Orbitz 2014 Annual Report Download - page 18

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As a result, we may operate our business differently than if we were not subject to these covenants and restrictions.
Certain of our international subsidiaries have a history of significant operating losses and our inability to improve their
scale and profitability could adversely affect our business and results of operations.
We have historically incurred significant operating losses for some of our international subsidiaries and may continue to
experience operating losses in the future. As a result, we have made, and may continue to make, significant investments in our
international operations by using a portion of the cash flow generated from our domestic operations or funds from other
borrowings under our other credit facilities. There can be no assurance that such international subsidiaries will be profitable in
the future or that any profits generated by them will be sufficient to recover our investments in them.
The profitability of our international subsidiaries depends to a large extent on the scale of their operations. If we fail to
achieve the desired scale, we may not be able to effectively compete in the global marketplace, and our business and results of
operations may be adversely affected.
Our international operations are subject to additional risks not usually encountered when doing business in the United
States, including foreign exchange risk.
We generated 26% of our net revenue for the year ended December 31, 2014, from our international operations and had
employees in over 25 countries. We are subject to certain risks as a result of having international operations and operations in
multiple countries generally, including:
• currency exchange rate fluctuations;
• difficulties in staffing and managing operations due to distance, time zones, language and cultural differences,
including issues associated with establishing management infrastructure in various countries;
• reduced flexibility in our foreign staffing due to more onerous employment law obligations and restrictions;
• differences and unexpected changes in local regulatory requirements and exposure to local economic conditions;
• limits on our ability to enforce our intellectual property rights;
• preference of local populations for local providers;
• restrictions on the repatriation of non-U.S. investments and earnings back to the United States, including withholding
taxes imposed by certain foreign jurisdictions;
• diminished ability to comply with local legal and licensing requirements due to discriminatory practices against
business operators based on nationality or place of establishment; and
• diminished ability to legally enforce our contractual rights.
We expect that our exposure to the foregoing risks will increase as we attempt to expand our international operations. To
the extent we are not able to effectively mitigate or eliminate these risks, our results of operations could be adversely affected.
Further, our international operations require us to comply with a number of U.S. and international regulations, including,
among others, the Foreign Corrupt Practices Act (“FCPA”) and the U.K.’s Bribery Act 2010. Any failure by us to adopt and
continue to practice appropriate compliance procedures to ensure that our employees and agents comply with the FCPA and
applicable laws and regulations in foreign jurisdictions could result in substantial penalties or restrictions on our ability to
conduct business in certain foreign jurisdictions.
We rely on information technology to operate our businesses and maintain our competitiveness, and any failure to adapt
to technological developments or industry trends could affect our ability to compete and harm our business.
We depend upon the use of sophisticated information technologies and systems, including technologies and systems
utilized for reservations, communications, procurement and administrative systems. Certain of our businesses also utilize third-
party fare search solutions and GDSs or other technologies. As our operations grow in both size and scope, we must
continuously improve and upgrade our systems and infrastructure to offer our customers enhanced products, services, features
and functionality, while maintaining the reliability and integrity of our systems and infrastructure. Our future success depends
on our ability to adapt our services and infrastructure to meet rapidly evolving industry standards while continuing to improve
the performance and features of our service in response to competitive service and product offerings and the changing demands
of the marketplace. In particular, we will need to commit additional financial, operational and technical resources in order to
expand our systems and infrastructure to meet any potential increases in business volume.
In addition, we may not be able to maintain our existing systems, obtain new technologies and systems, or replace or
introduce new technologies and systems as quickly as our competitors or in a cost-effective manner. We may fail to achieve the
benefits anticipated or required from any new technology or system, or we may be unable to devote financial resources to new