and Bodybuilding have experienced and may in the future experience system interruptions that make some or all of these systems unavailable or prevent them from efficiently fulfilling orders or providing services to third parties. These interruptions could include security intrusions, attacks on systems for fraud or service interruption, computer and telecommunications failures and natural events. Significant interruptions, outages or delays in their internal systems, or systems of third parties that they rely upon, and network access, or deterioration in the performance of such systems, would impair their ability to process transactions, decrease the quality of service that they can offer to customers, damage their reputation and brands, increase their costs and/or cause losses.

        Potential security breaches to Expedia's or Bodybuilding's systems or the systems of their service providers, whether resulting from internal or external sources, could significantly harm their respective businesses. Both Expedia and Bodybuilding devote resources to network security, monitoring and testing, employee training and other security measures, but there can be no guarantee that these

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security measures will prevent all possible security breaches or attacks. A party, whether internal or external, that is able to circumvent Expedia's or Bodybuilding's security systems could misappropriate customer or employee information, intellectual property, proprietary information or other business and financial data or cause significant interruptions in their operations. Expedia and Bodybuilding may need to expend significant resources to protect against security breaches or to address problems caused by breaches, and reductions in website availability could cause a loss of substantial business volume during the occurrence of any such incident. Because the techniques used to sabotage security change frequently, often are not recognized until launched against a target and may originate from less regulated and remote areas around the world, Expedia and Bodybuilding may be unable to proactively address these techniques or to implement adequate preventive measures. Security breaches could result in negative publicity, damage to reputation, exposure to risk of loss or litigation and possible liability due to regulatory penalties and sanctions or pursuant to contractual arrangements with payment card processors for associated expenses and penalties. Security breaches could also cause customers and potential users of Expedia and Bodybuilding and their respective business partners to lose confidence in their security, which would have a negative effect on the value of their brands. Failure to adequately protect against attacks or intrusions, whether for Expedia's or Bodybuilding's own systems or systems of vendors, could expose them to security breaches that could have an adverse impact on financial performance.

        In addition, no assurance can be given that Expedia's or Bodybuilding's backup systems or contingency plans will sustain critical aspects of their operations or business processes in all circumstances, many other systems are not fully redundant and their disaster recovery or business continuity planning may not be sufficient. Fire, flood, power loss, telecommunications failure, break-ins, earthquakes, acts of war or terrorism, acts of God, computer viruses, electronic intrusion attempts from both external and internal sources and similar events or disruptions may damage or impact or interrupt computer or communications systems or business processes at any time. Any of these events could cause system interruption, delays and loss of critical data, and could prevent Expedia or Bodybuilding from providing services to their customers and/or third parties for a significant period of time. Remediation may be costly and Expedia and Bodybuilding may not have adequate insurance to cover such costs. Moreover, the costs of enhancing infrastructure to attain improved stability and redundancy may be time consuming and expensive and may require resources and expertise that are difficult to obtain.

         Expedia and Bodybuilding process, store and use personal information, payment card information and other consumer data, which subjects them to risks stemming from possible failure to comply with governmental regulation and other legal obligations.

        Expedia and Bodybuilding may acquire personal or confidential information from users of their websites and mobile applications. There are numerous laws, regulations and policies in the U.S. and foreign jurisdictions regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information, payment card information and other consumer data, the scope of which is changing, subject to differing interpretations, and may be inconsistent between countries or conflict with other rules. Expedia and Bodybuilding strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data protection. It is possible, however, that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or the practices of the companies. Any failure or perceived failure by Expedia, Bodybuilding or their service providers to comply with the privacy policies, privacy related obligations to users or other third parties, or privacy related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information, payment card information or other consumer data, may result in governmental enforcement actions, litigation or public statements against Expedia or Bodybuilding, as applicable, by consumer advocacy groups or others and could cause Expedia's and Bodybuilding's

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customers and members to lose trust in them, as well as subject them to bank fines, penalties or increased transaction costs, all of which could have an adverse effect on their respective businesses.

        The regulatory framework for privacy issues worldwide is currently in flux and is likely to remain so for the foreseeable future. Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the internet have recently come under increased public scrutiny. The U.S. Congress and federal agencies, including the FTC and the Department of Commerce, are reviewing the need for greater regulation for the collection and use of information concerning consumer behavior on the internet, including regulation aimed at restricting certain targeted advertising practices. U.S. courts are also considering the applicability of existing federal and state statutes, including computer trespass and wiretapping laws, to the collection and exchange of information online. In addition, the European Court of Justice's invalidation of the U.S.-EU Safe Harbor Framework could make it more difficult for Expedia to transfer data outside of the European Union for processing and the European Union's reforms to its existing data protection legal framework, may result in a greater compliance burden for companies, including Expedia, with users in Europe and increased costs of compliance. Although European Union and U.S. authorities have reached agreement on a new data transfer framework called the EU-U.S. Privacy Shield, the European Union and the U.S. must implement the new framework, which may be subject to legal challenge. Finally, countries in other regions, most notably Asia, Eastern Europe and Latin America, are increasingly implementing new privacy regulations, resulting in additional compliance burdens and uncertainty as to how some of these laws will be interpreted.

         Expedia relies on the performance of highly skilled personnel and, if it is unable to retain or motivate key personnel or hire, retain and motivate qualified personnel, its business would be harmed.

        Expedia's performance is largely dependent on the talents and efforts of highly skilled individuals. Expedia's future success depends on its continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of its organization. In particular, the contributions of Barry Diller, Expedia's Chairman and Senior Executive, and Dara Khosrowshahi, its Chief Executive Officer, are critical to the overall management of the company. Expedia's future success will depend on the performance of its senior management and key employees. Expedia cannot ensure that it will be able to retain the services of Mr. Diller, Mr. Khosrowshahi or any other member of its senior management or key employees, the loss of whom could seriously harm its business. Competition for well-qualified employees in certain aspects of Expedia's business, including software engineers, developers, product management personnel, development personnel, and other technology professionals, also remains intense.

        Expedia's continued ability to compete effectively depends on its ability to attract new employees and to retain and motivate its existing employees. If Expedia does not succeed in attracting well-qualified employees or retaining or motivating existing employees, its business would be adversely affected. Expedia does not maintain any key person life insurance policies.

        Expedia has in the past, and may again in the future, restructure portions of its global workforce to simplify and streamline its organization, improve its cost structure and strengthen its overall businesses. These changes could affect employee morale and productivity and be disruptive to Expedia's business and financial performance.

         Actual or potential conflicts of interest may develop between Expedia management and directors, on the one hand, and the management and directors of IAC/InterActiveCorp, on the other.

        Mr. Diller serves as Expedia's Chairman of the Board of Directors and Senior Executive, while retaining his role as Chairman of the Board of Directors and Senior Executive of IAC/InterActiveCorp (IAC), and Mr. Victor Kaufman serves as Vice Chairman of both Expedia and IAC. The fact that

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Mr. Diller and Mr. Kaufman hold positions with and securities of both companies could create, or appear to create, potential conflicts of interest for them when facing decisions that may affect both IAC and Expedia. They may also face conflicts of interest with regard to the allocation of their time between the companies.

        Expedia's certificate of incorporation provides that no officer or director of Expedia who is also an officer or director of IAC be liable to Expedia or its stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to IAC instead of Expedia, or does not communicate information regarding a corporate opportunity to Expedia because the officer or director has directed the corporate opportunity to IAC. This corporate opportunity provision may have the effect of exacerbating the risk of conflicts of interest between the companies because the provision effectively shields an overlapping director/executive officer from liability for breach of fiduciary duty in the event that such director or officer chooses to direct a corporate opportunity to IAC instead of Expedia.

         Expedia and Bodybuilding work closely with various business partners and rely on third-parties for many systems and services, and therefore could be harmed by their activities.

        Expedia and Bodybuilding could be harmed by the activities of third parties that they do not control. Expedia and Bodybuilding work closely with business partners, including in connection with significant commercial arrangements and joint ventures, and, in the case of Expedia, through its Expedia Affiliate Network business. Expedia and Bodybuilding also rely on third-party service providers for certain customer care, fulfillment, processing, systems development, technology and other services, including, increasingly, travel care (in the case of Expedia) and information technology services. If these partners or third-party service providers experience difficulty or fail to meet Expedia's or Bodybuilding's respective requirements or standards or the requirements or standards of governmental authorities, it could damage Expedia's and Bodybuilding's respective reputations, make it difficult for them to operate some aspects of their respective businesses, or expose Expedia and Bodybuilding to liability for their actions which could have an adverse impact on Expedia's and Bodybuilding's respective business and financial performance. Likewise, if the third-party service providers on which Expedia and Bodybuilding rely were to cease operations, temporarily or permanently, face financial distress or other business disruption, Expedia and Bodybuilding could suffer increased costs and delays in their ability to provide similar services until an equivalent service provider could be found or Expedia and Bodybuilding could develop replacement technology or operations, any of which could also have an adverse impact on Expedia's and Bodybuilding's respective business and financial performance.

         Expedia is exposed to various counterparty risks.

        Expedia is exposed to the risk that various counterparties, including financial entities, will fail to perform. This creates risk in a number of areas, including with respect to Expedia's bank deposits and investments, foreign exchange risk management, insurance coverages, and letters of credit. As it relates to deposits, as of December 31, 2015, Expedia held cash in bank depository accounts of approximately $1.6 billion (primarily in Bank of America, BNP Paribas, HSBC, JPMorgan Chase, Royal Bank of Canada and Standard Chartered Bank) and held time deposits of approximately $29 million at financial institutions including, JPMorgan Chase and Nordea. Additionally, majority-owned subsidiaries of Expedia held cash of approximately $71 million (primarily in Deutsche Bank and Citibank). As it relates to foreign exchange, as of December 31, 2015, Expedia was party to forward contracts with a notional value of approximately $1.9 billion, the fair value of which was approximately $8 million. The counterparties to these contracts were Credit Suisse International, Standard Chartered Bank, Goldman Sachs Bank, JPMorgan Chase, Bank of America, US Bank, Barclays Bank PLC, BNP Paribas, Wells Fargo, Royal Bank of Canada, Societe Generale, Bank of Tokyo-Mitsubishi, Citibank and HSBC.

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Expedia employs forward contracts to hedge a portion of its exposure to foreign currency exchange rate fluctuations. At the end of the deposit term or upon the maturity of the forward contracts, the counterparties are obligated, or potentially obligated in the case of forward contracts, to return Expedia's funds or pay Expedia net settlement values. If any of these counterparties were to liquidate, declare bankruptcy or otherwise cease operations, it may not be able to satisfy its obligations under these time deposits or forward contracts.

        In addition, due to instability in the economy Expedia also faces increased credit risk and payment delays from its non-financial contract counterparties.

         Expedia has significant indebtedness, which could adversely affect its business and financial condition

        Expedia has outstanding long-term indebtedness with a face value of $3.2 billion, and it has a $1.5 billion unsecured revolving credit facility. Risks relating to Expedia's indebtedness include:

    Increasing Expedia's vulnerability to general adverse economic and industry conditions;

    Requiring Expedia to dedicate a portion of its cash flow from operations to payments on its indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;

    Making it difficult for Expedia to optimally capitalize and manage the cash flow for its businesses;

    Limiting Expedia's flexibility in planning for, or reacting to, changes in its businesses and the markets in which it operates;

    Placing Expedia at a competitive disadvantage compared to its competitors that have less debt; and

    Limiting Expedia's ability to borrow additional funds or to borrow funds at rates or on other terms we find acceptable.

        The agreements governing Expedia's indebtedness contain various covenants that may limit its ability to effectively operate its businesses, including those that restrict its ability to, among other things:

    Borrow money, and guarantee or provide other support for indebtedness of third parties including guarantees;

    Pay dividends on, redeem or repurchase Expedia's capital stock;

    Enter into certain asset sale transactions, including partial or full spin-off transactions;

    Enter into secured financing arrangements;

    Enter into sale and leaseback transactions; and

    Enter into unrelated businesses.

        In addition, Expedia's credit facility requires that it meet certain financial tests, including an interest coverage test and a leverage ratio test.

        Any failure to comply with the restrictions of Expedia's credit facility or any agreement governing its other indebtedness may result in an event of default under those agreements. Such default may allow the creditors to accelerate the related debt, which acceleration may trigger cross-acceleration or cross-default provisions in other debt. In addition, lenders may be able to terminate any commitments they had made to supply Expedia with further funds (including periodic rollovers of existing borrowings). In addition, it is possible that Expedia may need to incur additional indebtedness in the future in the ordinary course of business. The terms of Expedia's credit facility and the indentures governing its outstanding senior notes allow it to incur additional debt subject to certain limitations. If new debt is added to current debt levels, the risks described above could intensify.

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         Expedia and Bodybuilding cannot be sure that their intellectual property and proprietary information is protected from copying or use by others, including potential competitors.

        Expedia's and Bodybuilding's websites and mobile applications rely on content, brands and technology, much of which is proprietary. Expedia and Bodybuilding establish and protect their intellectual property by relying on a combination of trademark, copyright, trade secret, trademark and patent laws in the U.S. and other jurisdictions, license and confidentiality agreements, and internal policies and procedures. In connection with Expedia's and Bodybuilding's license agreements with third parties, they seek to control access to, and the use and distribution of, their proprietary information and intellectual property. Even with these precautions, however, it may be possible for another party to copy or otherwise obtain and use Expedia's or Bodybuilding's intellectual property without their authorization or to develop similar intellectual property independently. Effective trademark, copyright, patent and trade secret protection may not be available in every jurisdiction in which Expedia's and Bodybuilding's services are made available, and policing unauthorized use of intellectual property is difficult and expensive. Expedia and Bodybuilding cannot be sure that the steps they have taken will prevent misappropriation or infringement of their respective intellectual property. Any misappropriation or violation of these rights could have a material adverse effect on Expedia's and Bodybuilding's respective businesses. Furthermore, Expedia or Bodybuilding may need to go to court or other tribunals to enforce their intellectual property rights, to protect their trade secrets or to determine the validity and scope of the proprietary rights of others. These proceedings might result in substantial costs and diversion of resources and management attention.

        Expedia currently licenses from third parties some of the technologies, content and brands incorporated into its websites. As it continues to introduce new services that incorporate new technologies, content and brands, Expedia may be required to license additional technology, content or brands. Expedia cannot be sure that such technology, content and brand licenses will be available on commercially reasonable terms, if at all.

         Bodybuilding operates in a highly competitive industry and its failure to compete effectively could materially and adversely affect its sales and growth prospects.

        Bodybuilding competes primarily against other specialty retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations and mail order companies. This market is sensitive to the introduction of new products, which may rapidly capture a significant share of the market. As certain products become more mainstream, Bodybuilding experiences increased competition for those products. For example, as the trend in favor of whey protein products developed, it experienced increased competition for whey protein products from supermarkets, drug stores, mass merchants and other food companies. Increased competition from companies that distribute through retail, e-commerce or wholesale channels could have a material adverse effect on Bodybuilding's financial condition and results of operations. Certain of Bodybuilding's competitors may have significantly greater financial, technical and marketing resources. In addition, Bodybuilding's competitors may be more effective and efficient in introducing new products. Bodybuilding may not be able to compete effectively, and any of the factors listed above may cause price reductions, reduced margins and losses of market share.

         Bodybuilding's failure to appropriately and timely respond to changing consumer preferences and demand for new products and services could significantly harm its customer relationships and its business, financial condition and results of operations.

        Bodybuilding's performance is affected by industry trends including, among others, demographic trends and health and lifestyle preferences, as well as other factors, such as industry media coverage and governmental actions. For example, this industry is subject to potential regulatory activity and other legal matters that could affect the credibility of a given product or category of products. Consumer

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trends and their overall impact on consumer spending and limited product innovation and introductions in the vitamin, mineral and supplement (VMS) industry can dramatically affect purchasing patterns. Additionally, Bodybuilding's performance is affected by competitive trends such as the entry of new competitors, changes in promotional strategies or expansion of product assortment by various competitors.

        Sales of sports nutrition products are generally more sensitive to consumer trends, such as increased demand for products recommended by the media, resulting in higher volatility than other products. Accordingly, Bodybuilding launches new sports nutrition products on an ongoing basis in response to prevailing market conditions and consumer demands.

        Bodybuilding relies on consumer perception regarding the safety, quality and effectiveness of the supplement products it sells, as well as similar products distributed by other companies. Consumer perception of products can be significantly influenced by adverse publicity in the form of published scientific research, national media attention or other publicity, whether or not accurate, that associates consumption of Bodybuilding's products or any other similar products with illness or other adverse effects, or questions the benefits of Bodybuilding's products or other similar products or that claims that any such products are ineffective. Future scientific research or publicity could be unfavorable to the industry or any of Bodybuilding's specific products and may not be consistent with earlier favorable research or publicity. Unfavorable research or publicity could have a material adverse effect on Bodybuilding's ability to generate sales.

        Bodybuilding's business is subject to changing consumer trends and preferences. Any failure to accurately predict or react to these trends could negatively impact consumer opinion of Bodybuilding as a source for the latest products, which in turn could harm its customer relationships and cause it to lose market share. The success of Bodybuilding's product offerings depends upon a number of factors, including its ability to:

    anticipate customer needs;

    successfully introduce new products in a timely manner;

    price its products competitively;

    deliver its products in sufficient volumes and in a timely manner; and

    differentiate its product offerings from those of its competitors.

         Bodybuilding may be subject to material product liability claims if people or property are harmed by the products it sells, which could increase its costs and adversely affect its reputation, revenues and operating income.

        Some of the products Bodybuilding sells, distributes or manufactures may expose it to product liability claims relating to personal injury, death, or environmental or property damage, and may require product recalls or other actions. Bodybuilding's products consist of vitamins, minerals, herbs and other ingredients that are classified as foods or dietary supplements and are not subject to pre-market regulatory approval in the United States. These products could contain contaminated substances, and some of the products contain ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur.

        In addition, third-party manufacturers produce many of the products Bodybuilding sells. Bodybuilding relies on these manufacturers to ensure the integrity of their ingredients and formulations. As a distributor of products manufactured by third parties, Bodybuilding may also be liable for various product liability claims for products it does not manufacture. Moreover, as a practical matter, indemnification from a product supplier is dependent on the creditworthiness of the

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indemnifying party and its insurer, and the absence of significant defenses by the insurers. Bodybuilding may be unable to obtain full recovery from the insurer or any indemnifying third-party in respect of any claims against it in connection with products manufactured by such third-party.

        Even with adequate insurance and indemnification, product liability claims could significantly damage Bodybuilding's reputation and consumer confidence in its products. Bodybuilding's litigation expenses could increase as well, which also could have a material adverse effect on its results of operations even if a product liability claim is unsuccessful or is not fully pursued.

         Bodybuilding may experience product recalls, withdrawals or seizures, which could materially and adversely affect its business, financial condition and results of operations.

        Bodybuilding may initiate or participate in product recalls, withdrawals or seizures if any of the products it sells are believed to cause injury or illness or if Bodybuilding is alleged to have violated governmental regulations in the labeling, promotion, sale or distribution of those products. A significant product recall, withdrawal or seizure may require significant management attention, would likely result in substantial and unexpected costs and may materially and adversely affect Bodybuilding's business, financial condition and results of operations. Furthermore, a significant product recall, withdrawal or seizure may adversely affect consumer confidence in its brands and third-party brands sold by Bodybuilding and thus decrease consumer demand for products sold by Bodybuilding.

        As is common in the VMS industry, Bodybuilding relies on its contract manufacturers and suppliers to ensure that the products they manufacture and sell to Bodybuilding comply with all applicable regulatory and legislative requirements. In general, Bodybuilding seeks representations and warranties, indemnification and insurance from its contract manufacturers and suppliers. However, even with adequate insurance and indemnification, any claims of non-compliance could significantly damage Bodybuilding's reputation and consumer confidence in its products. In addition, if products offered for sale by Bodybuilding do not comply with applicable regulatory, statutory and legislative requirements, Bodybuilding cannot market such products and may be required to recall or remove such products from the market and may face lawsuits related to any alleged non-compliance, which in certain cases could materially and adversely affect Bodybuilding's business, financial condition and results of operations.

         Increases in the prices of key raw materials or shortages of such materials could materially and adversely affect Bodybuilding's business, financial condition and results of operations.

        Bodybuilding's products are composed of certain key raw materials. If the prices of these raw materials were to increase significantly, it could result in a significant increase in the prices charged to Bodybuilding for its own branded products and third-party products. Raw material prices may increase in the future and Bodybuilding may not be able to pass on those increases to customers who purchase the products it sells. A significant increase in the price of raw materials that cannot be passed on to customers could have a material adverse effect on Bodybuilding's business, financial condition and results of operations.

        Bodybuilding expects supplies of raw materials to meet its specifications. If any raw material is adulterated or does not meet Bodybuilding's specifications, it could significantly impact Bodybuilding's contract manufacturers ability to produce products and could materially and adversely affect its business, financial condition and results of operations.

        In addition, if Bodybuilding is no longer able to obtain products from one or more of its suppliers on reasonable terms, its customer relationships could be materially and adversely affected. Events such as terrorist attacks, civil unrest or war, or the perceived threat thereof, may also have a significant adverse effect on the availability of raw materials essential to the manufacturing of Bodybuilding's

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products, which could have a material adverse effect on its business, financial condition and results of operations.

         Compliance with governmental regulations could increase Bodybuilding's costs significantly and adversely affect its operating income.

        The processing, formulation, manufacturing, packaging, labeling, advertising and distribution of Bodybuilding's products and the products that it manufactures for third parties are subject to federal laws and regulation by one or more federal agencies, including the FDA, the FTC, the U.S. Department of Agriculture and the U.S. Environmental Protection Agency. These activities are also regulated by various state, local and international laws and the agencies of the states and localities in which Bodybuilding's products and the products that it manufactures for third parties are sold. Regulations, whether existing, new or changed, may prevent or delay the introduction of new products or require reformulation of existing products, which could result in lost sales and/or increased costs. A regulatory agency may reject the evidence of safety for new ingredients that Bodybuilding may want to market, may determine that a particular product or product ingredient presents an unacceptable health risk or may determine that a particular statement of nutritional support on used or proposed to be used on its products, or that third parties use or propose to use on products sold by Bodybuilding, are unsubstantiated claims to an unauthorized food "health claim" and not adequately supported by competent and reliable scientific evidence. Any such regulatory determination would prevent Bodybuilding or third parties, as applicable, from marketing particular products or using certain statements on those products, which could adversely affect Bodybuilding's sales of those products.

         If Bodybuilding does not successfully optimize and operate its fulfillment centers, its business could be materially and adversely affected.

        If Bodybuilding does not adequately predict customer demand or otherwise optimize and operate its fulfillment centers successfully or efficiently, excess or insufficient fulfillment center capacity could result in increased costs, impairment charges, or both, or harm its business in other ways. In addition, a failure to optimize inventory in Bodybuilding's fulfillment centers could increase net shipping costs by requiring long-zone or partial shipments.

        Bodybuilding relies on a limited number of shipping companies to deliver inventory to it and ship orders to customers. If Bodybuilding is not able to negotiate acceptable terms with these companies or they experience performance problems or other difficulties, it could negatively impact Bodybuilding's operating results and customer experience. In addition, Bodybuilding's ability to receive inbound inventory efficiently and ship completed orders to customers also may be materially and adversely affected by inclement weather, fire, flood, power loss, earthquakes, labor disputes, acts of war or terrorism, acts of God and other similar factors.

         Bodybuilding faces significant inventory risk.

        Bodybuilding is exposed to significant inventory risks as a result of, among other factors, seasonality, new product launches, raw ingredient supply shortages, rapid changes in product cycles and pricing, defective merchandise, changes in consumer demand and consumer spending patterns and changes in consumer tastes with respect to its products, each of which may adversely affect its operating results. Bodybuilding endeavors to accurately predict these trends and avoid overstocking or understocking products it sells. Demand for products, however, can change significantly between the time inventory or components are ordered and the date of sale.

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         A significant disruption to Bodybuilding's delivery network could adversely impact sales or increase its costs, which could decrease its profits.

        Because Bodybuilding relies on FedEx, DHL, the U.S. Postal Service and regional carriers such as OnTrac and LaserShip to deliver most of the small parcel products it offers on its sites, it is subject to shipping delays or disruptions caused by inclement weather, natural disasters, labor activism, health epidemics or bioterrorism. In addition, because it relies on such national and regional major transportation companies for the delivery of some of its other products, Bodybuilding is also subject to risks of breakage or other damage during delivery by any of these third parties. If Bodybuilding is not able to deliver products in a timely fashion or products are damaged during the delivery process, its customers could become dissatisfied and cease buying products through its sites, which would adversely affect its business, financial condition and results of operations.

         Bodybuilding's business relies on email and other messaging services, and any restrictions on the sending of emails or messages or an inability to timely deliver such communications could adversely affect its business, financial condition and results of operations.

        Bodybuilding's business is highly dependent upon email and other messaging services for promoting its sites and products. Bodybuilding provides emails and other "push" communications to customers and other visitors informing them of what is available for purchase on its site that day, and believes these messages are an important part of its marketing and generate a substantial portion of its revenue. If Bodybuilding is unable to successfully deliver emails or other messages to its subscribers, or if subscribers decline to open its emails or other messages, its revenue and profitability would be materially and adversely affected. Changes in how webmail applications organize and prioritize email may also reduce the number of subscribers opening its emails. Actions by third parties to block, impose restrictions on or charge for the delivery of emails or other messages could also adversely impact Bodybuilding's business. From time to time, Internet service providers or other third parties may block bulk email transmissions or otherwise experience technical difficulties that result in Bodybuilding's inability to successfully deliver emails or other messages to third parties. Changes in the laws or regulations that limit its ability to send such communications or impose additional requirements upon Bodybuilding in connection with sending such communications would also materially and adversely impact its business. Bodybuilding's use of email and other messaging services to send communications about its site or other matters may also result in legal claims against it, which may cause increased expenses, and if successful may result in fines and orders with costly reporting and compliance obligations or may limit or prohibit its ability to send emails or other messages. Bodybuilding also relies on social networking messaging services to send communications and to encourage customers to send communications. Changes to the terms of these social networking services to limit promotional communications, any restrictions that would limit Bodybuilding's ability or its customers' ability to send communications through their services, disruptions or downtime experienced by these social networking services or decline in the use of or engagement with social networking may materially and adversely affect its business, financial condition and results of operations.

         Bodybuilding's user growth, engagement and monetization on mobile devices depends upon effective operation of mobile operating systems, networks and standards that it does not control.

        There is no guarantee that popular mobile devices will continue to feature Bodybuilding.com or Bodybuilding's other products, or that mobile device users will continue to use its products rather than competing products. Bodybuilding is dependent on the interoperability of Bodybuilding.com and its other products with popular mobile operating systems, networks, and standards that it does not control, such as the Android and iOS operating systems, and any changes in such systems, its relationships with mobile operating system partners, handset manufacturers, or mobile carriers, or in their terms of service or policies that degrade Bodybuilding's products' functionality, reduce or eliminate its ability to

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distribute its products, or give preferential treatment to competitive products, could adversely affect Bodybuilding.com usage and monetization on mobile devices. Additionally, in order to deliver high quality mobile products, it is important that Bodybuilding's products work well with a range of mobile technologies, systems, networks, and standards that it does not control, and that it has good relationships with handset manufacturers and mobile carriers. Bodybuilding may not be successful in maintaining or developing relationships with key participants in the mobile industry or in developing products that operate effectively with these technologies, systems, networks, or standards. In the event that it is more difficult for its users to access and use Bodybuilding.com or its other products on their mobile devices, or if Bodybuilding's users choose not to access or use Bodybuilding.com or its other products on their mobile devices or use mobile products that do not offer access to Bodybuilding.com or its other products, Bodybuilding's user growth and user engagement could be harmed. From time to time, Bodybuilding may also take actions regarding the distribution of its products or the operation of its business based on what it believes to be in its long-term best interests. Such actions may adversely affect its relationships with the operators of mobile operating systems, handset manufacturers, mobile carriers, or other business partners, and there is no assurance that these actions will result in the anticipated long-term benefits. In the event that Bodybuilding's relationships with such third parties deteriorate, its user growth, engagement, and monetization could be adversely affected and its business could be harmed.

        Bodybuilding believes that its ability to compete effectively through a mobile presence depends upon many factors both within and beyond its control, including:

    the popularity, usefulness, ease of use, performance, and reliability of its products compared to its competitors' products, particularly with respect to mobile applications;

    the size and composition of its user base;

    the engagement of its users with its products and competing products;

    the timing and market acceptance of products, including developments and enhancements to its or its competitors' products;

    its ability to monetize its products;

    customer service and support efforts;

    changes mandated by legislation, regulatory authorities or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on Bodybuilding;

    acquisitions or consolidation within its industry, which may result in more formidable competitors;

    Bodybuilding's ability to attract, retain and motivate talented employees, particularly software engineers, designers and product managers;

    its ability to cost-effectively manage and grow its operations; and

    its reputation and brand strength relative to those of its competitors.

        If Bodybuilding is not able to compete effectively on mobile devices, its user base and level of user engagement may decrease, it may become less attractive to developers and marketers and its business, financial conditions and results of operations may be materially and adversely affected.

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         If Bodybuilding fails to retain existing users or add new users, or if its users decrease their level of engagement with its products, Bodybuilding's business, financial condition and results of operations may be significantly harmed.

        The size of Bodybuilding's user base and its users' level of engagement are critical to its success. Bodybuilding's financial performance has been and will continue to be significantly determined by its success in adding, retaining and engaging active users. If people do not perceive its products to be useful, reliable and trustworthy, Bodybuilding may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their engagement. Bodybuilding's user engagement patterns have changed over time, and user engagement can be difficult to measure, particularly as users continue to engage increasingly via mobile devices and as Bodybuilding introduces new and different products and services. Any number of factors could potentially negatively affect user retention, growth and engagement, including if:

    users increasingly engage with other products or services;

    Bodybuilding fails to introduce new products or services that users find engaging or if it introduces new products or services that are not favorably received;

    users have difficulty installing, updating or otherwise accessing its products on mobile devices;

    user behavior on any of Bodybuilding's products changes, including decreases in the quality and frequency of content shared on its products and services;

    Bodybuilding is unable to continue to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks and that achieve a high level of market acceptance;

    there are decreases in user sentiment about the quality or usefulness of its products or concerns related to privacy and sharing, safety, security or other factors;

    Bodybuilding is unable to manage and prioritize information to ensure users are presented with content that is interesting, useful and relevant to them;

    users adopt new technologies where its products may be displaced in favor of other products or services, or may not be featured or otherwise available;

    there are adverse changes in Bodybuilding's products that are mandated by legislation, regulatory authorities or litigation, including settlements or consent decrees;

    technical or other problems prevent Bodybuilding from delivering its products in a rapid and reliable manner or otherwise affect the user experience, such as security breaches or failure to prevent or limit spam or similar content;

    Bodybuilding adopts policies or procedures related to areas such as sharing or user data that are perceived negatively by its users or the general public;

    it elects to focus its user growth and engagement efforts more on longer-term initiatives, or if initiatives designed to attract and retain users and engagement are unsuccessful or discontinued, whether as a result of actions by Bodybuilding, third parties or otherwise;

    Bodybuilding fails to provide adequate customer service to users, marketers or developers;

    developers whose products are integrated with Bodybuilding.com or other companies in its industry are the subject of adverse media reports or other negative publicity; or

    Bodybuilding's current or future products, such as its development tools and application programming interfaces that enable developers to build, grow and monetize mobile and web

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      applications, reduce user activity on Bodybuilding.com by making it easier for its users to interact and share on third-party mobile and web applications.

        Any of the above factors could have a material and adverse effect on Bodybuilding's business, financial condition and results of operations.

         Bodybuilding's inability to acquire, use or maintain the marks and domain names for its sites could substantially harm its business and results of operations.

        Bodybuilding is currently the registrant of marks for its brands in numerous jurisdictions and is the registrant of the Internet domain name for the websites of Bodybuilding.com. However, it has not registered its marks or domain names in all major international jurisdictions. Domain names generally are regulated by Internet regulatory bodies. If Bodybuilding does not have or cannot obtain on reasonable terms the ability to use its marks in a particular country, or to use or register its domain name, it could be forced either to incur significant additional expenses to market its products within that country, including the development of a new brand and the creation of new promotional materials and packaging, or to elect not to sell products in that country. Either result could materially and adversely affect Bodybuilding's business, financial condition and results of operations.

        Furthermore, the regulations governing domain names and laws protecting marks and similar proprietary rights could change in ways that block or interfere with Bodybuilding's ability to use relevant domains or its current brand. Also, Bodybuilding might not be able to prevent third parties from registering, using or retaining domain names that interfere with its consumer communications or infringe or otherwise decrease the value of its marks, domain names and other proprietary rights. Regulatory bodies also may establish additional generic or country-code top-level domains or may allow modifications of the requirements for registering, holding or using domain names. As a result, Bodybuilding might not be able to register, use or maintain the domain names that utilize the name Bodybuilding or its other brands in all of the countries in which it currently or intends to conduct business.

         The seasonality of Bodybuilding's business places increased strain on its operations.

        Bodybuilding derives significant sales during the first quarter of each year. If it does not stock or restock popular products in sufficient amounts such that it fails to meet customer demand, it could significantly affect its revenue and future growth. If it overstocks products, it may be required to take significant inventory markdowns or write-offs and incur commitment costs, which could reduce profitability. If too many customers access Bodybuilding's websites within a short period of time due to increased demand, it may experience system interruptions or site performance slowdown that make its website unavailable or prevent it from efficiently fulfilling orders, which may reduce the volume of products it sells and the attractiveness of its products and services. In addition, Bodybuilding may be unable to adequately staff its fulfillment and customer service centers during these peak periods.

         Bodybuilding may be unable to accurately forecast revenue and appropriately plan its expenses in the future.

        Revenue and operating results are difficult to forecast because they generally depend on the volume, timing and type of the orders Bodybuilding receives, all of which are uncertain. Bodybuilding bases a significant portion of its expense levels and investment plans on its estimates of total revenue and gross margins. Bodybuilding's business is affected by general economic and business conditions in the United States and in international markets. A significant portion of its expenses are fixed, and as a result, it may be unable to adjust its spending in a timely manner to compensate for any unexpected shortfall in net revenue. Any failure to accurately predict net revenue or gross margins could cause

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Bodybuilding's operating results to be lower than expected, which could materially and adversely affect its financial condition.

Factors Relating to the Spin-Off

         The Spin-Off could result in a significant tax liability to Liberty Interactive and holders of Liberty Ventures common stock.

        It is a condition to the Spin-Off that Liberty Interactive receive the opinion of Skadden Arps, in form and substance reasonably acceptable to Liberty Interactive, to the effect that, for U.S. federal income tax purposes, the Spin-Off will qualify as a tax-free transaction to Liberty Interactive and holders of Liberty Ventures common stock under Section 355, Section 368(a)(1)(D) and related provisions of the Code (except with respect to the receipt of cash in lieu of fractional shares of our common stock).

        The opinion of Skadden Arps will be based on the law in effect as of the date of the Spin-Off and will rely upon certain assumptions, as well as statements, representations and certain undertakings made by officers of Liberty Interactive and SpinCo and John C. Malone. These assumptions, statements, representations and undertakings are expected to relate to, among other things, Liberty Interactive's business reasons for engaging in the Spin-Off, the conduct of certain business activities by Liberty Interactive and SpinCo, and the plans and intentions of Liberty Interactive and SpinCo to continue conducting those business activities and not to materially modify their ownership or capital structure following the Spin-Off. If any of those statements, representations or assumptions is incorrect or untrue in any material respect or any of those undertakings is not complied with, or if the facts upon which the opinion is based are materially different from the facts that prevail at the time of the Spin-Off, the conclusions reached in such opinion could be adversely affected.

        Liberty Interactive does not intend to seek a ruling from the Internal Revenue Service (the IRS) as to the U.S. federal income tax treatment of the Spin-Off. The opinion of Skadden Arps will not be binding on the IRS or a court, and there can be no assurance that the IRS will not challenge the conclusions reached in the opinion or that a court would not sustain such a challenge.

        Even if the Spin-Off otherwise qualifies under Section 355, Section 368(a)(1)(D) and related provisions of the Code, the Spin-Off would result in a significant U.S. federal income tax liability to Liberty Interactive (but not to holders of Liberty Ventures common stock) under Section 355(e) of the Code if one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by either vote or value) in the stock of Liberty Interactive or in the stock of SpinCo (excluding, for this purpose, the acquisition of SpinCo common stock by holders of Liberty Ventures common stock in the Spin-Off) as part of a plan or series of related transactions that includes the Spin-Off. Any acquisition of the stock of Liberty Interactive or SpinCo (or any successor corporation) within two years before or after the Spin-Off generally would be presumed to be part of a plan that includes the Spin-Off, although the parties may be able to rebut that presumption under certain circumstances. The process for determining whether an acquisition is part of a plan under these rules is complex, inherently factual in nature and subject to a comprehensive analysis of the facts and circumstances of the particular case. Notwithstanding the opinion of Skadden Arps described above, Liberty Interactive or SpinCo might inadvertently cause or permit a prohibited change in ownership of Liberty Interactive or SpinCo, thereby triggering tax liability to Liberty Interactive, which could have a material adverse effect.

        If, for any reason, it is subsequently determined that the Spin-Off does not qualify for tax-free treatment (other than with respect to the receipt of cash in lieu of fractional shares of our common stock), Liberty Interactive and/or holders of Liberty Ventures common stock could incur significant tax liabilities determined in the manner described in "The Spin-Off—U.S. Federal Income Tax Consequences of the Spin-Off." As described further under "Certain Relationships and Related Party Transactions—Relationships Between SpinCo and Liberty Interactive and/or Liberty Media—Tax

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Sharing Agreement," in certain circumstances, SpinCo will be required to indemnify Liberty Interactive, its subsidiaries and certain related persons for taxes and losses resulting from the Spin-Off.

        For a more complete discussion of the opinion of Skadden Arps and the material U.S. federal income tax consequences of the Spin-Off to Liberty Interactive and holders of Liberty Ventures common stock, please see "The Spin-Off—U.S. Federal Income Tax Consequences of the Spin-Off."

         We may have a significant indemnity obligation to Liberty Interactive, which is not limited in amount or subject to any cap, if the Spin-Off is treated as a taxable transaction.

        Pursuant to the tax sharing agreement that we will enter into with Liberty Interactive in connection with the Spin-Off (the tax sharing agreement), we will be required to indemnify Liberty Interactive, its subsidiaries and certain related persons for taxes and losses resulting from the failure of the Spin-Off to qualify as a tax-free transaction under Section 355, Section 368(a)(1)(D) and related provisions of the Code to the extent that such taxes and losses (i) result primarily from, individually or in the aggregate, the breach of certain covenants made by our company (applicable to actions or failures to act by SpinCo and its subsidiaries following the completion of the Spin-Off) or (ii) result from the application of Section 355(e) of the Code to the Spin-Off as a result of the treatment of the Spin-Off as part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by vote or value) in the stock of SpinCo (or any successor corporation).

        Our indemnification obligations to Liberty Interactive, its subsidiaries and certain related persons will not be limited in amount or subject to any cap. If we are required to indemnify Liberty Interactive, its subsidiaries or such related persons under the circumstances set forth in the tax sharing agreement, we may be subject to substantial liabilities, which could materially adversely affect our financial position.

        For a more detailed discussion of the tax sharing agreement, please see "Certain Relationships and Related Party Transactions—Relationships Between SpinCo and Liberty Interactive and/or Liberty Media—Tax Sharing Agreement."

         In certain circumstances, we may have a significant reimbursement obligation to Expedia pursuant to the terms of the Reimbursement Agreement.

        We have entered into a reimbursement agreement (the Reimbursement Agreement) with Liberty Interactive and Expedia in connection with the Spin-Off, pursuant to which Liberty Interactive and SpinCo have agreed to reimburse Expedia for certain costs and expenses resulting from the Spin-Off and the proxy arrangements that may be incurred by Expedia with respect to its Amended and Restated Credit Agreement, dated as of September 5, 2014, as amended (the Expedia Credit Agreement), Expedia's 7.456% Senior Notes due 2018 (the 2018 Notes) and Expedia's 5.95% Senior Notes due 2020 (the 2020 Notes). These reimbursement obligations of Liberty Interactive and SpinCo are capped at $45 million, subject to certain limited exceptions. For more information on the Reimbursement Agreement, see "Certain Relationships and Related Party Transactions—Relationships Among SpinCo, the Malone Group, Diller and Expedia—Proxy Arrangements—Reimbursement Agreement." If we are required to provide reimbursements to Expedia pursuant to the Reimbursement Agreement, our cash position will be adversely affected.

         We may determine to forgo certain transactions in order to avoid the risk of incurring significant tax-related liabilities.

        Under the tax sharing agreement, we will covenant not to take any action, or fail to take any action, following the Spin-Off, which action or failure to act is inconsistent with the Spin-Off qualifying for tax-free treatment under Section 355, Section 368(a)(1)(D) and related provisions of the Code.

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Further, the tax sharing agreement will require that we generally indemnify Liberty Interactive for any taxes or losses incurred by Liberty Interactive (or its subsidiaries) resulting from breaches of such covenants or resulting from the application of Section 355(e) of the Code to the Spin-Off as a result of the treatment of the Spin-Off as part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by vote or value) in the stock of our company (or any successor corporation). As a result, we might determine to forgo certain transactions that might otherwise be advantageous.

        In particular, we might determine to continue to operate certain of our business operations for the foreseeable future even if a sale or discontinuance of such business might otherwise be advantageous. Moreover, in light of the requirements of Section 355(e) of the Code, we might determine to forgo certain transactions, including share repurchases, stock issuances, certain asset dispositions and other strategic transactions, for some period of time following the Spin-Off. In addition, our indemnity obligation under the tax sharing agreement might discourage, delay or prevent our entering into a change of control transaction for some period of time following the Spin-Off.

         We may incur material costs as a result of our separation from Liberty Interactive.

        We will incur costs and expenses not previously incurred as a result of our separation from Liberty Interactive. These increased costs and expenses may arise from various factors, including financial reporting, costs associated with complying with the federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley)), tax administration and human resources related functions. Although Liberty Media will continue to provide many of these services for us under the services agreement, we cannot assure you that the services agreement will continue or that these costs will not be material to our business.

         Prior to the Spin-Off, we will not have been an independent company and we may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company.

        Prior to the Spin-Off, our business was operated by Liberty Interactive as part of its broader corporate organization, rather than as an independent company. Liberty Interactive's senior management oversaw the strategic direction of our businesses and Liberty Interactive (directly and through its services agreement with Liberty Media) performed various corporate functions for us, including, but not limited to:

    selected human resources related functions;

    tax administration;

    selected legal functions (including compliance with Sarbanes-Oxley), as well as external reporting;

    treasury administration, investor relations, internal audit and insurance functions; and

    selected information technology and telecommunications services.

        Following the Spin-Off, neither Liberty Interactive nor Liberty Media will have any obligation to provide these functions to us other than those services that will be provided by Liberty Media pursuant to the services agreement between us and Liberty Media. If, once our services agreement terminates, we do not have in place our own systems and business functions, we do not have agreements with other providers of these services or we are not able to make these changes cost effectively, we may not be able to operate our business effectively and our profitability may decline. If Liberty Media does not continue to perform effectively the services to be provided to us under the services agreement, we may not be able to operate our business effectively after the Spin-Off.

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         We may not realize the potential benefits from the Spin-Off in the near term or at all.

        In this prospectus, we have described anticipated strategic and financial benefits we expect to realize as a result of our separation from Liberty Interactive. See "The Spin-Off—Reasons for the Spin-Off." In particular, we believe that the Spin-Off will better position us to take advantage of business opportunities, strategic alliances and other acquisitions through SpinCo's enhanced acquisition currency, as well as facilitate a potential combination of SpinCo and Expedia. We also expect the Spin-Off to enable SpinCo to provide its employees with more attractive equity incentive awards. However, no assurance can be given that the market will react favorably to the Spin-Off or that the current discount applied by the market to the Liberty Ventures common stock will not be applied to SpinCo's common stock, thereby causing SpinCo's equity to not be as attractive to its employees as well as any potential acquisition counterparties. In addition, no assurance can be given that any investment, acquisition or other strategic opportunities will become available following the Spin-Off on terms that SpinCo finds favorable or at all, nor can any assurance be given that a combination of SpinCo and Expedia will ever occur. Given the added costs associated with the completion of the Spin-Off, including the separate accounting, legal and other compliance costs of being a separate public company, our failure to realize the anticipated benefits of the Spin-Off in the near term or at all could adversely affect our company.

         Our company has overlapping directors and officers with Liberty Interactive and Liberty Media, which may lead to conflicting interests.

        As a result of the Spin-Off, the September 2011 separation of Starz from Liberty Interactive and the January 2013 spin-off of Liberty Media from Starz, most of the executive officers of SpinCo also serve as executive officers of Liberty Interactive and Liberty Media and there are [some] overlapping directors. Following the Spin-Off, John C. Malone will be the Chairman of the Board and a director of our company, Liberty Interactive and Liberty Media, and Christopher W. Shean will be the Chief Executive Officer[, President] and a director of our company, and Senior Vice President and Chief Financial Officer of Liberty Interactive and Liberty Media. None of these companies has any ownership interest in any of the others. Our executive officers and members of our company's board of directors have fiduciary duties to our stockholders. Likewise, any such persons who serve in similar capacities at Liberty Interactive or Liberty Media or any other public company have fiduciary duties to that company's stockholders. For example, there may be the potential for a conflict of interest when our company, Liberty Interactive or Liberty Media pursues corporate opportunities that may be suitable for each of them. Therefore, such persons may have conflicts of interest or the appearance of conflicts of interest with respect to matters involving or affecting more than one of the companies to which they owe fiduciary duties. Our company has renounced its rights to certain business opportunities and our restated charter will provide that no director or officer of our company will breach their fiduciary duty and therefore be liable to our company or its stockholders by reason of the fact that any such individual directs a corporate opportunity to another person or entity (including Liberty Interactive and Liberty Media) instead of our company, or does not refer or communicate information regarding such corporate opportunity to our company, unless (x) such opportunity was expressly offered to such person solely in his or her capacity as a director or officer of our company or as a director or officer of any of our subsidiaries, and (y) such opportunity relates to a line of business in which our company or any of its subsidiaries is then directly engaged. In addition, any potential conflict that qualifies as a "related party transaction" (as defined in Item 404 of Regulation S-K) is subject to review by an independent committee of the applicable issuer's board of directors in accordance with its corporate governance guidelines. Any other potential conflicts that arise will be addressed on a case-by-case basis, keeping in mind the applicable fiduciary duties owed by the executive officers and directors of each issuer. From time to time, we may enter into transactions with Liberty Interactive or Liberty Media and/or their respective subsidiaries or other affiliates. There can be no assurance that the terms of any such transactions will be as favorable to our company, Liberty Interactive, Liberty Media or any of their

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respective subsidiaries or affiliates as would be the case where there is no overlapping officer or director.

         Our inter-company agreements are being negotiated while we are a subsidiary of Liberty Interactive.

        We are entering into a number of inter-company agreements covering matters such as tax sharing and our responsibility for certain liabilities previously undertaken by Liberty Interactive for certain of our businesses. In addition, we are entering into a services agreement with Liberty Media pursuant to which it will provide to us certain management, administrative, financial, treasury, accounting, tax, legal and other services, for which we will pay Liberty Media a services fee. The terms of all of these agreements are being established while we are a wholly owned subsidiary of Liberty Interactive, and hence may not be the result of arms' length negotiations. Although we believe that the negotiations with Liberty Media will be at arms' length, the persons negotiating on behalf of Liberty Media also serve as officers of Liberty Interactive, as described above. We believe that the terms of these inter-company agreements are commercially reasonable and fair to all parties under the circumstances; however, conflicts could arise in the interpretation or any extension or renegotiation of the foregoing agreements after the Spin-Off. See "Certain Relationships and Related Party Transactions."

         Liberty Interactive's board of directors may abandon the Spin-Off at any time, or its board of directors may determine to amend the terms of any agreement we enter into relating to the Spin-Off.

        No assurance can be given that the Spin-Off will occur, or if it occurs that it will occur on the terms described in this prospectus. In addition to the conditions to the Spin-Off described herein (certain of which may be waived by the Liberty Interactive board of directors in its sole discretion), the Liberty Interactive board of directors may abandon the Spin-Off at any time prior to the distribution date for any reason or for no reason. Additionally, the agreements to be entered into by SpinCo with Liberty Interactive and Liberty Media in connection with the Spin-Off (including the reorganization agreement, the tax sharing agreement, the services agreement, the facilities sharing agreement and the aircraft time sharing agreements) may be amended or modified prior to the distribution date in the sole discretion of Liberty Interactive or Liberty Media, as applicable. If any condition to the Spin-Off is waived or if any material amendments or modifications are made to the terms of the Spin-Off or to such ancillary agreements prior to the Spin-Off, Liberty Interactive intends to promptly issue a press release and file a Form 8-K informing the market of the substance of such waiver, amendment or modification.

Factors Relating to our Common Stock and the Securities Market

         We cannot be certain that an active trading market will develop or be sustained after the Spin-Off, and following the Spin-Off, our stock price may fluctuate significantly.

        There can be no assurance that an active trading market will develop or be sustained for our common stock after the Spin-Off. We cannot predict the prices at which either series of our common stock may trade after the Spin-Off, the effect of the Spin-Off on the trading prices of the Liberty Ventures common stock or whether the market value of the shares of a series of our common stock and the shares of the same series of the Liberty Ventures common stock held by a stockholder after the Spin-Off will be less than, equal to or greater than the market value of a share of the corresponding series of Liberty Ventures common stock held by such stockholder prior to the Spin-Off.

        The market price of our common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including:

    actual or anticipated fluctuations in our operating results;

    changes in earnings estimated by securities analysts or our ability to meet those estimates;

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    the operating and stock price performance of comparable companies; and

    domestic and foreign economic conditions.

        The fair value of Liberty Interactive's investment in Expedia, on an as-converted basis, was approximately $[            ] billion as of [                ], 2016, which represents a [large] portion of the total market value of the Ventures Group tracking stock, as a whole, and will represent an even larger portion of SpinCo's total market value following the Spin-Off. As a result of the Spin-Off, our stock price may move in tandem with the Expedia stock price to a greater degree than the Liberty Ventures common stock does today, with the result that our stock price may be disproportionately affected by the results of operations of Expedia and developments in its business.

         If, following the Spin-Off, we are unable to satisfy the requirements of Section 404 of Sarbanes-Oxley, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.

        Section 404 of Sarbanes-Oxley requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries' internal control over financial reporting. To comply with this statute, we will be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required to issue an opinion on management's assessment of those matters. Our compliance with Section 404 of Sarbanes-Oxley will first be tested in connection with the filing of our Annual Report on Form 10-K for the fiscal year ending December 31, 2016. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or significant deficiencies which may not be remedied in time to meet the deadline imposed by Sarbanes-Oxley. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our stock price may suffer.

         It may be difficult for a third party to acquire us, even if doing so may be beneficial to our stockholders.

        Certain provisions of our restated charter and bylaws may discourage, delay or prevent a change in control of our company that a stockholder may consider favorable. These provisions include the following:

    prior to the Proxy Arrangement Termination Date (as defined in "Certain Relationships and Related Party Transactions—Relationships Among SpinCo, the Malone Group, Diller and Expedia—Proxy Arrangements—Transaction Agreement—Proxy Arrangement Termination Date"):

    having a board divided into Series B Directors and Common Stock Directors (each as defined in "Management—Directors"), with the Series B Directors having certain powers with respect to the voting of our Expedia Common Shares in the election of Expedia directors;

    requiring that a supermajority vote of our stockholders is necessary to sell or transfer any of the shares of Expedia class B common stock held by our company;

    requiring stockholder approval by holders of at least 70% of our voting power or the approval by at least 80% of our board of directors with respect to certain extraordinary matters, such as a merger or consolidation of our company, a sale of all or substantially all of our assets or an amendment to our restated charter;

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      limiting the size of our board of directors to seven members;

      having the proxy arrangements terminate upon a change in control of our company, with the voting power over our Expedia Common Shares reverting to Mr. Diller pursuant to his proxy over such shares;

    prior to and following the Proxy Arrangement Termination Date:

    authorizing a capital structure with multiple series of common stock: a Series B that entitles the holders to ten votes per share, except in the election of Common Stock Directors prior to the Proxy Arrangement Termination Date, a Series A that entitles the holders to one vote per share and a Series C that, except as otherwise required by applicable law, entitles the holders to no voting rights;

    authorizing the issuance of "blank check" preferred stock, which could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt;

    providing that all legal actions with respect to derivative claims and fiduciary duty claims be brought exclusively in Delaware courts;

    limiting who may call special meetings of stockholders;

    prohibiting stockholder action by written consent, other than in certain limited circumstances, thereby requiring all stockholder actions to be taken at a meeting of the stockholders;

    establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;

    the existence of authorized and unissued stock which would allow our board of directors to issue shares to persons friendly to current management, thereby protecting the continuity of its management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us; and

    only following the Proxy Arrangement Termination Date:

    classifying our board of directors with staggered three-year terms, which may lengthen the time required to gain control of our board of directors; and

    requiring stockholder approval by holders of at least 70% of our voting power or the approval by at least 75% of our board of directors with respect to certain extraordinary matters, such as a merger or consolidation of our company, a sale of all or substantially all of our assets or an amendment to our restated charter.

        Certain other provisions of the proxy arrangements may also have the effect of making an acquisition of our company more difficult. See "—After the Spin-Off, SpinCo may be controlled by one principal stockholder" for a description of these arrangements and their potential impact on any proposed acquisition transaction.

         After the Spin-Off, SpinCo may be controlled by one principal stockholder.

        Malone currently has beneficial ownership of shares of Liberty Ventures common stock representing approximately [        ]% of the aggregate voting power of the outstanding shares of Liberty Ventures common stock as of [        ], 2016. Following the consummation of the Spin-Off, Malone is expected to beneficially own shares of our common stock representing approximately [        ]% of SpinCo's voting power, based upon the distribution ratios in the Spin-Off and his beneficial ownership

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of LVNTA and LVNTB as of [            ], 2016 (as reflected under "Security Ownership of Certain Beneficial Owners—Security Ownership of Management" below). Malone's rights to vote or dispose of his equity interest in SpinCo will not be subject to any restrictions in favor of SpinCo other than as may be required by applicable law and except for customary transfer restrictions pursuant to incentive award agreements. Malone's equity interest in SpinCo will, however, be subject to restrictions pursuant to the terms of the proxy arrangements.

        Until the Proxy Arrangement Termination Date, Malone and his wife will grant Diller an irrevocable proxy over the shares of SpinCo common stock beneficially owned by him and his wife (the Covered Shares). As a result, Diller will vote the Covered Shares in matters submitted to a vote of our stockholders, subject to limited exceptions. As a result of the voting power attributed to the Covered Shares, Diller will also effectively be able to block certain actions by SpinCo prior to the Proxy Arrangement Termination Date, including, but not limited to, certain amendments to our restated charter and bylaws and the transfer of all or any portion of the shares of Expedia class B common stock owned by SpinCo. Diller will also be able to remove and replace the Series B Directors. Following the Proxy Arrangement Termination Date, Malone and his wife will resume full voting control over the Covered Shares.

         Holders of a single series of our common stock may not have any remedies if an action by our directors has an adverse effect on only that series of our common stock.

        Principles of Delaware law and the provisions of our restated charter may protect decisions of our board of directors that have a disparate impact upon holders of any single series of our common stock. Under Delaware law, the board of directors has a duty to act with due care and in the best interests of all of our stockholders, including the holders of all series of our common stock. Principles of Delaware law established in cases involving differing treatment of multiple classes or series of stock provide that a board of directors owes an equal duty to all common stockholders regardless of class or series and does not have separate or additional duties to any group of stockholders. As a result, in some circumstances, our directors may be required to make a decision that is viewed as adverse to the holders of one series of our common stock. Under the principles of Delaware law and the business judgment rule, holders may not be able to successfully challenge decisions that they believe have a disparate impact upon the holders of one series of our stock if our board of directors is disinterested and independent with respect to the action taken, is adequately informed with respect to the action taken and acts in good faith and in the honest belief that the board is acting in the best interest of all of our stockholders.

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CAUTIONARY STATEMENTS CONCERNING FORWARD LOOKING STATEMENTS

        Certain statements in this prospectus and in the documents incorporated by reference herein constitute forward-looking statements, including certain statements relating to the business strategies, market potential and future financial performance of our company and our subsidiaries, and other matters. In particular, information included under "The Spin-Off," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Description of our Business" and "Financial Information" contain forward-looking statements. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but such statements necessarily involve risks and uncertainties and there can be no assurance that the expectation or belief will result or be achieved or accomplished. The use of words such as "anticipates," "estimates," "expects," "intends," "plans" and "believes," among others, generally identify forward-looking statements; however, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.

        These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this prospectus, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein or therein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based. When considering such forward-looking statements, you should keep in mind the factors described in "Risk Factors" and other cautionary statements contained or incorporated in this document. Such risk factors and statements describe circumstances which could cause actual results to differ materially from those contained in any forward-looking statement.

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THE SPIN-OFF

Background for the Spin-Off

        The board of directors of Liberty Interactive periodically reviews with management the strategic goals and prospects of its various businesses, equity affiliates and other investments. In 2012, Liberty Interactive recapitalized its common stock into two new tracking stocks, the Interactive Group (which, in 2015, was renamed the QVC Group) and the Ventures Group, for the purpose of creating greater transparency for the assets and liabilities attributed to each group, among other reasons. The QVC Group common stock and Liberty Ventures common stock are intended to track and reflect the economic performance of the QVC Group and the Ventures Group, respectively. Tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. While the QVC Group and the Ventures Group have separate collections of businesses, assets and liabilities attributed to them, no group is a separate legal entity and therefore no group can own assets, issue securities or enter into legally binding agreements. Holders of tracking stocks have no direct claim to the group's stock or assets and are not represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation. The Ventures Group is comprised primarily of Liberty Interactive's operating subsidiaries Bodybuilding and CommerceHub and Liberty Interactive's interests in Expedia, FTD, Interval and LendingTree, along with investments in TWX and TWC, cash, certain liabilities related to exchangeable debentures of Liberty LLC and certain deferred tax liabilities. The QVC Group is primarily focused on Liberty Interactive's merchandise-focused televised-shopping programs, Internet and mobile application businesses and has attributed to it Liberty Interactive's wholly owned subsidiaries QVC and zulily, and Liberty Interactive's interest in HSN, along with cash and certain liabilities that reside with QVC and the other attributed entities, as well as outstanding senior notes and one series of Liberty LLC's exchangeable debentures and certain deferred tax liabilities. At present, Liberty intends to pursue a plan to spin-off a newly formed company, CommerceHub, Inc., comprised of Liberty Interactive's CommerceHub business. In the event such spin-off occurs, CommerceHub will no longer be attributed to the Ventures Group. Similarly, upon completion of the Spin-Off, Liberty Interactive's entire ownership interest in Expedia and Bodybuilding will no longer be attributed to the Ventures Group.

        Although the public markets have responded favorably to these two tracking stocks, Liberty Interactive believes that the public markets continue to apply a meaningful discount to the underlying value of the businesses and assets attributed to the Ventures Group tracking stock group in establishing the trading value of the Liberty Ventures common stock due to the interrelationships of the businesses of Liberty Interactive, the multiple layers of financial reporting and uncertainty surrounding the allocation of corporate opportunities and capital resources among Liberty Interactive's tracking stock groups. Accordingly, in November 2015, the Liberty Interactive board of directors determined to pursue the Spin-Off, as described in more detail below, as well as the spin-off of CommerceHub, Inc. In the event such spin-off occurs, CommerceHub will no longer be attributed to the Ventures Group. Similarly, upon completion of the Spin-Off, Liberty Interactive's entire ownership interest in Expedia and Bodybuilding will no longer be attributed to the Ventures Group.

        Our company is currently a wholly owned subsidiary of Liberty Interactive. Upon completion of the Spin-Off, our principal businesses, assets and liabilities will consist of Liberty Interactive's approximate 15.7% ownership interest and 52.2% voting interest in Expedia, Liberty Interactive's wholly owned subsidiary Bodybuilding, anticipated corporate level cash and cash equivalents of $50 million and $350 million in indebtedness (such businesses and assets, as well as any related liabilities, including with respect to the Margin Loan, the SpinCo Assets and Liabilities). To accomplish the Spin-Off, Liberty Interactive will effect the distribution, whereby holders of LVNTA and LVNTB will receive, by means of a dividend, shares of our Series A common stock and Series B common stock,

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respectively. Holders of QVCA and QVCB will not receive shares of our common stock in the Spin-Off. Upon completion of the Spin-Off, Liberty Interactive will cease to own any equity interest in our company, and we will be an independent publicly traded company. No vote of Liberty Interactive's stockholders is required or being sought in connection with the Spin-Off, and holders of Liberty Ventures common stock will have no appraisal rights in connection with the Spin-Off.

Reasons for the Spin-Off

        In determining to approve the Spin-Off, it was believed that the Spin-Off would result in the creation of stockholder value because the aggregate trading value of our common stock and the Liberty Ventures common stock would exceed the aggregate trading value of the existing Liberty Ventures common stock. The Liberty Interactive board of directors took into account a number of factors approving the Spin-Off, including the following:

    Following the Spin-Off, SpinCo common stock is expected to provide greater transparency for investors with respect to SpinCo's dominant business, Expedia, resulting in more focus and attention by the investment community on this business.

    The Spin-Off is expected to cause the trading discount applied to the Liberty Ventures common stock to be reduced, because separating SpinCo will better highlight the discount at which the Liberty Ventures common stock historically has traded relative to the value of the underlying assets attributed to the Ventures Group. An increase in the aggregate trading prices of the Liberty Ventures common stock and the SpinCo common stock would enhance the ability of each of Liberty Interactive and SpinCo to issue its equity for purposes of making strategic acquisitions with less dilution to each company's respective stockholder base (including in a potential future combination of SpinCo with Expedia following the Spin-Off, in which SpinCo could issue its common stock as consideration).

    By separating SpinCo from Liberty Interactive, it is expected that complications in negotiations with Expedia regarding the valuation of Liberty Interactive's other businesses will be avoided, thus increasing the likelihood of reaching a potential agreement with respect to a combination of our company with Expedia in the future.

    The Spin-Off is expected to enhance the ability of Liberty Interactive and SpinCo to retain and attract qualified personnel, by enabling each company to grant equity incentive awards based on its own publicly traded equity with less dilution to its stockholders (as a result of the reduction in the discount associated with its equity), and will further enable each company to more effectively tailor employee benefit plans and retention programs and provide improved incentives to the management, employees and future hires of each company that will better and more directly align the incentives for each company's management and employees with their performance.

        The Liberty Interactive board of directors also considered a number of costs and risks associated with the Spin-Off in approving the Spin-Off, including the following:

    after the Spin-Off, the Liberty Ventures common stock and SpinCo will each have smaller individual market capitalizations than the current market capitalization of the Liberty Ventures common stock, and their trading prices may be more volatile than the trading price of the Liberty Ventures common stock prior to the Spin-Off. The board also considered the possibility that the combined market values of the separate stocks may be lower than the market value of the Liberty Ventures common stock in the absence of the Spin-Off;

    the risk of being unable to achieve the benefits expected from the Spin-Off;

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    the leverage to be incurred by SpinCo as a result of obtaining the proceeds from the Margin Loan, a substantial portion of which will be distributed to Liberty Interactive by SpinCo as part of the internal restructuring;

    the loss of synergies from operating as one company, particularly in administrative and support functions;

    the potential disruption of the businesses of Liberty Interactive, as its management and employees devote time and resources to completing the Spin-Off;

    the substantial costs of effecting the Spin-Off and continued compliance with legal and other requirements applicable to two separate public reporting companies;

    the potential tax liabilities that could arise from the Spin-Off, including the possibility that the IRS could successfully assert that the Spin-Off is taxable to holders of Liberty Ventures common stock and/or to Liberty Interactive. In the event such tax liabilities were to arise, SpinCo's potential indemnity obligation to Liberty Interactive is not subject to a cap; and

    the potential for having to register as an investment company under the Investment Company Act of 1940 in the future, such as in the event the proxy arrangements terminate and there is no exemption or grace period available to us at that time.

        Liberty Interactive's board of directors evaluated the costs and benefits of the transaction as a whole and did not find it necessary to assign relative weights to the specific factors considered. Liberty Interactive's board concluded, however, that the potential benefits of the Spin-Off outweighed its potential costs, and that separating our company from Liberty Interactive in the form of a distribution to Liberty Interactive's stockholders that is generally tax-free is appropriate, advisable and in the best interests of Liberty Interactive and its stockholders. The Liberty Interactive board did not consider alternatives to the Spin-Off due to the nature of the particular assets and businesses to be held by SpinCo upon completion of the Spin-Off, in particular the ownership interest in Expedia.

Interests of Certain Persons

        In connection with the Spin-Off, the executive officers and directors of Liberty Interactive will receive adjustments to their stock incentive awards with respect to Liberty Ventures common stock and stock incentive awards with respect to SpinCo common stock. See "—Effect of the Spin-Off on Outstanding Ventures Group Incentive Awards" below for more information.

        Certain current executive officers of Liberty Interactive will also serve as executive officers of SpinCo immediately following the Spin-Off. See "Risk Factors—Our company has overlapping directors and officers with Liberty Interactive and Liberty Media, which may lead to conflicting interests." Furthermore, the executive officers of Liberty Interactive and SpinCo are entitled to indemnification with respect to actions taken by them in connection with the Spin-Off under the organizational documents of Liberty Interactive and SpinCo, as well as customary indemnification agreements to which Liberty Interactive and SpinCo, on the one hand, and these persons, on the other hand, are parties.

        As of [      ], 2016, Liberty Interactive's executive officers and directors beneficially owned shares of Liberty Ventures common stock representing in the aggregate approximately [      ]% of the aggregate voting power of the outstanding shares of Liberty Ventures common stock.

        The Liberty Interactive board of directors was aware of these interests and considered them when it approved the Spin-Off.

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Conditions to the Spin-Off

        Liberty Interactive's board of directors has reserved the right, in its sole discretion, to amend, modify, delay or abandon the Spin-Off and the related transactions at any time prior to the distribution date. In addition, the completion of the Spin-Off and related transactions are subject to the satisfaction (as determined by the Liberty Interactive board of directors in its sole discretion) of the following conditions, certain of which may be waived by the Liberty Interactive board of directors in its sole discretion:

    (1)
    the opinion of Skadden Arps in form and substance reasonably acceptable to Liberty Interactive, providing to the effect that the Spin-Off will qualify as a tax-free transaction under Section 355, Section 368(a)(1)(D) and related provisions of the Code and that, for U.S. federal income tax purposes, (i) no gain or loss will be recognized by Liberty Interactive upon the distribution of our common stock in the Spin-Off, and (ii) no gain or loss will be recognized by, and no amount will be included in the income of, holders of Liberty Ventures common stock upon the receipt of shares of our common stock in the Spin-Off (except with respect to the receipt of cash in lieu of fractional shares);

    (2)
    the effectiveness under the Securities Act of the SpinCo registration statement, of which this prospectus forms a part, and the effectiveness of the registration of the SpinCo common stock under Section 12(b) of the Exchange Act;

    (3)
    the execution of the proxy arrangements;

    (4)
    the approval of Nasdaq for the listing of our common stock;

    (5)
    the entry into a margin loan arrangement by our company and one or more subsidiaries in a principal amount of $350 million; and

    (6)
    the receipt of any material regulatory or contractual consents or approvals that the Liberty Interactive board determines to obtain.

        The first four conditions set forth above are non-waivable. The Liberty Interactive board of directors may, however, waive the fifth and sixth conditions set forth above. In the event the Liberty Interactive board of directors waives a material condition to the Spin-Off, Liberty Interactive intends to promptly issue a press release and file a Current Report on Form 8-K to report such event.

Manner of Effecting the Spin-Off

        Liberty Interactive is effecting the Spin-Off by distribution to holders of its Liberty Ventures common stock as a dividend: (i) 0.5 of a share of our Series A common stock for each whole share of LVNTA, and (ii) 0.5 of a share of our Series B common stock for each whole share of LVNTB, in each case, held by such stockholder as of the record date. Cash will be paid in lieu of fractional shares of our Series A or Series B common stock.

        Following the record date and prior to the distribution date, Liberty Interactive will deliver all of the issued and outstanding shares of our Series A common stock and Series B common stock to the distribution agent. If you own Liberty Ventures common stock as of the close of business on the record date and continue to hold such shares through the distribution date, the shares of SpinCo common stock that you are entitled to receive in the Spin-Off will be issued electronically in book-entry form, as of the distribution date, to you or to your bank or brokerage firm on your behalf, which we expect to occur within one business day of the distribution date to allow the distribution agent to effect the distribution of shares. Registration in book-entry form refers to a method of recording stock ownership when no physical share certificates are issued to stockholders, as is the case in the Spin-Off. Please note that if any stockholder of Liberty Ventures common stock sells shares of LVNTA or LVNTB before the record date, so that such stockholder is not the record holder on the record date, the buyer

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of those shares, and not the seller, will become entitled to receive the shares of our common stock issuable in respect of the LVNTA and LVNTB shares sold. If you are a holder of shares of Liberty Ventures common stock on the record date, you will be entitled to receive the shares of SpinCo common stock issuable in respect of those shares sold only if you hold them on both the record date and the distribution date. See "—Trading Prior to the Record Date" below for more information. On the distribution date, pursuant to the reorganization agreement to be entered into between SpinCo and Liberty Interactive, SpinCo will be spun off from Liberty Interactive and will become an independent publicly traded company. If you are a record holder of Liberty Ventures common stock on the record date and you continue to hold such shares through the distribution date, Computershare will mail you a book-entry account statement that reflects your shares of SpinCo common stock following the distribution date. If you are a beneficial owner of Liberty Ventures common stock (but not a record holder) on the record date, your bank or brokerage firm will credit your account with the shares of SpinCo common stock that you are entitled to receive on the distribution date.

        Stockholders of Liberty Interactive are not being asked to take any action in connection with the Spin-Off. No stockholder approval of the Spin-Off is required or being sought. Neither Liberty Interactive nor our company is asking you for a proxy, and you are requested not to send us a proxy. You are not required to pay any consideration, give up any portion of your Liberty Ventures common stock or take any other action in order to receive shares of our common stock in the Spin-Off.

Effect of the Spin-Off on Outstanding Ventures Group Incentive Awards

        Options to purchase shares of Liberty Ventures common stock, restricted stock units with respect to shares of Liberty Ventures common stock and restricted shares of Liberty Ventures common stock have been granted to various directors, officers and employees and consultants of Liberty Interactive and certain of its subsidiaries pursuant to the various stock incentive plans administered by the Liberty Interactive board of directors or the compensation committee thereof. Below is a description of the effect of the Spin-Off on these outstanding equity awards.

    Option Awards

        Each holder of an outstanding option to purchase shares of Liberty Ventures common stock on the record date (an original Ventures option award) who is a member of the Liberty Interactive board of directors or an officer of Liberty Interactive holding the position of Vice President or above will receive (i) an option to purchase shares of the corresponding series of our common stock (a new SpinCo option award) and (ii) an adjustment to the exercise price of and the number of shares subject to the original Ventures option award (as so adjusted, an adjusted Ventures option award). The exercise prices of and the number of shares subject to the new SpinCo option award and the related adjusted Ventures option award will be determined based on the exercise price of and the number of shares subject to the original Ventures option award, the distribution ratios being used in the Spin-Off, the pre-Spin-Off trading price of Liberty Ventures common stock (determined using the volume weighted average price of the applicable series of Liberty Ventures common stock over the three-consecutive trading days immediately preceding the Spin-Off) and the relative post-Spin-Off trading prices of Liberty Ventures common stock and SpinCo common stock (determined using the volume weighted average price of the applicable series of common stock over the three-consecutive trading days beginning on the first trading day following the Spin-Off on which both the Liberty Ventures common stock and the SpinCo common stock trade in the "regular way" (meaning once the common stock trades using a standard settlement cycle)), such that the pre-Spin-Off intrinsic value of the original Ventures option award is allocated between the new SpinCo option award and the adjusted Ventures option award.

        All other holders of original Ventures option awards will not receive a new SpinCo option award as a result of the distribution. Rather, his or her original Ventures option award will instead be adjusted so as to preserve the pre-Spin-Off intrinsic value of the original Ventures option award based

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on the exercise price of and number of shares subject to such original Ventures option award, the distribution ratios being used in the Spin-Off, the pre-Spin-Off trading price of Liberty Ventures common stock and the post-Spin-Off trading price of Liberty Ventures common stock (determined as described above).

        Except as described above, all other terms of an adjusted Ventures option award and a new SpinCo option award (including, for example, the vesting terms thereof) will, in all material respects, be the same as those of the corresponding original Ventures option award. The terms of the adjusted Ventures option awards will be determined and the new SpinCo option awards will be issued as soon as practicable following the determination of the pre- and post-Spin-Off trading prices of Liberty Ventures common stock and SpinCo common stock, as applicable.

    Restricted Stock Units

        Each holder of a restricted stock unit with respect to shares of Series A or Series B Liberty Ventures common stock (an original Ventures restricted stock unit award) will receive in the distribution restricted stock awards with respect to shares of SpinCo common stock instead of restricted stock units with respect to shares of SpinCo common stock, such that a holder will receive 0.5 of a restricted share of the corresponding series of SpinCo common stock (such new restricted stock award with respect to SpinCo common stock, a new SpinCo restricted stock award) for each restricted stock unit with respect to shares of Liberty Ventures common stock held by them as of the distribution record date. Except as described above, all new SpinCo restricted stock awards (including, for example, the vesting terms thereof) will, in all material respects, be the same as those of the corresponding original Ventures restricted stock unit award.

    Restricted Stock Awards

        Each holder of a restricted stock award with respect to shares of Series A or Series B Liberty Ventures common stock (an original Ventures restricted stock award) will receive in the distribution 0.5 of a restricted share of the corresponding series of SpinCo common stock (such new restricted stock award with respect to SpinCo common stock, also a new SpinCo restricted stock award) for each restricted share of Liberty Ventures common stock held by them as of the distribution record date. Except as described above, all new SpinCo restricted stock awards (including, for example, the vesting terms thereof) will, in all material respects, be the same as those of the corresponding original Ventures restricted stock award.

    Transitional Plan

        All of the new SpinCo equity incentive awards will be issued pursuant to the SpinCo Transitional Stock Adjustment Plan (the transitional plan), a copy of which will be filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part. The transitional plan will govern the terms and conditions of the foregoing SpinCo incentive awards but will not be used to make any grants following the Spin-Off.

U.S. Federal Income Tax Consequences of the Spin-Off

        The following discussion summarizes the U.S. federal income tax consequences of the Spin-Off to holders of Liberty Ventures common stock. This discussion is based on the Code, applicable Treasury regulations, judicial authority, and administrative rulings and practice, all as in effect as of the date of this document, and all of which are subject to change at any time, possibly with retroactive effect. This discussion is limited to holders of Liberty Ventures common stock that are U.S. holders, as defined below, that hold their shares of Liberty Ventures common stock as capital assets, within the meaning of Section 1221 of the Code. Further, this discussion does not discuss all tax considerations that may be

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relevant to holders of Liberty Ventures common stock in light of their particular circumstances, nor does it address any tax consequences to holders of Liberty Ventures common stock subject to special treatment under the U.S. federal income tax laws, such as tax-exempt entities, partnerships (including entities treated as partnerships for U.S. federal income tax purposes), persons who acquired such shares of Liberty Ventures common stock pursuant to the exercise of employee stock options or otherwise as compensation, financial institutions, insurance companies, dealers or traders in securities, and persons who hold their shares of Liberty Ventures common stock as part of a straddle, hedge, conversion, constructive sale, synthetic security, integrated investment or other risk-reduction transaction for U.S. federal income tax purposes. This discussion does not address any U.S. federal estate, gift or other non-income tax consequences or any state, local or foreign tax consequences.

        Holders of Liberty Ventures common stock are urged to consult with their tax advisors as to the particular tax consequences to them as a result of the Spin-Off.

        For purposes of this section, a U.S. holder is a beneficial owner of Liberty Ventures common stock that is, for U.S. federal income tax purposes:

    an individual who is a citizen or a resident of the United States;

    a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state or political subdivision thereof;

    an estate, the income of which is subject to United States federal income taxation regardless of its source; or

    a trust, if (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) it has a valid election in place under applicable Treasury regulations to be treated as a U.S. person.

        If a partnership (including any entity treated as partnership for U.S. federal income tax purposes) holds shares of Liberty Ventures common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A partner in a partnership holding shares of Liberty Ventures common stock should consult its tax advisor regarding the tax consequences of the Spin-Off.

        The completion of the Spin-Off is conditioned upon the receipt by Liberty Interactive of the opinion of Skadden Arps, dated as of the date of the Spin-Off, to the effect that, under current U.S. federal income tax law, the Spin-Off will qualify as a tax-free transaction under Section 355, Section 368(a)(1)(D) and related provisions of the Code. The receipt of the opinion may not be waived by the Liberty Interactive board of directors as a condition to the Spin-Off.

        The opinion of Skadden Arps will be based on the law in effect as of the date of the Spin-Off and will rely upon certain assumptions, as well as statements, representations and certain undertakings made by officers of Liberty Interactive and SpinCo and John C. Malone. These assumptions, statements, representations and undertakings are expected to relate to, among other things, Liberty Interactive's business reasons for engaging in the Spin-Off, the conduct of certain business activities by Liberty Interactive and SpinCo, and the plans and intentions of Liberty Interactive and SpinCo to continue conducting those business activities and not to materially modify their ownership or capital structure following the Spin-Off. If any of those statements, representations or assumptions is incorrect or untrue in any material respect or any of those undertakings is not complied with, or if the facts upon which the opinion is based are materially different from the facts that prevail at the time of the Spin-Off, the conclusions reached in such opinion could be adversely affected.

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        Stockholders should note that Liberty Interactive does not intend to seek a ruling from the IRS as to the U.S. federal income tax treatment of the Spin-Off. The legal authorities upon which the opinion of Skadden Arps will be based are subject to change or differing interpretations at any time, possibly with retroactive effect. The opinion of Skadden Arps will not be binding on the IRS or a court, and there can be no assurance that the IRS will not challenge the conclusions reached in the opinion or that a court would not sustain such a challenge.

        Assuming that the Spin-Off qualifies as a tax-free transaction under Section 355, Section 368(a)(1)(D) and related provisions of the Code, then:

    subject to the discussion below regarding Section 355(e) of the Code, no gain or loss will be recognized by Liberty Interactive upon the distribution of (a) shares of SpinCo Series A common stock to holders of Series A Liberty Ventures common stock and (b) shares of SpinCo Series B common stock to holders of Series B Liberty Ventures common stock;

    except with respect to the receipt of cash in lieu of fractional shares of SpinCo common stock, no gain or loss will be recognized by, and no amount will be included in the income of, a holder of Liberty Ventures common stock upon the receipt of shares of SpinCo common stock pursuant to the Spin-Off;

    a stockholder who receives shares of SpinCo common stock in the Spin-Off will have an aggregate tax basis in its shares of Liberty Ventures common stock and shares of SpinCo common stock following the Spin-Off equal to the aggregate tax basis of the Liberty Ventures common stock that the stockholder held immediately before the Spin-Off, allocated among such shares of Liberty Ventures common stock and shares of SpinCo common stock in proportion to their respective fair market values; and

    the holding period of the shares of SpinCo common stock received in the Spin-Off by a holder of Liberty Ventures common stock will include the holding period of its shares of Liberty Ventures common stock.

        Stockholders who have acquired different blocks of Liberty Ventures common stock at different times or at different prices should consult their tax advisors regarding the allocation of their aggregate tax basis among, and the holding period of, the shares of SpinCo common stock received with respect to such blocks of Liberty Ventures common stock.

        If a stockholder receives cash in lieu of fractional shares of SpinCo common stock, the stockholder will be treated as receiving such fractional shares in the Spin-Off and then selling such fractional shares for the amount of cash received. The sale will generally result in the recognition of capital gain or loss for U.S. federal income tax purposes, measured by the difference between the amount of cash received for the fractional shares and the stockholder's tax basis in the fractional shares (determined as described above).

        If the Spin-Off does not qualify under Section 355, Section 368(a)(1)(D) and related provisions of the Code, Liberty Interactive would generally be subject to tax as if it sold the shares of SpinCo common stock distributed in the Spin-Off in a taxable transaction. Liberty Interactive would recognize taxable gain in an amount equal to the excess of (i) the total fair market value of the shares of SpinCo common stock distributed in the Spin-Off over (ii) Liberty Interactive's aggregate tax basis in such shares of SpinCo common stock. A stockholder who receives shares of SpinCo common stock in the Spin-Off would be treated as receiving a taxable distribution in an amount equal to the total fair market value of such shares of SpinCo common stock. In general, the distribution would be taxable as a dividend to the extent of Liberty Interactive's current and accumulated earnings and profits. Any amount of the distribution in excess of Liberty Interactive's earnings and profits would be treated first as a non-taxable return of capital to the extent of the stockholder's tax basis in its shares of Liberty Ventures common stock, with any remaining amount taxed as capital gain. A stockholder would have a

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tax basis in its shares of SpinCo common stock following the Spin-Off equal to their respective fair market values. Certain stockholders may be subject to special rules governing taxable distributions, such as those that relate to the dividends received deduction and extraordinary dividends.

        Even if the Spin-Off otherwise qualifies under Section 355, Section 368(a)(1)(D) and related provisions of the Code, the Spin-Off would result in a significant U.S. federal income tax liability to Liberty Interactive (but not to holders of Liberty Ventures common stock) under Section 355(e) of the Code if one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by either vote or value) in the stock of Liberty Interactive or in the stock of SpinCo (excluding, for this purpose, the acquisition of SpinCo common stock by holders of Liberty Ventures common stock in the Spin-Off) as part of a plan or series of related transactions that includes the Spin-Off. Any acquisition of the stock of Liberty Interactive or SpinCo (or any successor corporation) within two years before or after the Spin-Off generally would be presumed to be part of a plan that includes the Spin-Off, although the parties may be able to rebut that presumption under certain circumstances. The process for determining whether an acquisition is part of a plan under these rules is complex, inherently factual in nature, and subject to a comprehensive analysis of the facts and circumstances of the particular case. Notwithstanding the opinion of Skadden Arps described above, Liberty Interactive or SpinCo might inadvertently cause or permit a prohibited change in the ownership of Liberty Interactive or SpinCo to occur. If the Spin-Off were determined to be taxable to Liberty Interactive under Section 355(e) of the Code, Liberty Interactive would recognize taxable gain in an amount equal to the excess of (i) the total fair market value of the SpinCo common stock distributed in the Spin-Off over (ii) Liberty Interactive's aggregate tax basis in the SpinCo common stock.

        Pursuant to the tax sharing agreement, SpinCo will be required to indemnify Liberty Interactive, its subsidiaries and certain related persons for taxes and losses resulting from the failure of the Spin-Off to qualify as a tax-free transaction under Section 355 and Section 368(a)(1)(D) and related provisions of the Code to the extent that such taxes and losses (i) result primarily from, individually or in the aggregate, the breach of certain covenants made by SpinCo (applicable to actions or failures to act by SpinCo and its subsidiaries following the completion of the Spin-Off), or (ii) result from the application of Section 355(e) of the Code to the Spin-Off as a result of the treatment of the Spin-Off as part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by either vote or value) in the stock of SpinCo (or any successor corporation). Please see "Certain Relationships and Related Party Transactions— Relationships Between SpinCo and Liberty Interactive and/or Liberty Media—Tax Sharing Agreement" for a more detailed discussion of the tax sharing agreement between SpinCo and Liberty Interactive.

    Information Reporting and Backup Withholding

        A stockholder may be subject to backup withholding (currently imposed at a rate of 28%) to the extent of any cash received in lieu of fractional shares of SpinCo common stock pursuant to the Spin-Off, unless the stockholder provides its correct taxpayer identification number and complies with applicable certification procedures or otherwise establishes an exemption. In addition, a stockholder who receives cash in lieu of fractional shares of SpinCo common stock and fails to provide its correct taxpayer identification number or other adequate basis for exemption may be subject to certain penalties imposed by the IRS. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will generally be allowed as a credit against a stockholder's U.S. federal income tax liability, provided that certain required information is furnished to the IRS on a timely basis.

    Net Investment Income

        Recently enacted legislation imposes a 3.8% tax on the net investment income of certain U.S. citizens and resident aliens and on the undistributed net investment income of certain estates and

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trusts. Among other items, net investment income would generally include any capital gain recognized by a stockholder as a result of the receipt of cash in lieu of fractional shares of SpinCo common stock pursuant to the Spin-Off (net of certain capital losses).

Conduct of the Business of the Ventures Group if the Spin-Off is Not Completed

        If the Spin-Off is not completed, Liberty Interactive intends to continue to conduct the business of the Ventures Group substantially in the same manner as it is operated today. From time to time, Liberty Interactive will evaluate and review its business operations, properties, dividend policy and capitalization, and make such changes as are deemed appropriate, and continue to seek to identify strategic alternatives to maximize stockholder value. In addition, it is anticipated that Liberty Interactive will continue to pursue its plan to spin-off a newly formed company comprised of its CommerceHub business whether or not the Spin-Off is completed.

Amount and Source of Funds and Financing of the Transaction; Expenses

        It is expected that Liberty Interactive will incur an aggregate of $[        ] million in expenses in connection with the Spin-Off. These expenses will be comprised of:

    approximately $[        ] million in printing and mailing expenses associated with this prospectus;

    approximately $[        ] million in legal fees and expenses;

    approximately $[        ] million in accounting fees and expenses;

    approximately $[        ] million in SEC filing fees; and

    approximately $[        ] million in other miscellaneous expenses.

These expenses will be paid by Liberty Interactive from its existing cash balances.

Accounting Treatment

        The Spin-Off will be accounted for at historical cost due to the fact that our common stock is to be distributed pro rata to holders of Liberty Ventures common stock.

No Appraisal Rights

        Under the General Corporation Law of the State of Delaware, holders of Liberty Ventures common stock will not have appraisal rights in connection with the Spin-Off.

Results of the Spin-Off

        Immediately following the Spin-Off, we expect to have outstanding approximately [            ] shares of our Series A common stock and [            ] shares of our Series B common stock, based upon the number of shares of LVNTA and LVNTB, respectively, outstanding as of [                    ], 2016. The actual number of shares of our Series A common stock and our Series B common stock to be distributed in the Spin-Off will depend upon the actual number of shares of LVNTA and LVNTB outstanding on the record date.

        Immediately following the Spin-Off, we expect to have approximately [            ] holders of record of our Series A common stock and [            ] holders of record of our Series B common stock, based upon the number of holders of record of LVNTA and LVNTB, respectively, as of [                    ], 2016 (which amount does not include the number of stockholders whose shares are held of record by banks, brokerage houses or other institutions, but includes each such institution as one stockholder).

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Listing and Trading of our Common Stock

        On the date of this prospectus, we are a wholly owned subsidiary of Liberty Interactive. Accordingly, there is no public market for our common stock. We expect to list our Series A common stock and our Series B common stock on the Nasdaq Global Select Market under the symbols "LEXEA" and "LEXEB," respectively. Neither we nor Liberty Interactive can assure you as to the trading price of either series of our common stock after the Spin-Off. The approval of Nasdaq for the listing of our common stock is a condition to the Spin-Off, which may not be waived by the Liberty Interactive board of directors.

Stock Transfer Agent and Registrar

        Computershare Trust Company, N.A. is the transfer agent and registrar for all series of Liberty Interactive common stock, including the Liberty Ventures common stock, and SpinCo common stock.

Trading Prior to the Record Date

        Prior to the record date, Liberty Ventures common stock will continue to trade on the Nasdaq Global Select Market in the regular way. During this time, shares of LVNTA and LVNTB that trade in the regular way will trade with an entitlement to receive shares of the same series of our common stock distributable in the Spin-Off. Therefore, if you own shares of either LVNTA or LVNTB common stock and sell those shares prior to the record date, so that you are not the record holder of such shares on the record date, you will also be selling the shares of our common stock that would have been distributed to you in the Spin-Off with respect to the shares of LVNTA or LVNTB common stock you sell. However, because it is expected that the "ex-dividend" date for the Spin-Off will be the first trading date following the distribution date, if you are a holder of shares of LVNTA or LVNTB on the record date, you will be entitled to receive the shares of SpinCo common stock issuable in respect of those shares only if you hold them through the distribution date. If you are a holder of shares of LVNTA or LVNTB on the record date but sell them between the record date and the distribution date, you will not be entitled to receive the shares of SpinCo common stock issuable in respect of those shares sold. On the first day of trading following the distribution date, shares of our Series A common stock and our Series B common stock will begin trading under the symbols "LEXEA" and "LEXEB," respectively.

Reasons for Furnishing this Prospectus

        This prospectus is being furnished solely to provide information to Liberty Ventures stockholders who will receive shares of our common stock in the Spin-Off. We believe that the information contained in this prospectus is accurate as of the date set forth on the cover page of this prospectus. Changes to the information contained in this prospectus may occur after that date, and neither our company nor Liberty Interactive undertakes any obligation to update the information except in the normal course of our respective public disclosure obligations and practices or as required by law.

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CAPITALIZATION

        The following table sets forth (i) SpinCo's historical capitalization as of December 31, 2015 and (ii) SpinCo's adjusted capitalization assuming the Spin-Off was effective on December 31, 2015. The table below should be read in conjunction with the accompanying historical combined financial statements of SpinCo, including the notes thereto.

 
  Historical
12/31/2015
  As Adjusted
12/31/2015
 
 
  (amounts in thousands)
 

Cash and cash equivalents(1)

  $ 2,243     52,243  

Long-term debt and capital lease obligations, net, including current portion

   
41,204
   
41,204
 

Margin loan(1)

          350,000  

Income taxes payable(2)

    68,842      

Equity

   
 
   
 
 

Common stock(3)

        710  

Additional paid in capital(3)

        407,134  

Parent's investment(3)

    639,002      

Accumulated other comprehensive earnings, net of taxes

    (32,661 )   (32,661 )

Retained earnings

    65,778     65,778  

Total equity

    672,119     440,961  

Total capitalization

  $ 1,125,593     1,175,593  

(1)
In connection with the Spin-Off, SpinCo expects to borrow $350 million under a margin loan agreement that will be entered into by a subsidiary of SpinCo holding all the shares of EXPE that will be owned by SpinCo. Pursuant to the internal restructuring, approximately $300 million will be distributed from SpinCo to Liberty Interactive.

(2)
The income taxes payable allocated to SpinCo by Liberty Interactive as of December 31, 2015 and 2014, respectively, will be treated as an equity contribution upon completion of the Spin-Off.

(3)
Upon completion of the Spin-Off, the shares outstanding will be reflected in equity and parent's investment will be reclassified to additional paid in capital. The amounts reflected are the shares outstanding as of December 31, 2015 based on the distribution ratio of 0.5 of a share of SpinCo common stock for each share of Liberty Ventures common stock.

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SELECTED FINANCIAL DATA

Selected Historical Financial Data of SpinCo

        The following tables present selected combined financial statement information of SpinCo. The selected historical information relating to SpinCo's combined financial condition and results of operations is presented for each of the years in the five-year period ended December 31, 2015. The financial data for the three years ended December 31, 2015 has been derived from SpinCo audited combined financial statements for the respective periods. Data for the other periods presented has been derived from unaudited information. The data should be read in conjunction with SpinCo's combined financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included herein.

    Summary Balance Sheet Data:

 
  December 31,  
 
  2015   2014   2013   2012   2011  
 
  (amounts in thousands)
 

Cash and cash equivalents

  $ 2,243     1,631     3,072     2,545     2,731  

Inventory

  $ 53,194     48,961     58,452     33,798     24,530  

Investment in Expedia, Inc. 

  $ 927,057     513,814     476,538     431,332     620,904  

Property and equipment, net

  $ 29,628     31,617     33,186     21,336     13,224  

Intangible assets not subject to amortization

  $ 77,364     77,364     77,364     77,364     77,364  

Intangible assets subject to amortization, net

  $ 24,142     22,298     22,081     22,057     18,188  

Total assets

  $ 1,125,593     705,786     677,937     593,985     761,032  

Accounts payable

  $ 22,505     25,823     32,569     18,163     13,539  

Total related party notes payable(1)

  $     15,902     19,902     23,914     27,915  

Total debt and capital lease obligations

  $ 41,204     35,988     38,803     15,862     2,913  

Deferred income tax liabilities, noncurrent

  $ 304,483     156,150     147,848     141,731     114,787  

Income taxes payable, noncurrent

  $ 68,842     65,743     66,366     63,797     549  

Total parent's investment

  $ 672,119     387,236     354,721     314,935     589,158  

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    Summary Statement of Operations Data:

 
  Years ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (amounts in thousands, except per share amounts)
 

Revenue

  $ 464,415     454,733     420,990     320,898     250,484  

Gross profit

  $ 112,825     100,911     92,744     75,873     61,584  

Operating income

  $ 10,276     9,837     9,405     8,787     9,753  

Interest expense

  $ (1,218 )   (1,214 )   (734 )   (253 )   (22 )

Related party interest expense(1)

  $ (1,240 )   (1,867 )   (2,258 )   (2,684 )   (3,008 )

Share of earnings (losses) of Expedia, Inc. 

  $ 117,518     58,105     30,630     66,581     119,426  

Realized and unrealized gains (losses) on financial instruments, net

  $             (269,808 )    

Gains (losses) on transactions, net

  $             442,972      

Gain (loss) on dilution of investment in Expedia, Inc. 

  $ 319,587     2,768     (921 )   790     (4,489 )

Net earnings (loss) attributable to Liberty Expedia Holdings, Inc. shareholders

  $ 280,915     45,198     25,497     157,371     76,319  

Unaudited Pro Forma basic earnings (loss) per common share(2)

  $ 3.96     0.64     0.56     2.22     1.07  

(1)
As discussed in note 9 to the accompanying combined financial statements, as part of a contribution agreement entered into by Liberty Interactive and Bodybuilding on October 26, 2015, the balance of the related party note payable and accrued interest was contributed to equity.

(2)
Unaudited pro forma basic earnings (loss) per share was computed by dividing net earnings (loss) attributable to SpinCo stockholders by 71,026,789 common shares, which is the aggregate number of shares of Series A and Series B common stock that would have been issued if the Spin-Off had occurred on December 31, 2015, assuming a distribution ratio of 0.5 of a share of our Series A and Series B common stock for each share of Series A and Series B Liberty Ventures common stock, respectively, outstanding.

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DESCRIPTION OF OUR BUSINESS

Overview

        SpinCo is currently a wholly owned subsidiary of Liberty Interactive. Upon completion of the Spin-Off, we will be an independent, publicly traded company, and Liberty Interactive will not retain any ownership interest in us. SpinCo is a holding company, engaged primarily in (1) the global travel industry and (2) the online commerce industry through our ownership of interests in our subsidiaries. Upon the completion of the Spin-Off, our principal assets and businesses will consist of our consolidated subsidiary Expedia, in which we hold an approximate 15.7% equity interest and 52.2% voting interest, and our wholly owned subsidiary Bodybuilding.

Expedia, Inc.

        Expedia is an online travel company, empowering business and leisure travelers with the tools and information they need to efficiently research, plan, book and experience travel. Expedia seeks to grow its business through a dynamic portfolio of travel brands, including its majority owned subsidiaries that feature a broad supply portfolio—including more than 269,000 properties and 1.2 million live vacation rental listings in 200 countries, 400 airlines, packages, rental cars and cruises, as well as destination services and activities. Travel suppliers distribute and market products via its traditional desktop offerings, as well as through alternative distribution channels including mobile and social media, Expedia's private label business and its call centers in order to reach its extensive, global audience. In addition, its advertising and media businesses help other businesses, primarily travel providers, reach a large audience of travelers around the globe.

        Expedia is focused on revolutionizing travel through the power of technology. Expedia believes the strength of its brand portfolio as well as its enhanced product offerings and new channel penetration drives customer demand, which when combined with Expedia's global scale and broad based supply, gives Expedia a unique advantage in addressing the ongoing migration of travel bookings from offline to online around the world. With Expedia's unmatched global audience of travelers, and its deep and broad selection of travel products, there is a rich interplay between supply and demand in Expedia's global marketplace that helps it provide value to both travelers planning trips and supply partners wanting to grow their business through a better understanding of travel retailing and consumer demand in addition to reaching consumers in markets beyond their reach. Expedia's primary growth drivers are technology and product innovation, global expansion, and new channel penetration.

    Portfolio of Brands

        Expedia operates a strong brand portfolio with global reach, targeting a broad range of travelers, travel suppliers and advertisers. Expedia knows that consumers typically visit multiple travel sites prior to booking travel, and having a multi-brand strategy increases the likelihood that those consumers will visit one or more of its sites. Expedia also markets to consumers through a variety of channels, including internet search and metasearch sites, and having multiple brands appear in search results also increases the likelihood of attracting visitors. Expedia's brands tailor their product offerings and websites to particular traveler demographics. For example, Hotwire finds deep discount deals for the budget-minded travel shopper while the Classic Vacations brand targets high-end, luxury travelers. Brand Expedia spans the widest swath of potential customers with travel options across a broad value spectrum, while the Hotels.com brand focuses specifically on a hotel only product offering.

        Brand Expedia.    As one of the world's leading full-service online travel brands, Expedia-branded websites in 33 countries, including Expedia.com in the United States, make a large variety of travel products and services available directly to travelers. Brand Expedia aims to provide the latest technology and the widest selection of travel options for many different types of travelers, from families booking a summer vacation to individual travelers arranging a quick weekend getaway, as well as

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unmanaged business travelers. Travelers can search for, compare information about (including pricing, availability and verified traveler reviews) and book travel products and services on Expedia-branded websites and mobile apps, including airline tickets, lodging, car rentals, cruises, insurance and many local expert services—such as airport transfers, local attractions, activities and tours—from a large number of suppliers, on both a stand-alone and package basis.

        Hotels.com Worldwide.    Hotels.com is focused entirely on marketing and distributing lodging accommodations. Hotels.com, with 89 localized sites worldwide in 39 languages worldwide and market leading mobile apps on all major platforms, offers travelers a broad selection of lodging options. Because of its single product offering, Hotels.com is often Expedia's first entry point into a region, allowing Expedia to evaluate the market opportunity prior to adding additional brands and product offerings. Hotels.com Rewards®, the loyalty program established in 2008, offers travelers the ability to earn one free night for every ten nights stayed.

        Hotwire.    Hotwire offers a travel booking service that matches flexible, value-oriented travelers with suppliers who have excess seats, rooms and cars they offer at lower rates than retail. Hotwire's Hot Rate® Hotels, Hot Rate® Cars and Hot Rate® Flights offer travelers an extra low price but the supplier name is revealed after the traveler books and pays. With Hotwire's unique model, suppliers create value from excess availability without diluting their core, brand-loyal traveler base. Hotwire partners with leading hotel companies worldwide, brand-name domestic and international airlines, and major car rental companies in the United States.

        Orbitz.    In September 2015, Expedia acquired Orbitz Worldwide, Inc., including all of its brands and assets. Orbitz Worldwide is a global travel portfolio including Orbitz, ebookers, CheapTickets, Orbitz Partner Network and Orbitz for Business.

        Travelocity.    After entering into an exclusive, long-term strategic marketing agreement with Travelocity during the third quarter of 2013, under which Brand Expedia powered the technology platform, supply and customer service for Travelocity's existing websites in the United States and Canada, Expedia announced in January 2015 that it had acquired the Travelocity brand and associated assets from Sabre Corporation (Sabre) and had terminated the strategic marketing and other related agreements.

        HomeAway.    In December, 2015, Expedia acquired HomeAway, Inc. (HomeAway), which operates an online marketplace for the vacation rental industry. The HomeAway portfolio includes the vacation rental websites HomeAway.com, VRBO.com and VacationRentals.com in the United States; HomeAway.co.uk and OwnersDirect.co.uk in the United Kingdom; HomeAway.de in Germany; Abritel.fr and Homelidays.com in France; HomeAway.es and Toprural.es in Spain; AlugueTemporada.com.br in Brazil; HomeAway.com.au and Stayz.com.au in Australia; and travelmob.com in Singapore. HomeAway also owns a majority interest in Bookabach.com.nz, a vacation rental site in New Zealand, and operates BedandBreakfast.com, a comprehensive global site for finding bed-and-breakfast properties. In addition to its online marketplace, HomeAway also offers software solutions to property managers through its HomeAway Software for Professionals and Glad to Have You products.

        Expedia Affiliate Network.    Expedia's private label, business-to-business brand Expedia Affiliate Network (EAN) makes hotel bookings available to travelers through third-party branded websites, call centers and in-person locations. Some of EAN's largest partners include airline suppliers, loyalty programs, leading regional online travel companies and major retailers. EAN offers an Application Programming Interface and template solution and generally compensates partners on a gross profit-share basis.

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        Egencia.    Expedia's full-service travel management company offers travel products and services to businesses and their corporate travelers. Egencia maintains a global presence in 65 countries across North America, Europe and Asia Pacific. Egencia provides, among other things, a global technology platform coupled with local telephone assistance with expert travel consultants, unique supply targeted at business travelers and consolidated reporting for its clients. Egencia charges its corporate clients account management fees, as well as transactional fees for various contacts made as part of the travel process. In addition, Egencia provides on-site agents to some corporate clients to provide in-house, seamless support. Egencia also offers consulting and meeting management services as well as advertising opportunities. Expedia believes the corporate travel sector represents a significant opportunity for Expedia through Egencia's compelling technology solution for businesses seeking to improve employees' travel experiences and optimize travel costs by moving the focus of the corporate travel program to online and mobile services versus the traditional call center approach.

        trivago.    trivago is Expedia's majority-owned hotel metasearch company, based in Dusseldorf, Germany, featuring price comparison from more than one million hotels. Officially launched in 2005, trivago is one of the best known travel brands in Europe and is expanding globally with sites in 55 countries.

        Wotif Group.    In November 2014, Expedia completed the acquisition of Wotif Group, a leading Australian online travel company, comprised of the Wotif.com, lastminute.com.au and travel.com.au brands in Australia, and Wotif.co.nz and lastminute.co.nz in New Zealand. Wotif.com launched in 2000, and listed on the Australian Securities Exchange in June 2006 as Wotif.com Holdings Limited, under the ASX code "WTF," prior to being acquired by Expedia.

        Venere.    The Venere website, www.venere.com, lists hotel properties in hundreds of locations around the world and provides hotel partners with geographically diverse sources of demand.

        Classic Vacations.    Classic Vacations offers individually tailored vacations primarily through a national network of third-party retail travel agents. Classic Vacations delivers a full line of premium vacation packages—air, hotels, car rentals, activities, cruises and private transportation—to create customized luxury vacations in Hawaii, the Caribbean, Mexico, Costa Rica, Europe, Australia, New Zealand, Fiji, Maldives, Dubai, Seychelles and Tahiti. Travel agents and travelers can preview the product offering through Expedia's websites, www.classicforagents.com and www.classicvacations.com.

        Expedia Local Expert.    The Expedia Local Expert network offers online and in-market concierge services, activities, experiences, attractions and ground transportation. With access to a rich portfolio of thousands of tours and adventures, LX can be found on more than 40 Expedia, Orbitz, Travelocity and Wotif websites, and operates more than 100 concierge and activity desks in major resort destinations.

        Expedia CruiseShipCenters.    Expedia CruiseShipCenters is a leading seller of cruises and vacations. The franchise company has over 200 retail locations across North America, a team of over 4,100 professionally-trained vacation consultants and an inventory of more than 200,000 staterooms available to book online or in store.

        CarRentals.com.    CarRentals.com is an online car rental marketing and retail firm offering a diverse selection of car rentals direct to consumers. Following Expedia's July 2014 acquisition of Auto Escape Group, one of Europe's leading online car rental reservation companies, the Auto Escape Group joined with the CarRentals.com brand. With CarRentals.com's international expansion, it is able to provide Expedia's customers more choices across the globe and help its supply partners expand their marketing reach.

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    Growth Strategy

        Product Innovation.    Each of Expedia's leading brands was a pioneer in online travel and has been responsible for driving key innovations in the space over the past two decades. Each Expedia technology platform is operated by a dedicated technology team, which drives innovations that make researching and shopping for travel increasingly easier and help customers find and book the best possible travel options. In the past several years, Expedia made key investments in technology, including significant development of its technical platforms that makes it possible for them to deliver innovations at a faster pace. For example, Expedia launched new global platforms for Hotels.com and Brand Expedia, enabling them to significantly increase the innovation cycle, thereby improving conversion and driving faster growth rates for those brands. In 2013, Expedia signed an agreement to power the technology, supply, and customer service platforms for Travelocity-branded sites in the United States and Canada, enabling Expedia to leverage its investments in each of these key areas. The shift of Travelocity-branded sites to the Expedia technology platform was successfully completed over the course of 2014. In November 2014, Expedia completed the acquisition of Wotif Group and subsequently converted the Wotif.com site to the Expedia platform. In January 2015, Expedia acquired the Travelocity brand and other associated assets from Sabre. The strategic marketing and other related agreements previously entered into were terminated. In September 2015, Expedia completed the acquisition of Orbitz Worldwide, including all of its brands. In December 2015, Expedia completed the acquisition of HomeAway, including all of its brands. Expedia intends to continue leveraging these investments when launching additional points of sale in new countries, introducing new website features, adding supplier products and services including new business model offerings, as well as proprietary and user-generated content for travelers.

        Global Expansion.    The Expedia, Hotels.com, Egencia, EAN, and Hotwire brands operate both domestically and through international points of sale, including in Europe, Asia Pacific, Canada and Latin America. Expedia owns Venere, a European brand, which focuses on marketing hotel rooms in Southern Europe; Wotif Group, which has sites in Australia and New Zealand; and ebookers, which operates in a number of international countries. Egencia, Expedia's corporate travel business, operates in 65 countries around the world and continues to expand, including its 2012 acquisition of VIA Travel. The HomeAway portfolio has vacation rental sites all around the world. Expedia owns a majority share of trivago, a leading hotel metasearch company. Officially launched in 2005, trivago is one of the best known travel brands in Europe and North America. trivago continues to operate independently and rapidly grow revenue through global expansion, including aggressive expansion in new countries. In addition, Expedia has commercial agreements in place with Ctrip and eLong in China, as well as Decolar.com, Inc. in Latin America. In 2015, approximately 37% of Expedia's worldwide gross bookings excluding eLong and 44% of worldwide revenue were through international points of sale compared to just 21% for both worldwide gross bookings and revenue in 2005. Expedia has a goal of generating at least 65% of its revenue through businesses and points of sale outside of the United States.

        In expanding its global reach, Expedia leverages significant investments in technology, operations, brand building, supplier relationships and other initiatives that it has made since the launch of Expedia.com in 1996. Expedia's scale of operations enhances the value of technology innovations it introduces on behalf of its travelers and suppliers. Expedia believes that its size and scale affords the company the ability to negotiate competitive rates with its supply partners, provides breadth of choice and travel deals to its traveling customers through an expanding supply portfolio and creates opportunities for new value added offers for its customers such as its loyalty programs. The size of Expedia's worldwide traveler base makes its sites an increasingly appealing channel for travel suppliers to reach customers. In addition, the sheer size of Expedia's user base and search query volume allows it to test new technologies very quickly in order to determine which innovations are most likely to improve the travel research and booking process, and then roll those features out to its worldwide audience in order to drive improvements in conversion.

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        New Channel Penetration.    Today, the majority of online travel bookings are generated through typical desktop and laptop computers. However, technological innovations and developments are creating new opportunities including travel bookings made through mobile devices. In the past few years, each of Expedia's brands made significant progress creating new mobile websites and mobile/tablet applications that are receiving strong reviews and solid download trends. Expedia believes mobile bookings via smartphones present an opportunity for incremental growth as they are often completed within one or two days of the travel or stay, which is a much shorter booking window than Expedia has historically experienced via more traditional online booking methods. During the last few years, customers' behaviors and preferences on tablet devices began to show differences from trends seen on smartphones. For example, the booking window on a smartphone typically is much shorter than the emerging trend on the tablet device and historical average on a desktop or laptop. In addition, Expedia is seeing increasing cross-device usage among its customers, who connect to its websites and apps across multiple devices and platforms throughout their travel planning process. Expedia also believes that in the future mobile is likely to represent an efficient marketing channel given the opportunity for direct traffic acquisition, increase in share of wallet and in repeat customers, particularly through mobile applications. During the year ended December 31, 2015, one in four Expedia, Inc. transactions were booked globally on a mobile device.

    Business Models

        Expedia makes travel products and services available both on a stand-alone and package basis, primarily through the following business models: the merchant model, the agency model and the advertising model. In addition, upon Expedia's acquisition of HomeAway on December 15, 2015, Expedia also earns revenue related to subscription-based vacation rental listing and other ancillary services provided to property owners and managers. Under the merchant model, Expedia facilitates the booking of hotel rooms, airline seats, car rentals and destination services from its travel suppliers and Expedia is the merchant of record for such bookings. The majority of Expedia's merchant transactions relate to hotel bookings. Under the agency model, Expedia facilitates travel bookings and acts as the agent in the transaction, passing reservations booked by the traveler to the relevant travel provider. Expedia receives commissions or ticketing fees from the travel supplier and/or traveler.

        Expedia continues to see closer integration of the agency hotel product with its core merchant product through its Expedia Traveler Preference (ETP) program by offering, for participating hotels, customers the choice of whether to pay Expedia in advance under its merchant program or pay at the hotel at the time of the stay. Growth in the ETP program has generally resulted in reduced negotiated economics to compensate for hotel supply partners absorbing expenses such as credit card fees and customer service costs, and as Expedia continues to expand the breadth and depth of its global hotel offering, it has made and expects to continue to make adjustments to its economics in various geographies, including changes based on local market conditions. Based on these dynamics, Expedia expects its revenue per room night to remain under pressure in the future.

        Through various of its Expedia-branded and other websites, travelers can dynamically assemble multiple component travel packages in a single transaction at a lower price as compared to booking each component separately. Packages assembled by travelers through the packaging model on these websites primarily include a merchant hotel component and an air or car component. Travelers select packages based on the total package price, without being provided component pricing. The use of the merchant travel components in packages enables Expedia to make certain travel products available at prices lower than those charged on an individual component basis by travel suppliers without impacting their other models. In addition, Expedia also offers third-party pre-assembled package offerings, primarily through its international points of sale, further broadening the scope of products and services to travelers. Expedia expects the package product to continue to be marketed primarily using the merchant model.

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        Under the advertising model, Expedia offers travel and non-travel advertisers access to a potential source of incremental traffic and transactions through its various media and advertising offerings on trivago and its transaction-based websites.

        Expedia's HomeAway brand offers subscription-based vacation rental listing products and services to property owners or managers where property owners or managers purchase in advance online advertising services related to the listing of their properties for rent over a fixed term (typically one year), and on a transaction-basis where a commission is earned on traveler bookings completed on its websites. Going forward, Expedia expects to transition over time to more transaction-based service offerings, including the introduction of a consumer booking fee.

    Relationships with Travel Partners

        Overview.    Expedia makes travel products and services available from a variety of hotel companies, large and small commercial airlines, car rental companies, cruise lines, destination service providers, and with the closing of the HomeAway acquisition, property owners and managers. Expedia seeks to build and maintain long-term, strategic relationships with travel suppliers and global distribution system (GDS) partners. An important component of the success of Expedia's business depends on its ability to maintain its existing relationships, as well as build new relationships, with travel suppliers and GDS partners.

        Travel Suppliers.    Expedia strives to deliver value to its travel supply partners through a wide range of innovative, targeted merchandising and promotional strategies designed to generate consumer demand and increase their revenue, while simultaneously reducing their overall marketing transaction and customer service costs. Expedia's strategic account managers and local hotel market managers work directly with travel suppliers to optimize the exposure of their travel products and brands through Expedia's points of sale, including participation in need-based, seasonal and event-driven promotions and experimentation within the new channels Expedia is building.

        Expedia has developed proprietary, supplier-oriented technology that streamlines the interaction between some of its websites and hotel central reservation systems, making it easier and more cost-effective for hotels to manage reservations made through Expedia's brands. Through this "direct connect" technology, hotels can upload information about available products and services and rates directly from their central reservation systems into Expedia's websites, as well as automatically confirm hotel reservations made by Expedia's travelers. In the absence of direct connect technology, both of these processes are generally completed via a proprietary extranet.

        In addition, HomeAway's vacation rental listing services includes a set of tools for property owners or managers, which enables them to manage an availability calendar, reservations, inquiries and the content of the listing, as well as provide various other services for property owners or managers to manage reservations or drive incremental sales volume.

        Distribution Partners.    GDSs, also referred to as computer reservation services, provide a centralized, comprehensive repository of travel suppliers' 'content'—such as availability and pricing of seats on various airline point-to-point flights, or 'segments'. The GDSs act as intermediaries between the travel suppliers and travel agencies, allowing agents to reserve and book flights, rooms or other travel products. Expedia's relationships with GDSs primarily relate to its air business. Expedia uses Sabre, Amadeus and Travelport as its GDS segment providers in order to ensure the widest possible supply of content for Expedia's travelers.

    Marketing and Promotions

        Expedia's marketing programs are intended to build and maintain the value of its various brands, drive traffic and ultimately bookings through its various brands and businesses, optimize ongoing

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traveler acquisition costs and strategically position its brands in relation to one another. Expedia's long-term success and profitability depends on its continued ability to maintain and increase the overall number of traveler transactions flowing through its brand and shared global platforms in a cost-effective manner, as well as its ability to attract repeat customers to its sites.

        Expedia's marketing channels primarily include online advertising, including search engine marketing and optimization, as well as meta-search, social media sites, offline advertising, loyalty programs, mobile apps and direct and/or personalized traveler communications on its websites as well as through direct e-mail communication with its travelers. Expedia's marketing programs and initiatives include promotional offers such as coupons as well as seasonal or periodic special offers from its travel suppliers based on its supplier relationships. Expedia's traveler loyalty programs include Hotels.com Rewards on Hotels.com global websites and Expedia® + rewards on over 25 Brand Expedia points of sale, as well as Orbitz Rewards on Orbitz.com. The cost of these loyalty programs is recorded as a reduction of revenue in Expedia's financial statements.

        Expedia also makes use of affiliate marketing. The Expedia.com, Hotels.com, Hotwire, Travelocity, HomeAway, Wotif, lastminute.com.au and Venere-branded websites receive bookings from consumers who have clicked-through to the respective websites through links posted on affiliate partner websites. Affiliate partners can also make travel products and services available on their own websites through a Brand Expedia, Hotels.com or HomeAway co-branded offering or a private label website. Expedia's EAN and Orbitz Partner Network businesses provides its affiliates with technology and access to a wide range of products and services. Expedia manages agreements with thousands of third-party affiliate partners, including a number of leading travel companies, pursuant to which it pays a commission for bookings originated from their websites.

    Operations and Technology

        Expedia provides 24-hour-a-day, seven-day-a-week traveler sales and support by telephone or via e-mail. For purposes of operational flexibility, Expedia uses a combination of outsourced and in-house call centers. Expedia's call centers are located throughout the world, including outsourced operations in the Philippines, El Salvador, Egypt and India. Expedia invested significantly in its call center technologies, with the goal of improving customer experience and increasing the efficiency of its call center agents, and has plans to continue reaping the benefits of these investments going forward.

        Expedia's systems infrastructure and web and database servers are housed in various locations, mainly in the United States, which have 24-hour monitoring and engineering support, as well as in the public cloud. These data centers have their own generators and multiple back-up systems. Significant amounts of Expedia's owned computer hardware for operating the websites are located at these facilities. For some critical systems, Expedia has both production and disaster-recovery facilities. Expedia's technology systems are subject to certain risks, which are described in "Risk Factors."

    Intellectual Property

        Expedia's intellectual property rights, including its patents, trademarks, copyright, domain names, trade dress, proprietary technology and trade secrets, are an important component of its business. For example, Expedia relies heavily upon its intellectual property and proprietary information in its content, brands, software code, proprietary technology, ratings indexes, informational databases, images, graphics and other components that make up its services. Expedia has acquired some of its intellectual property rights and proprietary information through acquisitions, as well as licenses and content agreements with third parties.

        Expedia protects its intellectual property and proprietary information by relying on its terms of use, confidentiality procedures and contractual provisions, as well as international, national, state and common law rights. In addition, Expedia enters into confidentiality and invention assignment

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agreements with employees and contractors, and license and confidentiality agreements with other third parties. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use Expedia's trade secrets or its intellectual property and proprietary information without authorization which, if discovered, might require the uncertainty of legal action to correct. In addition, there can be no assurance that others will not independently and lawfully develop substantially similar properties.

        Expedia maintains its trademark portfolio by filing trademark applications with the appropriate international trademark offices, maintaining appropriate registrations, securing contractual trademark rights when appropriate, and relying on common law trademark rights when appropriate. Expedia also registers copyrights and domain names as it deems appropriate. Expedia protects its trademarks, copyrights and domain names with an enforcement program and use of intellectual property licenses. Trademark and intellectual property protection may not be available or may not be sought, sufficient or effective in every jurisdiction where Expedia operates. Contractual disputes or limitations may affect the use of trademarks and domain names governed by private contract.

        Expedia has considered, and will continue to consider, the appropriateness of filing for patents to protect future inventions, as circumstances may warrant. However, patents protect only specific inventions and there can be no assurance that others may not create new products or methods that achieve similar results without infringing upon patents owned by Expedia.

    Seasonality

        Expedia generally experiences seasonal fluctuations in the demand for its travel products and services. For example, traditional leisure travel bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and holiday travel. The number of bookings typically decreases in the fourth quarter. Because revenue for most of our travel products, including merchant and agency hotel, is recognized when the travel takes place rather than when it is booked, revenue typically lags bookings by several weeks or longer. The seasonal revenue impact is exacerbated with respect to income by the nature of Expedia's variable cost of revenue and direct sales and marketing costs, which it typically realizes in closer alignment to booking volumes, and the more stable nature of its fixed costs. Furthermore, operating profits for Expedia's primary advertising business, trivago, are experienced in the second half of the year as selling and marketing costs offset revenue in the first half of the year as Expedia aggressively markets during the busy booking period for summer travel. As a result, revenue and income are typically the lowest in the first quarter and highest in the third quarter. The continued growth of Expedia's international operations or a change in its product mix, including the assimilation, growth and shift to more of a transaction-based business model for the vacation rental listing business of HomeAway, may influence the typical trend of the seasonality in the future.

    Terms of Investment in Expedia

        We own an approximate 15.7% equity interest and 52.2% voting interest in Expedia. Historically, Liberty Interactive has been a party to a Stockholders Agreement with Diller, pursuant to which Diller held an irrevocable proxy over all the shares of EXPE and Expedia class B common stock owned by Liberty Interactive. In connection with the Spin-Off, and the completion of the proxy arrangements, the Stockholders Agreement will be assigned to us and amended to provide for the assignment of Diller's proxy over these shares to our company through the Proxy Arrangement Termination Date. As a result, we will begin consolidating Expedia as of the completion of the Spin-Off, as SpinCo will then control a majority of the voting interest in Expedia for accounting purposes. Additionally, in conjunction with the application of acquisition accounting, we anticipate a full step up in basis of Expedia along with a gain between our historical basis and the fair value of our interest in Expedia. Liberty Interactive is also subject to a Governance Agreement with Expedia, which will be assigned to us in connection with the

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Spin-Off and which will provide us following the Spin-Off, with certain director nomination and other rights and imposes certain restrictions on the ownership of shares of Expedia class B common stock. We will maintain our rights under the Governance Agreement, as assigned and amended, and the Stockholders Agreement, as assigned, even upon termination of the proxy arrangements.

        For more information regarding the proxy arrangements, see "Certain Relationships and Related Party Transactions—Relationships Among SpinCo, the Malone Group, Diller and Expedia—Proxy Arrangements."

Bodybuilding

        Bodybuilding is an Internet retailer of sports, fitness and dietary supplements and other health and wellness products. Bodybuilding markets approximately 550 globally recognized brands, including several brands exclusive to its retail channel. Through its website and mobile applications, Bodybuilding offers directly to its customers one of the largest varieties of supplements, vitamins, minerals, exercise products, frozen prepared meals, clothing and exercise equipment, with approximately 16,000 stock keeping units (SKUs), and delivers its products primarily through its fulfillment centers.

        Bodybuilding is one of the largest e-retailers in the nutritional and dietary-supplement industry, as ranked by Alexa.com. It also publishes a significant amount of online health and fitness content, offering complimentary fitness content, workout programs, video trainers, articles, recipes, health advice and motivational stories. Bodybuilding's online model also includes a combination of detailed product information and real-time user reviews to help its visitors select products designed to aid in achieving their health and fitness goals. Bodybuilding's website, which was launched in 1999, currently includes more than 30,000 pages of editorial content, 10,000 videos, 16,000 pages of store content and over 6.5 million forum threads comprising 125 million forum posts.

        Visitors to Bodybuilding's website typically include gym-goers, athletes, weightlifters and bodybuilders, as well as other individuals wanting to improve their mental and physical well-being through diet and exercise, including more than 30 million monthly unique visitors and 11 million members of BodySpace, an inclusive online fitness community that allows people of all health and fitness levels to track their progress and discuss goals, techniques, supplementation and achievements.

        Bodybuilding strives to provide everything necessary for individuals to be healthy and fit, as well as a platform for users to share their inspirational stories once they achieve their health and fitness goals. Providing customers with the information, motivation and supplements necessary to reach and maintain their health and fitness goals perpetuates website traffic, continued engagement and product purchases. Bodybuilding primarily generates revenue from the online sale of products, through Bodybuilding's website and mobile applications. In addition, a limited amount of revenue is generated through advertising.

        Bodybuilding is currently a wholly owned subsidiary of Liberty Interactive and, upon completion of the Spin-Off, will be our wholly owned subsidiary.

    Industry

        According to the Nutrition Business Journal (NBJ), the global supplement industry was worth $108 billion in 2014, and is estimated to grow to $153 billion by 2020. The global demand for supplements can vary based on, among other factors, market demand, gross domestic product, product availability and lifestyle of consumers. The United States represents the largest regional consumption of supplements, representing 34% of the global market demand in 2014. The Sports Nutrition, Meal, Homeopathic, and Specialty Supplement product category of dietary supplements was the fastest growing supplement sector in 2014, worth $39 billion.

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        The VMS industry in the United States is highly fragmented. According to the NBJ, no single industry participant accounted for more than 5% of total domestic VMS industry sales in 2014. Retailers of VMS products primarily include multi-level marketers, online specialty and mass retailers and brick-and-mortar stores, including, but not limited to, grocery stores, membership clubs and specialty and mass retailers. The NBJ anticipates that specialty retail will remain the major market driver for supplements through 2020, and the specialty retail channel is expected to add over $8 billion in new annual sales by that time. Additionally, the NBJ forecasts that online sales channel will achieve 13% compound annual growth from 2014 to 2020.

        Factors that affect the growth of the nutritional and dietary supplement industry include an aging U.S. population, rising healthcare costs and the increased use of preventive measures. In addition, the general population's increased focus on diet and nutrition, along with growing fitness and wellness program participation, serves as a positive trend for the nutritional and dietary supplement industry.

        In addition, worldwide readers continue to migrate from traditional print to digital media to consume content related to their professional and personal interests. The global supplement industry and general health and fitness markets are no exception to this trend, and consumers of health and fitness content and products are increasingly using the internet to research and purchase health and fitness supplements and other products.

        Bodybuilding's performance is affected by industry trends including, among others, demographic trends and health and lifestyle preferences, as well as other factors, such as competition, industry media coverage and governmental actions. For example, the dietary supplement industry is subject to potential regulatory activity and other legal matters that could affect the credibility of a given product or category of products. Consumer trends may be influenced by current economic conditions, and limited product innovation, and introductions in the VMS industry can dramatically affect purchasing patterns. Even though Bodybuilding's business model allows it to respond to changing industry trends by introducing new products and adjusting its product mix and offering sales incentives, such actions may not fully alleviate adverse trends.

    Competitive Strengths

        Bodybuilding believes it is well positioned to capitalize on favorable VMS industry dynamics and trends as a result of its competitive strengths described below:

    Extensive Product Selection, Including a Strong Assortment of Exclusive Brands

        Bodybuilding offers one of the largest online selections of dietary and nutritional supplements. It offers its consumers vast selection, ease of access, competitive prices, inspirational content, personalized and mobile shopping experiences and superior customer service to drive channel growth. Bodybuilding believes it has a complete and authoritative merchandise assortment and markets a broad product selection. Bodybuilding's merchandise assortment includes approximately 16,000 SKUs from a combination of over 550 nationally recognized brands, as well as its own private label brands. Merchandise from Bodybuilding's exclusive brands accounted for approximately 19% of its revenue in 2015, and provides its customers the opportunity to purchase quality products at strong value.

    Digital Content and Community

        Bodybuilding has a diverse and broad range of online content that allows its customers to experience a full scale fitness environment. In addition, the Bodybuilding online fitness community, BodySpace, allows over 11 million members to connect, track and share health and fitness progress, achievements and experiences. Bodybuilding hosts 30 million monthly unique visitors that utilize its digital content, which helps customers to remain engaged, drives traffic and increases sales in the Bodybuilding online store.

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    Competitive Pricing

        Bodybuilding strives to have low prices on the largest selection of sports nutrition products. Many of the products offered in Bodybuilding's industry require a minimum advertised price, which does not allow Bodybuilding to price below a certain threshold that is determined by the supplier. For the majority of Bodybuilding's other products, its strategy is to be price-competitive with its largest competitors. Bodybuilding utilizes third party technology to receive real time data on competitors' pricing and makes pricing adjustments accordingly. Bodybuilding's exclusive products are priced based on margin and category competitors to provide the best price and overall value to its customers.

    Fast Shipping and Methods of Fulfillment

        Bodybuilding's fulfillment centers target to complete and ship an order as quickly as possible, often in the same day it is received. In 2015, 58% of orders were shipped within the same day, and 98% of orders were shipped by the next day. In 2015, it was awarded the Elite Service Award by StellaService for fast shipping. In addition, the average order-to-delivery time for our domestic customers is less than 2.5 days, while many of our competitors offer 3-4 days from order to delivery. By operating its own facilities, Bodybuilding gains greater control over order timeliness, cost, accuracy and inventory levels.

    Value-Added Customer Service

        Bodybuilding offers one of the highest degrees of customer service among national competitors, and was recognized in 2015 by both Bizrate Insights and StellaService for its excellence in customer service. Bodybuilding has earned the Elite award for both outstanding email and phone support by StellaService, and has been rated in the Platinum Circle of Excellence by Bizrate Insights for the past six years. Bodybuilding's focus on value added customer service, aided by the deep product knowledge of its experienced customer service representatives, creates additional value for its customers. Bodybuilding does not require call quotas or time restrictions for its customer service representatives, which aides Bodybuilding in retaining its strong customer service team. This team helps Bodybuilding build trust with consumers, build its brand awareness, enhance its reputation and drive sales.

    Product Offerings

    Dietary Supplements: Sports Nutrition

        Bodybuilding's sports nutrition consumers look for products to help maintain or supplement a healthy lifestyle. These products are used in conjunction with cardiovascular conditioning, weight training and sports activities. Sports nutrition supplements include protein and weight gain powders, meal replacements, weight management, energy production, recovery enhancement and pre- and post-workout supplements. Bodybuilding's sports nutrition products are offered in many convenient forms, such as powders, tablets, capsules, soft gels and liquids. In 2015, these products generated approximately 83% of Bodybuilding's revenue, with protein, pre-workout and post-workout supplements representing 42%, 15% and 13% of revenue, respectively. Bodybuilding offers approximately 9,000 SKUs in sports nutrition.

    Dietary Supplements: Other

        Bodybuilding's Other category represents all other product classifications it stocks that do not fit within the Sports Nutrition category. These products include items such as multivitamins, herbs, minerals, botanicals, probiotics, apparel and accessories. Bodybuilding offers approximately 7,000 SKUs in its "Other" category.

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    Brands, Suppliers and Availability of Raw Materials

        Bodybuilding resells many dietary supplement brands through its vendor supplier partnerships and its exclusive brands. Based on sales, Bodybuilding's top ten brands for the year ended December 31, 2015 include: BPI Sports, BSN, Cellucor, Dymatize, JYM, MusclePharm, MuscleTech, Optimum Nutrition, RSP Nutrition and Universal Nutrition. The JYM line is exclusive to Bodybuilding.

        Bodybuilding partners with a large number of suppliers; however, approximately 60% of inventory purchases are concentrated with its top eight suppliers. Bodybuilding's largest supplier is Optimum Nutrition, from which Bodybuilding purchased approximately 17% of its merchandise in fiscal year 2015. Bodybuilding considers numerous factors in selecting its suppliers, including, among others, quality, price, credit terms and product offerings. Bodybuilding does not typically enter into fixed-term supply agreements with its vendors. Bodybuilding strives to maintain sufficient inventory to enable it to meet customer demand and provide a high level of service to its customers.

    Seasonality

        Bodybuilding's business is slightly seasonal. The first quarter of a given calendar year, when consumers implement their New Year's resolutions related to health and fitness, accounts for the largest percentage of company sales by quarter. There are varying degrees of seasonality throughout the remainder of the year based on key promotional events such as, among others, Black Friday, Cyber Monday, Bodybuilding's annual Birthday Sale, and the Bodybuilding supplement awards.

    Intellectual Property

        Bodybuilding's intellectual property (including trademarks, service marks, trade dress, logos, copyrights, domain names, patents, trade secrets and proprietary technologies) is a critical part of its business. To protect its intellectual property, Bodybuilding relies on a combination of laws and regulations, as well as contractual restrictions. Bodybuilding pursues the registration of trademarks and service marks, including "Bodybuilding.com" and certain variations thereon, copyrights and domain names in the United States and certain foreign locations. Bodybuilding also relies on the protection of laws regarding unregistered copyrights for its proprietary software and certain other content it creates. Bodybuilding continues to evaluate the merits of applying for future copyright registrations. Bodybuilding also evaluates technology and inventions for patentability and may consider filing patent applications for future technology inventions, and relies on trade secret laws to protect its proprietary technology and other intellectual property. To further protect its intellectual property, Bodybuilding enters into confidentiality and assignment of inventions agreements with certain employees and contractors, as well as confidentiality agreements with other third parties, such as suppliers. Bodybuilding's private label formulations are propriety, protected by contractual confidentiality, and subject to statutory trade secret protection where applicable.

    Technology

        Bodybuilding leverages a combination of best-in-class third party and custom-built proprietary technology and operational platforms to deliver a unique and engaging experience for its customers and suppliers. With over 140 engineers in an engineering department organized into distinct operating groups, Bodybuilding has built a full set of technology solutions specific for the online supplementation market.

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Regulatory Matters

    Internet Services

        Our online commerce businesses are subject, both directly and indirectly, to various laws and governmental regulations. Certain of these businesses engaged in the provision of goods and services over the Internet must comply with federal and state laws and regulations applicable to online communications and commerce. For example, the Children's Online Privacy Protection Act (COPPA) prohibits web sites from collecting personally identifiable information online from children under age 13 without parental consent and imposes a number of operational requirements. In 2012, the FTC adopted revised COPPA regulations amending certain definitions and modifying certain operational requirements regarding notice and parental consent, among other matters. Certain email activities are subject to the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, commonly known as the CAN-SPAM Act. The CAN-SPAM Act regulates the sending of unsolicited commercial email by requiring the email sender, among other things, to comply with specific disclosure requirements and to provide an "opt-out" mechanism for recipients. Both of these laws include statutory penalties for non-compliance. The Digital Millennium Copyright Act limits, but does not eliminate, liability for listing or linking to third party websites that may include content that infringes on copyrights or other rights so long as our Internet businesses comply with the statutory requirements. Various states also have adopted laws regulating certain aspects of Internet communications. On February 24, 2016, the President signed legislation that permanently extends the moratorium on state and local taxes on Internet access and commerce.

        Goods sold over the Internet also must comply with traditional regulatory requirements, such as the Federal Trade Commission (FTC) requirements regarding truthful and accurate claims. Our online commerce businesses are subject to laws governing the collection, use, retention, security and transfer of personally-identifiable information about their users. In particular, the collection and use of personal information by companies has received increased regulatory scrutiny on a global basis. The enactment, interpretation and application of user data protection laws are in a state of flux, and the interpretation and application of such laws may vary from country to country. For example, on December 15, 2015, the European Commission, the European Parliament and the Council of the European Union (Council) reached agreement on new data laws that give customers additional rights and impose additional restrictions and penalties on companies for illegal collection and misuse of personal information. The European Parliament and the Council are expected to adopt the new laws in 2016, with the laws to take effect two years later. Further, on October 6, 2015, the Court of Justice of the European Union invalidated the "Safe Harbor Framework," which had allowed companies to collect and process personal data in European Union nations for use in the U.S. European Union and U.S. authorities announced on February 2, 2016 that they had reached agreement on a new data transfer framework, called the EU-U.S. Privacy Shield. The European Union and the U.S. must implement the new framework, which may be subject to legal challenge. Finally, a European Union directive restricting the Internet tracking tools known as "cookies" has taken effect.

        In the U.S., the FTC has proposed a privacy policy framework, and legislation that would require organizations that suffer a breach of security related to personal information to notify owners of such information is pending in Congress. Many states have adopted laws requiring notification to users when there is a security breach affecting personal data, such as California's Information Practices Act. Complying with these different national and state privacy requirements may cause the Internet companies in which we have interests to incur substantial costs. In addition, such companies generally have and post on their websites privacy policies and practices regarding the collection, use and disclosure of user data. A failure to comply with such posted privacy policies or with the regulatory requirements of federal, state, or foreign privacy laws could result in proceedings or actions by governmental agencies or others (such as class action litigation) which could adversely affect our online commerce businesses. Technical violations of certain privacy laws can result in significant penalties,

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including statutory penalties. In 2012, the FCC amended its regulations under the Telephone Consumer Protection Act (TCPA), which could subject our Internet businesses to increased liability for certain telephonic communications with customers, including but not limited to text messages to mobile phones. Under the TCPA, plaintiffs may seek actual monetary loss or statutory damages of $500 per violation, whichever is greater, and courts may treble such damage awards for willful or knowing violations. Data collection, privacy and security are growing public concerns. If consumers were to decrease their use of our Internet businesses' websites to purchase products and services, the businesses could be harmed. Congress and individual states may consider additional online privacy legislation.

        Other Internet-related laws and regulations enacted in the future may cover issues such as defamatory speech, copyright infringement, pricing and characteristics and quality of products and services. The future adoption of such laws or regulations may slow the growth of commercial online services and the Internet, which could in turn cause a decline in the demand for the services and products of our online commerce businesses and increase their costs of doing business or otherwise have an adverse effect on their businesses, operating results and financial conditions. Moreover, the applicability to commercial online services and the Internet of existing laws governing issues such as property ownership, libel, personal privacy and taxation is uncertain and could expose these companies to substantial liability.

        On February 26, 2015, the FCC adopted rules in its open Internet proceeding that could restrict the ability of broadband providers to block or otherwise disadvantage our business. Among other things, the open Internet rules prohibit Internet service providers from: (1) blocking access to, or impairing or degrading, legal content, applications, services or non-harmful devices; and (2) favoring selected Internet traffic. Multiple parties have challenged the open Internet rules in the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit). The D.C. Circuit is expected to rule on the challenge in 2016.

        Proposed Changes in Regulation.    The regulation of Internet services, online sales and other forms of product marketing is subject to the political process and has been in constant flux over the past decade. Further material changes in the law and regulatory requirements must be anticipated and there can be no assurance that our business will not be adversely affected by future legislation, new regulation or deregulation.

    Expedia

        Expedia must comply with laws and regulations relating to the travel industry and the provision of travel services, including registration in various states as "sellers of travel" and compliance with certain disclosure requirements and participation in state restitution funds. In addition, Expedia's businesses are subject to regulation by the U.S. Department of Transportation and must comply with various rules and regulations governing the provision of air transportation, including those relating to advertising and accessibility.

        As Expedia continues to expand the reach of its brands into the European, Asia-Pacific and other international markets, it is increasingly subject to laws and regulations applicable to travel agents or tour operators in those markets, including, in some countries, pricing display requirements, licensing and registration requirements, mandatory bonding and travel indemnity fund contributions, industry specific value-added tax regimes and laws regulating the provision of travel packages. For example, the European Economic Community Council Directive on Package Travel, Package Holidays and Package Tours imposes various obligations upon marketers of travel packages, such as disclosure obligations to consumers and liability to consumers for improper performance of the package, including supplier failure.

        Additionally, Expedia is subject to consumer protection, privacy and consumer data, labor, economic and trade sanction programs, tax, and anti-trust and competition laws and regulations around

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the world that are not specific to the travel industry. Some of these laws and regulations have not historically been applied in the context of online travel companies, so there can be uncertainty regarding how these requirements relate to Expedia's various business models.

    Bodybuilding

        The FDA is the regulatory agency with principal oversight authority for the products Bodybuilding offers, and the FTC regulates the advertising of those products. Bodybuilding's internal legal department reviews all aspects of its FDA and FTC regulatory processes for compliance with regulations. Bodybuilding has established processes to review the underlying safety and efficacy of its branded products, which include review of the ingredients' safety information, product formulation, product form, product labeling, the efficacy and claim support for the product and any marketing materials. All consumer communications that deal with product and health issues must be approved by Bodybuilding's legal team prior to being disseminated to the public. Bodybuilding also has standard procedures whereby all potential contract manufacturers are reviewed and approved before they can supply any of Bodybuilding's branded products. In addition, all potential new products are evaluated and approved prior to being accepted into the branded product lines.

        Bodybuilding's relationships with manufacturers require that all of its branded products not be adulterated or misbranded under any provisions of the Federal Food, Drug, and Cosmetic Act and the regulations promulgated thereunder, including, but not limited to, compliance with applicable Current Good Manufacturing Practices. This means that ingredients in Bodybuilding's products must be tested for identity, purity, quality, strength and composition before being incorporated into branded products, and that Bodybuilding's final branded products must again be tested for identity, purity, quality, strength and composition prior to being released. All of these products require a certificate of analysis, which includes certification to 100% of label claims. Bodybuilding has established a standard quality control operating procedure that calls for on-site audits of its contract manufacturers' facilities and processes. Bodybuilding also requires that its manufacturers have certificates of analysis (such as for microbial testing and label testing). Third party vendors are also subject to a standard review, must comply with Bodybuilding's vendor partnership agreement and are required to carry adequate insurance policies to satisfy Bodybuilding's standards. Each new product proposed to be carried by Bodybuilding is reviewed by its legal department, which rejects those products that they believe may present undue risk or be unsafe.

Competition

    Expedia

        Expedia's brands compete in rapidly evolving and intensely competitive markets. Expedia believes international markets represent especially large opportunities for Expedia and those of its competitors that wish to expand their brands and businesses abroad to achieve global scale. Expedia also believes that it is one of only a few companies that are focused on building a truly global, travel marketplace.

        Expedia's competition, which is strong and increasing, includes online and offline travel companies that target leisure and corporate travelers, including travel agencies, tour operators, travel supplier direct websites and their call centers, consolidators and wholesalers of travel products and services, large online portals and search websites, certain travel meta-search websites, mobile travel applications and social media websites, as well as traditional consumer ecommerce and group buying websites. Expedia faces these competitors in local, regional, national and/or international markets. In some cases, competitors are offering favorable terms and improved interfaces to suppliers and travelers which make competition increasingly difficult. Expedia also faces competition for customer traffic on internet search engines and metasearch websites, which impacts its customer acquisition and marketing costs.

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        Expedia believes that maintaining and enhancing its brands is a critical component of its effort to compete. Expedia differentiates its brands from its competitors primarily based on the multiple channels it uses to generate demand, quality and breadth of travel products, channel features and usability, price or promotional offers, traveler service and quality of travel planning content and advice, as well as offline brand efforts. The emphasis on one or more of these factors varies, depending on the brand or business and the related target demographic. Expedia's brands face increasing competition from travel supplier direct websites. In some cases, supplier direct channels offer advantages to travelers, such as long standing loyalty programs, complimentary services such as Wi-Fi, and better pricing. Expedia's websites feature travel products and services from numerous travel suppliers, and allow travelers to combine products and services from multiple providers in one transaction. Expedia faces competition from airlines, hotels, rental car companies, cruise operators and other travel service providers, whether working individually or collectively, some of which are suppliers to its websites. Expedia's business is generally sensitive to changes in the competitive landscape, including the emergence of new competitors or business models, and supplier consolidation.

    Bodybuilding

        Bodybuilding's performance is affected by competitive trends such as the entry of new competitors and competitors that have expanded their product selection to focus on sports nutrition. This includes many mass retailers as well as some of the largest online e-retailers. Additionally, changes in promotional strategies or expansion of product assortment by various competitors also impact competitive conditions. Bodybuilding believes the following are the principal competitive factors in its market:

    pricing (including costs of shipping), selection and availability of products;

    reliability and speed of delivery of products ordered online

    the ability to offer relevant and engaging content;

    the accessibility and ease of use of website and mobile applications; and

    customer service and support.

Properties

        In connection with the Spin-Off, a wholly owned subsidiary of Liberty Media will enter into a facilities sharing agreement with SpinCo, pursuant to which SpinCo will share office facilities with Liberty Media and Liberty Interactive located at 12300 Liberty Boulevard, Englewood, Colorado. See "Certain Relationships and Related Party Transactions—Relationships between SpinCo and Liberty Interactive and/or Liberty Media—Facilities Sharing Agreement."

        Expedia leases approximately 2.9 million square feet of office space worldwide, pursuant to leases with expiration dates through December 2026. Expedia leases 510,000 square feet for its headquarters in Bellevue, Washington, pursuant to leases with expiration dates through October 2018. In addition, Expedia also leases approximately 890,000 square feet of office space for its domestic operations in various other cities and locations pursuant to leases with expiration dates through December 2022. Expedia also leases approximately 1.5 million square feet of office space for its international operations in various cities and locations pursuant to leases with expiration dates through December 2026. In addition to its leased space, on April 30, 2015, Expedia acquired its future corporate headquarters for $229 million, consisting of multiple office and lab buildings located in Seattle, Washington. The build out of the headquarters is expected to be significant as Expedia converts lab facilities into office space.

        Bodybuilding operates order fulfillment centers in Midway, Florida, Shiremanstown, Pennsylvania, North Las Vegas, Nevada, New Berlin, Wisconsin and Dunstable, Bedfordshire, England, and

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technology development operations in Santa Ana, Costa Rica and Portland, Oregon. Bodybuilding owns its corporate headquarters, which is located in Boise, Idaho. Fulfillment centers are typically leased with standard lease terms of three to five years, with lease expiration dates varying between 2016 and 2020.

Employees

        SpinCo (on a nonconsolidated basis) currently does not have any corporate employees. We anticipate that, subsequent to the Spin-Off, Liberty Media will provide SpinCo with certain transitional services pursuant to a services agreement, and that certain of Liberty Interactive and/or Liberty Media's corporate employees and executive officers will serve as corporate employees and executive officers of SpinCo. See "Certain Relationships and Related Party Transactions—Relationships between SpinCo and Liberty Interactive and/or Liberty Media—Services Agreement." As of December 31, 2015, Expedia had approximately 18,730 full and part-time employees. As of December 31, 2015, Bodybuilding had approximately 764 full time equivalent employees and 15 part-time employees. None of these employees are represented by a labor union or covered by a collective bargaining agreement. SpinCo believes that these employee relations are good.

Legal Proceedings

        In the ordinary course of their respective business, each of Expedia and its subsidiaries and Bodybuilding are party to legal proceedings and claims involving property, personal injury, contract, alleged infringement of third-party intellectual property rights and other claims. There are no other material pending legal proceedings or claims to which we or our subsidiaries are party or of which any of our property is the subject. There may be claims or actions pending or threatened against us or our subsidiaries of which we are currently not aware and the ultimate disposition of which would have a material adverse effect on us.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with our accompanying combined financial statements and the notes thereto.

Overview

        SpinCo is currently a wholly owned subsidiary of Liberty Interactive. Upon completion of the Spin-Off, we will be an independent, publicly traded company, and Liberty Interactive will not retain any ownership interest in us. SpinCo is a holding company, engaged primarily in (1) the global travel industry and (2) the online commerce industry through our ownership of interests in our subsidiaries. Upon completion of the Spin-Off, our principal assets and businesses will consist of our investment in Expedia (described below) and our wholly owned subsidiary Bodybuilding.

        We own an approximate 15.7% equity interest and 52.2% voting interest in Expedia. Historically, Liberty Interactive has been a party to a Stockholders Agreement with Diller, pursuant to which Diller held an irrevocable proxy over all the shares of EXPE and Expedia class B common stock owned by Liberty Interactive. Liberty Interactive is also subject to a Governance Agreement with Expedia which provides for the right to appoint approximately 20% of the members of Expedia's board of directors, which is currently comprised of 13 members (3 of which were appointed by Liberty Interactive). Based on these arrangements it was determined that SpinCo has significant influence and accounts for its investment in Expedia as an equity method affiliate. In connection with the Spin-Off, and the completion of the proxy arrangements, the Stockholders Agreement will be assigned to SpinCo and amended to provide for the assignment of Diller's proxy over these shares to SpinCo through the Proxy Arrangement Termination Date. As a result, SpinCo will begin consolidating Expedia as of the completion of the Spin-Off, as SpinCo will then control a majority of the voting interest in Expedia for accounting purposes. In conjunction with application of acquisition accounting we anticipate a full step up in basis of Expedia along with a gain related to a difference between our historical basis and the fair value of our interest in Expedia.

        The Governance Agreement with Expedia, which will be assigned to SpinCo in connection with the Spin-Off and will provide rights related to certain director nominations, registration and other rights and imposes certain restrictions on the ownership of shares of Expedia class B common stock. The rights under the Governance Agreement, as assigned and amended, will be maintained even upon termination of the proxy arrangements and includes a preemptive right. SpinCo will have preemptive rights that entitle it to purchase a number of Expedia Common Shares (excluding certain issuances related to options, warrants or convertible securities) so that SpinCo will maintain the identical ownership interest in Expedia (subject to certain adjustments) that it had immediately prior to such issuance or proposed issuance (but not in excess of 20.01%). Any purchase by SpinCo will be allocated between EXPE and Expedia class B common stock in the same proportion as the issuance or issuances giving rise to the preemptive right, except to the extent that SpinCo opts to acquire shares of EXPE in lieu of shares of Expedia class B common stock.

        The financial information represents a combination of the historical financial information of Bodybuilding and Liberty Interactive's interest in Expedia. This financial information refers to the combination of the aforementioned subsidiary and investments, as "SpinCo," "us," "we," and "our" here and in the notes to the combined financial statements.

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Strategies and Challenges

    Executive Summary

        Bodybuilding is an Internet retailer of sports, fitness, dietary supplements, and other health and wellness products. It is also a large publisher of online health and fitness content, offering complimentary fitness content, workout programs, video trainers, articles, recipes, health advice and motivational stories. The online model also includes a combination of detailed product information and real-time user reviews to help its visitors achieve their health and fitness goals. Visitors include gym-goers, athletes, weightlifters and bodybuilders, and any individual wanting to improve their mental and physical well-being through diet and exercise. Bodybuilding launched its website in 1999 and now includes more than 30,000 pages of editorial content, 10,000 videos, 16,000 pages of store content and over 6.5 million forum threads. Its properties encompass more than 30 million monthly unique visitors and 11 million members of BodySpace, an inclusive fitness community within Bodybuilding that allows people of all health and fitness levels to track their progress and discuss goals, techniques, supplementation and achievements.

        Expedia is an online travel company, empowering business and leisure travelers with the tools and information they need to efficiently research, plan, book and experience travel. Expedia seeks to grow its business through a dynamic portfolio of travel brands, including its majority owned subsidiaries that feature a broad supply portfolio—including approximately 271,000 hotels in 200 countries, 400 airlines, packages, rental cars, cruises, as well as destination services and activities. Travel suppliers distribute and market products via its traditional desktop offerings, as well as through alternative distribution channels including mobile and social media, its private label business and its call centers in order to reach its extensive, global audience.

    Key Drivers of Revenue

        Bodybuilding primarily earns revenue from the sale of health and fitness supplements and accessories on its website and mobile properties, with a very limited amount of sales coming from advertising revenue. Bodybuilding markets approximately 550 globally recognized brands, including several brands exclusive to its retail channel. Through its website, Bodybuilding offers directly to its customers one of the largest varieties of supplements, vitamins and minerals with approximately 16,000 SKUs, and delivers its products primarily through its fulfillment centers. Bodybuilding is diligent about offering a broad spectrum of products to meet the needs of its customers but also develops, identifies and retains exclusive brands for its customers. Bodybuilding expects to drive revenue by continuing to sell supplements, increase advertising revenue on its properties, further leverage its fitness related content, and optimize its online and mobile properties for a better shopping and online customer experience. Bodybuilding's business is slightly seasonal; the first quarter of the year is its busiest, as people start to implement their New Year's resolutions towards health and fitness.

        Expedia revenue is primarily derived from the facilitation of the booking of hotel rooms, airline seats, car rentals and destination services from their travel suppliers, commissions or ticketing fees from travel suppliers and/or travelers and revenue from click-through fees charged to their travel partners for traveler leads sent to the travel partners' websites. Expedia also earns revenue from term-based paid subscriptions for vacation rental listings and other ancillary services provided to property owners and managers. Expedia expects to continue to grow revenue through technology and product innovation, global expansion and new channel penetration.

    Current Trends Affecting Our Business

        Bodybuilding competes primarily against other specialty and online retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations and mail order companies. Bodybuilding faces these competitors in both domestic and international markets. This market is

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sensitive to fitness trends, product and shipping prices, government regulation, foreign currency exchange rates and the introduction of new products. As sports nutrition products become more mainstream, the size of the total addressable market will continue to increase. This will positively impact Bodybuilding's opportunity to serve more customers, but also attracts competition to this market. In addition, mobile visitors to its website continue to make up a larger portion of our total traffic. The capacity to increase total traffic and the ability to provide the full value proposition to visitors on a mobile platform is challenging, and these visitors make purchases at a lower rate than traditional desktop visitors. Bodybuilding expects these trends to negatively impact its domestic and international sales and profitability in the near-term.

        Expedia faces strong and increasing competition from online and offline travel companies that target leisure and corporate travelers, including travel agencies, tour operators, travel supplier direct websites and their call centers, consolidators and wholesalers of travel products and services, large online portals and search websites, certain travel meta-search websites, mobile travel applications, social media websites, as well as traditional consumer eCommerce and group buying websites. Expedia faces these competitors in local, regional, national and/or international markets. In some cases, competitors are offering favorable terms and improved interfaces to suppliers and travelers which make competition increasingly difficult. Expedia also faces competition for customer traffic on Internet search engines and metasearch websites, which impacts their customer acquisition and marketing costs.

        Bodybuilding and Expedia must stay abreast of rapidly evolving technological developments and offerings to remain competitive and increase the utility of their products and services. As their operations grow in size and scope, they must continuously improve and upgrade their systems and infrastructure while maintaining or improving the reliability and integrity of their systems and infrastructure. These companies must be able to incorporate new technologies into their products and services in order to address the needs of their customers.

Results of Operations—Combined

Combined operating results:

 
  Years ended December 31,  
 
  2015   2014   2013  
 
  amounts in thousands
 

Revenue

  $ 464,415     454,733     420,990  

Cost of sales (exclusive of depreciation and amortization included below)

    351,590     353,822     328,246  

Gross profit

    112,825     100,911     92,744  

Operating expenses, excluding stock-based compensation

                   

Operating expense

    31,912     29,268     26,584  

Selling, general and administrative

    47,817     40,820     35,665  

Adjusted OIBDA

    33,096     30,823     30,495  

Stock-based compensation

    1,882     1,679     1,722  

Depreciation and amortization

    20,938     19,307     19,368  

Operating income (loss)

  $ 10,276     9,837     9,405  

    Revenue

        Revenue increased $9.7 million and $33.7 million for the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior year periods.

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        Overall the increase in revenue during 2015 was primarily due to an approximate 7% increase in order volume for the year ended December 31, 2015 as compared to the prior year. During 2015, Bodybuilding continued to see traffic to the e-retail site grow as unique visitors increased 17% from the prior year. Conversion of visitors was down 68 basis points primarily due to a shift in desktop visits to mobile visits, which historically have converted at lower rates. Offsetting the order volume gain was a decrease in the average order value of approximately 4% from the prior year due to less international orders, increased mobile sales and reduced shipping prices paid by customers. The entire supplement space became more price sensitive as competition continued to increase. Bodybuilding evaluates promotions and reprices products continuously in order to present a compelling and competitive offering to customers. These changes to prices and Bodybuilding's ability to source products cost effectively impact margins. Private label and exclusive offerings typically have higher margins and continue to make up a larger portion of total sales. Additionally, during 2015 domestic net product sales grew 8% while international net product sales decreased approximately 24%. International demand was hurt by both competition and unfavorable exchange rates which increased overseas pricing as products are priced in USD and then translated into local currencies for the global customer.

        The overall 2014 increase in revenue was primarily due to a 5% increase in orders and a 1% increase in average order value. Bodybuilding had an increase in overall site traffic of approximately 15% but conversion was lower by 77 basis points. During 2014 domestic growth was 11% while international sales were down 10%. Bodybuilding experienced pricing pressure globally as exchange rates were unfavorable.

    Cost of Sales

        Cost of sales decreased $2.2 million and increased $25.6 million for the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior year periods.

        The decrease in 2015 was a result of Bodybuilding's ability to source products cost effectively, an increased sales mix to private label, lower returns and a reduction in overall shipping costs. During late 2013 and 2014 Bodybuilding increased their distribution center footprint to allow them to be closer to the customer. This has allowed Bodybuilding to decrease shipping costs while allowing them to deliver products timely to the customer.

        The increase in cost of goods sold in 2014 was primarily related to an increase in product sales during the year ended December 31, 2014. Additionally, as discussed above the addition of new distribution centers increased overall cost of goods during the period as the distribution centers were staffed and initially trained to be able to function at acceptable levels.

    Adjusted OIBDA

        We define Adjusted OIBDA as revenue less cost of sales, operating expenses and selling, general and administrative expenses (excluding stock compensation). Our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources among our businesses. We believe this is an important indicator of the operational strength and performance of our businesses, including each business's ability to service debt and fund capital expenditures. In addition, this measure allows us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes such costs as depreciation and amortization, stock-based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. See note 11 to the

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accompanying combined financial statements for a reconciliation of Adjusted OIBDA to earnings (loss) from continuing operations before income taxes.

        Adjusted OIBDA increased $2.3 million and $0.3 million during the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior year periods.

        The increase in Adjusted OIBDA during the year ended December 31, 2015 was a result of the increase in gross profits, discussed above (combined changes in revenue and cost of sales), partially offset by growth in operating expenses and selling, general and administrative costs. The increase in selling, general and administrative costs was driven by greater marketing efforts to grow site traffic, increased technology costs to sustain traffic growth and content and increased personnel costs during the period. Personnel costs were approximately $4.2 million higher due to increased headcount during 2015 and 2014 to support expected growth and due to changes related to merit and bonus program payments. During the period certain executives resigned and payments of severance and other retention costs of approximately $1.2 million were paid to secure necessary talent to manage the business. Additionally, with the opening of additional distribution centers in other parts of the United States the distribution center near Bodybuilding's headquarters was shut down and approximately $1 million in costs were incurred.

        The increase in Adjusted OIBDA during the year ended December 31, 2014 was driven by the increase in gross profits, discussed above (combined changes in revenue and cost of sales), mostly offset by increases in operating expenses and selling, general and administrative costs. The increase in costs were primarily the result of personnel costs and marketing costs related to the growth of the business.

    Operating Income (Loss)

        Operating income increased $439 thousand and $432 thousand for the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior year periods. The change in operating income for both the years ended December 31, 2015 and 2014 was largely due to the fluctuations in Adjusted OIBDA as discussed above.

        Stock-based compensation expense was relatively flat for both the years ended December 31, 2015 and 2014 as compared to the corresponding prior year periods.

        Depreciation and amortization expense increased $1.6 million and was relatively flat for the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior year periods. The increase in depreciation and amortization expense during the current year was primarily due to continued software costs capitalized in previous period depreciated during the current year.

Other Income and Expense:

        Components of Other Income (Expense) are presented in the table below.

 
  Years ended December 31,  
 
  2015   2014   2013  
 
  amounts in thousands
 

Other income (expense):

                   

Interest expense

  $ (1,218 )   (1,214 )   (734 )

Related party interest expense

    (1,240 )   (1,867 )   (2,258 )

Share of earnings (losses) of Expedia, Inc. 

    117,518     58,105     30,630  

Gain (loss) on dilution of investment in affiliate

    319,587     2,768     (921 )

Other, net

    (430 )   (525 )   12  

  $ 434,217     57,267     (26,729 )

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    Interest expense

        Interest expense was relatively flat and increased $480 thousand for the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior year periods. The increase in the year ended December 31, 2014 was primarily due to interest for a full year related to borrowings associated with the completion of construction of the Bodybuilding headquarters in 2013.

    Related party interest expense

        Related party interest decreased $627 thousand and $391 thousand for the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior year periods. The decrease in both the years ended December 31, 2015 and 2014 was due to the payment of outstanding principal during each of the periods as well as the contribution of the note to equity in the fourth quarter of 2015.

    Share of earnings (losses) of Expedia, Inc.

        Share of earnings of Expedia increased $59.4 million and $27.5 million during the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior year periods. The increase in SpinCo's share of Expedia's earnings between December 31, 2015 and 2014 is primarily due to a significant gain Expedia recognized on the sale of a business during the year ended December 31, 2015.

        The following is a discussion of Expedia's results of operations. In order to provide a better understanding of Expedia's operations, we have included a summarized presentation of Expedia's results of operations. Expedia is a separate publicly traded company and additional information about Expedia can be obtained through its website and public filings. The amounts included in the table below represent Expedia's results for each of the years ended December 31, 2015, 2014 and 2013.

 
  Years ended December 31,  
 
  2015   2014   2013  
 
  amounts in millions
 

Revenue

  $ 6,672     5,763     4,771  

Operating expenses, excluding stock-based compensation

    (5,613 )   (4,748 )   (3,904 )

Adjusted OIBDA

    1,059     1,015     867  

Depreciation and amortization

    (500 )   (345 )   (283 )

Stock-based compensation

    (178 )   (85 )   (130 )

Legal reserves, occupancy tax and other

    105     (42 )   (78 )

Restructuring and related reorganization charges

    (72 )   (25 )    

Acquisition-related and other

            (10 )

Operating income

    414     518     366  

Other income (expense), net

    512     (53 )   (66 )

Earnings (loss) before income taxes

    926     465     300  

Income tax benefit (expense)

    (203 )   (92 )   (84 )

Net earnings

  $ 723     373     216  

        Expedia had net earnings of approximately $723 million, $373 million and $216 million for the years ended December 31, 2015, 2014 and 2013, respectively.

        Expedia's revenue increased $909 million and $992 million during the years ended December 31, 2015 and 2014, respectively, as compared to the corresponding prior years. During 2015, Expedia's revenue increased primarily due to growth in the Core online travel agencies segment, including strong

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performance at Brand Expedia, Hotels.com and Expedia Affiliate Network as well as growth at trivago, partially offset by a decrease in revenue due to the sale of eLong. In 2014, revenue increased primarily due to growth in hotel and advertising media revenue. Acquisitions added approximately 8% and 1% to the year-over-year growth rates in total revenue for 2015 and 2014, respectively.

        The increase in revenue (described above) and other gains (described below) during the year ended December 31, 2015 were partially offset by the impact of an $865 million increase in operating expenses (described below), a $155 million increase in depreciation and amortization, a $93 million increase in stock-based compensation, a $47 million increase in restructuring and related reorganization charges and a $111 million increase in income tax expense.

        The increase in operating expenses was primarily driven by increased marketing expenses and personnel costs, higher data center costs, and higher net credit card processing costs related to growth of its merchant bookings. The increase in depreciation and amortization expense was primarily due to amortization of intangible assets related to new business acquisitions as well as increased depreciation and amortization of technology assets. The increase in stock-based compensation was largely due to additional options granted during the current year as well as expense related to replacement awards issued in connection with acquisitions and the acceleration of certain replacement awards. Restructuring and related reorganization charges during 2015 were primarily related to employee severance and benefits in connection with the Orbitz integration. The increase in income tax expense is primarily due to the gain on the sale of eLong during 2015, and the release of liabilities related to uncertain tax positions in 2014.

        Expedia recognized a $105 million gain in legal reserves, occupancy tax and other during 2015 due to the receipt of a refund of prepaid pay-to-play payments from the State of Hawaii in connection with the general excise tax litigation and the recovery of costs related to occupancy tax litigation matters, which were partially offset by charges for changes in its reserve related to hotel occupancy and other taxes. The $512 million other income (expense), net was largely due to a pre-tax gain of $509 million during 2015 in connection with the sale of Expedia's ownership stake in eLong, Inc.

        The increase in revenue (described above) during 2014 was partially offset by the net impact of an $844 million increase in operating expenses, a $62 million increase in depreciation and amortization, a $45 million decrease in stock-based compensation, a $25 million increase in restructuring and related reorganization charges and an $8 million increase in income tax expense.

        The increase in operating expenses was primarily driven by increased marketing expenses and personnel costs, including commissions and incentives, higher net credit card processing costs and increases in customer operations expenses primarily due to an increase in transaction costs and volumes period over period. The increase in depreciation and amortization expense was primarily due to increased depreciation and amortization of technology assets and amortization of intangible assets related to new business acquisitions, partially offset by the completion of amortization related to certain intangible assets. Restructuring and related reorganization charges in 2014 primarily related to severance and related benefits as well as an Australian stamp duty tax related to business restructuring events.

        These increases were slightly offset by a $45 million decrease in stock-based compensation, a $36 million decrease in legal reserves, occupancy tax and other, a $10 million decrease in acquisition-related and other, and a $13 million decrease in other income (expense), net. The decrease in stock-based compensation was largely due to stock-based compensation recorded in 2013 in connection with the trivago acquisition. Expedia recognized a loss in legal reserves, occupancy tax and other during 2014 related to monies paid in advance of litigation in the San Francisco occupancy tax proceedings. The loss in 2013 relates to amounts paid or expected to be paid in advance of litigation primarily related to penalties and interest in connection with Hawaii's general excise tax litigation. The

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$10 million acquisition-related and other charge in 2013 related to the upfront consideration paid to settle a portion of an employee compensation plan of trivago.

    Gain (loss) on dilution of investment in Expedia, Inc.

        The significant gain in 2015 was due to an acquisition by Expedia that was executed partially through the issuance of EXPE. This diluted our ownership percentage and is treated like a sale at a price greater than our cost basis.

    Income taxes

        Our effective tax rate for the years ended December 31, 2015, 2014 and 2013 was 37%, 32% and 28%, respectively. The effective tax rate differed from the federal tax rate of 35% in each period due to the impact of state and local taxes, net of a federal benefit and the dividends received deduction on dividends from Expedia. The impact of state and local taxes was relatively flat on a percentage basis in each of the years. The dividends received deduction on a dollar basis increased slightly each year, while book income increased considerably over those periods, which resulted in the dividends received deduction having less impact on a percentage basis in each period.

    Net earnings (losses)

        We had net earnings of $281.5 million, $45.7 million and $26.0 million for the years ended December 31, 2015, 2014 and 2013, respectively. The change in net earnings was the result of the above described fluctuations in our revenue, expenses and other income (expense) items including the significant gain on dilution of investment in Expedia in 2015.

Liquidity and Capital Resources

        The following are potential sources of liquidity: available cash balances, cash generated by the operating activities of our wholly owned subsidiaries (to the extent such cash exceeds the working capital needs of the subsidiaries and is not otherwise restricted), proceeds from asset sales, outstanding debt facilities, debt and equity issuances and dividend and interest receipts.

        As of December 31, 2015, Bodybuilding had a cash balance of $2.2 million. In conjunction with the Spin-Off the Company intends to borrow $350 million under a new margin loan and distribute $300 million to Liberty Interactive. This will result in a corporate cash balance of $50 million at the Spin-Off date to cover corporate costs associated with the new public company structure. We may, however, determine to execute a larger or subsequent margin loan to cover any reimbursement obligations we may have to Expedia pursuant to the Reimbursement Agreement.

 
  Years ended December 31,  
 
  2015   2014   2013  
 
  amounts in thousands
 

Cash flow information

                   

Net cash provided (used) by operating activities

  $ 37,698     38,224     25,720  

Net cash provided (used) by investing activities

  $ (43,461 )   (37,939 )   (49,521 )

Net cash provided (used) by financing activities

  $ 6,375     (1,726 )   24,328  

        During the year ended December 31, 2015, our primary uses of cash included the acquisition of an outstanding noncontrolling interest in Bodybuilding of $33.3 million, investments in Expedia of $22.6 million and capital expenditures of $20.9 million. These uses of cash were funded by cash provided by a contribution from parent, operating activities and additional net borrowings of debt of $1.9 million.

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        During the year ended December 31, 2014, our primary uses of cash included investments in Expedia of $20.4 million, capital expenditures of $17.5 million and the repayment of approximately $8.3 million. These uses of cash were funded by cash on hand, cash provided by operating activities, net borrowings and contributions from parent.

        During the year ended December 31, 2013, our primary uses of cash included investments in Expedia of $25.2 million and capital expenditures of $24.2 million. These uses of cash were funded by cash on hand, cash provided by operating activities, net borrowings and contributions from parent.

        The projected use of our cash will be continued investment in the Bodybuilding business and additional investments in new or existing businesses.

    Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

        Information concerning the amount and timing of required payments, both accrued and off-balance sheet, under our contractual obligations, excluding uncertain tax positions as it is indeterminable when payments will be made, is summarized below.

 
  Payments due by period  
 
  Total   Less than
1 year
  2 - 3 years   4 - 5 years   After
5 years
 
 
  amounts in thousands
 

Combined contractual obligations

                               

Long-term debt

  $ 37,276     3,407     6,773     23,015     4,081  

Interest payments(1)

  $ 4,855     1,012     1,676     653     1,514  

Lease obligations, including interest

  $ 12,300     3,992     7,155     1,153      

Total

  $ 54,431     8,411     15,604     24,821     5,595  

(1)
Assumed outstanding balance and interest rate were the same through the maturity of the note.

Critical Accounting Estimates and Policies

        The preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Listed below are the accounting estimates and accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being reported.

        Application of the Equity Method of Accounting for Investments in Affiliates.    For those investments in affiliates in which the Company has the ability to exercise significant influence, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize the Company's share of net earnings or losses of the affiliate as they occur rather than as dividends or other distributions are received. Losses are limited to the extent of the Company's investment in, advances to and commitments for the investee. The Company determines the difference between the purchase price of the investee and the underlying equity which results in an excess basis in the investment. This excess basis is allocated to the underlying assets and liabilities of the Company's investee through an acquisition accounting exercise and is allocated within memo accounts used for equity accounting purposes. Depending on the applicable underlying assets, these amounts are either amortized over the applicable useful lives or determined to be indefinite lived.

        Changes in the Company's proportionate share of the underlying equity of an equity method investee, which result from the issuance of additional equity securities by such equity investee, to

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investors other than the Company, are recognized in the statement of operations through the gain (loss) on dilution of investment in affiliate line item. We periodically evaluate our equity method investment to determine if decreases in fair value below our cost basis are other than temporary. If a decline in fair value is determined to be other than temporary, we are required to reflect such decline in our consolidated statement of operations. Other than temporary declines in fair value of our equity method investment would be included in share of earnings (losses) of affiliates in our combined statement of operations.

        The primary factors we consider in our determination of whether declines in fair value are other than temporary are the length of time that the fair value of the investment is below our carrying value; the severity of the decline; and the financial condition, operating performance and near term prospects of the investee. In addition, we consider the reason for the decline in fair value, be it general market conditions, industry specific or investee specific; analysts' ratings and estimates of 12 month share price targets for the investee; changes in stock price or valuation subsequent to the balance sheet date; and our intent and ability to hold the investment for a period of time sufficient to allow for a recovery in fair value. Fair value of our publicly traded cost and equity investments is based on the market prices of the investments at the balance sheet date. We estimate the fair value of our non-public cost and equity investments using a variety of methodologies, including cash flow multiples, discounted cash flow, per subscriber values, or values of comparable public or private businesses. Impairments are calculated as the difference between our carrying value and our estimate of fair value. As our assessment of the fair value of our investments and any resulting impairment losses and the timing of when to recognize such charges requires a high degree of judgment and includes significant estimates and assumptions, actual results could differ materially from our estimates and assumptions.

        Our evaluation of the fair value of our investments and any resulting impairment charges are made as of the most recent balance sheet date. Changes in fair value subsequent to the balance sheet date due to the factors described above are possible. Subsequent decreases in fair value will be recognized in our combined statement of operations in the period in which they occur to the extent such decreases are deemed to be other than temporary. Subsequent increases in fair value will be recognized in our combined statement of operations only upon our ultimate disposition of the investment.

        Fair Value of Non-Financial Instruments.    Our non-financial instrument valuations are primarily comprised of our determination of the estimated fair value allocation of net tangible and identifiable intangible assets acquired in business combinations, our annual assessment of the recoverability of our goodwill and other nonamortizable intangibles, and our evaluation of the recoverability of our other long-lived assets upon certain triggering events.

        The Company periodically reviews the carrying value of its intangible assets with definite lives and other long-lived assets to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets or asset groups might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset group, or a significant decline in the observable market value of an asset group, among others. If such facts indicate a potential impairment, the recoverability of the asset group is assessed by determining whether the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the asset group over the remaining economic life of the asset group. If the carrying amount of the asset group is greater than the expected undiscounted cash flows to be generated by such asset group, including its ultimate disposition, an impairment adjustment is recognized.

        If the carrying value of our intangible or long-lived assets exceeds their estimated fair value, we are required to write the carrying value down to fair value. Any such writedown is included in impairment expense in our combined statement of operations. A high degree of judgment is required

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to estimate the fair value of our intangible and long-lived assets. We may use quoted market prices, prices for similar assets, present value techniques and other valuation techniques to prepare these estimates. We may need to make estimates of future cash flows and discount rates as well as other assumptions in order to implement these valuation techniques. Due to the high degree of judgment involved in our estimation techniques, any value ultimately derived from our intangible or long-lived assets may differ from our estimate of fair value.

        The accounting guidance permits entities to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If the qualitative assessment supports that it is more likely than not that the carrying value of the Company's indefinite-lived intangible assets, other than goodwill, exceeds its fair value, then a quantitative assessment is performed. As of December 31, 2015, the Company had approximately $77.3 million of indefinite lived intangible assets.

        We perform our annual assessment of the recoverability of our goodwill in the fourth quarter each year. The Company utilizes a qualitative assessment for determining whether step one of the goodwill impairment analysis is necessary. The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. In evaluating goodwill on a qualitative basis, the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of our reporting units. The Company considers whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods. As part of the analysis, the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current and prior year for other purposes. At December 31, 2015 it was determined that no indication of impairment existed.

        Revenue Recognition and Retail Related Adjustments.    Revenue from product sales is recognized when all the following criteria are met: a customer executes an order, the sales price and shipping charge has been determined, credit card authorization has occurred and collection is reasonably assured and it is probable that the product has been received by the customer, based on estimated delivery times. Shipping charges billed to customers are classified as revenue. The sales price of orders that have been shipped, but for which the Company estimates that the order has not yet been received by the customer, is recorded as deferred revenue and included in other current liabilities.

        An allowance for returned merchandise is provided as a percentage of sales based on historical experience. The total reduction in sales due to returns for the years ended December 31, 2015, 2014 and 2013 aggregated $5.1 million, $6.4 million and $10.7 million, respectively.

        In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a retrospective or cumulative effect transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the effect that the new standard may have on its revenue recognition and has not yet selected a transition method but does not believe the standard will significantly impact its financial statements and related disclosures.

        Income Taxes.    We are required to estimate the amount of tax payable or refundable for the current year and the deferred income tax liabilities and assets for the future tax consequences of events

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that have been reflected in our financial statements or tax returns for each taxing jurisdiction in which we operate. This process requires our management to make judgments regarding the timing and probability of the ultimate tax impact of the various agreements and transactions that we enter into. Based on these judgments we may record tax reserves or adjustments to valuation allowances on deferred tax assets to reflect the expected realizability of future tax benefits. Actual income taxes could vary from these estimates due to future changes in income tax law, significant changes in the jurisdictions in which we operate, our inability to generate sufficient future taxable income or unpredicted results from the final determination of each year's liability by taxing authorities. These changes could have a significant impact on our financial position.

Quantitative and Qualitative Disclosures about Market Risk

        We are exposed to market risk in the normal course of business due to our ongoing investing and financial activities. Market risk refers to the risk of loss arising from adverse changes in stock prices and interest rates. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.

        Our investment in Expedia is subject to market risk that is not directly reflected in our financial statements. At December 31, 2015, the fair value of Expedia was approximately $2,934 million. Had the market price been 10% lower, the fair value of Expedia would have been $293 million lower.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

        [TO COME]

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MANAGEMENT

Directors

        From the completion of the Spin-Off until the Proxy Arrangement Termination Date, our board of directors will be comprised of seven members, five of whom are designated as Common Stock Directors (the Common Stock Directors) and are elected by the holders of our outstanding shares of Series A common stock and Series B common stock, and two of whom are designated as Series B Directors (the Series B Directors) and are elected by holders of our outstanding shares of Series B common stock. For more information on the Common Stock Directors and Series B Directors, see "Description of Our Capital Stock—Other Provisions of Our Charter and Bylaws—Board of Directors."

        The following sets forth certain information concerning the persons who are expected to serve as the initial Common Stock Directors and Series B Directors of SpinCo immediately following the Spin-Off, including their ages, directorships held and a description of their business experience, including, if applicable, current positions held with Liberty Interactive. No assurance can be given, however, as to whether these directors will continue to serve on the SpinCo board following the expiration of their respective terms, as their re-election will be subject to the approval of SpinCo's stockholders.

    Series B Directors

[                        ]

Age: [    ]

  [                        ]


Professional Background: [            ]


Other Public Company Directorships: [            ]


Board Member Qualifications: [            ]

[                        ]

Age: [    ]


 

[                        ]


Professional Background: [            ]


Other Public Company Directorships: [            ]


Board Member Qualifications: [            ]

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    Common Stock Directors

Name
  Position and Experience
John C. Malone

Age: [75]

  Chairman of the Board and a director of SpinCo.


Professional Background: Mr. Malone has served as Chairman of the Board of Liberty Interactive, including its predecessors, since its inception in 1994 and served as Liberty Interactive's Chief Executive Officer from August 2005 to February 2006. Mr. Malone served as Chairman of the Board of Tele-Communications, Inc. (TCI) from November 1996 until March 1999, when it was acquired by AT&T Corp., and as Chief Executive Officer of TCI from January 1994 to March 1997.


Other Public Company Directorships: Mr. Malone has served as (i) Chairman of the Board of Liberty Media (including its predecessor) since August 2011 and as a director since December 2010, (ii) Chairman of the Board of Liberty TripAdvisor Holdings, Inc. (Liberty TripAdvisor) from August 2014 to June 2015, (iii) Chairman of the Board of Liberty Broadband since November 2014, (iv) Chairman of the Board of Liberty Global plc (LGP) since June 2013, having previously served as Chairman of the Board of Liberty Global, Inc. (LGI), LGP's predecessor, from June 2005 to June 2013, as a director of LGI's predecessor, Liberty Media International, Inc. (LMI), from March 2004 to June 2005 and (v) a director of UnitedGlobalCom, Inc., now a subsidiary of LGP, from January 2002 to June 2005. He has served as (i) a director of Discovery Communications, Inc. (Discovery) since September 2008 and served as a director of Discovery's predecessor Discovery Holding Company (DHC) from May 2005 to September 2008, and as Chairman of the Board from March 2005 to September 2008, (ii) a director of Expedia, Inc. since December 2012, having previously served as a director from August 2005 to November 2012, (iii) a director of Charter Communications, Inc. (Charter) since May 2013 and (iv) a director of Lions Gate Entertainment Corp. since March 2015. Previously, he served as (i) a director of Sirius XM Holdings, Inc. (Sirius XM) from April 2009 to May 2013, (ii) a director of Ascent Capital Group, Inc. from January 2010 to September 2012, (iii) a director of Live Nation Entertainment, Inc. (Live Nation) from January 2010 to February 2011, (iv) a director of DIRECTV and its predecessors from February 2008 to June 2010 and (v) a director of IAC/InterActive Corp from May 2006 to June 2010.


Board Membership Qualifications: Mr. Malone, as President of TCI, co-founded Liberty Interactive's former parent company and is considered one of the preeminent figures in the media and telecommunications industry. He is well known for his sophisticated problem solving and risk assessment skills.

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Name
  Position and Experience

Christopher W. Shean

Age: [50]


 

Chief Executive Officer and a director of SpinCo.


Professional Background: Mr. Shean has served as Senior Vice President of Liberty Media since May 2007, the Chief Financial Officer since November 2011 and the Controller from May 2007 to October 2011. Mr. Shean served as a Senior Vice President and Chief Financial Officer of Liberty TripAdvisor from July 2013 to January 2016. He also has served as a Vice President of Liberty Interactive from October 2000 to January 2002, a Senior Vice President since January 2002, the Controller from October 2000 to October 2011 and the Chief Financial Officer since November 2011. He has also served as a Senior Vice President and Chief Financial officer of Liberty Broadband since June 2014.


Other Public Company Directorships: Mr. Shean has served as a director of Expedia since December 2015 and as a director of FTD since December 2014. Mr. Shean previously served as a director of TripAdvisor from February 2013 to December 2015.


Board Member Qualifications: Mr. Shean has significant financial and operational experience gained through his service as Chief Financial Officer and other executive-level positions at Liberty Interactive and Liberty Media and as a former partner of KPMG. As a result of his extensive business and financial experience, Mr. Shean will provide valuable business, financial and risk management advice to our board of directors. Mr. Shean also possesses a high level of financial literacy and expertise regarding mergers, acquisitions, investments and other strategic transactions.

[                        ]

Age: [    ]


 

[                        ]


Professional Background: [            ]


Other Public Company Directorships: [            ]


Board Member Qualifications: [            ]

[                        ]

Age: [    ]


 

[                        ]


Professional Background: [            ]


Other Public Company Directorships: [            ]


Board Member Qualifications: [            ]

[                        ]

Age: [    ]


 

[                        ]


Professional Background: [            ]


Other Public Company Directorships: [            ]


Board Member Qualifications: [            ]

Executive Officers

        The following sets forth certain information concerning the persons (other than Mr. Shean, who is also expected to serve as a Common Stock Director of SpinCo and is described above) who are existing officers of Liberty Interactive and who are expected to serve as SpinCo's initial executive officers

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immediately following the Spin-Off, including their ages, directorships held and a description of their business experience, including positions held with Liberty Interactive (including its predecessors). All of these executive officers also serve as officers at Liberty Interactive and provide such services pursuant to an existing services agreement between Liberty Interactive and Liberty Media. Notwithstanding the multiple roles to be served by these persons at SpinCo, Liberty Interactive and/or Liberty Media following the Spin-Off, SpinCo and Liberty Interactive believe the following persons are the most qualified and appropriate to serve in these multiple roles during the post-Spin-Off transition period given such person's in-depth knowledge of and experience with the businesses of SpinCo, Liberty Interactive and Liberty Media. No assurance can be given, however, as to whether or how long these officers will continue to serve at any of the companies.

Name
  Positions
Wade Haufschild

Age: [    ]

  Chief Financial Officer of SpinCo.


[                        ]

Richard N. Baer

Age: [59]


 

Chief Legal Officer of SpinCo.


Senior Vice President and General Counsel of Liberty Interactive and Liberty Media from January 2013 through December 2015 and Chief Legal Officer since January 2016. Senior Vice President and General Counsel of Liberty Broadband from June 2014 through December 2015 and Chief Legal Officer since January 2016. Senior Vice President and General Counsel of Liberty TripAdvisor from July 2013 through December 2015 and Chief Legal Officer since January 2016. Executive Vice President and Chief Legal Officer of UnitedHealth Group Incorporated from May 2011 to December 2012. Executive Vice President and General Counsel of Qwest Communications International Inc. from December 2002 to April 2011 and Chief Administrative Officer from August 2008 to April 2011.

Albert E. Rosenthaler

Age: [56]


 

Chief Tax Officer of SpinCo.


Senior Vice President of Liberty Media from May 2007 through December 2015 and Chief Tax Officer since January 2016. Senior Vice President of Liberty Interactive from April 2002 through December 2015 and Chief Tax Officer since January 2016. Senior Vice President of Liberty Broadband from June 2014 through December 2015 and Chief Tax Officer since January 2016. Senior Vice President of Liberty TripAdvisor from July 2013 through December 2015, Chief Tax Officer since January 2016 and a director since August 2014.

        SpinCo's executive officers will serve in such capacities until the first annual meeting of its board of directors, or until their respective successors have been duly elected and have been qualified, or until their earlier death, resignation, disqualification or removal from office.

Directors and Executive Officers

        There is no family relationship between any of SpinCo's executive officers or directors, by blood, marriage or adoption.

        During the past ten years, none of the above persons has had any involvement in such legal proceedings as would be material to an evaluation of his or her ability or integrity.

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Director Independence

        It will be SpinCo's policy that a majority of the members of its board of directors will be independent of its management. Pursuant to the Transaction Agreement, three of the Common Stock Directors and one of the Series B Directors will be independent of SpinCo's management. For a director to be deemed independent, SpinCo's board of directors must affirmatively determine that the director has no direct or indirect material relationship with the company. To assist SpinCo's board of directors in determining which of its directors will qualify as independent, the nominating and corporate governance committee of SpinCo's board is expected to follow the Corporate Governance Rules of Nasdaq on the criteria for director independence.

        In accordance with these criteria, it is expected that the SpinCo board of directors will determine that each of Messrs. [            ] and [            ] qualifies as an independent director of SpinCo.

Board Composition

        The board of SpinCo will be comprised of directors with a broad range of backgrounds and skill sets, including in [                        ]. Detailed information on SpinCo's policies with respect to board candidates will be available following the establishment of the board's nominating and corporate governance committee.

        Upon completion of the Spin-Off, the Common Stock Directors of SpinCo will serve for an initial one-year term and the Series B Directors will serve for an initial term ending upon the earlier of the Proxy Arrangement Termination Date and the second annual meeting of the stockholders of SpinCo following the completion of the Spin-Off. Following the Proxy Arrangement Termination Date, the members of SpinCo's board of directors, other than those who may be elected by holders of any then-outstanding preferred stock, will be divided into three classes. See "Description of Our Capital Stock—Other Provisions of Our Charter and Bylaws—Board of Directors."

Committees of the Board

        It is expected that SpinCo's board of directors will form the following committees: audit committee, compensation committee, nominating and corporate governance committee and executive committee, which will have comparable responsibilities to the corresponding committees of Liberty Interactive's board, as well as a Common Stock Director committee and a Series B Director committee, which will have the power and authority to take all such actions specified in SpinCo's organizational documents as to be taken by the Common Stock Directors and Series B Directors, respectively (or respective committees thereof). It is currently contemplated that the members and chairmen of these committees (with the exception of the executive committee, Common Stock Director committee and Series B Director committee, each of which will not have a chairman) will be appointed prior to the completion of the Spin-Off. In addition, it is currently contemplated that the "audit committee financial expert" for purposes of the Exchange Act and the rules and regulations of Nasdaq will be designated at such time.

Compensation Committee Interlocks and Insider Participation

        SpinCo's board of directors does not currently have a compensation committee. It is expected that no member of SpinCo's compensation committee (once formed) will be or will have been, during 2015, an officer or employee of SpinCo or Liberty Interactive, or will have engaged in any related party transaction in which SpinCo or Liberty Interactive was a participant. It is expected that no interlocking relationship will exist between the SpinCo board and its compensation committee and the board of directors or compensation committee of any other company.

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EXECUTIVE COMPENSATION

Executive Officers of SpinCo

        The initial executive officers of SpinCo will be comprised of the current officers of Liberty Interactive. SpinCo is a newly formed company, and therefore has not paid any compensation to any of its executive officers. In September 2011, Liberty Interactive completed the split-off (the Split-Off) of its former subsidiary then-known as Liberty Media Corporation (currently known as Starz, Old LMC). In January 2013, Old LMC completed the spin-off of its former subsidiary Liberty Media (then-known as Liberty Spinco, Inc.) (the LMC Spin-Off). In connection with the Split-Off, Liberty Interactive entered into a services agreement with Old LMC, which was assumed by Liberty Media in the LMC Spin-Off, pursuant to which Liberty Interactive compensates Liberty Media for the portion of the salary and other cash compensation Liberty Media pays to its employees, including the named executive officers, that is allocable to Liberty Interactive for time spent by each such employee on matters related to that company. As noted elsewhere and described in more detail herein, in connection with the Spin-Off, SpinCo and Liberty Media will enter into a services agreement pursuant to which SpinCo will pay Liberty Media an agreed-upon services fee in exchange for the performance of specified services by Liberty Media and its employees for SpinCo, including the services of SpinCo's executive officers. For more information regarding this agreement, please see "Certain Relationships and Related Party Transactions—Relationships Between SpinCo and Liberty Interactive and/or Liberty Media—Services Agreement." Although, as noted above, SpinCo has not paid any compensation to any of its executive officers, compensation has historically been paid to these officers for their service to each of Liberty Media and Liberty Interactive.

        The amount and timing of any equity-based compensation to be paid to the SpinCo executive officers following the Spin-Off (other than awards issued pursuant to the transitional plan) will be determined by the compensation committee of the SpinCo board of directors. Any equity incentive awards granted to executive officers of SpinCo following the Spin-Off will generally be granted pursuant to the Liberty Expedia Holdings, Inc. 2016 Omnibus Incentive Plan, which is described under "—Equity Incentive Plans" below.

Directors

        SpinCo's nonemployee directors will receive cash compensation directly from SpinCo in such amounts and at such times as the SpinCo board of directors shall determine. The amount and timing of any equity-based compensation to be paid to the SpinCo directors following the Spin-Off (other than awards issued pursuant to the transitional plan) will be determined by the SpinCo board of directors. Any equity incentive awards granted to nonemployee directors of SpinCo following the Spin-Off will generally be granted pursuant to the Liberty Expedia Holdings, Inc. 2016 Omnibus Incentive Plan, which is described under "—Equity Incentive Plans" below.

Equity Incentive Plans

    Liberty Expedia Holdings, Inc. 2016 Omnibus Incentive Plan

        In connection with the Spin-Off, SpinCo will adopt the Liberty Expedia Holdings, Inc. 2016 Omnibus Incentive Plan (the incentive plan). The incentive plan is designed to provide additional remuneration to officers, employees, nonemployee directors and independent contractors for exceptional service and to encourage their investment in SpinCo. Non-qualified stock options, SARs, restricted shares, restricted stock units, cash awards, performance awards or any combination of the foregoing may be granted under the incentive plan (collectively, awards). The maximum number of shares of SpinCo common stock with respect to which awards may be granted is [      ], subject to anti-dilution and other adjustment provisions of the incentive plan. With limited exceptions, under the incentive plan, no person may be granted in any calendar year awards covering more than [      ] shares

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of SpinCo common stock, subject to anti-dilution and other adjustment provisions of the incentive plan. In addition, no person may receive payment for cash awards during any calendar year in excess of $[      ] and no nonemployee director may be granted during any calendar year awards having a value (as determined on the grant date of such award) in excess of $[      ]. Shares of SpinCo common stock issuable pursuant to awards will be made available from either authorized but unissued shares or shares that have been issued but reacquired by SpinCo. The incentive plan will be administered by the compensation committee with regard to all awards granted under the incentive plan (other than awards granted to the nonemployee directors), and the compensation committee will have full power and authority to determine the terms and conditions of such awards. The incentive plan will be administered by the full board of directors with regard to all awards granted under the incentive plan to nonemployee directors, and the full board of directors will have full power and authority to determine the terms and conditions of such awards.

    Liberty Expedia Holdings, Inc. Transitional Stock Adjustment Plan

        At the time of the Spin-Off, SpinCo will also have awards outstanding under the transitional plan as described under "The Spin-Off—Effect of the Spin-Off on Outstanding Liberty Ventures Incentive Awards."

Equity Compensation Plan Information

        At the time of the Spin-Off, SpinCo will have two equity compensation plans, each of which is listed below. The only plan under which awards will be outstanding immediately following the Spin-Off is the transitional plan.

        The following table reflects the awards that would have been outstanding as of December 31, 2015 assuming that (i) the Spin-Off had occurred on that date and (ii) the treatment of the outstanding

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Liberty Ventures incentive awards described under "The Spin-Off—Effect of the Spin-Off on Outstanding Liberty Ventures Awards."

Plan Category
  Number of securities
to be issued upon
exercise of
outstanding options,
warrants and
rights (a)(1)
  Weighted average
exercise price of
outstanding
options, warrants
and rights
  Number of securities
available for future
issuance under
equity compensation
plans (excluding
securities reflected
in column (a))(2)
 

Equity compensation plans approved by security holders: None

                   

Equity compensation plans not approved by security holders:(1)

                   

Liberty Expedia Holdings, Inc. 2016 Omnibus Incentive Plan

                [      ]  

Series A common stock

    0     NA        

Series B common stock

    0     NA        

Liberty Expedia Holdings, Inc. Transitional Stock Adjustment Plan

                0  

Series A common stock

    [      ]   $ [      ]        

Series B common stock

    [      ]   $ [      ]        

Total

                   

Series A common stock

    [      ]              

Series B common stock

    [      ]              

                [      ]  

(1)
Each plan will be approved by Liberty Interactive in its capacity as the sole stockholder of SpinCo prior to the Spin-Off. Following the Spin-Off, SpinCo will seek stockholder approval of the incentive plan at its first annual meeting of stockholders.

(2)
Each plan permits grants of, or with respect to, shares of any series of SpinCo common stock, subject to a single aggregate limit.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

        Prior to the Spin-Off, all of the outstanding shares of our common stock will be owned by Liberty Interactive. The following table sets forth information, to the extent known by Liberty Interactive or ascertainable from public filings with respect to the estimated beneficial ownership of each person or entity (other than certain persons who will serve as directors or executive officers of SpinCo, whose ownership information follows) who is expected to beneficially own more than five percent of the outstanding shares of any series of SpinCo common stock, assuming that the distribution had occurred at 5:00 p.m., New York City time, on [      ], 2016. The percentage voting power is presented on an aggregate basis for all series of SpinCo common stock.

        The security ownership information for SpinCo common stock has been estimated based upon the distribution ratio of 0.5 of a share of our Series A common stock (LEXEA) and Series B common stock (LEXEB) to holders of LVNTA and LVNTB, respectively, and outstanding stock information for Liberty Interactive's common stock as of [      ], 2016, and, in the case of percentage ownership information, has been estimated based upon [      ] shares of SpinCo's Series A common stock and [      ] shares of SpinCo's Series B common stock estimated to have been issued in the distribution assuming that the distribution had occurred at 5:00 p.m., New York City time, on [      ], 2016. However, because of the difficulty in determining in advance the precise effect of the distribution on outstanding option awards and stock appreciation rights with respect to shares of LVNTA and LVNTB (see "The Spin-Off—Effect of the Spin-Off on Outstanding Ventures Group Incentive Awards" for more information), for purposes of the following presentation, we have not included beneficial ownership information with respect to any new option awards or stock appreciation rights with respect to shares of LEXEA and LEXEB that may be received by the persons for whom beneficial ownership information is presented below.

        So far as is known to Liberty Interactive, the persons indicated below would have sole voting power with respect to the shares estimated to be owned by them, except as otherwise stated in the notes to the table.

Name and Address of Beneficial Owner
  Title of
Series
  Amount and Nature of
Beneficial Ownership
  Percent
of Series
(%)
  Voting
Power
(%)
 

[      ]

    [      ]     [      ]     [      ]     [      ]  

Security Ownership of Management

        The following table sets forth information with respect to the estimated beneficial ownership by each person who is expected to serve as an executive officer or director of SpinCo and all of such persons as a group of (1) shares of SpinCo's Series A common stock and Series B common stock and (2) shares of EXPE, assuming that the distribution had occurred at 5:00 p.m., New York City time, on [      ], 2016. The percentage voting power is presented on an aggregate basis for all series of SpinCo common stock.

        The security ownership information for SpinCo common stock has been estimated based upon the distribution ratio of 0.5 of a share of our Series A common stock and Series B common stock to holders of LVNTA and LVNTB, respectively, and outstanding stock information for Liberty Interactive's common stock as of [      ], 2016, and, in the case of percentage ownership information, has been estimated based upon [      ] shares of SpinCo's Series A common stock and [      ] shares of SpinCo's Series B common stock estimated to have been issued in the distribution assuming that the distribution had occurred at 5:00 p.m., New York City time, on [      ] , 2016. In the case of percentage ownership information for Expedia Common Shares, the ownership information has been estimated

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based upon [137,459,353] shares of EXPE and 12,799,999 shares of Expedia class B common stock, in each case, outstanding on [      ], 2016. None of our directors or named executive officers own shares of Expedia class B common stock.

        Shares of restricted stock that will be issued pursuant to the transitional plan are included in the outstanding share numbers provided throughout this prospectus. However, because of the difficulty in determining in advance the precise effect of the distribution on outstanding option awards and stock appreciation rights with respect to shares of LVNTA and LVNTB for our directors and named executive officers (see "The Spin-Off—Effect of the Spin-Off on Outstanding Ventures Group Incentive Awards" for more information), for purposes of the following presentation, we have not included beneficial ownership information with respect to any new option awards or stock appreciation rights with respect to shares of LEXEA and LEXEB that may be received by the directors or named executive officers for whom beneficial ownership information is presented below.

        For purposes of the following presentation, beneficial ownership of shares of SpinCo Series B common stock, though convertible on a one-for-one basis into shares of SpinCo Series A common stock, is reported as beneficial ownership of Series B common stock, and not as beneficial ownership of Series A common stock, but the voting power of the Series A common stock and Series B common stock has been aggregated.

        The number of shares indicated as owned by the following persons includes interests in shares that would have been held by the Liberty Media 401(k) plan as of [      ], 2016. The shares held by the trustee of the Liberty Media 401(k) Savings Plan for the benefit of these persons are voted as directed by such persons.

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        So far as is known to Liberty Interactive, the persons indicated below would have sole voting power with respect to the shares estimated to be owned by them, except as otherwise stated in the notes to the table.

Name of Beneficial Owner
  Title of
Class
  Amount and
Nature of
Beneficial
Ownership
  Percent of
Class
(%)
  Voting
Power
(%)
 
 
   
  (In thousands)
   
   
 

John C. Malone

  Series A     [      ]     [      ]     [      ]  

Chairman of the Board and Director

  Series B     [      ]     [      ]     [      ]  

  EXPE     [      ]     [      ]     [      ]  

Christopher W. Shean

 

Series A

   
[      ]
   
[      ]
   
[      ]
 

Chief Executive Officer and Director

  Series B     [      ]     [      ]     [      ]  

  EXPE     [      ]     [      ]     [      ]  

Wade Haufschild

 

Series A

   
[      ]
   
[      ]
   
[      ]
 

Chief Financial Officer

  Series B     [      ]     [      ]     [      ]  

  EXPE     [      ]     [      ]     [      ]  

Richard N. Baer

 

Series A

   
[      ]
   
[      ]
   
[      ]
 

Chief Legal Officer

  Series B     [      ]     [      ]     [      ]  

  EXPE     [      ]     [      ]     [      ]  

Albert E. Rosenthaler

 

Series A

   
[      ]
   
[      ]
   
[      ]
 

Chief Tax Officer

  Series B     [      ]     [      ]     [      ]  

  EXPE     [      ]     [      ]     [      ]  

All directors and executive officers as a group ([    ] persons)

 

Series A

   
[      ]
   
[      ]
   
[      ]
 

  Series B     [      ]     [      ]     [      ]  

  EXPE     [      ]     [      ]     [      ]  

Change of Control

        Other than as contemplated by the Spin-Off, we know of no arrangements, including any pledge by any person of its securities, the operation of which may at a subsequent date result in a change in control of our company. For more information about the Spin-Off, please see "The Spin-Off."

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        In connection with the Spin-Off, we expect that our board of directors will adopt a formal written policy for the review, approval or ratification of any transactions or arrangements involving related parties. All of our directors, executive officers and employees will be subject to the policy and will be asked to promptly report any such related party transaction. We expect that the formal written policy will provide that, if a director or executive officer has an actual or potential conflict of interest (which includes being a party to a proposed "related party transaction" (as defined by Item 404 of Regulation S-K)), the director or executive officer should promptly inform the person designated by our board to address such actual or potential conflicts. We expect that the formal written policy will also provide that no related party transaction may be effected by our company without the approval of the audit committee of our board or another independent body of our board designated to address such actual or potential conflicts. We also expect that directors will be asked to recuse themselves from any discussion or decision by the board or a board committee that involves or affects their personal, business or professional interests.

Relationships Among SpinCo, the Malone Group, Diller and Expedia

        Prior to the completion of the Spin-Off, the relationship among Diller, Liberty Interactive and Expedia is governed by two agreements which were entered into in connection with the spin-off of TripAdvisor, Inc. from Expedia in December 2011 and each of which will be assigned to SpinCo in connection with the Spin-Off: an Amended and Restated Governance Agreement, dated as of December 20, 2011, among Expedia, Liberty Interactive and Diller (the Governance Agreement) and an Amended and Restated Stockholders Agreement, dated as of December 20, 2011, between Diller and Liberty Interactive (the Stockholders Agreement).

        The following summaries of the Governance Agreement, the Governance Agreement Assignment, the Stockholders Agreement and the Assigned Stockholders Agreement do not purport to be complete and are qualified in their entirety by reference to the Governance Agreement, the form of the Governance Agreement Assignment, the form of the Stockholders Agreement and the Stockholders Agreement Assignment, respectively, which are filed as exhibits to the Registration Statement on Form S-1 of which this prospectus forms a part.

    The Governance Agreement, As Assigned

    Assignment

        In connection with the Spin-Off, we will enter into an Assignment and Assumption of Governance Agreement (the Governance Agreement Assignment) with Liberty Interactive, Diller and Expedia to effect the assignment by Liberty Interactive and assumption by us of Liberty Interactive's rights, benefits and obligations under the Governance Agreement. Effective immediately prior to the Spin-Off, we will be substituted for Liberty Interactive for all purposes under the Governance Agreement. We refer to the Governance Agreement, as it will be amended by the Governance Agreement Assignment, as the Assigned Governance Agreement.

    Representation of SpinCo on the Expedia Board of Directors

        Under the terms of the Assigned Governance Agreement:

    SpinCo has the right to nominate up to such number of Expedia directors as is equal to 20% of the total number of Expedia directors (rounded up to the next whole number if the total number of directors is not an even multiple of 5) so long as SpinCo beneficially owns at least 16,825,982 equity securities of Expedia (i.e., so long as SpinCo's ownership percentage is at least equal to 15% of the total equity securities of Expedia);

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    SpinCo has the right to nominate one director of Expedia so long as SpinCo beneficially owns at least 11,217,321 equity securities of Expedia (i.e., so long as SpinCo owns at least 5% of the total equity securities of Expedia); and

    Expedia will use its reasonable best efforts to cause one of SpinCo's designees to be a member of a committee of the board of directors of Expedia and, to the extent the person designated by SpinCo would qualify as a member of the compensation committee of the board of directors of Expedia under applicable tax and securities laws and regulations, Expedia will seek to have that person appointed to the compensation committee of Expedia.

        Liberty Interactive's nominees serving on Expedia's board of directors at the time of the Spin-Off will continue to serve on Expedia's board of directors as SpinCo's initial nominees from and after the completion of the Spin-Off until their respective successors are duly elected or appointed and qualified, or until their earlier death, resignation, or removal. Pursuant to the terms of the Assigned Governance Agreement, Expedia will cause each director that SpinCo nominates to be included in the slate of nominees recommended by the board of directors of Expedia to the stockholders of Expedia for election as directors at each annual meeting of the stockholders of Expedia and will use all reasonable efforts to cause the election of each such director including soliciting proxies in favor of the election of such persons. SpinCo has the right to designate a replacement director to the board of directors of Expedia in order to fill any vacancy of a director previously designated by SpinCo. SpinCo would have the right to transfer this ability to nominate candidates to the board of directors of Expedia, subject to the same ownership requirements as SpinCo's current nomination rights, to its transferee in a Block Sale (as defined below), provided that the transferee's nominees are independent directors and are approved by Expedia's Nominating Committee (or equivalent committee of the board of directors of Expedia). In addition, as described below under "—Stockholders Agreement, As Assigned—Distribution Transactions," the spun-off or split-off company in a Distribution Transaction (as defined in "—The Stockholders Agreement, As Assigned—Distribution Transactions") will succeed to SpinCo's rights under the Assigned Governance Agreement, including SpinCo's right to nominate directors.

    Contingent Matters

        The Assigned Governance Agreement lists certain actions (which are referred to as Contingent Matters) that require the prior consent of SpinCo and Diller before Expedia can take any such action. For so long as:

    in the case of SpinCo, SpinCo owns at least 14,956,428 equity securities and at least 5% of the total equity securities of Expedia (the SpinCo Condition); and

    in the case of Diller, he owns at least 2,500,000 Expedia Common Shares (including options to purchase Expedia Common Shares, whether or not then exercisable), continues to serve as chairman of Expedia and has not become disabled (the Diller Condition, and together with the SpinCo Condition, the Consent Conditions),

Expedia has agreed that, without the prior approval of SpinCo and/or Diller (whichever (or both) satisfy certain ownership requirements), it will not engage in any transaction that would result in, or have the reasonable likelihood of resulting in, SpinCo or Diller having to divest any part of their interests in Expedia or any other material assets, or that would render any such ownership illegal or would subject Diller or SpinCo to any fines, penalties or material additional restrictions or limitations.

        In addition, for so long as the Consent Conditions apply, if Expedia (or any of its subsidiaries) incurs any indebtedness (other than a customary refinancing not to exceed the principal amount of the existing obligation being refinanced) after which Expedia's total debt ratio (as defined in the Assigned Governance Agreement) equals or exceeds 8:1, then for so long as the total debt ratio continues to

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equal or exceed 8:1, Expedia may not take any of the following actions without the prior approval of SpinCo and/or Diller:

    acquire or dispose of any assets, issue any debt or equity securities, repurchase any debt or equity securities, or incur indebtedness, if the aggregate value of such transaction or transactions (alone or in combination) during any six month period equals 10% or more of Expedia's market capitalization;

    voluntarily commence any liquidation, dissolution or winding up of Expedia or any material subsidiary of Expedia;

    make any material amendments to the certificate of incorporation or bylaws of Expedia;

    engage in any line of business other than online and offline travel services and products and related businesses, or other businesses engaged in by Expedia as of the date of determination of the total debt ratio;

    adopt any stockholder rights plan that would adversely affect SpinCo or Diller, as applicable; or

    grant additional consent rights to a stockholder of Expedia.

    Preemptive Rights

        In the event that Expedia issues or proposes to issue any shares of EXPE or Expedia class B common stock (with certain limited exceptions) including shares issued upon exercise, conversion or exchange of options, warrants and convertible securities, SpinCo will have preemptive rights that entitle it to purchase a number of Expedia Common Shares so that SpinCo will maintain the identical ownership interest in Expedia (subject to certain adjustments) that SpinCo had immediately prior to such issuance or proposed issuance (but not in excess of (20.01%)). Any purchase by SpinCo will be allocated between EXPE and Expedia class B common stock in the same proportion as the issuance or issuances giving rise to the preemptive right, except to the extent that SpinCo opts to acquire shares of EXPE in lieu of shares of Expedia class B common stock.

    Registration Rights

        SpinCo and Diller are entitled to customary, transferrable registration rights with respect to shares of EXPE owned by them. SpinCo is entitled to four demand registration rights and Diller is entitled to three demand registration rights. Expedia will pay the costs associated with such registrations (other than underwriting discounts, fees and commissions). Expedia will not be required to register shares of EXPE if a stockholder could sell the shares in the quantities proposed to be sold at such time in one transaction under Rule 144 of the Securities Act or under another comparable exemption from registration.

        In connection with a transfer of Expedia securities to an unaffiliated third party, SpinCo or Diller may assign any of its or his then-remaining demand registration rights to the third party transferee, if upon the transfer the transferee acquires beneficial ownership of more than 5% of the then outstanding equity securities of Expedia. If upon the transfer the transferee acquires beneficial ownership of equity securities of Expedia representing less than 5% of the then outstanding equity securities, but having at least $250 million in then-current market value, SpinCo or Diller may assign one of its or his remaining demand registration rights, which the transferee may exercise only in connection with an offering of shares of EXPE with a market value of at least $100 million.

    Inapplicability of Anti-Takeover Provisions to Distribution Transaction or Block Sale

        Pursuant to the Assigned Governance Agreement, Expedia will not, in the case of a Distribution Transaction, implement any anti-takeover provision (including any shareholder rights plan) or, in the

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case of a Block Sale (as defined in "—The Stockholders Agreement, As Assigned—Block Sales"), Expedia will render inapplicable any such anti-takeover provision:

    the purpose or reasonably evident effect of which is to restrict or limit SpinCo's ability to engage in a Distribution Transaction or a Block Sale; or

    the purpose or reasonably evident effect of which is to impose a material economic detriment on the company to which Expedia equity securities are transferred in connection with a qualifying Distribution Transaction (and whose shares are distributed to the public stockholders of SpinCo) or that would impose a material economic detriment on the transferee in a Block Sale.

        In addition, the Expedia board of directors will approve the transfer of Expedia Common Shares in a Distribution Transaction or Block Sale (up to a 30% ownership level in the case of a Block Sale) for purposes of Section 203 of the Delaware General Corporation Law (the DGCL), which imposes restrictions on certain transactions with "interested stockholders" under the DGCL. In the case of a Block Sale, however, such approval for purposes of Section 203 of the DGCL will be subject to the imposition of contractual restrictions on the Block Sale transferee analogous to the provisions of Section 203 of the DGCL (as described below).

    Restrictions on Block Sale Transferee

        For three years following a Block Sale by SpinCo, the transferee will be subject to, among other things, the following restrictions with regard to Expedia, unless the restrictions terminate early in the following circumstances:

    an ownership cap set at 30% of the total equity securities of Expedia (which would apply to any "group" which the transferee or its affiliates is a member), subject to adjustment under certain circumstances;

    specified "standstill" restrictions limiting the transferee's ability, at such time as any directors nominated by the transferee are serving on the Expedia board of directors, to, among other things, engage in proxy contests, propose transactions involving the company, form a "group" (as defined in the Exchange Act) or influence the management of Expedia. These restrictions, other than the prohibition on proxy contests, would terminate if the transferee relinquishes all rights to nominate directors under the Assigned Governance Agreement; and

    contractual provisions analogous to the provisions of Section 203 of the DGCL that would prohibit the transferee from engaging in specified "business combination" transactions with Expedia without the prior approval of Expedia, acting through a committee of independent directors.

        The contractual provisions mirroring Section 203 of the DGCL would not apply to the transferee if upon the Block Sale it would not be an "interested stockholder" (as defined in Section 203 of the DGCL) of Expedia. However, if these contractual provisions become applicable at the time of the Block Sale, they will continue in effect for the term of the standstill restrictions even if the transferee would subsequently cease to be an "interested stockholder" (as defined in Section 203 of the DGCL) of Expedia. The standstill restrictions and 30% ownership cap, as well as the termination provisions, would apply to subsequent transferees of all or substantially all of the shares transferred in a prior Block Sale, but in any event would not extend past the third anniversary of the original Block Sale. The statutory provisions of Section 203 of the DGCL would apply with respect to unaffiliated subsequent transferees of the shares transferred in a prior Block Sale to the extent applicable.

        Prior to the expiration of the three year term, the standstill restrictions, including the cap on ownership described above, would terminate at the earlier of (i) Diller and his affiliates "actually owning" securities representing more than 50% of the total voting power of Expedia or (ii) the Block

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Sale transferee and its affiliates beneficially owning (as defined in the Assigned Governance Agreement) securities representing less than 12% of the total voting power of Expedia and Diller beneficially owning (as defined in the Assigned Governance Agreement) securities representing more than 40% of the total voting power of Expedia. For this purpose, securities "actually owned" by Diller and his affiliates will include all securities of Expedia held by Diller and his "affiliates," plus those shares of class B common stock for which Diller and his "affiliates" have a right to "swap" shares of Common Stock (as discussed below) but for which the swap right has not been exercised, minus the securities Diller and his "affiliates" currently hold but would need to exchange for the class B common stock in such swap right.

        The above restrictions may be waived at any time by Expedia, acting through a committee of independent directors.

    Other Block Sale Provisions

        If Diller does not acquire from SpinCo all shares of Expedia class B common stock proposed to be transferred in a Block Sale or in a transfer of all of the shares of Expedia class B common stock and shares of EXPE owned by SpinCo through the exercise of his "swap" right or right of first refusal under the Assigned Stockholders Agreement (resulting in such Expedia class B common stock beneficially owned by SpinCo being converted into, or exchanged for, shares of EXPE before the Block Sale), for a period of two years after the Block Sale, Diller will have the right from time to time to acquire from Expedia an equal number of shares of Expedia class B common stock held in treasury, either by purchase at fair market value, through an exchange of an equivalent number of shares of EXPE, or a combination thereof. Diller may exercise this right either alone or in conjunction with one or more third parties so long as Diller retains voting control over the Expedia class B common stock acquired. Prior to the expiration of the two year period following a Block Sale, Diller's right to acquire Expedia class B common stock from Expedia will be suspended immediately upon the entry by Expedia into a merger agreement providing for a merger that constitutes a change of control of Expedia, and will terminate irrevocably upon the consummation of an exchange or tender offer for securities representing a majority of the total voting power of Expedia or a merger that constitutes a change of control of Expedia.

    Certain Waivers

        During the term of the Assigned Stockholders Agreement, without Expedia's consent (to be exercised by a committee of independent directors), Diller will not waive SpinCo's obligation under the Assigned Stockholders Agreement to convert or exchange shares of Expedia class B common stock to shares of EXPE in specified circumstances. This consent right is not applicable if Diller no longer has any rights under the Assigned Stockholders Agreement. In certain circumstances this consent right will survive a mutual termination of the Assigned Stockholders Agreement for a period of up to one year.

    Termination

        Generally, the Assigned Governance Agreement will terminate:

    with respect to SpinCo, at such time that SpinCo beneficially owns equity securities representing less than 5% of the total equity securities of Expedia; and

    with respect to Diller, at such time as Diller ceases to be the chairman of Expedia or becomes disabled.

        With respect to the provisions governing Contingent Matters, such provisions will terminate as to Diller and SpinCo as set forth under "—Contingent Matters."

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    The Stockholders Agreement, As Assigned

    Assignment

        In connection with the Spin-Off, we will enter into an Assignment and Assumption of Stockholders Agreement (the Stockholders Agreement Assignment) with Liberty Interactive and Diller to effect the assignment by Liberty Interactive and assumption by us of Liberty Interactive's rights, benefits and obligations under the Stockholders Agreement. Effective immediately prior to the Spin-Off, and subject to the Spin-Off, we will be substituted for Liberty Interactive for all purposes under the Stockholders Agreement. We refer to the Stockholders Agreement, as it will be amended by the Stockholders Agreement Assignment, as the Assigned Stockholders Agreement.

    General

        Diller holds the Diller Proxy with respect to all securities of Expedia beneficially owned by SpinCo on all matters submitted to a stockholder vote or by which the stockholders may act by written consent, except for Contingent Matters with respect to which SpinCo has not consented, so long as Diller continues to own at least 2,500,000 shares of EXPE (including options). The Diller Proxy will generally remain in effect until the earlier of (i) Diller no longer serving as chairman of Expedia and (ii) Diller becoming disabled. Under certain limited circumstances, including a breach by Diller of certain provisions of the Assigned Stockholders Agreement, the Diller Proxy may terminate sooner. In addition, the Assigned Stockholders Agreement provides for the suspension of the Diller Proxy if Diller cannot vote due to mental or physical disability.

        SpinCo and Diller will vote against any Contingent Matter with respect to Expedia if either Diller or SpinCo does not approve the Contingent Matter (so long as either such party continues to have veto rights with respect to the Contingent Matter under the Assigned Governance Agreement). Diller will also vote all securities of Expedia over which he has voting control in favor of the SpinCo designees to the board of directors of Expedia, and, subject to Diller's election as a director of Expedia, SpinCo will use its reasonable best efforts to cause Diller to be elected and continue to serve as chairman of the board of directors of Expedia.

        In connection with the Spin-Off, Diller will agree to assign the Diller Proxy to SpinCo, as further described below in "—Diller Assignment."

    Restrictions on Transfers

        Until the later of (i) the date Diller no longer serves as chairman of Expedia and (ii) the date Diller no longer holds the Diller Proxy (or upon Diller becoming disabled, if that occurs first), and subject to the other provisions of the Assigned Stockholders Agreement, neither SpinCo nor Diller can transfer shares of EXPE or Expedia class B common stock, other than:

    transfers by Diller to pay taxes relating to the granting, vesting and/or exercise of stock options to purchase shares of EXPE;

    transfers to each party's respective affiliates;

    transfers of EXPE pursuant to certain hedging transactions effected by SpinCo and meeting certain requirements;

    pledges relating to financings, subject to certain conditions, and any related transfer of shares of EXPE in connection with the enforcement of such pledge; and

    transfers of options or shares of EXPE in connection with "cashless exercises" of Diller's options to purchase shares of EXPE.

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        The restrictions on transfer are subject to a number of exceptions (which exceptions, in the case of a transfer of shares of Expedia class B common stock, are generally subject to the right of first refusal described below):

    either of SpinCo or Diller may transfer shares of EXPE or Expedia class B common stock to an unaffiliated third party, subject, in the case of shares of Expedia class B common stock, to the tag-along rights described below and Expedia's consent in the event of a waiver of SpinCo's obligation to convert or exchange shares of Expedia class B common stock to shares of EXPE in certain circumstances as described above under "—The Governance Agreement, As Assigned—Certain Waivers";

    either of SpinCo or Diller may transfer shares of EXPE so long as the transfer complies with the requirements of Rule 144 or Rule 145 under the Securities Act; and

    SpinCo may engage in a Distribution Transaction or Block Sale (as described below).

    Tag-Along Rights and Right of First Refusal

        Each of Diller and SpinCo will be entitled to a right to "tag-along" (i.e. participate on a pro rata basis) on sales by the other of shares of Expedia class B common stock to any unaffiliated third party with limited exceptions. Diller will not have a tag-along right in connection with a Distribution Transaction by SpinCo.

        Each of Diller and SpinCo has a right of first refusal in the case of a proposed transfer by the other of shares of Expedia class B common stock to an unaffiliated third party, subject to specified exceptions, including transfers by SpinCo pursuant to a Distribution Transaction.

    Transfers of Shares of Expedia Class B Common Stock

        If either SpinCo or Diller proposes to transfer shares of Expedia class B common stock, the other will have the right to swap any shares of EXPE it or he owns for such shares of Expedia class B common stock proposed to be transferred (subject to the right of first refusal described above). To the extent that, after application of the swap right described in the prior sentence, there remain shares of Expedia class B common stock that the selling stockholder would otherwise transfer to an unaffiliated third party, such shares must first be converted or exchanged into shares of EXPE.

        As described above under "—The Governance Agreement, As Assigned—Certain Waivers," any waiver by Diller of SpinCo's obligation in the Assigned Stockholders Agreement to convert shares of Expedia class B common stock to shares of EXPE before transfer to an unaffiliated third party will be subject to the consent of Expedia, exercisable through a committee of independent directors. This consent right is not applicable if Diller no longer has any rights under the Assigned Stockholders Agreement. The consent right will survive a mutual termination of the Assigned Stockholders Agreement for one year unless Diller's rights are terminated under the circumstances described below in "—Termination."

        This transfer restriction does not apply to, among other specified transfers, transfers among the parties and their affiliates and transfers by SpinCo in a Distribution Transaction.

    Distribution Transactions

        SpinCo will be permitted to spin-off or split-off to its public stockholders all, but not less than all, of its equity ownership in Expedia in a transaction meeting specified requirements (a Distribution Transaction) without first complying with the transfer restrictions described above, including Diller's tag-along right, right of first refusal, swap right and conversion requirement, and without being subject to the application of certain anti-takeover provisions, as described above under "—The Governance

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Agreement, As Assigned—Inapplicability of Anti-takeover Provisions to Distribution Transaction or Block Sale." The spun-off or split-off company will be required to assume all of SpinCo's obligations (including the Diller Proxy given to Diller) and will succeed to SpinCo's rights under the Assigned Governance Agreement and Assigned Stockholders Agreement (including SpinCo's right to nominate directors).

    Block Sales

        For so long as SpinCo's equity ownership in Expedia does not exceed 30% of the total equity securities of Expedia and Diller continues to hold a proxy over SpinCo's shares in Expedia, SpinCo will be permitted to sell all, but not less than all, of such equity interest in Expedia to an unaffiliated third party (a Block Sale), without being subject to the application of certain anti-takeover provisions, as described above under "—The Governance Agreement, As Assigned—Inapplicability of Anti-Takeover Provisions to Distribution Transaction or Block Sale," subject to prior compliance with Diller's tag-along right, right of first refusal and swap right, as well as the requirement that SpinCo convert shares of Expedia class B common stock to shares of EXPE or exchange them for shares of EXPE with Expedia before the Block Sale.

        Prior to any Block Sale, SpinCo will be required to exchange and/or convert any shares of Expedia class B common stock proposed to be transferred in such Block Sale, to the extent Diller does not acquire such shares pursuant to exercise of his right of first refusal or swap right, for newly-issued shares of EXPE (subject to application of relevant securities laws).

    Termination

        Diller's and SpinCo's rights and obligations under the Assigned Stockholders Agreement generally terminate at such time as, in the case of Diller, he no longer beneficially owns at least 1,000,000 shares of EXPE. SpinCo's tag-along rights and obligations terminate at such time as SpinCo ceases to beneficially own at least 5% of the outstanding shares of EXPE.

        In addition, Diller's rights under the Assigned Stockholders Agreement will terminate upon the later of (i) the date Diller ceases to serve as chairman of Expedia or becomes disabled and (ii) the date Diller no longer holds a proxy to vote the Expedia Common Shares owned by SpinCo.

    Proxy Arrangements

        In connection with the Spin-Off, SpinCo, Diller, the Malone Group, and Liberty Interactive have entered into the Transaction Agreement (as defined below) and will enter into additional agreements in order to facilitate the assignment of the Diller Proxy from Diller to SpinCo until the Proxy Arrangement Termination Date, including the Malone Proxy, the Diller Assignment and the Stockholders Agreement Amendment, each as described below, and SpinCo, Liberty Interactive and Expedia have entered into the Reimbursement Agreement, as described below.

    Transaction Agreement

        On March 24, 2016, SpinCo, Liberty Interactive, Diller and the Malone Group entered into the Transaction Agreement (the Transaction Agreement) which sets forth various arrangements with respect to the Spin-Off and the proxy arrangements with Diller. Unless the Transaction Agreement has been terminated prior to the completion of the Spin-Off, Liberty Interactive will, and will cause SpinCo to take all requisite action to, amend and restate the certificate of incorporation and bylaws of SpinCo, prior to the completion of the Spin-Off, to be substantially in the form of the certificate of incorporation and bylaws attached as Exhibits 3.1 and 3.2 to the Registration Statement on Form S-1 of which this prospectus forms a part, and the applicable parties to the Transaction Agreement will enter into the Diller Assignment, the Malone Proxy, the Governance Agreement Assignment, the

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Stockholders Agreement Assignment, the Stockholders Agreement Amendment and certain other documents in connection with the Spin-Off (collectively with the Transaction Agreement, the Proxy Arrangement Documents). In the event the Spin-Off is not completed by December 31, 2016, any Proxy Arrangement Documents executed prior to such date shall be void and of no further force and effect, other than certain waivers granted in connection with entry into the Transaction Agreement.

        The Transaction Agreement provides that, immediately following the completion of the Spin-Off, the SpinCo board of directors will consist of seven members, with five individuals designated by Liberty Interactive to serve as Common Stock Directors and two individuals designated by Diller to serve as Series B Directors. Three of the Common Stock Directors and one Series B Director will be "independent" as to SpinCo pursuant to Nasdaq rules and regulations. During the term of the Transaction Agreement, the SpinCo board of directors will cause each proposed Common Stock Director and each proposed Series B Director designated in accordance with SpinCo's bylaws to be nominated for election and included in the slate of nominees recommended by the SpinCo board (or a committee of the SpinCo board) for election at the applicable meeting of stockholders.

        The Transaction Agreement also provides that Liberty Interactive and SpinCo (the Indemnifying Parties) will indemnify each of Diller and the Malone Group (the Indemnified Parties) from any losses incurred in connection with, arising out of or resulting from, whether prior to or after the completion of the Spin-Off, any actions relating to the matters contemplated by the Malone Proxy, Diller Assignment, Transaction Agreement, Stockholders Agreement Amendment and certain provisions of our restated charter and bylaws (collectively, the Subject Instruments), or the exercise by any Indemnified Party of its rights under the Subject Instruments. Such indemnity does not cover any loss which (i)(x) results from such Indemnified Party's willful misconduct or gross negligence, including any willful breach of a representation or warranty in, or covenant in or pursuant to, a Subject Instrument to which it is a party or (y) results primarily from any breach, other than a willful breach, of any representation or warranty in, or covenant in or to be performed under, to a Subject Instrument to which it is a party, or (ii) is incurred in connection with, arising out of or resulting from actions based upon or relating to such Indemnified Party's actions in such Indemnified Party's capacity as a director or officer of Expedia, SpinCo or Liberty Interactive, as applicable.

        The Transaction Agreement further provides that Liberty Interactive and SpinCo will reimburse each of Diller and the Malone Group for their respective reasonable, documented costs, fees and expenses incurred in connection with the execution and delivery of the Proxy Arrangement Documents, regardless of whether the Spin-Off is completed, subject to certain expense caps. All costs and expenses incurred in connection with the Proxy Arrangement Documents not covered by the indemnification and expense reimbursement provisions will be paid by the party incurring such cost or expense.

        Prior to the completion of the Spin-Off, the Transaction Agreement will terminate upon the earliest to occur of (i) December 31, 2016, (ii) the delivery of a termination notice by Diller following Malone's death or disability, (iii) delivery of a notice from Liberty Interactive that it has determined to abandon the Spin-Off or terminate the Transaction Agreement, and (iv) Diller's death, disability or his ceasing to be chairman of Expedia. Following the completion of the Spin-Off, the Transaction Agreement and the proxy arrangements will terminate upon the first to occur of:

    i.
    the eighteen month anniversary of the completion of the Spin-Off;

    ii.
    upon the termination of the Diller Proxy upon Diller's death or disability or his ceasing to be chairman of Expedia (or any successor by merger, consolidation or other business combination);

    iii.
    following the first anniversary of the completion of the Spin-Off, the close of business on the tenth day following written notice from Diller to terminate the Diller Assignment or from Malone to terminate the Malone Proxy, in each case, for any reason;

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    iv.
    a finding that any of the Subject Instruments is invalid or unenforceable in any respect (other than a de minimis respect) or preliminarily or permanently enjoining the exercise of the parties' respective rights under any Subject Instrument, subject to certain exceptions;

    v.
    delivery of written notice from Diller to terminate the Diller Assignment or the Malone Group to terminate the Malone Proxy (or, in limited circumstances, without the requirement for any such notice) upon SpinCo's entry into a definitive agreement with respect to certain business combinations with a third party (including Expedia or Liberty Interactive), in which case the termination will occur immediately prior to the consummation of such business combination;

    vi.
    commencement by an independent party of certain exchange or tender offers with respect to our common stock, unless within ten business days following the commencement of such exchange or tender offer, SpinCo has taken action reasonably sufficient to deter such independent party from consummating the exchange or tender offer, in which case the termination will not be deemed to have occurred until immediately prior to the consummation of such exchange or tender offer;

    vii.
    delivery of a termination notice by a non-breaching party following certain breaches by Diller, on the one hand, SpinCo, Liberty Interactive or the Malone Group, on the other hand, of their respective representations, warranties or covenants contained in any related agreement to which he or it is a party, which breach remains uncured for five business days following the delivery of notice of such breach;

    viii.
    either SpinCo registering or becoming required to register under the 40 Act or the occurrence of changes in SpinCo's assets or capital structure, or changes in applicable law or interpretations thereof, such that assuming the termination of the Diller Assignment, SpinCo would not be required to register as an investment company pursuant to the 40 Act (without giving effect to any cure or grace period or delay in the requirement to become registered under the 40 Act);

    ix.
    delivery of a notice from Diller following Malone's death or determination of his disability or his ceasing to be chairman of the SpinCo board of directors;

    x.
    the date on which no shares of SpinCo's Series B Common Stock remain outstanding;

    xi.
    any purported transfer or assignment of the proxy granted pursuant to the Malone Proxy without the prior consent of Malone or any purported transfer or assignment of the Diller Proxy (other than pursuant to the Diller Assignment) without the consent of Diller;

    xii.
    if and to the extent a court of competent jurisdiction makes a final determination that the assignment of the Diller Proxy pursuant to the Diller Assignment renders the Diller Proxy invalid; and

    xiii.
    delivery of a notice from Diller within ten business days following SpinCo's failure to deliver certain notices with respect to an Expedia Board Voting Determination (as defined below).

        The date of termination of the Transaction Agreement, for any of the enumerated reasons, is referred to as the Proxy Arrangement Termination Date.

        The foregoing summary of the Transaction Agreement does not purport to be complete and is qualified in its entirety by reference to the Transaction Agreement, which is filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

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    Amendment No. 1 to Stockholders Agreement

        Prior to the completion of the Spin-Off and following the execution of the Stockholders Agreement Assignment (but subject to the Transaction Agreement then being in effect), Diller and SpinCo will enter into Amendment No. 1 to the Stockholders Agreement (the Stockholders Agreement Amendment) which provides for certain agreements relating to the voting of Diller's and SpinCo's Expedia Common Shares. From the completion of the Spin-Off until the Proxy Arrangement Termination Date, certain provisions of the Assigned Stockholders Agreement will be amended to provide that each of Diller and SpinCo will vote his or its Expedia Common Shares in favor of the SpinCo Director nominees as selected by the board of directors of SpinCo pursuant to SpinCo's restated charter and bylaws. With respect to the election of directors to Expedia's board of directors, other than the SpinCo directors, SpinCo will vote its Expedia Common Shares as directed by the SpinCo board of directors pursuant to the terms of SpinCo's restated charter and bylaws (i.e., as determined by the Series B Directors). Subject to the election of Diller to Expedia's board of directors, SpinCo will use its reasonable best efforts to cause Diller to be elected and continue to serve as chairman of the board of Expedia. The Stockholders Agreement Amendment further provides that with respect to any matter (other than the election of directors of Expedia) to be presented to Expedia's stockholders for approval, SpinCo and Diller will meet and use their respective reasonable best efforts to agree on a common position for such matters prior to any Expedia stockholder meeting, and each of Diller and SpinCo will vote their respective Expedia Common Shares if and as so agreed. If SpinCo and Diller are unable to agree on such a common position, with respect to any matter other than a Specified Corporate Action (as defined below), SpinCo and Diller may vote their respective Expedia Common Shares in its or his sole discretion. In the event the matter relates to a Specified Corporate Action, unless SpinCo and Diller agree as to how their respective Expedia Common Shares will be voted, then, subject to limited exceptions (including with regard to business combinations as described below), SpinCo and Diller will vote all of their respective Expedia Common Shares against the approval of such Specified Corporate Action. Specified Corporate Actions include (i) any recapitalization, reclassification or any other change in the existing capital structure of Expedia, or any voluntary liquidation, dissolution or winding up of Expedia, (ii) any business combination involving Expedia or its subsidiaries (other than solely among subsidiaries of Expedia), or any sale of all or substantially all of Expedia's assets, (iii) the creation of any new class or series of Expedia's capital stock or the issuance (other than pursuant to options, warrants or other rights outstanding at the completion of the Spin-Off) of Expedia Common Shares, (iv) any amendment to Expedia's organizational documents and (v) any removal of a director from the Expedia board of directors, subject to certain exceptions. If SpinCo and Diller do not agree on how to vote their Expedia Common Shares on a proposed business combination in which a third party (other than SpinCo, a Diller affiliate or another person in which Diller has a financial interest) would acquire Expedia, any of its subsidiaries or substantially all of its assets, then, if Diller supports the transaction, SpinCo will vote in favor of its approval unless at least 70% of the SpinCo board of directors votes to withhold such approval. Following the Proxy Arrangement Termination Date, the foregoing provisions will cease to be effective, and the corresponding provisions of the Assigned Stockholders Agreement will revert to the form in effect immediately prior to the effectiveness of the Stockholders Agreement Amendment.

        The foregoing summary of the Stockholders Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the form of the Stockholders Agreement Amendment, which is filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

    Diller Assignment

        Prior to the completion of the Spin-Off (and subject to the Transaction Agreement then being in effect), Diller and SpinCo will enter into an Assignment Agreement (the Diller Assignment), which will

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become effective immediately following the completion of the Spin-Off and pursuant to which Diller will irrevocably assign the Diller Proxy to SpinCo until the Proxy Arrangement Termination Date. For so long as the Diller Assignment is in effect, Diller will not have the right to vote the Expedia Common Shares beneficially owned by SpinCo. The Diller Assignment will terminate upon the Proxy Arrangement Termination Date, at which time the right to vote the Expedia Common Shares beneficially owned by SpinCo will revert to Diller pursuant to the Diller Proxy until the Diller Proxy is terminated upon his death or disability or his ceasing to be chairman of Expedia (or any successor by merger, consolidation or other business combination).

        The foregoing summary of the Diller Assignment does not purport to be complete and is qualified in its entirety by reference to the form of the Diller Assignment, which is filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

    Malone Proxy

        Prior to the completion of the Spin-Off (and subject to the Transaction Agreement then being in effect), Diller and the Malone Group will enter into a Proxy and Voting Agreement (the Malone Proxy), which will become effective immediately following the completion of the Spin-Off. Pursuant to the Malone Proxy, the Malone Group will, subject to certain exceptions, grant Diller an irrevocable proxy until the Proxy Arrangement Termination Date to vote all shares of SpinCo Series A common stock and Series B common stock beneficially owned upon the completion of the Spin-Off or thereafter by the Malone Group or which any member otherwise has the power to vote (the Covered Shares). The Malone Proxy provides that Diller will have no right to vote the Covered Shares on any matter acted on by SpinCo stockholders to approve any agreement or transaction (i) between SpinCo or any of its affiliates, on the one hand, and Diller, IAC or any of their respective affiliates, on the other hand, or (ii) between SpinCo or any of its affiliates, on the one hand, and Expedia or its subsidiaries, on the other hand. The Malone Proxy will be suspended during any period of Diller's disability (except that Malone will not remove or replace any Series B Directors during any such suspension).

        The Malone Proxy further provides that, on (i) any recapitalization, reclassification or other change in SpinCo's capital structure or the voluntary commencement of any liquidation, dissolution or winding up of SpinCo, (ii) any merger or other business combination involving SpinCo or its subsidiaries or a sale of all or substantially all of SpinCo's assets, (iii) the creation of any new class or series of SpinCo's capital stock or the issuance of SpinCo's capital stock, subject to limited exceptions, or (iv) any amendment to SpinCo's organizational documents, Malone (on behalf of the Malone Group) and Diller will seek to agree on how the Covered Shares will be voted on such matter. If they reach an agreement, Diller will vote the Covered Shares as agreed, but in the event they do not agree on how the Covered Shares are to be voted on such matter, Diller will vote all Covered Shares against such proposal. With respect to the election of, removal of or the filling of any vacancy with respect to Series B Directors, Diller will vote all Covered Shares that are shares of Series B common stock in his sole discretion. With respect to the election of Common Stock Directors, Diller will vote all Covered Shares in favor of the slate of directors recommended by the SpinCo board of directors (or a committee of the SpinCo board). In the event there is any proposal requiring a separate class vote of the Series B common stock (other than the election of, removal of or filling of a vacancy with respect to Series B Directors), Diller will vote all shares of Series B common stock that are Covered Shares as instructed by Malone (on behalf of the Malone Group), subject to certain exceptions. In the event there is a proposal to remove a Common Stock Director from the board of directors, Diller will vote all Covered Shares as instructed by Malone (on behalf of the Malone Group).

        Subject to certain exceptions, until the Proxy Arrangement Termination Date, the Malone Group will not transfer any Covered Shares except to a transferee who takes such shares subject to the Malone Proxy and who is acceptable to Diller in his sole discretion. Diller will vote all Covered Shares

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subject to the Malone Proxy and attend all meetings of SpinCo stockholders in person or by proxy for purposes of reaching a quorum.

        The Malone Proxy will terminate upon the Proxy Arrangement Termination Date, at which point the right to vote the Covered Shares will revert back to the Malone Group.

        The foregoing summary of the Malone Proxy does not purport to be complete and is qualified in its entirely by reference to the form of the Malone Proxy, which is filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

    Reimbursement Agreement

        On March 24, 2016, SpinCo and Liberty Interactive entered into the Reimbursement Agreement with Expedia, pursuant to which Liberty Interactive and SpinCo agreed to reimburse Expedia for certain costs and expenses resulting from the Spin-Off and the proxy arrangements that may be incurred by Expedia with respect to the Expedia Credit Agreement, the 2018 Notes and the 2020 Notes. The reimbursement obligations of Liberty Interactive and SpinCo are capped at $45 million, subject to certain limited exceptions, and conditioned on Expedia acting in all material respects consistent with its existing financial policies, which were previously provided to Liberty Interactive. Prior to the completion of the Spin-Off, the Reimbursement Agreement will terminate upon the termination of the Transaction Agreement. Following the completion of the Spin-Off, the Reimbursement Agreement will terminate upon the earliest to occur of (i) Diller's death, disability or in the event Diller ceases to be chairman of Expedia, (ii) failure of certain reimbursement triggers to occur prior to the sixtieth day following the completion of the Spin-Off (as such period may be extended in certain limited circumstances), and (iii) the date as of which SpinCo and Liberty Interactive have paid all amounts due to Expedia pursuant to the terms of the Reimbursement Agreement. The Reimbursement Agreement constitutes Expedia's sole and exclusive remedy with respect to any claim arising out of any potential change of control under any contract, debt instrument, agreement or other similar instrument resulting, directly or indirectly, from the Spin-Off or the proxy arrangements.

Relationships Between SpinCo and Liberty Interactive and/or Liberty Media

        Upon completion of the Spin-Off, Liberty Interactive and SpinCo will operate independently, and neither will have any ownership interest in the other. In order to govern certain of the ongoing relationships between Liberty Interactive and/or Liberty Media (or their respective subsidiaries), on the one hand, and SpinCo, on the other hand, after the Spin-Off and to provide mechanisms for an orderly transition, Liberty Interactive and/or Liberty Media (or their respective subsidiaries), on the one hand, and SpinCo, on the other hand, are entering into certain agreements, the terms of which are summarized below.

        In addition to the agreements described below, Liberty Interactive and/or Liberty Media may enter into, from time to time, agreements and arrangements with SpinCo and certain of its related entities, in connection with, and in the ordinary course of, its business.

    Reorganization Agreement

        Prior to the completion of the Spin-Off, SpinCo will enter into a reorganization agreement with Liberty Interactive (the reorganization agreement) to provide for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the Spin-Off, certain conditions to the Spin-Off and provisions governing the relationship between SpinCo and Liberty Interactive with respect to and resulting from the Spin-Off.

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        The reorganization agreement will provide that, prior to the distribution date, Liberty Interactive will transfer to SpinCo, or cause its other subsidiaries to transfer to SpinCo, directly or indirectly, the SpinCo Assets and Liabilities (other than the Margin Loan, which a subsidiary of SpinCo will incur directly). The reorganization agreement will also provide for mutual indemnification obligations, which are designed to make SpinCo financially responsible for substantially all of the liabilities that may exist relating to the businesses included in SpinCo at the time of the Spin-Off together with certain other specified liabilities, as well as for all liabilities incurred by SpinCo after the Spin-Off, and to make Liberty Interactive financially responsible for all potential liabilities of SpinCo which are not related to SpinCo's businesses, including, for example, any liabilities arising as a result of SpinCo having been a subsidiary of Liberty Interactive, together with certain other specified liabilities. These indemnification obligations exclude any matters relating to taxes. For a description of the allocation of tax-related obligations, please see "—Tax Sharing Agreement" below.

        In addition, the reorganization agreement will provide for each of SpinCo and Liberty Interactive to preserve the confidentiality of all confidential or proprietary information of the other party for five years following the Spin-Off, subject to customary exceptions, including disclosures required by law, court order or government regulation.

        The reorganization agreement may be terminated and the Spin-Off may be abandoned, at any time prior to the distribution date, by and in the sole discretion of the Liberty Interactive board of directors. In such event, Liberty Interactive will have no liability to any person under the reorganization agreement or any obligation to effect the Spin-Off.

        This summary is qualified by reference to the full text of the reorganization agreement, a form of which will be filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

    Tax Sharing Agreement

        Prior to the completion of the Spin-Off, SpinCo will enter into a tax sharing agreement with Liberty Interactive that governs Liberty Interactive's and SpinCo's respective rights, responsibilities and obligations with respect to taxes and tax benefits, the filing of tax returns, the control of audits and other tax matters.

        References in this summary (i) to the terms "tax" or "taxes" mean U.S. federal, state, local and foreign taxes as well as any interest, penalties, additions to tax or additional amounts in respect of such taxes, (ii) to the term "Tax-related losses" refer to losses arising from the failure of the Spin-Off and related restructuring transactions to be tax-free, and (iii) to the term "compensatory equity interests" refer to options, stock appreciation rights, restricted stock, stock units or other rights with respect to Liberty Interactive stock or SpinCo stock that are granted on or prior to the Spin-Off date by Liberty Interactive, SpinCo or any of their respective subsidiaries in connection with employee, independent contractor or director compensation or other employee benefits. In addition, references to the "SpinCo group" mean, with respect to any tax year (or portion thereof) ending at or before the effective time of the Spin-Off, SpinCo and its subsidiaries at the effective time of the Spin-Off, and with respect to any tax year (or portion thereof) beginning after the effective time of the Spin-Off, SpinCo and its subsidiaries during such tax year (or portion thereof); and references to the "Liberty Interactive group" mean, with respect to any tax year (or portion thereof), Liberty Interactive and its subsidiaries, other than any person that is a member of the SpinCo group, during such tax year (or portion thereof).

        SpinCo and certain of Liberty Interactive's eligible subsidiaries that will be contributed to SpinCo currently join with Liberty Interactive in the filing of a consolidated return for U.S. federal income tax purposes and also join with Liberty Interactive in the filing of certain consolidated, combined, and unitary returns for state, local, and foreign tax purposes. However, generally for tax periods beginning

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after the Spin-Off, SpinCo and the members of the SpinCo group will not join with Liberty Interactive in the filing of federal, state, local or foreign consolidated, combined or unitary tax returns.

        Under the tax sharing agreement, except as described below, (i) Liberty Interactive will be allocated all taxes attributable to the members of the Liberty Interactive group, and all taxes attributable to the members of the SpinCo group for a pre-Spin-Off period, that are reported on any consolidated, combined or unitary tax return that includes one or more members of the Liberty Interactive group and one or more members of the SpinCo group, and (ii) each of Liberty Interactive and SpinCo will be allocated all taxes attributable to the members of its respective group that are reported on any tax return (including any consolidated, combined or unitary tax return) that includes only the members of its respective group. Special rules apply, however, as follows:

    Liberty Interactive will be allocated any taxes and Tax-related losses that result from the Spin-Off and related restructuring transactions, except that SpinCo will be allocated any such taxes or Tax-related losses that (i) result primarily from, individually or in the aggregate, a breach by SpinCo of any of its covenants relating to the Spin-Off and related restructuring transactions as described below, or (ii) result from the application of Section 355(e) of the Code to the Spin-Off as a result of the treatment of the Spin-Off as part of a plan (or series of related transactions) pursuant to which one or more persons acquire a 50-percent or greater interest in the stock of SpinCo; and

    Liberty Interactive and SpinCo will each be allocated 50 percent of any transfer taxes arising from the Spin-Off and related restructuring transactions.

        Liberty Interactive will be responsible for preparing and filing all tax returns which include one or more members of the Liberty Interactive group and one or more members of the SpinCo group. In addition to the foregoing, each of Liberty Interactive and SpinCo will be responsible for preparing and filing any tax returns that include only members of its respective group. On any tax return that SpinCo is responsible for filing, SpinCo and the members of the SpinCo group will be required to allocate tax items between any tax returns for which SpinCo is responsible and any related tax return for which Liberty Interactive is responsible that are filed with respect to the same tax year in a manner that is consistent with the reporting of such tax items on the tax return prepared by Liberty Interactive. All tax returns will be required to be filed by the parties in a manner consistent with the tax opinion obtained in connection with the Spin-Off. Further, under the tax sharing agreement, amended tax returns with respect to the SpinCo group may only be filed by the party responsible for filing the original tax return and the consent of Liberty Interactive will be required with respect to the filing of any amended tax return by SpinCo that is likely to increase the taxes or indemnity obligations of Liberty Interactive by more than a de minimis amount (unless SpinCo otherwise agrees to pay such incremental taxes or obligations).

        To the extent permitted by applicable law, income tax deductions with respect to the issuance, exercise, vesting or settlement after the date of the Spin-Off of any compensatory equity interests will be required to be claimed: (i) in the case of any active officer or employee, solely by the group that employs such person at the time of such issuance, exercise, vesting or settlement (as applicable), (ii) in the case of any former officer or employee, solely by the group that was the last to employ such person, and (iii) in the case of a director or former director (who is not an officer or employee or former officer or employee), solely by the Liberty Interactive group if such person was, at any time before or after the Spin-Off, a director of any member of the Liberty Interactive group, and in any other case, solely by the SpinCo group. For purposes of the foregoing, an officer or employee of Liberty Interactive or a member of its group during any tax year (or portion thereof) shall exclusively be considered to be employed by Liberty Interactive or the applicable member of its group during such tax year (or portion thereof). The party whose group is allocated the foregoing income tax deductions (the employing party) will be required to satisfy all applicable tax reporting obligations and satisfy all

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liabilities for taxes imposed in connection with such compensatory equity interests; however, if the corporation that is the issuer or the obligor under the applicable compensatory equity interest is a member of a different group than the employing party, such issuing corporation will be required to remit to the employing party the amount required to be withheld in respect of any withholding taxes upon settlement of such compensatory equity interest.

        Generally, each of Liberty Interactive and SpinCo will be entitled to any refunds, credits, or offsets relating to taxes allocated to and paid by its respective group under the tax sharing agreement. If SpinCo requests in writing that Liberty Interactive obtain a refund, credit or offset of taxes with respect to the carryback of any tax attribute of SpinCo or the members of its group to a pre-Spin-Off tax period, Liberty Interactive will be required to take reasonable measures to obtain a refund, credit or offset of taxes with respect to such carryback; however, SpinCo will only be entitled to such refund, credit or offset of taxes attributable (on a last dollar basis) to such carryback, and such amount will be net of any out-of-pocket costs, expenses, or increase in taxes incurred by Liberty Interactive with respect to the receipt or accrual thereof.

        Each of Liberty Interactive and SpinCo will generally have the authority to respond to and control all tax proceedings, including tax audits, involving any taxes reported on tax returns for which it is responsible for preparing and filing, and the other company will have the right to participate, at its own cost and expense, in such tax proceedings to the extent such proceedings could result in a tax liability for which such other company may be liable under the tax sharing agreement. Notwithstanding the foregoing, Liberty Interactive and SpinCo will have the authority to jointly control all proceedings, including tax proceedings, involving any taxes or Tax-related losses arising from the Spin-Off or related restructuring transactions. The tax sharing agreement will further provide for the exchange of information for tax matters (and confidentiality protections related to such exchanged information), the retention of records that may affect the tax liabilities of the parties to the agreement, and cooperation between Liberty Interactive and SpinCo with respect to tax matters.

        To the extent permitted by applicable tax law, SpinCo and Liberty Interactive will treat any payments made under the tax sharing agreement as a capital contribution or distribution (as applicable) immediately prior to the Spin-Off. However, if any indemnity payment causes, directly or indirectly, an increase in the taxable income of the recipient (or its group), the payor's payment obligation must be grossed up to take into account the taxes owed by the recipient (or its group). Payments that are not made within the time period prescribed by the tax sharing agreement will bear interest until they are made.

        Finally, each of Liberty Interactive and SpinCo will be restricted by certain covenants related to the Spin-Off and related restructuring transactions. These restrictive covenants will require that neither Liberty Interactive, SpinCo nor any member of their respective groups take, or fail to take, any action following the Spin-Off if such action, or failure to act:

    would be inconsistent with or prohibit certain restructuring transactions related to the Spin-Off from qualifying for tax-free treatment for U.S. federal income tax purposes to Liberty Interactive and its subsidiaries;

    would be inconsistent with or prohibit the Spin-Off from qualifying as a tax-free transaction under Section 355, Section 368(a)(1)(D) and related provisions of the Code to Liberty Interactive, its subsidiaries and holders of Liberty Ventures common stock (except with respect to the receipt of cash in lieu of fractional shares of SpinCo common stock); or

    would be inconsistent with, or otherwise cause any person to be in breach of, any representation, covenant, or material statement made in connection with the tax opinion delivered to Liberty Interactive relating to the qualification of the Spin-Off as a transaction described under Sections 355 and 368(a)(1)(D) of the Code.

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Further, each party will be restricted from taking any position for tax purposes that is inconsistent with the tax opinion obtained in connection with the Spin-Off.

        The parties must indemnify each other for taxes and losses allocated to them under the tax sharing agreement and for taxes and losses arising from a breach by them of their respective covenants and obligations under the tax sharing agreement.

        Notwithstanding the tax sharing agreement, under U.S. Treasury Regulations, each member of a consolidated group is severally liable for the U.S. federal income tax liability of each other member of the consolidated group. Accordingly, with respect to periods prior to the Spin-Off in which SpinCo (or its subsidiaries) have been included in Liberty Interactive's consolidated group or another company's consolidated group, SpinCo (or its subsidiaries) could be liable to the U.S. government for any U.S. federal income tax liability incurred, but not discharged, by any other member of such consolidated group. However, if any such liability were imposed, SpinCo would generally be entitled to be indemnified by Liberty Interactive for tax liabilities allocated to Liberty Interactive under the tax sharing agreement.

        This summary is qualified by reference to the full text of the tax sharing agreement, a form of which will be filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

    Services Agreement

        Liberty Interactive is currently a party to a services agreement with Liberty Media under which Liberty Media provides Liberty Interactive with certain specified services. Similarly, in connection with the Spin-Off, SpinCo will enter into a services agreement with Liberty Media (the services agreement), pursuant to which, following the Spin-Off, Liberty Media will provide SpinCo with specified services, including:

    insurance administration and risk management services;

    other services typically performed by Liberty Media's legal, investor relations, tax, accounting and internal audit departments; and

    such other services as Liberty Media may obtain from its officers, employees and consultants in the management of its own operations that SpinCo may from time to time request or require.

In addition, Liberty Media will provide to SpinCo certain technical and information technology services, including management information systems, computer, data storage, network and telecommunications services.

        SpinCo will pay Liberty Media an agreed-upon services fee under the services agreement. SpinCo will also reimburse Liberty Media for direct out-of-pocket costs incurred by Liberty Media for third party services provided to SpinCo. Liberty Media and SpinCo will evaluate all charges for reasonableness semi-annually and make adjustments to these charges as the parties mutually agree upon. The fees payable to Liberty Media for the first year of the services agreement are not expected to exceed approximately $[      ] million.

        The services agreement will continue in effect until the close of business on the [      ] anniversary of the Spin-Off, unless earlier terminated (1) by SpinCo at any time on at least 30 days' prior written notice, (2) by Liberty Media upon written notice to SpinCo following a change in control or certain bankruptcy or insolvency-related events affecting SpinCo or (3) by SpinCo, upon written notice to Liberty Media, following certain changes in control of Liberty Media or Liberty Media being the subject of certain bankruptcy or insolvency-related events.

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        This summary is qualified by reference to the full text of the services agreement, a form of which will be filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

    Facilities Sharing Agreement

        In connection with the Spin-Off, SpinCo will enter into a facilities sharing agreement (the facilities sharing agreement) with Liberty Media and Liberty Property Holdings, Inc. (LPH), a wholly-owned subsidiary of Liberty Media, pursuant to which, following the Spin-Off, SpinCo will share office facilities with Liberty Interactive and Liberty Media located at 12300 Liberty Boulevard, Englewood, Colorado. SpinCo will pay a sharing fee for use of the office based on a comparable fair market rental rate and an estimate of the usage of the office facilities by or on behalf of SpinCo. The facilities sharing agreement will continue in effect until the close of business on the [      ] anniversary of the Spin-Off, unless earlier terminated (1) by SpinCo at any time on at least 30 days' prior written notice, (2) by LPH upon written notice to SpinCo following a default by SpinCo of any of its material obligations under the facilities sharing agreement, which default remains unremedied for 30 days after written notice of such default is provided, (3) by SpinCo upon written notice to LPH, following certain changes in control of Liberty Media or Liberty Media being the subject of certain bankruptcy or insolvency-related events or (4) by LPH upon written notice to SpinCo, following certain changes in control of SpinCo or SpinCo being the subject of certain bankruptcy or insolvency-related events.

        This summary is qualified by reference to the full text of the facilities sharing agreement, a form of which will be filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

    Aircraft Time Sharing Agreements

        Prior to the completion of the Spin-Off, SpinCo (Lessee) will enter into [three] aircraft time sharing agreements with Liberty Media or one or more of its wholly-owned subsidiaries for each of [three] aircraft owned by Liberty Media or in which a wholly owned subsidiary of Liberty Media owns a fractional interest. Each aircraft time sharing agreement will provide that Liberty Media or its subsidiaries will lease the aircraft to Lessee and provide or arrange for a fully qualified flight crew for all operations on a periodic, non-exclusive time sharing basis. Lessee will pay Liberty Media or its subsidiaries an amount equal to 200% of the actual expenses for fuel for each flight conducted under each aircraft time sharing agreement (which we estimate will be a de minimis amount for the first year under the aircraft time sharing agreements). The aircraft time sharing agreements will continue in effect until the close of business on the first anniversary of the Spin-Off, and then will be automatically renewed on a month-to-month basis, unless terminated earlier by either party upon at least 30 days' prior written notice.

        This summary is qualified by reference to the full text of the aircraft time sharing agreements, forms of which will be filed as an exhibit to the Registration Statement on Form S-1 of which this prospectus forms a part.

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DESCRIPTION OF OUR CAPITAL STOCK

        The following information reflects our certificate of incorporation (our charter) and bylaws as we expect to be in effect at the time of the Spin-Off.

Authorized Capital Stock

        Our authorized capital stock will consist of [            ] ( [            ]) shares, of which [            ] ([            ]) shares will be designated common stock, par value $0.01 per share, and [            ] ([            ]) shares will be designated preferred stock, par value $0.01 per share. Our common stock will be divided into three series. We will have [            ] ([            ]) shares of Series A common stock, [            ] ([            ]) shares of Series B common stock, and [            ] ( [            ]) shares of Series C common stock authorized.

        Immediately following the Spin-Off, we expect to have approximately [            ] shares of our Series A common stock and approximately [            ] shares of our Series B common stock outstanding, based upon the number of shares of LVNTA and LVNTB outstanding on [                    ], 2016 and based upon the distribution ratio of 0.5 of a share of LEXEA and LEXEB to holders of LVNTA and LVNTB, respectively. No shares of our Series C common stock or preferred stock will be outstanding immediately following the Spin-Off.

Our Common Stock

        The holders of our Series A common stock, Series B common stock and Series C common stock have equal rights, powers and privileges, except as otherwise described below.

    Voting Rights

        The holders of our Series A common stock will be entitled to one vote for each share held, and the holders of our Series B common stock will be entitled to ten votes for each share held on all matters (other than the election or removal of Common Stock Directors prior to the Series B Director Termination Time) on which they are entitled to vote. With respect to any vote of stockholders on the election or removal of Common Stock Directors occurring prior to the Series B Director Termination Time, holders of our Series A common stock will be entitled to one vote for each share held, and holders of our Series B common stock are entitled to two votes for each share held. The holders of our Series C common stock will not be entitled to any voting powers, except as required by Delaware law. When the vote or consent of holders of our Series C common stock is required by Delaware law, the holders of our Series C common stock will be entitled to 1/100th of a vote for each share held. Our charter does not provide for cumulative voting in the election of directors.

    Dividends; Liquidation

        Subject to any preferential rights of any outstanding series of our preferred stock created by our board from time to time, the holders of our common stock will be entitled to such dividends as may be declared from time to time by our board from funds available therefor. Except as otherwise described under "—Distributions," whenever a dividend is paid to the holders of one of our series of common stock, we will also pay to the holders of the other series of our common stock an equal per share dividend. For a more complete discussion of our dividend policy, please see "—Dividend Policy."

    Conversion

        Each share of our Series B common stock is convertible, at the option of the holder, into one share of our Series A common stock. Our Series A common stock and Series C common stock are not convertible into shares of any other series of our common stock.

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    Distributions

        Distributions made in shares of our Series A common stock, our Series B common stock, our Series C common stock or any other security with respect to our Series A common stock, our Series B common stock or our Series C common stock may be declared and paid only as follows:

    a share distribution (1) consisting solely of shares of our Series C common stock (or securities convertible therefor) to holders of our Series A common stock, Series B common stock and Series C common stock, on an equal per share basis; or (2) consisting of (x) shares of our Series A common stock (or securities convertible therefor other than, for the avoidance of doubt, shares of our Series B common stock) to holders of our Series A common stock, on an equal per share basis, (y) shares of our Series B common stock (or securities convertible therefor) to holders of our Series B common stock, on an equal per share basis, and (z) shares of our Series C common stock (or securities convertible therefor) to holders of our Series C common stock, on an equal per share basis; and

    a share distribution consisting of any class or series of securities of our company or any other person, other than solely our Series A common stock, Series B common stock or Series C common stock (or securities convertible therefor) on the basis of a distribution of (1) identical securities, on an equal per share basis, to holders of our Series A common stock, Series B common stock and Series C common stock; or (2) separate classes or series of securities, on an equal per share basis, to holders of each such series of our common stock; or (3) a separate class or series of securities to the holders of one or more series of our common stock and, on an equal per share basis, a different class or series of securities to the holders of all other series of our common stock, provided that, in the case of (2) or (3) above, the securities so distributed do not differ in any respect other than their relative voting rights and related differences in designation, conversion and share distribution provisions, with the holders of shares of Series B common stock receiving securities of the class or series having the highest relative voting rights and the holders of shares of each other series of our common stock receiving securities of the class or series having lesser relative voting rights, without regard to whether such rights differ to a greater or lesser extent than the corresponding differences in voting rights and any related differences in designation, conversion and share distributions, as applicable, and provided further that, if different classes or series of securities are being distributed to holders of our Series A common stock and Series C common stock, then such securities shall be distributed either as determined by our board of directors or such that the relative voting rights of the securities of the class or series of securities to be received by the holders of our Series A common stock and Series C common stock correspond, to the extent practicable, to the relative voting rights of each such series of our common stock.

    Reclassification

        We may not reclassify, subdivide or combine any series of our common stock without reclassifying, subdividing or combining the other series of our common stock, on an equal per share basis.

    Liquidation and Dissolution

        In the event of our liquidation, dissolution or winding up, after payment or provision for payment of our debts and liabilities and subject to the prior payment in full of any preferential amounts to which our preferred stock holders may be entitled, the holders of our Series A common stock, Series B common stock and Series C common stock will share equally, on a share for share basis, in our assets remaining for distribution to the holders of our common stock.

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    Our Preferred Stock

        Our charter authorizes our board of directors to establish one or more series of our preferred stock and to determine, with respect to any series of our preferred stock, the terms and rights of the series, including:

    the designation of the series;

    the number of authorized shares of the series, which number our board may subsequently increase or decrease, but not below the number of such shares of such series preferred stock then outstanding;

    the dividend rate or amounts, if any, payable on the shares and, in the case of cumulative dividends, the date or dates from which dividends on all shares of the series will be cumulative and the relative preferences or rights of priority or participation with respect to such dividends;

    the rights of the series in the event of our voluntary or involuntary liquidation, dissolution or winding up and the relative preferences or rights of priority of payment;

    the rights, if any, of holders of the series to convert into or exchange for other classes or series of stock or indebtedness and the terms and conditions of any such conversion or exchange, including provision for adjustments within the discretion of our board;

    the voting rights, if any, of the holders of the series (provided that no class or series of preferred stock outstanding prior to the Series B Director Termination Time will be entitled to vote in the election or removal of directors of our company or elect or appoint any directors);

    the terms and conditions, if any, for us to purchase or redeem the shares of the series; and

    any other relative rights, preferences and limitations of the series.

        We believe that the ability of our board of directors to issue one or more series of our preferred stock will provide us with flexibility in structuring possible future financings and acquisitions, and in meeting other corporate needs that might arise. The authorized shares of our preferred stock, as well as shares of our common stock, will be available for issuance without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange or automatic quotation system on which our securities may be listed or traded.

        Although we have no intention at the present time of doing so, our company could issue a series of preferred stock that could, depending on the terms of such series, impede the completion of a merger, tender offer or other takeover attempt. Our board will make any determination to issue such shares based upon its judgment as to the best interests of our stockholders. Our board, in so acting, could issue preferred stock having terms that could discourage an acquisition attempt through which an acquirer may be able to change the composition of our board of directors, including a tender offer or other transaction that some, or a majority, of our stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then-current market price of the stock.

Dividend Policy

        We presently intend to retain future earnings, if any, to finance the expansion of our business. Therefore, we do not expect to pay any cash dividends in the foreseeable future. All decisions regarding the payment of dividends by our company will be made by our board of directors, from time to time, in accordance with applicable law after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, plans for expansion and possible loan covenants which may restrict or prohibit our payment of dividends.

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Other Provisions of Our Charter and Bylaws

    Protective Covenants

        Our charter provides that, until the Series B Director Termination Time, we will not (i) issue any shares of Series B common stock, other than upon exercise of certain securities convertible therefor outstanding immediately following the completion of the Spin-Off, without the approval of a majority of the Series B Directors then in office (in addition to any other required stockholder approval), (ii) change the number of directors constituting the entire board of directors, including the relative number of Series B Directors and Common Stock Directors or (iii) authorize any merger or consolidation of our company with or into any other corporation or other entity in which the surviving entity is not a corporation organized under the laws of the State of Delaware.

    Board of Directors

        Prior to the Series B Director Termination Time, our charter provides that the number of directors will be fixed at seven, with two directors being Series B Directors (the Series B Directors) and five directors being Common Stock Directors (the Common Stock Directors). Our charter provides that, following the Series B Director Termination Time, subject to any rights of the holders of any series of preferred stock to elect additional directors, the number of our directors will not be less than three and the exact number will be fixed from time to time by a resolution of our board. Prior to the Series B Director Termination Time, the Series B Directors will be elected exclusively by the holders of our Series B common stock and, upon completion of the Spin-Off, the initial Series B Directors will serve until the earlier of (i) the termination of the Diller Assignment (the date and time of such termination, the Series B Director Termination Time) and (ii) the second annual meeting of our stockholders following the completion of the Spin-Off. At the Series B Director Termination Time, the persons then serving as Series B Directors will cease to be directors of SpinCo and the total authorized number of directorships of SpinCo shall automatically be reduced by the total number of authorized Series B Director directorships. Prior to the Series B Director Termination Time, the Common Stock Directors will be elected by the holders of our Series A common stock and holders of our Series B common stock (with holders of our Series B common stock having two votes per share instead of ten votes per share in such election), and will serve for one year terms expiring at each annual meeting of stockholders. At the Series B Director Termination Time, the Common Stock Directors then in office will constitute the entire board of directors and will be divided into three classes. Each class will consist, as nearly as possible, of a number of directors equal to one-third of the then authorized number of board members, other than any directors who may be elected by holders of any then-outstanding preferred stock. The board of directors of SpinCo will be authorized to assign those directors already in office to such classes upon the Series B Director Termination Time. The term of office of our Class I directors expires at the first annual meeting of our stockholders following the Series B Director Termination Time. The term of office of our Class II directors expires at the second annual meeting of our stockholders following the Series B Director Termination Time. The term of office of our Class III directors expires at the third annual meeting of our stockholders following the Series B Director Termination Time. Following the Series B Director Termination Time, at each annual meeting of our stockholders, the successors of that class of directors whose term expires at that meeting will be elected to hold office for a term expiring at the annual meeting of our stockholders held in the third year following the year of their election. The directors of each class will hold office until the expiration of the term of such class and their respective successors are elected and qualified or until such director's earlier death, resignation or removal.

        Except as otherwise required by law, on all matters other than an Expedia Board Voting Determination or a SpinCo Director Determination, each director will have one vote on each matter considered by our board of directors. Prior to the Series B Director Termination Time, in connection with an election of persons (other than persons to be designated as SpinCo directors pursuant to the

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Assigned Governance Agreement) to serve on the board of directors of Expedia, SpinCo will vote the shares of EXPE and shares of Expedia class B common stock beneficially owned by SpinCo only in accordance with a resolution approved by a majority of the votes cast at a meeting of the board of directors at which at least one Series B Director is present or set forth in a unanimous written consent at a time when there is at least one Series B Director then in office (an Expedia Board Voting Determination). At a meeting at which an Expedia Board Voting Determination is considered, each Common Stock Director will be entitled to cast one vote with respect to the Expedia Board Voting Determination and each Series B Director present at the meeting will be entitled to cast a number of votes with respect to such determination equal to (i) the total number of then-authorized Common Stock Directors, plus one, divided by (ii) the number of Series B Directors present at such meeting, rounded up to the next whole number of votes. The Expedia Board Voting Determination (i) shall be made not less than twenty four business days prior to the date set by Expedia for any annual or special meeting of stockholders of Expedia at which directors are to be elected (provided, that, in the event the proxy statement for the applicable Expedia stockholder meeting has not been filed with the SEC on or prior to the thirtieth business day prior to the date set by Expedia for such meeting, the Expedia Board Voting Determination shall be made as promptly as practical following the filing of such proxy statement with the SEC, and in any event not later than the close of business, New York City time, on the third business day after such proxy statement is filed with the SEC, (ii) may not be made by or delegated to a committee of our board of directors and (iii) may only be modified, amended or changed by (A) a resolution approved either (x) unanimously by directors constituting the entire board of directors or (y) in the event the holders of Series B common stock have taken action by written consent to fill any vacancy in the Series B Director directorships, which action has become effective, by a majority of the votes entitled to be cast with respect to an Expedia Board Voting Determination or (B) in a unanimous written consent of our board at a time when there is at least one Series B Director in office. After the Expedia Board Voting Determination is adopted, in the event any candidate for election to the board of directors of Expedia for whom SpinCo's shares of EXPE and shares of Expedia class B common stock are to be voted does not stand for election for any reason, then all such shares of Expedia common stock will be voted in favor of the replacement nominee proposed by the person who nominated the person for whom such shares were to be originally voted. In connection with decisions relating to the selection of persons to stand for election as SpinCo directors pursuant to the Assigned Governance Agreement or the voting of Expedia Common Shares beneficially owned by SpinCo with respect to the election of such SpinCo directors to the board of directors of Expedia (each, a SpinCo Director Determination), SpinCo will designate the persons to stand for election as SpinCo directors and will vote its Expedia Common Shares only in accordance with a resolution (i) approved by a majority of the votes cast by directors of SpinCo at a meeting or (ii) set forth in a unanimous written consent. At a meeting at which a SpinCo Director Determination is considered, (i) each Common Stock Director will be entitled to cast three votes with respect to the SpinCo Director Determination and (ii) each Series B Director will be entitled to cast one vote with respect to such determination. SpinCo Director Determinations relating to the voting of SpinCo's Expedia Common Shares with respect to the election of SpinCo directors shall be made at the same meeting (or set forth in a unanimous written consent on the same date) as the Expedia Board Voting Determination. In the event, after the SpinCo Director Determination is adopted, any candidate for election to the board of directors of Expedia for whom SpinCo's shares of EXPE and shares of Expedia class B common stock are to be voted does not stand for election for any reason, then all such Expedia Common Shares will be voted in favor of the replacement nominee proposed by the board of directors of SpinCo.

        Our charter provides that, prior to the Series B Director Determination Time, any or all Series B Directors may be removed from office, with or without cause, only by the affirmative vote (or written consent) of holders of at least a majority of the total voting power of our outstanding Series B common stock and any and all Common Stock Directors may be removed from office, with or without cause,

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only by the affirmative vote of holders of at least a majority of the voting power of our Series A common stock and Series B common stock (with holders of our Series B common stock having two votes per share instead of ten votes per share on such matter). Following the Series B Director Termination Time, subject to the rights of the holders of any series of our preferred stock, directors may be removed from office only for cause upon the affirmative vote of the holders of at least a majority of the aggregate voting power of our outstanding capital stock entitled to vote on such matter voting together as a single class.

        Our charter provides that, prior to the Series B Director Termination Time, vacancies in the Common Stock Director directorships on our board of directors resulting from death, resignation, removal, disqualification or other cause will be filled only by the affirmative vote of a majority of the Common Stock Directors then in office (or, if only one remains in office, the sole remaining Common Stock Director). Prior to the Series B Director Termination Time, vacancies in the Series B Director directorships on our board of directors resulting from (i) removal will be filled only by the affirmative vote of the holders of at least a majority of the total voting power of our outstanding Series B common stock and (ii) death, resignation, disqualification or other cause (excluding removal) will be filled either by (x) the affirmative vote of holders of at least a majority of the total voting power of our outstanding Series B common stock or (y) a majority of the Series B Directors then in office (or, if only one remains in office, the sole remaining Series B Director).

        From the completion of the Spin-Off until the Series B Director Termination Time, in connection with each annual or special meeting of stockholders of SpinCo at which Common Stock Directors or Series B Directors are to be elected, the Common Stock Director Committee will have the right to propose the persons for nomination for election as Common Stock Directors and the Series B Director Committee will have the right to propose the persons for nomination for election as Series B Directors to the nominating and corporate governance committee of SpinCo.

        Our charter provides that, following the Series B Director Termination Time, subject to the rights of the holders of any series of our preferred stock, vacancies on our board resulting from death, resignation, removal, disqualification or other cause, and newly created directorships resulting from any increase in the number of directors on our board, will be filled only by the affirmative vote of a majority of the remaining directors then in office (even though less than a quorum) or by the sole remaining director. Any director so elected shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred or to which the new directorship is assigned, and until that director's successor will have been elected and qualified or until such director's earlier death, resignation or removal. No decrease in the number of directors constituting our board will shorten the term of any incumbent director, except as may be provided in any certificate of designation with respect to a series of our preferred stock with respect to any additional director elected by the holders of that series of our preferred stock.

        Following the Series B Director Termination Time, these provisions would preclude a third party from removing incumbent directors and simultaneously gaining control of our board by filling the vacancies created by removal with its own nominees. Under the classified board provisions described above, it would take at least two elections of directors for any individual or group to gain control of our board. Accordingly, these provisions could discourage a third party from initiating a proxy contest, making a tender offer or otherwise attempting to gain control of us.

    Limitation on Liability and Indemnification

        To the fullest extent permitted by Delaware law, our directors are not liable to our company or any of its stockholders for monetary damages for breaches of fiduciary duties as a director. In addition, our company indemnifies, to the fullest extent permitted by applicable law, any person involved in any suit or action by reason of the fact that such person is a director or officer of our company or, at our

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request, a director, officer, employee or agent of another corporation or entity, against all liability, loss and expenses incurred by such person. We will pay the expenses of a director or officer in defending any proceeding in advance of its final disposition, provided that such payment is made upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should be ultimately determined that the director or officer is not entitled to indemnification. See "Item 14. Indemnification of Directors and Officers."

    Corporate Opportunity

        Our charter acknowledges that SpinCo may have overlapping directors and officers with other entities that compete with our businesses and that SpinCo may engage in material business transactions with such entities. SpinCo has renounced its rights to certain business opportunities and our charter provides that no director or officer of SpinCo will breach their fiduciary duty and therefore be liable to SpinCo or its stockholders by reason of the fact that any such individual directs a corporate opportunity to another person or entity (including Liberty Interactive or Liberty Media) instead of SpinCo, or does not refer or communicate information regarding such corporate opportunity to SpinCo, unless (x) such opportunity was expressly offered to such person solely in his or her capacity as a director or officer of SpinCo or as a director or officer of any of SpinCo's subsidiaries, and (y) such opportunity relates to a line of business in which SpinCo or any of its subsidiaries is then directly engaged.

    No Stockholder Action by Written Consent; Special Meetings

        Our charter provides that, except as provided in the terms of any series of preferred stock, any action required to be taken or which may be taken at any annual or special meeting of the stockholders may not be taken without a meeting and may not be effected by any consent in writing by such holders, provided that prior to the Series B Director Termination Time, holders of Series B common stock may take action by written consent with respect to the election, appointment or removal of any or all Series B Directors or the filling of any vacancy in a Series B Director directorship. Except as otherwise required by law and subject to the rights of the holders of any series of our preferred stock, special meetings of our stockholders for any purpose or purposes may be called only by our Secretary (i) upon the written request of the holders of not less than 70% of the total voting power of the then outstanding shares of our Series A common stock, Series B common stock and, if applicable, our preferred stock, entitled to vote thereon or (ii) at the request of, if prior to the Series B Director Termination Time, at least 80% of the members of the entire board of directors, or, if following the Series B Director Termination Time, at least 75% of the members of the entire board of directors (such percentage of the entire board of directors, the Applicable Percentage).

    Advance Notice Procedures

        Our bylaws establish an advance notice procedure for stockholders to make nominations of candidates for election as directors or to bring other business before an annual meeting of our stockholders.

        All nominations by stockholders or other business to be properly brought before a meeting of stockholders will be made pursuant to timely notice in proper written form to our company's Secretary. To be timely, a stockholder's notice will be given to our company's Secretary at SpinCo's offices as follows:

    (1)
    with respect to an annual meeting of our stockholders that is called for a date within 30 days before or after the anniversary date of the immediately preceding annual meeting of our stockholders, such notice must be given no earlier than the close of business on the 90th day and no later than the close of business on the 60th day prior to the meeting date;

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    (2)
    with respect to an annual meeting of our stockholders that is called for a date not within 30 days before or after the anniversary date of the immediately preceding annual meeting of our stockholders, such notice must be given no later than the close of business on the 10th day following the day on which SpinCo first provides notice of or publicly announces the date of the current annual meeting, whichever occurs first; and

    (3)
    with respect to an election to be held at a special meeting of our stockholders, such notice must be given no earlier than the close of business on the 90th day prior to such special meeting and no later than the close of business on the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the proposed nominees.

        The public announcement of an adjournment or postponement of a meeting of our stockholders does not commence a new time period (or extend any time period) for the giving of any such stockholder notice. However, if the number of directors to be elected to our board at any meeting is increased, and we do not make a public announcement naming all of the nominees for director or specifying the size of the increased board at least 100 days prior to the anniversary date of the immediately preceding annual meeting, a stockholder's notice will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to our company's Secretary at our offices not later than the close of business on the 10th day following the day on which we first made the relevant public announcement. For purposes of the first annual meeting of stockholders to be held in 2017, the first anniversary date will be deemed to be the anniversary of the date of the completion of the Spin-Off. For purposes of nominations by stockholders prior to the Series B Director Termination Time, (i) only holders of our Series B common stock will be entitled to nominate persons for election to our board of directors as Series B Directors and (ii) only holders of our Series A common stock and Series B common stock shall be entitled to nominate persons for election to our board of directors as Common Stock Directors.

    Amendments

        Our charter provides that, subject to the rights of the holders of any series of our preferred stock, the affirmative vote of the holders of at least 70% of the aggregate voting power of our outstanding capital stock entitled to vote on such matter, voting together as a single class, is required to adopt, amend or repeal any provision of our charter or to add or insert any provision in our charter, provided that the foregoing enhanced voting requirement will not apply to any adoption, amendment, repeal, addition or insertion (1) as to which Delaware law does not require the consent of our stockholders or (2) which has been approved by at least the Applicable Percentage of the members of our board then in office. Our charter further provides that the affirmative vote of the holders of at least 70% of the aggregate voting power of our outstanding capital stock entitled to vote on such matter, voting together as a single class, is required to adopt, amend or repeal any provision of our bylaws, provided that the board of directors may adopt, amend or repeal the bylaws by the affirmative vote of not less than the Applicable Percentage of the members of our board then in office, provided, further, that prior to the Series B Director Termination Time, certain provisions of the bylaws may not be amended without the approval of a majority of the Series B Directors then in office at such time as there is at least one Series B Director in office.

    Supermajority Voting Provisions

        In addition to the supermajority voting provisions discussed under "—Amendments" above, our charter provides that, subject to the rights of the holders of any series of our preferred stock, the

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affirmative vote of the holders of at least 70% of the aggregate voting power of our outstanding capital stock entitled to vote on such matter, voting together as a single class, is required for:

    the merger or consolidation of our company with or into any other corporation (including a merger consummated pursuant to Section 251(h) of the DGCL (pursuant to which an acquiror owning shares representing the voting percentage required to approve a merger may forego having a stockholder meeting to approve such transaction as long as certain conditions are met) and notwithstanding the exception to a vote of the stockholders for such merger set forth therein), provided, that the foregoing voting provision will not apply to any such merger or consolidation (1) as to which the laws of the State of Delaware, as then in effect, do not require the consent of our stockholders (other than Section 251(h) of the DGCL), or (2) that at least the Applicable Percentage of the members of our board of directors then in office have approved;

    the sale, lease or exchange of all, or substantially all, of our assets, provided, that the foregoing voting provisions will not apply to any such sale, lease or exchange that at least the Applicable Percentage of the members of our board of directors then in office have approved;

    our dissolution, provided, that the foregoing voting provision will not apply to such dissolution if at least the Applicable Percentage of the members of our board of directors then in office have approved such dissolution; or

    until the Series B Director Termination Time, the sale, assignment, transfer or conveyance of all or any portion of our shares of Expedia class B common stock, provided, that a business combination in which a third party acquires control of us prior to the Series B Director Termination Time will not be deemed a sale, assignment, transfer or conveyance of the shares of Expedia class B common stock, subject to certain exceptions or so long as certain conditions are satisfied.

Section 203 of the Delaware General Corporation Law

        Section 203 of the DGCL imposes restrictions on certain transactions between a Delaware corporation and an "interested stockholder" (as defined in Section 203 of the DGCL) of such corporation. An "interested stockholder" for this purpose generally is a stockholder who is directly or indirectly a beneficial owner of 15% or more of the outstanding voting power of the Delaware corporation. Section 203 of the DGCL imposes restrictions on certain business combinations between an interested stockholder including certain related persons and a corporation for a period of three years after the date on which the stockholder became an interested stockholder, unless: (1) prior to the time that such stockholder became an interested stockholder, either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder is approved by the corporation's board of directors, (2) the interested stockholder acquired at least 85% of the voting power of the corporation in the transaction in which the stockholder became an interested stockholder (subject to certain exclusions), or (3) at or subsequent to such time, the business combination is approved by a majority of the board of directors and the affirmative vote of the holders of 662/3% of the outstanding voting power of the shares not owned by the interested stockholder. SpinCo is subject to Section 203 of the DGCL.

Transfer Agent and Registrar

        Computershare Trust Company, N.A. will be the transfer agent and registrar for our common stock:

Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02121

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LEGAL MATTERS

        Legal matters relating to the validity of the securities to be issued in the Spin-Off will be passed upon by Baker Botts L.L.P. Legal matters relating to the U.S. federal income tax consequences of the Spin-Off will be passed upon by Skadden, Arps, Slate, Meagher & Flom LLP.


EXPERTS

        The combined financial statements of Liberty Expedia Holdings, Inc. as of December 31, 2015 and 2014, and for each of the years in the three-year period ended December 31, 2015, have been included herein and in the Registration Statement on Form S-1 in reliance upon the reports of KPMG LLP, independent registered public accounting firm, and Ernst & Young LLP, independent registered public accounting firm, appearing elsewhere herein, and upon authority of such firms as experts in accounting and auditing.

        The consolidated financial statements of Expedia, Inc. at December 31, 2015 and 2014, and for each of the three years in the period ended December 31, 2015, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We expect that the audit committee of Liberty Interactive's board of directors will select KPMG LLP as our independent registered public accounting firm for the year ended December 31, 2016.


WHERE YOU CAN FIND MORE INFORMATION

        We have filed a Registration Statement on Form S-1 with the SEC under the Securities Act with respect to the shares of our common stock being distributed in the Spin-Off as contemplated by this prospectus. This prospectus is a part of, and does not contain all of the information set forth in, the Registration Statement and the exhibits and schedules to the Registration Statement. For further information with respect to our company and our common stock, please refer to the Registration Statement, including its exhibits and schedules. Statements made in this prospectus relating to any contract or other document are not necessarily complete, and you should refer to the exhibits attached to the Registration Statement for copies of the actual contract or document.

        Upon the effectiveness of the Registration Statement on Form S-1, of which this prospectus forms a part, we will become subject to the information and reporting requirements of the Exchange Act and, in accordance with the Exchange Act, we will file periodic reports, proxy statements and other information with the SEC. You may read and copy any document that SpinCo files with the SEC, including the Registration Statement on Form S-1, including its exhibits and schedules, at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. You may also inspect such filings on the Internet website maintained by the SEC at www.sec.gov. Our website will be [http://www.libertyexpediaholdings.com], and we intend to make our periodic reports and other information filed with or furnished to the SEC available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information contained on any website referenced in this prospectus is not incorporated by reference in this prospectus and does not constitute a party of this prospectus.

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        You may request a copy of any of our filings with the SEC at no cost, by writing or telephoning the office of:

    Investor Relations
    Liberty Expedia Holdings, Inc.
    12300 Liberty Blvd.
    Englewood, Colorado 80112
    Telephone: (720) 875-[        ]

        We intend to furnish holders of our common stock with annual reports containing consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles and audited and reported on, with an opinion expressed by, an independent public accounting firm.

        For additional information regarding Liberty Interactive and its subsidiaries, you may read and copy Liberty Interactive's periodic reports, proxy statements and other information publicly filed by Liberty Interactive at the SEC's Public Reference Room or on the SEC's website, and you may contact Liberty Interactive at the contact information set forth therein.

        You may request a copy of any of Liberty Interactive's filings with the SEC at no cost, by writing or telephoning the office of:

    Investor Relations
    Liberty Interactive Corporation
    12300 Liberty Blvd.
    Englewood, Colorado 80112
    Telephone: (720) 875-5408

        Before the Spin-Off, if you have questions relating to the Spin-Off, you should contact the office of Investor Relations of Liberty Interactive at the address and telephone number listed above.

        Pursuant to a services agreement to be entered into between our company and Liberty Media, Liberty Media will provide SpinCo with investor relations assistance for a period following the Spin-Off. Accordingly, if you have questions relating to SpinCo following the Spin-Off, you should contact the office of Investor Relations of Liberty Media at the following address and telephone number:

    Investor Relations
    Liberty Media Corporation
    12300 Liberty Blvd.
    Englewood, Colorado 80112
    Telephone: (877) 772-1518

        You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized any person to provide you with different information or to make any representation not contained in this prospectus.

        This prospectus includes information concerning Expedia, which is a public company and files reports and other information with the SEC in accordance with the requirements of the Securities Act and the Exchange Act. Information included in this prospectus concerning Expedia has been derived from the reports and other information filed by it with the SEC. Those reports and such other information filed by Expedia with the SEC are not incorporated by reference in this prospectus. You may read and copy any reports and other information filed by these companies as set forth above.

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Index to Financials Statements

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Liberty Interactive Corporation:

        We have audited the accompanying combined balance sheets of Liberty Expedia Holdings, Inc. (the Company) as of December 31, 2015 and 2014, and the related combined statements of operations, comprehensive earnings (loss), cash flows, and equity for each of the years in three-year period ended December 31, 2015. These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audits. We did not audit the financial statements of Expedia, Inc., (a 15.7% percent owned investee company as of December 31, 2015). The Company's investment in Expedia, Inc. at December 31, 2015, and 2014, included $763,868,000 and $327,442,000, respectively, and its share of earnings of Expedia, Inc. included $140,670,000, $71,765,000 and $39,496,000 for the years 2015, 2014 and 2013, respectively, that we did not audit. The financial statements of Expedia, Inc. were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the portion of the amounts included for Expedia, Inc. referred to above, is based solely on the report of the other auditors.

        We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.

        In our opinion, based on our audits and the reports of the other auditors, the combined financial statements referred to above present fairly, in all material respects, the financial position of Liberty Expedia Holdings, Inc. as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

  /s/ KPMG LLP

Denver, Colorado
March 24, 2016

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LIBERTY EXPEDIA HOLDINGS, INC.

Combined Balance Sheets

December 31, 2015 and 2014

 
  2015   2014  
 
  amounts in thousands
 

Assets

             

Current assets:

             

Cash and cash equivalents

  $ 2,243     1,631  

Accounts receivable

    701     1,101  

Inventory, net

    53,194     48,961  

Prepaid expenses

    4,661     3,870