Orbitz 2008 Annual Report Download - page 57

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business model could either increase or decrease the volatility in our cash flows that results from seasonality.
As of December 31, 2007, we had a working capital deficit of $301 million as compared to a deficit of $283 million as of December 31, 2006. This deficit is
primarily a result of our merchant business described above. We expect this deficit to increase over time as we continue to grow our merchant business.
We generated positive cash flow from operations for the years ended December 31, 2005 through 2007, despite experiencing net losses. Historically, we
have incurred losses due to significant non-cash expenses, primarily 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, which historically has primarily financed the development and expansion of our global 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. 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, 2008, we expect our capital expenditures to be between
$55 million and $65 million. We anticipate that our capital expenditures will decrease as a percentage of total net revenue as our business continues to grow. We
expect a positive impact on our liquidity as we continue to execute our strategic plan, including increasing growth in non-air categories and in international
markets as well as realizing operating efficiencies as we migrate onto our global technology platform.
We believe that cash flow generated from operations, cash on hand and availability under our revolving credit facility will provide sufficient liquidity to
fund our operating activities, capital expenditures and other obligations for the foreseeable future. However, if we are not successful in generating sufficient cash
flow from operations, 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 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. 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. Furthermore, if we are unable to secure an amendment to the separation agreement to
obligate Travelport to continue to issue letters of credit on our behalf and we are unable to obtain a replacement facility, we would be required to issue new, or
renew existing, letters of credit under our credit agreement, which would reduce available liquidity.
50
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008