TripAdvisor 2011 Annual Report Download - page 29

Table of Contents
Union. In addition, enforcement authorities in the United States continue to rely on their authority under existing consumer protection laws to
take action against companies relating to data privacy and security practices. The growth and development of online commerce may prompt calls
for more stringent consumer protection laws and more aggressive enforcement efforts, which may impose additional burdens on online
businesses generally.
Mr. Diller currently is a controlling shareholder. If Mr. Diller ceases to be a controlling shareholder, Liberty Interactive Corporation may
effectively be a controlling shareholder.
Mr. Diller effectively controls the outcome of all matters submitted to a vote or for the consent of our stockholders (other than with respect
to the election by the holders of our Common Stock of 25% of the members of our Board of Directors and matters as to which Delaware law
requires separate class votes). Upon Mr. Diller’s ceasing to serve in his capacity as Chairman or his becoming disabled, Liberty Interactive
Corporation may effectively control the voting power of our capital stock through its ownership of our common shares.
Our effective tax rate is impacted by a number of factors that could have a material impact 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 other foreign jurisdictions. In the event we
incur net income in certain jurisdictions but incur losses in other jurisdictions, we generally cannot offset the income from one jurisdiction with
the loss from another, which could increase our effective tax rate. Furthermore, significant judgment is required to calculate our worldwide
provision for income taxes. In the ordinary course of our business there are many transactions and calculations where the ultimate tax
determination is uncertain. By virtue of our previously filed separate company and consolidated income tax returns with Expedia we are
routinely under audit by federal, state and foreign taxing authorities. Although we believe our tax estimates are reasonable, the final
determination of audits could be materially different from our historical income tax provisions and accruals. The results 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.
Additionally, we earn an increasing portion of our income, and accumulate a greater portion of cash flow, in foreign jurisdictions. Any
repatriation of funds currently held in foreign jurisdictions may result in higher effective tax rates and incremental cash tax payments. In
addition, there have been proposals to amend U.S. tax laws that would significantly impact the manner in which U.S. companies are taxed on
foreign earnings. Although we cannot predict whether or in what form any legislation will pass, if enacted, it could have a material adverse
impact on our U.S. tax expense and cash flows.
We cannot be sure that our intellectual property is protected from copying or use by others, including potential competitors.
Our websites rely on content, brands and technology, much of which is proprietary. We protect our proprietary content, brands and
technology by relying on a combination of trademarks, copyrights, trade secrets, patents and confidentiality agreements. In connection with our
license agreements with third parties, we seek to control access to, and the use and distribution of, proprietary technology, content and brands.
Even with these precautions, it may be possible for another party to copy or otherwise obtain and use our proprietary technology, content or
brands without authorization or to develop similar technology, content or brands independently. Effective trademark, copyright, patent and trade
secret protection may not be available in every jurisdiction in which our services are made available, and policing unauthorized use of our
proprietary technology, content and brands is difficult and expensive. Therefore, in certain jurisdictions, we may be unable to protect our
proprietary technology, content and brands adequately against unauthorized third-party copying or use, which could adversely affect our
business or ability to compete. We cannot be sure that the steps we have taken will prevent misappropriation or infringement of proprietary
technology, content or brands. Any misappropriation or violation of our rights could have a material adverse effect on our business. Furthermore,
we may need to go to court or
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