Orbitz 2013 Annual Report Download - page 70

ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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including our future taxable income, the tax rate, the timing of tax payments, current and projected market conditions, and the
applicable discount rate, all of which we believe are reasonable. These assumptions are inherently uncertain, however, and
actual amounts may differ from these estimates.
The changes in the tax sharing liability for the years ended December 31, 2013 and 2012 were as follows:
Amount
(in thousands)
Balance at January 1, 2012 (current and non-current) $ 88,990
Accretion of interest expense 12,556
Cash payments (15,408)
Balance at December 31, 2012 (current and non-current) 86,138
Accretion of interest expense 10,818
Cash payments (16,765)
Balance at December 31, 2013 (current and non-current) $ 80,191
Based upon the estimated timing of future payments we expect to make, the current portion of the tax sharing liability of
$18.7 million and $15.2 million was included in accrued expenses in our consolidated balance sheets at December 31, 2013 and
2012, respectively. The long-term portion of the tax sharing liability of $61.5 million and $70.9 million was reflected as the tax
sharing liability in our consolidated balance sheets at December 31, 2013 and 2012, respectively. Our estimated payments under
the tax sharing agreement are as follows:
Year (in thousands)
2014 $ 20,143
2015 21,475
2016 26,425
2017 32,234
2018 6,864
Total $ 107,141
8. Unfavorable Contracts
In December 2003, we entered into amended and restated airline charter associate agreements (“Charter Associate
Agreements”) with the Founding Airlines as well as US Airways (collectively, the “Charter Associate Airlines”). These
agreements pertained 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 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 was 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 provided Orbitz with
nondiscriminatory access to seat availability for published fares, as well as marketing and promotional support. Under each
agreement, the Charter Associate Airline provided us with agreed upon transaction payments when consumers booked air travel
on the Charter Associate Airline on Orbitz.com.
Under the Charter Associate Agreements, we paid a portion of the GDS incentive revenue we earned from Worldspan
back to the Charter Associate Airlines in the form of a rebate. The rebate payments were required when airline tickets for travel
on a Charter Associate Airline were booked through our Orbitz.com and OrbitzforBusiness.com websites utilizing Worldspan.
We also received in-kind marketing and promotional support from the Charter Associate Airlines under the Charter Associate
Agreements.
The rebate structure under the Charter Associate Agreements was considered unfavorable when compared with market
conditions at the time of the Blackstone Acquisition. As a result, a net unfavorable contract liability was established on the
acquisition date. The amount of this liability was determined based on the discounted cash flows of the expected future rebate
payments we would be required to make to the Charter Associate Airlines, net of the fair value of the expected in-kind
marketing and promotional support we would receive from the Charter Associate Airlines. The portion of the net unfavorable