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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
66
6. Accrued Expenses
Accrued expenses consisted of the following:
December 31, 2014 December 31, 2013
(in thousands)
Advertising and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,475 $ 37,612
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,921 33,315
Tax sharing liability (see Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,093 18,673
Customer service costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,564 7,020
Contract exit costs (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,629 11,371
Customer incentive costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,545 6,974
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,723 10,294
Airline rebates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,644 3,323
Customer refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,767 5,669
Technology costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,727 7,142
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,666 4,385
Total accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 158,754 $ 145,778
(a) In connection with the early termination of an agreement with Trilegiant Corporation (now Affinion Group) in 2007, we
accrued termination payments for the period from January 1, 2008 to December 31, 2016. At December 31, 2014 and
2013, the liability’s carrying value of $11.7 million was included in our Consolidated Balance Sheets, $11.6 million of
which was included in Accrued expenses and $0.1 million of which was included in Other non-current liabilities at
December 31, 2014, and $11.4 million of which was included in Accrued expenses and $0.3 million of which was
included in Other non-current liabilities at December 31, 2013.
7. Term Loan and Revolving Credit Facility
On April 15, 2014, we entered into an amendment (the “Second Amendment”) to the $515.0 million senior secured
credit agreement entered into on March 25, 2013, as refinanced and amended on May 24, 2013 (the “Credit Agreement”),
composed of a 7-year, $450.0 million term loan maturing April 15, 2021 (the “Term Loan”) and a 5-year $80.0 million
revolving credit facility maturing April 15, 2019 (the “Revolver”). The proceeds of the Term Loan were used to repay
approximately $439.9 million of term loans outstanding under the Credit Agreement, pay certain fees and expenses incurred
with the Second Amendment and for general corporate purposes. The term loans under the Credit Agreement, which were
repaid, had original principal amounts of $100.0 million maturing September 25, 2017 and $350.0 million maturing March 25,
2019. Interest rates on these tranches were the Eurocurrency Rate plus 3.50% per annum, or the Base Rate plus 2.50% per
annum and the Eurocurrency Rate plus 4.75% per annum or the Base Rate plus 3.75% per annum, respectively.
Following the Second Amendment, the $530.0 million senior secured credit facility (the “Amended Credit Agreement”)
consists of the Term Loan and the Revolver. Among other things, the Second Amendment reduced the financial maintenance
covenants, increased certain baskets and added certain exceptions under certain negative covenants in the Credit Agreement.
Term Loan
The Term Loan bears interest at a variable rate, at our option, of the Eurocurrency Rate plus a margin of 3.50% per
annum, or the Base Rate plus 2.50% per annum. The Eurocurrency Rate is equal to the LIBOR rate as determined by the
British Bankers Association (adjusted for any applicable statutory reserves as defined in the Amended Credit Agreement) and
with respect to the Term Loan shall not be less than 1.00% per annum. The Base Rate for any day is equal to the greater of (a)
the Fed Funds Rate in effect plus 0.5%, (b) the Credit Suisse AG prime rate and (c) the one-month Eurocurrency Rate plus
1.00%.
The principal amount of the Term Loan is payable in quarterly installments of $1.125 million beginning September 30,
2014, with the final installment of the remaining outstanding balance due at the applicable maturity date with respect to such
Term Loan. In addition, we are required, subject to certain exceptions, to make payments on the Term Loan (a) annually in the
first quarter of each fiscal year in an amount of 50% (which percentage will be reduced to 25% and 0% subject to achieving