Orbitz 2011 Annual Report Download - page 45

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45
payments to suppliers typically exceed the cash inflows from new merchant reservations. While we expect this seasonal cash
flow pattern to generally continue, changes in our business model could affect the timing and amounts of our cash flows.
As of December 31, 2011, we had a working capital deficit of $233.0 million compared with a deficit of $234.4 million
as of December 31, 2010. Over time, we expect to decrease this deficit through growth in our business, in particular our global
hotel business, and through our positive cash flow from operations.
We generated positive cash flow from operations for the years ended December 31, 2009 through December 31, 2011
despite experiencing net losses in these periods, and we expect annual cash flow from operations to remain positive in the
foreseeable future. We generally use this cash flow to fund our operations, make principal and interest payments on our debt,
finance capital expenditures and meet our other cash operating needs. For the year ending December 31, 2012, we expect our
capital expenditures to be between $45.0 million and $49.0 million, a portion of which is discretionary in nature. We do not
intend to declare or pay any cash dividends on our common stock in the foreseeable future.
We currently believe that cash flow generated from operations, cash on hand and borrowing availability under the
Revolver will provide sufficient liquidity to fund our operating activities, capital expenditures and other obligations over at
least the next twelve months. However, in the future, our liquidity could be reduced as a result of the termination of any major
suppliers participation on our websites or a change in their distribution strategy, a decline in merchant gross bookings resulting
from changes in our merchant business model, changes to payment terms or other requirements imposed by vendors, suppliers
or regulatory agencies, such as requiring us to provide letters of credit, cash reserves, or other forms of financial security or
increases in such requirements, lower than anticipated operating cash flows, or other unanticipated events, such as unfavorable
outcomes in our legal proceedings, including in the case of hotel occupancy tax proceedings, certain jurisdictions’ requirements
that we provide financial security or pay an assessment to the municipality in order to challenge the assessment in court, or our
inability to recover defense costs. If as a result of these requirements we require additional letters of credit, or if Travelport is
no longer required or able to issue letters of credit on our behalf, we would be required to issue these letters of credit under the
Revolver or to establish cash reserves/collateral, which would reduce our liquidity and cash available to grow our business.
In regards to our long-term liquidity needs, we believe that cash flow generated from operations, cash on hand and cash
available under the Revolver through its maturity in July 2013 will provide sufficient liquidity to fund our operating activities
and capital expenditures. However, if in the future, we require more liquidity than is available to us under the Revolver, or we
are unable to refinance or extend the Revolver beyond its July 2013 maturity date, or we are unable to refinance or repay the
term loan by its July 2014 maturity date, we may need to raise additional funds through debt or equity offerings, which may not
be available to us on favorable terms or at all.
Cash Flows
Our net cash flows from operating, investing and financing activities for the periods indicated in the tables below were
as follows:
Years ended December 31,
2011 2010 2009
(in thousands)
Beginning cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 97,222 $ 88,656 $ 31,193
Cash provided by/(used in):
Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,846 98,609 105,074
Investing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47,530)(40,142)(43,591)
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,511)(49,075)(6,368)
Effect of changes in exchange rates on cash and cash equivalents . . . . . . . . . . (856)(826) 2,348
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,949 8,566 57,463
Ending cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 136,171 $ 97,222 $ 88,656
Operating Activities
Cash provided by operating activities consists of our net loss, adjusted for non-cash items such as depreciation,
amortization, impairment of goodwill and intangible assets and stock-based compensation, and changes in various working
capital accounts, principally accounts receivable, deferred revenue, accrued merchant payables, accounts payable and accrued
expenses.