3. Orbitz Worldwide

The Company accounts for its investment of approximately 45% 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 statements of operations and consolidated condensed statements of comprehensive income, respectively. The Company’s investment in Orbitz Worldwide has been diluted from its investment of approximately 46% to 45% during 2013 as a result of issuance of shares by Orbitz Worldwide under its equity incentive plan.

As of June 30, 2013 and December 31, 2012, the carrying value of the Company’s investment in Orbitz Worldwide was $13 million and nil, respectively. The fair market value of the Company’s investment in Orbitz Worldwide as of June 30, 2013 was approximately $392 million.

Presented below are the summary results of operations for Orbitz Worldwide for the three and six months ended June 30, 2013 and 2012.


(in $ millions)	Three Months Ended June 30, 2013		Three Months Ended June 30, 2012		Six Months Ended June 30, 2013		Six Months Ended June 30, 2012
Net revenue		226		201		429		391
Operating expenses		203		186		409		372

Operating income		23		15		20		19
Interest expense, net		(13)		(9)		(22)		(19)
Loss on extinguishment of debt		(18)		—		(18)		—

(Loss) income before income taxes		(8)		6		(20)		—
Benefit (provision) for income taxes		9		(1)		167		(2)

Net income (loss)		1		5		147		(2)

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, in the first quarter of 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.

In the first quarter of 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 statements of operations for the three months ended March 31, 2013.

The Company has recorded earnings of nil and $2 million related to its investment in Orbitz Worldwide for the three and six months ended June 30, 2013, respectively, within the equity in earnings (losses) of investment in Orbitz Worldwide on the Company’s consolidated condensed statements of operations. For the three and six months ended June 30, 2012, the Company recorded earnings (losses) of $2 million and $(1) million, respectively, within the equity in earnings (losses) of investment in Orbitz Worldwide on the Company’s consolidated condensed statements of operations.

Net revenue disclosed above includes approximately $20 million and $42 million of net revenue earned by Orbitz Worldwide through transactions with the Company during the three and six months ended June 30, 2013, respectively. Net revenue disclosed above includes approximately $25 million and $51 million of net revenue earned by Orbitz Worldwide through transactions with the Company during the three and six months ended June 30, 2012, respectively.

As of June 30, 2013 and December 31, 2012, the Company had balances payable to Orbitz Worldwide of approximately $15 million and $5 million, respectively, which are included on the Company’s consolidated condensed balance sheets within accrued expenses and other current liabilities.