What changed in this filing

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Item 1A. Risk Factors

2024-08-01 compared with 2024-05-02 · 33 added, 32 removed, 501 unchanged (11% of the section changed)

20 unchanged sentences

While we have experienced a gradual recovery in our primary metrics over the past few years, we cannot predict the long-term effects of the pandemic on our business or the travel industry as a whole.

If our business or the travel industry is fundamentally changed by the COVID-19 outbreak in ways that are detrimental to our operating model, our business may continue to be adversely affected even as the broader global economy or the travel industry recovers.

Developments that could affect the extent of any future recovery include, but are not limited to, the effect of changes in hiring levels and remote working arrangements;

23 unchanged sentences

Adapting to new technological and marketplace developments may require substantial expenditures and lead time and we cannot guarantee that projected future increases in business volume will actually materialize.

We may experience difficulties that could delay or prevent the successful development, marketing and implementation of enhancements, upgrades and additions.

We may experience difficulties that could delay or prevent the successful development, marketing and implementation of platforms, enhancements, upgrades and additions.

Moreover, we may fail to maintain, upgrade or introduce new products, services, technologies and systems as quickly as our competitors or in a cost-effective manner.

139 unchanged sentences

These sanctions, export controls and related items, as well as actions taken by us or others in response to them or otherwise in connection with the military conflict, have adversely impacted, and in the future could further adversely impact, our business, results of operations and financial condition.

Russia has adopted legislation and related regulations, effective October 30, 2022, that require activities related to the development, creation and operation of automated information systems for processing domestic air transportation within the Russian Federation to be owned and operated by Russian residents or legal entities with no updates from or connection with systems abroad.

Effective October 30, 2022, Russian legislation and related regulations have required activities related to the development, creation and operation of automated information systems for processing domestic air transportation within the Russian Federation to be owned and operated by Russian residents or legal entities with no updates from or connection with systems abroad.

This legislation and these regulations have prohibited our ability to provide these services in Russia, which has negatively impacted and is expected to continue to negatively impact our revenue and results.

See “—Recent Developments Affecting our Results of Operations" for further details.

As noted, the regulations and sanctions described above, as well as other sanctions regimes, are complex, and, while we have a compliance program in place to help us address these items, there can be no assurance that we will be able to consistently address them in an effective manner.

On May 23, 2024, Russia issued a decree establishing a process for the seizure of assets of U.S.

companies and nationals in Russia.

Any implementation of this decree would significantly limit our operations and ability to provide services in Russia, negatively impacting our revenue and results.

As noted, the regulations and sanctions described above, as well as other sanctions regimes, are complex.

While we have a compliance program in place to help us address these items, there can be no assurance that we will be able to consistently address them in an effective manner.

Any failure to comply with these sanctions, export controls and related rules and regulations may subject us to fines, penalties and potential criminal violations.

In the third quarter of 2022, we identified elements of our sanctions compliance program that were not functioning as we intended, which we are addressing.

It is possible that our enhanced program will identify material items that do not comply with these regulatory or sanction requirements.

The amount of any penalties and other impacts, costs or remediations related to these items may adversely impact our results.

We have become aware that we received payments that were not material in amount from an air carrier in Russia for GDS services, and the receipt of these payments may be in violation of U.K.

In the third quarter of 2022, we identified elements of our sanctions compliance program that were not functioning as we intended, which we believe we have substantially addressed.

In identifying these elements, we became aware that we received payments that were not material in amount from an air carrier in Russia for GDS services, and the receipt of these payments may be in violation of U.K.

We have voluntarily disclosed the receipt of these payments to the U.K.

18 unchanged sentences

We believe that maintaining and expanding our portfolio of product and service brands are important aspects of our efforts to attract and expand our customer base.

Our brands may be negatively impacted by, among other things, unreliable service levels from third-party providers, customers’ inability to properly interface their applications with our technology, the loss or

unauthorized disclosure of personal data, including PCI or personally identifiable information (“PII”), or other bad publicity due to litigation, regulatory concerns or otherwise relating to our business.

Our brands may be negatively impacted by, among other things, unreliable service

levels from third-party providers, customers’ inability to properly interface their applications with our technology, the loss or unauthorized disclosure of personal data, including PCI or personally identifiable information (“PII”), or other bad publicity due to litigation, regulatory concerns or otherwise relating to our business.

See “—Security incidents expose us to liability and could damage our reputation and our business.” Any inability to maintain or enhance awareness of our brands among our existing and target customers could negatively affect our current and future business prospects.

33 unchanged sentences

Computer viruses, malware, denial of service attacks, ransomware attacks, attacks on, or exploitations of, hardware or software vulnerabilities, physical or electronic break-ins, phishing attacks, cybersecurity incidents or other security incidents, and similar disruptions affecting the Internet, telecommunication services, our systems, or our customers' systems have caused in the past and could at any time, including in the future, cause service interruptions or the loss of critical data, preventing us from providing timely services.

For example, in April 2021 our subsidiary Radixx announced an event impacting its Radixx reservation system.

See “—Security incidents expose us to liability and could damage our reputation

and our business.” Failure to efficiently provide services to customers or other third parties could cause damage to our reputation and result in the loss of customers and revenues, asset impairments, significant recovery costs or litigation and liabilities.

For example, in April 2021 our subsidiary Radixx announced an

event impacting its Radixx reservation system.

See “—Security incidents expose us to liability and could damage our reputation and our business.” Failure to efficiently provide services to customers or other third parties could cause damage to our reputation and result in the loss of customers and revenues, asset impairments, significant recovery costs or litigation and liabilities.

Moreover, such risks are likely to increase as we expand our business and as the tools and techniques involved become more sophisticated.

112 unchanged sentences

(1) business, political and economic instability in foreign locations, including actual or threatened terrorist activities, and military action, as well as the effects of the current military conflict in Ukraine and in the Middle East;

(2) adverse laws and regulatory requirements, including more comprehensive regulation in the E.U., the continued effects of the U.K.'s exit from the E.U.

("Brexit") and legislation and related regulations in Russia (see “—Any failure to comply with regulations or any changes in such regulations governing our businesses could adversely affect us.”);

(2) adverse laws and regulatory requirements, including more comprehensive regulation in the E.U.

and legislation and related regulations in Russia (see “—Any failure to comply with regulations or any changes in such regulations governing our businesses could adversely affect us.”);

(3) changes in foreign currency exchange rates and financial risk arising from transactions in multiple currencies;

13 unchanged sentences

We have a significant amount of indebtedness.

As of March 31, 2024, we had $5.0 billion of indebtedness outstanding which is net of debt issuance costs and unamortized discounts.

As of June 30, 2024, we had $5.0 billion of indebtedness outstanding which is net of debt issuance costs and unamortized discounts.

Our substantial level of indebtedness increases the possibility that we may not generate enough cash flow from operations to pay, when due, the principal of, interest on or other amounts due in respect of, these obligations.

28 unchanged sentences

These covenants may limit our ability to effectively operate our businesses or maximize stockholder value.

Any failure to comply with the restrictions of our Amended and Restated Credit Agreement or any agreement governing our other indebtedness may result in an event of default under those

Such default may allow the creditors to accelerate the related debt, which may trigger cross-acceleration or cross-default provisions in other debt.

Any failure to comply with the restrictions of our Amended and Restated Credit Agreement or any agreement governing our other indebtedness may result in an event of default under those agreements.

Such default may allow the creditors to accelerate the related debt, which may trigger cross-acceleration or cross-

default provisions in other debt.

In addition, lenders may be able to terminate any commitments they had made to supply us with further funds.

28 unchanged sentences

We may recognize impairments on long-lived assets, including goodwill and other intangible assets, or recognize impairments on our equity method investments.

Our consolidated balance sheets as of March 31, 2024 contained goodwill and intangible assets, net totaling $2.9 billion.

Our consolidated balance sheets as of June 30, 2024 contained goodwill and intangible assets, net totaling $2.9 billion.

Future acquisitions that result in the recognition of additional goodwill and intangible assets would cause an increase in these types of assets.

We do not amortize goodwill and intangible assets that are determined to have indefinite useful lives, but we amortize definite-lived intangible assets on a straight-line basis over their useful economic lives, which range from four to thirty

years, depending on classification.

We evaluate goodwill for impairment on an annual basis or earlier if impairment indicators exist and we evaluate definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of definite-lived intangible assets used in combination to generate cash flows largely independent of other assets may not be recoverable.

We evaluate goodwill for impairment on an annual basis or earlier if impairment indicators

exist and we evaluate definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of definite-lived intangible assets used in combination to generate cash flows largely independent of other assets may not be recoverable.

We record an impairment charge whenever the estimated fair value of our reporting units or of such intangible assets is less than its carrying value.

27 unchanged sentences

Such changes could result in an increase or decrease in the effective tax rate applicable to all or a portion of our income or losses which would impact our profitability.

We consider the undistributed capital investments in our foreign subsidiaries to be indefinitely reinvested as of March 31, 2024, and, accordingly, have not provided deferred taxes on any outside basis differences for most subsidiaries.

We consider the undistributed capital investments in our foreign subsidiaries to be indefinitely reinvested as of June 30, 2024, and, accordingly, have not provided deferred taxes on any outside basis differences for most subsidiaries.

We establish reserves for our potential liability for U.S.

1 unchanged sentence

We also establish reserves when required relating to the collection of refunds related to value-added taxes, which are subject to audit and collection risks in various countries.

Historically our right to recover certain value-added tax receivables associated with our

European businesses has been questioned by tax authorities.

These reserves represent our best estimate of our contingent liability for taxes.

Historically our right to recover certain value-added tax receivables associated with our European businesses has been questioned by tax authorities.

These reserves represent our best estimate of our contingent

liability for taxes.

The interpretation of tax laws and the determination of any potential liability under those laws are complex, and the amount of our liability may exceed our established reserves.

11 unchanged sentences

We are closely monitoring developments and evaluating the impacts these new rules will have on our tax rate.

Additionally, several countries, primarily in Europe, and the European Commission have proposed or adopted taxes on revenue earned by multinational corporations in certain “digital economy” sectors from activities linked to the user-based activity of their residents.

These proposals have generally been labeled as “digital services taxes” (“DST”).

Additionally, several countries, primarily Canada and in Europe, have proposed or adopted taxes on revenue earned by multinational companies from the provision of certain digital services, such as the use of an online marketplace, regardless of physical presence.

These regulations have generally been labeled as a digital services tax (“DST”).

We continue to evaluate the potential effects that the DST may have on our operations, cash flows and results of operations.

The future impact of the DST, including on our global operations, is uncertain, and our business and financial condition could be adversely affected.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity Outlook.” The future impact of the DST, including on our global operations, is uncertain, and our business and financial condition could be adversely affected.

Our pension plan obligations are currently unfunded, and we may have to make significant cash contributions to our plans, which could reduce the cash available for our business.

18 unchanged sentences

The combination of our insurance coverage, cash flows and reserves may not be adequate to satisfy product liabilities we may incur in the future.

management’s attention, and force us to limit or forgo further development and commercialization of these products.

Even meritless claims could subject us to adverse publicity, hinder us from securing insurance coverage in the future, require us to incur significant legal fees, decrease demand for any products that we successfully develop, divert management’s attention, and force us to limit or forgo further development and commercialization of these products.

The cost of any product liability litigation or other proceedings, even if resolved in our favor, could be substantial.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors