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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission File Number 001-33599
ORBITZ WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware 20-5337455
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)
500 W. Madison Street, Suite 1000
Chicago, Illinois 60661
(Address of principal executive offices) (Zip Code)
(312) 894-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, $0.01 par value New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 2012 was approximately $177.3
million based on the closing price of the registrant’s common stock as reported on the New York Stock Exchange for such date.
As of February 25, 2013, 105,106,307 shares of Common Stock, par value $0.01 per share, of Orbitz Worldwide, Inc. were
outstanding. DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-K incorporates by reference certain information from the definitive proxy statement for
the registrant’s Annual Meeting of Shareholders to be held on or about June 11, 2013 (the “2013 Proxy Statement”). The registrant
intends to file the proxy statement with the Securities and Exchange Commission within 120 days of December 31, 2012.

Table of contents

  • Page 1
    ... defined in Rule 12b-2 of the Act). Yes No The aggregate market value of the registrant's common stock held by non-affiliates as of June 30, 2012 was approximately $177.3 million based on the closing price of the registrant's common stock as reported on the New York Stock Exchange for such date. As...

  • Page 2
    ... and Director Independence ...Principal Accounting Fees and Services ...Business ...Executive Officers of the Registrant ...Risk Factors...Unresolved Staff Comments ...Properties ...Legal Proceedings ...Mine Safety Disclosure ... 3 4 12 13 24 24 24 30 Market for Registrant's Common Equity, Related...

  • Page 3
    ... markets, including the global hotel marketplace; our ability to increase our brand awareness; our expectations of future air capacity and fares; our expectations for future average daily rates for hotel and car bookings; and our expectation for international growth rates for online travel sales...

  • Page 4
    ... the ability to book a wide array of travel products and services from suppliers worldwide, including air travel, hotels, vacation packages, car rentals, cruises, travel insurance and destination services such as ground transportation, event tickets and tours. History Orbitz, Inc. was established...

  • Page 5
    ... U.S. travel website that focuses on value-conscious customers. CheapTickets offers customers the ability to search for and book a broad range of travel products and services, including air travel, hotels, car rentals, cruises, travel insurance and destination services, from suppliers worldwide on...

  • Page 6
    ... with American Express to provide a variety of private label solutions for air, car, hotel and vacation packages for the American Express Consumer Travel Network. Partner Marketing The Partner Marketing team is responsible for building innovative online marketing and advertising partnerships...

  • Page 7
    ...products and services on our websites. We have teams that manage relationships and negotiate agreements with our suppliers. These agreements generally cover access to the supplier's travel inventory as well as payment for our services. Our teams cover air, hotel, car rental, cruise, travel insurance...

  • Page 8
    ... overall number of booked transactions in a cost-effective manner. We use various forms of online marketing to drive traffic to our websites including search engine marketing ("SEM"), travel research websites, meta-search travel websites, display advertising, affiliate programs and email marketing...

  • Page 9
    ... for corporate travel; • portions of our private label vacation packaging technology; and • our extranet supplier connectivity functionality. The Master License Agreement granted us the right to use a corporate online booking product developed by Travelport. We have entered into a value added...

  • Page 10
    ... meta-search websites are capable of sending customers to the websites of suppliers and our direct competitors. Factors affecting our competitive success include price, availability of travel products, ability to package travel products across multiple suppliers, brand recognition, customer service...

  • Page 11
    ...continue these business activities, which are directly related to and promote the arrangement of travel for individuals." Company Website and Public Filings We maintain a corporate website at corp.orbitz.com. The content of our website is not incorporated by reference into this Annual Report on Form...

  • Page 12
    ... and Vice President and General Manager of Transportation, which was comprised of air, car, cruise and travel insurance for Orbitz and CheapTickets. Mr. Fulton has also held positions in business strategy, product management, supplier services and business development since joining the Company in...

  • Page 13
    ... served as Vice President of Europe and Middle East (EMEA) distribution for Expedia from February 2008 to July 2009. From 2004 to 2008, Mr. Tamar served in a variety of roles at Expedia, including managing Expedia's EMEA car businesses, leading the strategy and corporate development function for...

  • Page 14
    ... any such individual directs a corporate opportunity to Travelport instead of us or does not communicate information regarding a corporate opportunity to us because the officer or director has directed the corporate opportunity to Travelport. These provisions may have the effect of exacerbating the...

  • Page 15
    ... payment of reasonable and customary fees paid to, and indemnities provided for the benefit of, officers, directors, employees or consultants of Travelport, any of its direct or indirect parent companies or any of its restricted subsidiaries, including us; (3) any agreement as in effect on the date...

  • Page 16
    ... products and online booking tools for corporate travel; portions of our private label vacation package technology; and our extranet supplier connectivity functionality. Travelport and its affiliates may use these technologies as part of, or in support of, their own products or services, including...

  • Page 17
    ...• decline in standalone hotel merchant gross bookings due to a shift from the merchant model to the retail model; • changes to payment terms or other requirements imposed by vendors, suppliers or regulatory agencies, such as requiring us to provide letters of credit, cash reserves or other forms...

  • Page 18
    ... number of airline tickets available for booking on our website and increased air fares, which may have a negative impact on demand for travel products. The travel industry is highly competitive, and we may not be able to effectively compete in the future. We operate in the highly competitive travel...

  • Page 19
    ... to book directly, such as member-only fares, bonus miles or loyalty points, which could make their offerings more attractive to customers. In response to these pressures in the past, we and other online travel companies reduced or eliminated domestic booking fees on retail airline tickets and hotel...

  • Page 20
    ... service providers and software companies, including the electronic central reservation systems and GDSs of the airline, hotel and car rental industries. In particular, our businesses rely on third parties to: • conduct searches for airfares; • process hotel room transactions; • process credit...

  • Page 21
    ... and Amadeus, to process a significant portion of our bookings, and any interruption or deterioration in our GDS partners' products or services could prevent us from searching and booking airline and car rental reservations, which would have a material adverse effect on our business. Our success is...

  • Page 22
    ... adverse tax events. New sales, use, occupancy or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Such enactments could adversely affect our domestic and international business operations and our business and financial performance. Further, existing tax laws...

  • Page 23
    ... in the United States and internationally. Our business, financial condition and results of operations could be adversely affected by unfavorable changes in or the enactment of new laws, rules and regulations applicable to us, which could decrease demand for our products and services, increase costs...

  • Page 24
    ... to bring new products and services to market or impairing the success of our operations or prospects for future growth. Item 1B. Unresolved Staff Comments None. Item 2. Properties Our corporate headquarters are located in leased office space in Chicago, Illinois. We also lease office space for...

  • Page 25
    ..., Florida (local tax). We have motions for summary judgment pending in an additional four of these cases (Chicago, Illinois; City of Atlanta; Georgia; City of Gallup, New Mexico; and Hamilton County, Ohio). In the San Antonio case, in November 2011, the online travel companies filed a motion in...

  • Page 26
    ...seeking to set aside the Department of Revenue's final determination. Orbitz, LLC v. Miami-Dade, Florida, No. 2009 CA 4977 (Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida): On December 21, 2009, the online travel companies filed a complaint in the Circuit Court, Second...

  • Page 27
    ...'s "pay to play" requirement. On April 2, 2010, we filed a refund request with the City. On May 14, 2010, the online travel companies filed a Complaint for Tax Refund and Declaratory Relief against the City and County of San Francisco seeking a tax refund and declaratory relief. On December 18, 2012...

  • Page 28
    ... San Diego On February 9, 2006, the City of San Diego, California filed an action in Court for the County of San Diego, California against a number of current and former Internet travel companies, including Orbitz, Inc., Orbitz, LLC, Trip Network, Inc. and Internetwork Publishing Corp. The complaint...

  • Page 29
    ... and consumer protection laws by entering into agreements in which online travel companies agree not to facilitate the reservation of hotel rooms at prices that are less than what the hotel chain offers on its own website. Following the filing of the initial complaint on August 20, 2012, several...

  • Page 30
    ... and Orbitz Worldwide, LLC in the United States District Court for the Northern District of Texas. American Airlines alleged that Orbitz, through its Travelport GDS Service Agreement, violated the Sherman Antitrust Act. On June 9, 2011, American Airlines filed a First Amended Complaint, adding Sabre...

  • Page 31
    PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the New York Stock Exchange under the symbol "OWW." The following table sets forth the high and low sales prices for our common ...

  • Page 32
    ..., including Internet software and services companies and e-commerce companies. Historic stock performance is not necessarily indicative of future stock price performance. All values assume reinvestment of the full amount of all dividends and are calculated as of the last day of each month. The...

  • Page 33
    ...," of this Annual Report on Form 10-K. 2012 Years Ended December 31, 2011 2010 2009 (in millions, except share and per share data) 2008 Statements of Operations Data: Net revenue ...Cost and expenses: Cost of revenue (a) ...Selling, general and administrative ...Marketing (a) ...Depreciation and...

  • Page 34
    ... broad range of partners. We provide customers with the ability to book a wide array of travel products and services from suppliers worldwide, including air travel, hotels, vacation packages, car rentals, cruises, travel insurance and destination services such as ground transportation, event tickets...

  • Page 35
    ... of the year. Domestically, hotel and vacation package transaction volume grew in 2012. However, air volume declined due primarily to lower U.S. OTC channel volume and changes we made with respect to certain revenue management strategies in September 2011. Internationally, we continued to see growth...

  • Page 36
    ...rentals, vacation packages, cruises, destination services and travel insurance. Years Ended December 31, 2012 Gross bookings: Domestic...International ...Total gross bookings ...Standalone air ...Non-air ...Total gross bookings ...Net revenue: Air...Hotel ...Vacation package ...Advertising and media...

  • Page 37
    ... fares on meta-search sites such as Kayak, higher air fares, a fare structure change implemented by a major airline and, to a lesser extent, due to American Airlines content not being offered on Orbitz.com and Orbitz for Business websites from December 22, 2010 through June 1, 2011. We were able...

  • Page 38
    ...one of our airline hosting agreements in 2010 and the termination of our remaining airline hosting agreement effective July 30, 2011. Costs and Expenses Cost of Revenue Our cost of revenue is comprised of costs to operate our customer service call centers, credit card processing fees and other costs...

  • Page 39
    ... service costs largely driven by the growth in our private label distribution channel, a $1.4 million increase in credit card processing fees due primarily to the volume growth at ebookers, a $0.8 million increase in connectivity and processing costs, a $0.5 million increase in customer refunds...

  • Page 40
    ... in expected future cash flows for the Americas reporting unit, we recorded a non-cash impairment charge of $321.2 million, of which $301.9 million related to goodwill, $17.6 million related to trademarks and trade names associated with Orbitz and CheapTickets and $1.6 million related to finite...

  • Page 41
    ... support certain supplier and commercial agreements, lease obligations and non-U.S. regulatory and governmental regulations. At December 31, 2012 and 2011, we had $96.5 million and $85.0 million of outstanding letters of credit. The majority of these letters of credit have been issued by Travelport...

  • Page 42
    ... websites or a change in their distribution strategy; decline in merchant gross bookings resulting from changes in our business model; changes to payment terms or other requirements imposed by vendors, suppliers or regulatory agencies, such as requiring us to provide letters of credit, cash reserves...

  • Page 43
    ... in our global platform and private label distribution infrastructure, and an increase in restricted cash balances. Financing Activities Cash flow used in financing activities increased to $50.0 million for the year ended December 31, 2012 from $30.5 million for the year ended December 31, 2011. The...

  • Page 44
    ... total leverage ratio of 3.0 to 1 for the remainder of the Credit Agreement. As of December 31, 2012, we were in compliance with all covenants and conditions of the Credit Agreement and expect to be in compliance for the foreseeable future. In addition, we are required to make an annual prepayment...

  • Page 45
    ...of our voting stock. Travelport charges us fees for issuing, renewing or extending letters of credit on our behalf. The expenses related to these fees are included in interest expense in our consolidated statements of operations. During 2012, we secured a new multi-currency letter of credit facility...

  • Page 46
    ...segments processed in the preceding year, we are unable to predict shortfall payments that may be required beyond 2013. However, we do not expect to make any shortfall payments for our domestic brands in the foreseeable future. The Travelport GDS Service Agreement also requires that ebookers use the...

  • Page 47
    ... and have the ability to determine the price charged to the customer. We have agreements with suppliers that provide our customers the ability to book their supply through our sites (for example, air tickets or hotel rooms) that we sell. We present merchant revenues on a net basis in accordance with...

  • Page 48
    ...statements. During the year ended December 31, 2012, we performed our annual impairment test of goodwill and trademarks and trade names as of December 31, 2012. We used the income approach to estimate the fair value of all reporting units and used the market approach to corroborate this estimate. We...

  • Page 49
    ...benefit we expect to receive, as well as the associated effective income tax rates. The estimates require certain assumptions as to our future operating performance and taxable income, the tax rate, the timing of tax payments, current and projected market conditions, and the applicable discount rate...

  • Page 50
    ... currency exchange rates and interest rates utilizing a sensitivity analysis that measures the potential impact on earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in foreign currency rates and interest rates. We used December 31, 2012 market rates...

  • Page 51
    ... REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Orbitz Worldwide, Inc. Chicago, Illinois We have audited the accompanying consolidated balance sheets of Orbitz Worldwide, Inc. and subsidiaries (the "Company") as of December 31, 2012 and 2011...

  • Page 52
    ORBITZ WORLDWIDE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Years Ended December 31, 2012 2011 2010 Net revenue ...$ 778,796 $ Cost and expenses: Cost of revenue ...147,840 Selling, general and administrative...260,253 Marketing ...252,993 ...

  • Page 53
    ORBITZ WORLDWIDE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Years Ended December 31, 2012 2011 2010 Net loss ...$ Other comprehensive income/(loss) (a): Currency translation adjustment ...Unrealized gain on floating to fixed interest rate swaps...Other comprehensive income/(...

  • Page 54
    ...Term loan, non-current ...Tax sharing liability...Unfavorable contracts ...Other non-current liabilities ...Total Liabilities ...Commitments and contingencies (see Note 9) Shareholders' Equity/(Deficit): Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding Common...

  • Page 55
    ... awards ...Proceeds from exercise of employee stock options ...Payments on tax sharing liability ...Payments on line of credit...Proceeds from note payable ...Payments on note payable ...Net cash used in financing activities ...Effects of changes in exchange rates on cash and cash equivalents ...Net...

  • Page 56
    ... 31, 2012 2011 2010 Supplemental disclosure of cash flow information: Income tax payments, net...$ Cash interest payments...$ Non-cash investing activity: Capital expenditures incurred not yet paid...$ Non-cash financing activity: Repayment of term loan in connection with debt-equity exchange 49...

  • Page 57
    ... vesting ...Common shares issued pursuant to Exchange Agreement and Stock Purchase Agreement (see Note 6) ...Common shares issued upon vesting of restricted stock units ...Common shares issued upon exercise of stock options ...Common shares withheld to satisfy employee tax withholding obligations...

  • Page 58
    ... broad range of partners. We provide customers with the ability to book a wide array of travel products and services from suppliers worldwide, including air travel, hotels, vacation packages, car rentals, cruises, travel insurance and destination services such as ground transportation, event tickets...

  • Page 59
    ... models, we record revenue earned net of all amounts paid to our suppliers. We provide customers the ability to book air travel, hotels, car rentals and other travel products and services through our various websites. These travel products and services are made available to our customers for booking...

  • Page 60
    ... travel because unlike air travel where the reservation is secured by a customer's credit card at booking, car rental bookings and hotel bookings are not secured by a customer's credit card until the pick-up date and check-in date, respectively. Allowances for cancelled reservations primarily relate...

  • Page 61
    ... 31, 2012 qualified for hedge accounting and were highly effective as hedges. Accordingly, we have recorded the change in fair value of our interest rate swaps in accumulated other comprehensive income/ (loss). We have entered into foreign currency contracts to manage exposure to changes in foreign...

  • Page 62
    ... excess of the purchase price over the estimated fair value of the underlying assets acquired and liabilities assumed in the acquisition of a business. We assign goodwill to reporting units that are expected to benefit from the business combination as of the acquisition date. Goodwill is not subject...

  • Page 63
    ...obligated to pay the Founding Airlines a significant percentage of the amount of the tax benefit realized as a result of the taxable exchange. The tax sharing agreement commenced upon consummation of the Orbitz IPO and continues until all tax benefits have been utilized. We use discounted cash flows...

  • Page 64
    ... WORLDWIDE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Recently Issued Accounting Pronouncements In July 2012, the Financial Accounting Standards Board ("FASB") issued guidance to allow companies the option of performing a qualitative assessment before calculating the fair value...

  • Page 65
    ... and discount rates. Significant judgment was required to select these inputs based on observed market data. In connection with our annual impairment test as of December 31, 2012, and as a result of lower than expected performance and future cash flows for the Americas reporting unit, we recorded...

  • Page 66
    ... used in determining the estimated fair value of our trademarks and trade names were the terminal growth rates, forecasted revenues, assumed royalty rates and the discount rates. Significant judgment was required to select these inputs based on observed market data. In connection with our annual...

  • Page 67
    ... Advertising and marketing ...$ Tax sharing liability (see Note 7) ...Employee costs ...Contract exit costs (a) ...Professional fees ...Customer service costs ...Technology costs ...Customer refunds...Customer incentive costs...Unfavorable contracts (see Note 8) ...Airline rebates ...Other ...Total...

  • Page 68
    ... and at December 31, 2012 bears interest at a variable rate, at our option, of LIBOR plus a margin of 200 basis points or the alternative base rate plus a margin of 100 basis points. The margin is subject to change based on our total leverage ratio, as defined in the Credit Agreement, with a maximum...

  • Page 69
    ...in future years. For each tax period while the tax sharing agreement is in effect, we are obligated to pay the Founding Airlines a significant percentage of the amount of the tax benefit realized as a result of the taxable exchange. The tax sharing agreement commenced upon consummation of the Orbitz...

  • Page 70
    ... 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...

  • Page 71
    ... revenue and $5.5 million was recorded as an increase to marketing expense) for the year ended December 31, 2010. (b) For the year ended December 31, 2012, we reduced the unfavorable contract liability by $1.2 million due to the negotiation of a new agreement with one of our airline suppliers, which...

  • Page 72
    ... our merchant hotel business model. Some of the cases are class actions (some of which have been confirmed on a state-wide basis and some which are purported), and most of the cases were brought simultaneously against other online travel companies, including Expedia, Travelocity and Priceline. The...

  • Page 73
    ... payments. On August 20, 2012, a putative consumer class action was filed in the United States District Court for the Northern District of California against hotel chains, and the major online travel companies, including Orbitz. The complaint alleges that hotel chains and several major online travel...

  • Page 74
    ... restricted cash at December 31, 2012 and 2011. Financing Arrangements We are required to issue letters of credit to support certain suppliers, commercial agreements, leases and nonU.S. regulatory and governmental agencies primarily to satisfy consumer protection requirements. The majority of these...

  • Page 75
    ... million and $85.0 million of outstanding letters of credit issued under our various arrangements. Total letter of credit fees were $7.0 million, $5.8 million and $4.1 million for the years ended December 31, 2012, 2011 and 2010, respectively. 10. Income Taxes Pre-tax income/(loss) for U.S. and non...

  • Page 76
    ...trademark and trade names impairment charges recorded during each of those years. Our effective income tax rate differs from the U.S. federal statutory rate as follows: Years Ended December 31, 2012 2011 2010 Federal statutory rate ...State and local income taxes, net of federal benefit ...Taxes on...

  • Page 77
    ... million at December 31, 2012 and 2011, respectively. We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which we have unrecognized tax benefits, is audited and finally resolved...

  • Page 78
    ..., 2012, 8,111,408 shares were available for future issuance under the plan. Restricted Stock Units The table below summarizes activity regarding unvested restricted stock units under the Plan during the year ended December 31, 2012: WeightedAverage Grant Date Fair Value (per share) Restricted Stock...

  • Page 79
    ...on a monthly basis thereafter. The fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period. There were no stock options granted in 2012. The fair value of stock options granted under the Plan is estimated on the date of grant using the...

  • Page 80
    ... non-employee director to receive one share of our common stock for each deferred stock unit following the director's retirement or termination of service from the Board of Directors. For all awards granted prior to 2011, the DSUs are distributed 200 days immediately following such termination date...

  • Page 81
    ...31, 2012 that is expected to be reclassified to interest expense in the next twelve months if interest rates remain unchanged is approximately $0.3 million after-tax. Foreign Currency Hedges We enter into foreign currency contracts to manage our exposure to changes in the foreign currency associated...

  • Page 82
    ... net loss per share calculation because they would have had an antidilutive effect due to a net loss for each period: Years Ended December 31, Antidilutive Equity Awards 2012 2011 2010 Stock options ...Restricted stock units...Performance-based restricted stock units ...Total... 3,009,654 4,379...

  • Page 83
    ...pays us fees for related maintenance and support services. The licenses include our supplier link technology; portions of ebookers' booking, search and vacation package technologies; certain of our products and online booking tools for corporate travel; portions of our private label vacation package...

  • Page 84
    ... were unable to agree to terms under which AA tickets would be marketed and distributed to our customers and thus the offering of AA tickets on the Orbitz.com and Orbitz for Business websites was discontinued. Pursuant to a court order in June 2011, AA restored its content to our sites. This ruling...

  • Page 85
    ... currency contract rate and widely available foreign currency rates as of the measurement date. Our foreign currency hedges are short-term in nature, generally maturing within 30 days. We value our interest rate swaps using valuations that are calibrated to the initial trade prices. Using a market...

  • Page 86
    ..., Ireland, Switzerland and other international territories. The table below presents net revenue by geographic area: the United States and all other countries. Net revenue is based on the location of the legal entity through which the booking is processed. 2012 Years Ended December 31, 2011 (in...

  • Page 87
    ...information. Three Months Ended December 31, 2012 (a) September 30, 2012 June 30, 2012 March 31, 2012 (in thousands, except per share data) Net revenue...) (a) During the three months ended December 31, 2012 and 2011, we recorded non-cash impairment charges related to goodwill and intangible assets...

  • Page 88
    ... allowance and the effects of a U.K. tax rate change. (b) Includes a reduction of $12.0 million to the deferred tax asset in connection with a reduction of the tax sharing liability to the airlines. The remaining $3.3 million represents the combined effect of foreign currency translation adjustments...

  • Page 89
    ...in Management's Annual Report on Internal Control over Financial Reporting. Management's Annual Report on Internal Control over Financial Reporting Internal control over financial reporting is the process designed by, or under the supervision of, our CEO and Interim CFO, and effected by our Board of...

  • Page 90
    ... discussed below. Ineffective Information Technology Controls: Our management identified a number of deficiencies related to the design and operating effectiveness of certain information technology ("IT") general and application controls that have a direct impact on our financial reporting. Based on...

  • Page 91
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Orbitz Worldwide, Inc. Chicago, Illinois We have audited Orbitz Worldwide, Inc. and subsidiaries (the "Company's") internal control over financial reporting as of December 31, 2012, based on the criteria...

  • Page 92
    ..., we have adopted a Code of Ethics for our chief executive officer and senior financial officers. The Code of Business Conduct and the Code of Ethics are available on the corporate governance page of our Investor Relations website at www.orbitz-ir.com. Amendments to, or waivers from, the Code of...

  • Page 93
    ... of Regulation S-K will be included under the caption "Corporate Governance - Independence of Directors" in the 2013 Proxy Statement, and that information is incorporated by reference herein. Item 14. Principal Accounting Fees and Services The information concerning principal accounting fees and...

  • Page 94
    ... L. Kram Thomas L. Kram Group Vice President and Chief Accounting Officer (Principal Accounting Officer) Date: March 5, 2013 By: /s/ Jeff Clarke Jeff Clarke Chairman of the Board of Directors Date: March 5, 2013 By: /s/ Martin J. Brand Martin J. Brand Director Date: March 5, 2013 By: /s/ Mark...

  • Page 95
    ... L. Friedman Robert L. Friedman Director Date: March 5, 2013 By: /s/ Bradley T. Gerstner Bradley T. Gerstner Director Date: March 5, 2013 By: /s/ Jill A. Greenthal Jill A. Greenthal Director Date: March 5, 2013 By: /s/ Kristina M. Leslie Kristina M. Leslie Director Date: March 5, 2013 By...

  • Page 96
    ... on Form S-1 (Registration No. 333-142797) filed on June 13, 2007). Amendment to the Orbitz Supplier Link Agreement, dated as of July 7, 2009, between Orbitz, LLC and United Air Lines, Inc. (incorporated by reference to Exhibit 10.3 to the Orbitz Worldwide, Inc. Quarterly Report on Form 10-Q for the...

  • Page 97
    ... Orbitz Worldwide, Inc. Annual Report on Form 10-K for the Fiscal Year ended December 31, 2008). Fourth Amendment, dated as of July 8, 2009, to Subscriber Services Agreement, dated as of July 23, 2007, between Travelport International, L.L.C. (f/k/a Galileo International, L.L.C.), Travelport Global...

  • Page 98
    ... Services Agreement, dated as of July 23, 2007, between Travelport, LP (f/k/a Travelport International, L.L.C.), Travelport Global Distribution System B.V. (f/k/a Galileo Nederland B.V.) and Orbitz Worldwide, LLC (incorporated by reference to Exhibit 10.35 to the Orbitz Worldwide, Inc. Annual Report...

  • Page 99
    .... 2007 Equity and Incentive Plan, as amended and restated, effective June 12, 2012 (incorporated by reference to Exhibit 10.1 to the Orbitz Worldwide, Inc. Current Report on Form 8K/A, Amendment No. 1, filed on July 20, 2012). Employment Agreement (including Form of Option Award Agreement), dated as...

  • Page 100
    ... 30, 2007). Form of Stock Option Award Agreement (Executive Officers) (incorporated by reference to Exhibit 10.1 to the Orbitz Worldwide, Inc. Current Report on Form 8-K filed on June 25, 2008). Form of Stock Option Award Agreement (Executive Officers) - 2010 Stock Option Exchange (incorporated...

  • Page 101
    ... Inc. Non-Employee Directors Deferred Compensation Plan, as amended and restated, effective January 1, 2013. Form of Indemnity Agreement for Directors and Officers (incorporated by reference to Exhibit 10.1 to the Orbitz Worldwide, Inc. Current Report on Form 8-K filed on December 18, 2007). List of...

  • Page 102

  • Page 103
    ... Capital Management Jill A. Greenthal Senior Advisor in the Private Equity group of The Blackstone Group Barney Harford Chief Executive Officer of Orbitz Worldwide, Inc. Kristina M. Leslie Consultant Jaynie Miller Studenmund Corporate Director and Advisor Jeff Clarke Chairman of Travelport Limited...

  • Page 104