NOTE 4 — Discontinued Operations
On December 20, 2011, we completed the spin-off of TripAdvisor, Inc., which included its flagship brand as well as 18 other travel media brands. Accordingly, we have presented the financial condition and results of operations of our former TripAdvisor Media Group segment in the consolidated financial statements through December 20, 2011 as discontinued operations. Additionally, the 2012 loss incurred to extinguish our 8.5% senior notes due 2016 (the “8.5% Notes”), a result of the spin-off, was recorded as discontinued operations. See below for a full description of the extinguishment. Financial data for the discontinued operations for the years ended December 31, 2012 and 2011 was as follows:
| Year ended December 31, | ||||||||
| 2012 | 2011 | |||||||
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Revenue |
$ | — | $ | 620,994 | ||||
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Income (loss) before income taxes |
$ | (37,568 | ) | $ | 230,380 | |||
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Provision for income taxes |
15,029 | (82,118 | ) | |||||
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Net income (loss) |
(22,539 | ) | 148,262 | |||||
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Net income attributable to noncontrolling interest |
— | (114 | ) | |||||
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Net income (loss) attributable to discontinued operations |
$ | (22,539 | ) | $ | 148,148 | |||
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Earnings (loss) per share: |
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Basic |
$ | (0.17 | ) | $ | 1.09 | |||
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Diluted |
(0.16 | ) | 1.07 | |||||
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Shares used in computing earnings per share: |
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Basic |
134,203 | 135,888 | ||||||
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Diluted |
139,929 | 138,702 | ||||||
Discontinued operations for the year ended December 31, 2011 included spin-off costs (e.g., legal and professional fees) of $14 million. Our Leisure segment recognized approximately $207 million of sales and marketing expense from TripAdvisor in 2011 through the spin-off date. Interest expense and amortization of debt issuance and discount costs related to the 8.5% Notes of $35 million for the year ended December 31, 2011 were also included within discontinued operations.
The indenture governing our $400 million aggregate principal amount of the 8.5% Notes contained certain covenants that could have restricted implementation of the spin-off. On December 20, 2011, prior to consummation of the spin-off, we gave “Notice of Redemption” to the bondholders, the effect of which was the bonds became due and payable on the redemption date at the redemption price. The redemption price was equal to 100% of the principal amount plus a make-whole premium as of, and accrued and unpaid interest to, the redemption date. The redemption date was defined as 30 days after the Notice of Redemption was given. In order to complete the Notice of Redemption, we were required to irrevocably deposit, with the Trustee, funds sufficient to pay the redemption price plus accrued interest on the 8.5% Notes (approximately $451 million). The 8.5% Notes were fully redeemed on January 19, 2012, the redemption date, for approximately $450 million. In connection with the redemption, we incurred a pre-tax loss from early extinguishment of debt of approximately $38 million (or $24 million net of tax), which included an early redemption premium of $33 million and the write-off of $5 million of unamortized debt issuance and discount costs. This loss was recorded within discontinued operations in the first quarter of 2012, as that was the period in which the bonds were legally extinguished. During 2013, we received an income tax refund of $14 million related to the tax benefit for extinguishment, which was included within cash provided by discontinued operations in our consolidated statement of cash flows for the period.