Attached files
file | filename |
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EX-10.2 - EX-10.2 - Travelport LTD | y84314exv10w2.htm |
EX-31.2 - EX-31.2 - Travelport LTD | y84314exv31w2.htm |
EX-31.1 - EX-31.1 - Travelport LTD | y84314exv31w1.htm |
EX-10.1 - EX-10.1 - Travelport LTD | y84314exv10w1.htm |
EX-10.3 - EX-10.3 - Travelport LTD | y84314exv10w3.htm |
EX-32 - EX-32 - Travelport LTD | y84314exv32.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10-Q
(Mark One) | ||
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the quarterly period ended March 31, 2010 | ||
or
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Commission File
No. 333-141714
Travelport Limited
(Exact name of registrant as specified in its charter)
Bermuda (State or other jurisdiction of incorporation or organization) |
98-0505100 (I.R.S. Employer Identification Number) |
405
Lexington Avenue
New York, NY 10174
(Address of principal executive offices, including zip code)
(212) 915-9150
New York, NY 10174
(Address of principal executive offices, including zip code)
(212) 915-9150
(Registrants telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past
90 days. Yes o No x
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes o No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o |
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No x
As of May 6, 2010, there were 12,000 shares of the
Registrants common stock, par value $1.00 per share,
outstanding.
Table of
Contents
Page | ||||||||
PART I | 3 | |||||||
Item 1. | 3 | |||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7 | ||||||||
Item 2. | 26 | |||||||
Item 3. | 34 | |||||||
Item 4. | 35 | |||||||
PART II | 36 | |||||||
Item 1. | 36 | |||||||
Item 1A. | 36 | |||||||
Item 2. | 36 | |||||||
Item 3. | 36 | |||||||
Item 4. | 36 | |||||||
Item 5. | 36 | |||||||
Item 6. | 36 | |||||||
37 | ||||||||
EX-10.1 | ||||||||
EX-10.2 | ||||||||
EX-10.3 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32 |
1
Table of Contents
FORWARD-LOOKING
STATEMENTS
The forward-looking statements contained herein involve risks
and uncertainties. Many of the statements appear, in particular,
in the sections entitled Risk Factors and
Managements Discussion and Analysis of Financial
Condition and Results of Operations. Forward-looking
statements identify prospective information. Important factors
could cause actual results to differ, possibly materially, from
those in the forward-looking statements. In some cases you can
identify forward-looking statements by words such as
anticipate, believe, could,
estimate, expect, intend,
may, plan, predict,
potential, should, will and
would or other similar words. You should read
statements that contain these words carefully because they
discuss our future priorities, goals, strategies, actions to
improve business performance, market growth assumptions and
expectations, new products, product pricing, changes to our
business processes, future business opportunities, capital
expenditures, financing needs, financial position and other
information that is not historical information. References
within this Quarterly Report on
Form 10-Q
to we, our or us means
Travelport Limited, a Bermuda company, and its subsidiaries.
The following list represents some, but not necessarily all, of
the factors that could cause actual results to differ from
historical results or those anticipated or predicted by these
forward-looking statements:
| factors affecting the level of travel activity, particularly air travel volume, including security concerns, general economic conditions, natural disasters and other disruptions; | |
| our ability to achieve expected cost savings from our efforts to improve operational efficiency; | |
| the impact outstanding indebtedness may have on the way we operate our business; | |
| 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 maintain existing relationships with travel agencies and tour operators and to enter into new relationships; | |
| our ability to develop and deliver products and services that are valuable to travel agencies and travel suppliers; | |
| the impact on supplier capacity and inventory resulting from consolidation of the airline industry; | |
| 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; | |
| risks associated with doing business in multiple countries and in multiple currencies; | |
| maintenance and protection of our information technology and intellectual property; and | |
| financing plans and access to adequate capital on favorable terms. |
We caution you that the foregoing list of important factors may
not contain all of the factors that are important to you. In
addition, in light of these risks and uncertainties, the matters
referred to in the forward-looking statements contained in this
report may not in fact occur.
Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be
accurate indications of the times at, or by which, such
performance or results will be achieved. Forward-looking
information is based on information available at the time
and/or
managements good faith belief with respect to future
events and is subject to risks and uncertainties that could
cause actual performance or results to differ materially from
those expressed in the statements. The factors listed in the
sections captioned Risk Factors in our Annual Report
on
Form 10-K
for the year ended December 31, 2009 filed with the
Securities and Exchange Commission (the SEC) on
March 17, 2010, as amended by Amendment No. 1 to the
Form 10-K
filed with the SEC on April 16, 2010, as well as any other
cautionary language in this Quarterly Report on
Form 10-Q,
provide examples of risks, uncertainties and events that may
cause actual results to differ materially from the expectations
described in the forward-looking statements. You should be aware
that the occurrence of the events described in these risk
factors and elsewhere in this report could have an adverse
effect on our business, results of operations, financial
position and cash flows.
Forward-looking statements speak only as of the date the
statements are made. We assume no obligation to update
forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting
forward-looking information except to the extent required by
applicable securities laws. If we do update one or more
forward-looking statements, no inference should be drawn that we
will make additional updates with respect thereto or with
respect to other forward-looking statements.
2
Table of Contents
PART IFINANCIAL
INFORMATION
Item 1. | Financial Statements (unaudited) |
Three Months |
Three Months |
|||||||
Ended |
Ended |
|||||||
March 31, |
March 31, |
|||||||
(in $ millions) | 2010 | 2009 | ||||||
Net revenue
|
581 | 553 | ||||||
Costs and expenses
|
||||||||
Cost of revenue
|
311 | 278 | ||||||
Selling, general and administrative
|
151 | 150 | ||||||
Restructuring charges
|
1 | 6 | ||||||
Depreciation and amortization
|
58 | 62 | ||||||
Total costs and expenses
|
521 | 496 | ||||||
Operating income
|
60 | 57 | ||||||
Interest expense, net
|
(66 | ) | (66 | ) | ||||
Loss from operations before income taxes and equity in losses
of investment in Orbitz Worldwide
|
(6 | ) | (9 | ) | ||||
Provision for income taxes
|
(12 | ) | | |||||
Equity in losses of investment in Orbitz Worldwide
|
(3 | ) | (161 | ) | ||||
Net loss
|
(21 | ) | (170 | ) | ||||
Less: Net income attributable to non-controlling interest in
subsidiaries
|
| (1 | ) | |||||
Net loss attributable to the Company
|
(21 | ) | (171 | ) | ||||
See Notes to Consolidated Condensed Financial Statements
3
Table of Contents
March 31, |
December 31, |
|||||||
(in $ millions) | 2010 | 2009 | ||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
107 | 217 | ||||||
Accounts receivable (net of allowances for doubtful accounts of
$43 and $59)
|
407 | 346 | ||||||
Deferred income taxes
|
22 | 22 | ||||||
Other current assets
|
143 | 156 | ||||||
Total current assets
|
679 | 741 | ||||||
Property and equipment, net
|
552 | 452 | ||||||
Goodwill
|
1,272 | 1,285 | ||||||
Trademarks and tradenames
|
413 | 419 | ||||||
Other intangible assets, net
|
1,134 | 1,183 | ||||||
Investment in Orbitz Worldwide
|
111 | 60 | ||||||
Non-current deferred income tax
|
2 | 2 | ||||||
Other non-current assets
|
205 | 204 | ||||||
Total assets
|
4,368 | 4,346 | ||||||
Liabilities and equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
138 | 139 | ||||||
Accrued expenses and other current liabilities
|
814 | 765 | ||||||
Current portion of long-term debt
|
21 | 23 | ||||||
Total current liabilities
|
973 | 927 | ||||||
Long-term debt
|
3,682 | 3,640 | ||||||
Deferred income taxes
|
129 | 143 | ||||||
Other non-current liabilities
|
226 | 228 | ||||||
Total liabilities
|
5,010 | 4,938 | ||||||
Commitments and contingencies (note 11)
|
||||||||
Shareholders equity:
|
||||||||
Common shares $1.00 par value; 12,000 shares
authorized; 12,000 shares issued and outstanding
|
| | ||||||
Additional paid in capital
|
1,006 | 1,006 | ||||||
Accumulated deficit
|
(1,664 | ) | (1,643 | ) | ||||
Accumulated other comprehensive income
|
1 | 30 | ||||||
Total shareholders equity
|
(657 | ) | (607 | ) | ||||
Equity attributable to non-controlling interest in subsidiaries
|
15 | 15 | ||||||
Total equity
|
(642 | ) | (592 | ) | ||||
Total liabilities and equity
|
4,368 | 4,346 | ||||||
See Notes to Consolidated Condensed Financial Statements
4
Table of Contents
Three Months |
Three Months |
|||||||
Ended |
Ended |
|||||||
March 31, |
March 31, |
|||||||
(in $ millions) | 2010 | 2009 | ||||||
Operating activities
|
||||||||
Net loss
|
(21 | ) | (170 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation and amortization
|
58 | 62 | ||||||
Provision for bad debts
|
| 5 | ||||||
Amortization of debt finance costs
|
4 | 4 | ||||||
Loss (gain) on interest rate derivative instruments
|
2 | (5 | ) | |||||
Loss (gain) on foreign exchange derivative instruments
|
1 | (3 | ) | |||||
Equity in losses of investment in Orbitz Worldwide
|
3 | 161 | ||||||
FASA liability
|
(5 | ) | (8 | ) | ||||
Deferred income taxes
|
(2 | ) | (2 | ) | ||||
Changes in assets and liabilities, net of effects from
acquisitions and disposals
|
||||||||
Accounts receivable
|
(72 | ) | (21 | ) | ||||
Other current assets
|
1 | 6 | ||||||
Accounts payable, accrued expenses and other current liabilities
|
4 | (32 | ) | |||||
Other
|
| (6 | ) | |||||
Net cash used in operating activities
|
(27 | ) | (9 | ) | ||||
Investing activities
|
||||||||
Property and equipment additions
|
(114 | ) | (11 | ) | ||||
Business acquired
|
(5 | ) | | |||||
Investment in Orbitz Worldwide
|
(50 | ) | | |||||
Other
|
5 | | ||||||
Net cash used in investing activities
|
(164 | ) | (11 | ) | ||||
Financing activities
|
||||||||
Principal repayments
|
(8 | ) | (5 | ) | ||||
Proceeds from new borrowings
|
100 | | ||||||
Payments on settlement of derivative contracts
|
(7 | ) | | |||||
Net share settlement for equity-based compensation
|
| (7 | ) | |||||
Distribution to a parent company
|
| (42 | ) | |||||
Net cash provided by (used in) financing activities
|
85 | (54 | ) | |||||
Effect of changes in exchange rates on cash and cash equivalents
|
(4 | ) | (3 | ) | ||||
Net decrease in cash and cash equivalents
|
(110 | ) | (77 | ) | ||||
Cash and cash equivalents at beginning of period
|
217 | 345 | ||||||
Cash and cash equivalents at end of period
|
107 | 268 | ||||||
Supplementary disclosures
|
||||||||
Interest payments
|
90 | 90 | ||||||
Income tax payments, net
|
12 | 13 |
See Notes to Consolidated Condensed Financial Statements
5
Table of Contents
Accumulated |
Non- |
|||||||||||||||||||||||
Additional |
Other |
Controlling |
||||||||||||||||||||||
Common |
Paid in |
Accumulated |
Comprehensive |
Interest in |
Total |
|||||||||||||||||||
(in $ millions) | Stock | Capital | Deficit | Income (Loss) | Subsidiaries | Equity | ||||||||||||||||||
Balance as of January 1, 2010
|
| 1,006 | (1,643 | ) | 30 | 15 | (592 | ) | ||||||||||||||||
Comprehensive (loss) income
|
||||||||||||||||||||||||
Net loss
|
| | (21 | ) | | | (21 | ) | ||||||||||||||||
Currency translation adjustment, net of tax of $0
|
| | | (25 | ) | | (25 | ) | ||||||||||||||||
Unrealized loss on cash flow hedges, net of tax of $0
|
| | | (8 | ) | | (8 | ) | ||||||||||||||||
Unrealized gain on equity investment and other, net of tax of $0
|
| | | 4 | | 4 | ||||||||||||||||||
Total comprehensive loss
|
(50 | ) | ||||||||||||||||||||||
Balance as of March 31, 2010
|
| 1,006 | (1,664 | ) | 1 | 15 | (642 | ) | ||||||||||||||||
See Notes to Consolidated Condensed Financial Statements
6
Table of Contents
TRAVELPORT
LIMITED
(unaudited)
1. | Basis of Presentation |
Travelport Limited (the Company or
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. It operates 20 leading brands, including Galileo and
Worldspan global distribution systems (GDS) and
Gullivers Travel Associates (GTA), a wholesaler of
travel content. The Company has approximately
5,400 employees and operates in 160 countries. Travelport
is a closely held company owned by affiliates of The Blackstone
Group (Blackstone) of New York, Technology Crossover
Ventures (TCV) of Palo Alto, California, One Equity
Partners (OEP) of New York and Travelport management.
These financial statements and other financial information
included in this Quarterly Report on
Form 10-Q
are unaudited. They have been prepared in accordance with
accounting principles generally accepted in the United States of
America (US GAAP) and the rules and regulations of
the US Securities and Exchange Commission (SEC) for
interim reporting. Certain disclosures normally included in
financial statements prepared in accordance with US GAAP have
been condensed or omitted pursuant to such rules and regulations.
The December 31, 2009 balance sheet was derived from
audited financial statements but does not include all
disclosures required by US GAAP. However, the Company believes
that the disclosures are adequate to make the information
presented not misleading.
The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that
affect the amounts reported and related disclosures. Estimates,
by their nature, are based on judgments and available
information. Accordingly, actual results could differ from those
estimates. In managements opinion, the Companys
consolidated condensed financial statements contain all normal
recurring adjustments necessary for a fair presentation of these
interim results. The results of operations reported for interim
periods are not necessarily indicative of the results of
operations for the entire year or any subsequent interim period.
These financial statements should be read in conjunction with
the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009 filed with the SEC on
March 17, 2010, as amended by Amendment No. 1 to the
Form 10-K
filed with the SEC on April 16, 2010.
2. | Recently Issued Accounting Pronouncements |
Improving
Disclosures about Fair Value Measurements
In January 2010, the Financial Accounting Standards Board
(FASB) issued guidance related to new disclosures
about fair value measurements and clarification on certain
existing disclosure requirements. This guidance requires new
disclosures on significant transfers in and out of Level 1
and Level 2 categories of fair value measurements. This
guidance also clarifies existing requirements on (i) the
level of disaggregation in determining the appropriate classes
of assets and liabilities for fair value measurement
disclosures, and (ii) disclosures about inputs and
valuation techniques. The Company has adopted the provisions of
this guidance, except for the new disclosures around the
activity in Level 3 categories of fair value measurements
which will be adopted on January 1, 2011, as required.
There was no material impact on the consolidated condensed
financial statements resulting from the adoption of this
guidance.
Accounting
and Reporting for Decreases in Ownership of a
Subsidiary
In January 2010, the FASB issued guidance related to accounting
and reporting for decreases in ownership of a subsidiary. This
guidance clarifies the scope of the requirements surrounding the
decrease in ownership of a subsidiary and expands the disclosure
requirements for deconsolidation of a subsidiary or
de-recognition of a group of assets. The Company has adopted the
provisions of this guidance. There was no material impact on the
consolidated condensed financial statements resulting from the
adoption of this guidance.
7
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
2. | Recently Issued Accounting Pronouncements (Continued) |
Amendment
to Revenue Recognition involving Multiple Deliverable
Arrangements
In October 2009, the FASB issued amended revenue recognition
guidance for arrangements with multiple deliverables. The new
guidance eliminates the residual method of revenue recognition
and allows the use of managements best estimate of selling
price for individual elements of an arrangement when vendor
specific objective evidence of fair value, vendor objective
evidence of fair value or third-party evidence is unavailable.
This guidance is effective for all new or materially modified
arrangements entered into on or after June 15, 2010 with
earlier application permitted as of the beginning of a fiscal
year. Full retrospective application of the new guidance is
optional. The Company is assessing the impact of this new
guidance but does not expect a material impact on the
consolidated condensed financial statements.
Amendment
to Software Revenue Recognition
In October 2009, the FASB issued guidance which amends the scope
of existing software revenue recognition accounting. Tangible
products containing software components and non-software
components that function together to deliver the products
essential functionality would be scoped out of the accounting
guidance on software and accounted for based on other
appropriate revenue recognition guidance. This guidance is
effective for all new or materially modified arrangements
entered into on or after June 15, 2010 with earlier
application permitted as of the beginning of a fiscal year. Full
retrospective application of the new guidance is optional. This
guidance must be adopted in the same period that the Company
adopts the amended accounting for arrangements with multiple
deliverables described in the preceding paragraph. The Company
is assessing the impact of this new guidance but does not expect
a material impact on the consolidated condensed financial
statements.
3. | Other Current Assets |
Other current assets consisted of:
March 31, |
December 31, |
|||||||
(in $ millions) | 2010 | 2009 | ||||||
Upfront inducement payments and supplier deposits
|
72 | 70 | ||||||
Sales and use tax receivables
|
43 | 48 | ||||||
Prepaid expenses
|
22 | 20 | ||||||
Deferred costs
|
| 10 | ||||||
Other
|
6 | 8 | ||||||
143 | 156 | |||||||
Deferred costs as of December 31, 2009 relate to costs
incurred directly in relation to a proposed offering of
securities. These costs were expensed in the first quarter of
2010 due to events occurring in the first quarter of 2010 which
resulted in a postponement of the Companys proposed
offering of securities.
8
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
4. | Property and Equipment, Net |
Property and equipment consisted of:
As of |
As of |
|||||||||||||||||||||||
March 31, 2010 | December 31, 2009 | |||||||||||||||||||||||
Accumulated |
Accumulated |
|||||||||||||||||||||||
(in $ millions) | Cost | depreciation | Net | Cost | depreciation | Net | ||||||||||||||||||
Land
|
4 | | 4 | 4 | | 4 | ||||||||||||||||||
Capitalized software
|
569 | (202 | ) | 367 | 455 | (182 | ) | 273 | ||||||||||||||||
Furniture, fixtures and equipment
|
238 | (133 | ) | 105 | 230 | (129 | ) | 101 | ||||||||||||||||
Building and leasehold improvements
|
47 | (20 | ) | 27 | 48 | (20 | ) | 28 | ||||||||||||||||
Construction in progress
|
49 | | 49 | 46 | | 46 | ||||||||||||||||||
907 | (355 | ) | 552 | 783 | (331 | ) | 452 | |||||||||||||||||
Additions in the three months ended March 31, 2010 include
the acquisition of a transaction processing facility software
license from International Business Machines Corporation
(IBM).
The Company recorded depreciation expense of $28 million
during each of the three months ended March 31, 2010 and
2009.
5. | Intangible Assets |
The changes in the carrying amount of goodwill and intangible
assets for the Company between January 1, 2010 and
March 31, 2010 are as follows:
January 1, |
Foreign |
March 31, |
||||||||||||||
(in $ millions) | 2010 | Additions | Exchange | 2010 | ||||||||||||
Non-Amortizable
Assets:
|
||||||||||||||||
Goodwill
|
||||||||||||||||
GDS
|
979 | | | 979 | ||||||||||||
GTA
|
306 | 5 | (18 | ) | 293 | |||||||||||
1,285 | 5 | (18 | ) | 1,272 | ||||||||||||
Trademarks and tradenames
|
419 | | (6 | ) | 413 | |||||||||||
Amortizable Intangible Assets
|
||||||||||||||||
Customer relationships
|
1,564 | | (26 | ) | 1,538 | |||||||||||
Vendor relationships and other
|
51 | | (2 | ) | 49 | |||||||||||
1,615 | | (28 | ) | 1,587 | ||||||||||||
Accumulated amortization
|
(432 | ) | (30 | ) | 9 | (453 | ) | |||||||||
Other intangible assets, net
|
1,183 | (30 | ) | (19 | ) | 1,134 | ||||||||||
In the three months ended March 31, 2010, the Company made
a small acquisition in the GTA business, resulting in goodwill
of $5 million.
As of March 31, 2010, the GDS and GTA segments had a gross
carrying value of other intangible assets of $1,439 million
and $561 million, respectively.
As of December 31, 2009, the GDS and GTA segments had a
gross carrying value of other intangible assets of
$1,439 million and $595 million, respectively.
9
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
5. | Intangible Assets (Continued) |
Amortization expense relating to all intangible assets was as
follows:
Three Months |
Three Months |
|||||||
Ended |
Ended |
|||||||
March 31, |
March 31, |
|||||||
(in $ millions) | 2010 | 2009 | ||||||
Customer relationships
|
29 | 33 | ||||||
Vendor relationships and other
|
1 | 1 | ||||||
Total*
|
30 | 34 | ||||||
* | Included as a component of depreciation and amortization on the consolidated condensed statements of operations. |
The Company expects amortization expense relating to intangible
assets to be approximately $92 million for the remainder of
2010 and $117 million, $112 million,
$110 million, $107 million and $99 million for
each of the five succeeding fiscal years, respectively.
The assessment of the fair value of goodwill and other
intangible assets requires the utilization of various
assumptions, including projections of future cash flows and
discount rates. A change in these underlying assumptions could
cause a change in the results of the tests and as such, could
cause the fair value to be less than the respective carrying
amount. Although the Company believes such assets are
recoverable as of March 31, 2010, the Company cannot assure
that these assets will not be impaired in future periods.
6. | Orbitz Worldwide |
The Company accounts for its investment of approximately 48% in
Orbitz Worldwide, Inc. (Orbitz Worldwide) under the
equity method of accounting. As of March 31, 2010 and
December 31, 2009, the Companys investment in Orbitz
Worldwide was $111 million and $60 million,
respectively. The fair market value of the Companys
investment in Orbitz Worldwide as of March 31, 2010 was
approximately $347 million.
On January 26, 2010, the Company purchased approximately
$50 million of newly-issued common shares of Orbitz
Worldwide. After this investment, and a simultaneous agreement
between Orbitz Worldwide and PAR Investment Partners to exchange
approximately $49.68 million of Orbitz Worldwide debt for
Orbitz Worldwide common shares, the Company continues to own
approximately 48% of Orbitz Worldwides outstanding shares.
10
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
6. | Orbitz Worldwide (Continued) |
Presented below are the summary results of operations for Orbitz
Worldwide for the three months ended March 31, 2010 and
2009.
Three Months |
Three Months |
|||||||
Ended |
Ended |
|||||||
March 31, |
March 31, |
|||||||
(in $ millions) | 2010 | 2009 | ||||||
Statement of Operations
|
||||||||
Net revenue
|
187 | 188 | ||||||
Operating expenses
|
179 | 179 | ||||||
Impairment of assets
|
2 | 332 | ||||||
Operating income (loss)
|
6 | (323 | ) | |||||
Interest expense, net
|
(11 | ) | (15 | ) | ||||
Loss before income taxes
|
(5 | ) | (338 | ) | ||||
Income tax benefit
|
| 2 | ||||||
Net loss
|
(5 | ) | (336 | ) | ||||
The Company has recorded losses of $3 million and
$161 million related to its investment in Orbitz Worldwide
for the three months ended March 31, 2010 and 2009,
respectively, within the equity in losses of investment in
Orbitz Worldwide on the Companys consolidated condensed
statements of operations.
The loss in the three months ended March 31, 2009 includes
the Companys share of a non-cash impairment charge
recorded by Orbitz Worldwide of $332 million, of which
$250 million related to goodwill and $82 million
related to trademarks and tradenames. During that period, Orbitz
Worldwide experienced a significant decline in its stock price
and a decline in its operating results due to continued weakness
in economic and industry conditions. These factors, coupled with
an increase in competitive pressures, resulted in the
recognition of an impairment charge.
Net revenue disclosed above includes approximately
$11 million and $25 million of net revenue earned by
Orbitz Worldwide through transactions with the Company during
the three months ended March 31, 2010 and 2009,
respectively.
As of March 31, 2010 and December 31, 2009, the
Company had balances payable to Orbitz Worldwide of
approximately $13 million and $3 million,
respectively, which are included on the Companys
consolidated condensed balance sheets within accrued expenses
and other current liabilities.
11
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
7. | Long-Term Debt |
Long-term debt consisted of:
March 31, |
December 31, |
|||||||||
(in $ millions) | Maturity | 2010 | 2009 | |||||||
Senior Secured Credit Facility
|
||||||||||
Term loan facility
|
||||||||||
Dollar denominated
|
August 2013 | 1,844 | 1,846 | |||||||
Euro denominated
|
August 2013 | 473 | 501 | |||||||
Senior notes
|
||||||||||
Dollar denominated floating rate notes
|
September 2014 | 143 | 143 | |||||||
Euro denominated floating rate notes
|
September 2014 | 219 | 232 | |||||||
97/8%
Dollar denominated notes
|
September 2014 | 443 | 443 | |||||||
Senior subordinated notes
|
||||||||||
117/8%
Dollar denominated notes
|
September 2016 | 247 | 247 | |||||||
107/8%
Euro denominated notes
|
September 2016 | 189 | 201 | |||||||
Revolver borrowings
|
August 2012 | 100 | | |||||||
Capital leases and other
|
45 | 50 | ||||||||
Total debt
|
3,703 | 3,663 | ||||||||
Less: current portion
|
21 | 23 | ||||||||
Long-term debt
|
3,682 | 3,640 | ||||||||
During the three months ended March 31, 2010, the Company
repaid approximately $3 million of its Dollar denominated
debt under its senior secured credit facility as required under
the senior secured credit agreement and approximately
$5 million under its capital lease obligations.
The principal amount of Euro denominated long-term debt
decreased by approximately $52 million as a result of
foreign exchange fluctuations during the three months ended
March 31, 2010. This foreign exchange gain was largely
offset by losses on foreign exchange hedge instruments
contracted by the Company and the Companys net investment
hedging strategies.
As of March 31, 2010, there were $100 million of
borrowings and $30 million of letter of credit commitments
outstanding under the Companys revolving credit facility,
with a remaining capacity of $140 million. The revolver
borrowings have an interest rate of 2.75% above USLIBOR.
In addition, the Company has a synthetic letter of credit
facility of $150 million. As of March 31, 2010, the
Company had approximately $144 million of commitments
outstanding under the Companys synthetic letter of credit
facility, including commitments of approximately
$69 million in letters of credit issued by the Company on
behalf of Orbitz Worldwide pursuant to the Companys
Separation Agreement with Orbitz Worldwide. As of March 31,
2010, this facility had remaining capacity of $6 million.
8. | Financial Instruments |
The Company uses derivative instruments as part of its overall
strategy to manage its exposure to market risks primarily
associated with fluctuations in foreign currency and interest
rates. The Company does not use derivatives for trading or
speculative purposes.
12
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
8. | Financial Instruments (Continued) |
As of March 31, 2010, the Company had a net liability
position of $91 million related to derivative instruments
associated with its Euro denominated and floating rate debt, its
foreign currency denominated receivables and payables, and
forecasted earnings of its foreign subsidiaries.
Interest
Rate Risk
A portion of the debt used to finance much of the Companys
operations is exposed to interest rate fluctuations. The Company
uses various hedging strategies and derivative financial
instruments to create an appropriate mix of fixed and floating
rate debt. The primary interest rate exposure as of
March 31, 2010 and December 31, 2009 was to interest
rate fluctuations in the United States and Europe, specifically
USLIBOR and EURIBOR interest rates. The Company currently uses
interest rate swaps, cross-currency swaps and foreign currency
forward contracts as the derivative instruments in these hedging
strategies. Several derivatives used to manage the risk
associated with floating rate debt were designated as cash flow
hedges. Deferred amounts to be recognized in earnings will
change with market conditions and will be substantially offset
by changes in the value of the related hedge transactions. The
Company records the effective portion of designated cash flow
hedges in accumulated other comprehensive income (loss) on the
Companys consolidated condensed balance sheet. As of
March 31, 2010, the Companys interest rate hedges
cover transactions for periods that do not exceed three years.
Foreign
Currency Risk
The Company uses foreign currency forward contracts in order to
manage its exposure to changes in foreign currency exchange
rates associated with its Euro denominated debt. During the
three months ended March 31, 2010, the Company replaced its
existing net investment hedging strategy with additional foreign
currency forward contracts to manage its exposure to changes in
foreign currency exchange risk associated with its Euro
denominated debt. The Company did not designate these forward
contracts as cash flow hedges; however, the fluctuations in the
value of these forward contracts recorded within the
Companys consolidated condensed statements of operations
largely offset the impact of the changes in the value of the
Euro denominated debt they are intended to economically hedge.
The fair value of the forward contracts and the impact of the
changes in the fair value of these forward contracts are
presented in the tables below.
The Company uses foreign currency forward contracts to manage
its exposure to changes in foreign currency exchange rates
associated with its foreign currency denominated receivables and
payables and forecasted earnings of its foreign subsidiaries.
The Company primarily enters into foreign currency forward
contracts to manage its foreign currency exposure to the British
pound, Euro and Japanese yen. Some of these forward contracts
are not designated as hedges for accounting purposes. The
fluctuations in the value of these forward contracts do,
however, largely offset the impact of changes in the value of
the underlying risk that they are intended to economically
hedge. Losses on these forward contracts amounted to
$4 million and $6 million for the three months ended
March 31, 2010 and 2009, respectively. These amounts are
recorded as a component of selling, general, and administrative
expenses on the Companys consolidated condensed statements
of operations.
Fair
Value Disclosures for Derivative Instruments
The Companys financial assets and liabilities recorded at
fair value consist primarily of derivative instruments. These
amounts have been categorized based upon a fair value hierarchy
and are categorized as Level 2 Significant
Other Observable Inputs.
13
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
8. | Financial Instruments (Continued) |
The fair value of derivative instruments is determined using
pricing models that use inputs from actively quoted markets for
similar instruments, adjusted for the Companys own credit
risk and counterparty credit risk. This adjustment is calculated
based on default probability of the banking counterparty or the
Company, as applicable and is obtained from active credit
default swap markets.
Changes in fair value of derivatives not designated as hedging
instruments and the ineffective portion of derivatives
designated as hedging instruments are currently recognized in
earnings in the Companys consolidated condensed statements
of operations.
Presented below is a summary of the fair value of the
Companys derivative contracts recorded on the consolidated
condensed balance sheets at fair value.
Asset | Liability | |||||||||||
Fair Value Asset |
Fair Value Asset |
|||||||||||
(Liability) | (Liability) | |||||||||||
Balance Sheet |
March 31, |
December 31, |
Balance Sheet |
March 31, |
December 31, |
|||||||
(in $ millions) | Location | 2010 | 2009 | Location | 2010 | 2009 | ||||||
Derivatives designated as hedging instruments
|
||||||||||||
Interest rate swaps
|
Other non-current assets | (2) | (5) | Accrued expenses and other current liabilities | (9) | (8) | ||||||
Other non-current liabilities | (3) | (3) | ||||||||||
Foreign exchange impact of cross currency swaps
|
Other non-current assets | 11 | 23 | Other non-current liabilities | | | ||||||
Foreign exchange forward contracts
|
Accrued expenses and other current liabilities | (7) | (4) | |||||||||
Total | 9 | 18 | Total | (19) | (15) | |||||||
Derivatives not designated as hedging instruments
|
||||||||||||
Interest rate swaps
|
Accrued expenses and other current liabilities | (26) | (25) | |||||||||
Other non-current liabilities | (12) | (10) | ||||||||||
Foreign exchange forward contracts
|
Other current assets | | 1 | Accrued expenses and other current liabilities | (43) | (6) | ||||||
| 1 | (81) | (41) | |||||||||
Total fair value of derivative assets (liabilities)
|
9 | 19 | (100) | (56) | ||||||||
As of March 31, 2010, the Company had an aggregate
outstanding notional $1,250 million of interest rate swaps,
$180 million of cross currency swaps and $939 million
of foreign exchange forward contracts.
14
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
8. | Financial Instruments (Continued) |
The table below presents the impact that changes in fair values
of derivatives designated as hedges had on accumulated other
comprehensive income (loss) and income (loss) during the period
and the impact derivatives not designated as hedges had on
income (loss) during that period.
Amount of Gain (Loss) |
Amount of Gain (Loss) |
|||||||||||||||||
Recognized in Other |
Recorded |
|||||||||||||||||
Comprehensive Income (Loss) | into Income (Loss) | |||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||||
March 31, |
Location of Gain (Loss) |
March 31, | ||||||||||||||||
(in $ millions) | 2010 | 2009 | Recorded into Income | 2010 | 2009 | |||||||||||||
Derivatives designated as hedging instruments
|
||||||||||||||||||
Interest rate swaps
|
(2 | ) | (1 | ) | Interest expense, net | (2 | ) | (6 | ) | |||||||||
Foreign exchange impact of cross currency swaps
|
(11 | ) | (49 | ) | Selling, general and administrative | (11 | ) | (49 | ) | |||||||||
Foreign exchange forward contracts
|
(8 | ) | | Selling, general and administrative | | | ||||||||||||
Derivatives not designated as hedging instruments
|
||||||||||||||||||
Interest rate swaps
|
Interest expense, net | (10 | ) | (1 | ) | |||||||||||||
Foreign exchange forward contracts
|
Selling, general and administrative | (47 | ) | (6 | ) | |||||||||||||
(70 | ) | (62 | ) | |||||||||||||||
The total amount of gain (loss) reclassified into interest
expense from accumulated other comprehensive income (loss) for
the interest rate swaps designated as hedges includes amounts
for ineffectiveness of less than $1 million and
$2 million for the three months ended March 31, 2010
and 2009, respectively.
The total amount of gain (loss) expected to be reclassified from
accumulated other comprehensive income (loss) to the
Companys consolidated condensed statements of operations
within the next 12 months is expected to be
$(21) million.
Fair
Value Disclosures for All Financial Instruments
The carrying amounts of cash and cash equivalents, accounts
receivable, other current assets, accounts payable and accrued
expenses and other current liabilities approximate to their fair
value due to the short-term maturities of these assets and
liabilities.
The fair values of the Companys other financial
instruments are as follows:
March 31, 2010 | December 31, 2009 | |||||||||||||||
Carrying |
Carrying |
|||||||||||||||
(in $ millions) | Amount | Fair Value | Amount | Fair Value | ||||||||||||
Asset/(liability)
|
||||||||||||||||
Investment in Orbitz Worldwide
|
111 | 347 | 60 | 292 | ||||||||||||
Derivative assets (see above)
|
9 | 9 | 19 | 19 | ||||||||||||
Derivative liabilities (see above)
|
(100 | ) | (100 | ) | (56 | ) | (56 | ) | ||||||||
Total debt
|
(3,703 | ) | (3,690 | ) | (3,663 | ) | (3,526 | ) |
15
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
8. | Financial Instruments (Continued) |
The fair values of the senior notes and senior subordinated
notes have been calculated based on quoted prices in active
markets for identical debt instruments. The fair value of the
amounts outstanding under the senior secured credit facility is
based on market observable inputs.
9. | Equity-Based Compensation |
As detailed in the Companys Annual Report on
Form 10-K
filed with the SEC on March 17, 2010, as amended by
Amendment No. 1 to the
Form 10-K
filed with the SEC on April 16, 2010, the Company has an
equity-based, long-term incentive program for the purpose of
retaining certain key employees. Under several plans within this
program, key employees have been granted restricted equity units
and profit interests in the partnership that owns 100% of the
Company.
In May 2009, the board of directors of the partnership
authorized the grant of 33.3 million restricted equity
units under the 2009 Travelport Long-Term Incentive Plan. Of
these, 8.2 million restricted equity units were recognized
for accounting purposes as being granted in May 2009,
8.4 million restricted equity units were recognized for
accounting purposes as being granted in March 2010, and the
remainder will be recognized as granted for accounting purposes
over the subsequent period up to December 31, 2012. The
level of award vesting each year is dependent upon continued
service and performance measures of the business as established
by the board of directors of the partnership towards the start
of each year. The fair value of the restricted equity units,
recognized as grants for accounting purposes, is based on a
valuation of the total equity of the partnership that owns 100%
of the Company at the time of each grant.
The activity of all the Companys equity award programs is
presented below:
Restricted Equity Units | ||||||||
Class A-2 | ||||||||
Weighted |
||||||||
Number |
Average |
|||||||
of Shares |
Grant Date |
|||||||
(in millions) | Fair Value | |||||||
Balance, January 1, 2010
|
90.0 | $ | 2.32 | |||||
Granted at fair market value
|
8.4 | $ | 1.13 | |||||
Balance, March 31, 2010
|
98.4 | $ | 2.22 | |||||
For the three months ended March 31, 2010 and 2009, the
Company recorded less than $1 million and less than
$1 million of non-cash equity compensation expense,
respectively.
16
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
10. | Comprehensive Income (Loss) |
Other comprehensive income (loss) amounts are recorded directly
as an adjustment to shareholders equity, net of tax, and
were as follows:
Three Months |
||||||||
Ended |
||||||||
March 31, | ||||||||
(in $ millions) | 2010 | 2009 | ||||||
Net loss
|
(21 | ) | (170 | ) | ||||
Other comprehensive income (loss)
|
||||||||
Currency translation adjustment, net of tax of $0
|
(25 | ) | (66 | ) | ||||
Unrealized (loss) gain on cash flow hedges, net of tax of $0
|
(8 | ) | 7 | |||||
Unrecognized actuarial gain on defined benefit plans, net of tax
of $0
|
| 3 | ||||||
Unrealized gain on equity investment and other, net of tax of $0
|
4 | 1 | ||||||
Comprehensive loss
|
(50 | ) | (225 | ) | ||||
11. | Commitments and Contingencies |
Purchase
Commitments
In the ordinary course of business, the Company makes various
commitments to purchase goods and services from specific
suppliers, including those related to capital expenditures. As
of March 31, 2010, the Company had approximately
$220 million of outstanding purchase commitments, primarily
relating to service contracts for information technology (of
which $66 million relates to the twelve months ended
March 31, 2011). These purchase obligations extend through
2015.
Company
Litigation
The Company is involved in various claims, legal proceedings and
governmental inquiries related to contract disputes, business
practices, intellectual property and other commercial,
employment and tax matters. The Company believes it has
adequately accrued for such matters as appropriate or, for
matters not requiring accrual, believes they will not have a
material adverse effect on its results of operations, financial
position or cash flows based on information currently available.
However, litigation is inherently unpredictable and although the
Company believes its accruals are adequate
and/or that
it has valid defenses in these matters, unfavorable resolutions
could occur, which could have a material adverse effect on the
Companys results of operations or cash flows in a
particular reporting period.
In connection with the Companys existing national
distribution company (NDC) arrangements in the
Middle East, the Company is involved in a dispute with one of
its existing NDC partners regarding the payment of certain fees.
The Company intends to defend vigorously any claims brought
against the Company and to pursue vigorously appropriate
cross-claim. While no assurance can be provided, the Company
does not believe the outcome of this dispute will have a
material adverse effect on the Companys consolidated
condensed results of operations or its liquidity condition.
Standard
Guarantees/Indemnifications
In the ordinary course of business, the Company enters into
numerous agreements that contain standard guarantees and
indemnities whereby the Company indemnifies another party for
breaches of representations
17
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
11. | Commitments and Contingencies (Continued) |
and warranties. In addition, many of these parties are also
indemnified against any third-party claim resulting from the
transaction that is contemplated in the underlying agreement.
Such guarantees or indemnifications are granted under various
agreements, including those governing (i) purchases, sales
or outsourcing of assets or businesses, (ii) leases of real
estate, (iii) licensing of trademarks, (iv) use of
derivatives and (v) issuances of debt securities. The
guarantees or indemnifications issued are for the benefit of the
(i) buyers in sale agreements and sellers in purchase
agreements, (ii) landlords in lease contracts,
(iii) licensees of trademarks, (iv) financial
institutions in derivative contracts and (v) underwriters
in debt security issuances. While some of these guarantees
extend only for the duration of the underlying agreement, many
survive the expiration of the term of the agreement or extend
into perpetuity (unless subject to a legal statute of
limitations). There are no specific limitations on the maximum
potential amount of future payments that the Company could be
required to make under these guarantees, nor is the Company able
to develop an estimate of the maximum potential amount of future
payments to be made under these guarantees, as the triggering
events are not subject to predictability and there is little or
no history of claims against the Company under such
arrangements. With respect to certain of the aforementioned
guarantees, such as indemnifications of landlords against
third-party claims for the use of real estate property leased by
the Company, the Company maintains insurance coverage that
mitigates any potential payments to be made.
12. | Segment Information |
The US GAAP measures with which management and the Chief
Operating Decision Maker (the CODM) evaluate the
performance of the Company are net revenue and Segment EBITDA,
which is defined as operating income (loss) before depreciation
and amortization, each of which is presented on the
Companys consolidated condensed statements of operations.
Although not presented herein, the Company also evaluates its
performance based on Segment Adjusted EBITDA, which is 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 and development of a global on-line travel
platform, non-cash equity-based compensation, and other
adjustments made to exclude expenses management and the CODM
view as outside the normal course of operations.
The reportable segments presented below represent the
Companys operating segments for which separate financial
information is available and which is utilized on a regular
basis by its management and CODM to assess financial performance
and to allocate resources. Certain expenses which are managed
outside of the segments are excluded from the results of the
segments and are included within Corporate and unallocated, as
reconciling items.
The Companys presentation of Segment EBITDA may not be
comparable to similarly titled measures used by other companies.
18
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
12. | Segment Information (Continued) |
Three Months |
Three Months |
|||||||
Ended |
Ended |
|||||||
March 31, |
March 31, |
|||||||
(in $ millions) | 2010 | 2009 | ||||||
GDS
|
||||||||
Net revenue
|
536 | 511 | ||||||
Segment EBITDA
|
151 | 152 | ||||||
GTA
|
||||||||
Net revenue
|
45 | 42 | ||||||
Segment EBITDA
|
(2 | ) | (11 | ) | ||||
Combined Totals
|
||||||||
Net revenue
|
581 | 553 | ||||||
Segment EBITDA
|
149 | 141 | ||||||
Reconciling items:
|
||||||||
Corporate and
unallocated(a)
|
(31 | ) | (22 | ) | ||||
Interest expense, net
|
(66 | ) | (66 | ) | ||||
Depreciation and amortization
|
(58 | ) | (62 | ) | ||||
Loss from operations before income taxes and equity in losses
of investment in Orbitz Worldwide
|
(6 | ) | (9 | ) | ||||
(a) | Corporate and unallocated includes corporate general and administrative costs not allocated to the segments, such as treasury, legal and human resources and other costs that are managed at the corporate level, including company-wide equity compensation plans and the impact of foreign exchange derivative contracts. |
Provided below is a reconciliation of segment assets to total
assets:
March 31, |
December 31, |
|||||||
(in $ millions) | 2010 | 2009 | ||||||
GDS
|
3,138 | 3,007 | ||||||
GTA
|
1,017 | 1,089 | ||||||
Total segment assets
|
4,155 | 4,096 | ||||||
Reconciling items: corporate and unallocated
|
213 | 250 | ||||||
Total
|
4,368 | 4,346 | ||||||
13. | Guarantor and Non-Guarantor Consolidating Condensed Financial Statements |
The following consolidating condensed financial statements
presents the Companys consolidating condensed balance
sheets as of March 31, 2010 and December 31, 2009 and
the consolidating condensed statements of operations and cash
flows for the three months ended March 31, 2010 and 2009
for: (a) Travelport Limited (the Parent
Guarantor); (b) Waltonville Limited, which is
currently in dissolution, and TDS Investor (Luxembourg) s.a.r.l.
(the Intermediate Parent Guarantor),
(c) Travelport LLC (formerly known as Travelport Inc.)
(the Issuer), (d) the guarantor subsidiaries;
(e) the non-guarantor subsidiaries; (f) elimination
and adjusting entries necessary to combine the Parent and
Intermediate Parent Guarantor with the guarantor and
non-guarantor subsidiaries; and (g) the Company on a
consolidated basis.
19
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
13. | Guarantor and Non-Guarantor Consolidating Condensed Financial Statements (Continued) |
TRAVELPORT
LIMITED
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2010
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2010
Intermediate |
||||||||||||||||||||||||||||
Parent |
Parent |
Guarantor |
Non-Guarantor |
Travelport |
||||||||||||||||||||||||
(in $ millions) | Guarantor | Guarantor | Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||
Net revenue
|
| | | 308 | 328 | (55 | ) | 581 | ||||||||||||||||||||
Cost and expenses
|
||||||||||||||||||||||||||||
Cost of revenue
|
| | | 156 | 155 | | 311 | |||||||||||||||||||||
Selling, general and administrative
|
| | 3 | 33 | 170 | (55 | ) | 151 | ||||||||||||||||||||
Restructuring charges
|
| | | 1 | | | 1 | |||||||||||||||||||||
Depreciation and amortization
|
| | | 41 | 17 | | 58 | |||||||||||||||||||||
Total costs and expenses, net
|
| | 3 | 231 | 342 | (55 | ) | 521 | ||||||||||||||||||||
Operating (loss) income
|
| | (3 | ) | 77 | (14 | ) | | 60 | |||||||||||||||||||
Interest expense, net
|
| | (63 | ) | (3 | ) | | | (66 | ) | ||||||||||||||||||
Equity in (losses) earnings of subsidiaries
|
(21 | ) | 5 | 71 | | | (55 | ) | | |||||||||||||||||||
(Loss) income from operations before income taxes and equity
in losses of investment in Orbitz Worldwide
|
(21 | ) | 5 | 5 | 74 | (14 | ) | (55 | ) | (6 | ) | |||||||||||||||||
Provision for income taxes
|
| | | (3 | ) | (9 | ) | | (12 | ) | ||||||||||||||||||
Equity in losses of investment in Orbitz Worldwide
|
| (3 | ) | | | | | (3 | ) | |||||||||||||||||||
Net (loss) income
|
(21 | ) | 2 | 5 | 71 | (23 | ) | (55 | ) | (21 | ) | |||||||||||||||||
Less: Net income attributable to non-controlling interest in
subsidiaries
|
| | | | | | | |||||||||||||||||||||
Net (loss) income attributable to the Company
|
(21 | ) | 2 | 5 | 71 | (23 | ) | (55 | ) | (21 | ) | |||||||||||||||||
20
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
13. | Guarantor and Non-Guarantor Consolidating Condensed Financial Statements (Continued) |
TRAVELPORT
LIMITED
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2009
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2009
Intermediate |
||||||||||||||||||||||||||||
Parent |
Parent |
Guarantor |
Non-Guarantor |
Travelport |
||||||||||||||||||||||||
(in $ millions) | Guarantor | Guarantor | Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||
Net revenue
|
| | | 322 | 257 | (26 | ) | 553 | ||||||||||||||||||||
Cost and expenses
|
||||||||||||||||||||||||||||
Cost of revenue
|
| | | 94 | 184 | | 278 | |||||||||||||||||||||
Selling, general and administrative
|
| | | 50 | 126 | (26 | ) | 150 | ||||||||||||||||||||
Restructuring charges
|
| | | 5 | 1 | | 6 | |||||||||||||||||||||
Depreciation and amortization
|
| | | 45 | 17 | | 62 | |||||||||||||||||||||
Total costs and expenses
|
| | | 194 | 328 | (26 | ) | 496 | ||||||||||||||||||||
Operating income (loss)
|
| | | 128 | (71 | ) | | 57 | ||||||||||||||||||||
Interest expense, net
|
| | (63 | ) | (3 | ) | | | (66 | ) | ||||||||||||||||||
Equity in (losses) earnings of subsidiaries
|
(171 | ) | 59 | 122 | | | (10 | ) | | |||||||||||||||||||
(Loss) income from operations before income taxes and equity
in losses of investment in Orbitz Worldwide
|
(171 | ) | 59 | 59 | 125 | (71 | ) | (10 | ) | (9 | ) | |||||||||||||||||
(Provision) benefit for income taxes
|
| | | (2 | ) | 2 | | | ||||||||||||||||||||
Equity in losses of investment in Orbitz Worldwide
|
| (161 | ) | | | | | (161 | ) | |||||||||||||||||||
Net (loss) income
|
(171 | ) | (102 | ) | 59 | 123 | (69 | ) | (10 | ) | (170 | ) | ||||||||||||||||
Less: Net income attributable to non-controlling interest in
subsidiaries
|
| | | (1 | ) | | | (1 | ) | |||||||||||||||||||
Net (loss) income attributable to the Company
|
(171 | ) | (102 | ) | 59 | 122 | (69 | ) | (10 | ) | (171 | ) | ||||||||||||||||
21
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
13. | Guarantor and Non-Guarantor Consolidating Condensed Financial Statements (Continued) |
TRAVELPORT
LIMITED
CONSOLIDATING CONDENSED BALANCE SHEETS
As of March 31, 2010
CONSOLIDATING CONDENSED BALANCE SHEETS
As of March 31, 2010
Intermediate |
||||||||||||||||||||||||||||
Parent |
Parent |
Guarantor |
Non-Guarantor |
Travelport |
||||||||||||||||||||||||
(in $ millions) | Guarantor | Guarantor | Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||
Current assets:
|
||||||||||||||||||||||||||||
Cash and cash equivalents
|
| | 2 | 15 | 90 | | 107 | |||||||||||||||||||||
Accounts receivable, net
|
| | | 87 | 320 | | 407 | |||||||||||||||||||||
Deferred income taxes
|
| | | 16 | 6 | | 22 | |||||||||||||||||||||
Other current assets
|
| | | 40 | 103 | | 143 | |||||||||||||||||||||
Total current assets
|
| | 2 | 158 | 519 | | 679 | |||||||||||||||||||||
Investment in subsidiary/intercompany
|
(661 | ) | (1,403 | ) | 2,328 | | | (264 | ) | | ||||||||||||||||||
Property and equipment, net
|
| | | 432 | 120 | | 552 | |||||||||||||||||||||
Goodwill
|
| | | 985 | 287 | | 1,272 | |||||||||||||||||||||
Trademarks and tradenames
|
| | | 313 | 100 | | 413 | |||||||||||||||||||||
Other intangible assets, net
|
| | | 681 | 453 | | 1,134 | |||||||||||||||||||||
Investment in Orbitz Worldwide
|
| 111 | | | | | 111 | |||||||||||||||||||||
Non-current deferred income taxes
|
| | | | 2 | | 2 | |||||||||||||||||||||
Other non-current assets
|
4 | | 33 | 71 | 97 | | 205 | |||||||||||||||||||||
Total assets
|
(657 | ) | (1,292 | ) | 2,363 | 2,640 | 1,578 | (264 | ) | 4,368 | ||||||||||||||||||
Liabilities and equity
|
||||||||||||||||||||||||||||
Current liabilities:
|
||||||||||||||||||||||||||||
Accounts payable
|
| | | 40 | 98 | | 138 | |||||||||||||||||||||
Accrued expenses and other current liabilities
|
| 45 | 93 | 67 | 609 | | 814 | |||||||||||||||||||||
Current portion of long-term debt
|
| | 12 | 9 | | | 21 | |||||||||||||||||||||
Total current liabilities
|
| 45 | 105 | 116 | 707 | | 973 | |||||||||||||||||||||
Long-term debt
|
| | 3,646 | 36 | | | 3,682 | |||||||||||||||||||||
Deferred income taxes
|
| | | 33 | 96 | | 129 | |||||||||||||||||||||
Other non-current liabilities
|
| | 15 | 127 | 84 | | 226 | |||||||||||||||||||||
Total liabilities
|
| 45 | 3,766 | 312 | 887 | | 5,010 | |||||||||||||||||||||
Total shareholders equity/intercompany
|
(657 | ) | (1,337 | ) | (1,403 | ) | 2,328 | 676 | (264 | ) | (657 | ) | ||||||||||||||||
Equity attributable to non-controlling interest in subsidiaries
|
| | | | 15 | | 15 | |||||||||||||||||||||
Total equity
|
(657 | ) | (1,337 | ) | (1,403 | ) | 2,328 | 691 | (264 | ) | (642 | ) | ||||||||||||||||
Total liabilities and equity
|
(657 | ) | (1,292 | ) | 2,363 | 2,640 | 1,578 | (264 | ) | 4,368 | ||||||||||||||||||
22
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
13. | Guarantor and Non-Guarantor Consolidating Condensed Financial Statements (Continued) |
TRAVELPORT
LIMITED
CONSOLIDATING
CONDENSED BALANCE SHEETS
As of
December 31, 2009
Intermediate |
||||||||||||||||||||||||||||
Parent |
Parent |
Guarantor |
Non-Guarantor |
Travelport |
||||||||||||||||||||||||
(in $ millions) | Guarantor | Guarantor | Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||
Current assets:
|
||||||||||||||||||||||||||||
Cash and cash equivalents
|
| | | 38 | 179 | | 217 | |||||||||||||||||||||
Accounts receivable, net
|
| | | 77 | 269 | | 346 | |||||||||||||||||||||
Deferred income taxes
|
| | | 16 | 6 | | 22 | |||||||||||||||||||||
Other current assets
|
1 | | 2 | 45 | 108 | | 156 | |||||||||||||||||||||
Total current assets
|
1 | | 2 | 176 | 562 | | 741 | |||||||||||||||||||||
Investment in subsidiary/intercompany
|
(608 | ) | (1,408 | ) | 2,250 | | | (234 | ) | | ||||||||||||||||||
Property and equipment, net
|
| | | 324 | 128 | | 452 | |||||||||||||||||||||
Goodwill
|
| | | 985 | 300 | | 1,285 | |||||||||||||||||||||
Trademarks and tradenames
|
| | | 313 | 106 | | 419 | |||||||||||||||||||||
Other intangible assets, net
|
| | | 701 | 482 | | 1,183 | |||||||||||||||||||||
Investment in Orbitz Worldwide
|
| 60 | | | | | 60 | |||||||||||||||||||||
Non-current deferred income taxes
|
| | | | 2 | | 2 | |||||||||||||||||||||
Other non-current assets
|
4 | | 45 | 71 | 84 | | 204 | |||||||||||||||||||||
Total assets
|
(603 | ) | (1,348 | ) | 2,297 | 2,570 | 1,664 | (234 | ) | 4,346 | ||||||||||||||||||
Liabilities and equity
|
||||||||||||||||||||||||||||
Current liabilities:
|
||||||||||||||||||||||||||||
Accounts payable
|
| | | 27 | 112 | | 139 | |||||||||||||||||||||
Accrued expenses and other current liabilities
|
4 | 35 | 78 | 77 | 571 | | 765 | |||||||||||||||||||||
Current portion of long-term debt
|
| | 12 | 11 | | | 23 | |||||||||||||||||||||
Total current liabilities
|
4 | 35 | 90 | 115 | 683 | | 927 | |||||||||||||||||||||
Long-term debt
|
| | 3,601 | 39 | | | 3,640 | |||||||||||||||||||||
Deferred income taxes
|
| | | 33 | 110 | | 143 | |||||||||||||||||||||
Other non-current liabilities
|
| | 14 | 133 | 81 | | 228 | |||||||||||||||||||||
Total liabilities
|
4 | 35 | 3,705 | 320 | 874 | | 4,938 | |||||||||||||||||||||
Total shareholders equity/intercompany
|
(607 | ) | (1,383 | ) | (1,408 | ) | 2,250 | 775 | (234 | ) | (607 | ) | ||||||||||||||||
Equity attributable to non-controlling interest in subsidiaries
|
| | | | 15 | | 15 | |||||||||||||||||||||
Total equity
|
(607 | ) | (1,383 | ) | (1,408 | ) | 2,250 | 790 | (234 | ) | (592 | ) | ||||||||||||||||
Total liabilities and equity
|
(603 | ) | (1,348 | ) | 2,297 | 2,570 | 1,664 | (234 | ) | 4,346 | ||||||||||||||||||
23
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
13. | Guarantor and Non-Guarantor Consolidating Condensed Financial Statements (Continued) |
TRAVELPORT
LIMITED
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2010
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2010
Intermediate |
||||||||||||||||||||||||||||
Parent |
Parent |
Guarantor |
Non-Guarantor |
Travelport |
||||||||||||||||||||||||
(in $ millions) | Guarantor | Guarantor | Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||
Operating activities
|
||||||||||||||||||||||||||||
Net (loss) income
|
(21 | ) | 2 | 5 | 71 | (23 | ) | (55 | ) | (21 | ) | |||||||||||||||||
Adjustments to reconcile net (loss) income to net cash provided
by (used in) operating activities:
|
||||||||||||||||||||||||||||
Depreciation and amortization
|
| | | 41 | 17 | | 58 | |||||||||||||||||||||
Amortization of debt finance costs
|
| | 4 | | | | 4 | |||||||||||||||||||||
Loss on interest rate derivative instruments
|
| | 2 | | | | 2 | |||||||||||||||||||||
Loss on foreign exchange derivative instruments
|
| | 1 | | | | 1 | |||||||||||||||||||||
Equity in losses of investment in Orbitz Worldwide
|
| 3 | | | | | 3 | |||||||||||||||||||||
FASA liability
|
| | | (5 | ) | | | (5 | ) | |||||||||||||||||||
Deferred income taxes
|
| | | | (2 | ) | | (2 | ) | |||||||||||||||||||
Equity in losses (earnings) of subsidiaries
|
21 | (5 | ) | (71 | ) | | | 55 | | |||||||||||||||||||
Changes in assets and liabilities, net of effects from
acquisitions:
|
||||||||||||||||||||||||||||
Accounts receivable
|
| | | (10 | ) | (62 | ) | | (72 | ) | ||||||||||||||||||
Other current assets
|
| | | 5 | (4 | ) | | 1 | ||||||||||||||||||||
Accounts payable, accrued expenses and other current liabilities
|
| 10 | (31 | ) | 3 | 22 | | 4 | ||||||||||||||||||||
Other
|
| | | (6 | ) | 6 | | | ||||||||||||||||||||
Net cash provided by (used in) operating activities
|
| 10 | (90 | ) | 99 | (46 | ) | | (27 | ) | ||||||||||||||||||
Investing activities
|
||||||||||||||||||||||||||||
Property and equipment additions
|
| | | (113 | ) | (1 | ) | | (114 | ) | ||||||||||||||||||
Business acquired
|
| | | | (5 | ) | | (5 | ) | |||||||||||||||||||
Investment in Orbitz Worldwide
|
| (50 | ) | | | | | (50 | ) | |||||||||||||||||||
Intercompany funding
|
| 40 | 2 | (8 | ) | (34 | ) | | | |||||||||||||||||||
Other
|
| | | 5 | | | 5 | |||||||||||||||||||||
Net cash (used in) provided by investing activities
|
| (10 | ) | 2 | (116 | ) | (40 | ) | | (164 | ) | |||||||||||||||||
Financing activities
|
||||||||||||||||||||||||||||
Principal repayments
|
| | (3 | ) | (5 | ) | | | (8 | ) | ||||||||||||||||||
Proceeds from new borrowings
|
| | 100 | | | | 100 | |||||||||||||||||||||
Payments on settlement of derivative contracts
|
| | (7 | ) | | | | (7 | ) | |||||||||||||||||||
Net cash provided by (used in) financing activities
|
| | 90 | (5 | ) | | | 85 | ||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents
|
| | | (1 | ) | (3 | ) | | (4 | ) | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents
|
| | 2 | (23 | ) | (89 | ) | | (110 | ) | ||||||||||||||||||
Cash and cash equivalents at beginning of period
|
| | | 38 | 179 | | 217 | |||||||||||||||||||||
Cash and cash equivalents at end of period
|
| | 2 | 15 | 90 | | 107 | |||||||||||||||||||||
24
Table of Contents
TRAVELPORT
LIMITED
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
13. | Guarantor and Non-Guarantor Consolidating Condensed Financial Statements (Continued) |
TRAVELPORT
LIMITED
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2009
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2009
Intermediate |
||||||||||||||||||||||||||||
Parent |
Parent |
Guarantor |
Non-Guarantor |
Travelport |
||||||||||||||||||||||||
(in $ millions) | Guarantor | Guarantor | Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||
Operating activities
|
||||||||||||||||||||||||||||
Net (loss) income
|
(171 | ) | (102 | ) | 59 | 123 | (69 | ) | (10 | ) | (170 | ) | ||||||||||||||||
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
|
||||||||||||||||||||||||||||
Depreciation and amortization
|
| | | 45 | 17 | | 62 | |||||||||||||||||||||
Provision for bad debts
|
| | | | 5 | | 5 | |||||||||||||||||||||
Amortization of debt finance costs
|
| | 4 | | | | 4 | |||||||||||||||||||||
Gain on interest rate derivative instruments
|
| | (5 | ) | | | | (5 | ) | |||||||||||||||||||
Gain on foreign exchange derivative instruments
|
| | (3 | ) | | | | (3 | ) | |||||||||||||||||||
Equity in losses of investment in Orbitz Worldwide
|
| 161 | | | | | 161 | |||||||||||||||||||||
FASA liability
|
| | | (8 | ) | | | (8 | ) | |||||||||||||||||||
Deferred income tax
|
| | | 1 | (3 | ) | | (2 | ) | |||||||||||||||||||
Equity in losses (earnings) of subsidiaries
|
171 | (59 | ) | (122 | ) | | | 10 | | |||||||||||||||||||
Changes in assets and liabilities, net of effects from
acquisitions:
|
||||||||||||||||||||||||||||
Accounts receivable
|
| | | (8 | ) | (13 | ) | | (21 | ) | ||||||||||||||||||
Other current assets
|
| | | 4 | 2 | | 6 | |||||||||||||||||||||
Accounts payable, accrued expenses and other current liabilities
|
| | (30 | ) | 10 | (12 | ) | | (32 | ) | ||||||||||||||||||
Other
|
| | | (4 | ) | (2 | ) | | (6 | ) | ||||||||||||||||||
Net cash (used in) provided by operating activities
|
| | (97 | ) | 163 | (75 | ) | | (9 | ) | ||||||||||||||||||
Investing activities
|
||||||||||||||||||||||||||||
Property and equipment additions
|
| | | (9 | ) | (2 | ) | | (11 | ) | ||||||||||||||||||
Intercompany funding
|
42 | | 100 | (213 | ) | 71 | | | ||||||||||||||||||||
Net cash provided by (used in) investing activities
|
42 | | 100 | (222 | ) | 69 | | (11 | ) | |||||||||||||||||||
Financing activities
|
||||||||||||||||||||||||||||
Principal repayments
|
| | (3 | ) | (2 | ) | | | (5 | ) | ||||||||||||||||||
Net share settlement for equity-based compensation
|
| | | (7 | ) | | | (7 | ) | |||||||||||||||||||
Distribution to a parent company
|
(42 | ) | | | | | | (42 | ) | |||||||||||||||||||
Net cash used in financing activities
|
(42 | ) | | (3 | ) | (9 | ) | | | (54 | ) | |||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents
|
| | | | (3 | ) | | (3 | ) | |||||||||||||||||||
Net decrease in cash and cash equivalents
|
| | | (68 | ) | (9 | ) | | (77 | ) | ||||||||||||||||||
Cash and cash equivalents at beginning of period
|
94 | | | 189 | 62 | | 345 | |||||||||||||||||||||
Cash and cash equivalents at end of period
|
94 | | | 121 | 53 | | 268 | |||||||||||||||||||||
25
Table of Contents
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion should be read in conjunction with
our consolidated condensed financial statements and accompanying
notes thereto included elsewhere in this Quarterly Report on
Form 10-Q.
This discussion contains forward-looking statements and involves
numerous risks and uncertainties. Actual results may differ
materially from those contained in any forward-looking
statements. See Forward-Looking Statements beginning
on page 2 of this
Form 10-Q.
Unless otherwise noted, all amounts are in $ millions.
Segments
Our operations are organized under the following business
segments:
| The Global Distribution System (GDS) business consists of Travelport GDSs, which provide aggregation, search and transaction processing services to travel suppliers and travel agencies, allowing travel agencies to search, compare, process and book itinerary and pricing options across multiple travel suppliers. Our GDS business operates three systems, Galileo, Apollo and Worldspan providing travel agencies with booking technology and access to supplier inventory that we aggregate from airlines, hotels, car rental companies, rail networks, cruise and tour operators, and destination service providers. Within our GDS business, our Airline IT Solutions business provides hosting solutions and a number of IT services to airlines to enable them to focus on their core business competencies and reduce costs. | |
| The GTA business receives access to accommodation, ground travel, sightseeing and other destination services from travel suppliers at negotiated rates and then distributes this inventory through multiple channels to other travel wholesalers, tour operators and travel agencies, as well as directly to consumers via its affiliate channels. |
Factors
Affecting Results of Operations
Macroeconomic and Travel Industry Conditions: Our
business is highly correlated to the overall performance of the
travel industry, in particular, growth in air passenger travel
which, in turn, is linked to the global macro-economic
environment. During the recent global economic recession, our
air travel volumes declined. Nonetheless, the GDS industry has
recently shown signs of entering a cyclical recovery, with air
passenger volumes increasing 10% in the three months ended
March 31, 2010, compared to the corresponding period in the
previous year. Total GDS air bookings also increased by 6% in
the three months ended March 31, 2010 compared to the three
months ended March 31, 2009. The GDS industry is poised to
benefit from the recovery and expected future growth in the
global travel industry. Total transaction value
(TTV), for the GTA business is driven by room nights
and average daily rates achieved by GTA for hotels. The GTA
business has begun to show signs of recovery, with an increase
in room nights and average daily rates in the three months ended
March 31, 2010 as compared to the corresponding period in
the previous year.
Impact of Delta and Northwest Merger: Delta, one of
our largest IT services customers, completed its acquisition of
Northwest, another of our largest IT services customers, in
2009. As part of their integration, Delta and Northwest are
migrating to a common IT platform and will have reduced needs
for our IT services after the integration. As a result, we
anticipate that our annual revenue and EBITDA will decrease in
2010.
Seasonality: Our businesses experience seasonal
fluctuations, reflecting seasonal trends for the products and
services we offer. These trends cause our revenue to be
generally higher in the second and third calendar quarters of
the year, with GDS revenue peaking as travelers plan and
purchase their spring and summer travel, and GTA revenue is
traditionally highest in the third quarter, as group travel
peaks in this quarter. Revenue then typically flattens or
declines in the fourth and first quarters of the calendar year.
Our results may also be affected by seasonal fluctuations in the
inventory made available to us by our travel suppliers.
Foreign Exchange Movements: We transact our business
primarily in US dollars. While the majority of our revenue is
denominated in US dollars, a portion of costs are denominated in
other currencies (principally, the British pound, Euro and
Japanese yen). We use foreign currency forward contracts to
manage our exposure to changes in foreign currency exchange
rates associated with our foreign currency-denominated
receivables
26
Table of Contents
and payables and forecasted earnings of foreign subsidiaries.
The fluctuations in the value of these forward contracts largely
offset the impact of changes in the value of the underlying risk
that they are intended to economically hedge. Nevertheless, our
operating results are impacted to a certain extent by movements
in the underlying exchange rates between those currencies listed
above.
Restructuring: Historically, we have taken a number
of actions to enhance organizational efficiency and consolidate
and rationalize existing processes, which include, among others,
the migration of the Galileo data center, formerly located in
Denver, Colorado, into the Worldspan data center, located in
Atlanta, Georgia; consolidating certain administrative and
support functions of Galileo and Worldspan; and the
renegotiation of several material vendor contracts. The most
significant impact of these initiatives was the elimination of
redundant staff positions, reduced technology costs associated
with renegotiated vendor contracts, and, to a lesser extent,
cost savings and synergies resulting from a reduction in the
amount of office rental space required and related utilities,
maintenance and other facility operating costs. Our results of
operations were significantly impacted by these actions in 2009.
Results
of Operations
Our management and Chief Operating Decision Maker
(CODM) use Segment EBITDA to measure segment
operating performance. Segment EBITDA is defined as operating
income (loss) before depreciation and amortization, each of
which is presented on the Companys consolidated condensed
statements of operations. Segment EBITDA is not intended to be a
measure of free cash flow available for management and the
CODMs discretionary use, as it does not consider certain
cash requirements such as interest payments, tax payments and
debt service requirements. Management and the CODM believe
Segment EBITDA is helpful in highlighting trends because it
excludes the results of transactions that are not considered to
be directly related to the underlying segment operations and
excludes costs associated with decisions made at the corporate
level such as company-wide equity compensation plans and the
impact of financing arrangements and derivative transactions.
Segment EBITDA may not be comparable to similarly named measures
used by other companies. In addition, this measure should
neither be considered as a measure of liquidity or cash flow
from operations nor measures comparable to net income as
determined under US GAAP as it does not take into account
certain requirements such as capital expenditures and related
depreciation, principal and interest payments and tax payments,
and other costs associated with items unrelated to our ongoing
operations.
27
Table of Contents
Three
Months Ended March 31, 2010 compared to Three Months Ended
March 31, 2009
Reconciling Items | ||||||||||||||||||||||||||||||||
Corporate and |
||||||||||||||||||||||||||||||||
Unallocated |
||||||||||||||||||||||||||||||||
GDS Segment | GTA Segment | Expenses | Consolidated | |||||||||||||||||||||||||||||
Three Months |
Three Months |
Three Months |
Three Months |
|||||||||||||||||||||||||||||
Ended |
Ended |
Ended |
Ended |
|||||||||||||||||||||||||||||
March 31, | March 31, | March 31, | March 31, | |||||||||||||||||||||||||||||
(in $ millions) | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||
Net revenue
|
536 | 511 | 45 | 42 | | | 581 | 553 | ||||||||||||||||||||||||
Costs and expenses
|
||||||||||||||||||||||||||||||||
Cost of revenue
|
303 | 270 | 8 | 8 | | | 311 | 278 | ||||||||||||||||||||||||
Selling, general and administrative
|
82 | 87 | 39 | 43 | 30 | 20 | 151 | 150 | ||||||||||||||||||||||||
Restructuring charges
|
| 2 | | 2 | 1 | 2 | 1 | 6 | ||||||||||||||||||||||||
Depreciation and amortization
|
47 | 45 | 10 | 15 | 1 | 2 | 58 | 62 | ||||||||||||||||||||||||
Total costs and expenses, net
|
432 | 404 | 57 | 68 | 32 | 24 | 521 | 496 | ||||||||||||||||||||||||
Operating income (loss)
|
104 | 107 | (12 | ) | (26 | ) | (32 | ) | (24 | ) | 60 | 57 | ||||||||||||||||||||
Depreciation and amortization
|
47 | 45 | 10 | 15 | ||||||||||||||||||||||||||||
Segment EBITDA
|
151 | 152 | (2 | ) | (11 | ) | ||||||||||||||||||||||||||
Interest expense, net
|
(66 | ) | (66 | ) | ||||||||||||||||||||||||||||
Loss from operations before income taxes and equity in losses
of investment in Orbitz Worldwide
|
(6 | ) | (9 | ) | ||||||||||||||||||||||||||||
Provision for income taxes
|
(12 | ) | | |||||||||||||||||||||||||||||
Equity in losses of investment in Orbitz Worldwide
|
(3 | ) | (161 | ) | ||||||||||||||||||||||||||||
Net loss
|
(21 | ) | (170 | ) | ||||||||||||||||||||||||||||
Consolidated
Results
The net revenue increase of $28 million (5%) consists of a
$25 million (5%) growth in our GDS segment and a
$3 million (7%) growth in our GTA segment. The growth in
net revenue is primarily due to increased global demand which
has resulted in volume growth in both the GDS and GTA segments,
as described in more detail in the segment analysis below.
The cost of revenue increase of $33 million (12%) is
attributable to growth in our GDS segment. The growth in cost of
revenue is the result of transaction volumes, commission costs
and movements in exchange rates as described in more detail in
the segment analysis below.
The SG&A increase of $1 million (1%) is primarily due
to (i) a $10 million (50%) increase in our corporate
costs and expenses not allocated to segments as detailed below,
(ii) a $5 million (6%) decrease in
28
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our GDS segment expenses as detailed in the GDS segment analysis
below and (iii) a $4 million (9%) decrease in our GTA
segment as detailed in the GTA segment analysis below.
Three Months |
||||||||
Ended |
||||||||
March 31, | ||||||||
(in $ millions) | 2010 | 2009 | ||||||
Corporate administrative expenses
|
11 | 15 | ||||||
Transaction and integration costs
|
18 | 2 | ||||||
Monitoring fees
|
| 3 | ||||||
Other, including loss on foreign currency derivatives
|
1 | | ||||||
30 | 20 | |||||||
The increase in transaction and integration costs for the three
months ended March 31, 2010 is due to costs incurred in
relation to a proposed offering of securities. The decrease in
corporate administrative expenses is primarily the result of
cost savings resulting from the restructuring programs.
Restructuring
Charges
Restructuring charges decreased by $5 million (83%) as our
actions to enhance organizational efficiency and consolidate and
rationalize existing processes, following the acquisition of
Worldspan in 2007, were substantially completed in 2009. Further
future charges may be incurred in relation to exiting a number
of lease arrangements in the US as a result of relocations.
Depreciation
and Amortization
Depreciation and amortization decreased $4 million (6%)
primarily due to a lower amortization expense in GTA as a result
of a reduction in the amortizable intangible asset values
following the impairment charge in the third quarter of 2009.
Interest
Expense, Net
The underlying interest charge was $7 million lower than
the prior year due to lower interest rates and a lower debt
balance. However, there was a $7 million increased interest
expense due to a change in the fair value of interest rate
derivative instruments compared to the three months ended
March 31, 2009.
Equity in
Losses of Investment in Orbitz Worldwide
Our losses incurred from our investment in Orbitz Worldwide have
decreased from $161 million in the three months ended
March 31, 2009 to $3 million in the three months ended
March 31, 2010. These losses reflect our 48% ownership
interest in the losses incurred by Orbitz Worldwide. In the
three months ended March 31, 2009, Orbitz Worldwide
recorded a $332 million impairment charge on certain
intangible assets.
Provision
for Income Taxes
Our tax benefit (provision) differs materially from the benefit
(provision) at the US Federal statutory rate primarily as a
result of (i) we are subject to income tax in numerous
non-US
jurisdictions with varying rates on average and (ii) a
valuation allowance established against the losses generated in
the US due to the historical losses in that jurisdiction and
release of a portion of that allowance in 2009.
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The reconciliation from the statutory tax benefit at the
US tax rate of 35% is as follows:
Three Months |
||||||||
Ended |
||||||||
March 31, | ||||||||
(in $ millions) | 2010 | 2009 | ||||||
Tax benefit at US Federal statutory rate of 35%
|
2 | 3 | ||||||
Taxes on
non-US operations
at alternative rates
|
(13 | ) | (12 | ) | ||||
Liability for uncertain tax positions
|
| (2 | ) | |||||
Valuation allowance released
|
| 13 | ||||||
Other
|
(1 | ) | (2 | ) | ||||
Provision for income taxes
|
(12 | ) | | |||||
GDS
Segment
Net
Revenue
GDS revenue is comprised of:
Three Months |
||||||||||||||||
Ended |
||||||||||||||||
March 31, | Change | |||||||||||||||
(in $ millions) | 2010 | 2009 | $ | % | ||||||||||||
Transaction processing revenue
|
485 | 455 | 30 | 7 | ||||||||||||
Airline IT solutions revenue
|
51 | 56 | (5 | ) | (9 | ) | ||||||||||
GDS revenue
|
536 | 511 | 25 | 5 | ||||||||||||
Transaction processing revenue by region is comprised of:
Three Months |
||||||||||||||||
Ended |
||||||||||||||||
March 31, | Change | |||||||||||||||
(in $ millions) | 2010 | 2009 | $ | % | ||||||||||||
Americas
|
191 | 182 | 9 | 5 | ||||||||||||
Europe
|
148 | 142 | 6 | 4 | ||||||||||||
MEA
|
69 | 68 | 1 | 1 | ||||||||||||
APAC
|
77 | 63 | 14 | 22 | ||||||||||||
Transaction processing revenue
|
485 | 455 | 30 | 7 | ||||||||||||
GDS revenue increased $25 million (5%) as a result of a
$30 million (7%) increase in transaction processing
revenue, partially offset by a $5 million (9%) decrease in
Airline IT solutions revenue. Americas transaction processing
revenue increased by $9 million (5%) due to a 6% increase
in segments, partially offset by a 1% decline in average revenue
per segment. Europe transaction processing revenue increased by
$6 million (4%) due to a 6% increase in segments, partially
offset by a 2% decline in average revenue per segment. MEA
transaction processing revenue increased by $1 million (1%)
due to an 8% increase in average revenue per segment, partially
offset by a 6% decline in segments. APAC transaction processing
revenue increased by $14 million (22%) due to a 17%
increase in segments and a 5% increase in average revenue per
segment. Airline IT Solutions revenue decreased by
$5 million (9%) primarily due to lower hosting revenues
arising from the Delta Northwest merger.
The GDS business experienced an improvement in global demand
during the three months ended March 31, 2010, as reflected
in the 6% increase in segment volumes which was attributable to
global economic conditions, including improved consumer
confidence, an increase in business travel and an increase in
airline capacity.
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Cost of
Revenue
GDS cost of revenue is comprised of:
Three Months |
||||||||||||||||
Ended |
||||||||||||||||
March 31, | Change | |||||||||||||||
(in $ millions) | 2010 | 2009 | $ | % | ||||||||||||
Commissions
|
228 | 195 | 33 | 17 | ||||||||||||
Telecommunication and technology costs
|
75 | 75 | | | ||||||||||||
Cost of revenue
|
303 | 270 | 33 | 12 | ||||||||||||
GDS cost of revenue increased by $33 million (12%) as a
result of an increase in commissions paid to travel agencies and
national distribution companies (NDCs). This
increase is attributable to the growth in volumes for the GDS
business, an increase in the average rate of agency commissions,
and unfavorable movements in foreign exchange rates.
Selling,
General and Administrative Expenses (SG&A)
GDS SG&A decreased $5 million (6%) as a result of a
reduction in transaction and integration costs primarily
associated with costs incurred during 2009 related to the
integration of Worldspan.
GTA
Segment
Net
Revenue
GTA revenue increased $3 million (7%) from $42 million
in the three months ended March 31, 2009 to
$45 million in the three months ended March 31, 2010.
The increase in revenue is due to an increase in TTV, which rose
by 19% in the three months ended March 31, 2010 due to a
10% growth in the number of room nights and exchange rate
movements, partially offset by a reduction in margin on sales.
Cost of
Revenue
GTA cost of revenue remained flat at $8 million for the
three months ended March 31, 2010 and 2009. The cost of
transactions for which GTA takes inventory risk was
$3 million in both periods.
Selling,
General and Administrative Expenses (SG&A)
GTA SG&A decreased $4 million (9%) primarily due to a
decrease in the bad debt charge as a result of a reduction in
the level of delinquencies experienced during the period.
Liquidity
and Capital Resources
Our principal source of liquidity is cash flow generated from
operations, including working capital. We maintain an
appropriate level of liquidity through several sources,
including maintaining appropriate levels of cash, access to
funding sources, a committed credit facility and other committed
and uncommitted lines of credit. As of March 31, 2010, our
financing needs were supported by $140 million of available
capacity under our $300 million revolving credit facility
and approximately $6 million of capacity under our
$150 million synthetic letter of credit facility. We have
the ability to add incremental term loan facilities or to
increase commitments under the revolving credit facility by an
aggregate amount of up to $500 million, of which
$150 million was utilized as of March 31, 2010. In the
event additional funding is required, there can be no assurance
that further funding will be available on terms favorable to us
or at all.
Our principal uses of cash are to fund planned operating
expenditures, capital expenditures, interest payments on debt
and any mandatory or discretionary principal payments or
repurchases of debt. As a result of the cash on our balance
sheet and our ability to generate cash from operations over the
course of a year and through access to our revolving credit
facility and other lending sources, we believe we have
sufficient liquidity to meet our ongoing needs for at least the
next 12 months. If our cash flows from operations are less
31
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than we expect or we require funds for acquisitions of other
businesses, assets, products or technologies, we may need to
incur additional debt, sell or monetize certain existing assets
or utilize our cash or cash equivalents. Alternatively, we may
be able to offset any potential shortfall in cash flows from
operations by taking cost reduction measures or reducing capital
expenditures from existing levels.
Our primary future cash needs on a recurring basis will be for
working capital, capital expenditures, debt service obligations
and debt repurchases. As market conditions warrant, we may from
time to time repurchase debt securities issued by us, in
privately negotiated or open market transactions, by tender
offer, exchange offer or otherwise.
Cash
Flows
The following table summarizes the changes to our cash flows
from operating, investing and financing activities for the three
months ended March 31, 2010 and 2009:
Three Months |
||||||||||||
Ended |
||||||||||||
March 31, | Change | |||||||||||
(in $ millions) | 2010 | 2009 | $ | |||||||||
Cash provided by (used in):
|
||||||||||||
Operating activities
|
(27 | ) | (9 | ) | (18 | ) | ||||||
Investing activities
|
(164 | ) | (11 | ) | (153 | ) | ||||||
Financing activities
|
85 | (54 | ) | 139 | ||||||||
Effects of exchange rate changes
|
(4 | ) | (3 | ) | (1 | ) | ||||||
Net decrease in cash and cash equivalents
|
(110 | ) | (77 | ) | (33 | ) | ||||||
As of March 31, 2010, we had $107 million of cash and
cash equivalents, a decrease of $110 million compared to
December 31, 2009. The following discussion summarizes
changes to our cash flows from operating, investing and
financing activities for the three months ended March 31,
2010 compared to the three months ended March 31, 2009.
Operating Activities. For the three months ended
March 31, 2010, cash used in operations was
$27 million compared to cash used in operations of
$9 million for the three months ended March 31, 2009.
This is mainly due to $20 million of additional cash used
for working capital. There was $67 million of cash outflow
of working capital in the three months ended March 31, 2010
compared to $47 million of cash outflow of working capital
in the three months ended March 31, 2009 primarily due to
an increase in revenue in the three months ended March 31,
2010 compared to March 31, 2009 and fluctuations in our
collections cycle, partially offset by a reduction in cash used
to settle accounts payable and accrued expense balances.
Investing Activities. The use of cash in investing
activities for the three months ended March 31, 2010 was
$114 million for capital expenditures and $50 million
of additional investment in Orbitz Worldwide. During the three
months ended March 31, 2010, we purchased $114 million
of property and equipment, consisting primarily of software and
computer equipment, including amounts related to the transaction
processing facility software license from IBM. The use of cash
in investing activities for the three months ended
March 31, 2009 was $11 million for capital
expenditures.
Financing Activities. Cash provided by financing
activities for the three months ended March 31, 2010 was
$85 million, primarily due to $100 million of new
borrowings under the revolving credit facility, offset by
$3 million of mandatory term loan repayments,
$5 million of capital lease payments and $7 million of
cash paid on derivative contracts. The use of cash in financing
activities for the three months ended March 31, 2009 was
$54 million due to $42 million in cash distributions
to our parent company, $5 million of mandatory term loan
repayments and $7 million for net share settlement on
equity-based compensation.
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Table of Contents
Debt
and Financing Arrangements
During the three months ended March 31, 2010, we repaid
approximately $3 million of our Dollar denominated debt
under our senior secured credit facility as required under the
senior secured credit agreement and approximately
$5 million under our capital lease obligations.
The principal amount of Euro denominated long-term debt
decreased by approximately $52 million as a result of
foreign exchange fluctuations during the three months ended
March 31, 2010. This foreign exchange gain was largely
offset by losses on foreign exchange hedge instruments
contracted by us and our net investment hedging strategies.
As of March 31, 2010, there were $100 million of
borrowings and $30 million of letter of credit commitments
outstanding under our revolving credit facility with a remaining
capacity of $140 million.
In addition, we have a $150 million synthetic letter of
credit facility. As of March 31, 2010, we had approximately
$144 million of commitments outstanding under the synthetic
letter of credit facility, including commitments of
approximately $69 million in letters of credit issued on
behalf of Orbitz Worldwide pursuant to our Separation Agreement
with Orbitz Worldwide. As of March 31, 2010, this facility
has remaining capacity of $6 million.
Our leverage ratio under the senior secured credit agreement is
computed by calculating the last twelve months of our
consolidated Adjusted EBITDA including the impact of cost
savings and synergies and dividing the total net debt
outstanding (as defined in the terms of our credit agreement) at
the balance sheet date by this figure. Our leverage ratio as of
March 31, 2010 is 5.74 as compared to the maximum allowable
of 6.0.
Total net debt per our credit agreement is broadly defined as
total debt less cash and the net position of related derivative
instrument balances.
The Adjusted EBITDA measure is a defined term within our credit
agreement. 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 and development of a global on-line travel
platform, non-cash equity-based compensation, and other
adjustments made to exclude expenses management and the CODM
view as outside the normal course of operations.
Foreign
Currency and Interest Rate Risk
We use foreign currency forward contracts in order to manage our
exposure to changes in foreign currency exchange rates
associated with our Euro denominated debt. During the three
months ended March 31, 2010, we replaced our existing net
investment hedging strategy with additional foreign currency
forward contracts to manage our exposure to changes in foreign
currency exchange risks associated with our Euro denominated
debt. These forward contracts were not designated as cash flow
hedges; however, the fluctuations in the value of these forward
contracts recorded within our consolidated condensed statements
of operations largely offset the impact of the changes in the
value of the Euro denominated debt they are intended to
economically hedge.
We use foreign currency forward contracts to manage our exposure
to changes in foreign currency exchange rates associated with
our foreign currency denominated receivables and payables and
forecasted earnings of our foreign subsidiaries. We primarily
enter into foreign currency forward contracts to manage our
foreign currency exposure to the British pound, Euro and
Japanese yen. Some of these forward contracts are not designated
as hedges for accounting purposes. The fluctuations in the value
of these forward contracts do, however, largely offset the
impact of changes in the value of the underlying risk that they
are intended to economically hedge. Losses on these forward
contracts amounted to $4 million and $6 million for
the three months ended March 31, 2010 and 2009,
respectively. These amounts are recorded as a component of
selling, general and administrative expenses on our consolidated
condensed statements of operations.
33
Table of Contents
A portion of the debt used to finance much of our operations is
exposed to interest rate fluctuations. We use various hedging
strategies and derivative financial instruments to create an
appropriate mix of fixed and floating rate debt. The primary
interest rate exposure as of March 31, 2010 and
December 31, 2009 was to interest rate fluctuations in the
United States and Europe, specifically USLIBOR and EURIBOR
interest rates. We currently use interest rate swaps,
cross-currency swaps and foreign currency forward contracts as
the derivative instruments in these hedging strategies. Several
derivatives used to manage the risk associated with our floating
rate debt are designated as cash flow hedges. Deferred amounts
to be recognized in earnings will change with market conditions
and will be substantially offset by changes in the value of the
related hedge transactions. We record the effective portion of
designated cash flow hedges in other comprehensive income
(loss). As of March 31, 2010, our interest rate hedges
cover transactions for periods that do not exceed three years.
As of March 31, 2010, we had a net liability position of
$91 million related to derivative instruments associated
with our Euro denominated and floating rate debt, our foreign
currency denominated receivables and payables, and forecasted
earnings of our foreign subsidiaries.
Contractual
Obligations
On March 31, 2010, we entered into an amendment to our
Asset Management Offering Agreement (IBM Agreement),
effective as of July 1, 2002, as amended, with
International Business Machines Corporation (IBM).
This amendment updated certain terms and extended the overall
term of the IBM Agreement until December 31, 2014. Pursuant
to the terms of the amendment, we will obtain upgrades to
existing systems architecture and software infrastructure at our
Atlanta, Georgia data center; migration services and access to
IBMs transaction processing facility software platform;
licenses and other software products; equipment and software
maintenance; and various other services.
The following table summarizes our future purchase commitments
as of March 31, 2010:
(in $ millions) |
||||
Twelve Month Period Ended March 31,
|
||||
2011
|
66 | |||
2012
|
61 | |||
2013
|
41 | |||
2014
|
29 | |||
2015
|
23 | |||
Thereafter
|
| |||
220 | ||||
Additionally, during the three months ended March 31, 2010,
we drew down $100 million of new borrowings under our
revolving credit facility. This facility expires in August 2012.
Our other future contractual obligations have not changed
significantly from the amounts reported within our 2009
financial statements included in our Annual Report on
Form 10-K
filed with the SEC on March 17, 2010, as amended by
Amendment No. 1 to the
Form 10-K
filed with the SEC on April 16, 2010.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
We assess our market risk based on changes in interest and
foreign currency exchange rates utilizing a sensitivity analysis
that measures the potential impact in earnings, fair values, and
cash flows based on a hypothetical 10% change (increase and
decrease) in interest rates and foreign currency exchange rates.
We used March 31, 2010 market rates to perform a
sensitivity analysis separately for each of our market risk
exposures. The estimates assume instantaneous, parallel shifts
in interest rate yield curves and exchange rates. We have
determined, through such analyses, that the impact of a 10%
change in interest rates and foreign currency exchange rates on
our earnings, fair values and cash flows would not be material.
There have been no material changes in our exposure to market
risks from what was disclosed in our Annual Report on
Form 10-K
for the year ended December 31, 2009 filed with the SEC on
March 17, 2010 as amended by Amendment No. 1 to the
Form 10-K
filed with the SEC on April 16, 2010.
34
Table of Contents
Item 4. | Controls and Procedures |
(a) | Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (the Act) is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. |
Our management, with the participation of the Companys
Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of its disclosure controls and
procedures, as such term is defined in
Rules 13a-15(e)
and
15d-15(e)
under the Act, for the period ended March 31, 2010. Based
on the evaluation performed, the Companys Chief Executive
Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures are effective.
(b) | Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting (as such term is defined in rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. |
35
Table of Contents
PART IIOTHER
INFORMATION
Item 1. | Legal Proceedings. |
There are no material changes from the description of our legal
proceedings disclosed in our Annual Report on
Form 10-K
for the year ended December 31, 2009 filed with the SEC on
March 17, 2010 as amended by Amendment No. 1 to the
Form 10-K
filed with the SEC on April 16, 2010.
Item 1A. | Risk Factors. |
See Part I, Item 1A, Risk Factors, of our
Annual Report on
Form 10-K
for the year ended December 31, 2009 filed with the SEC on
March 17, 2010 as amended by Amendment No. 1 to the
Form 10-K
filed with the SEC on April 16, 2010 for a detailed
discussion of the risk factors affecting our Company. There are
no material changes from the risk factors previously disclosed
in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Not Applicable.
Item 3. | Defaults Upon Senior Securities. |
Not Applicable.
Item 4. | Removed and Reserved. |
Item 5. | Other Information. |
Not Applicable.
Item 6. | Exhibits. |
See Exhibit Index.
36
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
TRAVELPORT LIMITED | ||||
Date: May 6, 2010
|
By: |
/s/ Philip
Emery Philip Emery Executive Vice President and Chief Financial Officer |
||
Date: May 6, 2010
|
By: |
/s/ Simon
Gray Simon Gray Senior Vice President and Chief Accounting Officer |
37
Table of Contents
EXHIBIT INDEX
Exhibit No.
|
Description | |||
3 | .1 | Certificate of Incorporation of Travelport Limited (f/k/a TDS Investor (Bermuda) Ltd.) (Incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-4 of Travelport Limited (333-141714) filed on March 30, 2007). | ||
3 | .2 | Memorandum of Association and By-laws of Travelport Limited (f/k/a TDS Investor (Bermuda) Ltd.) (Incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-4 of Travelport Limited (333-141714) filed on March 30, 2007). | ||
10 | .1 | Sixth Amendment to Subscriber Services Agreement, dated as of July 23, 2007, by and among Orbitz Worldwide, Inc., Travelport, LP (f/k/a Travelport International, L.L.C.) and Travelport Global Distribution System B.V. (f/k/a Galileo Nederland B.V.)* | ||
10 | .2 | Seventh Amendment to Subscriber Services Agreement dated as of July 23, 2007, by and among Orbitz Worldwide, Inc., Travelport, LP (f/k/a Travelport International, L.L.C.) and Travelport Global Distribution Systems B.V. (f/k/a Galileo Nederland B.V.) | ||
10 | .3 | Amendment 11 to the Asset Management Offering Agreement, effective as of July 1, 2002, as amended, among Travelport, LP, International Business Machines Corporation and IBM Credit LLC.)* | ||
31 | .1 | Certification of Chief Executive Officer Pursuant to Rules 13(a)-14(a) and 15(d)-14(a) Promulgated Under the Securities Exchange Act of 1934, as amended. | ||
31 | .2 | Certification of Chief Financial Officer Pursuant to Rules 13(a)-14(a) and 15(d)-14(a) Promulgated Under the Securities Exchange Act of 1934, as amended. | ||
32 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Portions of this document have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2. |
38