Orbitz 2011 Annual Report Download - page 49

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preceding year. We are required to process approximately 15.4 million segments through Galileo during the year ending
December 31, 2012. Our failure to process at least 95% of these segments through the Travelport GDSs would result in a
shortfall payment of $1.25 per segment below the required minimum. We are not subject to these minimum volume
thresholds to the extent that we process all eligible segments through the Travelport GDS. Historically, we have met the
minimum segment requirement for our domestic brands. The table above includes shortfall payments required by the
agreement if we do not process any segments through Worldspan during the remainder of the contract term and shortfall
payments required if we do not process any segments through Galileo during the year ending December 31, 2012.
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 beyond 2012. However, we do not expect to make
any shortfall payments for our domestic brands in the foreseeable future.
The Travelport GDS Service Agreement also requires that ebookers use the Travelport GDSs exclusively in certain
countries for segments processed through GDSs in Europe. Our failure to process at least 95% of these segments through
the Travelport GDSs would result in a shortfall payment of $1.25 per segment for each segment processed through an
alternative GDS provider. We failed to meet this minimum segment requirement during each of the years ended
December 31, 2011, December 31, 2010 and December 31, 2009, and as a result, we were required to make shortfall
payments of $0.4 million to Travelport related to each of these years, respectively. Because the required number of
segments to be processed through the Travelport GDSs is dependent on the actual segments processed by ebookers in
certain countries in a given year, we are unable to predict shortfall payments that may be required for the years beyond
2010. As a result, the table above excludes any shortfall payments that may be required related to our ebookers brands for
the years beyond 2010. If we meet the minimum number of segments, we are not required to make shortfall payments to
Travelport (see Note 16 - Related Party Transactions of the Notes to Consolidated Financial Statements).
(e) Represents payments in connection with the tax sharing agreement with the Founding Airlines (see Note 7 - Tax Sharing
Liability of the Notes to Consolidated Financial Statements).
(f) Excluded from the above table are $3.4 million of liabilities for uncertain tax positions for which the period of settlement
is not currently determinable.
Other Commercial Commitments and Off-Balance Sheet Arrangements
In the ordinary course of business, we obtain surety bonds and bank guarantees, issued for the benefit of a third party, to
secure performance of certain of our obligations (see Note 9 - Commitments and Contingencies of the Notes to Consolidated
Financial Statements).
We are also required to issue letters of credit to certain suppliers and non-U.S. regulatory and government agencies. See
“Financing Arrangements” above for further discussion of our outstanding letters of credit.
CRITICAL ACCOUNTING POLICIES
The preparation of our consolidated financial statements and related notes in conformity with generally accepted
accounting principles requires us to make judgments, estimates and assumptions that affect the amounts reported therein. An
accounting policy is considered to be critical if it meets the following two criteria:
• the policy requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at
the time the estimate is made; and
• different estimates that reasonably could have been used or changes in the estimates that are reasonably likely to
occur from period to period would have a material impact on our consolidated financial statements.
We believe that the estimates and assumptions used when preparing our consolidated financial statements were the most
appropriate at that time. However, events that are outside of our control cannot be predicted and, as such, they cannot be
contemplated in evaluating such estimates and assumptions. We have discussed these estimates with our Audit Committee.
Presented below are those accounting policies that we believe require subjective and complex judgments that could
potentially affect our reported results. Although we believe these policies to be the most critical, other accounting policies also
have a significant effect on our consolidated financial statements and certain of these policies may also require the use of
estimates and assumptions (see Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial
Statements).