Orbitz 2008 Annual Report Download - page 59

Download and view the complete annual report

Please find page 59 of the 2008 Orbitz annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 146

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146

Financing Activities
Cash flow provided by financing activities for the year ended December 31, 2007 was $13 million compared to cash flow used in financing activities of
$77 million for the year ended December 31, 2006. The increase in cash flow provided by financing activities was primarily due to the net proceeds received
from the IPO and the $600 million term loan facility entered into concurrent with the IPO, offset in part by repayments of the intercompany notes to Travelport, a
dividend paid to Travelport and an increase in cash distributed to Travelport in 2007 prior to the IPO.
Comparison of the year ended December 31, 2006 to the year ended December 31, 2005
Operating Activities
Our net cash provided by operations increased $101 million to $160 million for the year ended December 31, 2006 from $59 million for the year ended
December 31, 2005. This increase was primarily the result of cash generated from earnings and due to changes in our working capital accounts. The increase in
the working capital deficit was primarily due to additional accrued travel supplier payments, deferred revenue and customer advances, which relate primarily to
merchant model transactions.
Investing Activities
Cash flow used in investing activities decreased $396 million to $83 million for the year ended December 31, 2006 from $479 million for the year ended
December 31, 2005. The majority of the change was due to the use of $437 million in cash for acquisitions in 2005, primarily for the acquisition of ebookers.
Capital expenditures were $83 million for the combined year ended December 31, 2006, an increase of $20 million from the year ended December 31, 2005. The
increase was due in part to strategic initiatives, including $27 million for the development of our new global technology platform.
Financing Activities
Cash flow used in financing activities for the year ended December 31, 2006 was $77 million compared to cash provided by financing activities for the year
ended December 31, 2005 of $433 million. Cash flow used in financing activities in 2006 included $31 million of payments to settle a portion of the tax sharing
liability that would have become due in future periods. Cash flow provided by financing activities for 2005 related to capital contributions from Cendant of
$504 million to fund the acquisition of ebookers, which partially offset $31 million used to pay down long term debt assumed in the ebookers acquisition.
Financing Arrangements
On January 26, 2007 and January 30, 2007, we became the obligor on two intercompany notes payable to affiliates of Travelport in the amounts of
$25 million and $835 million, respectively, and recorded an $860 million reduction to net invested equity. These notes accrued interest at a fixed rate of 10.25%
and were scheduled to mature on February 19, 2014. On July 25, 2007, we used proceeds from our IPO and a $600 million term loan facility to repay the notes
and the interest accrued thereon in full. We recorded interest expense of $43 million on these notes during the year ended December 31, 2007.
On July 25, 2007, concurrent with the IPO, we entered into a $685 million senior secured credit agreement ("Credit Agreement") consisting of a seven-year
$600 million term loan facility ("Term Loan") and a six-year $85 million revolving credit facility ("Revolver"). The Term Loan and the Revolver bear interest at
variable rates, at our option, of LIBOR or an alternative base rate plus a margin. We used approximately $530 million of the net proceeds from the Term Loan to
repay the intercompany notes payable to Travelport, as described above, and to pay a dividend to Travelport. We
52
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008