Orbitz 2010 Annual Report Download - page 56

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Financing Activities
Cash flow used in financing activities decreased $2 million, to $6 million for the year ended December 31,
2009 from $8 million for the year ended December 31, 2008 primarily due to a $9 million decrease in
payments made under the tax sharing agreement with the Founding Airlines, a decrease in capital lease
payments and a decrease in payments made to satisfy tax withholding obligations upon the vesting of equity-
based awards. The decrease in cash flow used in financing activities is partially offset by $8 million of
payments made by us in June 2009 to purchase $10 million in principal amount of the Term Loan (see
Note 7 — Term Loan and Revolving Credit Facility of the Notes to Consolidated Financial Statements) and a
decrease in net borrowings made under our revolving credit facility during the year ended December 31, 2009.
Comparison of the year ended December 31, 2008 to the year ended December 31, 2007
Operating Activities
We generated cash flow from operations of $76 million for the year ended December 31, 2008 compared
with $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 the 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 was 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.
This decrease in cash flow used in investing activities was partially offset by a $5 million increase in capital
expenditures as well as the absence of the receipt of proceeds from asset sales during 2008. We received
$4 million of cash proceeds from asset sales during 2007.
Financing Activities
Cash flow used in financing activities for the year ended December 31, 2008 was $8 million compared
with $13 million of cash flow provided by financing activities for the year ended December 31, 2007. The
decrease in cash flow provided by financing activities of $21 million was partially due to the absence of 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 in
connection with the IPO and net cash distributed to and received from Travelport in 2007 prior to the IPO.
Following the IPO, we are no longer required to distribute available cash to Travelport. Cash flow used in
financing activities increased largely due to $20 million of payments made under the tax sharing agreement
with the Founding Airlines, a $5 million increase in principal payments made on the $600 million term loan
facility and $1 million of payments made to satisfy employee minimum tax withholding obligations upon
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