Avis 2007 Annual Report Download - page 83

Table of Contents
ownership interest and the interests of the noncontrolling owners of a subsidiary. This Statement is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008. The Company will adopt SFAS No. 160 on January 1, 2009, as
required, and is currently evaluating the impact of such adoption on its financial statements.
Travelport. On August 23, 2006, the Company completed the sale of Travelport, which comprised the Company’s former travel
distribution services businesses for proceeds of approximately $4.1 billion, net of closing adjustments. The loss incurred on disposal of
Travelport included a $1.3 billion impairment charge reflecting the difference between Travelport’s carrying value and its estimated fair
value and a tax charge related to asset basis differences resulting from the 2001 acquisition of a Travelport subsidiary.
Realogy and Wyndham. On July 31, 2006, the Company completed the spin-offs of Realogy and Wyndham in tax-free distributions of
one share each of Realogy and Wyndham common stock for every four and five shares, respectively, of Cendant common stock held on
July 21, 2006. Direct costs incurred in connection with the spin-offs of Realogy and Wyndham are included within gain (loss) on disposal
of discontinued operations, net of tax on the accompanying Consolidated Statements of Operations.
Marketing Services Division.
On October 17, 2005, the Company completed the sale of its Marketing Services division for approximately
$1.8 billion. The proceeds consisted of approximately $1.7 billion of cash, net of closing adjustments, plus $125 million face value of
newly issued preferred stock of Affinion and warrants to purchase up to 7.5% of the common equity of Affinion (see Note 2—
Summary of
Significant Accounting Policies). The Company distributed the proceeds from the sale of Affinion preferred stock and warrants and
transferred its residual shares of Affinion preferred stock and warrants to Realogy and Wyndham pursuant to the Separation Agreement.
Wright Express. On February 22, 2005, the Company completed the initial public offering of Wright Express for $964 million of cash.
Additionally, the Company entered into a tax receivable agreement with Wright Express pursuant to which Wright Express is obligated to
make payments to the Company over a 15 year term. The Company is obligated to distribute all such payments received from Wright
Express to Realogy and Wyndham following the Cendant Separation. Excluding amounts remitted to Realogy and Wyndham, the
Company received $9 million during 2006 and $15 million during 2005 in connection with this tax receivable agreement. Such amounts
are recorded within gain (loss) on disposal of discontinued operations, net of tax on the accompanying Consolidated Statements of
Operations.
PHH. On January 31, 2005, the Company completed the spin-off of PHH, which includes its former mortgage, fleet leasing and appraisal
businesses. In connection with the spin-off, the Company recorded a non-cash impairment charge of $281 million and transaction costs of
$4 million during first quarter 2005. There were no tax benefits recorded in connection with these charges, as such charges are not tax
deductible.
Summarized statement of income data for discontinued operations are as follows:
Year Ended December 31, 2007
The $2 million loss from discontinued operations, net of tax for the year ended December 31, 2007 represents a tax charge due to an
increase in non-deductible expenses offset by a benefit in state taxes on discontinued operations. The $33 million gain on disposal of
discontinued operations, net of tax for the year ended December 31, 2007, primarily represents a tax benefit realized as a result of certain
elections made in connection with the Travelport disposition on the income tax returns filed during 2007.
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3.
Discontinued Operations