TripAdvisor 2013 Annual Report Download - page 40

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 brand. Failure to adequately protect against attacks or intrusions, whether for our own systems or systems
of vendors, could expose us to security breaches that could have an adverse impact on financial performance.
We also face risks associated with security breaches affecting third parties conducting business over the
Internet. Much of our business is conducted with third party marketing affiliates, which may generate travel
reservations through our infrastructure or through our systems. In addition, we frequently use third parties to
process credit card payments. A security breach at such third party could be perceived by consumers as a security
breach of our systems and could result in negative publicity, damage our reputation, expose us to risk of loss or
litigation and possible liability and subject us to regulatory penalties and sanctions. In addition, such third parties
may not comply with applicable disclosure requirements, which could expose us to liability.
If the businesses we have acquired or invested in do not perform as expected or we are unable to effective
integrate acquired businesses, our operating results and prospects could be harmed.
We have acquired a number of businesses in the past, and our future growth may depend, in part, on future
acquisitions, any of which could be material to our financial condition and results of operations. Certain financial
and operational risks related to acquisitions that may have a material impact on our business are:
• Use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions may
limit other potential uses of our cash, including stock repurchases, dividend payments and retirement of
outstanding indebtedness;
• Use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions 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;
• Expected and unexpected costs incurred in identifying and pursuing acquisitions, 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 business;
• Difficulties and expenses in integrating 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, revenues, earnings or cash flows or to
retain key management or employees;
• Failure to generate adequate returns on acquisitions and investments;
• Entrance into markets in which we have no direct prior experience and increased complexity in our
business;
• Impairment of goodwill or other intangible assets such as trademarks or other intellectual property
arising from acquisitions; and
• Adverse market reaction to acquisitions.
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