Orbitz 2008 Annual Report Download - page 50

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Results of Operations
Comparison of the year ended December 31, 2007 to the year ended December 31, 2006
Year Ended December 31,
2007
Successor
2006
Combined
$
Change
%
Change
(in millions)
Net revenue
Air $ 375 $ 355 $ 20 6%
Non-air and other 484 397 87 22%
Total net revenue 859 752 107 14%
Cost and expenses
Cost of revenue 157 113 44 39%
Selling, general and administrative 301 303 (2) (1)%
Marketing 302 277 25 9%
Depreciation and amortization 57 55 2 4%
Impairment of goodwill and intangible assets — 122 (122) (100)%
Total operating expenses 817 870 (53) (6)%
Operating income (loss) 42 (118) 160 (136)%
Other (expense) income
Interest expense, net (83) (27) (56) 207%
Other income, net — 1 (1) (100)%
Total other (expense) (83) (26) (57) 219%
Loss before income taxes and minority interest (41) (144) 103 (72)%
Provision for income taxes 43 2 41 2050%
Minority interest, net of tax 1 — 1 100%
Net loss $ (85) $ (146) $ 61 (42)%
As a percent of net revenue
Cost of revenue 18% 15%
Selling, general and administrative expenses 35% 40%
Net Revenue
Net revenue increased $107 million, or 14%, to $859 million for the year ended December 31, 2007 from $752 million for the year ended December 31,
2006. As a result of the Blackstone Acquisition, our net revenue during the third and fourth quarters of 2006 and the year ended December 31, 2007 was reduced
as a result of deferred revenue that was written off at the time of the acquisition. Accordingly, we could not record revenue that was generated before the
Blackstone Acquisition but not yet recognized at the time of the acquisition. The following discussion and analysis describes the impact on the comparability of
net revenue year-over-year due to our inability to record this revenue, and refers to these amounts as "purchase accounting adjustments."
Air. Net revenue from air bookings increased $20 million, or 6%, to $375 million for the year ended December 31, 2007 from $355 million for the year
ended December 31, 2006. Of this increase, $5 million, or 1 percentage point, was due to foreign currency fluctuations. In addition, $4 million of the increase in
net revenue year-over-year was due to the impact of purchase accounting adjustments which resulted in a reduction in air net revenue for the year ended
December 31, 2006. The remaining
43
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008