"Expedia is consistently executing across all of its business lines," said Barry Diller, Expedia Inc.'s Chairman and Senior Executive. "Notwithstanding the broader issues of the world economy, Expedia is proving it can manage in any environment - a testament to its business model and superior management."

"To deliver 26% worldwide room night and continued OIBA growth in this environment speaks volumes about the abilities and execution of the global Expedia team," said Dara Khosrowshahi, Expedia Inc.'s CEO and President. "Significant improvements in our customer value proposition, marketing efficiencies and improved cost control are just a few of the many accomplishments driving our businesses forward. There is much environmental uncertainty and a lot of hard work left to do, but we are well on our way."

Financial Summary & Operating Metrics (figures in $MM's, except per share amounts)

                                 3 Months            3 Months       Y/Y         Metric                Ended 6.30.09       Ended 6.30.08   Growth         ------              ----------------    ----------------  ------    Gross bookings               5,623.2              5,933.4        (5%)    --------------               -------              -------        ---    Revenue                        769.8                795.0         (3%)    -------                        -----                -----         ---     Revenue margin                13.69%               13.40%      +29bps     --------------                -----                -----       ------    Operating income     before amortization*     ("OIBA")                      212.4                204.1         4%    ---------------------          -----                -----        ---    Operating income               114.6                170.5       (33%)    ----------------               -----                -----       ----    Adjusted net income *          113.7                120.8        (6%)    --------------------           -----                -----        ---    Net income     attributable to     Expedia, Inc.                  40.9                 96.1       (57%)    ----------------                ----                 ----       ----    Adjusted EPS *                 $0.38                $0.40        (5%)    -------------                  -----                -----        ---    Diluted EPS                    $0.14                $0.33       (58%)    -----------                    -----                -----       ----    Free cash flow *               323.9                269.7        20%    ---------------                -----                -----        ---   

*"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" on pages 15-18 herein for an explanation of non-GAAP measures used throughout this release. The definitions for OIBA and Adjusted net income were revised in the first half of 2009.

   Discussion of Results    Gross Bookings & Revenue  

Gross bookings decreased 5% (down 1% excluding the estimated impact from foreign exchange) for the second quarter of 2009 compared with the second quarter of 2008, driven primarily by lower prices for hotel rooms and airline tickets, partially offset by an increase in transactions. Domestic bookings decreased 4% and international bookings decreased 8% (up 4% excluding foreign exchange).

Revenue decreased 3% (up 1% excluding foreign exchange) for the second quarter, primarily driven by lower domestic air revenue. Domestic revenue decreased 6% while international revenue increased 3% (up 14% excluding foreign exchange).

Worldwide hotel revenue decreased 1% for the second quarter primarily due to a 19% decrease in average daily rates ("ADRs"), partially offset by a 26% increase in room nights stayed, including rooms delivered as a component of packages and nights booked through Venere(TM) (which we acquired in the third quarter of 2008).

Worldwide air revenue decreased 20% for the second quarter, primarily due to a 29% decrease in revenue per ticket, partially offset by a 13% increase in ticket volume. Expedia.com eliminated consumer booking fees on air tickets beginning in March of 2009, which primarily drove the decline in revenue per ticket and the lift in ticket volume.

Advertising and media revenue, including net revenue from our TripAdvisor segment, increased 5% for the second quarter, accounting for 10% of worldwide revenue.

Worldwide revenue from other products and services (primarily revenue from car rentals and destination services) decreased 2% for the second quarter.

Revenue as a percentage of gross bookings ("revenue margin") was 13.69% for the second quarter, an increase of 29 basis points compared to the second quarter of 2008. Domestic revenue margin decreased 31 basis points to 12.67% while international revenue margin increased 168 basis points to 15.98%. The increase in the worldwide revenue margin was primarily due to a reduction in the mix of lower margin air product and an increased mix of advertising and media revenue. The decrease in the domestic revenue margin was primarily due to a reduction in hotel service fees and the elimination of air booking fees, partially offset by an increased mix of advertising revenue. The increase in the international revenue margin was driven primarily by higher air overrides (in part due to timing of receipts), a reduction in the mix of air product and a benefit related to the changes in foreign exchange rates between the time of hotel bookings and the associated stays.

Profitability

OIBA for the second quarter increased 4% to $212 million and increased 193 basis points as a percentage of revenue to 27.6%, driven primarily by decreases in selling and marketing expense and cost of revenue at faster rates than the decrease in revenue, offset partially by growth in technology and content and general and administrative expenses. Operating income decreased 33%, driven primarily by $74 million of occupancy tax assessments and legal reserves in the second quarter of 2009.

Adjusted net income for the second quarter decreased $7 million compared to the prior year period primarily due to an increase in foreign exchange losses and an increase in net interest expense, partially offset by higher OIBA. Net income decreased $55 million compared to the prior year period primarily due to the decrease in operating income, increased net interest expense and higher foreign exchange losses. Second quarter adjusted EPS and diluted EPS were $0.38 and $0.14, respectively. Adjusted EPS decreased 5% and diluted EPS decreased 58% primarily as a result of lower adjusted net income and net income.

Cash Flows & Working Capital

For the six months ended June 30, 2009, net cash provided by operating activities was $845 million and free cash flow was $802 million. Both measures include $684 million from net changes in operating assets and liabilities, primarily driven by a working capital benefit from our merchant hotel business. Free cash flow increased $2 million compared to the first six months of the prior year primarily due to an increase in OIBA excluding depreciation, higher total cash provided by changes in operating assets and liabilities and lower capital expenditures, partially offset by an increase in cash paid for income taxes and interest.

   Recent Highlights    Global Presence   --  Gross bookings from Expedia Inc.'s international businesses were $1.73       billion in the second quarter, accounting for 31% of worldwide       bookings, down from 32% in the prior year period. Revenue from       international businesses was $277 million, or 36% of worldwide       revenue, up from 34% in the prior year period.   --  hotels.com  launched a Mandarin-language version for Chinese travelers       in partnership with eLong(TM), providing customers in China with       access to over 100,000 international hotels and over 7,000 domestic       hotels in nearly 400 cities across China. hotels.com also launched an       Arabic-language site.   --  Hotwire  launched its first-ever national cable TV advertising       campaign in Canada. Hotwire Group's revenue grew 24% in the second       quarter and exceeded $250 million for the first time on a trailing       twelve month basis.    --  Expedia  Affiliate Network (EAN) signed a Europe-wide white label       partnership agreement to power hotel bookings on Avis Rental Car       websites in twelve countries. EAN also signed its first agreement in       Japan, enabling Airlink to package its air and ground services with       Expedia's hotel offering.     Brand Portfolio   --  Expedia.com eliminated online air booking fees, as well as change and       cancel fees on all hotel, car rental and cruise reservations and on       virtually all flight reservations.   --  In the first year since the hotels.com welcomerewards(TM) program       launched, members have earned free nights by staying in more than       36,000 properties worldwide and have redeemed in more than 7,000       properties.   --  Expedia.co.jp has partnered with MSN Japan, the country's second       largest internet portal, to power its international hotel bookings.   --  Egencia(TM) expanded its Preferred Rate program across Europe,       offering exclusive discounts at 4,000 hotels plus amenities such as       loyalty points, high speed internet, early check-in, complimentary       breakfast and free parking.    --  Expedia Media Solutions  signed agreements with VisitDenmark, the       Spain Ministry of Tourism, the San Diego Convention and Visitors       Bureau and South African Tourism to promote travel to those       destinations across a variety of Expedia  and hotels.com sites in       multiple countries. Expedia Media Solutions now has agreements with       more than 50 destination marketing organizations.     Content & Innovation   --  The U.S. Travel Association named TripAdvisor "Innovator of the Year".   --  TripAdvisor launched its Business Travel Center that ranks the best       hotels for business travelers in 750 cities and incorporates Egencia       content in the ranking algorithm.   --  FlipKey(TM), TripAdvisor Media Network's vacation rental review site,       launched a self-service program for homeowners to list their       properties on flipkey.com for $1.99 per month until the end of this       year.   --  Expedia.com's Annual Summer Sale kicked off June 1, and represents the       single largest ever hotel promotional event, with more than 5,000       participating hotels worldwide, up from 1,800 in 2008.    --  Egencia's Meetings & Incentives division introduced the corporate       travel industry's first fully integrated global technology solution       combining online registration, attendee management, travel booking and       reporting.     Supply Portfolio   --  Expedia signed long term agreements with a number of regional air       partners, including Mexico's AeroMexico and Mexicana; Ireland's Aer       Arann and Isle of Man's Manx2, which will be featured on all Expedia       sites in Europe;  Etihad, the national airline of the United Arab       Emirates; as well as Air New Zealand.   --  Expedia signed a renewed global contract with Virgin Atlantic through       which Virgin Atlantic schedules and fares will be available on all       Expedia sites worldwide.   --  Expedia signed an agreement with Berlin-based Design Hotels(TM),       giving their 180 member properties the opportunity for enhanced       exposure on Expedia and hotels.com sites worldwide. Expedia also       signed a new strategic agreement with Red Roof Inn to offer the       chain's properties in Expedia's global marketplace.   --  Expedia signed deals with Hertz and Payless Car Rental through which       both will be offered as Preferred Partners on Expedia.com. In       addition, both will be offered on Expedia.ca, EAN, Expedia sites in       APAC and Egencia and Hertz will also be offered on Hotwire.    --  Expedia began rolling out its new commission-based Expedia Easy Manage       agency hotel program in Europe as an alternative to the longstanding       Expedia Special Rate merchant hotel program. The new program is       targeted primarily towards smaller properties outside primary       destinations.                                    EXPEDIA, INC.                                            CONSOLIDATED STATEMENTS OF OPERATIONS                     (In thousands, except per share data)                                  (Unaudited)                                  Three months ended      Six months ended                                      June 30,                June 30,                                   -------------            -----------                                    2009      2008        2009        2008                                    ----      ----        ----        ----    Revenue                      $769,768  $795,048  $1,405,480  $1,482,865    Costs and expenses:     Cost of revenue (1)         148,762   170,027     292,275     322,287     Selling and marketing (1)   271,492   300,361     507,376     588,356     Technology and content (1)   77,881    71,544     155,553     143,490     General and      administrative (1)          67,380    63,915     135,289     131,482     Amortization of intangible      assets                       9,302    18,660      18,371      36,711     Restructuring charges         6,098         -      14,816           -     Occupancy tax assessments      and      legal reserves              74,211         -      74,211           -                                  ------   -------      ------     -------   Operating income              114,642   170,541     207,589     260,539    Other income (expense):     Interest income               1,417     9,073       4,088      17,188     Interest expense            (20,805)  (13,342)    (42,450)    (29,042)     Other, net                  (19,073)   (5,098)    (26,020)     (8,771)                                 -------    ------     -------      ------   Total other expense, net      (38,461)   (9,367)    (64,382)    (20,625)                                 -------    ------     -------     -------   Income before income taxes     76,181   161,174     143,207     239,914   Provision for income taxes    (34,338)  (65,944)    (61,610)    (94,916)                                 -------   -------     -------     -------   Net income                     41,843    95,230      81,597     144,998   Net (income) loss    attributable to    noncontrolling interests        (941)      859      (1,311)      2,397                                    ----       ---      ------       -----   Net income attributable to    Expedia,    Inc.                         $40,902   $96,089     $80,286    $147,395                                 =======   =======     =======    ========    Earnings per share attributable to    Expedia, Inc. available     to common stockholders:     Basic                         $0.14     $0.34       $0.28       $0.52     Diluted                        0.14      0.33        0.28        0.50    Shares used in computing earnings per    share:     Basic                       288,180   285,986     287,764     285,547     Diluted                     290,889   293,999     289,384     294,010     (1) Includes stock-based compensation    as follows:       Cost of revenue              $514      $663      $1,225      $1,243       Selling and marketing       2,780     2,719       6,771       6,471       Technology and content      3,412     3,406       8,588       8,228       General and        administrative             6,870     8,066      15,564      16,718                                   -----     -----      ------      ------            Total stock-based             compensation        $13,576   $14,854     $32,148     $32,660                                 =======   =======     =======     =======                                  EXPEDIA, INC.                        CONSOLIDATED BALANCE SHEETS                   (In thousands, except per share data)                                                   June 30,    December 31,                                                    2009          2008                                                    ----          ----                                                (Unaudited)                     ASSETS    Current assets:     Cash and cash equivalents                  $862,294      $665,412     Restricted cash and cash equivalents         20,569         3,356     Short-term investments                       47,861        92,762     Accounts receivable, net of allowance      of      $13,509 and $12,584                        371,417       267,270     Prepaid merchant bookings                   102,077        66,081     Prepaid expenses and other current      assets                                     112,748       103,833                                                 -------       -------   Total current assets                        1,516,966     1,198,714   Property and equipment, net                   235,232       247,954   Long-term investments and other    assets                                        54,901        75,593   Intangible assets, net                        829,741       833,419   Goodwill                                    3,569,225     3,538,569                                               ---------     ---------   TOTAL ASSETS                               $6,206,065    $5,894,249                                              ==========    ==========          LIABILITIES AND STOCKHOLDERS'                     EQUITY    Current liabilities:     Accounts payable, merchant                 $741,907      $625,059     Accounts payable, other                     194,501       150,534     Deferred merchant bookings                1,112,913       523,563     Deferred revenue                             20,596        15,774     Accrued expenses and other current      liabilities                                322,732       251,238                                                 -------       -------   Total current liabilities                   2,392,649     1,566,168   Long-term debt                                894,811       894,548   Credit facility                                     -       650,000   Deferred income taxes, net                    198,005       189,541   Other long-term liabilities                   230,534       213,028    Commitments and contingencies    Stockholders' equity:     Preferred stock $.001 par value                   -             -       Authorized shares: 100,000       Series A shares issued and        outstanding: 1 and 1     Common stock $.001 par value                    342           340       Authorized shares: 1,600,000       Shares issued: 341,519 and 339,525       Shares outstanding: 262,738 and        261,374     Class B common stock $.001 par value             26            26       Authorized shares: 400,000       Shares issued and outstanding:        25,600 and 25,600     Additional paid-in capital                6,001,925     5,979,484     Treasury stock - Common stock, at cost   (1,736,669)   (1,731,235)       Shares: 78,781 and 78,151     Retained earnings (deficit)              (1,835,273)   (1,915,559)     Accumulated other comprehensive loss         (5,760)      (16,002)                                                  ------       -------       Total Expedia, Inc. stockholders'        equity                                 2,424,591     2,317,054     Noncontrolling interest                      65,475        63,910                                                  ------        ------   Total stockholders' equity                  2,490,066     2,380,964                                               ---------     ---------   TOTAL LIABILITIES AND    STOCKHOLDERS' EQUITY                      $6,206,065    $5,894,249                                              ==========    ==========                                  EXPEDIA, INC.