TripAdvisor 2013 Annual Report Download - page 35

regarding the qualification of the Spin-Off, together with certain related transactions, as a transaction that is
generally tax free for U.S. federal income tax purposes under Sections 355 and 368(a) (1) (D) of the Internal
Revenue Code of 1986, as amended, or the Code. The IRS private letter ruling and the opinion of counsel were
based on, among other things, certain facts, assumptions as well as the accuracy of certain representations,
statements and undertakings that Expedia and we made to the IRS and to counsel. If any of these representations,
statements or undertakings are, or become, inaccurate or incomplete, or if we or Expedia breach any of the
covenants, the IRS private letter ruling and the opinions of counsel may be invalid.
Moreover, the IRS private letter ruling does not address all the issues that are relevant to determining
whether the Spin-Off qualifies as a transaction that is generally tax free for U.S. federal income tax purposes.
Notwithstanding the IRS private letter ruling and/or the opinion of counsel, the IRS could determine that the
Spin-Off should be treated as a taxable transaction if it determines that any of the representations, assumptions or
undertakings that were included in the request for the IRS private letter ruling or on which the opinion of counsel
was based is false or has been violated or if it disagrees with the conclusions in the opinion of counsel that are
not covered by any IRS ruling.
Under the Tax Sharing Agreement between us and Expedia, we are generally required to indemnify Expedia
for any taxes resulting from the Spin-Off (and any related interest, penalties, legal and professional fees, and all
costs and damages associated with related stockholder litigation or controversies) to the extent such amounts
resulted from (i) any act or failure to act by us described in the covenants in the tax sharing agreement, (ii) any
acquisition of our equity securities or assets or those of a member of our group, or (iii) any failure of the
representations with respect to us or any member of our group to be true or any breach by us or any member of
our group of any covenant, in each case, which is contained in the separation documents or in the documents
relating to the IRS private letter ruling and/or the opinion of counsel.
If we fail to manage our growth effectively, our brand, results of operations and business could be harmed.
We have experienced rapid growth in our headcount and operations, which places substantial demands on
management and our operational infrastructure. We have also consummated a number of acquisitions which have
increased our headcount, operations and locations. We intend to make substantial investments in our technology,
sales and marketing and community management organizations. We also intend to continue to explore
acquisitions. As we continue to grow, we must effectively integrate, develop and motivate a large number of new
employees, including employees in international markets, while maintaining the beneficial aspects of our
company culture. If we do not manage the growth of our business and operations effectively, the quality of our
platform and efficiency of our operations could suffer, which could harm our brand, results of operations and
business.
Our international operations involve additional risks and our exposure to these risks will increase as our
business expands globally.
We operate in a number of jurisdictions outside of the United States and intend to continue to expand our
international operations. To achieve widespread acceptance in new countries and markets, we must continue to
tailor our services and business model to the unique circumstances of such countries and markets, which can be
difficult, costly and divert management and personnel resources. Failure to adapt practices and models
effectively to each country into which we expand could slow our international growth.
We have businesses operating in China, which create particular risks and uncertainties relating to the laws in
China. We operate in China under the brands daodao.com and kuxun.cn. The success of these businesses, and of
any future investments in China, is subject to risks and uncertainties regarding the application, development and
interpretation of China’s laws and regulations.
The laws and regulations of China restrict foreign investment in areas including air-ticketing and travel
agency services, Internet content provision, mobile communication and related businesses. Although we have
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