Orbitz Worldwide

12 Months Ended

Dec. 31, 2011

Orbitz Worldwide [Abstract]

Orbitz Worldwide

6.    Orbitz Worldwide

The Company accounts for its investment of approximately 48% in Orbitz Worldwide under the equity method of accounting. As of December 31, 2011 and 2010, the carrying value of the Company’s investment in Orbitz Worldwide was $77 million and $91 million, respectively. The fair market value of the Company’s investment in Orbitz Worldwide as of December 31, 2011 was approximately $184 million.

In January 2010, the Company purchased $50 million of newly issued shares of common stock of Orbitz Worldwide. After this investment, and a simultaneous agreement between Orbitz Worldwide and a third party investor, PAR Investment Partners, to exchange approximately $49.68 million of Orbitz Worldwide debt for Orbitz Worldwide common stock, the Company continues to own approximately 48% of Orbitz Worldwide outstanding shares.

Presented below are the summary balance sheets for Orbitz Worldwide as of December 31, 2011 and 2010:

(in $ millions)	December 31, 2011		December 31, 2010
Current assets		221		188
Non-current assets		925		1,029
Total assets		1,146		1,217
Current liabilities		454		423
Non-current liabilities		531		604
Total liabilities		985		1,027

As of December 31, 2011 and 2010, the Company had balances payable to Orbitz Worldwide of approximately $3 million and $16 million, respectively, which are included on the Company’s consolidated balance sheets within accrued expenses and other current liabilities.

Presented below are the summary results of operations for Orbitz Worldwide for the years ended December 31, 2011, 2010 and 2009:

(in $ millions)	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009
Net revenue		767			757			738
Operating expenses (excluding impairment)		712			688			679
Impairment of goodwill, intangible assets, property and equipment and other long-lived assets		50			81			332
Operating income (loss)		5			(12	)		(273	)
Interest expense, net		(41	)		(44	)		(57	)
Other income		1			—			2
Loss before income taxes		(35	)		(56	)		(328	)
Income tax provision		(2	)		(2	)		(9	)
Net loss		(37	)		(58	)		(337	)

The Company has recorded losses of $18 million, $28 million and $162 million related to its investment in Orbitz Worldwide for the years ended December 31, 2011, 2010 and 2009, respectively, within equity in losses of investment in Orbitz Worldwide in the Company’s consolidated statements of operations.

Equity in losses of investment in Orbitz Worldwide for the year ended December 31, 2011 includes the Company’s share of a non-cash impairment charge recorded by Orbitz Worldwide of $50 million, of which $30 million was to impair goodwill and $20 million was to impair trademarks and tradenames.

Equity in losses of investment in Orbitz Worldwide for the year ended December 31, 2010 includes the Company’s share of a non-cash impairment charge recorded by Orbitz Worldwide of $81 million. During the fourth quarter of 2010, Orbitz Worldwide performed its annual impairment test for goodwill and intangible assets. This resulted in Orbitz Worldwide recognizing an impairment charge of $70 million, of which $42 million was to impair goodwill and $28 million was to impair trademarks and tradenames. Additionally, during 2010, Orbitz Worldwide recorded an $11 million non-cash impairment charge related to property, equipment and other assets.

Equity in losses of investment in Orbitz Worldwide for the year ended December 31, 2009 includes the Company’s share of a non-cash impairment charge recorded by Orbitz Worldwide of $332 million, of which $250 million related to goodwill and $82 million related to trademarks and tradenames. During that period, Orbitz Worldwide experienced a significant decline in its stock price and a decline in its operating results due to continued weakness in economic and industry conditions. These factors, coupled with an increase in competitive pressures, resulted in the recognition of an impairment charge.

Net revenue disclosed above includes approximately $104 million, $110 million and $108 million of net revenue earned by Orbitz Worldwide through transactions with the Company during the years ended December 31, 2011, 2010 and 2009, respectively.

The Company has various commercial agreements with Orbitz Worldwide, and under those commercial agreements, it has earned approximately $2 million, $4 million and $3 million of revenue in each of the years ended December 31, 2011, 2010 and 2009, respectively, and recorded approximately $106 million, $114 million and $111 million of expense in the years ended December 31, 2011, 2010 and 2009, respectively. Furthermore, the Company has recorded approximately $6 million, $4 million and $4 million of interest income related to letters of credit issued by the Company on behalf of Orbitz Worldwide in the years ended December 31, 2011, 2010 and 2009, respectively.