Global transactions decline for Worldspan

Worldspan reported financial results for the first quarter ended March 31, 2006. The company reported revenues for the quarter of $262.1 million, operating income of $54.3 million and net income of $36.5 million.

The company’s financial results for the quarter benefited from a reduction in expenses of $11.3 million related to contractual payments that were received from certain former online travel agencies towards settlement of disputes.

Excluding these benefits, operating income would have been $43.0 million and net income would have been $25.2 million.

The year-over-year net income comparison also benefited from a $55.6 million charge the company incurred in the first quarter of 2005 in connection with its refinancing activities in February 2005.

Excluding this charge, the company’s reported net loss of $34.1 million in the first quarter of 2005 would have been net income of $21.5 million.

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“We are pleased with the first quarter’s results, which reflect ongoing control over our expenses while continuing to provide superior service levels to all our customers,” said Rakesh Gangwal, Chairman, President and Chief Executive Officer for Worldspan.


  Financial Highlights

  First Quarter 2006
 
Revenue: First quarter revenue was $262.1 million, up $1.5 million or 1% from revenue of $260.6 million in the first quarter of 2005.

Electronic travel distribution revenue was $242.7 million, a $0.7 million increase compared to $242.0 million in the first quarter of 2005. This increase was a result of higher yields, offset by a decline in transactions in the first quarter of 2006 versus 2005.

IT Services revenue was $19.4 million, an increase of $0.8 million, or 4%, compared to revenue of $18.6 million in the first quarter of 2005.

Operating Income: For the first quarter 2006, the company reported operating income of $54.3 million, which included $11.3 million of expense reduction related to contractual payments that were received from certain former online travel agencies towards settlement of disputes.

Excluding this benefit, operating income would have been $43.0 million, an improvement of $8.0 million, or 23%, compared to operating income of $35.0 million last year.

This year-over-year improvement reflects lower employee costs, lower communication and technology expenses, lower maintenance expenses, lower rental expenses and lower other expenses partially offset by increased outside services expense associated with the Company’s outsourcing programs.

Net Income: First quarter reported net income was $36.5 million compared to a net loss of $34.1 million for the same period last year. Both periods had non-recurring items. As mentioned above, in the first quarter of 2006, Worldspan collected contractual payments from certain former online travel agencies, which improved net income by $11.3 million.

Whereas, in the first quarter of 2005, the Company incurred a charge of $55.6 million in connection with its refinancing activities.

Without these items, net income for the first quarter of 2006 would have been $25.2 million and net income for the first quarter of 2005 would have been $21.5 million. This $3.7 million, or 17%, improvement in net income is a result of higher operating income, offset partially by additional interest expense.

Cash Flow: Worldspan generated $58.6 million in cash from operations during the first quarter of 2006. Cash capital spending was $2.1 million and principal payments on the term loan were $40 million, representing mandatory payments of $1 million and discretionary payments of $39 million. The Company ended the quarter with a cash balance of $70.2 million.

Global Transactions: Worldspan’s global transaction volumes declined by 2% in the first quarter of 2006 compared to the first quarter of 2005. Transaction volumes by online agencies declined by 2% year over year, while traditional travel agency volumes declined by 1% year over year.
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