Expedia 2013 Annual Report Download - page 32

security measures will prevent all possible security breaches or attacks. A party, whether internal or external, that
is able to circumvent our security systems could misappropriate user information or proprietary information or
cause significant interruptions in our operations. In the past, we have experienced “denial-of-service” type
attacks on our systems that have made portions of our websites unavailable for short periods of time as well as
unauthorized access of our systems and data. We may need to expend significant resources to protect against
security breaches or to address problems caused by breaches, and reductions in website availability could cause a
loss of substantial business volume during the occurrence of any such incident. Because the techniques used to
sabotage security change frequently, often are not recognized until launched against a target and may originate
from less regulated and remote areas around the world, we may be unable to proactively address these techniques
or to implement adequate preventive measures. Security breaches could result in negative publicity, damage to
reputation, exposure to risk of loss or litigation and possible liability due to regulatory penalties and sanctions.
Security breaches could also cause travelers and potential users to lose confidence in our security, which would
have a negative effect on the value of our brands. Failure to adequately protect against attacks or intrusions,
whether for their own systems or systems of vendors, could expose us to security breaches that could have an
adverse impact on financial performance. Finally, countries in other regions, most notably Asia and Latin
America, are increasingly implementing new privacy regulations, resulting in additional compliance burdens and
uncertainty as to how some of these laws will be interpreted.
Acquisitions, investments or significant commercial arrangements could result in operating and
financial difficulties.
We have acquired, invested in or entered into significant commercial arrangements with a number of
businesses in the past, and our future growth may depend, in part, on future acquisitions, investments or
significant commercial arrangements, any of which could be material to our financial condition and results of
operations. Certain financial and operational risks related to acquisitions, investments or significant commercial
arrangements that may have a material impact on our business are:
• Use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions,
including with regard to future payment obligations in connection with put/call rights, may limit other
potential uses of our cash, including stock repurchases, dividend payments and retirement of
outstanding indebtedness;
• Amortization expenses related to acquired intangible assets and other adverse accounting
consequences, including changes in fair value of contingent consideration;
• Expected and unexpected costs incurred in pursuing acquisitions, including identifying and performing
due diligence on potential acquisition targets that may or may not be successful;
• Diversion of management’s attention or other resources from our existing businesses;
• Difficulties and expenses in assimilating the operations, products, technology, privacy protection
systems, information systems or personnel of the acquired company;
• Impairment of relationships with employees, suppliers and affiliates of our business and the acquired
business;
• The assumption of known and unknown debt and liabilities of the acquired company;
• Failure of the acquired company to achieve anticipated traffic, transactions, revenues, earnings or cash
flows or to retain key management or employees;
• Failure to generate adequate returns on our acquisitions and investments, or returns in excess of
alternative uses of capital;
• Entrance into markets in which we have no direct prior experience and increased complexity in our
business;
• Challenges relating to the structure of an investment, such as governance, accountability and decision-
making conflicts that may arise in the context of a joint venture or majority ownership investment;
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