Orbitz 2008 Annual Report Download - page 116

ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Related Party Transactions (Continued)
General corporate overhead expenses were allocated based on a percentage of the forecasted revenue. Direct billed expenses were based upon actual utilization of
the services. Cost subject to the overhead allocations and direct billings included executive management, tax, insurance, accounting, legal, treasury, information
technology, telecommunications, call center support and real estate expenses.
Intercompany Notes Payable
In August 2006, in connection with the Blackstone Acquisition, $106 million of intercompany notes payable were executed among subsidiaries of
Travelport and our subsidiaries. These notes accrued interest at a variable rate of LIBOR plus 500 basis points and were scheduled to mature in February 2017.
Concurrent with our IPO, the notes were assigned to us, and we repaid the interest that had accrued through the date of assignment.
On January 26, 2007 and January 30, 2007, we became the obligor on two intercompany notes payable to affiliates of Travelport in the amounts of
$25 million and $835 million, respectively, and recorded an $860 million reduction to net invested equity. These notes accrued interest at a fixed rate of 10.25%
and were scheduled to mature on February 19, 2014. On July 25, 2007, we used proceeds from the IPO and Term Loan to repay the notes and the interest accrued
thereon in full.
Separation Agreement
We entered into a Separation Agreement with Travelport at the time of our IPO. This agreement provided the general terms for the separation of our
respective businesses. As a wholly-owned subsidiary of Travelport, Travelport provided guarantees, letters of credit and surety bonds on our behalf under our
commercial agreements and leases and for the benefit of certain regulatory agencies. Under the Separation Agreement, we were required to have Travelport
released from any then outstanding guarantees and surety bonds. As a result, Travelport no longer provides surety bonds on our behalf or guarantees in
connection with commercial agreements or leases entered into or replaced by us. At December 31, 2007, there were $74 million of letters of credit issued by
Travelport on our behalf. At December 31, 2006, there were $113 million of guarantees, letters of credit and surety bonds issued by Travelport on our behalf.
Transition Services Agreement
At the time of our IPO, we entered into a Transition Services Agreement with Travelport. Under this agreement, Travelport has provided us with certain
transition services, including insurance, human resources and employee benefits, payroll, tax, communications, collocation and data center facilities, information
technology and other existing shared services. We have also provided Travelport with certain services, including accounts payable, information technology
hosting, data warehousing and storage as well as Sarbanes-Oxley compliance testing and deficiency remediation. The terms for the services provided under the
Transition Services Agreement generally expire on March 31, 2008, subject to certain exceptions. The charges for the services are based on the time expended by
the employee or service provider billed at the approximate human resource cost, including wages and benefits.
Master License Agreement
We entered into a Master License Agreement with Travelport at the time of our IPO. Pursuant to this agreement, Travelport paid us a one-time fee for
licenses to use certain of our intellectual property
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Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008