Orbitz 2009 Annual Report Download - page 58

replaced by us subsequent to the IPO. At December 31, 2008 and December 31, 2007, there were $67 million
and $74 million of letters of credit issued by Travelport on our behalf, respectively. Under the Separation
Agreement, Travelport has agreed to issue U.S. Dollar denominated letters of credit on our behalf in an
aggregate amount not to exceed $75 million through at least March 31, 2010 and thereafter so long as
Travelport and its affiliates (as defined in the Separation Agreement) own at least 50% of our voting stock.
Financial Obligations
Commitments and Contingencies
We and certain of our affiliates are parties to cases brought by consumers and municipalities and other
U.S. governmental entities involving hotel occupancy taxes. We believe that we have meritorious defenses and
we are vigorously defending against these claims (see Note 11 — Commitments and Contingencies of the
Notes to Consolidated Financial Statements for additional information).
Litigation is inherently unpredictable and, although we believe we have valid defenses in these matters
based upon advice of counsel, unfavorable resolutions could occur. While we cannot estimate our range of
loss, an adverse outcome from these unresolved proceedings could be material to us with respect to earnings
or cash flows in any given reporting period. We do not believe that the impact of such unresolved litigation
would result in a material liability to us in relation to our financial position or liquidity.
We are currently seeking to recover insurance reimbursement for costs incurred to defend the hotel
occupancy tax cases. We recorded a reduction to selling, general and administrative expense in our
consolidated statements of operations for reimbursements received of $8 million and $3 million for the years
ended December 31, 2008 and December 31, 2007, respectively. The recovery of additional amounts, if any,
by us and the timing of receipt of these recoveries is unclear. As such, in accordance with SFAS No. 5,
“Accounting for Contingencies,” as of December 31, 2008, we have not recognized a reduction to selling,
general and administrative expense in our consolidated statements of operations for the outstanding contingent
claims for which we have not yet received reimbursement.
Contractual Obligations
The following table summarizes our future contractual obligations as of December 31, 2008:
2009 2010 2011 2012 2013 Thereafter Total
(in millions)
Term Loan (a) ........................... $ 6 $ 6 $ 6 $ 6 $ 6 $563 $ 593
Revolver (a) ............................ — ———21 — 21
Interest (b).............................. 35 25 20 20 20 11 131
Contract exit costs (c) ..................... 4 5 4 2 1 1 17
Operating leases ......................... 6 6 5 4 4 25 50
Travelport GDS contract (d) ................. 45 20 20 20 20 20 145
Tax sharing liability (e) .................... 15 18 21 17 18 137 226
Telecommunications service agreement......... 1 2 — — — — 3
Software license agreement ................. 9 9 — — — — 18
Total contractual obligations (f) ............. $121 $91 $76 $69 $90 $757 $1,204
(a) In July 2007, concurrent with the IPO, we entered into the $685 million Credit Agreement consisting of
the seven-year $600 million Term Loan and the six-year $85 million Revolver. The Term Loan and
Revolver bear interest at variable rates, at our option, of LIBOR or an alternative base rate plus a margin.
The amounts shown in the table above represent future payments under the Term Loan and Revolver (see
Note 8 — Term Loan and Revolving Credit Facility of the Notes to Consolidated Financial Statements).
However, the timing of the future payments shown in the table above could change with respect to the
Term Loan, as beginning in the first quarter of 2009, we are required to make mandatory prepayments on
the Term Loan annually in an amount up to 50% of the prior year’s excess cash flow, as defined in the
58