Orbitz Worldwide

3 Months Ended

Mar. 31, 2013

Orbitz Worldwide [Abstract]

Orbitz Worldwide

3. 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 condensed statement of operations and consolidated condensed statement of comprehensive income, respectively. The Company’s investment in Orbitz Worldwide has been diluted from its investment of approximately 48% to 46% during 2012 as a result of issuance of shares by Orbitz Worldwide under its equity incentive plan.

As of March 31, 2013 and December 31, 2012, the carrying value of the Company’s investment in Orbitz Worldwide was $7 million and nil, respectively. The fair market value of the Company’s investment in Orbitz Worldwide as of March 31, 2013 was approximately $279 million.

Presented below are the summary results of operations for Orbitz Worldwide for the three months ended March 31, 2013 and 2012.

(in $ millions)	Three Months Ended March  31, 2013		Three Months Ended March  31, 2012
Net revenue		203		190
Operating expenses		206		186
Operating (loss) income		(3)		4
Interest expense, net		(9)		(10)
Loss before income taxes		(12)		(6)
Benefit from (provision for) income taxes		158		(1)
Net income (loss)		146		(7)

During the fourth quarter of the year ended December 31, 2012, the Company reduced its investment in Orbitz Worldwide to nil, 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 had no commitment which was probable to be incurred to provide additional funding to Orbitz Worldwide. However, during the three months ended March 31, 2013, the Company resumed the equity method of accounting as its share of net income from Orbitz Worldwide exceeded the share of net loss not recognized during the period for which equity accounting was suspended.

During the three months ended March 31, 2013, Orbitz Worldwide concluded that a significant portion of its US valuation allowance on deferred tax assets was no longer required, resulting in a recognition of a benefit from income taxes of $158 million in its consolidated condensed statement of operations.

The Company has recorded earnings of $2 million and losses of $3 million related to its investment in Orbitz Worldwide for the three months ended March 31, 2013 and 2012, respectively, within the equity in earnings (losses) of investment in Orbitz Worldwide in the Company’s consolidated condensed statements of operations.

Net revenue disclosed above includes approximately $22 million and $26 million of net revenue earned by Orbitz Worldwide through transactions with the Company during the three months ended March 31, 2013 and 2012, respectively.

As of March 31, 2013 and December 31, 2012, the Company had balances payable to Orbitz Worldwide of approximately $14 million and $5 million, respectively, which are included on the Company’s consolidated condensed balance sheets within accrued expenses and other current liabilities.