Orbitz 2009 Annual Report Download - page 91

determined using the discounted cash flows of the expected rebates, net of the expected fair value of in-kind
marketing support.
At December 31, 2008 and December 31, 2007, the net present value of the unfavorable contract liability
was $16 million and $20 million, respectively. The current portion of the liability of $3 million was included
in accrued expenses in our consolidated balance sheets at December 31, 2008 and December 31, 2007,
respectively. The long term portion of the liability of $13 million and $17 million is included in unfavorable
contracts in our consolidated balance sheets at December 31, 2008 and December 31, 2007, respectively.
This liability is being amortized to revenue in our consolidated statements of operations on a straight-line
basis over the remaining contractual term. We recognized revenue for the unfavorable portion of the Charter
Associate Agreements in the amount of $3 million, $3 million, $1 million and $1 million for the years ended
December 31, 2008 and December 31, 2007 and for the periods from August 23, 2006 to December 31, 2006
and January 1, 2006 to August 22, 2006, respectively.
11. Commitments and Contingencies
The following table summarizes our commitments and contingencies as of December 31, 2008:
2009 2010 2011 2012 2013 Thereafter Total
(in millions)
Operating leases (a) .................. $ 6 $ 6 $ 5 $ 4 $ 4 $25 $ 50
Travelport GDS contract (b)............ 45 20 20 20 20 20 145
Telecommunications service agreement . . . 1 2 — — — — 3
Software license agreement ............ 9 9 — — — — 18
Total ........................... $61 $37 $25 $24 $24 $45 $216
(a) These operating leases are primarily for facilities and equipment and represent non-cancelable leases.
Certain leases contain periodic rent escalation adjustments and renewal options. Our operating leases
expire at various dates, with the latest maturing in 2023. For the years ended December 31, 2008 and
December 31, 2007 and for the periods from August 23, 2006 to December 31, 2006 and January 1,
2006 to August 22, 2006, we recorded rent expense in the amount of $6 million, $8 million,
$3 million and $8 million, respectively. As a result of various subleasing arrangements that we have
entered into, we are expecting approximately $5 million in sublease income through 2012.
(b) The Travelport GDS service agreement is structured such that we earn incentive revenue for each
segment that is processed through Galileo or Worldspan. The agreement also required us to process
38 million segments during 2008, 16 million segments through Worldspan and 22 million segments
through Galileo. The required number of segments processed in future years for Worldspan remains
fixed at 16 million segments, while the required number of segments for Galileo is subject to
adjustment based upon the actual segments processed in the preceding year. In 2009, we are required
to process approximately 20 million segments through Galileo. Our failure to process the required
number of segments would result in a shortfall payment of $1.25 per segment below the required
minimum. The table above includes shortfall payments required by the agreement if we do not
process any segments through Worldspan, as well as shortfall payments required if we do not process
any segments through Galileo during the year ended December 31, 2009. Because the required
number of segments for Galileo adjusts based on the actual segments processed in the preceding year,
we are unable to predict shortfall payments that may be required by the agreement beyond 2009. If
we meet the minimum number of segments, we are not required to make payments of any kind to
Galileo or Worldspan (see Note 18 — Related Party Transactions). No payments were made to
Travelport in 2008 related to the required minimum segments.
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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)