Expedia 2005 Annual Report Download - page 22

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interruption, remediation may be costly and have a material adverse effect on our operating results and
financial condition.
Our expansion places a significant strain on our management, technical, operational and financial
resources.
We have rapidly and significantly expanded our operations both domestically and internationally and
anticipate expanding further to pursue growth of our product and service offerings and customer base.
Such expansion increases the complexity of our business and places a significant strain on our
management, operations, technical performance, financial resources, and internal financial control and
reporting functions.
There can be no assurance that we will be able to manage our expansion effectively. Our current and
planned personnel, systems, procedures and controls may not be adequate to support and effectively
manage our future operations, especially as we employ personnel in multiple geographic locations. We may
not be able to hire, train, retain, motivate and manage required personnel, which may limit our growth. If
any of this were to occur, it could damage our reputation, limit our growth, negatively affect our operating
results, and hard our business.
We may experience operational and financial risks in connection with any acquisitions. In addition,
some of the businesses acquired by us may incur significant losses from operations or experience
impairment of carrying value.
Our future growth may depend, in part, on acquisitions. To the extent that we continue to grow
through acquisitions, we may face the operational and financial risks that commonly accompany that
strategy. We would also face operational risks, such as failing to assimilate the operations and personnel of
the acquired businesses, disrupting their ongoing businesses, impairing management resources and their
relationships with employees and travelers as a result of changes in their ownership and management
Further, the evaluation and negotiation of potential acquisitions, as well as the integration of an acquired
business, will divert management time and other resources. Some acquisitions may not be successful and
their performances may result in the impairment of their carrying value.
Certain financial and operational risks related to acquisitions that may have a material impact on our
business are:
‚ Use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions,
‚ Stockholder dilution if an acquisition is consummated through an issuance of our securities,
‚ Amortization expenses related to acquired intangible assets and other adverse accounting
consequences,
‚ Costs incurred in identifying and performing due diligence on potential acquisition targets that may
or may not be successful,
‚ Difficulties and expenses in assimilating the operations, products, technology, information systems
or personnel of the acquired company,
‚ Impairment of relationships with employees, retailers and affiliates of our business and the acquired
business,
‚ The assumption of known and unknown liabilities of the acquired company,
‚ Entrance into markets in which we have no direct prior experience, and
‚ Impairment of goodwill arising from our acquisitions.
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