CHICAGO, Feb. 23 /PRNewswire-FirstCall/ -- Orbitz Worldwide, Inc.
(NYSE: OWW) today announced results for the fourth quarter and full year ended
December 31, 2008. Net revenue was $180 million for the fourth quarter of
2008, down nine percent from $197 million for the fourth quarter of 2007.
Over half of the year-over-year decline in net revenue, or approximately $9
million, was due to the impact of foreign currency fluctuations. The company
reported net income of $8 million or $0.10 per diluted share for the fourth
quarter compared with a net loss of $11 million or ($0.13) per diluted share
in the fourth quarter of 2007. Adjusted EBITDA for the fourth quarter was $35
million, a decrease of five percent from the fourth quarter of 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070813/AQM125LOGO)
For the full year, Orbitz Worldwide's net revenue increased one percent to
$870 million versus $859 million in the prior year. The company reported a
net loss of $299 million, which included a $297 million non-cash charge for
the impairment of goodwill and intangible assets, or ($3.58) per diluted share
for 2008 compared with a net loss of $85 million for 2007. Adjusted EBITDA
was $136 million for the full year, a decrease of six percent compared with
2007.
"During the fourth quarter, global economic softness significantly
impacted our performance and created more uncertainty for the entire travel
industry," said Barney Harford, president and CEO of Orbitz Worldwide. "In
response to this softness, we took immediate steps in both November and
January to reduce costs, and as a result, we believe Orbitz Worldwide is
better positioned to manage through this challenging environment."
Summary Operating Results
(In millions, except per share data)
Fourth Quarter Full Year
2008 2007 Change 2008 2007 Change
Gross bookings (a) $2,156 $2,356 -8% $10,808 $10,791 0%
Net revenue (b) $180 $197 -9% $870 $859 1%
EBITDA (c) $41 $29 41% ($172) $98 **
Adjustments ($6) $8 ** $308 $46 **
Adjusted EBITDA (c) $35 $37 -5% $136 $144 -6%
Net income (loss) $8 ($11) ** ($299) ($85) **
Basic and Diluted EPS $0.10 ($0.13) ** ($3.58) ** **
Operating cash flow ($45) $4 ** $76 $69 10%
Capital spending $16 $17 -6% $58 $53 9%
** Not meaningful.
(a) Excludes gross bookings for an offline U.K. travel subsidiary (see
Note l in Adjusted EBITDA table contained in Appendix A).
(b) The net impact of purchase accounting adjustments recorded in 2007
accounted for $6 million of the overall increase in net revenue from
the full year 2007 to the full year 2008.
(c) Non-GAAP financial measures. A definition of EBITDA and adjusted
EBITDA and a reconciliation of these non-GAAP financial measures to
the most comparable GAAP financial measure is contained in
Appendix A.
Fourth Quarter 2008 Financial Highlights
Gross Bookings and Net Revenue
For the fourth quarter of 2008, Orbitz Worldwide's gross bookings were
down eight percent (six percent on a constant currency basis) compared with
the fourth quarter of 2007. Air gross bookings declined nine percent (eight
percent on a constant currency basis) and non-air and other gross bookings
decreased six percent (one percent on a constant currency basis) compared with
the fourth quarter of 2007. International gross bookings decreased 18 percent
(two percent on a constant currency basis) for the quarter due primarily to
softness in Europe.
Gross Bookings and Net Revenue
(In millions)
Fourth Quarter Full Year
2008 2007 Change 2008 2007 Change
Gross Bookings (a)
Air $1,593 $1,760 -9% $7,883 $7,964 -1%
Non-air / Other 563 596 -6% 2,925 2,827 3%
Domestic 1,867 2,004 -7% 9,134 9,393 -3%
International 289 352 -18% 1,674 1,398 20%
Worldwide $2,156 $2,356 -8% $10,808 $10,791 0%
Net Revenue (b)
Air $67 $81 -17% $339 $375 -10%
Non-air / Other 113 116 -3% 531 484 10%
Domestic 153 153 0% 686 679 1%
International 27 44 -39% 184 180 2%
Worldwide $180 $197 -9% $870 $859 1%
(a) Excludes gross bookings for an offline U.K. travel subsidiary (see
Note l in Adjusted EBITDA table contained in Appendix A).
(b) The net impact of purchase accounting adjustments recorded in 2007
accounted for $6 million of the overall increase in net revenue from
the full year 2007 to the full year 2008.
Net revenue for the fourth quarter of 2008 was $180 million, a decrease of
nine percent from $197 million in the fourth quarter of 2007.
-- Air net revenue was $67 million for the fourth quarter of 2008, down
17 percent (15 percent on a constant currency basis) from $81 million in the
fourth quarter of 2007. Domestic air net revenue declined nine percent driven
by lower volume in the quarter, while international air net revenue declined
50 percent (43 percent on a constant currency basis) driven by lower volume
and lower margins. The global decline in volume during the quarter was
primarily the result of the adverse impact of current economic conditions on
air traveler demand.
-- Non-air and other net revenue, which consists primarily of car, hotel,
dynamic packaging, advertising and travel insurance revenue, was $113 million
for the fourth quarter of 2008, down three percent (four percent growth on a
constant currency basis) from $116 million in the fourth quarter of 2007.
Bookings for all non-air products were soft in the quarter except for dynamic
packaging, which continued to grow at a solid rate.
-- Domestic net revenue was $153 million for the fourth quarter of 2008,
which was flat with the fourth quarter of 2007. Lower domestic volume for all
products except dynamic packaging and cruises was offset by higher
advertising, travel insurance and service fee revenue in the quarter.
-- International net revenue was $27 million for the fourth quarter of
2008, a decrease of 39 percent (23 percent on a constant currency basis) from
$44 million in the fourth quarter of 2007. Weak economic conditions in Europe
and lower air margins contributed to the net revenue decline in the quarter.
The company has posted on its website (http://orbitz-ir.com) a schedule
that adjusts net revenue for purchase accounting impacts, the sale of the
offline U.K. travel subsidiary and currency fluctuations in order to provide a
more comparable view of operating performance across periods.
Operating Expenses
Orbitz Worldwide's cost of revenue declined $8 million to $33 million, or
18.3 percent of net revenue, for the fourth quarter of 2008 versus the fourth
quarter of 2007. This decline in cost of revenue was due to lower volume in
the quarter and significantly lower charge-backs at one of the company's
international locations.
Marketing expense in the fourth quarter was $58 million, an increase of
two percent compared with the same period last year. This increase was due to
higher online marketing costs as the competition to generate online traffic in
the travel industry continues to be fierce.
Selling, general and administrative (SG&A) expense decreased $21 million
in the fourth quarter of 2008 to $48 million from $69 million in the same
period of 2007. This decrease is attributable to lower bonus and stock
compensation expense as well as higher capitalized development costs. In
addition, the company's operating expenses were reduced by $14 million (non-
cash) in the quarter due to a reduction in the present value of the company's
tax sharing liability to the founding airlines arising from a lower projected
effective state income tax rate.
In November 2008 and January 2009, Orbitz Worldwide took actions to reduce
its cash operating costs by approximately $40 to $45 million on an annualized
basis. These actions included a reduction in work force, a reduction in
outside contractors, and other operating expense cuts. Management believes
that these measures will better position the company to face the challenging
economic prospects for the global travel industry.
Interest Expense
Orbitz Worldwide incurred interest expense of $16 million in the fourth
quarter of 2008 compared with $17 million in the fourth quarter of last year.
This year-over-year decline in interest expense for the quarter was primarily
due to a lower effective interest rate on the term loan compared with the same
period last year. At December 31, 2008, $400 million of the $593 million
outstanding on the term loan had a fixed interest rate and the company's
weighted average effective interest rate on the term loan was 6.15 percent.
Cash Flow
Orbitz Worldwide had an operating cash outflow of $45 million for the
fourth quarter of 2008. This cash outflow was primarily attributable to the
seasonal nature of the merchant hotel business as payments to hotels typically
exceed cash inflows from new reservations in the fourth quarter. However, a
decline in international merchant hotel bookings and lower average daily hotel
rates, due in part to softening economic conditions, also contributed to the
cash outflow in the quarter.
At December 31, 2008, cash and cash equivalents (net of borrowings under
the company's revolving line of credit) were $10 million compared with $24
million at December 31, 2007. The year-over-year decline in net cash was
primarily driven by higher capital expenditures due to investments made to
complete the migration of ebookers' country sites to the new technology
platform and tax sharing payments made to the company's founding airlines.
This decline was partially offset by an increase in operating cash flow of $7
million for the year ended December 31, 2008.
Operational Highlights
-- Orbitz Price Assurance, launched in mid-2008, continues to deliver
meaningful value to consumers. Under Price Assurance, if the price of an
airline ticket booked on Orbitz.com drops and another customer subsequently
books the same airline ticket on Orbitz.com for a lower price, Orbitz will
automatically send the customer a cash refund for the difference in fare up to
$250. During 2008, the company issued thousands of checks to its customers
under this program.
-- ebookers completed the process of migrating all 13 of its country
sites in Europe to Orbitz Worldwide's new technology platform.
-- Orbitz Worldwide signed distribution agreements with Accor Group in
Europe and Millennium and Copthorne Hotels in Europe and the Middle East.
These agreements add over 2,700 new hotels to the company's international
merchant and retail hotel offering.
-- Orbitz for Business International went live in Canada and the U.K.
Orbitz for Business also had continued success signing up new corporate
accounts including Club Med Sales Inc., Dynegy Inc., Indiana University,
Libbey Glass Inc. and Yamaha Corporation of America.
-- HotelClub announced an exclusive agreement with Virgin Blue Airlines
to provide a seamless hotel booking solution.
Quarterly Conference Call
Orbitz Worldwide will host a conference call to discuss its fourth quarter
and full year 2008 results at 10:00 a.m. EST (9:00 a.m. CST) on Tuesday,
February 24, 2009. A live webcast of the conference call can be accessed
through the Orbitz Worldwide Investor Relations website at
http://orbitz-ir.com. An archive of the webcast can be accessed through the
Orbitz Worldwide Investor Relations website (http://orbitz-ir.com) under
"Webcasts & Presentations" for a period of at least 30 days and an MP3 file
and transcript of the call will also be available on the site.
About Orbitz Worldwide
Orbitz Worldwide is a leading global online travel company that uses
innovative technology to enable leisure and business travelers to research,
plan and book a broad range of travel products. Orbitz Worldwide owns a
portfolio of consumer brands that includes Orbitz (http://www.orbitz.com),
CheapTickets (http://www.cheaptickets.com), ebookers
(http://www.ebookers.com), HotelClub (http://www.hotelclub.com), RatesToGo
(http://www.ratestogo.com), the Away Network (http://www.away.com), and
corporate travel brand Orbitz for Business (http://www.orbitzforbusiness.com).
For more information on how your company can partner with Orbitz Worldwide,
visit http://corp.orbitz.com.
Orbitz Worldwide uses its Investor Relations website to make information
available to its investors and the public at http://www.orbitz-ir.com. You
can sign up to receive email alerts whenever the company posts new information
to the website.
Forward-Looking Statements
This press release and its attachments may contain forward-looking
statements that involve risks, uncertainties and other factors concerning,
among other things, Orbitz Worldwide's (the "Company's") expected financial
performance and its strategic operational plans. The results presented are
preliminary and unaudited. The Company's actual results could differ
materially from the results expressed or implied by such forward-looking
statements and reported results should not be considered as an indication of
future performance. The potential risks, uncertainties and other factors that
could cause actual results to differ from those expressed by the forward-
looking statements in this press release and its attachments include, but are
not limited to, the current economic downturn and global financial crisis;
competition in the travel industry; factors affecting the level of travel
activity, particularly air travel volume; maintenance and protection of the
Company's information technology and intellectual property; the outcome of
pending litigation; the Company's significant indebtedness; risks associated
with doing business in multiple currencies; trends in the travel industry; and
general economic and business conditions. More information regarding these
and other risks, uncertainties and factors is contained in the section
entitled "Risk Factors" in the Company's filings with the Securities and
Exchange Commission ("SEC") which are available on the SEC's website at
www.sec.gov or the Company's Investor Relations website at
http://orbitz-ir.com. You are cautioned not to unduly rely on these forward-
looking statements, which speak only as of the date of this press release.
All information in this press release and its attachments is as of February
23, 2009, and Orbitz Worldwide undertakes no obligation to publicly revise any
forward-looking statement.
About Basis of Presentation
Prior to an intercompany restructuring (the "Reorganization") that was
completed on July 18, 2007, the Company's businesses were operated by
Travelport as a part of its broader corporate organization, rather than as a
separate consolidated entity. The legal entity Orbitz Worldwide, Inc. was
formed in connection with the Reorganization and as a result, prior to the
Reorganization, there was no single capital structure upon which to calculate
historical earnings (loss) per share information for the Orbitz Worldwide
businesses. Accordingly, earnings (loss) per share information has not been
presented for historical periods prior to the Reorganization.
About Non-GAAP Financial Measures
This press release and its attachments include certain non-GAAP financial
measures as defined by the SEC. These measures may be different from non-GAAP
measures used by other companies. The presentation of this financial
information is not intended to be considered in isolation or as a substitute
for the financial information prepared and presented in accordance with U.S.
generally accepted accounting principles (GAAP). Further information
regarding the non-GAAP financial measures included in this press release are
contained in Appendix A attached to this press release.
Orbitz Worldwide, Inc.
Consolidated Statements of Operations (Unaudited)
(In millions, except share and per share data)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Net revenue $180 $197 $870 $859
Cost and expenses
Cost of revenue 33 41 163 157
Selling, general and administrative 48 69 272 301
Marketing 58 57 310 302
Depreciation and amortization 17 15 66 57
Impairment of goodwill and
intangible assets - - 297 -
Total operating expenses 156 182 1,108 817
Operating income (loss) 24 15 (238) 42
Other (expense)
Interest expense, net (16) (17) (63) (83)
Total other (expense) (16) (17) (63) (83)
Income (loss) before income taxes
and minority interest 8 (2) (301) (41)
Provision (benefit) for income taxes - 8 (2) 43
Minority interest, net of tax - 1 - 1
Net income (loss) $8 ($11) ($299) ($85)
Period from
Three Months Three Months July 18,
Ended Ended Year Ended 2007 to
December 31, December 31, December 31, December 31,
2008 2007 2008 2007
Net income (loss) $8 ($11) ($299) ($42)
Net income (loss) per
share-basic:
Net income (loss) per
share $0.10 ($0.13) ($3.58) ($0.51)
Weighted average shares
outstanding 83,505,126 83,054,018 83,342,333 81,600,478
Net income (loss) per
share-diluted:
Net income (loss) per
share $0.10 ($0.13) ($3.58) ($0.51)
Weighted average shares
outstanding 83,535,817 83,054,018 83,342,333 81,600,478
Orbitz Worldwide, Inc.
Consolidated Balance Sheets (Unaudited)
(In millions, except share data)
December 31, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $31 $25
Accounts receivable (net of allowance
for doubtful accounts of $1 and
$2, respectively) 58 60
Prepaid expenses 17 16
Security deposits - 8
Deferred income taxes, current 6 3
Due from Travelport, net 10 -
Other current assets 6 9
Total current assets 128 121
Property and equipment, net 190 184
Goodwill 949 1,181
Trademarks and trade names 232 313
Other intangible assets, net 34 68
Deferred income taxes, non-current 9 12
Other non-current assets 48 46
Total Assets $1,590 $1,925
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $37 $37
Accrued merchant payable 205 218
Accrued expenses 106 121
Deferred income 23 28
Due to Travelport, net - 8
Term loan, current 6 6
Other current liabilities 9 4
Total current liabilities 386 422
Term loan, non-current 587 593
Line of credit 21 1
Tax sharing liability 109 114
Unfavorable contracts 13 17
Other non-current liabilities 36 40
Total Liabilities 1,152 1,187
Commitments and contingencies
Shareholders' Equity:
Preferred stock, $0.01 par value, 100 shares
authorized, no shares issued or outstanding - -
Common stock, $0.01 par value, 140,000,000
shares authorized, 83,345,437 and
83,107,909 shares issued and outstanding,
respectively 1 1
Treasury stock, at cost, 18,055 and 8,852
shares held, respectively - -
Additional paid in capital 908 894
Accumulated deficit (450) (151)
Accumulated other comprehensive (loss) (net
of accumulated tax benefit of $2 and $2,
respectively) (21) (6)
Total Shareholders' Equity: 438 738
Total Liabilities and Shareholders'
Equity $1,590 $1,925
Orbitz Worldwide, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Year Ended December 31,
2008 2007
Operating activities:
Net loss ($299) ($85)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 66 57
Impairment of goodwill and intangible assets 297 -
Non-cash revenue (3) (7)
Non-cash interest expense 18 15
Deferred income taxes (4) 38
Stock compensation 15 8
Provision for bad debts - 2
Income allocated to minority interests - 1
Deconsolidation of minority interests - (7)
Changes in assets and liabilities:
Accounts receivable - (2)
Deferred income - 8
Due to/from Travelport, net (5) 2
Accounts payable, accrued merchant
payable, accrued expenses and other
current liabilities - 38
Other (9) 1
Net cash provided by operating activities 76 69
Investing activities:
Property and equipment additions (58) (53)
Proceeds from sale of business, net
of cash assumed by buyer - (31)
Proceeds from asset sales - 4
Net cash (used in) investing activities (58) (80)
Financing activities:
Proceeds from initial public
offering, net of offering costs - 477
Proceeds from issuance of debt, net
of issuance costs - 595
Repayment of note payable to Travelport - (860)
Dividend to Travelport - (109)
Capital contributions from Travelport - 25
Capital lease and debt payments (7) (3)
Advances to Travelport - (113)
Payments to satisfy employee tax
withholding obligations upon
vesting of equity-based awards (1) -
Payments on tax sharing liability (20) -
Proceeds from line of credit 69 152
Payments on line of credit (49) (151)
Net cash (used in) provided by
financing activities (8) 13
Effects of changes in exchange rates
on cash and cash equivalents (4) 5
Net increase in cash and cash equivalents 6 7
Cash and cash equivalents at
beginning of period 25 18
Cash and cash equivalents at end of period $31 $25
Supplemental disclosure of cash flow
information:
Income tax (refunds) payments, net ($2) $11
Cash interest payments, net of
capitalized interest of $1 and
$3, respectively $47 $74
Non-cash investing activity:
Capital expenditures incurred not yet paid $2 $4
Non-cash allocation of purchase price
related to the Blackstone Acquisition - $7
Non-cash financing activity:
Non-cash capital contributions and
distributions to Travelport - ($814)
Appendix A
Non-GAAP Financial Measures
EBITDA is a performance measure used by management that is defined as net
income or net loss plus: net interest expense, provision for income taxes and
depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted
for certain items as described below. These measures are among the primary
metrics by which management evaluates operating performance of the business,
on which internal budgets are based, by which management and other employees
within the Company are compensated, and on which the Company's debt covenants
are based.
Orbitz Worldwide uses and believes investors and other external users of
the Company's financial statements benefit from the presentation of EBITDA and
adjusted EBITDA in evaluating its operating performance because:
-- These measures provide greater insight into management decision making
at Orbitz Worldwide as adjusted EBITDA is management's primary internal metric
for evaluating the operating performance of the Company's business and the
performance evaluation metric off of which executive and employee incentive
compensation programs have historically been based. Management believes that
investors should have access to the same information that it uses to analyze
the Company's results.
-- Adjusted EBITDA corresponds more closely to cash earnings generated
from the Company's core operations by excluding significant non-cash operating
expenses, such as stock-based compensation and goodwill and intangible asset
impairment charges, and other unusual and non-recurring items that management
does not believe are indicative of its core operations. The exclusion of
these items provides the Company and its investors with a useful tool to
compare operating performance period over period on a consistent basis.
-- EBITDA is widely used by investors to measure a company's operating
performance without regard to items such as interest expense, income taxes,
depreciation and amortization, which can vary substantially from company to
company depending upon accounting methods and book value of assets, capital
structure and the method by which assets were acquired. Management believes
investors commonly adjust EBITDA to eliminate the effect of non-recurring
items such as restructuring charges, as well as non-cash items such as stock-
based compensation and goodwill and intangible asset impairment charges, all
of which vary widely from company to company and impact comparability.
EBITDA and adjusted EBITDA, as presented for the three months and the
years ended December 31, 2008 and December 31, 2007, are not defined under
GAAP, and do not purport to be an alternative to net income or net loss as a
measure of operating performance or to cash flows from operating activities as
a measure of liquidity. EBITDA and adjusted EBITDA have certain limitations
in that they do not take into account the impact of certain expenses to the
Company's income statement, such as stock-based compensation, goodwill and
intangible asset impairment charges, acquisition-related accounting and
certain one-time items, if applicable. Furthermore, because not all companies
use identical calculations, this presentation of EBITDA and adjusted EBITDA
may not be comparable to other similarly-titled measures used by other
companies.
The following table provides a reconciliation of net income (loss) to
EBITDA:
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
(In millions)
Net income (loss) $8 ($11) ($299) ($85)
Interest expense, net 16 17 63 83
Provision (benefit) for income taxes - 8 (2) 43
Depreciation and amortization 17 15 66 57
EBITDA $41 $29 ($172) $98
EBITDA was adjusted by the items listed and described in more detail
below. The following table provides a reconciliation of EBITDA to
adjusted EBITDA.
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
(In millions)
EBITDA $41 $29 ($172) $98
Impairment of goodwill and intangible
assets (a) - - 297 -
Purchase accounting adjustments (b) - - - 6
Corporate allocations and other direct
corporate costs (c) - - - 7
Global platform expense (d) - 1 - 8
Stock-based compensation expense (e) 4 4 17 8
Restructuring and moving expense (f) - 1 - 2
Public company costs (g) - - - (8)
Professional services fees (h) 2 1 5 8
Severance expense (i) 2 2 3 2
Contract exit costs (j) - - - 13
Adjustment to tax sharing liability
(k) (14) (1) (14) -
Adjusted EBITDA (l) $35 $37 $136 $144
(a) Represents the non-cash charge recorded for impairment of goodwill and
intangible assets at both the Company's international and domestic
subsidiaries during the year ended December 31, 2008. Management
adjusts for this item because it represents significant non-cash
operating expense that is not representative of the performance of the
Company's core operations during the year and it impacts comparability
across periods.
(b) Represents the purchase accounting adjustments made at the time the
Company was acquired by affiliates of The Blackstone Group and
Technology Crossover Ventures in August 2006 in order to reflect the
fair value of deferred revenue and accrued liabilities on the opening
balance sheet date. These adjustments reduced deferred revenue and
accrued liabilities and resulted in a reduction in net revenue and
operating income for the year ended December 31, 2007. Management
adjusts for this item because it represents a significant non-cash
reduction to operating income, which is not representative of the
performance of the Company's core operations and impacts comparability
across periods, as management does not reasonably believe that this
item will recur in future periods.
(c) Represents corporate allocations and direct costs for services
performed on the Company's behalf by Travelport through the date of
the Company's initial public offering in July 2007 ("IPO").
Following the IPO, the Company performs these services with either
internal or external resources, although it continues to utilize
Travelport for certain services under a transition services agreement.
Refer to footnote (g) below for a discussion of the Company's estimate
of costs it would have incurred had it been operating as a public
company for the year ended December 31, 2007. Management adjusts for
these costs in the year ended December 31, 2007 because they provide
for comparability across periods in a time of the Company's transition
from a private to a public company.
(d) Represents costs associated with operating two technology platforms
simultaneously as the Company invested in its global technology
platform. Management adjusts for this item as it is a significant
expense that impacts comparability across periods, as management does
not reasonably believe that these duplicative expenses will recur in
future periods.
(e) Primarily represents non-cash stock compensation expense; also
includes expense related to restricted cash awards granted as a
private company. Management adjusts for this item because it
represents significant non-cash operating expense that is not
representative of the performance of the Company's core operations and
that impacts comparability across periods, as the expense varies
widely across the pre-IPO and post-IPO periods.
(f) Represents costs incurred to relocate the Company's corporate offices.
Management adjusts for this item because it represents one-time, non-
recurring charges that are not indicative of the Company's core
operations.
(g) Certain corporate costs were previously incurred on the Company's
behalf by Travelport. This adjustment represents the Company's
estimate of costs it would have expected to incur for certain
headquarters and public company costs had it been operating as a
public company for the year ended December 31, 2007, including costs
for services which were previously provided by Travelport and adjusted
for in footnote (c) above. These costs include tax, treasury, internal
audit, board of directors' costs, and similar items. Also included are
costs for directors and officers insurance, audit, investor relations
and other public company costs. The amount shown for the year ended
December 31, 2007, includes the Company's estimate of such costs.
Management adjusts for these costs for the year ended December 31,
2007 because they provide for comparability across periods in a time
of the Company's transition from a private to a public company.
(h) Represents one-time accounting and consulting services primarily
associated with the IPO and post-IPO transition period. Management
adjusts for these costs because they are non-recurring charges,
representative of our transition to a public company. The Company
expects these one-time costs to cease in 2009.
(i) Represents severance costs for departed Company employees. Management
adjusts for these costs because it believes they are not indicative of
the Company's core operations and they impact comparability across
periods.
(j) Represents costs to exit an online marketing services agreement.
Management adjusts for these costs because they represent one-time,
non-recurring charges that are not indicative of the performance of
the Company's core operations, and they impact comparability across
periods, as management does not reasonably believe that these costs
will recur in future periods.
(k) Represents an adjustment recorded to properly reflect the present
value of the tax sharing liability. Management adjusts for this item
as it represents a non-cash item that is not indicative of the
performance of the Company's core operations, and it impacts
comparability across periods.
(l) Includes EBITDA of Tecnovate, an Indian services organization that the
Company sold on July 5, 2007, of $1 million and $3 million for the
three months and year ended December 31, 2007, respectively. Also
includes EBITDA of Travelbag (an offline U.K. travel subsidiary) that
the Company sold on July 16, 2007 of $0 and $(2) million for the three
months and year ended December 31, 2007, respectively. Travelbag had
net revenue of $0 and $15 million and gross bookings of $0 and $136
million for the three months and year ended December 31, 2007,
respectively. Includes air net revenue of $0 and $8 million and non-
air and other net revenue of $0 and $7 million of Travelbag for the
three months and year ended December 31, 2007, respectively.
