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8-K - FORM 8-K - Travelport LTD | y91276e8vk.htm |
Exhibit 99.1
Travelport
First Quarter 2011 Results
Increased Adjusted EBITDA and Positive Cash Generation
Atlanta, GA, May 13, 2011 Travelport Limited, a leading provider of critical transaction
processing for the global travel industry, today announces its financial results for the first
quarter ended March 31, 2011.
Financial Summary:
($ in millions)
($ in millions)
| Net Revenue Q1 2011: $531 (2010: $536) | ||
| Operating Income Q1 2011: $79 (2010: $72) | ||
| Adjusted EBITDA Q1 2011: $147 (2010: $142) | ||
| Cash generated by continuing operations Q1 2011: $61 (2010: cash used of $21) |
Operational Highlights:
| Announced ground-breaking merchandising agreements with Air Canada and British Airways | ||
| Signed global Travelport Universal API agreement with Hogg Robinson Group | ||
| Secured numerous contract renewals |
Post Quarter End Highlights:
| Completed sale of GTA business | ||
| Repaid $655 million of indebtedness | ||
| Signed merchandising agreement with Qantas |
Commenting on developments, Jeff Clarke, President and CEO of Travelport, said:
Im pleased with Travelports Q1 growth in operating income and cash flow given the market and
industry headwinds.
Travelport continues
to invest in new and innovative travel distribution technologies,
including our Travelport Universal API, Travelport Universal Desktop
and Travelport ePricing products.
Financial Highlights for First Quarter 2011
Travelports main business is its global distribution system (GDS), which includes the Worldspan
and Galileo brands and the Companys Airline IT Solutions business.
On March 5, 2011, Travelport reached an agreement to sell its Gullivers Travel Associates (GTA)
business to Kuoni Travel Holdings Limited for a gross consideration of $720 million, subject to
certain closing working capital adjustments based on cash, working capital and indebtedness
targets. The transaction completed on May 5, 2011. As a result, the assets and liabilities of our
GTA business are classified as held for sale on our consolidated condensed balance sheets, and the
results of operations are presented as discontinuing operations in our consolidated condensed
statements of operations and consolidated condensed statements of cash flows.
($ in millions) | Q1 2011 | Q1 2010 | Change | % Change | ||||||||||||
Net Revenue |
$ | 531 | $ | 536 | $ | (5 | ) | (1 | )% | |||||||
Operating Income |
$ | 79 | $ | 72 | $ | 7 | 10 | % | ||||||||
EBITDA |
$ | 135 | $ | 120 | $ | 15 | 13 | % | ||||||||
Adjusted EBITDA |
$ | 147 | $ | 142 | $ | 5 | 4 | % |
Travelports Net Revenue of $531 million for the first quarter of 2011 represented a $5
million decrease compared to the corresponding period in the prior year. Operating Income and
EBITDA were $79 million and $135 million, respectively, for
the first quarter of 2011, with an increase of 10% in Operating Income and an increase of 13% in
EBITDA compared to 2010. Adjusted EBITDA was $147 million for the first quarter of 2011, a 4%
increase compared to 2010. Net Revenue
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decreased compared to the prior year as a result of a
decrease in transaction processing revenue in the Middle East and Africa, partially offset by
increases in Europe and Asia Pacific. Operating Income improved $7 million (10%) with a reduction
in selling, general and administrative costs, partially offset by increases in cost of revenue and
depreciation expense.
First quarter 2011 interest costs of $77 million were $11 million higher than for 2010 due to
higher interest rates arising from amendments to our senior secured credit agreement in the fourth
quarter of 2010.
During the three months ended March 31, 2011, Travelport generated $61 million in cash from
continuing operations, an $82 million improvement over 2010. This increase is primarily
attributable to $78 million of incremental cash generated from operating working capital.
Travelports net debt as of March 31, 2011 was $3,451 million, which comprised debt of $3,860
million less $174 million in cash and cash equivalents, less $98 million in cash and cash
equivalents of discontinuing operations and less $137 million of restricted cash provided as
collateral.
Orbitz Worldwide
Travelport currently owns approximately 48% of the outstanding equity of Orbitz Worldwide.
Travelport accounts for its investment in Orbitz Worldwide under the equity method of accounting.
During the quarter ended March 31, 2011, Travelport recorded a
$5 million loss from
its investment in Orbitz Worldwide.
Conference Call/Webcast
The Companys first quarter 2011 earnings conference call will be accessible to the media and
general public via live Internet webcast on Tuesday, May 17, 2011, beginning at 2 pm (EDT) and
through a limited number of dial-in conference lines. The webcast and conference call details are
available through the Investor Center section of the Companys website
(www.travelport.com/investor.aspx), where pre-registration for the event is required.
About Travelport
Travelport is a broad-based business services company and a leading provider of critical
transaction processing solutions to companies operating in the global travel industry.
With a presence in 160 countries, approximately 3,500 employees and reported 2010 revenues of $2.3
billion, Travelport is comprised of the global distribution system (GDS) business, which includes
the Galileo and Worldspan brands and its Airline IT Solutions business, which hosts mission
critical applications and provides business and data analysis solutions for major airlines.
Travelport also owns approximately 48% of Orbitz Worldwide (NYSE: OWW), a leading global online
travel company. Travelport is a private company owned by The Blackstone Group, One Equity Partners,
Technology Crossover Ventures, and Travelport management.
Investor Contact
Julian Walker
Head of Corporate Communications and Investor Relations
+44 (0) 1753 288210
julian.walker@travelport.com
Head of Corporate Communications and Investor Relations
+44 (0) 1753 288210
julian.walker@travelport.com
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Forward-Looking Statements
Certain statements in this press release constitute forward-looking statements that involve known
and unknown risks, uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Statements preceded by,
followed by or that otherwise include the words believes, expects, anticipates, intends,
projects, estimates, plans, may increase, may fluctuate and similar expressions or future
or conditional verbs such as will, should, would, may and could are generally
forward-looking in nature and not historical facts. Any statements that refer to expectations or
other characterizations of future events, circumstances or results are forward-looking statements.
Various risks that could cause future results to differ from those expressed by the forward-looking
statements included in this press release include, but are not limited to: the impact that our
outstanding indebtedness may have on the way we operate our business; factors affecting the level
of travel activity, particularly air travel volume, including security concerns, general economic
conditions, natural disasters and other disruptions; general economic and business conditions in
the markets in which we operate, including fluctuations in currencies; pricing, regulatory and
other trends in the travel industry; our ability to obtain travel supplier inventory from travel
suppliers, such as airlines, hotels, car rental companies, cruise lines and other travel suppliers;
our ability to develop and deliver products and services that are valuable to travel agencies and
travel suppliers and generate new revenue streams, including our new universal desktop product;
risks associated with doing business in multiple countries and in multiple currencies; maintenance
and protection of our information technology and intellectual property; the impact on supplier
capacity and inventory resulting from consolidation of the airline industry; financing plans and
access to adequate capital on favorable terms; our ability to achieve expected cost savings from
our efforts to improve operational efficiency; our ability to maintain existing relationships with
travel agencies and tour operators and to enter into new relationships on acceptable financial and
other terms; and our ability to grow adjacencies, such as our acquisition of Sprice and our
controlling interest in eNett. Other unknown or unpredictable factors also could have material
adverse effects on our performance or achievements. In light of these risks, uncertainties,
assumptions and factors, the forward-looking events discussed in this press release may not occur.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only
as of the date stated, or if no date is stated, as of the date of this press release. Except to the
extent required by applicable securities laws, the Company undertakes no obligation to release any
revisions to any forward-looking statements, to report events or to report the occurrence of
unanticipated events unless required by law.
This release includes certain non-GAAP financial measures as defined under SEC rules. As
required by SEC rules, important information regarding such measures is contained below.
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TRAVELPORT LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, | March 31, | |||||||
(in $ millions) | 2011 | 2010 | ||||||
Net revenue |
531 | 536 | ||||||
Costs and expenses |
||||||||
Cost of revenue |
317 | 303 | ||||||
Selling, general and administrative |
76 | 112 | ||||||
Restructuring charges |
3 | 1 | ||||||
Depreciation and amortization |
56 | 48 | ||||||
Total costs and expenses |
452 | 464 | ||||||
Operating income |
79 | 72 | ||||||
Interest expense, net |
(77 | ) | (66 | ) | ||||
Income from continuing operations before income taxes and equity
in losses of investment in Orbitz Worldwide |
2 | 6 | ||||||
Provision for income taxes |
(11 | ) | (15 | ) | ||||
Equity in losses of investment in Orbitz Worldwide |
(5 | ) | (3 | ) | ||||
Net loss from continuing operations |
(14 | ) | (12 | ) | ||||
Loss from discontinuing operations, net of tax |
(10 | ) | (9 | ) | ||||
Net loss |
(24 | ) | (21 | ) | ||||
Net loss attributable to non-controlling interest in subsidiaries |
1 | | ||||||
Net loss attributable to the Company |
(23 | ) | (21 | ) | ||||
4
TRAVELPORT LIMITED
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
March 31, | December 31, | |||||||
(in $ millions) | 2011 | 2010 | ||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
174 | 94 | ||||||
Accounts receivable (net of allowances for doubtful accounts of $25 and $24) |
215 | 161 | ||||||
Deferred income taxes |
4 | 4 | ||||||
Assets of discontinuing operations |
1,047 | 1,066 | ||||||
Other current assets |
234 | 185 | ||||||
Total current assets |
1,674 | 1,510 | ||||||
Property and equipment, net |
465 | 484 | ||||||
Goodwill |
986 | 986 | ||||||
Trademarks and tradenames |
314 | 314 | ||||||
Other intangible assets, net |
747 | 770 | ||||||
Investment in Orbitz Worldwide |
85 | 91 | ||||||
Non-current deferred income tax |
4 | 4 | ||||||
Other non-current assets |
351 | 341 | ||||||
Total assets |
4,626 | 4,500 | ||||||
Liabilities and equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
105 | 72 | ||||||
Accrued expenses and other current liabilities |
521 | 474 | ||||||
Liabilities of discontinuing operations |
549 | 555 | ||||||
Current portion of long-term debt |
18 | 18 | ||||||
Total current liabilities |
1,193 | 1,119 | ||||||
Long-term debt |
3,842 | 3,796 | ||||||
Deferred income taxes |
40 | 37 | ||||||
Other non-current liabilities |
215 | 220 | ||||||
Total liabilities |
5,290 | 5,172 | ||||||
Commitments and contingencies |
||||||||
Shareholders equity: |
||||||||
Common shares $1.00 par value; 12,000 shares authorized; 12,000 shares
issued and outstanding |
| | ||||||
Additional paid in capital |
1,011 | 1,011 | ||||||
Accumulated deficit |
(1,709 | ) | (1,686 | ) | ||||
Accumulated other comprehensive income (loss) |
22 | (9 | ) | |||||
Total shareholders equity |
(676 | ) | (684 | ) | ||||
Equity attributable to non-controlling interest in subsidiaries |
12 | 12 | ||||||
Total equity |
(664 | ) | (672 | ) | ||||
Total liabilities and equity |
4,626 | 4,500 | ||||||
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TRAVELPORT LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, | March 31, | |||||||
(in $ millions) | 2011 | 2010 | ||||||
Operating activities of continuing operations |
||||||||
Net loss |
(24 | ) | (21 | ) | ||||
Loss from discontinuing operations |
10 | 9 | ||||||
Net loss from continuing operations |
(14 | ) | (12 | ) | ||||
Adjustments to reconcile net loss from continuing operations to net cash provided by
(used in) operating activities of continuing operations: |
||||||||
Depreciation and amortization |
56 | 48 | ||||||
Amortization of debt finance costs |
3 | 4 | ||||||
Loss on interest rate derivative instruments |
2 | 2 | ||||||
(Gain) loss on foreign exchange derivative instruments |
(3 | ) | 1 | |||||
Equity in losses of investment in Orbitz Worldwide |
5 | 3 | ||||||
FASA liability |
(5 | ) | (5 | ) | ||||
Deferred income taxes |
3 | | ||||||
Changes in assets and liabilities, net of effects from acquisitions: |
||||||||
Accounts receivable |
(52 | ) | (56 | ) | ||||
Other current assets |
(5 | ) | 1 | |||||
Accounts payable, accrued expenses and other current liabilities |
68 | (8 | ) | |||||
Other |
3 | 1 | ||||||
Net cash provided by (used in) operating activities of continuing operations |
61 | (21 | ) | |||||
Investing activities of continuing operations |
||||||||
Property and equipment additions |
(18 | ) | (113 | ) | ||||
Investment in Orbitz Worldwide |
| (50 | ) | |||||
Cash received from GTA Business |
41 | 13 | ||||||
Other |
| 5 | ||||||
Net cash provided by (used in) investing activities of continuing operations |
23 | (145 | ) | |||||
Financing activities of continuing operations |
||||||||
Principal repayments |
(5 | ) | (8 | ) | ||||
Proceeds from new borrowings |
| 100 | ||||||
Payments on settlement of derivative contracts |
| (7 | ) | |||||
Net cash (used in) provided by financing activities of continuing operations |
(5 | ) | 85 | |||||
Effect of changes in exchange rates on cash and cash equivalents of continuing operations |
1 | (1 | ) | |||||
Net increase (decrease) in cash and cash equivalents of continuing operations |
80 | (82 | ) | |||||
Cash used in discontinuing operations |
||||||||
Operating activities |
(9 | ) | (6 | ) | ||||
Investing activities |
(3 | ) | (6 | ) | ||||
Financing activities |
(41 | ) | (13 | ) | ||||
Effect of changes in exchange rates on cash and cash equivalents of discontinuing
operations |
3 | (3 | ) | |||||
Net cash used in discontinuing operations |
(50 | ) | (28 | ) | ||||
Cash and cash equivalents at beginning of period |
242 | 217 | ||||||
Cash and cash equivalents at end of period |
272 | 107 | ||||||
Less: cash of discontinuing operations |
(98 | ) | (65 | ) | ||||
Cash and cash equivalents of continuing operations at end of period |
174 | 42 | ||||||
Supplementary disclosures of cash flow information for continuing operations |
||||||||
Interest payments |
99 | 90 | ||||||
Income tax payments, net |
3 | 12 |
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TRAVELPORT LIMITED
NON-GAAP MEASURES
(in $ millions and unaudited)
NON-GAAP MEASURES
(in $ millions and unaudited)
Reconciliation of Travelport Adjusted EBITDA to Operating Income
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Travelport Adjusted EBITDA |
147 | 142 | ||||||
Less adjustments: |
||||||||
Acquisitions and corporate transaction costs |
3 | 19 | ||||||
Restructuring charges |
3 | 1 | ||||||
Unrealized (gains) losses on foreign exchange derivatives |
(3 | ) | 1 | |||||
Other |
9 | 1 | ||||||
Total |
12 | 22 | ||||||
EBITDA |
135 | 120 | ||||||
Less: Depreciation and amortization |
(56 | ) | (48 | ) | ||||
Operating income |
79 | 72 | ||||||
Reconciliation of Adjusted EBITDA to Net Cash Provided by (Used In)
Operating Activities of Continuing Operations and Unlevered Free Cash Flow
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Travelport Adjusted EBITDA |
147 | 142 | ||||||
Less: |
||||||||
Cash interest payments |
(99 | ) | (90 | ) | ||||
Tax payments |
(3 | ) | (12 | ) | ||||
Changes in operating working capital |
30 | (48 | ) | |||||
FASA liability payments |
(5 | ) | (5 | ) | ||||
Other non-operating and adjusting items |
(9 | ) | (8 | ) | ||||
Net cash provided by (used in) operating activities of continuing operations |
61 | (21 | ) | |||||
Add cash interest payments |
99 | 90 | ||||||
Less capital expenditures |
(18 | ) | (113 | ) | ||||
Unlevered free cash flow |
142 | (44 | ) | |||||
Adjusted EBITDA is a non-GAAP measure and may not be comparable to similarly named measures used by
other companies. We believe this measure provides management with a more complete understanding of
the underlying results and trends and an enhanced overall understanding of our financial liquidity
and prospects for the future. Adjusted EBITDA is the primary metric for; measuring our business
results, forecasting and determining future capital investment allocations and is used by the Board
of Directors to determine incentive compensation. Capital expenditures, which impact depreciation
and amortization, interest expense and income tax expense, are reviewed separately by management.
Adjusted EBITDA is disclosed so that investors have the same tools available to management when
evaluating the results of Travelport. The Adjusted EBITDA measure is a defined term within our
credit agreement and bond indentures. Adjusted EBITDA is defined as EBITDA adjusted to exclude the
impact of purchase accounting, impairment of goodwill and intangibles assets, expenses incurred in
conjunction with Travelports separation from Cendant, expenses incurred to acquire and integrate
Travelports portfolio of businesses, costs associated with Travelports restructuring efforts,
non-cash equity-based compensation, and other adjustments made to exclude expenses management views
as outside the normal course of operations. Adjusted EBITDA is a critical measure as it is required
to calculate our key financial ratio under our credit agreement covenants. This ratio compares our
Adjusted EBITDA for the last twelve months to our consolidated net debt and is known as our
Leverage Ratio. We are currently in compliance with our Leverage Ratio. A breach of this covenant
could result in a default under the senior secured credit agreement and the indentures governing
our notes.
Unlevered free cash flow is a non-GAAP measure and may not be comparable to similarly named
measures used by other companies. Unlevered free cash flow is defined as net cash provided by (used
in) operations adjusted to exclude cash interest payments and include capital expenditures, all of
which are GAAP measures included within our Statements of Cash Flows. We believe unlevered free
cash flow provides management and investors with a more complete understanding of the underlying
liquidity of the core operating businesses and our ability to meet its current and future financing
and investing needs.
7
TRAVELPORT LIMITED
Operating Statistics
(unaudited)
Operating Statistics
(unaudited)
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2011 | 2010 | Change | % Change | |||||||||||||
GDS (segments in millions) |
||||||||||||||||
Americas Segments |
47.2 | 46.9 | 0.3 | 1 | % | |||||||||||
International Segments: |
||||||||||||||||
Europe |
24.2 | 24.2 | | | % | |||||||||||
Asia Pacific |
14.5 | 14.2 | 0.3 | 2 | % | |||||||||||
Middle East and Africa |
9.6 | 10.5 | (0.9 | ) | (9 | )% | ||||||||||
Total Segments |
95.5 | 95.8 | (0.3 | ) | | % | ||||||||||
8