Orbitz 2010 Annual Report Download - page 111

Corporate Related Functions
Our consolidated statement of operations for the year ended December 31, 2007 reflects an allocation
from Travelport of both general corporate overhead expenses and direct billed expenses incurred on our behalf
prior to the IPO. General corporate overhead expenses were allocated based on a percentage of the forecasted
revenue. Direct billed expenses were based upon actual utilization of the services. Costs subject to the
overhead allocations and direct billings included executive management, tax, insurance, accounting, legal,
treasury, information technology, telecommunications, call center support and real estate expenses.
Intercompany Notes Payable
On January 26, 2007 and January 30, 2007, we became the obligor on two intercompany notes payable to
affiliates of Travelport in the amounts of $25 million and $835 million, respectively. These notes accrued
interest at a fixed rate of 10.25% and were scheduled to mature on February 19, 2014. These notes represented
a portion of the debt used to finance the Blackstone Acquisition. Because we did not receive any cash
consideration for the assumption of this debt from Travelport in January 2007, the transaction was effectively
a distribution of capital. Accordingly, we recorded an $860 million reduction to net invested equity. On July 25,
2007, we used proceeds from the IPO and Term Loan to repay the notes and the interest accrued thereon in
full.
Separation Agreement
We entered into a Separation Agreement with Travelport at the time of the IPO. This agreement, as
amended, provided the general terms for the separation of our respective businesses. When we were a wholly-
owned subsidiary of Travelport, Travelport provided guarantees, letters of credit and surety bonds on our
behalf under our commercial agreements and leases and for the benefit of regulatory agencies. Under the
Separation Agreement, we are required to use commercially reasonable efforts to have Travelport released
from any then outstanding guarantees and surety bonds. As a result, Travelport no longer provides surety
bonds on our behalf or guarantees in connection with commercial agreements or leases entered into or
replaced by us subsequent to the IPO.
In addition, Travelport agreed to continue to issue letters of credit on our behalf through at least March 31,
2010 and thereafter so long as Travelport and its affiliates (as defined in the Separation Agreement, as
amended) own at least 50% of our voting stock, in an aggregate amount not to exceed $75 million
(denominated in U.S. dollars). Travelport charges us fees for issuing, renewing or extending letters of credit on
our behalf. This fee is included in interest expense in our consolidated statements of operations. At
December 31, 2009 and December 31, 2008, there were $59 million and $67 million of letters of credit issued
by Travelport on our behalf, respectively (see Note 11 — Commitments and Contingencies).
Transition Services Agreement
At the time of the IPO, we entered into a Transition Services Agreement with Travelport. Under this
agreement, as amended, Travelport provided us with certain transition services, including insurance, human
resources and employee benefits, payroll, tax, communications, collocation and data center facilities, informa-
tion technology and other existing shared services. We also provided Travelport with certain services,
including accounts payable, information technology hosting, data warehousing and storage as well as
Sarbanes-Oxley compliance testing and deficiency remediation. The terms for the services provided under the
Transition Services Agreement generally expired on March 31, 2008, subject to certain exceptions. The term
of the Transition Services Agreement was extended until September 30, 2009 for services Travelport provided
us related to the support and maintenance of applications for storage of certain financial and human resources
data and until December 31, 2009 for services Travelport provided to us related to non-income tax return
111
ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)