Comfort Inn 2013 Annual Report Download - page 30

Table of Contents
assurance that current margins or levels of utilization associated with either our online or contact center distribution channels will not decrease in the face of
such competition. In addition, there can be no assurance that we will be able to renegotiate these agreements, upon their expiration, with terms as favorable as
the provisions that existed before such expiration, replacement or renegotiation.
We are dependent upon our ability to attract and retain key officers and other highly qualified personnel.
Our future success and our ability to manage future growth depend in large part upon the efforts and skills of our senior management and our ability to
attract and retain key officers and other highly qualified personnel. Competition for such personnel is intense. There can be no assurance that we will continue
to be successful in attracting and retaining qualified personnel. Accordingly, there can be no assurance that our senior management will be able to successfully
execute and implement our growth and operating strategies.
Our international operations are subject to political and monetary risks.
We have franchised properties open and operating in more than 30 countries and territories outside of the United States. We also have investments in
foreign hotel franchisors. International operations generally are subject to greater political and other risks than those affecting United States operations. In
certain countries, these risks include the risk of war or civil unrest, expropriation and nationalization. In addition, the laws of some international jurisdictions
do not adequately protect our intellectual property and restrict the repatriation of non-United States earnings. Various international jurisdictions also have laws
limiting the right and ability of non-United States entities to pay dividends and remit earnings to affiliated companies unless specified conditions have been
met. In addition, revenues from international jurisdictions typically are earned in local currencies, which subjects us to risks associated with currency
fluctuations. Currency devaluations and unfavorable changes in international monetary and tax policies could have a material adverse effect on our
profitability and financing plans, as could other changes in the international regulatory climate and international economic conditions. We intend to continue to
expand internationally, which would make the risks related to our international operations more significant over time.
We are subject to certain risks related to our indebtedness.
As the result of the Company's $600 million special cash dividend paid in August 2012, we have substantially increased our level of indebtedness.
There can be no assurance in the future that we will generate sufficient cash flow from operations or through asset sales to meet our debt service obligations.
Our present indebtedness and future borrowings could have important adverse consequences to us, such as:
•making it more difficult for us to satisfy our obligations with respect to our existing indebtedness;
•limiting our ability to obtain additional financing;
•requiring a substantial portion of our cash flow to be used for principal and interest payments on the debt, thereby reducing our ability to use cash
flow to fund working capital, capital expenditures, pay dividends and/or repurchase our common stock;
•limiting our ability to respond to changing business, industry and economic conditions and to withstand competitive pressures, which may affect
our financial condition;
•causing us to incur higher interest expense in the event of increases in interest rates on our borrowings that have variable interest rates or in the event
of refinancing existing debt at higher interest rates;
•limiting our ability to make investments or acquisitions;
•increasing our vulnerability to downturns in our business, our industry or the general economy and restricting us from making improvements or
acquisitions or exploring business opportunities;
•placing us at a competitive disadvantage to competitors with less debt or greater resources; and
•subjecting us to financial and other restrictive covenants in our indebtedness the non-compliance with which could result in an event of default.
We cannot assure you that our business will generate sufficient cash flow from operations to enable us to pay our indebtedness or to fund our other
liquidity needs. If we fail to generate sufficient cash flow from future operations to meet our debt service obligations, we may need to refinance all or a portion
of our debt on or before maturity. We cannot assure you that we will be able to refinance any of our debt on attractive terms, commercially reasonable terms or
at all, particularly because of our increased levels of debt and the debt incurrence restrictions imposed by the agreements governing our debt. Our future
operating performance and our ability to service, extend or refinance our indebtedness will be subject to future economic conditions and to financial, business
and other factors, many of which are beyond our control.
A portion of our borrowings are at variable rates of interest, and to the extent not protected with interest rate hedges, could expose us to market risk from
adverse changes in interest rates. Unless we enter into interest rate hedges, if interest rates
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