BELLEVUE, Wash., Feb. 15 /PRNewswire-FirstCall/ — Expedia, Inc. (NASDAQ: EXPE) today announced financial results for its fourth quarter and year ended December 31, 2005.

 

“Despite a fiercely competitive environment, headwinds in the hotel and airline industries and a mid-year spin-off, Expedia, Inc. delivered meaningful bookings, earnings and free cash flow for its stockholders in 2005,” said Expedia, Inc. Chairman and Senior Executive Barry Diller. “The Company approaches its second decade of operations with a solid foundation-a complementary portfolio of industry-leading brands, a broad and growing geographic footprint and an experienced, energized and focused management team.”

 

“While the fourth quarter wasn’t as strong as we hoped it would be, The Expedia® Promise, Best Price Guarantee and Expedia® Trip Guides are fitting additions to what was a solid operational and financial year,” said Dara Khosrowshahi, Expedia, Inc.’s CEO and President. “These innovations are just the latest signposts marking Expedia’s multi-year evolution from efficient transaction engine to world class retailer of travel products and services. We are investing to transform the way travelers plan, purchase and enjoy their trips — again.”

 

  Financial Summary (figures in $MM's, except per share amounts)
  ::::::::::::::_
                   3 Months  3 Months            Year       Year
                     Ended    Ended   Y / Y     Ended      Ended   Y / Y
    Measure        12.31.05  12.31.04 Change   12.31.05   12.31.04 Change
  ::::::::::::::_
  Gross bookings   $3,395.1  $2,894.9   17%   $15,551.5  $12,773.9   22%
  ::::::::::::::_
  Revenue             494.7     439.0   13%     2,119.5    1,843.0   15%
  ::::::::::::::_
  Gross profit        384.5     342.6   12%     1,648.7    1,452.7   13%
  ::::::::::::::_
  Operating income
   before
   amortization*      132.9     143.3   (7%)      627.4      553.7   13%
  ::::::::::::::_
  Operating income     85.7      70.0   22%       397.1      240.5   65%
  ::::::::::::::_
  Adjusted net
   income *            72.7      91.9  (21%)      415.8      366.9   13%
  ::::::::::::::_
  Adjusted EPS *      $0.20     $0.27  (26%)      $1.18      $1.08    9%
  ::::::::::::::_
  Net income           25.2      44.1  (43%)      228.7      163.5   40%
  ::::::::::::::_
  Diluted EPS         $0.07     $0.13  (46%)      $0.65      $0.48   35%
  ::::::::::::::_
  Free cash flow *   (105.2)     72.4   N/A       797.6      749.4    6%
  ::::::::::::::_

 

* “Operating income before amortization,” “Adjusted net income,” “Adjusted EPS” and “Free cash flow” are non-GAAP measures as defined by the Securities and Exchange Commission (the “SEC”). Please see “Definitions of Non-GAAP Measures” and “Tabular Reconciliations for Non-GAAP Measures” for an explanation of non-GAAP measures used throughout this release. Please also see “Basis of Presentation” below for additional information on financial results presented throughout this release.

 

  Discussion of Results - Fourth Quarter 2005

Gross Bookings & Revenue

 

Gross bookings increased 17% for the fourth quarter 2005 compared with fourth quarter 2004. Domestic gross bookings increased 14% and international gross bookings increased 31%, or 38% excluding the impact of year-over-year changes in foreign exchange.

 

Revenue increased 13% during the quarter, primarily driven by increased worldwide merchant hotel revenue, acquisitions and growth in our car rental business. Fourth quarter domestic revenue increased 8% and international revenue grew 30%, a reduced rate of growth compared with the first three quarters of 2005, reflecting continued challenges in the travel and competitive environments in Europe, particularly in the U.K., and the impact of foreign exchange.

 

Worldwide merchant hotel revenue, which accounts for over 90% of worldwide hotel revenue, increased 9% for the fourth quarter, driven by 12% growth in room nights stayed, including rooms delivered as a component of vacation packages. Revenue per room night decreased 2%, resulting from a contraction in hotel raw margins (defined as hotel net revenue as a percentage of hotel gross bookings), partially offset by a 4% increase in average daily rates (“ADRs”).

 

Worldwide air revenues decreased 4% during the quarter, due to an 11% decrease in revenue per air ticket, partially offset by an 8% increase in air tickets sold. The revenue per ticket decrease was more pronounced in the merchant air business, reflecting less inventory allocation and lower discounting of merchant air tickets, as the industry hit record load factors during the quarter.

 

Revenue as a percentage of gross bookings (“revenue margin”) was 14.6% for the fourth quarter, down 59 basis points compared with fourth quarter 2004 and similar to the 58 basis point year-over-year decline experienced in the third quarter of 2005. Domestic revenue margin was down 72 basis points, while international was down 13 basis points. The fourth quarter decline in worldwide revenue margin was due primarily to lower domestic hotel margin and lower domestic air revenue per ticket, partially offset by higher revenue margins associated with our destination services businesses. In addition, average airfares increased 7% year-over-year, which has the effect of increasing gross bookings without a corresponding increase in per ticket air revenues as our remuneration generally does not vary with the cost of the ticket.

 

Profitability

 

Gross profit for the fourth quarter was $385 million, up $42 million, or 12% from fourth quarter 2004. Gross margin was down 33 basis points to 77.7%, driven by the inclusion of lower gross margin revenue from an acquired destination services company, which records its event ticketing revenue on a gross basis. Excluding this acquisition, gross margin would have increased 45 basis points.

 

Operating Income Before Amortization (“OIBA”) decreased 7% to $133 million, driven by the Company’s more even distribution of selling and marketing expense throughout the year versus the prior year, hiring in our market management teams, increased general and administrative expenses to support the Company’s spin-off as an independent public company and increased hiring in our technology teams. OIBA as a percentage of revenue was down 577 basis points to 26.9% reflecting higher growth in operating expenses as compared to revenue growth during the quarter, and lower gross margin.

 

Operating income grew 22% during the quarter to $86 million. Operating income growth was greater than OIBA growth due to a $25 million reduction in stock-based compensation expense and relatively flat amortization of intangibles expense.

 

Adjusted net income and net income for the fourth quarter both decreased by $19 million compared to the same period in 2004. Adjusted net income declined due to lower operating income before amortization, lower interest income and a higher effective tax rate. Net income declined due to an $18 million unrealized loss on derivative liabilities, lower interest income and a higher effective tax rate, partially offset by higher operating income. Adjusted EPS was $0.20 for the fourth quarter, and diluted EPS was $0.07.

 

Cash Flows & Working Capital

 

For the three months ended December 31, 2005, net cash used in operating activities was $94 million. Free cash flow was negative $105 million. Both net cash used in operating activities and free cash flow for the quarter were negatively impacted by the timing of processing supplier payments.

 

  Discussion of Results - Full Year 2005

Gross Bookings & Revenue

 

Gross bookings for 2005 increased 22% compared with 2004. Domestic gross bookings increased 15% and international gross bookings increased 50%, or 48% excluding the impact of year-over-year movements in foreign exchange. Revenue increased 15%, with domestic revenue increasing 8% and international revenue increasing 48%.

 

Worldwide merchant hotel revenue for 2005 increased 10%, driven by a 9% increase in room nights and a 1% increase in revenue per room night. The increase in revenue per room night was fueled by a 7% increase in ADRs, offset by a contraction in hotel raw margin.

 

Worldwide air revenue increased 5% in 2005, driven by a 17% increase in air tickets sold, offset by an 11% decline in air revenue per ticket. As in the fourth quarter, the decline in revenue per ticket was more pronounced in the merchant air business.

 

Revenue margin for the year decreased 80 basis points from 14.4% to 13.6%, due largely to the decreases in hotel raw margin and air revenue per ticket. As in the fourth quarter, the revenue margin decline was more pronounced in Expedia’s domestic operations, with revenue margin down 90 basis points, compared with a 21 basis point decline internationally.

 

Profitability

 

Gross profit increased 13% to $1.65 billion, while gross margin was 77.8%, a decrease of 103 basis points compared with 78.8% in 2004, again due primarily to inclusion of the destination services company revenues on a gross basis.

 

OIBA increased 13% to $627 million, while OIBA margin was down 44 basis points to 29.6% due to the decrease in gross margin, partially offset by a decrease in selling and marketing expense as a percentage of revenue due to offline marketing efficiency at Expedia.com® and Hotwire®.

 

Operating income increased 65% to $397 million, due to an $80 million decrease in stock-based compensation, increased revenue, relatively flat amortization of non-cash marketing and amortization expenses and a decrease in other operating expenses as a percentage of revenue.

 

Adjusted net income and net income increased by $49 million and $65 million respectively, both due primarily to increases in operating income, partially offset by lower interest income and correspondingly higher taxes. Adjusted EPS was $1.18 for full-year 2005, and diluted EPS was $0.65.

 

For additional information on income statement items for both the three and twelve month periods ended December 31, 2005, please see the “Income Statement Notes” elsewhere in this release.

 

Cash Flows & Working Capital

 

For the twelve months ended December 31, 2005, net cash provided by operating activities was $850 million. Free cash flow was $798 million. Both net cash provided by operating activities and free cash flow for 2005 include inflows of $339 million from the increases in accounts payable, accrued liabilities and deferred merchant bookings.

 

  Highlights

— Expedia and Hotels.com entered into a three-year strategic
partnership with Marriott International. The innovative, long-term
agreement is designed to reward Expedia for delivering business to
hoteliers during off-peak travel periods. As part of the agreement,
Marriott will expand its direct connect technology agreement with
Expedia globally, and provide Expedia travelers greater access to
Marriott inventory.
— Expedia, Inc.’s international points of sale in Canada, the United
Kingdom, Germany, France, Italy, The Netherlands, China, Australia and
other countries accounted for 23% of gross bookings and revenue in the
fourth quarter, up from 21% of gross bookings and 20% of revenue in the
prior year period. For full-year 2005, international points of sale
accounted for 22% of gross bookings and revenue, up from 18% and 17% in
2004.
— Expedia, Inc. travelers worldwide can now book reservations with over
25,000 merchant hotel properties, including more than 10,000
international properties in Europe and the Asia Pacific region. Over
30% of merchant properties are now fully direct-connected, offering
real-time availability, rates and inventory on our websites, benefiting
Expedia’s travelers and suppliers.
— Hotels.com® grew gross bookings 16% in the fourth quarter, its fourth
straight quarter of accelerating growth. With nearly $1.9 billion in
annual gross bookings Hotels.com would be the world’s fifth largest
online travel brand on a stand-alone basis.
— Expedia travelers have created over 100,000 qualified reviews of hotel
stays covering over 15,000 distinct properties since the feature
launched. Traveler reviews provide valuable, differentiated content to
Expedia travelers.
— Expedia, Inc. launched its eighth Expedia-branded website,
http://www.expedia.com.au/. Australia-based travelers now have access to an
unprecedented set of features to help them make informed decisions in
choosing a hotel property that best meets their needs from a selection
of over 60,000 properties worldwide.
— Expedia® Corporate Travel (“ECT”) grew gross bookings in 2005 by more
than 90% to over $700 million. In addition, ECT also launched
operations in Canada, and continued to add clients during the fourth
quarter, including CVS-America’s largest retail pharmacy.
— TripAdvisor™, the largest global travel information and advice
destination, launched international sites in the United Kingdom,
Germany, France, Italy and Spain. The Company also published its first
offline print guide, The TripAdvisor™ Insider Spring & Summer Travel
Guide. This free 24-page color guide features tips, stories, secrets
and reviews about this year’s most desirable locations, including
Australia, Las Vegas, Paris, New York City, London, China, Prague and
Venezuela.
— Expedia, Inc. and the United Nations Foundation announced the launch of
World Heritage Alliance, an innovative joint initiative to promote
sustainable tourism and awareness of World Heritage sites and
communities around the world.

EXPEDIA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)

Three months ended Year ended
December 31, December 31,
::::___ ::::___
2005 2004 2005 2004
:: :: :: ::

Revenue $494,749 $438,999 $2,119,455 $1,843,013
Cost of revenue 110,242 96,366 470,716 390,318
:: :: :: ::
Gross profit 384,507 342,633 1,648,739 1,452,695

Operating expenses:
Selling and marketing 155,330 129,019 697,503 653,018
General and
administrative 65,306 46,989 211,515 160,965
Technology and content 30,931 23,334 112,280 85,020
Amortization of
intangibles 31,863 32,571 126,067 125,091
Stock-based
compensation 11,826 37,006 91,725 171,400
Amortization of
non-cash distribution
and marketing 3,542 3,701 12,597 16,728
:: :: :: ::
Operating income 85,709 70,013 397,052 240,473

Other income (expense):
Interest income:
Interest income from
IAC/InterActiveCorp — 13,444 40,089 30,851
Other interest income
(expense), net 1,194 1,301 8,584 7,505
Write-off of
long-term investment — — (23,426) —

Other (20,317) (12,192) (8,428) (9,286)
:: :: :: ::
Total other income
(expense), net (19,123) 2,553 16,819 29,070
:: :: :: ::
Earnings before
income taxes and
minority interest 66,586 72,566 413,871 269,543
Provision for
income taxes (42,082) (28,634) (185,977) (106,371)
Minority interest in
loss of consolidated
subsidiaries 730 188 836 301
:: :: :: ::
Net income $25,234 $44,120 $228,730 $163,473
========== ========== ========== ==========
Net earnings per share
available to common
stockholders:
Basic $0.07 $0.13 $0.68 $0.49
Diluted $0.07 $0.13 $0.65 $0.48

Shares used in computing
earnings per share:
Basic 339,746 335,540 336,819 335,540
Diluted 363,632 340,549 349,530 340,549

EXPEDIA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)

December 31,
:::::ampersand_lt;br /> 2005 2004
:: ::

ASSETS

Current assets:
Cash and cash equivalents $297,416 $141,668
Restricted cash and cash equivalents 23,585 13,889
Accounts and notes receivable,
net of allowance of $3,914 and $2,338 174,019 143,905
Receivables from IAC/InterActiveCorp
and subsidiaries — 1,874,745
Deferred income taxes — 8,696
Prepaid merchant bookings 30,655 28,151
Prepaid expenses and other current assets 64,569 34,803
:: ::
Total current assets 590,244 2,245,857
Property and equipment, net 90,984 81,426
Long-term investments and other assets 39,431 140,432
Intangible assets, net 1,176,503 1,279,361
Goodwill 5,859,730 5,790,111
:: ::
TOTAL ASSETS $7,756,892 $9,537,187
========== ==========
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable, merchant $515,561 $429,739
Accounts payable, trade 127,260 98,666
Deferred merchant bookings 406,948 361,199
Deferred revenue 7,068 5,353
Income tax payable 43,405 421
Deferred income taxes 3,178 —
Short-term borrowings 230,755 13
Other current liabilities 104,050 86,788
:: ::
Total current liabilities 1,438,225 982,179
Deferred income taxes 368,880 333,696
Derivative liabilities 105,827 12,812
Other long-term liabilities 38,423 37,436
Minority interest 71,774 18,435

Commitments and contingencies

Total stockholders’ equity 5,733,763 8,152,629
:: ::
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $7,756,892 $9,537,187
========== ==========

EXPEDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

Year ended
December 31,
:::::::
2005 2004 2003
:___ :___ :___
Operating activities
Net income $228,730 $163,473 $111,407
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 50,445 44,066 34,772
Amortization of non-cash
distribution and marketing 12,597 16,728 41,974
Stock-based compensation 91,725 171,400 95,781
Amortization of intangibles 126,067 125,091 76,073
Amortization of premium
on investment securities — 161 2,392
Deferred income taxes 16,147 (5,295) 774
Unrealized loss on
derivative instruments 6,042 — —
Equity in income of
unconsolidated affiliates (1,668) (175) (9)
Minority interest in (loss)
income of consolidated
subsidiaries (836) (301) 46,889
Write-off of long-term investment 23,426 — —
Other 1,161 — —
Changes in current assets
and current liabilities:
Accounts and notes receivable (21,833) 10,904 (52,007)
Prepaid merchant bookings
and prepaid expenses (22,492) 3,038 (23,043)
Accounts payable and
accrued liabilities 293,618 225,679 221,550
Deferred merchant bookings 45,051 54,872 69,474
Deferred revenue 1,715 (2,463) 13,981
Other, net — (4,325) 4,015
:___ :___ :___
Net cash provided by
operating activities 849,895 802,853 644,023
:___ :___ :___
Investing activities
Acquisitions, net of
cash acquired 10,547 (261,390) (704,885)
Capital expenditures (52,315) (53,407) (46,183)
Purchase of marketable securities (63) (5,015) (1,259,388)
Proceeds from sale of
marketable securities 1,000 722,646 1,329,408
(Increase) decrease in
long-term investments
and deposits (369) (62,441) 9,960
Transfers to
IAC/InterActiveCorp, net (757,206) (1,272,714) (548,356)
Other, net (2,937) (85) (32,093)
:___ :___ :___
Net cash used in
investing activities (801,343) (932,406) (1,251,537)
:___ :___ :___
Financing activities
Short-term borrowings 230,735 — —
Changes in restricted cash
and cash equivalents (9,495) (2,319) (583)
Proceeds from sale of stock,
including stock options 29,060 — 57,358
Withholding taxes for
stock option exercises (86,556) — —
Purchase of treasury stock — — (98,492)
Contribution from
(distribution to)
IAC/InterActiveCorp, net (52,844) 103,807 628,681
Principal payments on long-term
obligations — (2,860) —
Other, net (4,393) 8,692 (1,216)
:___ :___ :___
Net cash provided by
financing activities 106,507 107,320 585,748
Effect of exchange rate
changes on cash and
cash equivalents 689 (13,768) (3,232)
:___ :___ :___
Net increase (decrease) in
cash and cash equivalents 155,748 (36,001) (24,998)
Cash and cash equivalents
at beginning of period 141,668 177,669 202,667
:___ :___ :___
Cash and cash equivalents
at end of period $297,416 $141,668 $177,669
======== ======== ========

Income Statement Notes

Revenue
— Expedia, Inc. makes travel products and services available on a
merchant and agency basis. Merchant transactions typically produce a
higher level of net revenues per transaction, and are generally
recognized when the customer uses the travel product or service. Agency
revenues are typically recognized at the time the reservation is
booked.
— Agency gross bookings were 61% and 59% of total gross bookings for the
three and twelve month periods ended December 31, 2005, compared with
61% and 58% for the respective prior year periods.

Expense Reclassifications
— As disclosed in our October 25, 2005 8-K/A filing with the SEC, we have
reclassified certain expense amounts relating to prior periods’ results
to conform to our 2005 results presentation. The reclassifications did
not affect our cash balances, cash flows, revenue, operating income or
net income for any periods.

Cost of Revenue
— Cost of revenue consists of: (1) credit card merchant fees; (2) fees
paid to fulfillment vendors for processing airline tickets and related
customer services; (3) reserves and related payments to airlines for
tickets purchased with fraudulent credit cards; (4) costs of our data
and call centers and (5) costs paid to suppliers for certain
destination inventory.
— Cost of revenue as a percentage of revenue was 22% for each of the
three and twelve month periods ended December 31, 2005, compared with
22% and 21% for the comparable three and twelve month periods in 2004.
The increase for full year 2005 is largely due to lower gross margin
revenues associated with our acquisition of a destination services
provider in February 2005 which records its ticketing revenue on a
gross basis.
— Cost of revenue includes depreciation expense of $3 million and
$11 million for the three and twelve month periods ended December 31,
2005, and $3 million and $12 million for the comparable prior year
periods.

Operating Expenses
— Operating expenses as a percentage of revenue for the three and twelve
month periods were as follows (differences due to rounding):

Three months Twelve months
ended December 31, ended December 31,
:::___ :::___
2005 2004 2005 2004
: :_ :_ :
Selling and marketing 31.4% 29.4% 32.9% 35.4%
General and administrative 13.2% 10.7% 10.0% 8.7%
Technology and content 6.3% 5.3% 5.3% 4.6%
:_ :_ :_ :_
Total 50.8% 45.4% 48.2% 48.8%

— Operating expenses include depreciation expense of $10 million and
$39 million for the three and twelve month periods ended December 31,
2005, and $8 million and $32 million for the comparable prior year
periods.

Selling and Marketing
o Selling and marketing expenses relate to direct advertising and
distribution expense, including traffic generation from Internet
portals, search engines, private label and affiliate programs. The
remainder of the expense relates to personnel costs, including
market manager staffing in our Partner Services Group (“PSG”) to
enhance supplier relationships and destination services desk
personnel.
o The 2.0% year-over-year increase in selling and marketing as a
percentage of revenue for the fourth quarter was primarily due to
increased personnel costs.
o The 2.5% year-over-year decrease in selling and marketing expense as
a percentage of revenue for 2005 was due to reduced offline spend at
our Expedia.com and Hotwire brands and keyword search efficiencies,
partially offset by the higher personnel costs associated with PSG
team expansion and destination services staffing assumed in our
acquisitions. Fixed personnel costs increased 1.4% as a percentage
of revenue in 2005.
o While we remain focused on optimizing the efficiency of our various
sales and marketing channels, we expect absolute amounts spent in
sales and marketing to increase over time due to continued expansion
of our international businesses, reduced opportunities for offline
spend efficiencies, inflation in search-related and other traffic
acquisition vehicles, increased marketing volumes and the increased
fixed costs associated with our market management staffing
increases. In 2006 we expect selling and marketing expense to
increase as a percentage of revenue.

General and Administrative
o General and administrative expense consists primarily of
(1) personnel-related costs for support functions that include our
executive leadership, finance, legal, tax and human resources
functions, and (2) fees for professional services that include
legal, tax and accounting.
o General and administrative expense increased 2.5% and 1.3% as a
percentage of revenue for the quarter and full-year as we built our
executive teams and supporting staff levels largely to support our
becoming a public company.
o We expect absolute amounts spent on corporate personnel and
professional service to increase over time as we add headcount and
continue incurring incremental costs as a stand-alone public
company.

Technology and Content
o Technology and content expense includes product development expenses
such as payroll and related expenses for localization, and
depreciation of website development costs.
o Technology and content expense was up 1.0% and 0.7% as a percentage
of sales for the quarter and full year as we increased our software
development and engineering teams, and increased our level of site
innovation.
o Given the increasing complexity of our business, geographic
expansion, initiatives in corporate travel, increased supplier
integration, service-oriented architecture improvements and other
initiatives, we expect absolute amounts spent in technology and
content to increase over time.

Stock-Based Compensation Expense
— Stock-based compensation expense relates primarily to expense for stock
options and restricted stock units (“RSUs”). Since February 2003, we
have awarded RSUs as our primary form of employee stock-based
compensation. Our stock-based awards generally vest over periods
between four and five years.
— Stock-based compensation expense for the fourth quarter was
$12 million, consisting of $17 million in expense related to stock
options and $9 million in expense related to RSUs and other equity
compensation, reduced by $14 million due to a change in forfeiture rate
estimates and capitalization of software development costs.
— Stock-based compensation for 2005 was $92 million, consisting of
$94 million in expense related to stock options, $32 million related to
RSUs and $10 million related to other equity compensation. 2005 expense
was reduced by a $44 million net credit due to a change in our
forfeiture rate assumption for stock awards partially offset by a
modification charge on stock option awards related to the Spin-Off, a
change in the forfeiture rate estimates for RSUs and other equity
compensation and capitalization of software development costs.
— We anticipate stock-based compensation expense in 2006 and beyond will
decrease from the $136 million in 2005 (prior to the reductions).

Net Interest Income
— The reduction in interest income from the date of the Spin-Off relates
to the extinguishment in the Spin-Off of interest-bearing Receivables
from IAC. We expect that interest income will decline substantially in
the first two quarters of 2006 versus 2005 due to lower relative cash
balances.

Income Taxes
— From January 1, 2005 through August 8, 2005, we were a member of the
IAC® consolidated tax group. Accordingly, we will file a federal
income tax return and certain state income tax returns on a combined
basis with IAC for this period. IAC will pay the income tax liability
related to these filings; as such, these amounts are not included in
our income taxes payable. As of December 31, 2005, our current income
tax payable represents amounts that we anticipate paying to the IRS and
other tax authorities based on our income tax after the Spin-Off.
However, this amount may change based on actual returns to be filed by
Expedia and IAC in accordance with the Tax Sharing Agreement.
— We have computed income taxes using our stand-alone tax rate.
— The effective tax rates on pre-tax adjusted income were 45% and 38% for
the three and twelve months ended December 31, 2005 compared to 37% in
the prior year periods. Fourth quarter and annual effective tax rates
were higher than the federal statutory rate of 35% principally due to
state taxes and the impact of foreign taxes including valuation
allowance on foreign losses.
— The effective tax rates on income for US GAAP pre-tax net income were
63% and 45% for the three and twelve months ended December 31, 2005,
respectively, compared to 39% in the prior year periods. The fourth
quarter and annual effective tax rates were higher than the federal
statutory rate of 35% principally due to state taxes, non-deductible
stock compensation, and unrealized derivative losses. Additionally,
the full year rate was impacted by a third quarter investment
impairment.

Foreign Exchange
— As Expedia, Inc.’s reporting currency is the U.S. Dollar (“USD”),
reported financial results are affected by strength or weakness in the
USD in comparison to the currencies of our international websites.
Management believes investors may find it useful to assess 2005 growth
rates with and without the impact of foreign exchange. The estimated
impact of foreign exchange was as follows:

Three Impact Twelve Impact
months Y/Y on Y/Y months Y/Y on Y/Y
ended growth growth ended growth growth
Dec. 31, rates rates Dec. 31, rates rates
2005 Y/Y excluding from 2005 Y/Y excluding from
growth foreign foreign growth foreign foreign
rates exchange exchange rates exchange exchange
movements movements movements movements
::::::____ ::::::
Gross
Bookings 17.3% 18.6% (1.3%) 21.7% 21.4% 0.3%
Revenue 12.7% 13.8% (1.1%) 15.0% 15.4% (0.4%)
Operating
Income 22.4% 23.4% (1.0%) 64.7% 68.8% (4.1%)
Operating
Income
Before
Amortization (7.2%) (6.6%) (0.6%) 13.3% 15.1% (1.8%)

Acquisitions & Investments
— A number of acquisitions and investments were completed during 2004 and
2005 that affected financial results during the time periods included
in this release, specifically our acquisitions and investments in
TripAdvisor, Egencia (“ECT Europe”) Activity World and WTM (“ECT U.K.”)
in 2004, and eLong and Premier Getaways in 2005.
— Management believes that investors may find it useful to assess 2005
growth rates both with and without the impact of acquisitions and
investments. The estimated impact of these items was as follows:

Impact Impact
Y/Y on Y/Y Y/Y on Y/Y
growth growth growth growth
Three rates rates Twelve rates rates
months excluding from months excluding from
ended acqui- acqui- ended acqui- acqui-
Dec. 31, sitions sitions Dec. 31, sitions sitions
2005 Y/Y and and 2005 Y/Y and and
growth invest- invest- growth invest- invest-
rates ments ments rates ments ments
::::::____ ::::::
Gross
Bookings 17.3% 15.1% 2.2% 21.7% 19.1% 2.6%
Revenue 12.7% 9.4% 3.3% 15.0% 11.0% 4.0%
Operating
Income 22.4% 24.1% (1.7%) 65.1% 62.5% 2.6%
Operating
Income
Before
Amortization (7.2%) (6.7%) (0.5%) 13.3% 11.1% 2.2%

Balance Sheet Notes
Cash, Cash Equivalents, Current and Restricted Cash
— Cash, cash equivalents and current restricted cash were $321 million at
December 31, 2005. This amount includes $24 million in restricted cash
and equivalents, which includes amounts reclassified from prior year.

Receivables from IAC
— In connection with the Spin-Off, we extinguished substantially all IAC
intercompany receivables by recording a distribution to IAC, as
explained in our Registration Statement on Form S-4, filed on
June 17, 2005.

Accounts Receivable
— Accounts receivable include credit card receivables generally due
within two to three days from credit card agencies, as well as
receivables from agency transactions, which are generally due within 30
days from our airlines, global distribution and hotel suppliers.
— These receivables generally track with our gross bookings pattern,
building throughout the first half of the year and decreasing in the
second half.

Prepaid expenses and other current assets
— Prepaid expenses and other current assets are primarily composed of
prepaid marketing, merchant fees, fulfillment and other prepaid
expenses. 2005 amounts increased $30 million from 2004 for several
incremental prepaids, the largest of which was $10 million related to a
contribution of media time from IAC as part of the Spin-Off.

Goodwill & Intangible Assets, net
— Goodwill and intangible assets, net relate primarily to Expedia’s
acquisitions of Hotels.com®, Expedia.com® and Hotwire.com®.
— Amortization of intangible assets with definite lives was $32 million
and $126 million for the three and twelve months ended December 31,
2005, compared with $33 million and $125 million for the three and
twelve month periods ended December 31, 2004. These amounts are
generally not deductible for tax purposes.

Long-Term Investments and Other
— The $53 million reduction in our long-term investments at December 31,
2005 versus December 31, 2004 reflects our consolidation of eLong after
exercising our warrants to increase our ownership to a majority
interest in January 2005, and the Company’s $23 million write-off of a
minority investment in the third quarter, both of which were partially
offset by our 50% ownership interest in an aircraft through a capital
contribution from IAC.

Deferred Merchant Bookings and Accounts Payable, Merchant
— Deferred merchant bookings consist of amounts received from travelers
who have not yet traveled. The payment to suppliers related to these
bookings is not made until approximately one week after booking for air
travel and, for all other merchant bookings, after the customer’s use
and subsequent billing from the supplier. Therefore, especially for
merchant hotel, which represents over 90% of Expedia’s overall merchant
bookings, there is generally some period of time from the receipt of
cash from travelers to supplier payment.
— As long as the merchant hotel business continues to grow positively, as
it has historically, and our business model does not change, we expect
that changes in working capital will continue to be positive. If this
business declines or if the model changes, it would negatively affect
our working capital.
— For the twelve months ended December 31, 2005, the change in deferred
merchant bookings and accounts payable and accrued liabilities
contributed $339 million to cash flow from operating activities.

Revolving Credit Facility
— The Company maintains a $1 billion five-year unsecured revolving credit
facility which bears interest based on our financial leverage,
currently priced at a rate equal to LIBOR plus 0.50%, or approximately
5% as of December 31, 2005. As of year-end we were in compliance with
all financial covenants governing the facility.
— As of December 31, 2005 our revolver balance was $230 million,
reflecting our seasonal low in gross bookings proceeds and the payment
of accounts payable from prior period merchant bookings. We anticipate
our cash balance will build in the first half of 2006, affording us the
option of eliminating our revolver balance.
— Interest and other expenses associated with the facility were
approximately $2 million for the quarter and year ended December 31,
2005. These amounts are classified in net interest income on the
statements of income.

Derivative Liabilities
— In connection with IAC’s acquisition of Ask Jeeves® (“Ask”), we
issued 4.3 million shares of Expedia, Inc. common stock into an escrow
account, which shares (or cash in equal value) were due to holders of
Ask convertible notes upon conversion. These shares have been included
in Expedia’s diluted shares outstanding from the date of spin.
— The estimated fair value of this obligation and certain stock warrants
at December 31, 2005 was $105 million, recorded as a derivative
liability on our balance sheet.
— For the three and twelve months ended December 31, 2005, we recorded
unrealized losses of $18 million and $6 million respectively,
principally related to the Ask liability, due to the increase in our
share price during the fourth quarter, partially offset by a decrease
in the share price in the third quarter. These non-cash losses are
recorded in “other income” on our statements of income.
— In January 2006, Ask debt holders converted notes in exchange for 2.5
million Expedia common shares held in escrow, leaving 1.8 million
shares remaining in escrow.
— We anticipate recording a quarterly gain or loss in future quarters
related to the remaining escrow shares as we adjust the fair value of
these long-term liabilities due to fluctuations in our stock price. The
size or incidence of such gains or losses is not predictable.

Minority Interest

 

Minority interest relates principally to minority ownership positions in eLong, ECT Europe and TripAdvisor, which are consolidated for all 2005 periods.

 

  -- The increase in minority interest from December 31, 2004 to December
     31, 2005 relates to our consolidation of eLong as of January 1, 2005.

Expedia Class B Common Stock
— There are approximately 26 million shares of Expedia Class B common
stock outstanding. Class B holders are entitled to ten votes when
voting on matters together with the holders of Expedia common and
preferred stock.
— Our Chairman has voting authority for the Class B shares, affording him
a controlling, 53% voting interest in Expedia, Inc.

Warrants
— As of December 31, 2005 Expedia, Inc. had approximately 59 million
warrants outstanding, which if exercised in full would entitle their
holders to acquire approximately 35 million common shares of Expedia,
Inc. for an aggregate purchase price of approximately $774 million (an
average $22.33 per Expedia, Inc. common share).
— 32 million of these warrants are privately held and expire in 2012, and
26 million warrants are publicly-traded and expire in 2009.
— There are fewer than 1 million miscellaneous warrants outstanding.

Stock-Based Awards – Outstanding & Granted
— At December 31, 2005, there were approximately 33.5 million stock-based
awards outstanding, primarily consisting of 27.7 million stock options
with a $15.71 weighted average exercise price and a weighted average
remaining life of 4.3 years, and 5.6 million restricted stock units.
— We granted approximately 0.5 million stock awards during the fourth
quarter, consisting of restricted stock units. In 2005 Expedia,
Inc. and IAC granted approximately 7.3 million stock awards to
Expedia employees, consisting of 3.8 million options with a five-year
cliff vest granted to our Chairman and Senior Executive with a weighted
average exercise price of $32.12, and approximately 3.5 million RSUs
granted to other employees.

Expedia, Inc.
Supplemental Information – Fourth Quarter & Full-Year 2005
(All figures in $millions or millions)

— The following metrics are intended as a supplement to the financial
statements found in this press release and in our filings with the SEC.
In the event of discrepancies between amounts in these tables and our
historical financial statements, readers should rely on our SEC filings
and the financial statements in our releases.
— As our business evolves and as we integrate our operations, we intend
to periodically review and refine the definition, methodology and
appropriateness of each of our supplemental metrics. As a result, these
metrics are subject to removal and / or change, and such changes could
be material.
— “Expedia” gross bookings constitute bookings from all Expedia-branded
properties, including our international sites and our worldwide
Expedia® Corporate Travel businesses. “Other” gross bookings
constitute bookings from all brands other than Expedia-branded
properties and Hotels.com.
— Metrics, with the exception of revenue items, include 100% of the
results of an unconsolidated joint-venture of which we own
approximately 49.9%.
— These metrics do not include adjustments for one-time items,
acquisitions, foreign exchange or other adjustments.
— Some numbers may not add due to rounding.

2004
Q1 Q2 Q3 Q4
:_ :_ :_ :_

Gross Bookings by Geography
Domestic $2,771 $2,753 $2,630 $2,301
International 564 526 636 594
:_ :_ :_ :_
Total $3,334 $3,279 $3,266 $2,895

Net Revenue by Geography
Domestic $353 $415 $414 $350
International 60 72 89 89
:_ :_ :_ :_
Total $413 $487 $504 $439

Gross Bookings by Brand
Expedia $2,538 $2,505 $2,525 $2,310
Hotels.com 494 470 461 351
Other 302 304 280 234
:_ :_ :_ :_
Total $3,334 $3,279 $3,266 $2,895

Gross Bookings by
Agency/Merchant
Agency $1,824 $1,888 $1,875 $1,760
Merchant 1,510 1,392 1,391 1,135
:_ :_ :_ :_
Total $3,334 $3,279 $3,266 $2,895

Packages Revenue $ 95 $107 $109 $ 94
Number of Transactions 8.2 8.5 9.2 7.6
Merchant hotel room nights 7.0 8.3 9.1 7.4

2005 Full Year
Q1 Q2 Q3 Q4 2004 2005
:_ :__ :_ :_ :__ :_

Gross Bookings
by Geography
Domestic $3,184 $3,224 $3,051 $2,614 $10,454 $12,073
International 902 909 887 781 2,320 3,479
:_ :__ :_ :_ :__ :_
Total $4,086 $4,133 $3,938 $3,395 $12,774 $15,552

Net Revenue
by Geography
Domestic $386 $440 $457 $379 $1,533 $1,662
International 99 115 128 115 310 457
:_ :__ :_ :_ :__ :_
Total $485 $555 $585 $495 $1,843 $2,119

Gross Bookings
by Brand
Expedia $3,252 $3,191 $3,048 $2,679 $9,878 $12,169
Hotels.com 483 497 502 407 1,775 1,890
Other 352 445 387 309 1,121 1,493
:_ :__ :_ :_ :__ :_
Total $4,086 $4,133 $3,938 $3,395 $12,774 $15,552

Gross Bookings by
Agency/Merchant
Agency $2,386 $2,421 $2,297 $2,082 $7,346 $9,186
Merchant 1,700 1,712 1,640 1,314 5,428 6,366
:_ :__ :_ :_ :__ :_
Total $4,086 $4,133 $3,938 $3,395 $12,774 $15,552

Packages Revenue $114 $124 $128 $106 $406 $472
Number of
Transactions 9.6 10.1 10.4 8.7 33.4 38.8
Merchant hotel
room nights 7.3 8.8 10.2 8.3 31.7 34.6

Notes & Definitions:

 

Gross Bookings — Total retail value of transactions booked for both agency and merchant transactions, recorded at the time of booking. Bookings include the total price due for travel by travelers, including taxes, fees and other charges, and are not reduced for some cancellations and traveler refunds.

 

Number of Transactions — Quantity of purchases reported as booked, net of cancellations. Packages purchased using our packages wizard, which by definition include a merchant hotel, are recorded as a single transaction.

 

Merchant Hotel Room Nights — Worldwide merchant hotel nights, net of cancellations. With the exception of Hotwire, which records room nights upon booking, nights are reported as stayed. This metric includes nights stayed on both a package and stand-alone basis.

 

Definitions of Non-GAAP Measures

 

Expedia, Inc. reports Operating Income Before Amortization, Adjusted Net Income, Adjusted EPS and Free Cash Flow, all of which are supplemental measures to GAAP, and are defined by the SEC as non-GAAP financial measures. These measures are among the primary metrics by which management evaluates the performance of the business, on which internal budgets are based and by which management is compensated. Management believes that investors should have access to the same set of tools that management uses to analyze our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. We endeavor to compensate for the limitation of the non- GAAP measures presented by also providing comparable GAAP measures, GAAP financial statements, and descriptions of the reconciling items and adjustments, to derive the non-GAAP measures.

 

Operating Income Before Amortization is defined as operating income plus: (1) amortization of non-cash distribution and marketing expense, (2) stock- based compensation expense, (3) amortization of intangible assets and goodwill impairment, if applicable and (4) certain one-time items, if applicable. Management believes this measure is useful to investors because it represents the combined operating results of Expedia, Inc.’s businesses, taking into account depreciation, which we believe is an ongoing cost of doing business, but excluding the effects of other non-cash expenses that may not be indicative of our core business operations. Operating Income Before Amortization has certain limitations in that it does not take into account the impact to Expedia, Inc.’s statements of income of certain expenses, including non-cash compensation, non-cash payments to partners, and acquisition-related accounting. Due to the high variability and difficulty in predicting certain items that affect net income, such as interest rates and tax rates, Expedia, Inc. is unable to provide reconciliation to net income on a forward-looking basis without unreasonable efforts.

 

Adjusted Net Income generally captures all items on the statements of income that have been, or ultimately will be, settled in cash and is defined as net income available to stockholders plus (1) amortization of non-cash distribution and marketing expense, (2) stock-based compensation expense, (3) amortization of intangible assets and goodwill impairment, if applicable, (4) one-time items, net of related tax, and minority interest, (5) mark to market gains and losses on derivative liabilities and (6) discontinued operations, net of tax. We believe Adjusted Net Income is useful to investors because it represents Expedia, Inc.’s combined results, taking into account depreciation, which management believes is an ongoing cost of doing business, but excluding the impact of other non-cash expenses and items not directly tied to the recurring core operations of our businesses.

 

Adjusted EPS is defined as Adjusted Net Income divided by weighted fully diluted shares outstanding for Adjusted EPS purposes. We include dilution from options and warrants per the treasury stock method and include all shares relating to restricted stock units (“RSU”) in shares outstanding for Adjusted EPS. This differs from the GAAP method for including RSUs, which treats them on a treasury method basis. Shares outstanding for Adjusted EPS purposes are therefore higher than shares outstanding for GAAP EPS purposes. We believe Adjusted EPS is useful to investors because it represents, on a per share basis, Expedia’s consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other charges which are not allocated to the operating businesses such as interest expense, taxes and minority interest, but excluding the effects of other non-cash expenses not directly tied to the core operations of our businesses. Adjusted Net Income and Adjusted EPS have the same limitations as Operating Income Before Amortization. In addition, Adjusted Net Income does not include all items that affect our net income and net income per share for the period. Therefore, we think it is important to evaluate these measures along with our consolidated statements of income.

 

Free Cash Flow is defined as net cash flow provided by operating activities less capital expenditures. Management believes Free Cash Flow is useful to investors because it represents the operating cash flow that our operating businesses generate, less capital expenditures but before taking into account other cash movements that are not directly tied to the core operations of our businesses, such as financing activities or certain investing activities. Free Cash Flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. Therefore, it is important to evaluate Free Cash Flow along with the consolidated statements of cash flows.

 

   Tabular Reconciliations for Non-GAAP Measures

Operating Income Before Amortization

Three months ended Year ended
December 31, December 31,
:::___ :::___
2005 2004 2005 2004
:___ :___ :___ :___
(in thousands)
(Unaudited)

OIBA $132,940 $143,291 $627,441 $553,692
Amortization of intangibles (31,863) (32,571) (126,067) (125,091)
Stock-based compensation (11,826) (37,006) (91,725) (171,400)
Amortization of non-cash
distribution and marketing (3,542) (3,701) (12,597) (16,728)
:___ :___ :___ :___
Operating Income 85,709 70,013 397,052 240,473

Net interest income 1,194 14,745 48,673 38,356
Write-off of
long-term investment — — (23,426) —
Other (20,317) (12,192) (8,428) (9,286)
Provision for income taxes (42,082) (28,634) (185,977) (106,371)
Minority interest in loss
of consolidated subsidiaries 730 188 836 301
:___ :___ :___ :___
Net Income $25,234 $44,120 $228,730 $163,473
======== ======== ======== ========
Adjusted Net Income & Adjusted EPS

Three months ended Year ended
December 31, December 31,
:::___ :::___
2005 2004 2005 2004
:___ :___ :___ :___
(in thousands, except per share data)

Net income $25,234 $44,120 $228,730 $163,473
Amortization of intangibles 31,863 32,571 126,067 125,091
Stock-based compensation 11,826 37,006 91,725 171,400
Amortization of non-cash
distribution and marketing 3,542 3,701 12,597 16,728
Write-off of long-term investment — — 23,426 —

Unrealized loss on
derivative instruments 18,042 — 6,042 —

Minority interest (382) (191) (1,827) (523)
Provision for income taxes (17,378) (25,328) (70,982) (109,251)
:___ :___ :___ :___
Adjusted net income $72,747 $91,879 $415,778 $366,918
======== ======== ======== ========

GAAP diluted weighted average
shares outstanding 363,632 340,549 349,530 340,549
Additional restricted
stock units 4,648 — 2,366 —
:___ :___ :___ :___
Adjusted weighted average
shares outstanding 368,280 340,549 351,896 340,549
======== ======== ======== ========

Diluted earnings per share $0.07 $0.13 $ 0.65 $0.48
======== ======== ======== ========
Adjusted earnings per share $0.20 $0.27 $ 1.18 $1.08
:___ :___ :___ :___

Free Cash Flow

Year ended
December 31,
::::::::_
2005 2004 2003
:____ :___ :___
(in thousands)
Net cash provided by
operating activities $849,895 $802,853 $644,023
Less: capital expenditures (52,315) (53,407) (46,183)
:___ :___ :___
Free cash flow $797,580 $749,446 $597,840
======== ======== ========

Conference Call

 

Expedia, Inc. will audiocast its conference call with investors and analysts discussing its fourth quarter financial results and certain forward-looking information on Wednesday, February 15, 2006 at 2:00 p.m. Pacific Time (PT). The audiocast will be open to the public and available via http://www.expediainc.com/ir. Expedia, Inc. expects to maintain access to the audiocast on the IR website for approximately one month subsequent to the initial broadcast.

 

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

 

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance. These forward-looking statements are based on management’s expectations as of February 15, 2006, and assumptions which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. 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 and may include statements relating to future revenues, expenses, margins, profitability, net income, earnings per share and other measures of results of operation and the prospects for future growth of Expedia, Inc.’s business.

 

Actual results and the timing and outcome of events may differ materially from those expressed or implied in the forward-looking statements for a variety of reasons, including, among others: Expedia, Inc.’s ability to effectively update, automate and integrate disparate financial and accounting systems and approaches among its brands and businesses; the accuracy, integrity, security and redundancy of systems, including financial and accounting systems, and networks of Expedia, Inc.; reliance on newly implemented systems supporting our financial planning and projections; adverse changes in senior management; the rate of growth of the Internet and online travel; changes in global economic conditions; consumer spending, the competitive environment; the e-commerce industry and broadband access; world events (including adverse weather, health risks and terrorism); the rate of online migration in the various geographies and markets in which Expedia, Inc. operates, including Asia; fluctuations in foreign exchange rates; the health of the travel industry, including consumer and business spending on travel; Expedia, Inc.’s ability to expand successfully in international markets; possible one-time charges resulting from, among other events, integration and process review activities, platform migration and shared services efforts; failure to realize cost efficiencies; the successful completion of pending corporate transactions and the integration of current and acquired businesses; and other risks detailed in Expedia, Inc.’s public filings with the SEC, including Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.

 

Except as required by law, Expedia, Inc. undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.

 

Basis of Presentation

 

On August 9, 2005, IAC separated into two independent companies. As a result, Expedia, Inc. became an independent public company (the “Spin-Off”). These financial statements present results of operations, financial position and cash flows on a combined basis until the Spin-Off and on a consolidated basis thereafter. The unaudited financial statements relating to periods prior to August 9, 2005 were prepared on a combined basis because there was no direct ownership relationship among any or all of the businesses that comprised Expedia, Inc. upon Spin-Off.

 

About Expedia, Inc.

 

Expedia, Inc. is the world’s leading online travel company, empowering business and leisure travelers with the tools and information they need to easily research, plan, book, and experience travel. Expedia, Inc. also provides wholesale travel to offline retail travel agents. Expedia, Inc.’s portfolio of brands include: Expedia.com®, Hotels.com®, Hotwire®, Expedia® Corporate Travel, TripAdvisor™ and Classic Vacations®. Expedia, Inc.’s companies also operate internationally with sites in Canada, the United Kingdom, Germany, France, Italy, the Netherlands, Australia and China, through its investment in eLong™. For more information, visit http://www.expediainc.com/. (NASDAQ: EXPE).

 

Expedia, Expedia.com, Enjoy Your Trip and the Airplane logo are either registered trademarks or trademarks of Expedia, Inc. in the U.S. and/or other countries. Hotels.com, the Hotels.com logo, and We Know Hotels Inside And Out are either registered trademarks or trademarks of Hotels.com, LLP in the U.S. and/or other countries. Hotwire and the Hotwire logo are either registered trademarks or trademarks of Hotwire, Inc. in the U.S. and/or other countries. TripAdvisor, the TripAdvisor logo, and the Owl Logo are either registered trademarks or trademarks in the U.S. and/or other countries of Trip Advisor LLC. Other product and company names mentioned herein may be trademarks of their respective owners.

 

CST 2029030-40

 

First Call Analyst:
FCMN Contact: shaas@expedia.com </br/>

 

SOURCE: Expedia, Inc.

 

CONTACT: Investor Relations, Stu Haas, +1-425-679-3555, or
ir@expedia.com, or Wendy Grover, Communications, +1-425-679-7874, both of
Expedia, Inc.</br/></br/>

 

Web site: http://www.expedia.com/