TripAdvisor 2012 Annual Report Download - page 30

technology or content found to be in violation of another party’s rights. We might be required or may opt to seek
a license for rights to intellectual property held by others, which may not be available on commercially
reasonable terms, or at all. Even if a license is available, we could be required to pay significant royalties, which
would increase our operating expenses. We may also be required to develop alternative non-infringing
technology, or content, which could require significant effort and expense and make us less competitive in the
relevant market. Any of these results could harm our business and financial performance.
We may have future capital needs and may not be able to obtain additional financing on acceptable terms.
We are party to a term loan in the amount of $400 million, as well as a revolving credit facility of
$200 million. These arrangements may limit our ability to secure significant additional financing in the future on
favorable terms. Our ability to secure additional financing and satisfy our financial obligations under
indebtedness outstanding from time to time will depend upon our future operating performance, which is subject
to then prevailing general economic and credit market conditions, including interest rate levels and the
availability of credit generally, and financial, business and other factors, many of which are beyond our control.
In addition, we may be unable to secure additional financing or financing on favorable terms, or our
operating cash flow may be insufficient to satisfy our financial obligations under indebtedness outstanding from
time to time (if any). Furthermore, if financing is not available when needed or is not available on favorable
terms, we may be unable to issue or repurchase equity, develop new or enhanced existing services, complete
acquisitions or otherwise take advantage of business opportunities, any of which could have a material adverse
effect on our business, financial condition and results of operations. If additional funds are raised through the
issuance of equity securities, our stockholders may experience significant dilution.
We have significant indebtedness, which could adversely affect our business and financial condition.
The face value of our term loan totals $400 million. Risks relating to our indebtedness include:
• Increasing our vulnerability to general adverse economic and industry conditions;
• Requiring us to dedicate a portion of our cash flow from operations to principal and interest payments
on our indebtedness, thereby reducing the availability of cash flow to fund working capital, capital
expenditures, acquisitions and investments and other general corporate purposes;
• Making it more difficult for us to optimally capitalize and manage the cash flow for our businesses;
• Limiting our flexibility in planning for, or reacting to, changes in our businesses and the markets in
which we operate;
• Possibly placing us at a competitive disadvantage compared to our competitors that have less debt;
• Limiting our ability to borrow additional funds or to borrow funds at rates or on other terms that we
finds acceptable; and
• Exposing us to the risk of increased interest rates because our outstanding debt is expected to be subject
to variable rates of interest.
In addition, it is possible that we may need to incur additional indebtedness in the future in the ordinary course
of business. The terms of our term loan and revolving credit facility will allow us to incur additional debt subject to
certain limitations. If new debt is added to current debt levels, the risks described above could intensify.
The agreements that govern our credit facility contain various covenants that limit our discretion in the
operation of our business and also require us to meet financial maintenance tests and other covenants. The
failure to comply with such tests and covenants could have a material adverse effect on us.
We are party to a credit agreement providing for a revolving credit facility with a borrowing capacity of
$200 million and a term of five years, as well as a five-year, $400 million term loan to TripAdvisor Holdings,
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