Orbitz 2009 Annual Report Download - page 54

As a result, immediately following our IPO, we continued to have a working capital deficit. Because of
this deficit, we use cash from customer transactions as well as borrowings under our revolving credit facility
to fund our working capital requirements, including certain investing and financing commitments, such as
capital expenditures and principal payments on our outstanding term loan, respectively.
Over time, we expect to decrease this deficit through continued growth in our business and the generation
of positive cash flow from operations, which we expect to achieve by improving our operating efficiency,
simplifying the way we do business and continuing to innovate.
We generated positive cash flow from operations for the years ended December 31, 2006 through 2008,
despite experiencing net losses. Historically, we have incurred losses due to significant non-cash expenses,
such as the impairment of goodwill and intangible assets. We utilize this cash flow to fund our operations,
make principal and interest payments on our debt, finance capital expenditures and meet our other cash needs.
We invest cash flow from operations into our business. Historically, this cash flow has primarily financed the
development and expansion of our new technology platform. We do not intend to declare or pay any cash
dividends on our common stock in the foreseeable future.
We expect annual cash flow from operations to remain positive in the foreseeable future. We intend to
continue to use this cash flow to fund capital expenditures as well as other investing and financing activities,
such as the repayment of debt. For the year ended December 31, 2009, we expect our capital expenditures to
be between $45 million and $50 million.
Lehman Commercial Paper Inc. (“LCPI”), which filed for bankruptcy protection under Chapter 11 of the
United States Bankruptcy Code on October 5, 2008, holds a $12.5 million commitment, or 14.7% percent, of
the $85 million available under our revolving credit facility. As a result, total availability under our revolving
credit facility has effectively been reduced from $85 million to $72.5 million. We do not believe that this
reduction in availability will have a material impact on our liquidity or financial position.
We currently believe that cash flow generated from operations, cash on hand and availability under our
revolving credit facility (despite having been effectively reduced) will provide sufficient liquidity to fund our
operating activities, capital expenditures and other obligations for the foreseeable future. However, in the
future, our liquidity could be negatively impacted as a result of changes in our business model, changes to
payment terms or other supplier-imposed requirements, lower than anticipated operating cash flows or other
unanticipated events, such as unfavorable outcomes in our legal proceedings. For example, the liquidity
provided by cash flows from our merchant model bookings could be negatively impacted if our suppliers,
including credit card processors and hotels, changed their payment terms or imposed other requirements on us,
such as requiring us to provide letters of credit or to establish cash reserves, or if our merchant model
bookings declined as a result of current economic conditions or other factors.
If in the future, we require more liquidity than is available to us under our revolving credit facility, we
may need to raise additional funds through debt or equity offerings. In the event additional financing is
required, our ability to raise third-party debt may be limited by the covenants and restrictions under our senior
secured credit agreement (see “Financing Arrangements” below) and may require the consent of Travelport
pursuant to the terms of our certificate of incorporation. In addition, financing may not be available to us at all
or may not be available to us at favorable terms, particularly in the wake of the current economic environment.
We may raise additional funds through the issuance of equity securities, which could result in potential
dilution of our stockholders’ equity. However, any such issuance may require the consent of Travelport and
our other shareholders. Furthermore, if we require letters of credit in excess of the $75 million available under
the facility provided by Travelport or if we require letters of credit denominated in foreign currencies and are
unable to obtain these letters of credit, we would be required to issue such letters of credit under our revolving
credit facility, which could, depending upon the amount, substantially reduce available liquidity.
54