Orbitz 2010 Annual Report Download - page 92

(b) This adjustment was recorded to appropriately reflect our liability under the tax sharing agreement
following a reduction in our effective tax rate during the year ended December 31, 2008, which
resulted from a change in state tax law as it relates to the apportionment of income. The reduction in
our effective tax rate reduces the estimated remaining payments that may be due to the airlines under
the tax sharing agreement. The adjustment to the tax sharing liability was recorded as a reduction to
selling, general and administrative expense in our consolidated statements of operations, as this
liability represents a commercial liability, not a tax liability. If our effective tax rate changes in the
future, at either the federal or state level, we may be required to further adjust our liability under the
tax sharing agreement.
Based upon the future payments we expect to make, the current portion of the tax sharing liability of
$17 million and $15 million is included in accrued expenses in our consolidated balance sheets at
December 31, 2009 and December 31, 2008, respectively. The long-term portion of the tax sharing liability of
$109 million is reflected as the tax sharing liability in our consolidated balance sheets at December 31, 2009
and December 31, 2008. At the time of the Blackstone Acquisition, Cendant (now Avis Budget Group, Inc.)
indemnified Travelport and us for a portion of the 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, 2009 and December 31, 2008, 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 not collectable, the portion of this receivable that
was 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)
2010............................................................... $ 19
2011............................................................... 20
2012............................................................... 21
2013............................................................... 18
2014............................................................... 18
Thereafter........................................................... 118
Total............................................................. $214
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 agreements also provide 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.
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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)