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Orbitz Worldwide, Inc. Reports First Quarter 2010 Results

CHICAGO, May 5, 2010 /PRNewswire via COMTEX/ --Orbitz Worldwide, Inc. (NYSE: OWW) today announced results for the first quarter ended March 31, 2010.

(Logo: http://www.newscom.com/cgi-bin/prnh/20070813/AQM125LOGO)

"Orbitz Worldwide delivered strong Adjusted EBITDA growth of 12% in the first quarter. Transaction growth accelerated for the fourth consecutive quarter to 20% driven by consumer fee reductions and ongoing operational improvements," said Barney Harford, president & CEO of Orbitz Worldwide. "Room night growth remained solid at 13%, with particular strength coming from ebookers and Orbitz for Business, which grew stayed room nights 80% and 26% respectively."


    Summary Operating Results
    (in thousands, except per share data)


                              Three Months Ended
                                  March 31,
                                  ---------
                                2010         2009   Change
                                ----         ----   ------
    Gross bookings (a)    $3,011,625   $2,428,687        24%
    Net revenue             $187,153     $188,393        -1%
    Net (loss)               ($5,261)   ($336,156)       **
    Basic and Diluted
     EPS                      ($0.05)      ($4.02)       **
    Operating cash flow      $95,991     $116,712       -18%
    Capital spending          $7,367      $11,757       -37%

    EBITDA (b)               $25,353    ($309,222)       **
      Impairment              $1,704     $331,527        **
      Other adjustments       $3,570       $5,123        **
    Adjusted EBITDA (b)      $30,627      $27,428        12%

    Transaction growth
     (c)                          20%         -12%   32 ppt
    Hotel room night
     growth (d)                   13%          -1%   14 ppt



    ** Not meaningful.

          In the first quarter 2010, the company revised its gross bookings
           reporting methodology for its ebookers brand to ensure
           consistency with the reporting methodology used for its other
           brands. Under this revised methodology, the company now reports
           global gross bookings on a booked basis. The company had
           previously reported ebookers gross bookings on a stayed basis.
           The prior period amounts in the table above have been updated to
           reflect this change in methodology. The company has also posted
           on its website (www.orbitz-ir.com) a schedule that updates
    (a)    historically reported gross bookings for this change.
          Non-GAAP financial measures.  A definition of EBITDA and Adjusted
           EBITDA and a reconciliation of these non-GAAP financial measures
           to the most comparable GAAP financial measure are contained in
    (b)    Appendix A.
    (c)   Represents year over year transaction growth on a booked basis.
          Represents year over year growth in stayed hotel room nights.
           Includes both standalone hotel room nights and hotel room nights
    (d)    included in vacation packages.


First Quarter 2010 Financial Highlights

For the first quarter 2010, the company reported a net loss of $5.3 million or ($0.05) per diluted share compared with a net loss of $336.2 million or ($4.02) per diluted share for the first quarter 2009, which included a $331.5 million non-cash goodwill and intangible asset impairment charge. Adjusted EBITDA increased 12 percent year over year to $30.6 million from $27.4 million for the first quarter of the prior year.

Gross Bookings and Net Revenue

Global gross bookings increased 24 percent (22 percent on a constant currency basis) year over year. This increase was due primarily to higher transaction volume and higher air fares. Air gross bookings increased 30 percent (29 percent on a constant currency basis) and non-air gross bookings increased 11 percent (seven percent on a constant currency basis) year over year. Domestic gross bookings increased 21 percent and international gross bookings increased 41 percent (25 percent on a constant currency basis) year over year.

Net revenue was $187.2 million for the first quarter 2010, a decrease of one percent (three percent on a constant currency basis) year over year. Domestic net revenue was down eight percent while international net revenue increased 38 percent (19 percent on a constant currency basis) year over year. The net revenue decline was due primarily to the removal of most domestic air booking fees and a significant reduction in hotel booking fees, partially offset by higher air and standalone hotel transactions.


    Gross Bookings and Net Revenue
    (in thousands)


                                           Three Months Ended
                                               March 31,
                                               ---------
                                             2010         2009   Change
                                             ----         ----   ------

      Gross Bookings
        Air                            $2,166,787   $1,667,527        30%
        Non-air                           844,838      761,160        11%
                                          -------      -------       ---
      Total Gross Bookings             $3,011,625   $2,428,687        24%

        Domestic                       $2,506,631   $2,069,523        21%
        International                     504,994      359,164        41%
                                          -------      -------       ---
      Total Gross Bookings (a)         $3,011,625   $2,428,687        24%

      Net Revenue
        Air                               $71,625      $81,328       -12%
        Hotel                              43,468       39,441        10%
        Vacation Packaging                 27,853       28,905        -4%
        Advertising and Media              12,218       14,006       -13%
        Other                              31,989       24,713        29%
                                           ------       ------       ---
      Total Net Revenue                  $187,153     $188,393        -1%

      Transactional Net Revenue
          Domestic                       $130,266     $140,160        -7%
          International                    42,183       30,696        37%
                                           ------       ------       ---
      Total Transactional Net Revenue
       (b)                               $172,449     $170,856         1%

      Non-transactional Net Revenue
          Domestic                        $13,729      $16,861       -19%
          International                       975          676        44%
                                              ---          ---
      Total Non-transactional Net
       Revenue (c)                        $14,704      $17,537       -16%

          Domestic                       $143,995     $157,021        -8%
          International                    43,158       31,372        38%
                                           ------       ------       ---
      Total Net Revenue                  $187,153     $188,393        -1%



          In the first quarter 2010, the company revised its gross
          bookings reporting methodology for its ebookers brand to
          ensure consistency with the reporting methodology used for its
          other brands. Under this revised methodology, the company now
          reports global gross bookings on a booked basis. The company
          had previously reported ebookers gross bookings on a stayed
          basis. The prior period amounts in the table above have been
          updated to reflect this change in methodology. The company has
          also posted on its website (www.orbitz-ir.com) a schedule
          that updates historically reported gross bookings for this
    (a)   change.
          Transactional net revenue is comprised of net revenue from air
          bookings, hotel bookings, vacation packaging, car bookings,
    (b)   cruise bookings, destination services and travel insurance.
          Non-transactional net revenue is primarily comprised of
          advertising and media revenue and revenue from the company's
    (c)   hosting business.

    --Air net revenue was $71.6 million in the first quarter 2010,
     down 12 percent (13 percent on a constant currency basis) year
     over year.  Domestic air net revenue declined $13.2 million or 20
     percent due to the removal of most domestic booking fees in April
     2009, partially offset by higher air transactions as a result of
     the fee removals. The company's domestic air transaction growth
     rate increased 34 percentage points in the first quarter 2010
     compared with the first quarter 2009 when the company still
     charged booking fees on all airline tickets. The anniversary of
     the fee removals was in early April 2010, and as a result, the
     company expects that its air transaction growth rates will be
     slower for the balance of the year.  International air net
     revenue increased $3.5 million or 23 percent (14 percent on a
     constant currency basis) year over year due primarily to higher
     air transactions, partially offset by lower net revenue per
     airline ticket.
    -- Hotel net revenue was $43.5 million in the first quarter
     2010, up ten percent (two percent on a constant currency basis)
     year over year.  Hotel net revenue increased due to strong
     performance at ebookers driven by an increase in standalone hotel
     transactions and an increase in net revenue per transaction.
     This strength at ebookers was partially offset by weak
     performance at HotelClub.  The decline at HotelClub was driven by
     lower volume in European destinations and lower net revenue per
     transaction due to the shift in the geographic mix of its
     bookings.  The Asia-Pacific region now represents over 65% of
     HotelClub transactions.  Hotel net revenue for the company's
     domestic brands was flat year over year.  Lower hotel booking
     fees and lower breakage revenue offset the increase in domestic
     standalone hotel transactions.
    --Vacation package net revenue decreased four percent in the
     quarter to $27.9 million as a result of lower domestic
     transactions and lower breakage. The decline in domestic
     transactions was primarily due to higher pricing for packages.
     Strong demand for packages at ebookers partially offset this
     decrease.
    --Advertising and media revenue decreased 13 percent year over
     year to $12.2 million, primarily due to a decline in revenue from
     third party referral programs, specifically membership discount
     programs.  Effective March 31, 2010, the company ended the third
     party membership discount program previously offered on its
     domestic websites and terminated its relationship with its
     supplier for these programs.  The company is actively seeking out
     opportunities to offset some if not all of the resulting revenue
     decline over time.
    --Other net revenue, which primarily includes car rental, cruise,
     destination services and travel insurance revenue, increased 29
     percent (28 percent on a constant currency basis) year over year,
     due to an increase in global travel insurance revenue, domestic
     car rental revenue and revenue from credit card surcharges.
     Travel insurance revenue increased due to a change in the timing
     of revenue recognition and, to a lesser extent, higher air
     transaction volume, higher attachment and higher air fares.
     Domestic car net revenue increased due to higher volume,
     partially offset by lower average daily rates for car rentals.


The company has included a schedule in Appendix A to this press release that adjusts gross bookings and net revenue for currency impacts in order to provide a more comparable view of the company's operating performance across periods. The company has also included a schedule of trended operating metrics in Appendix B to this press release.

Operating Expenses

Cost of revenue

Cost of revenue is primarily comprised of customer service costs, credit card processing fees and other costs including ticketing and fulfillment, customer refunds and charge-backs, affiliate commissions and connectivity and other processing costs.



                                Three Months Ended
                                     March 31,
                                     ---------          %
                                  2010      2009      Change
                                  ----      ----      ------
                                   (in thousands)
    Customer service costs      $14,413    $12,570       15%
    Credit card processing
     fees                        11,726     10,674       10%
    Other                        12,111     12,112        -
        Total cost of revenue   $38,250    $35,356        8%
                                =======    =======      ===
        % of net revenue           20.4%      18.8%

Cost of revenue increased to 20.4 percent of net revenue in the first quarter 2010 due to lower net revenue per transaction and higher costs associated with the increase in transaction volume, both of which resulted from the removal of domestic air booking fees and lower hotel booking fees.

Selling, general and administrative expense (SG&A)

Our selling, general and administrative expense is primarily comprised of wages and benefits, contract labor costs, and network communications, systems maintenance and equipment costs.



                                    Three Months Ended
                                         March 31,
                                         ---------          %
                                      2010      2009      Change
                                      ----      ----      ------
    Wages and benefits              $36,802    $40,620       -9%
    Contract labor                    4,637      5,243      -12%
    Network communications,
     systems maintenance and
     equipment                       6,530      7,212        -9%
    Other                            15,821     13,353       18%
      Total SG&A                    $63,790    $66,428       -4%
                                    =======    =======      ===

SG&A expense decreased $2.6 million, or four percent, in the first quarter 2010 to $63.8 million due primarily to lower severance and compensation expense, lower contract labor costs and lower systems maintenance and equipment costs, partially offset by an increase in foreign currency losses.

Marketing expense

The company's marketing expense is primarily comprised of online marketing costs, such as search and banner advertising, and offline marketing costs, such as television, radio and print advertising.Marketing expense in the first quarter 2010 was $57.7 million, a decrease of ten percent year over year. This decrease was mainly due to improved online marketing efficiency, lower offline marketing spending and a quarterly shift in timing of marketing spending in 2010 relative to 2009. This decrease was partially offset by higher emarketing transactions.

Interest Expense

Orbitz Worldwide incurred net interest expense of $11.3 million in the first quarter 2010 compared with $14.5 million in the first quarter 2009. This year over year decline was due primarily to lower outstanding borrowings and a lower effective interest rate on the company's term loan. At March 31, 2010, $400.0 million of the $506.0 million outstanding on the company's term loan had fixed interest rates. The weighted average effective interest rate on the term loan was 4.78 percent at March 31, 2010, down from 6.13 percent at March 31, 2009.

Cash Flow

Orbitz Worldwide reported operating cash flow of $96.0 million for the first quarter 2010, a decrease of 18 percent year over year. The decline in operating cash flow for the quarter was primarily driven by changes in the company's working capital accounts due to changes in the timing of payments received from vendors and the payment of employee bonuses in the first quarter 2010. No bonus payment was made in the first quarter 2009 based on 2008 results. Lower booking fee revenue also contributed to the decline in operating cash flow. Higher merchant gross bookings, improved marketing efficiency and lower interest payments partially offset the decline in operating cash flow.

At March 31, 2010, cash and cash equivalents were $161.9 million compared with cash and cash equivalents of $112.4 million at March 31, 2009 (net of $60.5 million of borrowings under the revolving credit facility). The year over year increase in cash is driven in part by the $50.0 million of cash proceeds received from the additional equity investment made by Travelport in January 2010.

Operational Highlights

  • In April, the company entered into an exclusive, multi-year partnership with New Orleans-based iSeatz to develop customized private label and in-path travel solutions. As part of the agreement, Orbitz Worldwide will give customers of existing iSeatz partners, including Delta Air Lines, Air France, KLM and Amtrak, the ability to book travel products through the Orbitz Worldwide global network of suppliers. Orbitz Worldwide and iSeatz will work together to bring increased power and flexibility to travel suppliers around the world.
  • As of March 31, 2010, Orbitz Worldwide offered approximately 100,000 bookable hotels on its websites. Orbitz Worldwide websites offer 40,000 hotels in the EMEA region and 16,000 hotels in the Asia Pacific region.
  • In February, the company removed hotel change and cancellation fees on its ebookers websites. The company previously removed hotel change and cancellation fees on its Orbitz and CheapTickets websites in September 2009.
  • Orbitz for Business completed a strong first quarter, delivering 25% year over year transaction growth. This growth reflects accelerating corporate travel demand and the addition of new customers. During the first quarter, Orbitz for Business added major new clients including FMC Corporation and the European business of Cooper Industries. In addition, Orbitz for Business signed renewals with IBM and Yale University.
  • During the first quarter, Orbitz Worldwide signed global contracts with a number of destination marketing organizations including the Puerto Rico Tourism Company, Vancouver Tourism and Illinois Bureau of Tourism to promote travel to those destinations. Orbitz Worldwide now has partner marketing agreements with nearly 165 destination marketing organizations.

Q2 2010 Outlook

For the second quarter 2010, the company expects to report:

  • 3% to 6% year over year increase in net revenue;
  • 20% to 22% cost of revenue as a percentage of net revenue, reflecting increased costs associated with higher transaction volume and higher customer service costs as a result of the eruption of the Eyjafjallajökull volcano; and
  • 10% to 20% year over year decrease in Adjusted EBITDA, reflecting a number of factors, the largest of which is an expected year over year increase in marketing expense in the second quarter.

For the full year 2010, the company expects total marketing expense as a percentage of net revenue will approximate 2009 levels, although the 2010 quarterly pattern of marketing expenses will vary from the 2009 pattern. The company also expects that Adjusted EBITDA for the full year 2010 will exceed the full year 2009. The company anticipates annual capital expenditures in the range of $40 million to $45 million, consistent with 2009 levels.

The outlook above assumes relatively stable foreign exchange rates.

Quarterly Conference Call

Orbitz Worldwide will host a conference call to discuss its first quarter 2010 results at 10:00 a.m. EDT (9:00 a.m. CDT) on Wednesday, May 5, 2010. A live webcast of the conference call can be accessed through the Orbitz Worldwide Investor Relations website at www.orbitz-ir.com. An archive of the webcast and a transcript will also be available on the website for a period of at least 30 days.

About Orbitz Worldwide

Orbitz Worldwide is a leading global online travel company that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products. Orbitz Worldwide owns a portfolio of consumer brands that includes Orbitz (www.orbitz.com), CheapTickets (www.cheaptickets.com), ebookers (www.ebookers.com), HotelClub (www.hotelclub.com), RatesToGo (www.ratestogo.com), the Away Network (www.away.com) and corporate travel brand Orbitz for Business (www.orbitzforbusiness.com). For more information on how your company can partner with Orbitz Worldwide, visit corp.orbitz.com.

Orbitz Worldwide uses its Investor Relations website to make information available to its investors and the public at www.orbitz-ir.com. You can sign up to receive email alerts whenever the company posts new information to the website.

Forward-Looking Statements

This press release and its attachments may contain forward-looking statements that involve risks, uncertainties and other factors concerning, among other things, Orbitz Worldwide's (the "Company's") expected financial performance and its strategic operational plans. The results presented are unaudited. The Company's actual results could differ materially from the results expressed or implied by such forward-looking statements and reported results should not be considered as an indication of future performance. The potential risks, uncertainties and other factors that could cause actual results to differ from those expressed by the forward-looking statements in this press release and its attachments include, but are not limited to, the current economic downturn and global financial crisis; competition in the travel industry; factors affecting the level of travel activity, particularly air travel volume; maintenance and protection of the Company's information technology and intellectual property; the outcome of pending litigation; the Company's level of indebtedness; risks associated with doing business in multiple currencies; trends in the travel industry; and general economic and business conditions. More information regarding these and other risks, uncertainties and factors is contained in the section entitled "Risk Factors" in the Company's filings with the Securities and Exchange Commission ("SEC") which are available on the SEC's website at www.sec.gov or the Company's Investor Relations website at www.orbitz-ir.com. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of May 5, 2010, and Orbitz Worldwide undertakes no obligation to publicly revise any forward-looking statement.

About Non-GAAP Financial Measures

This press release and its attachments include certain non-GAAP financial measures as defined by the SEC. These measures may be different from non-GAAP measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP). Further information regarding the non-GAAP financial measures included in this press release is contained in Appendix A attached to this press release.


                       Orbitz Worldwide, Inc.
    Condensed Consolidated Statements of Operations (Unaudited)
          (in thousands, except share and per share data)


                                             Three Months Ended
                                                 March 31,
                                             ------------------
                                             2010            2009
                                             ----            ----
      Net revenue                        $187,153        $188,393
      Cost and expenses
        Cost of revenue                    38,250          35,356
        Selling, general and
         administrative                    63,790          66,428
        Marketing                          57,657          64,269
        Depreciation and amortization      18,986          14,388
        Impairment of other assets          1,704               -
        Impairment of goodwill and
         intangible assets                      -         331,527
      Total operating expenses            180,387         511,968
                                          -------         -------
      Operating income (loss)               6,766        (323,575)

      Other (expense)
        Net interest expense              (11,311)        (14,513)
        Other expense                        (399)            (35)
      Total other (expense)               (11,710)        (14,548)
                                          -------         -------

      Loss before income taxes             (4,944)       (338,123)
      Provision (benefit) for income
       taxes                                  317          (1,967)
      Net loss                            ($5,261)     ($336,156)
                                          =======       =========

       Net loss per share-basic and
        diluted:
         Net loss per share                ($0.05)         ($4.02)
                                           ======          ======
         Weighted average shares
          outstanding                  96,736,876      83,593,448
                                       ==========      ==========



                           Orbitz Worldwide, Inc.
              Condensed Consolidated Balance Sheets (Unaudited)
                      (in thousands, except share data)


                                                 March 31,       December 31,
                                                    2010             2009
                                                ----------      -------------
      Assets
      Current assets:
        Cash and cash equivalents                 $161,930            $88,656
        Accounts receivable (net of
         allowance for doubtful
         accounts of $1,156 and $935,
         respectively)                              67,979             54,708
        Prepaid expenses                            17,841             17,399
        Due from Travelport, net                    13,540              3,188
        Other current assets                         4,072              5,702
                                                     -----              -----
      Total current assets                         265,362            169,653
      Property and equipment, net                  172,935            180,962
      Goodwill                                     714,483            713,123
      Trademarks and trade names                   155,261            155,090
      Other intangible assets, net                  14,528             18,562
      Deferred income taxes, non-
       current                                       9,057              9,954
      Other non-current assets                      55,745             46,898
      Total Assets                              $1,387,371         $1,294,242
                                                ==========         ==========

      Liabilities and Shareholders'
       Equity
      Current liabilities:
        Accounts payable                           $30,606            $30,279
        Accrued merchant payable                   310,493            219,073
        Accrued expenses                           111,058            112,771
        Deferred income                             45,233             30,924
        Term loan, current                          19,768             20,994
        Other current liabilities                    3,434              5,162
                                                     -----              -----
      Total current liabilities                    520,592            419,203
      Term loan, non-current                       486,250            555,582
      Line of credit                                     -             42,221
      Tax sharing liability                        108,513            108,736
      Unfavorable contracts                         10,325              9,901
      Other non-current liabilities                 26,767             28,096
      Total Liabilities                          1,152,447          1,163,739
                                                 ---------          ---------
      Commitments and contingencies
      Shareholders' Equity:
        Preferred stock, $0.01 par
         value, 100 shares authorized,
         no shares issued or
         outstanding                                     -                  -
        Common stock, $0.01 par value,
         140,000,000 shares
         authorized, 101,027,029 and
         83,831,561 shares issued
         and outstanding, respectively               1,010                838
        Treasury stock, at cost,
         24,913 and 24,521 shares
         held, respectively                            (50)               (48)
        Additional paid in capital               1,022,509            921,425
        Accumulated deficit                       (790,633)          (785,372)
        Accumulated other
         comprehensive income (loss)
         (net of accumulated tax
         benefit of $2,558 and
         $2,558, respectively)                       2,088             (6,340)
      Total Shareholders' Equity                   234,924            130,503
                                                   -------            -------
      Total Liabilities and
       Shareholders' Equity                     $1,387,371         $1,294,242
                                                ==========         ==========


                              Orbitz Worldwide, Inc.
            Condensed Consolidated Statements of Cash Flows (Unaudited)
                                  (in thousands)

                                                         Three Months Ended
                                                              March 31,
                                                        -------------------
                                                         2010            2009
                                                         ----            ----
     Operating activities:
     Net loss                                         ($5,261)      ($336,156)
     Adjustments to reconcile net loss to
      net cash provided by operating activities:
       Loss on extinguishment of debt                     389               -
       Depreciation and amortization                   18,986          14,388
       Impairment of other assets                       1,704               -
       Impairment of goodwill and intangible
        assets                                              -         331,527
       Amortization of unfavorable contract
        liability                                        (825)           (825)
       Non-cash net interest expense                    4,017           4,196
       Deferred income taxes                              291          (3,787)
       Stock compensation                               2,901           4,767
       Provision for bad debts                            141             255
       Changes in assets and liabilities:
        Accounts receivable                           (14,720)         (4,796)
        Deferred income                                14,477          16,818
        Due to/from Travelport, net                   (10,442)          8,567
        Accrued merchant payable                       96,073          67,879
        Accounts payable, accrued expenses and
         other current liabilities                     (7,947)         10,803
           Other                                       (3,793)          3,076
     Net cash provided by operating
      activities                                       95,991         116,712
                                                       ------         -------

     Investing activities:
       Property and equipment additions                (7,367)        (11,757)
       Changes in restricted cash                         (14)              -
     Net cash (used in) investing
      activities                                       (7,381)        (11,757)
                                                       ------         -------

     Financing activities:
       Proceeds from issuance of common
        stock, net of issuance costs                   48,950               -
        Payment of fees to repurchase a
         portion of the term loan                        (248)              -
       Payments on the term loan                      (20,994)         (1,500)
       Payments to satisfy employee tax
        withholding obligations
        upon vesting of equity-based awards               (60)            (36)
       Proceeds from exercise of employee
        stock options                                      65               -
       Proceeds from line of credit                         -          99,457
       Payments on line of credit                     (42,221)        (59,823)
     Net cash (used in) provided by
      financing activities                            (14,508)         38,098
                                                      -------          ------
     Effects of changes in exchange rates
      on cash and cash equivalents                       (828)         (1,328)
                                                         ----          ------
     Net increase in cash and cash
      equivalents                                      73,274         141,725
     Cash and cash equivalents at beginning
      of period                                        88,656          31,193
     Cash and cash equivalents at end of
      period                                         $161,930        $172,918
                                                     ========        ========
     Supplemental disclosure of cash flow
      information:
       Income tax payments, net                        $1,072          $1,437
       Cash interest payments, net of
        capitalized interest of $10
        and $43, respectively                          $6,695         $10,506
     Non-cash financing activity:
       Repayment of term loan in connection
        with debt-equity exchange                     $49,564               -

Appendix A: Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

EBITDA is a performance measure used by management that is defined as net income or net loss plus: net interest expense, provision (benefit) for income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted for certain non-cash and unusual or non-recurring items as described below. Orbitz Worldwide uses and believes investors and other external users of the Company's financial statements benefit from the presentation of EBITDA and Adjusted EBITDA in evaluating its operating performance because:

  • These measures provide greater insight into management decision making at Orbitz Worldwide as they are among the primary metrics by which management evaluates the operating performance of the Company's business. Management believes that when viewed with GAAP results and the accompanying reconciliation, EBITDA and Adjusted EBITDA provide additional information that is useful for management and other external users to gain an understanding of the factors and trends affecting the ongoing cash earnings capability of the Company's business, from which capital investments are made and debt is serviced. These supplemental measures are used by management and the board of directors to evaluate the Company's actual results against management's expectations. The compensation of management and other employees within the Company is also tied to the Company's actual performance, as measured by Adjusted EBITDA relative to performance targets established by the Company's board of directors and its compensation committee.
  • EBITDA measures performance apart from items such as interest expense, income taxes and depreciation and amortization. Management believes that the exclusion of interest expense is necessary to evaluate the cash earnings capability of the business. The Company generally only funds working capital requirements with borrowed funds (specifically, funds borrowed under its revolving credit facility) in the fourth quarter of the year when its cash balances are typically the lowest. As a result, nearly all of the Company's interest expense is not incurred to fund its operating activities. In addition, excluding interest expense from the Company's non-GAAP measures is consistent with the Company's intent to disclose the ongoing cash earnings capability of the business, from which capital investments are made and debt is serviced. Management believes that the exclusion of non-cash depreciation and amortization is also necessary to evaluate the cash earnings capability of the business. Management believes that the review of its non-GAAP measures in conjunction with other GAAP metrics, such as capital expenditures, is more useful in understanding the Company's business than the inclusion of depreciation and amortization expense in the non-GAAP measures used by management, since depreciation and amortization expense has historically fluctuated as a result of purchase accounting and this expense involves management judgment (e.g. estimated useful lives).
  • Adjusted EBITDA corresponds more closely to the ongoing cash earnings capability of the Company's business, by excluding the items described above, as well as certain other non-cash items, such as goodwill and intangible asset impairment charges and stock-based compensation, and other unusual and non-recurring items, such as restructuring expense. Adjusted EBITDA does not exclude certain non-cash items, such as accruals of revenue and expense, because these items represent timing differences and management believes that by including these items, it is providing a better view of the cash earnings capability of the business.

EBITDA and Adjusted EBITDA, as presented for the three months ended March 31, 2010 and March 31, 2009, are not defined under GAAP and do not purport to be an alternative to net income or net loss as a measure of operating performance. EBITDA and Adjusted EBITDA have certain limitations in that they do not take into account the impact of certain expenses to the Company's income statement, such as stock-based compensation, goodwill and intangible asset impairment charges, acquisition-related accounting and certain one-time items, if applicable. Because not all companies use identical calculations, this presentation of EBITDA and Adjusted EBITDA may not be comparable to other similarly-titled measures used by other companies.



    The following table provides a reconciliation of net loss to EBITDA:


                                                  Three Months Ended March 31,
                                                  ----------------------------
                                                         2010           2009
                                                         ----           ----
                                                            (in thousands)

    Net loss                                          ($5,261)     ($336,156)
    Net interest expense                               11,311         14,513
    Provision (benefit) for income taxes                  317         (1,967)
    Depreciation and amortization                      18,986         14,388
    EBITDA                                            $25,353      ($309,222)
                                                      =======      =========


    EBITDA was adjusted by the items listed and described in more detail
    below.  The following table provides a reconciliation of EBITDA to
    Adjusted EBITDA.


                                                  Three Months Ended March 31,
                                                  ----------------------------
                                                         2010          2009
                                                         ----          ----
                                                           (in thousands)

    EBITDA                                            $25,353     ($309,222)
    Impairment of other assets (a)                      1,704             -
    Impairment of goodwill and intangible
     assets (b)                                             -       331,527
    Stock-based compensation expense (c)                3,181         5,091
    Loss on extinguishment of debt (d)                    389             -
    Professional services fees (e)                          -            32
    Adjusted EBITDA                                   $30,627       $27,428
                                                      =======       =======


    (a)  Represents a non-cash charge recorded in the first quarter 2010
    for the impairment of an asset related to in-kind marketing and
    promotional support from Northwest Airlines under the Charter
    Associate Agreement. As a result of the completion of the
    operational merger of Northwest Airlines and Delta Airlines into a
    single operating carrier, Northwest Airlines will no longer be
    obligated to provide the Company with in-kind marketing and
    promotional support after June 1, 2010. Management adjusts for this
    item because it represents a significant non-cash operating expense
    that is not reflective of the cash earnings capability of the
    business.

    (b)  Represents non-cash charges recorded for the impairment of
    goodwill and intangible assets during the first quarter 2009.
    Management adjusts for this item because it represents a significant
    non-cash operating expense that is not reflective of the cash
    earnings capability of the business.

    (c)  Primarily represents non-cash stock compensation expense; also
    includes expense related to restricted cash awards granted prior to
    the Company's initial public offering in July 2007 ("IPO").
    Management adjusts for this item as it represents a significant non-
    cash operating expense that is not indicative of the cash earnings
    capability of the business.

    (d)  Represents the loss recorded upon extinguishment of $49.6
    million of the Company's term loan. The fair value of the common
    shares issued in the exchange was $49.4 million. After the write-
    off of unamortized debt issuance costs and other miscellaneous fees
    incurred to retire this debt, the Company recorded a $0.4 million
    loss on extinguishment of the term loan. Management adjusts for this
    item because it represents a significant non-recurring charge that
    is not indicative of the cash earnings capability of the business.

    (e)  Represents accounting and consulting services primarily
    associated with the IPO and post-IPO transition period. Management
    adjusted for these costs because they were non-recurring charges,
    representative of the Company's transition to a public company.

Gross Bookings and Net Revenue, at Constant Currency

The Company's reporting currency is the U.S. Dollar. As a result, reported financial results are impacted by the strength or weakness of the U.S. Dollar relative to the currencies of the international markets in which the Company operates particularly the Pound Sterling, Euro and Australian Dollar. Management evaluates the Company's operating performance with and without the impact of changes in foreign exchange rates because it believes excluding the impact of foreign exchange rates provides a more comparable view of the Company's operating performance across periods. Management believes that when viewed with GAAP results and the accompanying reconciliation, management and other external users are better able to gain an understanding of the factors and trends affecting operating performance. The following table adjusts gross bookings and net revenue for foreign currency impacts across the relevant periods:



                                                                 Total
                                                                 Orbitz
                                        Domestic  International Worldwide
                                        --------  -------------   ---------
                                                   (in thousands)

    Gross Bookings
    --------------
    Q1, 2010 Reported Gross Bookings   $2,506,631      $504,994  $3,011,625
                                       ----------      --------  ----------

    Q1, 2009 Reported Gross Bookings   $2,069,523      $359,164  $2,428,687
      Impact of Foreign Exchange Rates          -        44,550      44,550
                                              ---        ------      ------
    Q1, 2009 Gross Bookings at
     Constant Currency                 $2,069,523      $403,714  $2,473,237

    Reported Gross Bookings Growth             21%           41%         24%
    Gross Bookings Growth at Constant
     Currency                                  21%           25%         22%

    Net Revenue
    -----------
    Q1, 2010 Reported Net Revenue        $143,995       $43,158    $187,153
                                         --------       -------    --------

    Q1, 2009 Reported Net Revenue        $157,021       $31,372    $188,393
      Impact of Foreign Exchange Rates          -         4,924       4,924
                                              ---         -----       -----
    Q1, 2009 Net Revenue at Constant
     Currency                            $157,021       $36,296    $193,317

    Reported Net Revenue Growth                -8%           38%         -1%
    Net Revenue Growth at Constant
     Currency                                  -8%           19%         -3%




                        Appendix B: Trended Operational Metrics

                                                  1Q09        2Q09       3Q09

    Year over Year Growth
      Transaction Growth                          -12%          3%         7%
      Hotel Room Night Growth                      -1%          2%         3%

    Gross Bookings (in thousands)
    Domestic
      Air                                   $1,439,161  $1,736,475 $1,616,320
      Non-air                                  630,362     594,599    583,040
    Total Domestic Gross Bookings            2,069,523   2,331,074  2,199,360

    International
      Air                                      228,366     225,730    216,246
      Non-air                                  130,798     135,927    159,058
    Total International Gross Bookings         359,164     361,657    375,304

    Orbitz Worldwide
      Air                                    1,667,527   1,962,205  1,832,566
      Non-air                                  761,160     730,526    742,098
    Total Gross Bookings                    $2,428,687  $2,692,731 $2,574,664

    Year over Year Gross Bookings Growth
      Domestic                                    -13%         -9%        -5%
      International                               -34%        -29%       -17%
      Orbitz Worldwide                            -17%        -12%        -7%
    At Constant Currency
      Domestic                                    -13%         -9%        -5%
      International                               -18%        -15%       -10%
      Orbitz Worldwide                            -14%        -10%        -6%

    Net Revenue (in thousands)
    Transactional Net Revenue
      Domestic
        Air                                    $66,063     $53,577    $47,945
        Non-air                                 74,097      79,103     79,675
    Total Domestic Transactional Net Revenue   140,160     132,680    127,620

      International
        Air                                     15,265      15,389     11,930
        Non-air                                 15,431      22,498     29,616
    Total International Transactional Net
     Revenue                                    30,696     37,887     41,546

    Orbitz Worldwide
        Air                                     81,328      68,966     59,875
        Non-air                                 89,528     101,601    109,291
    Total Orbitz Worldwide Transactional
        Net Revenue                           $170,856    $170,567   $169,166

    Non-transactional Net Revenue
      Domestic                                 $16,861     $16,362    $16,393
      International                                676       1,030      1,044
    Total Orbitz Worldwide
      Non-transactional Net Revenue            $17,537     $17,392    $17,437

    Orbitz Worldwide
        Air                                    $81,328     $68,966    $59,875
        Non-air                                107,065     118,993    126,728
    Total Orbitz Worldwide Net Revenue        $188,393    $187,959   $186,603

    Year over Year Net Revenue Growth
      Transactional Net Revenue
        Domestic                                   -8%        -18%       -24%
        International                             -39%        -24%       -18%
        Orbitz Worldwide                          -16%        -20%       -23%
      Transactional Net Revenue
        at Constant Currency
        Domestic                                   -8%        -18%       -24%
        International                             -23%         -9%       -12%
        Orbitz Worldwide                          -11%        -17%       -22%

      Non-transactional Net Revenue                 4%         -5%       -12%

      Orbitz Worldwide Net Revenue                -14%        -19%       -22%
      Orbitz Worldwide Net Revenue
          at Constant Currency                    -10%        -15%       -21%



                                                        4Q09          1Q10

    Year over Year Growth
      Transaction Growth                                 19%           20%
      Hotel Room Night Growth                            13%           13%

    Gross Bookings (in thousands)
    Domestic
      Air                                         $1,652,524     $1,845,225
      Non-air                                        489,285       661,406
    Total Domestic Gross Bookings                  2,141,809     2,506,631

    International
      Air                                            238,292       321,562
      Non-air                                        144,724       183,432
    Total International Gross Bookings               383,016       504,994

    Orbitz Worldwide
      Air                                          1,890,816     2,166,787
      Non-air                                        634,009       844,838
    Total Gross Bookings                          $2,524,825    $3,011,625

    Year over Year Gross Bookings Growth
      Domestic                                           15%           21%
      International                                      33%           41%
      Orbitz Worldwide                                   17%           24%
    At Constant Currency
      Domestic                                           15%           21%
      International                                      15%           25%
      Orbitz Worldwide                                   15%           22%

    Net Revenue (in thousands)
    Transactional Net Revenue
      Domestic
        Air                                          $46,408       $52,846
        Non-air                                       70,372        77,420
    Total Domestic Transactional Net Revenue         116,780       130,266

      International
        Air                                           13,066        18,779
        Non-air                                       25,511        23,404
    Total International Transactional Net Revenue     38,577        42,183

    Orbitz Worldwide
        Air                                           59,474        71,625
        Non-air                                       95,883       100,824
    Total Orbitz Worldwide Transactional
        Net Revenue                                 $155,357      $172,449

    Non-transactional Net Revenue
      Domestic                                       $18,095       $13,729
      International                                    1,241           975
    Total Orbitz Worldwide
      Non-transactional Net Revenue                  $19,336       $14,704

    Orbitz Worldwide
        Air                                          $59,474       $71,625
        Non-air                                      115,219       115,528
    Total Orbitz Worldwide Net Revenue              $174,693      $187,153

    Year over Year Net Revenue Growth
      Transactional Net Revenue
        Domestic                                        -12%           -7%
        International                                    49%           37%
        Orbitz Worldwide                                 -2%            1%
      Transactional Net Revenue
        at Constant Currency
        Domestic                                        -12%           -7%
        International                                    25%           19%
        Orbitz Worldwide                                 -5%           -2%

      Non-transactional Net Revenue                     -10%          -16%

      Orbitz Worldwide Net Revenue                       -3%           -1%
      Orbitz Worldwide Net Revenue
          at Constant Currency                           -6%           -3%





SOURCE Orbitz.com

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Orbitz Worldwide Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.