Travelport Performance and Innovation -Fourth Quarter and Full Year 2013 Results- PR Newswire ATLANTA, Feb. 27, 2014 ATLANTA, Feb. 27, 2014 /PRNewswire/ --Travelport Limited, a leading distribution services and e-commerce provider for the global travel industry, today announces its financial results for the fourth quarter and full year ended December 31, 2013. Commenting on developments, Gordon Wilson, President and CEO of Travelport, said: "I am delighted to report a successful growth year for Travelport, with key financial performance metrics up 5% with positive innovation and traction across all aspects of the business. We maintain forward momentum in transforming our core air business and growing our Beyond Air initiatives of payments, hospitality and advertising. I am also pleased to note that this momentum has continued into the early part of the current year." Highlights o5% growth in Net Revenue and 5% growth in Adjusted EBITDA for the full year^* oNew airline merchandising platform attracting low cost airline participation and wider network carrier content oDouble digit growth in Beyond Air initiatives – including advertising, hospitality and payments oDeployed new Point of Sale upgrades to over 75% of our targeted customer base oFirst Quarter 2014 developments include: oNew long-term agreement with Orbitz Worldwide oRenewed and extended British Airways, Iberia, Iberia Express and easyJet contracts oDeleveraging debt-for-equity exchange of $135 million, further improving our capital structure _____________ * Excluding the loss of the Master Services Agreement ("MSA") with United Airlines Financial Highlights Fourth Quarter 2013 (in $ millions) Q4 2013 Q42012 $Change %Change Net Revenue 480 457 23 5 Operating Income (Loss) 26 (17) 43 * EBITDA 80 41 39 95 Adjusted EBITDA 109 103 6 4 *Not meaningful Travelport's Net Revenue of $480 million for the fourth quarter of 2013 was $23 million (5%) higher than the fourth quarter of 2012, and Adjusted EBITDA of $109 million was $6 million (4%) higher than the fourth quarter of 2012. Travelport RevPas increased 2% to $5.58. Full Year 2013 Excluding MSA (in $ millions) 2013 2012 $ Change %Change $ Change % Change Net Revenue 2,076 2,002 74 4 101 5 Operating Income 208 138 70 51 91 78 EBITDA 414 365 49 13 70 20 Adjusted EBITDA 517 517 — — 23 5 Travelport's Net Revenue of $2,076 million for the full year 2013 was $74 million (4%) higher than 2012 and Adjusted EBITDA of $517 million was flat compared to the full year 2012. The MSA with United Airlines contributed approximately $27 million to Net Revenue, $21 million to each of Operating Income and EBITDA and $23 million to Adjusted EBITDA on a year to date basis for 2012.Excluding the impact of the MSA, Net Revenue increased $101 million (5%), and Adjusted EBITDA increased $23 million (5%) compared to 2012. The MSA only impacted the comparison of the results of operations for six months of the year in 2013 compared to 2012. Travelport RevPas increased 4% to $5.49. Interest costs of $342 million for the full year 2013 were $52 million higher than 2012 due to higher interest rates on our debt as a result of the debt refinancings we completed in April and June 2013. Travelport's net debt was $3,340 million as of December 31, 2013, which comprised debt of $3,573 million less $154 million in cash and cash equivalents and less $79 million of cash held as collateral. Travelport generated $100 million in net cash from operating activities for the full year 2013 compared to $181 million for 2012. The decrease is primarily a result of increased interest payments, increased customer loyalty payments and changes in operating working capital. To further strengthen our capital structure, Travelport Worldwide Limited, our ultimate parent company, entered into separate, individually negotiated private exchange agreements with Morgan Stanley, certain funds and accounts managed by AllianceBernstein L.P. and certain funds and accounts managed by P. Schoenfeld Asset Management LP to exchange $135 million of our subordinated debt at par into common stock, par value $0.0002 (the "Common Shares"), of Travelport Worldwide at a value of $1.55 per Common Share. An aggregate of approximately 87 million Common Shares will be issued in the exchanges, which brings our fully diluted shares outstanding to approximately 928 million. In connection with the refinancing of our first lien credit agreement in June 2013, we amended our definition of Adjusted EBITDA to exclude the amortization of customer loyalty payments. As a result, we have revised our reported Adjusted EBITDA for all periods presented to exclude the amortization of customer loyalty payments. Adjusted EBITDA now excludes the amortization of customer loyalty payments of $18 million and $14 million for the quarters ended December 31, 2013 and 2012, respectively, and $63 million and $62 million for the full year 2013 and 2012, respectively. Conference Call The Company's fourth quarter and full year 2013 earnings conference call will be held on February 27, 2014 beginning at 2:00 p.m. (EST). Details for this conference call as well as the earnings presentation are available through the Investor Center section of the Company's website (www.travelport.com/investors/Financial-Calendar), where pre-registration for the call is required. A recording of the call will be made available within 24 hours in the Financial/Operating Data section of the Investor Centre on the Company's website. About Travelport Travelport Limited is a leading distribution services and e-commerce provider for the global travel industry. With a presence in over 170 countries, over 3,500 employees and 2013 net revenue of more than $2.0 billion, Travelport is comprised of the global distribution system (GDS) business, which includes the Galileo and Worldspan brands and its Airline IT Solutions business and a majority joint venture in virtual payments business, eNett. Headquartered in Atlanta, Georgia, Travelport is a privately-owned company. Investor Contact Julian Walker Head of Corporate Communications and Investor Relations +44 (0)1753 288 210 firstname.lastname@example.org Media Contacts Kate Aldridge Senior Director, Corporate Communications, EMEA and APAC +44 (0)1753 328 8720 email@example.com Jill Brenner Senior Director, Corporate Communications, Americas +1 (973) 753 3110 firstname.lastname@example.org Forward-Looking Statements Certain statements in this press release constitute "forward-looking statements" that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "may fluctuate" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to: the impact that our outstanding indebtedness may have on the way we operate our business; factors affecting the level of travel activity, particularly air travel volume, including security concerns, general economic conditions, natural disasters and other disruptions; general economic and business conditions in the markets in which we operate, including fluctuations in currencies and the economic conditions in the eurozone; pricing, regulatory and other trends in the travel industry; our ability to obtain travel supplier inventory from travel suppliers, such as airlines, hotels, car rental companies, cruise lines and other travel suppliers; our ability to develop and deliver products and services that are valuable to travel agencies and travel suppliers and generate new revenue streams; risks associated with doing business in multiple countries and in multiple currencies; maintenance and protection of our information technology and intellectual property; the impact on supplier capacity and inventory resulting from consolidation of the airline industry; financing plans and access to adequate capital on favorable terms; our ability to achieve expected cost savings from our efforts to improve operational efficiency; our ability to maintain existing relationships with travel agencies and to enter into new relationships on acceptable financial and other terms; and our ability to grow adjacencies, such as our controlling interest in eNett. Other unknown or unpredictable factors could also have material adverse effects on our performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Except to the extent required by applicable securities laws, the Company undertakes no obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law. This press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules. As required by SEC rules, important information regarding such measures is contained below. TRAVELPORT LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Year Year Three Months Ended Ended Ended Ended (in $ millions) December 31, December 31, December 31, December 31, 2013 2012 2013 2012 Net Revenue 480 457 2,076 2,002 Costs and expenses Cost of revenue 294 272 1,266 1,191 Selling, general and 106 144 396 446 administrative Depreciation and 54 58 206 227 amortization Total costs and expenses 454 474 1,868 1,864 Operating income (loss) 26 (17) 208 138 Interest expense, net (85) (75) (342) (290) (Loss) gain on early — — (49) 6 extinguishment of debt Loss from continuing operations before income taxes and equity in (59) (92) (183) (146) earnings (losses) of investment in Orbitz Worldwide Benefit from (provision 4 1 (20) (23) for) income taxes Equity in earnings (losses) of investment in 2 (80) 10 (74) Orbitz Worldwide Net loss from continuing (53) (171) (193) (243) operations Gain from disposal of discontinued operations, 4 7 4 7 net of tax Net loss (49) (164) (189) (236) Net income attributable to non-controlling interest (1) — (3) — in subsidiaries Net loss attributable to (50) (164) (192) (236) the Company TRAVELPORT LIMITED CONSOLIDATED BALANCE SHEETS (in $millions) December31, December31, 2013 2012 Assets Current assets: Cash and cash equivalents 154 110 Accounts receivable (net of allowances for doubtful 177 150 accounts of $13 and $16) Deferred income taxes 1 2 Other current assets 134 170 Total current assets 466 432 Property and equipment, net 428 416 Goodwill 986 986 Trademarks and tradenames 314 314 Other intangible assets, net 671 717 Cash held as collateral 79 137 Investment in Orbitz Worldwide 19 — Non-current deferred income taxes 5 6 Other non-current assets 120 150 Total assets 3,088 3,158 Liabilities and equity Current liabilities: Accounts payable 72 74 Accrued expenses and other current liabilities 540 537 Deferred income taxes 24 38 Current portion of long-term debt 45 38 Total current liabilities 681 687 Long-term debt 3,528 3,392 Deferred income taxes 18 7 Other non-current liabilities 172 274 Total liabilities 4,399 4,360 Commitments and contingencies Shareholders' equity: Common shares ($1.00par value; 12,000shares authorized; 12,000shares issued and — — outstanding) Additional paid in capital 691 718 Accumulated deficit (1,939) (1,747) Accumulated other comprehensive loss (82) (189) Total shareholders' equity (deficit) (1,330) (1,218) Equity attributable to non-controlling interest in 19 16 subsidiaries Total equity (deficit) (1,311) (1,202) Total liabilities and equity 3,088 3,158 TRAVELPORT LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended Year ended (in $millions) December 31, December 31, 2013 2012 Operating activities Net loss (189) (236) Income from discontinued operations (including (4) (7) gain from disposal), net of tax Net loss from continuing operations (193) (243) Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities of continuing operations: Depreciation and amortization 206 227 Amortization of customer loyalty payments 63 62 Amortization of debt finance costs 24 37 Non-cash accrual of repayment fee and amortization 7 — of debt discount Loss (gain) on early extinguishment of debt 49 (6) Payment-in-kind interest 22 14 Gain on interest rate derivative instruments (3) (1) Loss on foreign exchange derivative instruments 1 — Equity in (earnings) losses of investment in (10) 74 Orbitz Worldwide Equity-based compensation 6 2 Deferred income taxes (1) 4 Customer loyalty payments (78) (47) Defined benefit pension plan funding (3) (27) FASA liability — (7) Changes in assets and liabilities: Accounts receivable (27) 22 Other current assets 5 (3) Accounts payable, accrued expenses and other 5 37 current liabilities Other 27 36 Net cash provided by operating activities 100 181 Investing activities Property and equipment additions (107) (92) Proceeds from sale of assets held for sale 17 — Other (6) 3 Net cash used in investing activities (96) (89) Financing activities Proceeds from new term loans 2,169 170 Proceeds from revolver borrowings 73 80 Repayment of term loans (1,667) (165) Repayment of revolver borrowings (93) (95) Repurchase of Senior Notes (413) (20) Repayment of capital lease obligations (20) (16) Debt finance costs (55) (20) Release of cash provided as collateral 137 — Cash provided as collateral (79) — Payments on settlement of foreign exchange (8) (51) derivative contracts Proceeds from settlement of foreign exchange 4 9 derivative contracts Distribution to a parent company (6) — Other (2) 2 Net cash provided by (used in) financing 40 (106) activities Net increase (decrease) in cash and cash 44 (14) equivalents Cash and cash equivalents at beginning of year 110 124 Cash and cash equivalents at end of year 154 110 Supplemental disclosure of cash flow information Interest payments 273 232 Income tax payments, net 29 16 Non-cash capital lease additions 32 63 Non-cash capital distribution to a parent company 25 — Exchange of Second Priority Secured Notes for 229 — Tranche 2 Loans Exchange of Senior Notes due 2014 and 2016 for new 591 — Senior Notes due 2016 TRAVELPORT LIMITED NON-GAAP MEASURES (in $ millions) Reconciliation of Travelport Adjusted EBITDA Three Months Ended December 31, to Operating Income (Loss) 2013 2012 Travelport Adjusted EBITDA 109 103 Less adjustments: Amortization of customer loyalty payments (18) (14) Corporate costs (3) (10) Equity-based compensation (2) — Litigation and related costs — (28) Other – non cash (6) (10) Total Adjustments (29) (62) EBITDA 80 41 Less: Depreciation and amortization (54) (58) Operating income (loss) 26 (17) Reconciliation of Travelport Adjusted EBITDA Year Ended December 31, to Operating Income 2013 2012 Travelport Adjusted EBITDA 517 517 Less adjustments: Amortization of customer loyalty payments (63) (62) Corporate costs (7) (19) Equity-based compensation (6) (2) Litigation and related costs (12) (53) Other – non cash (15) (16) Total Adjustments (103) (152) EBITDA 414 365 Less: Depreciation and amortization (206) (227) Operating income 208 138 Reconciliation of Travelport Adjusted EBITDA to Net Cash Provided by Operating Activities and Unlevered Free Cash Flow Year Ended December 31, 2013 2012 Travelport Adjusted EBITDA 517 517 Less: Interest payments (273) (232) Tax payments (29) (16) Changes in operating working capital 13 57 Customer loyalty payments (78) (47) Defined benefit pension plan funding (3) (27) Other adjusting items^(*) (47) (71) Net cash provided by operating 100 181 activities Add back interest paid 273 232 Less: Capital expenditures on property (107) (92) and equipment additions Less: Repayment of capital lease (20) (16) obligations Unlevered free cash flow 246 305 (*) Other adjusting items relate to payments for costs included within operating income, but excluded from Travelport Adjusted EBITDA. These include (i) $24 million and $20 million of corporate costs payments during the years ended December 31, 2013 and 2012, respectively, (ii) $23 million and $28 million of litigation and related costs payments for the years ended December 31, 2013 and 2012, respectively, (iii) a $15 million payment related to a historical dispute related to a now terminated arrangement with a former distributor in the Middle East during the year ended December 31, 2012, and (iv) $1 million of restructuring related payments made during the year ended December 31, 2012. TRAVELPORT LIMITED OPERATING STATISTICS AND DEFINITIONS (unaudited) Three Months Ended December 31, 2013 2012 Change % Change Segments (in millions) Americas 38 37 1 3 Europe 20 19 1 5 Asia Pacific 13 12 1 8 Middle East and Africa 9 9 — — Total Segments 80 77 3 4 RevPas $5.58 $5.47 $0.11 2.0% Year Ended Excluding MSA December 31, 2013 2012 Change % Change Change % Change Segments (in millions) Americas 170 172 (2) (1) — — Europe 85 82 3 4 3 4 Asia Pacific 56 54 2 4 2 4 Middle East and Africa 39 39 — — — — Total Segments 350 347 3 1 5 2 RevPas $5.49 $5.28 $0.21 4.0% ______________________ Definitions: RevPas: Revenue per Segment is transaction processing revenue divided by the number of reported segments. Customer Loyalty Payments: development advance payments that are made with the objective of increasing the number of clients or improving customer loyalty with travel agents or travel providers. The amortization of such payments is excluded from Adjusted EBITDA under the terms of our senior secured credit agreement and our second lien credit agreement. Unlevered free cash flow: is a non-GAAP measure and may not be comparable to similarly named measures used by other companies. Unlevered free cash flow is defined as net cash provided by (used in) operating activities adjusted to exclude cash interest payments and include capital expenditures and capital lease repayments. We believe unlevered free cash flow provides management and investors with a more complete understanding of the underlying liquidity of the core operating businesses and its ability to meet current and future financing and investing needs. Travelport EBITDA: is a non-GAAP financial measure and may not be comparable to similarly named measures used by other companies. Travelport EBITDA is defined as operating income (loss) plus depreciation and amortization expense. Travelport Adjusted EBITDA: is a non-GAAP financial measure and may not be comparable to similarly named measures used by other companies. We believe this measure provides management with a more complete understanding of the underlying results and trends and an enhanced overall understanding of our financial liquidity and prospects for the future. Adjusted EBITDA is the primary metric for measuring our business results, forecasting and determining future capital investment allocations and is used by the Board of Directors to determine incentive compensation for future periods. Capital expenditures, which impact depreciation and amortization, customer loyalty payments, interest expense and income tax expense, are reviewed separately by management. Travelport Adjusted EBITDA is disclosed so investors have the same tools as available to management when evaluating the results of Travelport. Travelport Adjusted EBITDA is defined as EBITDA adjusted to exclude items we believe potentially restrict our ability to assess the results of our underlying business. Travelport Adjusted EBITDA is a critical measure as it is required to calculate our key financial ratios under the covenants contained in our credit agreements. These ratios use a number which is broadly computed from Travelport Adjusted EBITDA for the last twelve months and consolidated net debt, as at the balance sheet date and are known as the Total Leverage Ratio and Senior Secured Leverage Ratio. Travelport is currently in compliance with all of its financial covenants. A breach of these covenants could result in a default under the senior secured credit agreement, second lien credit agreement and the indentures governing the notes. SOURCE Travelport Website: http://www.travelport.com
Travelport Performance and Innovation
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