Expedia 2015 Annual Report Download - page 27

affected by changes to our operating structure, changes in the mix of earnings in countries with differing
statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or the discontinuance of
beneficial tax arrangements in certain jurisdictions.
We continue to work with relevant authorities and legislators to clarify our obligations under existing, new
and emerging tax laws and regulations.
We are involved in various legal proceedings and may experience unfavorable outcomes, which could
adversely affect our business and financial condition.
We are involved in various legal proceedings and claims involving taxes, property, personal injury, contract,
alleged infringement of third-party intellectual property rights, antitrust, consumer protection, securities laws, and
other claims, including, but not limited to, the legal proceedings described in Part I, Item 3, Legal Proceedings.
These matters may involve claims for substantial amounts of money or for other relief that might necessitate
changes to our business or operations. The defense of these actions is and will likely continue to be both time
consuming and expensive and their outcomes cannot be predicted with certainty. Determining reserves for pending
litigation is a complex, fact-intensive process that requires significant legal judgment. It is possible that unfavorable
outcomes in one or more such proceedings could result in substantial payments that could adversely affect our
business, consolidated financial position, results of operations, or cash flows in a particular period.
Declines or disruptions in the travel industry could adversely affect our business and financial
performance.
Our business and financial performance are affected by the health of the worldwide travel industry. Travel
expenditures are sensitive to personal and business-related discretionary spending levels and tend to decline or
grow more slowly during economic downturns. Decreased travel expenditures could reduce the demand for our
services, thereby causing a reduction in revenue.
For example, during regional or global recessions, domestic and global economic conditions can deteriorate
rapidly resulting in increased unemployment and a reduction in available budgets for both business and leisure
travelers, which slow spending on the services we provide and have a negative impact on our revenue growth.
Additionally, if individual countries or regions experience deteriorating credit and economic conditions, and/or
significant fluctuations of currency values relative to other currencies such as the U.S. dollar, it can lead to a
negative impact on our foreign denominated net assets, gross bookings, revenues, operating expenses, and net
income as expressed in U.S. dollars. Further economic weakness and uncertainty may result in significantly
decreased spending on our services by both business and leisure travelers, which may have a material adverse
impact on our business and financial performance. Geopolitical conflicts, significant fluctuations in currency
values, sovereign debt issues and macroeconomic concerns are examples of events that contribute to a somewhat
uncertain economic environment, which could have a negative impact on the travel industry in the future.
Our business is also sensitive to fluctuations in hotel supply, occupancy and ADRs, decreases in airline
capacity, periodically rising airline ticket prices, or the imposition of taxes or surcharges by regulatory
authorities, all of which we have experienced historically.
Other factors that could negatively affect our business include:
• Significant changes in oil prices;
• Continued air carrier and hotel chain consolidation;
• Reduced access to discount airfares;
• Travel-related strikes or labor unrest, bankruptcies or liquidations;
23