As discussed in Note 1 “Organization and Basis of Presentation,” LQH Parent completed the Spin-Off on May 30, 2018. As part of the Spin-Off closing, LQH Parent distributed to its stockholders all the outstanding shares of CorePoint common stock. Each holder of LQH Parent common stock received one share of CorePoint common stock for each share of LQH Parent common stock held by such holder on the record date after giving effect to a reverse stock split, whereby each share of the common stock of LQH Parent (par value $0.01) was reclassified and combined into one half of a share of the common stock of LQH Parent (par value $0.02).

Notwithstanding the legal form of the Spin-Off, for accounting and financial reporting purposes, LQH Parent is presented as being spun-off from CorePoint (a “Reverse Spin”). This presentation is in accordance with GAAP and is primarily a result of the relative significance of CorePoint’s business to LQH’s business, as measured in terms of revenues, profits, and assets. Therefore, CorePoint is considered the divesting entity and treated as the “accounting successor,” and LQH Parent is the “accounting spinnee” and “accounting predecessor” for consolidated financial reporting purposes.

In accordance with GAAP, the results of operations related to the hotel franchise and hotel management business are reported as discontinued operations for all periods presented. Additionally, our condensed consolidated financial statement presentation was modified to be more consistent with other REIT lodging companies and reflects the results of discontinued operations.

Because the separation was a spin-off among stockholders, for financial statement presentation, there is no gain or loss on the separation of the disposed net assets and liabilities. Rather, the carrying amounts of the net assets and liabilities of the Company’s former hotel franchise and hotel management accounts are removed at their historical cost with an offsetting amount to stockholders’ equity. The amount recognized will be adjusted in future reporting periods as the amount recorded is preliminary pending the finalization of various items including the final determination of the tax liabilities associated with the transaction and the settlement of other remaining considerations with Wyndham. As these matters are finalized pursuant to the transaction agreements, the Company will record an adjustment to its assets or liabilities accounts with an offsetting amount to stockholders’ equity. Additionally, as the Spin-Off was a taxable spin, Wyndham reserved $240 million to cover the tax payment for the Spin-Off, fully assuming all federal and state income taxes related to the Spin-Off and the period from January 1, 2018 to the May 30, 2018 Spin-Off date (the “Spin-Off Date”). Any residual amount of the reserve in excess of the tax payment will be remitted to the Company. Any related tax payment in excess of such reserve is the responsibility of Wyndham with the Company responsible for either delivering to Wyndham cash equal to the excess or issuing shares of common stock to Wyndham in lieu of such cash payment. Any such shares issued to Wyndham would be subject to a registration rights agreement. As these tax valuations are completed and the estimates are refined and finalized, the impact of the reorganization and separation from LQH on stockholders’ equity will be adjusted.

There was no activity related to discontinued operations for the three months ended March 31, 2019.

The following table summarizes the results of the hotel franchise and hotel management business which are presented as discontinued operations for the three months ended March 31, 2018 (in millions):


FRANCHISE, MANAGEMENT AND OTHER FEE BASED REVENUES	$	33
OPERATING EXPENSES
Corporate, general, administrative and marketing		28
Depreciation and amortization		2
Total Operating Expenses		30
Operating Income		3
OTHER EXPENSES:
Interest expense		(9	)
Total Other Expenses		(9	)
Loss Before Income Taxes		(6	)
Income tax benefit		1
Loss from Discontinued Operations, net of tax	$	(5	)

As permitted under GAAP, the Company has elected not to adjust the condensed consolidated statements of cash flows for the three months ended March 31, 2018 to exclude cash flows attributable to discontinued operations. As such, the following table presents selected financial information of LQH Parent included in the condensed consolidated statements of cash flows for the three months ended March 31, 2018 (in millions):

Non-cash items included in net income (loss):
Depreciation and amortization	$	2
Amortization of deferred costs		1
Equity-based compensation expense		2

Investing activities:
Capital expenditures	$	3