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 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 46% to approximately 45% during 2013 primarily as a result of the issuance of shares by Orbitz Worldwide under its equity incentive plan.

As of September 30, 2013 and December 31, 2012, the carrying value of the Company’s investment in Orbitz Worldwide was $15 million and $0, respectively. The fair market value of the Company’s investment in Orbitz Worldwide as of September 30, 2013 was approximately $469 million.

Presented below are the summary results of operations for Orbitz Worldwide for the three and nine months ended September 30, 2013 and 2012:


(in $ millions)	Three Months Ended September 30, 2013		Three Months Ended September 30, 2012		Nine Months Ended September 30, 2013		Nine Months Ended September 30, 2012
Net revenue		221		198		650		589
Operating expenses		194		173		603		545

Operating income		27		25		47		44
Interest expense, net		(12)		(9)		(34)		(28)
Loss on extinguishment of debt		—		—		(18)		—

Income (loss) before income taxes		15		16		(5)		16
(Provision for) / benefit from income taxes		(2)		(1)		165		(3)

Net income		13		15		160		13

During the fourth quarter of 2012, the Company reduced its investment in Orbitz Worldwide to $0 because 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 that 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 the recognition of a benefit from income taxes of $158 million in its consolidated condensed statements of operations.

The Company recorded earnings of $6 million and $8 million related to its investment in Orbitz Worldwide for the three and nine months ended September 30, 2013, respectively, within the equity in earnings of investment in Orbitz Worldwide on the Company’s consolidated condensed statements of operations. For the three and nine months ended September 30, 2012, the Company recorded earnings of $7 million and $6 million, respectively, within the equity in earnings of investment in Orbitz Worldwide on the Company’s consolidated condensed statements of operations.

Net revenue disclosed above includes approximately $18 million and $60 million of net revenue earned by Orbitz Worldwide through transactions with the Company during the three and nine months ended September 30, 2013, respectively. Net revenue disclosed above includes approximately $21 million and $72 million of net revenue earned by Orbitz Worldwide through transactions with the Company during the three and nine months ended September 30, 2012, respectively.

As of September 30, 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.