Orbitz 2013 Annual Report Download - page 71

ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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contract liability related to the expected future rebate payments was amortized as an increase to net revenue, whereas the
partially offsetting amount for the expected in-kind marketing and promotional support was amortized as an increase to
marketing expense in our consolidated statements of operations, both on a straight-line basis over the estimated contractual
term.
The changes in the net unfavorable contract 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) $ 8,880
Amortization (a) (4,082)
Other (b) (1,218)
Balance at December 31, 2012 (current) 3,580
Amortization (a) (3,580)
Balance at December 31, 2013 (current) $ —
(a) We recognized net amortization of $3.6 million ($5.6 million was recorded as an increase to net revenue and $2.0
million was recorded as an increase to marketing expense) for the year ended December 31, 2013 and $4.1 million ($6.7
million was recorded as an increase to net revenue and $2.6 million was recorded as an increase to marketing expense)
for the year ended December 31, 2012 and $1.7 million ($7.5 million was recorded as an increase to net revenue and
$5.8 million was recorded as an increase to marketing expense) for the year ended December 31, 2011.
(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 resulted in the termination of the Charter
Associate Agreement with this airline. The $1.2 million reduction in the liability was composed of a $2.6 million non-
cash increase to net revenue and a $1.4 million non-cash charge related to the in-kind marketing and promotional support
that we expected to receive under the former agreement. The impairment charge was included in the impairment of
property and equipment and other assets line item in our consolidated statement of operations for the year ended
December 31, 2012.
The current portion of the liability of $3.6 million was included in accrued expenses in our consolidated balance sheet at
December 31, 2012. The Charter Associate Agreements expired on December 31, 2013.
9. Commitments and Contingencies
The following table summarizes the timing of our commitments as of December 31, 2013:
2014 2015 2016 2017 2018 Thereafter Total
(in thousands)
Contract exit costs (a) $11,371 $ 258 $ 61 $ — $ — $ — $ 11,690
Operating leases (b) 8,009 4,298 3,139 2,777 2,853 12,187 33,263
GDS contracts (c) — 15,000 16,120 12,370 16,120 1,120 60,730
Other service and licensing contracts 14,956 4,850 4,325 — — — 24,131
Total $34,336 $24,406 $23,645 $15,147 $18,973 $13,307 $ 129,814
(a) Represents disputed costs due to the early termination of an agreement (see Note 5 and Company Litigation section below
for further details).
(b) These operating leases are primarily for facilities and equipment and represent non-cancellable leases. Certain leases
contain periodic rent escalation adjustments and renewal options. Our operating leases expire at various dates, with the
latest maturing in 2023. For the years ended December 31, 2013, 2012 and 2011, we recorded rent expense in the amount
of $6.8 million, $6.2 million and $7.4 million, respectively. As a result of various subleasing arrangements that we have
entered into, we are expecting approximately $0.2 million in sublease income in 2014.
(c) In February 2014, the Company announced that it has 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