ServiceMagic 2012 Annual Report Download - page 18

Table of Contents
are currently subject to audits in a number of jurisdictions. Although we believe our income tax estimates and related determinations are
reasonable and appropriate, relevant taxing authorities may disagree. The ultimate outcome of any such audits and reviews could be materially
different from estimates and determinations reflected in our historical income tax provisions and accruals. Any adverse outcome of any such
audit or review could have an adverse effect on our financial condition and results of operations.
We may experience operational and financial risks in connection with acquisitions. In addition, some of the businesses we acquire may incur
significant losses from operations or experience impairment of carrying value.
We have made numerous acquisitions in the past and we continue to seek to identify potential acquisitions candidates that will allow us to
apply our expertise to expand their capabilities, as well as maximize our existing assets. As a result, our future growth may depend, in part, on
acquisitions. Even if we identify what we believe to be suitable acquisition candidates, we may experience operational and financial risks in
connection with acquisitions, and to the extent that we continue to grow through acquisitions, we will need to:
We may not be successful in addressing these challenges or any other problems encountered in connection with historical and future
acquisitions. In addition, the anticipated benefits of one or more acquisitions may not be realized and future acquisitions could result in increased
operating losses, potentially dilutive issuances of equity securities and the assumption of contingent liabilities. Also, the value of goodwill and
other intangible assets acquired could be impacted by one or more continuing unfavorable events and/or trends, which could result in significant
impairment charges. The occurrence of any these events could have an adverse effect on our business, financial condition and results of
operations.
We operate in various international markets, some in which we have limited experience. As a result, we face additional risks in connection
with our international operations. Also, we may not be able to successfully expand into new, or further into our existing, international
markets.
We currently operate in various jurisdictions abroad and may continue to expand our international presence. In order for our products and
services in these jurisdictions to achieve widespread acceptance, commercial use and acceptance of the internet must continue to grow, which
growth may occur at slower rates than those experienced in the United States. Moreover, we must continue to successfully tailor our products
and services to the unique customs and cultures of foreign jurisdictions, which can be difficult and costly and the failure to do so could slow our
international growth and adversely impact our business, financial condition and results of operations.
Operating abroad, particularly in jurisdictions where we have limited experience, exposes us to additional risks. For example, we may
experience difficulties in managing international operations due to distance, language and cultural differences, including issues associated with
the establishment of management systems and infrastructures (including disclosure controls and procedures and internal control over financial
reporting), the staffing of foreign operations, exchange rate fluctuations and online privacy and protection of personal information. Our success
in international markets will also depend, in part, on our ability to identify potential acquisition candidates, joint venture or other partners, and to
enter into arrangements with these parties on favorable terms and successfully integrate their businesses and operations with our own.
A variety of new laws, or new interpretations of existing laws, could subject us to claims or otherwise harm our business.
We are subject to a variety of laws in the U.S. and abroad that are costly to comply with, can result in negative publicity and diversion of
management time and effort and can subject us to claims or other remedies. Some of these laws, such as income, sales, use, value1added and
other tax laws and consumer protection laws, are applicable to businesses generally and others are unique to the various types of businesses in
which we are engaged. Many of these laws were adopted prior to the advent of the internet and related technologies and, as a result, do not
contemplate or address the unique issues of the internet
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• successfully integrate the operations, as well as the accounting, financial controls, management information, technology, human
resources and other administrative systems, of acquired businesses with our existing operations and systems;
•
successfully identify and realize potential synergies among acquired and existing businesses;
•
retain or hire senior management and other key personnel at acquired businesses; and
• successfully manage acquisition
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related strain on the management, operations and financial resources of IAC and its businesses and/or
acquired businesses.