Orbitz 2009 Annual Report Download - page 48
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Interest Expense, Net
Interest expense decreased by $20 million, or 24%, to $63 million for the year ended December 31, 2008
from $83 million for the year ended December 31, 2007. The decrease in interest expense is primarily due to
the repayment of $860 million of intercompany notes payable to Travelport and, to a lesser extent, the
assignment of certain notes payable between subsidiaries of Travelport and our subsidiaries to us, both of
which occurred in connection with the IPO. This decrease was offset in part by interest expense incurred on
the $600 million term loan facility entered into concurrent with the IPO and the corresponding interest rate
swaps entered into to hedge a portion of the variable interest payments on the term loan. An increase in
interest expense accreted on the tax sharing liability and a decrease in capitalized interest on internal software
development projects also partially offset the decrease in interest expense. During the year ended December 31,
2008 and December 31, 2007, $18 million and $15 million of the total interest expense recorded was non-
cash, respectively.
(Benefit) Provision for Income Taxes
We recorded a tax benefit of $2 million for the year ended December 31, 2008 and a tax provision of
$43 million for the year ended December 31, 2007. The tax benefit recorded during the year ended
December 31, 2008 related to certain of our international subsidiaries. The amount of the tax benefit recorded
during the year ended December 31, 2008 is disproportionate to the amount of pre-tax net loss incurred during
the year primarily because we are not able to realize any tax benefits on the goodwill impairment charge
recorded during the third quarter of 2008.
The tax provision recorded during the year ended December 31, 2007 was primarily due to a valuation
allowance established in the third quarter of 2007 against $30 million of foreign net operating loss
carryforwards, net of tax, related to portions of our U.K.-based business. This item was unique to 2007 and
did not recur in 2008.
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