Orbitz 2008 Annual Report Download - page 28

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we are required to use a substantial portion of our cash flow from operations to make debt service payments on our senior secured credit
agreement, which reduces the funds available to us for other purposes such as potential acquisitions and capital expenditures;
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we are exposed to fluctuations in interest rates on approximately 50% of the debt outstanding under our senior secured credit agreement;
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we may have a higher level of indebtedness than some of our competitors, which may put us at a competitive disadvantage and reduce our
flexibility in planning for, or responding to, changing conditions in our industry, including increased competition; and
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we may be more vulnerable to general economic downturns and adverse developments in our business.
If we incur additional indebtedness, it could make it more difficult for us to satisfy our payment obligations and could increase the severity of these risks.
We rely on Travelport to issue letters of credit on our behalf under its credit facility.
As of December 31, 2007, approximately $74 million of letters of credit were issued by Travelport on our behalf under its credit facility. Under the terms of
the separation agreement entered into at the time of the IPO, Travelport is currently not required to issue new, or renew existing, letters of credit on our behalf.
Although we expect to enter into an amendment to the separation agreement to extend Travelport's obligation to issue letters of credit on our behalf, this
obligation is expected to be subject to certain conditions, including a $75 million cap on the aggregate amount of letters of credit that Travelport would be
required to issue on our behalf at any given point in time. If we do not have a separate letter of credit facility in place if or when Travelport is not obligated to
issue letters of credit on our behalf, we would be required to issue letters of credit under our $85 million revolving credit facility, which could significantly
reduce our borrowing capacity under the terms of our revolving credit facility. If letters of credit were issued under our revolving credit facility, our ability to
borrow amounts to fund our working capital and other needs may be severely limited.
We are a restricted subsidiary under the indentures governing some of Travelport's indebtedness, which may limit Travelport's ability to permit us to take
certain actions.
While we are not a party to Travelport's bond indentures, we are a restricted subsidiary of Travelport under those indentures which may limit Travelport's
ability to allow us to take certain actions. Among these restrictions are limitations on Travelport's ability to permit us to incur additional indebtedness, issue
preferred stock, sell assets (including our stock) and enter into certain types of agreements, such as credit facilities, if such agreements limit our ability to pay
dividends.
We have a history of net operating losses and may incur losses in the future.
Our net operating losses were $410 million and $118 million for the years ended December 31, 2005 and the combined twelve months ended December 31,
2006, respectively. For the year ended December 31, 2007, we had net operating income of $42 million; however, we may not be able to maintain such
profitability in future periods, particularly since we will continue to incur significant sales and marketing expenses as we execute on our plan to expand our
business.
If our uncertain tax positions are resolved for amounts different than our estimates, we will be required to adjust the related assets and liabilities which may
have a material impact on our provision for income taxes and results of operations.
As of December 31, 2007, we recorded estimated liabilities of $2 million for uncertain income tax positions under Financial Accounting Standards Board
("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). In the future, the liabilities we recognize for uncertain
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Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008