Orbitz 2008 Annual Report Download - page 62

Galileo is subject to adjustment based upon the actual segments processed in the preceding year. In 2008, we are required to process approximately
22 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. Because the required number of segments for Galileo adjusts based on the actual segments processed in the preceding year, we are unable
to predict any shortfall. If we meet the minimum number of segments, we are not required to make payments of any kind to Galileo or Worldspan (see
Note 16—Related Party Transactions of the Notes to Consolidated Financial Statements). No payments were made to Travelport in 2007 related to the
required minimum segments.
(e)
We expect to make approximately $277 million of payments in connection with the tax sharing agreement with the Founding Airlines (see
Note 8—Tax Sharing Liability of the Notes to Consolidated Financial Statements).
(f)
Excluded from the above table are $2 million of liabilities for uncertain tax positions for which the period of settlement is not determinable.
Other Commercial Commitments and Off-Balance Sheet Arrangements
Standard Guarantees/Indemnifications
In the ordinary course of business, we enter into numerous agreements that contain standard guarantees and indemnities whereby we indemnify another
party for breaches of representations and warranties. In addition, many of these parties are also indemnified against any third-party claim resulting from the
transaction that is contemplated in the underlying agreement. These guarantees and indemnifications are granted under various agreements, including, but not
limited to, those governing (i) purchases, sales or outsourcing of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks or other intellectual
property, (iv) access to credit facilities and use of derivatives and (v) issuances of surety bonds. The guarantees and indemnifications issued are for the benefit of
the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) financial institutions in credit facility arrangements and
derivative contracts and (iv) surety companies in surety bond arrangements. While some of these guarantees and indemnifications extend only for the duration of
the underlying agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless subject to a legal statute of limitations).
There are no specific limitations on the maximum potential amount of future payments that we could be required to make under these guarantees and
indemnifications, nor are we able to develop an estimate of the maximum potential amount of future payments to be made under these guarantees and
indemnifications as the triggering events are not subject to predictability. With respect to certain of the aforementioned guarantees and indemnifications, such as
indemnifications of landlords against third-party claims for the use of real estate property leased by us, insurance coverage is maintained that mitigates any
potential payments to be made. As of December 31, 2007 and December 31, 2006, there were $3 million and $2 million, respectively, of surety bonds
outstanding.
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
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Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008