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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Commitments and Contingencies
The following table summarizes our commitments and contingencies as of December 31, 2007:
2008
2009
2010
2011
2012
Thereafter
Total
(in millions)
Operating leases(a) $ 8 $ 8 $ 8 $ 8 $ 7 $ 34 $ 73
Capital leases (see Note 4—Property and Equipment, Net) 1 — — — — — 1
Travelport GDS contract(b) 20 20 20 20 20 40 140
Telecommunications service agreement(c) 1 — — — — — 1
Software license agreement 9 9 8 — — — 26
Total $ 39 $ 37 $ 36 $ 28 $ 27 $ 74 $ 241
(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 year ended December 31, 2007
and for the periods August 23, 2006 to December 31, 2006 and January 1, 2006 to August 22, 2006 and for the year ended December 31, 2005, we
recorded rent expense in the amount of $8 million, $3 million, $8 million and $16 million, respectively. As a result of various subleasing arrangements
that we have entered into, we are expecting approximately $4 million in sublease income through 2011.
(b)
The Travelport GDS service agreement is structured such that we receive an incentive payment for each segment that is processed through Galileo or
Worldspan. The agreement also required us to process 33 million segments during 2007, 16 million segments through Worldspan and 17 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 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). No payments were made to Travelport in 2007 related to the required
minimum segments.
(c)
As part of an agreement with a vendor, we have an obligation to purchase $1 million of telecommunications equipment by August 31, 2008.
In addition to the commitments and contingencies shown above, we are required to make principal payments on our Term Loan and pay down amounts
outstanding on our Revolver (see Note 7—Term Loan and Revolving Credit Facility). We also 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). Also excluded from the above table are $2 million of
liabilities for uncertain tax positions for which the period of settlement is not determinable.
91
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008