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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
Recently Issued Accounting Pronouncements
We have identified the following new accounting pronouncements that either have been recently adopted or issued that may affect us upon adoption:
In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"), which is an interpretation of SFAS
No. 109. FIN 48 prescribes a recognition threshold and a measurement standard for recognition and measurement in the financial statements of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by
taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate
settlement. We adopted FIN 48 on January 1, 2007. We have been indemnified by Cendant for taxes related to periods prior to the Blackstone Acquisition. See
Note 11—Income Taxes for details regarding the adoption of this pronouncement. Upon adoption of FIN 48, we recorded an additional income tax liability of
$2 million and corresponding goodwill of $2 million.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"), which defines fair value, establishes a framework for
measuring fair value and expands disclosure about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We
will adopt SFAS No. 157 on January 1, 2008. The adoption of this standard is not expected to have a material effect on our consolidated 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"), providing
companies with an option to report selected financial assets and liabilities at fair value. SFAS No. 159's objective is to reduce both complexity in accounting for
financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS No. 159 helps to mitigate this type of
accounting-induced volatility by enabling companies to report related assets and liabilities at fair value, which would likely reduce the need for companies to
comply with detailed rules for hedge accounting. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 requires companies to provide
additional information that will help investors and other users of financial statements to more easily understand the effect of its choice to use fair value on its
earnings. It also requires companies to display the fair value of those assets and liabilities for which it has chosen to use fair value on the face of the balance
sheet. SFAS No. 159 is effective on January 1, 2008. We are currently evaluating the impact of the adoption of this statement on our financial statements.
In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" ("SFAS No. 141(R)"), which establishes principles and requirements for
the reporting entity in a business combination, including recognition and measurement in the financial statements of the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree. This statement also establishes disclosure requirements to enable financial statement users to evaluate
the nature and financial effects of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on
or after the beginning of the first annual reporting period beginning on or after December 15, 2008, and interim periods within those fiscal years. SFAS
No. 141(R) will become effective for our fiscal year beginning January 1, 2009. We are currently evaluating the effect the adoption of SFAS No. 141(R) on our
financial statements.
78
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008