Expedia 2014 Annual Report Download - page 33
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deposit term or upon the maturity of the forward contracts, the counterparties are obligated, or potentially
obligated in the case of forward contracts, to return our funds or pay us net settlement values. If any of these
counterparties were to liquidate, declare bankruptcy or otherwise cease operations, it may not be able to satisfy
its obligations under these time deposits or forward contracts.
In addition, due to instability in the economy we also face increased credit risk and payment delays from our
non-financial contract counterparties.
We have significant long-term indebtedness, which could adversely affect our business and financial
condition.
As of December 31, 2014, the face value of our long-term indebtedness totaled $1.7 billion. Risks relating to
our long-term indebtedness include:
• Increasing our vulnerability to general adverse economic and industry conditions;
• Requiring us to dedicate a portion of our cash flow from operations to payments on our indebtedness,
thereby reducing the availability of cash flow to fund working capital, capital expenditures,
acquisitions and investments and other general corporate purposes;
• Making it difficult for us to optimally capitalize and manage the cash flow for our businesses;
• Limiting our flexibility in planning for, or reacting to, changes in our businesses and the markets in
which we operate;
• 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.
Our discretion in the operation of our business is limited by certain factors, including various covenants
contained in the agreements governing our indebtedness; these covenants 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;
• 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.
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