Orbitz 2008 Annual Report Download - page 32

maintain our employee base, the resources needed to attract and retain such employees may adversely affect our profits, growth and operating margins.
Fluctuations in the exchange rate of the U.S. dollar and other foreign currencies may adversely impact our results of operations.
While most of our revenue is denominated in U.S. dollars, a portion of our costs and revenue is or will be denominated in other currencies, such as the
pound sterling, the Euro and the Australian dollar. As a result, we face exposure to adverse movements in currency exchange rates. The results of our operations
are exposed to foreign exchange rate fluctuations as the financial results of those operations are translated from local currency into U.S. dollars upon
consolidation. If the U.S. dollar weakens against the local currency, the translation of these foreign-currency-denominated balances will result in increased net
assets, net revenue, operating expenses, and net income or loss. Similarly, our net assets, net revenue, operating expenses, and net income or loss will decrease if
the U.S. dollar strengthens against local currency. Additionally, transactions denominated in currencies other than the functional currency may result in gains and
losses that may adversely impact our results of operations.
We may have exposure to additional tax liabilities as a result of our intercompany transfer pricing policies.
With operations globally, we are subject to income taxes in both the U.S. and various foreign jurisdictions. Significant judgment is required in determining
our worldwide income tax provision and related tax liabilities. Intercompany transactions and calculations inherently result in a variety of uncertain tax positions.
Our intercompany transfer pricing policies will be subject to audits by the various foreign tax jurisdictions. Although we believe that our intercompany transfer
pricing policies and tax positions are reasonable, the final determination of tax audits or potential tax disputes may be materially different from that which is
reflected in our income tax provisions and accruals.
Seasonal fluctuations in the travel industry could adversely affect us.
Some of our businesses experience seasonal fluctuations, reflecting seasonal trends for the products and services we offer. These trends cause our net
revenue to be generally highest in the second and third calendar quarters of the year as travelers plan and book their spring and summer travel, and then flatten in
the fourth and first calendar quarters of the year. Our results may also be affected by seasonal fluctuations in access to the inventory made available to us by our
travel suppliers. For instance, during seasonal periods when demand is high, suppliers may impose blackouts for their inventory that prohibit us from making
their inventory available for booking during such periods. As a result, we may be required to borrow cash in order to fund operations or to meet debt service
obligations during seasonal slowdowns or at other times. Our inability to finance our funding needs during a seasonal slowdown or at other times could have a
material adverse effect on us.
We have a limited operating history as stand-alone public company, and our historical financial information is not necessarily representative of the results
we would have achieved as an independent company and may not be a reliable indicator of our future results.
Our historical financial information does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as
an independent company during the periods presented or those that we will achieve in the future, primarily as a result of the following factors:
•
Our businesses were previously operated by Cendant and Travelport as part of their broader corporate organizations, rather than as an
independent company. Travelport or one of its affiliates historically performed various corporate functions for us, including, but not limited
to, tax administration, certain governance functions (including compliance with the Sarbanes-Oxley Act of 2002 and internal audit) and
external reporting. Our historical combined consolidated
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Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008