Orbitz 2013 Annual Report Download - page 46

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46
(c) Represents disputed costs due to the early termination of an agreement.
(d) In February 2014, the Company announced that it entered into an agreement with Travelport for the provision of GDS
services (“New Travelport GDS Service Agreement”), replacing our prior Travelport GDS service agreement. Under the
New Travelport GDS Service Agreement, Orbitz is obligated in 2014 to use only Travelport GDSs for all air and car
segments booked on its domestic agencies and is subject to certain other exclusivity obligations for its segments booked
in Europe and other markets as defined in the New Travelport GDS Service Agreement. The Company is required to pay a
fee for each segment that is not booked through Travelport GDSs in 2014 subject to exclusivity obligations discussed
above. However beginning January 1, 2015, the Company will no longer be subject to exclusivity obligations. Under the
GDS Agreement beginning in 2015, we are obligated to provide certain levels of volume over the contract period and may
be subject to pay shortfall payments in certain cases if we fail to meet volume commitments. The agreement terminates on
December 31, 2018.
In February 2014, the Company announced it has entered into an agreement with Amadeus IT Group, S.A. to provide
GDS services. This contract requires the Company to meet certain minimum annual booking requirements beginning in
2016.
(e) Represents payments in connection with the tax sharing agreement with the Founding Airlines (see Note 7 - Tax Sharing
Liability of the Notes to Consolidated Financial Statements).
(f) Excluded from the above table are $3.6 million of liabilities for uncertain tax positions for which the period of settlement
is not currently determinable.
Other Commercial Commitments and Off-Balance Sheet Arrangements
In the ordinary course of business, we obtain surety bonds and bank guarantees, issued for the benefit of a third party, to
secure performance of certain of our obligations (see Note 9 - Commitments and Contingencies of the Notes to Consolidated
Financial Statements).
We are also required to issue letters of credit to certain suppliers and non-U.S. regulatory and government agencies. See
“Financing Arrangements” above for further discussion of our outstanding letters of credit.
CRITICAL ACCOUNTING POLICIES
The preparation of our consolidated financial statements and related notes in conformity with generally accepted
accounting principles requires us to make judgments, estimates and assumptions that affect the amounts reported therein. An
accounting policy is considered to be critical if it meets the following two criteria:
• the policy requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at
the time the estimate is made; and
• different estimates that reasonably could have been used or changes in the estimates that are reasonably likely to
occur from period to period would have a material impact on our consolidated financial statements.
We believe that the estimates and assumptions used when preparing our consolidated financial statements were the most
appropriate at that time. However, events that are outside of our control cannot be predicted and, as such, they cannot be
contemplated in evaluating such estimates and assumptions. We have discussed these estimates with our Audit Committee of
the Board of Directors.
Presented below are those accounting policies that we believe require subjective and complex judgments that could
potentially affect our reported results. Although we believe these policies to be the most critical, other accounting policies also
have a significant effect on our consolidated financial statements and certain of these policies may also require the use of
estimates and assumptions (see Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial
Statements).
Revenue Recognition
Merchant revenues are from transactions where we are the merchant of record 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 (for
example, air tickets or hotel rooms) that we sell through our sites. We present merchant revenues on a net basis in accordance