Back to GetFilings.com



Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended March 31, 2003

 

Commission File Number 0-27429

 

 

EXPEDIA, INC.

(Exact name of registrant as specified in its charter)

 

Washington

  

91-1996083

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

13810 SE Eastgate Way, Ste. 400,

Bellevue, WA

  

98005

(Address of principal executive office)

  

(Zip Code)

 

Registrant’s telephone number, including area code: (425) 564-7200

 

 

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  x    No  ¨

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  x    No  ¨

 

The number of shares outstanding of the registrant’s stock as of April 30, 2003 was 119,826,000 consisting of 50,824,000 of common stock and 69,002,000 of Class B common stock.

 

Table of Contents

EXPEDIA, INC.

 

FORM 10-Q

 

For the Quarter Ended March 31, 2003

 

INDEX

 

              

Page

PART I.    Financial Information

     
    

Item 1.

   

Unaudited Condensed Consolidated Financial Statements

   

3

         

a)

   

Unaudited Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2003 and 2002

   

3

         

b)

   

Unaudited Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002

   

4

         

c)

   

Unaudited Consolidated Statement of Changes in Stockholders’ Equity for the Period from January 1, 2003 to March 31, 2003

   

5

         

d)

   

Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002

   

6

         

e)

   

Notes to Unaudited Condensed Consolidated Financial Statements

   

7

    

Item 2.

   

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

17

    

Item 3.

   

Quantitative and Qualitative Disclosures About Market Risk

   

36

    

Item 4.

   

Controls and Procedures

   

36

PART II.    Other Information

     
    

Item 1.

   

Legal Proceedings

   

37

    

Item 2.

   

Changes in Securities and Use of Proceeds

   

38

    

Item 4.

   

Submission of Matter to a Vote of Security Holders

   

38

    

Item 5.

   

Other Information

   

38

    

Item 6.

   

Exhibits and Reports on Form 8-K

   

39

SIGNATURES

   

40

CERTIFICATIONS

     

 

2

Table of Contents

PART I.  FINANCIAL INFORMATION

 

ITEM 1.    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

EXPEDIA, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

    

Three Months Ended

March 31,

  
    

2003

     

2002

(restated)

  

Merchant revenues

   

$

116,741

 

   

$

57,650

 

Agency revenues

   

 

77,855

 

   

 

51,741

 

Advertising and other revenues

   

 

4,164

 

   

 

6,615

 

    
  

Revenues

   

 

198,760

 

   

 

116,006

 

    
  

Cost of merchant revenues (excluding recognition of stock-based compensation, of $79 and
$24 for the three months ended March 31, 2003 and 2002)

   

 

30,677

 

   

 

14,793

 

Cost of agency revenues (excluding recognition of stock-based compensation of $63 and $25
for the three months ended March 31, 2003 and 2002)

   

 

24,504

 

   

 

19,503

 

Cost of advertising and other revenues (excluding recognition of stock-based compensation
of $1 and $4 for the three months ended March 31, 2003 and 2002)

   

 

533

 

   

 

848

 

    
  

Cost of revenues

   

 

55,714

 

   

 

35,144

 

    
  

Gross profit

   

 

143,046

 

   

 

80,862

 

    
  

Operating expenses:

                  

Product development (excluding recognition of stock-based compensation of $560 and
$971 for the three months ended March 31, 2003 and 2002)

   

 

10,964

 

   

 

8,727

 

Sales and marketing (excluding recognition of stock-based compensation of $254 and
$96 for the three months ended March 31, 2003 and 2002)

   

 

62,465

 

   

 

34,836

 

General and administrative (excluding recognition of stock-based compensation of
$6,724 and $486 for the three months ended March 31, 2003 and 2002)

   

 

15,499

 

   

 

8,241

 

Amortization of intangible assets

   

 

4,552

 

   

 

8,768

 

Recognition of stock-based compensation

   

 

7,681

 

   

 

1,606

 

    
  

Total operating expenses

   

 

101,161

 

   

 

62,178

 

    
  

Income from operations

   

 

41,885

 

   

 

18,684

 

Net interest income and other

   

 

2,562

 

   

 

2,683

 

Share of joint venture net loss

   

 

(242

)

   

 

(247

)

USA merger related expense

   

 

(2,002

)

   

 

(9,860

)

    
  

Income before provision for income taxes

   

 

42,203

 

   

 

11,260

 

Provision for income taxes

   

 

(15,337

)

   

 

(4,614

)

    
  

Net income

   

$

26,866

 

   

$

6,646

 

    
  

Net income per common share:

                  

Basic

   

$

0.23

 

   

$

0.06

 

    
  

Diluted

   

$

0.20

 

   

$

0.05

 

    
  

Weighted average number of shares outstanding:

                  

Basic

   

 

118,316

 

   

 

108,558

 

    
  

Diluted

   

 

132,028

 

   

 

122,848

 

    
  

 

3

Table of Contents

 

EXPEDIA, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

 

    

March 31,

2003

     

December 31,

2002

  

ASSETS

                  

Current assets:

                  

Cash and cash equivalents

   

$

269,641

 

   

$

218,219

 

Marketable securities

   

 

501,806

 

   

 

365,790

 

Accounts receivable, net of allowance of $2,028 and $1,859, respectively

   

 

41,773

 

   

 

35,741

 

Prepaid merchant bookings

   

 

30,505

 

   

 

12,435

 

Prepaid expenses and other current assets

   

 

19,334

 

   

 

12,667

 

    
  

Total current assets

   

 

863,059

 

   

 

644,852

 

Property and equipment, net

   

 

30,782

 

   

 

30,368

 

Restricted deposits and other assets

   

 

17,307

 

   

 

15,739

 

Goodwill, net

   

 

124,202

 

   

 

124,286

 

Intangible assets, net

   

 

40,182

 

   

 

44,668

 

    
  

Total assets

   

$

1,075,532

 

   

$

859,913

 

    
  

LIABILITIES

                  

Current liabilities:

                  

Accounts payable

   

$

67,804

 

   

$

39,159

 

Accrued expenses

   

 

206,650

 

   

 

180,628

 

Deferred merchant bookings

   

 

270,202

 

   

 

149,348

 

Unearned revenue

   

 

5,048

 

   

 

4,772

 

    
  

Total current liabilities

   

 

549,704

 

   

 

373,907

 

    
  

Commitments and contingencies (Note 8)

                  

STOCKHOLDERS’ EQUITY

                  

Common stock, $.01 par value, 600,000 shares authorized,
50,424 and 48,906 shares issued and outstanding, respectively

   

 

505

 

   

 

488

 

Class B common stock, $.01 par value, 150,000 shares authorized,
69,002 shares issued and outstanding

   

 

690

 

   

 

690

 

Preferred stock, $.01 par value, 20,000 shares authorized,
none issued and outstanding

                  

Stockholder warrants

   

 

77,839

 

   

 

77,839

 

Additional paid-in-capital

   

 

534,848

 

   

 

500,839

 

Contribution from parent

   

 

95,443

 

   

 

95,443

 

Contribution receivable from parent

   

 

(59,230

)

   

 

(62,234

)

Unearned stock-based compensation

   

 

(550

)

   

 

(1,564

)

Retained deficit

   

 

(126,473

)

   

 

(128,328

)

Accumulated other comprehensive income

   

 

2,756

 

   

 

2,833

 

    
  

Total stockholders’ equity

   

 

525,828

 

   

 

486,006

 

    
  

Total liabilities and stockholders’ equity

   

$

1,075,532

 

   

$

859,913

 

    
  

 

4

Table of Contents

 

EXPEDIA, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(in thousands)

(unaudited)

 

   

Common Stock

    

Class B

Common Stock

   

Stockholder Warrants

  

Additional

Paid-In Capital

     

Contribution by Parent

   

Contribution Receivable from Parent

     

Unearned Stock-Based Compensation

    

Retained Deficit

       

Accumulated Other Comprehensive Income

        
                                
                                
   

Shares

     

Amount

    

Shares

   

Amount