Expedia 2010 Annual Report Download - page 23

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• Possible refinancing risk if certain of our senior note issues are put by holders in 2013;
• Placing us at a competitive disadvantage compared to our competitors that have less debt; and
• Limiting our ability to borrow additional funds or to borrow funds at rates or on other terms we find
acceptable.
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 credit facility and the indentures governing our outstanding senior notes
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 governing our indebtedness 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.
The agreements governing our indebtedness contain various covenants, including those that restrict our
ability to, among other things:
• Borrow money, and guarantee or provide other support for indebtedness of third parties including
guarantees;
• Pay dividends on, redeem or repurchase our capital stock;
• Make investments in entities that we do not control, including joint ventures;
• Enter into certain asset sale transactions, including partial or full spin-off transactions;
• Enter into secured financing arrangements;
• Enter into sale and leaseback transactions; and
• Enter into unrelated businesses.
These covenants may limit our ability to effectively operate our businesses or maximize stockholder value.
In addition, our credit facility requires that we meet certain financial tests, including an interest coverage
test and a leverage ratio test.
Any failure to comply with the restrictions of our credit facility or any agreement governing our other
indebtedness may result in an event of default under those agreements. Such default may allow the creditors to
accelerate the related debt, which acceleration may trigger cross-acceleration or cross-default provisions in other
debt. In addition, lenders may be able to terminate any commitments they had made to supply us with further
funds (including periodic rollovers of existing borrowings).
We have foreign exchange risk.
We conduct a significant and growing portion of our business outside the United States. As a result, we face
exposure to movements in currency exchange rates, particularly those related to the euro, British pound sterling,
Canadian dollar, Australian dollar and Chinese renminbi.
These exposures include but are not limited to re-measurement 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; fluctuations in merchant hotel revenue due to relative
currency movements from the time of booking to the time of stay; planning risk related to changes in exchange
rates between the time we prepare our annual and quarterly forecasts and when actual results occur; and the
impact of relative exchange rate movements on cross-border travel such as from Europe to the United States and
the United States to Europe.
Depending on the size of the exposures and the relative movements of exchange rates, if we choose not to
hedge or fail to hedge effectively our exposure, we could experience a material adverse effect on our financial
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