Expedia 2012 Annual Report Download - page 24

The determination of our worldwide tax provision for income taxes is subject to significant judgment,
and a number of factors could have a material effect on our financial results and could increase the
volatility of those results.
Due to the global nature of our business, we are subject to income taxes in the United States and numerous
foreign jurisdictions. Significant judgment and estimation is required in determining our worldwide provision for
income taxes. In the ordinary course of our business, there are various transactions and calculations for which the
ultimate tax determination is uncertain or otherwise subject to interpretation. We are regularly audited by U.S.
and foreign tax authorities, which authorities may become more aggressive in their interpretation of applicable
laws, rules and regulations over time, whether as a result of economic pressures or otherwise. Although we
believe our tax estimates are reasonable, the final determination of tax audits could be materially different from
our historical income tax provisions and accruals. The final determination of an audit could have a material effect
on our financial position, results of operations, or cash flows in the period or periods for which that determination
is made.
We earn an increasing portion of our income, and accumulate a greater portion of our cash flow, in foreign
jurisdictions. Repatriation of funds currently held by our subsidiaries in foreign jurisdictions may result in a
higher effective tax rate and incremental cash tax payments. In addition, recent legislative proposals would
significantly alter the manner in which U.S. companies are taxed on foreign earnings. Although we cannot
predict whether or in what form any proposed legislation will pass, if enacted, it could have a material effect on
our effective tax rate and cash tax payments.
We rely on the performance of highly skilled personnel and, if we are unable to retain or motivate key
personnel or hire, retain and motivate qualified personnel, our business would be harmed.
Our performance is largely dependent on the talents and efforts of highly skilled individuals. Our future
success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel
for all areas of our organization. In particular, the contributions of Barry Diller, our Chairman and Senior
Executive, and Dara Khosrowshahi, our Chief Executive Officer, are critical to the overall management of the
company. Our future success will depend on the performance of our senior management and key employees.
Expedia cannot ensure that it will be able to retain the services of Mr. Diller, Mr. Khosrowshahi or any other
member of our senior management or key employees, the loss of whom could seriously harm our business.
Competition for well-qualified employees in certain aspects of our business, including software engineers,
developers, product management personnel, development personnel, and other technology professionals, also
remains intense.
Our continued ability to compete effectively depends on our ability to attract new employees and to retain
and motivate our existing employees. If we do not succeed in attracting well-qualified employees or retaining or
motivating existing employees, our business would be adversely affected. We do not maintain any key person
life insurance policies.
We have in the past and may again in the future, restructure portions of our global workforce to simplify and
streamline our organization, improve our cost structure and strengthen our overall businesses. These changes
could affect employee morale and productivity and be disruptive to our business and financial performance.
Our stock price is highly volatile.
The market price of our common stock is highly volatile and could continue to be subject to wide
fluctuations in response to factors such as the following, some of which are beyond our control:
• Quarterly variations in our operating and financial results;
• Operating and financial results that vary from the expectations of securities analysts and investors,
including failure to deliver returns on technology or emerging market marketing investments;
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