Orbitz 2012 Annual Report Download - page 80

ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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We grant deferred stock units ("DSUs") to each participating director on the date that the deferred fees would have
otherwise been paid to the director. The DSUs are issued as restricted stock units under the Plan and are immediately vested
and non-forfeitable. The DSUs entitle the 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 and for all awards granted in 2011 or
later, the DSUs are distributed immediately. The entire grant date fair value of deferred stock units is expensed on the date of
grant.
The table below summarizes the deferred stock unit activity under the Plan during the year ended December 31, 2012:
Deferred
Stock Units
Weighted-
Average
Grant Date
Fair Value
(per share)
Outstanding at January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004,273 $ 3.90
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325,958 $ 3.47
Distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (146,594) $ 4.49
Outstanding at December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,183,637 $ 3.71
The weighted-average grant date fair value for deferred stock units granted during the years ended December 31, 2012,
2011 and 2010 was $3.47, $2.89 and $5.06, respectively.
Compensation Expense
We recognized total equity-based compensation expense of $7.6 million, $8.5 million and $12.5 million for the years
ended December 31, 2012, 2011 and 2010, respectively, none of which has provided us with a tax benefit. As of December 31,
2012, a total of $13.8 million of unrecognized compensation costs related to unvested restricted stock units, unvested stock
options and unvested PSUs are expected to be recognized over the remaining weighted-average period of 2.8 years.
During the year ended December 31, 2011, we began using historical share forfeitures rather than historical employee
turnover to estimate future share forfeitures, which did not have a significant impact on equity-based compensation expense or
on unrecognized compensation costs related to unvested awards in 2011.
12. Derivative Financial Instruments
Interest Rate Hedges
At December 31, 2012, we had the following interest rate swap outstanding that effectively converted $100.0 million of
the Term Loan from a variable to a fixed interest rate. We pay a fixed interest rate on the swap and in exchange receive a
variable interest rate based on the one-month LIBOR.
Notional Amount Effective Date Maturity Date Fixed Interest Rate Paid Variable Interest Rate Received
$100.0 million July 29, 2011 July 31, 2013 0.68% One-month LIBOR
The following interest rate swaps matured in January 2012:
Notional Amount Effective Date Maturity Date Fixed Interest Rate Paid Variable Interest Rate Received
$100.0 million January 29, 2010 January 31, 2012 1.15% One-month LIBOR
$100.0 million January 29, 2010 January 31, 2012 1.21% Three-month LIBOR
The objective of entering into our interest rate swaps is to protect against volatility of future cash flows and effectively
hedge a portion of the variable interest payments on the Term Loan. We determined that these designated hedging instruments
qualify for cash flow hedge accounting treatment. Our interest rate swaps are the only derivative financial instruments that we
have designated as hedging instruments.