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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
69
The changes in the tax sharing liability for the years ended December 31, 2014 and 2013 were as follows:
Amount
(in thousands)
Balance at January 1, 2013 (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
Accretion of interest expense and tax rate changes (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,566
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,375)
Balance at December 31, 2014 (current and non-current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,382
(a) We accreted interest expense related to the tax sharing liability of $10.1 million and $10.8 million for the years ended
December 31, 2014 and 2013, respectively. Due to a tax rate change in one of our tax jurisdictions, the net present
value of the amount we expect to pay to the Founding Airlines increased by approximately $2.5 million during the
year ended December 31, 2014, and the related charge is recorded in Selling, general and administrative expenses in
the Consolidated Statement of Operations.
Based upon the estimated timing of future payments we expect to make, the current portion of the tax sharing liability of
$17.1 million and $18.7 million was included in Accrued expenses in our Consolidated Balance Sheets at December 31, 2014
and 2013, respectively. The long-term portion of the tax sharing liability of $61.3 million and $61.5 million was reflected as the
tax sharing liability in our Consolidated Balance Sheets at December 31, 2014 and 2013, respectively. Our estimated payments
under the tax sharing agreement are as follows:
Year (in thousands)
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,224
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,355
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,873
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,719
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 96,171
9. Commitments and Contingencies
The following table summarizes the timing of our commitments as of December 31, 2014:
2015 2016 2017 2018 2019 Thereafter Total
(in thousands)
Operating leases (a). . . . . . . . . . . . . . . . . . . . . 5,787 5,071 4,958 4,804 4,033 9,395 34,048
GDS contracts (b) . . . . . . . . . . . . . . . . . . . . . . 15,000 16,120 12,370 16,120 1,120 — 60,730
Other service and licensing contracts . . . . . . . 7,141 5,134 — — — — 12,275
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $27,928 $26,325 $17,328 $20,924 $ 5,153 $ 9,395 $ 107,053
(a) 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, 2014, 2013 and 2012, we recorded rent expense in the amount
of $7.3 million, $6.8 million and $6.2 million, respectively. As a result of a subleasing arrangement that we have entered
into, we are expecting approximately $1.0 million in sublease income through 2017.
(b) 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”). Beginning January 1, 2015, the Company will no longer be subject
to exclusivity obligations. Under the New Travelport GDS Service 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.