TripAdvisor 2015 Annual Report Download - page 25

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,whichweconsider
indefinitelyreinvested.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 are subject to fluctuation in foreign currency exchange risk.
WeconductasignificantandgrowingportionofourbusinessoutsidetheUnitedStatesbutreportourresultsinU.S.dollars.Asaresult,wefaceexposure
tomovementsincurrencyexchangerates,particularlythoserelatedtotheEuro,Britishpoundsterling,Singaporedollar,Australiandollar,andChineserenminbi.
Theseexposuresinclude,butarenotlimitedtore-measurementofgainsandlossesfromchangesinthevalueofforeigndenominatedassetsandliabilities;
translationgainsandlossesonforeignsubsidiaryfinancialresultsthataretranslatedintoU.S.dollarsuponconsolidation;andplanningriskrelatedtochangesin
exchangeratesbetweenthetimeweprepareourannualandquarterlyforecastsandwhenactualresultsoccur.
Dependingonthesizeoftheexposuresandtherelativemovementsofexchangerates,ifweweretochoosenottohedgeorweretofailtohedgeeffectively
ourexposure,wecouldexperienceamaterialadverseeffectonourfinancialstatementsandfinancialcondition.Asseeninsomerecentperiods,intheeventof
severevolatilityinexchangeratestheimpactoftheseexposurescanincrease,andtheimpactonresultsofoperationscanbemorepronounced.Inaddition,the
currentenvironmentandtheincreasinglyglobalnatureofourbusinesshavemadehedgingtheseexposuresbothmorecomplexandcostly.Wehedgecertainshort-
termforeigncurrencyexposureswiththepurchaseofforwardexchangecontracts.Thesehedgecontractsonlyhelpmitigatetheimpactofchangesinforeign
currencyratesthatoccurduringthetermoftherelatedcontractperiodandcarryrisksofcounter-partyfailure.Therecanbenoassurancethatourhedgeswillhave
theirintendedeffects.
Significantfluctuationsincurrencyexchangeratescanaffectconsumertravelbehavior.Volatilityinforeignexchangeratesanditsimpactonconsumer
behavior,whichmaydifferacrossregions,makesitmoredifficulttoforecastindustryandconsumertrendsandthetiminganddegreeoftheirimpactonour
marketsandbusiness,whichinturncouldadverselyaffectourabilitytoeffectivelymanageourbusinessandadverselyaffectourresultsofoperations.
In connection with the Spin-Off, we could be subject to significant tax liabilities.
UndertheTaxSharingAgreementbetweenusandExpediaenteredintoinconnectionwiththeSpin-Off,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.
WecontinuetoberesponsibleforpotentialtaxliabilitiesinconnectionwithconsolidatedincometaxreturnsfiledwithExpediapriortoorinconnection
withtheSpin-Off.WearecurrentlyunderanIRSauditforthe2009and2010taxyears,andhavevariousongoingstateincometaxaudits.Theseauditsinclude
questioningofthetimingandtheamountofincomeanddeductionsandtheallocationofincomeamongvarioustaxjurisdictions.Theoutcomeofthesemattersor
anyotherauditscouldsubjectustosignificanttaxliabilities.
Liberty TripAdvisor Holdings, Inc. currently is a controlling stockholder.
LibertyTripAdvisorHoldings,Inc.,orLTRIP,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,includingbutnotlimitedto,corporatetransactionssuchasmergers,businesscombinationsordispositionsofassets,theauthorization
orissuanceofnewequityordebtsecuritiesanddeterminationswithrespecttoourbusinessdirectionandpolicies).LTRIP,whichhasinvestmentsinother
companies,mayhaveintereststhatdifferfromthoseofourotherstockholdersandtheymayvoteinawaywithwhichourotherstockholdersmaynotagreeorthat
maybeadversetootherstockholders’interests.LTRIPisnotrestrictedfrominvestinginotherbusinessesinvolvingorrelatedtoourbusiness.Liberty’scontrolof
us,aswellastheexistingprovisionsofourorganizationaldocumentsandDelawarelaw,maydiscourageorpreventachangeofcontrolofus,whichmayreduce
themarketpriceofourcommonstock.
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