Expedia 2014 Annual Report Download - page 29

We may experience constraints in our liquidity and may be unable to access capital when necessary or
desirable, either of which could harm our financial position.
We are accumulating a greater portion of our cash flows in foreign jurisdictions than previously and any
repatriation of such funds for use in the United States, including for corporate purposes such as acquisitions,
stock repurchases, dividends or debt refinancings, would likely result in additional U.S. income tax expense. In
addition, we have experienced, and may experience in the future, declines in seasonal liquidity and capital
provided by our merchant hotel business, which has historically provided a meaningful portion of our operating
cash flow and is dependent on several factors, including the rate of growth of our merchant hotel business and the
relative growth of businesses which consume rather than generate working capital, such as our agency hotel,
advertising and managed corporate travel businesses and payment terms with suppliers. We also continued to see
positive momentum in our global roll out of the ETP program launched in 2012. As this program continues to
expand, and depending on relative traveler and supplier and traveler adoption rates and customer payment
preferences, among other things, the scaling of ETP has and will continue to negatively impact near term
working capital cash balances, cash flow over time and liquidity.
The availability of funds depends in significant measure on capital markets and liquidity factors over which
we exert no control. In light of periodic uncertainty in the capital and credit markets, we can provide no
assurance that sufficient financing will be available on desirable or even any terms to fund investments,
acquisitions, stock repurchases, dividends, debt refinancing or extraordinary actions or that our counterparties in
any such financings would honor their contractual commitments. In addition, any downgrade of our debt ratings
by Standard & Poor’s, Moody’s Investor Service or similar ratings agencies, increases in general interest rate
levels and credit spreads or overall weakening in the credit markets could increase our cost of capital.
System interruption, security breaches and the lack of redundancy in our information systems may
harm our businesses.
We rely on information technology systems, including the Internet and third-party hosted services, to
support a variety of business processes and activities and to store sensitive data, including booking transactions,
intellectual property, our proprietary business information and that of our suppliers and business partners,
personally identifiable information of our customers and employees, and data with respect to invoicing and the
collection of payments, accounting, procurement, and supply chain activities. In addition, we rely on our
information technology systems to process financial information and results of operations for internal reporting
purposes and to comply with financial reporting, legal, and tax requirements. These interruptions could include
security intrusions and attacks on our systems for fraud or service interruption (called “denial of service” or “bot”
attacks). The risk of a cybersecurity-related attack, intrusion, or disruption, including by criminal organizations,
hacktivists, foreign governments, and terrorists, is persistent. We have experienced and may in the future
experience system interruptions that make some or all of these systems unavailable or prevent us from efficiently
fulfilling orders or providing services to third parties. Significant interruptions, outages or delays in our internal
systems, or systems of third parties that we rely upon — including multiple co-location providers for data
centers, cloud computing providers for application hosting, and network access providers — and network access,
or deterioration in the performance of such systems, would impair our ability to process transactions, decrease
our quality of service that we can offer to our travelers, damage our reputation and brands, increase our costs
and/or cause losses.
Potential security breaches to our systems or the systems of our service providers, whether resulting from
internal or external sources, could significantly harm our business. There can be no guarantee that our existing
security measures will prevent all possible security breaches or attacks. A party, whether internal or external, that
is able to circumvent our security systems could misappropriate customer or employee information, intellectual
property, proprietary information or other business and financial data or cause significant interruptions in our
operations. We may need to expend significant resources to protect against security breaches or to address
problems 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
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