Orbitz 2009 Annual Report Download - page 90

Based upon the future payments we expect to make, the current portion of the tax sharing liability of
$15 million and $27 million is included in accrued expenses in our consolidated balance sheets at
December 31, 2008 and December 31, 2007, respectively. The long-term portion of the tax sharing liability of
$109 million and $114 million is reflected as the tax sharing liability in our consolidated balance sheets at
December 31, 2008 and December 31, 2007, respectively. At the time of the Blackstone Acquisition, Cendant
indemnified Travelport and us for amounts due under the tax sharing agreement. As a result, we recorded a
receivable of $37 million which is included in other non-current assets in our consolidated balance sheets at
December 31, 2008 and December 31, 2007, respectively. We expect to collect this receivable when Cendant
receives the tax benefit. Similar to our trade accounts receivable, if we were, in the future, to determine that
all or a portion of this receivable is no longer collectable, the portion of this receivable that is no longer
deemed collectable would be written off.
The table below shows the estimated payments under our tax sharing liability over the next five years:
Year (in millions)
2009............................................................... $ 15
2010............................................................... 18
2011............................................................... 21
2012............................................................... 17
2013............................................................... 18
Thereafter........................................................... 137
Total ............................................................. $226
10. Unfavorable Contracts
In December 2003, we entered into amended and restated airline charter associate agreements, or “Charter
Associate Agreements,” with the Founding Airlines as well as US Airways (“Charter Associate Airlines”).
These agreements pertain to our Orbitz business, which was owned by the Founding Airlines at the time we
entered into the agreements. Under each Charter Associate Agreement, the Charter Associate Airline has
agreed to provide Orbitz with information regarding the airline’s flight schedules, published air fares and seat
availability at no charge and with the same frequency and at the same time as this information is provided to
the airline’s own website or to a website branded and operated by the airline and any of its alliance partners or
to the airline’s internal reservation system. The agreement also provides Orbitz with nondiscriminatory access
to seat availability for published fares, as well as marketing and promotional support. Under each agreement,
the Charter Associate Airline provides us with agreed upon transaction payments when consumers book air
travel on the Charter Associate Airline on Orbitz.com. The payments we receive are based on the value of the
tickets booked and gradually decrease over time. The agreements expire on December 31, 2013. However,
certain of the Charter Associate Airlines may terminate their agreements for any reason or no reason prior to
the scheduled expiration date upon thirty days prior notice to us.
Under the Charter Associate Agreements, we must pay a portion of the GDS incentive revenue earned
from Worldspan back to the Charter Associate Airlines in the form of a rebate. The rebate payments are
required when airline tickets for travel on a Charter Associate Airline are booked through the Orbitz.com
website utilizing Worldspan. The rebate payments are made in part for in-kind marketing and promotional
support we receive. However, a portion of the rebate payments are deemed to be unfavorable because we
receive no benefit for these payments.
The rebate structure under the Charter Associate Agreements was considered unfavorable when compared
to market conditions at the time of the Blackstone Acquisition. As a result, an unfavorable contract liability
was recorded at its fair value at the acquisition date. The fair value of the unfavorable contract liability was
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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)