Facebook 2013 Annual Report Download - page 29

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arrangements to finance some of our equipment and data centers. In addition, we have a $6.5 billion revolving credit facility that we
may draw upon to finance our operations or other corporate purposes. If we default on these leasing and credit obligations, our leasing
partners and lenders may, among other things:
• require repayment of any outstanding lease obligations or amounts drawn on our credit facility;
• terminate our leasing arrangements and credit facilities;
• terminate our access to the leased data centers we utilize;
• stop delivery of ordered equipment;
• sell or require us to return our leased equipment; or
• require us to pay significant damages.
If some or all of these events were to occur, our operations may be interrupted and our ability to fund our operations or obligations,
as well as our business, financial results, and financial condition, could be adversely affected.
We may have exposure to greater than anticipated tax liabilities.
Our income tax obligations are based in part on our corporate operating structure and intercompany arrangements, including
the manner in which we develop, value, and use our intellectual property and the valuations of our intercompany transactions. The
tax laws applicable to our business, including the laws of the United States and other jurisdictions, are subject to interpretation and
certain jurisdictions are aggressively interpreting their laws in new ways in an effort to raise additional tax proceeds from companies
such as Facebook. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing
developed technology or intercompany arrangements, which could increase our worldwide effective tax rate and harm our financial
position and results of operations. We are subject to regular review and audit by U.S. federal and state and foreign tax authorities. Tax
authorities may disagree with certain positions we have taken and any adverse outcome of such a review or audit could have a negative
effect on our financial position and results of operations. In addition, the determination of our worldwide provision for income taxes
and other tax liabilities requires significant judgment by management, and there are many transactions where the ultimate tax
determination is uncertain. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the
amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such
determination is made. In addition, our future income taxes could be adversely affected by earnings being lower than anticipated in
jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by
changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations, or accounting principles. For
example, we have previously incurred losses in certain international subsidiaries that resulted in an effective tax rate that is significantly
higher than the statutory tax rate in the United States and this could continue to happen in the future.
Changes in tax laws or tax rulings could materially affect our financial position and results of operations.
Changes in tax laws or tax rulings could materially affect our financial position and results of operations. For example, the
current U.S. administration and key members of Congress have made public statements indicating that tax reform is a priority. Certain
changes to U.S. tax laws, including limitations on the ability to defer U.S. taxation on earnings outside of the United States until those
earnings are repatriated to the United States, could affect the tax treatment of our foreign earnings. In addition, many countries in the
European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and
Development, are actively considering changes to existing tax laws. Certain proposals could include recommendations that would
significantly increase our tax obligations in many countries where we do business. Due to the large and expanding scale of our
international business activities, any changes in the taxation of such activities may increase our worldwide effective tax rate and harm
our financial position and results of operations.
Risks Related to Ownership of Our Class A Common Stock
The trading price of our Class A common stock has been and will likely continue to be volatile.
The trading price of our Class A common stock has been, and is likely to continue to be, volatile. Since shares of our Class A
common stock were sold in our IPO in May 2012 at a price of $38.00 per share, our stock price has ranged from $17.55 to $58.58
through December 31, 2013. In addition to the factors discussed in this Annual Report on Form 10-K, the trading price of our Class A
common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
• actual or anticipated fluctuations in our revenue and other operating results;
• the financial projections we may provide to the public, any changes in these projections or our failure to meet these