Travelzoo 2007 Annual Report Download - page 64

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In 2007, we started up operations in Australia, China, France, Hong Kong, Japan, and Taiwan. We plan to start
up operations in South Korea in 2008 and we plan to start up operations in India in 2009.
In 2007, we began to allocate significant resources to the development of the Travelzoo Network, a network of
third-party Web sites that list travel deals published by Travelzoo.
In 2008, we continue to develop shows and events listings.
In 2008, we plan to develop a new travel search engine.
Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Accounting
Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 establishes a
framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased
consistency in how fair value determinations are made under various existing accounting standards which permit, or
in some cases require, estimates of fair market value. SFAS No. 157 was effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that
the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for
a interim period within that fiscal year. The FASB issued FASB Staff Position (“FSP”) No. 157-2 (FSP No. 157-2),
which delays the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except
those that are recognized or disclosed at fair value in the financial statements on a recurring basis. FSP No. 157-2
partially defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 and interim
periods within those fiscal years for items within the scope of FSP No. 157-2. We do not expect the adoption of this
standard to have a material effect on our financial position or results of operations.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities” (“SFAS No. 159”). SFAS No. 159 allows companies to choose to measure many financial instruments
and other certain items at fair value. The statement requires that unrealized gains and losses on items for which the
fair value option has been elected to be reported in earnings. SFAS No. 159 also amends certain provisions of
SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007, although earlier adoption is permitted. We do not expect the
adoption of this standard to have a material effect on our financial position or results of operations.
In December 2007, the FASB issued SFAS No. 141-R, “Business Combinations” (“SFAS No. 141-R”), to
replace SFAS No. 141, “Business Combinations.” SFAS No. 141-R requires the use of the acquisition method of
accounting, defines the acquirer, establishes the acquisition date and broadens the scope to all transactions and other
events in which one entity obtains control over one or more other businesses. This statement is effective for financial
statements issued for fiscal years beginning on or after December 15, 2008.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We believe that our potential exposure to changes in market interest rates is not material. The Company has no
outstanding debt and is not a party to any derivatives transactions. We invest in highly liquid investments with short
maturities. Accordingly, we do not expect any material loss from these investments.
Our operations in Asia Pacific expose us to foreign currency risk associated with agreements being denom-
inated in Australian Dollars, Chinese Yuan, Hong Kong Dollars, Japanese Yen, and Taiwan Dollars. Our operations
in Canada expose us to foreign currency risk associated with agreements being denominated in Canadian Dollars.
Our operations in Europe expose us to foreign currency risk associated with agreements being denominated in
British Sterling Pounds and Euros. We are exposed to foreign currency risk associated with fluctuations of these
currencies as the financial position and operating results of our operations in Asia Pacific, Canada and Europe will
be translated into U.S. Dollars for consolidation purposes. We do not use derivative instruments to hedge these
exposures.
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