Orbitz Worldwide

12 Months Ended

Dec. 31, 2012

Orbitz Worldwide [Abstract]

Orbitz Worldwide

5.    Orbitz Worldwide

The Company accounts for its investment of approximately 46% in Orbitz Worldwide under the equity method of accounting and records its share of Orbitz Worldwide’s net income (loss) and other comprehensive income (loss) in its consolidated statement of operations and consolidated statement of comprehensive income, respectively. The Company’s investment in Orbitz Worldwide has been diluted from its investment of approximately 48% to 46% in 2012, as a result of issuance of shares by Orbitz Worldwide under its equity investment plan.

During the fourth quarter of the year ended December 31, 2012, the Company wrote off its investment in Orbitz Worldwide as its share of Orbitz Worldwide’s net loss exceeded the carrying value. The Company also discontinued applying the equity method of accounting as the Company has no commitment which is probable to be incurred to provide additional funding to Orbitz Worldwide. The Company will resume applying the equity method of accounting only after its share of net income from Orbitz Worldwide equals the share of net losses not recognized during the period the equity method of accounting is suspended.

As of December 31, 2012 and 2011, the carrying value of the Company’s investment in Orbitz Worldwide was nil and $77 million, respectively. The fair market value of the Company’s investment in Orbitz Worldwide as of December 31, 2012 was approximately $133 million.

Presented below are the summary balance sheets for Orbitz Worldwide as of December 31, 2012 and 2011:

(in $ millions)	December 31, 2012		December 31, 2011
Current assets		226		221
Non-current assets		608		925
Total assets		834		1,146
Current liabilities		473		454
Non-current liabilities		504		531
Total liabilities		977		985

As of December 31, 2012 and 2011, the Company had balances payable to Orbitz Worldwide of approximately $5 million and $3 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, 2012, 2011 and 2010:

(in $ millions)	Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net revenue		779			767			757
Operating expenses (excluding impairment)		720			712			688
Impairment of goodwill, intangible assets, property and equipment and other long-lived assets		321			50			81
Operating (loss) income		(262	)		5			(12	)
Interest expense, net		(37	)		(41	)		(44	)
Other income		—			1			—
Loss before income taxes		(299	)		(35	)		(56	)
Provision for income taxes		(3	)		(2	)		(2	)
Net loss		(302	)		(37	)		(58	)

The Company has recorded losses of $74 million, $18 million and $28 million related to its investment in Orbitz Worldwide for the years ended December 31, 2012, 2011 and 2010, 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, 2012, 2011 and 2010 includes the Company’s share of a non-cash impairment charge related to goodwill, other intangible assets and other long-lived assets recorded by Orbitz Worldwide of $321 million, $50 million, and $81 million respectively.

Net revenue disclosed above includes approximately $88 million, $104 million and $110 million of net revenue earned by Orbitz Worldwide through transactions with the Company during the years ended December 31, 2012, 2011 and 2010, respectively.

The Company has various commercial agreements with Orbitz Worldwide, and under those commercial agreements, it has earned approximately $4 million, $2 million and $4 million of revenue for each of the years ended December 31, 2012, 2011 and 2010, respectively, and recorded approximately $92 million, $106 million and $114 million of expense in the years ended December 31, 2012, 2011 and 2010, respectively. Furthermore, the Company has recorded approximately $7 million, $6 million and $4 million of interest income related to letters of credit issued by the Company on behalf of Orbitz Worldwide during the years ended December 31, 2012, 2011 and 2010, respectively.