Orbitz 2009 Annual Report Download - page 55

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Cash Flows
Our net cash flows from operating, investing and financing activities for the periods indicated in the
tables below were as follows:
Year Ended
December 31, 2008
Successor
Year Ended
December 31, 2007
Successor
Period from
August 23, 2006 to
December 31, 2006
Successor
Period from
January 1, 2006 to
August 22, 2006
Predecessor
(in millions)
Beginning cash and cash
equivalents ............ $ 25 $ 18 $ 26 $ 28
Cash provided by (used in):
Operating activities ...... 76 69 39 121
Investing activities ....... (58) (80) (29) (54)
Financing activities ...... (8) 13 (7) (70)
Effect of changes in exchange
rates on cash and cash
equivalents ............ (4) 5 (11) 1
Net increase (decrease) in
cash and cash equivalents. . 6 7 (8) (2)
Ending cash and cash
equivalents ............ $ 31 $ 25 $ 18 $ 26
Comparison of the year ended December 31, 2008 to the year ended December 31, 2007
Operating Activities
Cash provided by operating activities consists of net loss, adjusted for non-cash items such as deprecia-
tion, amortization, impairment of goodwill and intangible assets, and stock based compensation and changes in
various working capital items, principally accrued merchant payables, deferred income and accounts payable.
We generated cash flow from operations of $76 million for the year ended December 31, 2008 compared
to $69 million for the year ended December 31, 2007. The increase in operating cash flows was largely driven
by a $48 million decrease in cash interest expense due to the repayment of intercompany notes to Travelport
in connection with the IPO, offset in part by a $22 million increase in cash interest expense incurred on our
$85 million revolving credit facility, the $600 million term loan and the corresponding interest rate swaps
entered into to hedge a portion of the variable interest payments on the term loan. Accrued expenses drove an
additional $25 million increase in operating cash flows. This increase was primarily driven by the timing of
payments of domestic accrued marketing expenditures. The remaining increase in operating cash flows during
the year ended December 31, 2008 was primarily due to the overall growth of our operations.
The cash flow increases discussed above were partially offset by a $23 million decrease in accounts
payable, driven largely by timing of payments, as a result of changes in our payment mechanisms and cash
management policies following our IPO. A $35 million decrease in accrued merchant payables and an
$8 million decrease in deferred income also offset the cash flow increases. These decreases were primarily
driven by a decrease in transaction volume, particularly for hotel bookings, during the fourth quarter of 2008.
The cash flow increases above were further offset by changes in other operating assets and liabilities.
Investing Activities
Cash flow used in investing activities decreased $22 million, to $58 million for the year ended
December 31, 2008 from $80 million for the year ended December 31, 2007. The decrease in cash flow used
in investing activities is primarily due to the sale of an offline U.K. travel subsidiary in July 2007. The sale of
this subsidiary resulted in a $31 million reduction in cash due to the buyer’s assumption of this subsidiary’s
cash balance at the time of sale, partially offset by the cash proceeds we received for the sale of the subsidiary.
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