This annual report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding expectations about future events and are based on then available information. Actual results could differ materially. 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. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Please carefully review and consider the various disclosures made in our Annual Report on Form 10-K enclosed herein and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may impact future results. The logos on the front cover are service marks or trademarks of Expedia, Inc. and/or its affiliated companies. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 OR ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-51447 EXPEDIA, INC. (Exact name of registrant as specified in its charter) Delaware 20-2705720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 333 108th Avenue NE Bellevue, WA 98004 (Address of principal executive office) (Zip Code) Registrant’s telephone number, including area code: (425) 679-7200 Securities registered pursuant to Section 12(b) of the Act: Title of each class: Name of each exchange on which registered: Common stock, $0.0001 par value The Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No Í Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Í No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes Í No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘ 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. (Check one): Large accelerated filer Í Accelerated filer ‘ Non-accelerated filer ‘ (Do not check if a smaller reporting company) Smaller reporting company ‘ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No Í As of June 30, 2014, the aggregate market value of the registrant’s common equity held by non-affiliates was approximately $7,766,127,000. For the purpose of the foregoing calculation only, all directors and executive officers of the registrant are assumed to be affiliates of the registrant. Outstanding Shares at January 23, 2015 Class were approximately, Common stock, $0.0001 par value per share 113,920,007 shares Class B common stock, $0.0001 par value per share 12,799,999 shares Documents Incorporated by Reference Document Parts Into Which Incorporated Portions of the definitive Proxy Statement for the 2015 Annual Meeting of Stockholders (Proxy Statement) Part III Expedia, Inc. Form 10-K For the Year Ended December 31, 2014 Contents Part I Item 1 Business 1 Item 1A Risk Factors 11 Item 1B Unresolved Staff Comments 30 Item 2 Properties 30 Item 3 Legal Proceedings 31 Item 4 Mine Safety Disclosures 43 Part II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 43 Item 6 Selected Financial Data 46 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 Item 7A Quantitative and Qualitative Disclosures About Market Risk 68 Item 8 Consolidated Financial Statements and Supplementary Data 69 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 70 Item 9A Controls and Procedures 70 Item 9B Other Information 72 Part III Item 10 Directors, Executive Officers and Corporate Governance 72 Item 11 Executive Compensation 72 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 72 Item 13 Certain Relationships and Related Transactions, and Director Independence 72 Item 14 Principal Accountant Fees and Services 72 Part IV Item 15 Exhibits, Consolidated Financial Statements and Financial Statement Schedules 72 Signatures 78 Expedia, Inc. Form 10-K For the Year Ended December 31, 2014 Part I. Item 1. Business We refer to Expedia, Inc. and its subsidiaries collectively as “Expedia,” the “Company,” “us,” “we” and “our” in this Annual Report on Form 10-K. Forward-Looking Statements This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not limited to, those discussed in the section entitled “Risk Factors” as well as those discussed elsewhere in this report. Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition and results of operations. Accordingly, readers should not place undue reliance on these forward-looking statements. 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 are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. We are not under any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Please carefully review and consider the various disclosures made in this report and in our other reports filed with the Securities and Exchange Commission (“SEC”) that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations. Management Overview General Description of our Business Expedia, Inc. 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. We seek to grow our business through a dynamic portfolio of travel brands, including our majority-owned subsidiaries that feature the world’s broadest supply portfolio — including approximately 435,000 properties in 200 countries, 400 airlines, packages, rental cars, cruises, as well as destination services and activities. Travel suppliers distribute and market products via our traditional desktop offerings, as well as through alternative distribution channels including mobile and social media, our private label business and our call centers in order to reach our extensive, global audience. In addition, our advertising and media businesses help other businesses, primarily travel providers, reach a large audience of travelers around the globe. Our portfolio of brands includes: • Expedia.com®, the world’s largest full service online travel agency with localized sites in 31 countries; • Hotels.com®, a hotel specialist with localized sites in more than 60 countries; • Hotwire.com®, a leading discount travel site that offers opaque deals in 12 countries throughout North America, Europe and Asia; 1 • Expedia® Affiliate Network (“EAN”),