Orbitz 2010 Annual Report Download - page 58

The Credit Agreement requires us to maintain a minimum fixed charge coverage ratio and not to exceed
a maximum total leverage ratio, each as defined in the Credit Agreement. The minimum fixed charge coverage
ratio that we are required to maintain as of December 31, 2009 and for the remaining term of the Credit
Agreement is 1 to 1. The maximum total leverage ratio that we are required not to exceed is 4.25 to 1 as of
December 31, 2009 and declines to 3.5 to 1 effective March 31, 2010 and to 3 to 1 effective March 31, 2011.
If we fail to comply with these covenants and we are unable to obtain a waiver or amendment, our
lenders could accelerate the maturity of all amounts borrowed under the Term Loan and Revolver and could
proceed against the collateral securing this indebtedness. We are permitted, however, to cure any such failure
by issuing equity to certain permitted holders, as defined in the Credit Agreement, which include The
Blackstone Group and certain of its affiliates. The amount of the net cash proceeds received from this equity
issuance would then be applied to increase consolidated EBITDA, as defined in the Credit Agreement and on
which the covenant calculations are based, for the applicable quarter. As of December 31, 2009, we were in
compliance with all covenants and conditions of the Credit Agreement.
In addition, beginning in the first quarter of 2009, we are required to make an annual prepayment on the
Term Loan in the first quarter of each fiscal year in an amount up to 50% of the prior year’s excess cash flow,
as defined in the Credit Agreement. These prepayments from excess cash flow are applied, in order of
maturity, to the scheduled quarterly term loan principal payments. Based on our cash flow for the year ended
December 31, 2008, we were not required to make a prepayment in 2009. Based on our cash flow for the year
ended December 31, 2009, we are required to make a prepayment on the Term Loan of $21 million in the first
quarter of 2010. The potential amount of prepayment from excess cash flow that will be required beyond the
first quarter of 2010 is not reasonably estimable as of December 31, 2009.
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. 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. 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. Under the Separation
Agreement, Travelport has agreed to issue U.S. Dollar denominated letters of credit on our behalf in an
aggregate amount not to exceed $75 million through at least March 31, 2010 and thereafter so long as
Travelport and its affiliates (as defined in the Separation Agreement) own at least 50% of our voting stock.
Financial Obligations
Commitments and Contingencies
We and certain of our affiliates are parties to cases brought by consumers and municipalities and other
U.S. governmental entities involving hotel occupancy taxes. We believe that we have meritorious defenses, and
we are vigorously defending against these claims, proceedings and inquiries (see Note 11 — Commitments
and Contingencies of the Notes to Consolidated Financial Statements).
Litigation is inherently unpredictable and, although we believe we have valid defenses in these matters
based upon advice of counsel, unfavorable resolutions could occur. While we cannot estimate our range of loss
and believe it is unlikely that an adverse outcome will result from these proceedings, an adverse outcome
could be material to us with respect to earnings or cash flows in any given reporting period.
We are currently seeking to recover insurance reimbursement for costs incurred to defend the hotel
occupancy tax cases. We recorded a reduction to selling, general and administrative expense in our
consolidated statements of operations for reimbursements received of $6 million, $8 million and $3 million for
the years ended December 31, 2009, December 31, 2008 and December 31, 2007, respectively. The recovery
of additional amounts, if any, by us and the timing of receipt of these recoveries is unclear. As such, as of
December 31, 2009, we have not recognized a reduction to selling, general and administrative expense in our
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