ServiceMagic 2014 Annual Report Download - page 21

Table of Contents
Item 1A. Risk Factors
Cautionary Statement Regarding Forward-Looking Information
This annual report on Form 10-K contains “forward1looking statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify
forward1looking statements. These forward1looking statements include, among others, statements relating to: IAC’s future financial performance,
IAC’s business prospects and strategy, anticipated trends and prospects in the industries in which IAC’s businesses operate and other similar
matters. These forward1looking statements are based on IAC management's expectations and assumptions about future events as of the date of this
annual report, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.
Actual results could differ materially from those contained in these forward1looking statements for a variety of reasons, including, among
others, the risk factors set forth below. Other unknown or unpredictable factors that could also adversely affect IAC’s business, financial condition
and results of operations may arise from time to time. In light of these risks and uncertainties, the forward1looking statements discussed in this
annual report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward1looking statements, which only
reflect the views of IAC management as of the date of this annual report. IAC does not undertake to update these forward1looking statements.
Risk Factors
Mr. Diller owns a significant percentage of the voting power of our stock and will be able to exercise significant influence over the composition
of our Board of Directors, matters subject to stockholder approval and our operations.
As of January 30, 2015, Mr. Diller owned 5,789,499 shares of IAC Class B common stock representing 100% of IAC’s outstanding Class B
common stock and approximately 42.5% of the total outstanding voting power of IAC. As of this date, Mr. Diller also owned 930,734 vested
options to purchase IAC common stock and 75,000 unvested options to purchase IAC common stock.
In addition, under an amended and restated governance agreement between IAC and Mr. Diller, for so long as Mr. Diller serves as IAC’s
Chairman and Senior Executive, he generally has the right to consent to limited matters in the event that IAC’s ratio of total debt to EBITDA (as
defined in the governance agreement) equals or exceeds four to one over a continuous twelve1month period. While Mr. Diller may not currently
exercise this right, no assurances can be given that this right will not become exercisable in the future, and if so, that Mr. Diller will consent to any
of the limited matters at such time, in which case IAC would not be able to engage in transactions or take actions covered by this consent right.
As a result of Mr. Diller’s ownership interest, voting power and the contractual rights described above, Mr. Diller currently is in a position to
influence, subject to our organizational documents and Delaware law, the composition of IAC’s Board of Directors and the outcome of corporate
actions requiring stockholder approval, such as mergers, business combinations and dispositions of assets, among other corporate transactions. In
addition, this concentration of voting power could discourage others from initiating a potential merger, takeover or other change of control
transaction that may otherwise be beneficial to IAC, which could adversely affect the market price of IAC securities.
We depend on our key personnel.
Our future success will depend upon our continued ability to identify, hire, develop, motivate and retain highly skilled individuals, with the
continued contributions of our senior management being especially critical to our success. Competition for well-qualified employees across IAC
and its various businesses is intense and our continued ability to compete effectively depends, in part, upon our ability to attract new employees.
While we have established programs to attract new employees and provide incentives to retain existing employees, particularly our senior
management, we cannot assure you that we will be able to attract new employees or retain the services of our senior management or any other key
employees in the future. Effective succession planning is also important to our future success. If we fail to ensure the effective transfer of senior
management knowledge and smooth transitions involving senior management across our various businesses, our ability to execute short and long
term strategic, financial and operating goals, as well as our business, financial condition and results of operations generally, could be adversely
affected.
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