- Domestic air transaction growth rate increased by 22 percentage points
versus the first quarter of 2009
- Net income was $10 million for the quarter compared with a net loss of $5
million for the second quarter of 2008
- Adjusted EBITDA for the quarter was $45 million, an increase of 23 percent
from the second quarter of 2008
CHICAGO, Aug. 5 /PRNewswire-FirstCall/ -- Orbitz Worldwide, Inc. (NYSE:
OWW) today announced results for the second quarter and six months ended June
30, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070813/AQM125LOGO)
"Despite a challenging economic and travel environment, our domestic air
transaction growth rate increased by 22 percentage points versus the first
quarter 2009, and our dynamic packaging product continued to post strong
volume growth as a result of the value we provide to customers who 'get it
together and save'," said Barney Harford, President and CEO of Orbitz
Worldwide. "Internationally ebookers delivered strong net revenue growth as we
realize the benefits of the new global platform."
"Looking forward we recognize the central importance of the hotel business
to our future strategic position," continued Harford. "We took some
significant initial steps towards improving our hotel offering during the
quarter by drastically cutting booking fees on hotels around the world and by
launching two industry-leading innovations - Total Price hotel search results
and Orbitz Hotel Price Assurance. We recognize that we face formidable
competition in this space, however we believe there is still tremendous
opportunity for us to improve the way customers choose and book hotels."
Summary Operating Results
(In millions, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2009 2008 Change (a) 2009 2008 Change (a)
---- ---- ---------- ---- ---- ----------
Gross bookings $2,678 $3,043 -12% $5,061 $5,918 -14%
Net revenue $188 $231 -19% $376 $450 -16%
Net income
(loss) $10 ($5) ** ($326) ($20) **
Basic and
Diluted EPS $0.12 ($0.06) ** ($3.89) ($0.24) **
Operating cash
flow ($18) $1 ** $99 $109 -10%
Capital spending $9 $14 -36% $21 $26 -21%
EBITDA (b) $43 $32 37% ($266) $46 **
Impairment - - ** $332 - **
Other
adjustments $2 $5 ** $7 $11 **
Adjusted EBITDA
(b)(c) $45 $37 23% $73 $57 28%
** Not meaningful.
(a) Percentages are calculated on unrounded numbers.
(b) 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.
(c) EBITDA is no longer adjusted for severance charges which were $2
million and almost nil during the three months ended June 30, 2009
and June 30, 2008, respectively, and $5 million and $1 million during
the six months ended June 30, 2009 and June 30, 2008, respectively.
"Despite a weak economy and a dramatic change in the U.S. fee landscape,
we are pleased to report net income of $10 million for the second quarter of
2009, an improvement of $15 million versus last year. We delivered $45 million
in Adjusted EBITDA, an increase of 23 percent over 2008, by achieving
worldwide transaction growth, focusing on costs, and improving our marketing
efficiency," said Marsha Williams, SVP and CFO of Orbitz Worldwide.
Net revenue was $188 million for the second quarter of 2009, down 19
percent (15 percent on a constant currency basis) from the second quarter of
last year. This net revenue decline was due primarily to the removal of most
air booking fees on the company's domestic sites and a decline in average
hotel room rates globally. The company reported net income of $10 million or
$0.12 per diluted share for the second quarter of 2009, compared with a net
loss of $5 million or ($0.06) per diluted share for the same period last year.
Adjusted EBITDA increased 23 percent to $45 million for the second quarter of
2009 as compared with the second quarter of 2008. Adjusted EBITDA margin
increased to 24 percent for the second quarter of 2009 from 16 percent for the
same quarter last year.
For the six months ended June 30, 2009, net revenue was $376 million, down
16 percent (13 percent on a constant currency basis) from the same period of
2008. This net revenue decline was due primarily to the removal of most air
booking fees, a decline in average hotel room rates globally, and fewer air
and hotel transactions. The company reported a net loss of $326 million or
($3.89) per diluted share for the first six months of 2009, compared with a
net loss of $20 million or ($0.24) per diluted share for the same period last
year. The 2009 year-to-date net loss was due primarily to a $332 million
non-cash charge for the impairment of goodwill and intangible assets taken in
the first quarter. Adjusted EBITDA increased 28 percent to $73 million for the
six months ended June 30, 2009 compared with the same period in 2008. This
year-over-year increase in Adjusted EBITDA was driven by the significant
operating cost reductions made in the fourth quarter of last year and earlier
this year and better returns on the company's online marketing investment.
Second Quarter 2009 Financial Highlights
Gross Bookings and Net Revenue
Global gross bookings were down 12 percent (10 percent on a constant
currency basis) for the quarter compared with the year earlier period. This
decline was primarily due to lower air fares and lower average hotel rates,
partially offset by growth in total transactions. Air gross bookings declined
13 percent (11 percent on a constant currency basis) and non-air gross
bookings decreased 9 percent (6 percent on a constant currency basis) compared
with the second quarter of last year. Domestic gross bookings decreased 9
percent compared with the second quarter of 2008. International gross bookings
decreased 27 percent (12 percent on a constant currency basis) compared with
the same quarter last year.
Net revenue for the quarter was $188 million, a decrease of 19 percent (15
percent on a constant currency basis) from the second quarter of 2008, with
domestic net revenue down 16 percent and international net revenue down 27
percent (12 percent on a constant currency basis).
Gross Bookings and Net Revenue
(In millions)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2009 2008 Change (a) 2009 2008 Change (a)
---- ---- ---------- ---- ---- ----------
Gross Bookings
Air $1,960 $2,252 -13% $3,622 $4,323 -16%
Non-air 718 791 -9% 1,439 1,595 -10%
--- --- --- ----- ----- ---
Total Gross Bookings $2,678 $3,043 -12% $5,061 $5,918 -14%
Domestic $2,332 $2,567 -9% $4,401 $4,954 -11%
International 346 476 -27% 660 964 -31%
--- --- --- --- --- ---
Total Gross Bookings $2,678 $3,043 -12% $5,061 $5,918 -14%
Net Revenue
Air $69 $90 -24% $150 $185 -19%
Hotel 47 69 -33% 86 124 -31%
Dynamic Packaging 31 28 9% 60 56 7%
Advertising and
Media 14 13 11% 28 25 12%
Other 27 31 -12% 52 60 -13%
--- --- --- --- --- ---
Total Net Revenue $188 $231 -19% $376 $450 -16%
Domestic $149 $178 -16% $306 $346 -12%
International 39 53 -27% 70 104 -33%
--- --- --- --- --- ---
Total Net Revenue $188 $231 -19% $376 $450 -16%
(a) Percentages are calculated on unrounded numbers.
-- Air net revenue (which consists of revenue from standalone air
bookings) was $69 million in the second quarter, down 24 percent (22
percent on a constant currency basis) from the second quarter of 2008.
Domestic air net revenue declined 28 percent due largely to the
removal of most booking fees in early April on flights booked through
Orbitz.com and CheapTickets.com, offset in part by higher air
transactions as a result of both lower fees and lower air fares. The
company's domestic air transaction growth rate increased by 22
percentage points versus the first quarter 2009. International air net
revenue declined 3 percent year-over-year as a result of the impact of
foreign currency, but grew 15 percent on a constant currency basis due
to higher air transactions driven by the new platform in Europe.
-- Hotel net revenue (which consists of revenue from standalone hotel
bookings) was $47 million in the second quarter, down 33 percent (27
percent on a constant currency basis) from the second quarter of 2008.
Hotel net revenue declined in both domestic and international markets
due to fewer standalone hotel transactions and lower hotel room rates.
-- Dynamic packaging net revenue increased 9 percent (10 percent on a
constant currency basis) in the quarter to $31 million as compared
with the second quarter of last year, as travelers continue to
recognize the value inherent in booking travel products as part of a
vacation package. Domestic dynamic packaging transaction growth was 26
percent in the quarter compared with the same period last year.
-- Advertising and media revenue increased 11 percent (12 percent on a
constant currency basis) in the quarter to $14 million, as compared
with the second quarter of 2008, as the company continues to focus on
monetizing the significant traffic that its global websites attract.
-- Other revenue, which primarily includes car rental, cruise,
destination services and travel insurance revenue, decreased 12
percent (9 percent on a constant currency basis) in the quarter
compared with the same period last year, primarily due to fewer car
transactions, partially offset by higher average car rental rates.
The company has posted on its website (http://orbitz-ir.com) a schedule
that adjusts net revenue for currency impacts in order to provide a more
comparable view of operating performance across periods.
Operating Expenses
Cost of revenue declined by 27 percent to $34 million, or 18 percent of
net revenue, for the second quarter versus the same period in 2008. Cost of
revenue declined primarily because of lower customer service costs and lower
charge-backs versus last year. For the remainder of 2009, the company may add
to its customer service staff in order to better support the higher number of
air tickets the company is selling. As a result, the cost of revenue as a
percentage of net revenue may increase in the second half of 2009.
Selling, general and administrative expense decreased $13 million, or 17
percent, in the second quarter of 2009 to $59 million. This decrease was
primarily attributable to the cost cutting actions the company took late last
year and earlier this year.
Marketing expense in the second quarter was $54 million, a decrease of 34
percent compared with the same period in 2008. This decrease occurred in both
online and offline channels globally. In 2009, the company has made a number
of changes to its online marketing approach and has focused on achieving
higher global marketing efficiency. These moves include less reliance on
search engine marketing and a stronger focus on attracting more non-paid
traffic.
Interest Expense
Orbitz Worldwide incurred net interest expense of $14 million in the
second quarter compared with $15 million in the second quarter of 2008. This
decline in interest expense for the quarter was primarily due to a lower
effective interest rate on the company's term loan compared with the same
period last year. At June 30, 2009, $400 million of the $580 million
outstanding on the term loan had fixed interest rates and the company's
weighted average effective interest rate on the term loan was 6.04 percent. In
addition, the company had $63 million of outstanding borrowings under its
revolving credit facility at June 30, 2009.
In June 2009, the company obtained an amendment to its senior secured
credit agreement which permits it to purchase and retire portions of its term
loan on a non-pro-rata basis until early June 2010. The company purchased and
retired $10 million in principal amount of the term loan for approximately $8
million, inclusive of transaction fees. As a result, the company recorded a $2
million gain on debt extinguishment in the quarter.
Cash Flow
Orbitz Worldwide reported an operating cash outflow of $18 million for the
second quarter compared with a $1 million inflow for the same period in 2008.
This operating cash outflow was primarily due to lower domestic merchant hotel
gross bookings driven by lower room rates and to softness in international
hotels due in part to weak travel demand.
At June 30, 2009, cash and cash equivalents were $131 million, including
cash from borrowings under the revolving credit facility, compared with $99
million of cash and cash equivalents and no outstanding borrowings at June 30,
2008.
Operational Highlights
-- In July, Orbitz Worldwide launched Trip.com, a productivity-enhancing
facilitated search tool that helps customers search for deals across
multiple sites.
-- On July 8, Michael Nelson was named President, Orbitz Worldwide
Partner Services Group, with global responsibility for partner
relationships and customer operations.
-- On June 23, Tamer Tamar was named President, ebookers.
-- On June 18, Frank Petito was named President, Orbitz for Business.
-- On May 5, Orbitz launched Hotel Price Assurance, a groundbreaking
innovation that refunds travelers when lower hotel rates are booked on
Orbitz.com. Hotel Price Assurance provides peace of mind to consumers
who want to book early but be protected in case rates drop later, and
it's completely automatic. Here's how it works: you book any prepaid
hotel on Orbitz, another Orbitz customer subsequently books the same
hotel stay at a lower rate, and Orbitz automatically sends you a check
for the difference.
-- On April 22, Orbitz launched the "Hotel Fee Cut" promotion,
drastically cutting booking fees on hotels around the world. Other
hotel promotions included "The Biggest Hotel Sale Ever" and the "Huge
Hotel Sale", which is currently running, where customers can get at
least 25% off over 5,000 hotels.
-- On April 22, Orbitz also launched Total Price hotel search results,
becoming the first and only major online travel company to show base
rate, taxes & fees and Total Price per night upfront on the initial
search results page.
-- On April 7, Orbitz launched the "Fly Fee Free" promotion, removing
most booking fees on flights booked on Orbitz.com and
CheapTickets.com.
-- During the quarter Orbitz Worldwide signed contracts with a number of
destination marketing organizations including Taiwan Tourism Board,
Swiss National Tourism Office, San Diego Tourism, Visit Mexico, Aruba
Tourism Authority, and Canada Tourism Commission to promote travel to
those destinations across our global sites and to provide valuable
travel information to our customers. Orbitz Worldwide now has partner
marketing agreements with over 150 destination marketing
organizations.
Quarterly Conference Call
Orbitz Worldwide will host a conference call to discuss its second quarter
2009 results at 10:00 a.m. EDT (9:00 a.m. CDT) on Wednesday, August 5, 2009. A
live webcast of the conference call can be accessed through the Orbitz
Worldwide Investor Relations website at www.orbitz-ir.com. An archive of the
webcast and a transcript will also be available on the website for a period of
at least 30 days.
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 (www.orbitz.com),
CheapTickets (www.cheaptickets.com), ebookers (www.ebookers.com), HotelClub
(www.hotelclub.com), RatesToGo (www.ratestogo.com), the Away Network
(www.away.com), and corporate travel brand Orbitz for Business
(www.orbitzforbusiness.com). For more information on how your company can
partner with Orbitz Worldwide, visit corp.orbitz.com.
Orbitz Worldwide uses its Investor Relations website to make information
available to its investors and the public at 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
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 August 5, 2009, and Orbitz Worldwide undertakes no
obligation to publicly revise any forward-looking statement.
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 is contained in
Appendix A attached to this press release.
Orbitz Worldwide, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in millions, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
Net revenue $188 $231 $376 $450
Cost and expenses
Cost of revenue 34 46 69 89
Selling, general and
administrative 59 72 125 149
Marketing 54 81 118 166
Depreciation and amortization 19 17 33 32
Impairment of goodwill and
intangible assets - - 332 -
--- --- --- ---
Total operating expenses 166 216 677 436
--- --- --- ---
Operating income (loss) 22 15 (301) 14
Other income (expense)
Interest expense, net (14) (15) (29) (31)
Gain on extinguishment of debt 2 - 2 -
--- --- --- ---
Total other (expense) (12) (15) (27) (31)
--- --- --- ---
Income (loss) before income
taxes 10 - (328) (17)
Provision (benefit) for income
taxes - 5 (2) 3
--- --- ----- ----
Net income (loss) $10 ($5) ($326) ($20)
=== === ===== ====
Net income (loss) per
share-basic:
Net income (loss) per
share $0.12 ($0.06) ($3.89) ($0.24)
===== ====== ====== ======
Weighted average
shares outstanding 83,873,230 83,243,607 83,734,112 83,199,010
========== ========== ========== ==========
Net income (loss) per
share-diluted:
Net income (loss) per
share $0.12 ($0.06) ($3.89) ($0.24)
===== ====== ====== ======
Weighted average
shares outstanding 84,208,662 83,243,607 83,734,112 83,199,010
========== ========== ========== ==========
Orbitz Worldwide, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in millions, except share data)
June 30, December 31,
2009 2008
--------- --------
Assets
Current assets:
Cash and cash equivalents $131 $31
Accounts receivable (net of allowance for
doubtful accounts of $1 and $1, respectively) 63 58
Prepaid expenses 17 17
Deferred income taxes, current 8 6
Due from Travelport, net - 10
Other current assets 8 6
--- ---
Total current assets 227 128
Property and equipment, net 188 190
Goodwill 706 949
Trademarks and trade names 153 232
Other intangible assets, net 27 34
Deferred income taxes, non-current 13 9
Other non-current assets 53 48
--- ---
Total Assets $1,367 $1,590
====== ======
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $30 $37
Accrued merchant payable 265 205
Accrued expenses 108 106
Deferred income 39 23
Term loan, current 6 6
Other current liabilities 8 9
--- ---
Total current liabilities 456 386
Term loan, non-current 574 587
Line of credit 63 21
Tax sharing liability 107 109
Unfavorable contracts 12 13
Other non-current liabilities 33 36
--- ---
Total Liabilities 1,245 1,152
----- -----
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, 83,618,755 and 83,345,437
shares issued and outstanding, respectively 1 1
Treasury stock, at cost, 23,873 and 18,055
shares held, respectively - -
Additional paid in capital 916 908
Accumulated deficit (776) (450)
Accumulated other comprehensive loss (net
of accumulated tax benefit of $2 and $2,
respectively) (19) (21)
--- ---
Total Shareholders' Equity: 122 438
--- ---
Total Liabilities and Shareholders' Equity $1,367 $1,590
====== ======
Orbitz Worldwide, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in millions)
Six Months Ended
June 30,
----------------
2009 2008
---- ----
Operating activities:
Net loss ($326) ($20)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Gain on extinguishment of debt (2) -
Depreciation and amortization 33 32
Impairment of goodwill and intangible assets 332 -
Non-cash revenue (2) (2)
Non-cash interest expense 8 9
Deferred income taxes (4) 1
Stock compensation 8 8
(Recovery of) bad debts - (1)
Changes in assets and liabilities:
Accounts receivable (3) (22)
Deferred income 16 18
Due to/from Travelport, net 10 (22)
Accounts payable, accrued merchant payable, accrued
expenses and other current liabilities 43 115
Other (14) (7)
--- ---
Net cash provided by operating activities 99 109
--- ---
Investing activities:
Property and equipment additions (21) (26)
--- ---
Net cash (used in) investing activities (21) (26)
--- ---
Financing activities:
Capital lease payments and principal payments on the
term loan (3) (4)
Payments to extinguish debt (8) -
Payment to satisfy employee tax withholding obligations
upon vesting of equity-based awards - (1)
Payments on tax sharing liability (8) (7)
Proceeds from line of credit 100 29
Payments on line of credit (60) (30)
--- ---
Net cash provided by (used in) financing activities 21 (13)
--- ---
Effects of changes in exchange rates on cash and cash
equivalents 1 4
--- ---
Net increase in cash and cash equivalents 100 74
Cash and cash equivalents at beginning of period 31 25
---- ---
Cash and cash equivalents at end of period $131 $99
==== ===
Supplemental disclosure of cash flow information:
Income tax payments, net $2 $2
Cash interest payments, net of capitalized interest of
almost nil and almost nil, respectively $21 $22
Non-cash investing activity:
Capital expenditures incurred not yet paid $2 $3
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 (benefit) for income
taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA as
adjusted for certain non-cash and unusual or non-recurring items as described
below. 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 they are among the primary metrics by which
management evaluates the operating performance of the Company's
business. Management believes that when viewed with GAAP results and
the accompanying reconciliation, EBITDA and Adjusted EBITDA provide
additional information that is useful for management and other
external users to gain an understanding of the factors and trends
affecting the ongoing cash earnings capability of the Company's
business, from which capital investments are made and debt is
serviced. These supplemental measures are used by management and the
board of directors to evaluate the Company's actual results against
management's expectations. The compensation of management and other
employees within the Company is also tied to the Company's actual
performance, as measured by Adjusted EBITDA relative to performance
targets established by the Company's board of directors and its
compensation committee.
-- EBITDA measures performance apart from items such as interest expense,
income taxes and depreciation and amortization. Management believes
that the exclusion of interest expense is necessary to evaluate the
cash earnings capability of the business. The Company generally only
funds working capital requirements with borrowed funds (specifically,
funds borrowed under its revolving credit facility) in the fourth
quarter of the year when its cash balances are typically the lowest.
As a result, nearly all of the Company's interest expense is not
incurred to fund its operating activities. In addition, excluding
interest expense from the Company's non-GAAP measures is consistent
with the Company's intent to disclose the ongoing cash earnings
capability of the business, from which capital investments are made
and debt is serviced. Management believes that the exclusion of
non-cash depreciation and amortization is also necessary to evaluate
the cash earnings capability of the business. Management believes that
the review of its non-GAAP measures in conjunction with other GAAP
metrics, such as capital expenditures, is more useful in understanding
the Company's business than the inclusion of depreciation and
amortization expense in the non-GAAP measures used by management,
since depreciation and amortization expense has historically
fluctuated as a result of purchase accounting and this expense
involves management judgment (e.g. estimated useful lives).
-- Adjusted EBITDA corresponds more closely to the ongoing cash earnings
capability of the Company's business, by excluding the items described
above, as well as certain other non-cash items, such as goodwill and
intangible asset impairment charges and stock-based compensation, and
other unusual and non-recurring items, such as restructuring expense.
Adjusted EBITDA does not exclude certain non-cash items, such as
accruals of revenue and expense, because these items represent timing
differences and management believes that by including these items, it
is providing a better view of the cash earnings capability of the
business.
EBITDA and Adjusted EBITDA, as presented for the three and six months
ended June 30, 2009 and June 30, 2008, 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. 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. 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 Six Months
Ended June 30, Ended June 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
(in millions)
Net income (loss) $10 $(5) $(326) $(20)
Interest expense, net 14 15 29 31
Provision (benefit) for income taxes - 5 (2) 3
Depreciation and amortization 19 17 33 32
--- --- ---- ---
EBITDA $43 $32 $(266) $46
=== === ===== ===
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 Six Months
Ended June 30, Ended June 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
(in millions)
EBITDA $43 $32 $(266) $46
Impairment of goodwill and
intangible assets (a) - - 332 -
Stock-based compensation expense (b) 4 5 9 9
Professional services fees (c) - - - 2
Gain on extinguishment of debt (d) (2) - (2) -
--- --- --- ---
Adjusted EBITDA (e) $45 $37 $73 $57
=== === === ===
(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 first quarter of 2009. Management
adjusts for this item because it represents a significant non-cash
operating expense that is not necessarily reflective of the cash
earnings capability of the business.
(b) Primarily represents non-cash stock compensation expense; also
includes expense related to restricted cash awards granted prior to
the Company's initial public offering in July 2007 ("IPO").
Management adjusts for this item as it represents a significant
non-cash operating expense that is not indicative of the cash
earnings capability of the business.
(c) Represents 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, incurred during
the transition to a standalone public company. The Company expects
these costs to end in 2009.
(d) Represents the non-cash gain recorded upon extinguishment of a
portion of the Company's $600 million term loan. Management
adjusts for this item because it represents a significant
non-recurring charge that is not indicative of the cash earnings
capability of the business.
(e) During the first quarter of 2009, the Company reviewed the nature of
the items for which EBITDA is adjusted and concluded that although
the Company had initially considered severance charges to be
non-recurring in nature, given the frequency of occurrence of these
charges, the Company believes that they are more likely to be viewed
as recurring in nature. As a result, beginning in the first quarter
of 2009, the Company no longer adds severance charges back to EBITDA
to arrive at Adjusted EBITDA. For comparability purposes, the Company
has adjusted prior periods for this change. The Company recorded
severance charges of $2 million and almost nil during the three
months ended June 30, 2009 and June 30, 2008, respectively, and $5
million and $1 million during the six months ended June 30, 2009 and
June 30, 2008, respectively.
SOURCE
Orbitz Worldwide, Inc.
CONTACT:
Media, Brian Hoyt, +1-312-894-6890, bhoyt@orbitz.com, or
Investors, Marsha Williams, +1-312-260-2415, marsha.williams@orbitz.com, both
of Orbitz Worldwide, Inc.
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