Orbitz 2010 Annual Report Download - page 85

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and $82 million related to trademarks and trade names. This charge is included in the impairment of goodwill
and intangible assets expense line item in our consolidated statement of operations.
Due to the current economic uncertainty and other factors, we cannot assure that the remaining amounts
of goodwill, indefinite-lived intangible assets and finite-lived intangible assets will not be further impaired in
future periods.
2008
During the year ended December 31, 2008, in connection with our annual planning process, we lowered
our long-term earnings forecast in response to changes in the economic environment, including the potential
future impact of airline capacity reductions, increased fuel prices and a weakening global economy. These
factors, coupled with a prolonged decline in our market capitalization, indicated potential impairment of our
goodwill and trademarks and trade names. Additionally, given the economic environment, our distribution
partners were under increased pressure to reduce their overall costs and could have attempted to terminate or
renegotiate their agreements with us on more favorable terms to them. These factors indicated that the carrying
value of certain of our finite-lived intangible assets, specifically customer relationships, may not be
recoverable. As a result, in connection with the preparation of our financial statements for the third quarter of
2008, we performed an interim impairment test of our goodwill, indefinite-lived intangible assets and finite-
lived intangible assets.
For purposes of testing goodwill for potential impairment, we estimated the fair value of the applicable
reporting units to which all goodwill is allocated using generally accepted valuation methodologies, including
the market and income based approaches, and relevant data available through and as of September 30, 2008.
We further used appropriate valuation techniques to separately estimate the fair values of all of our
indefinite-lived intangible assets as of September 30, 2008 and compared those estimates to the respective
carrying values. We used a market or income valuation approach to estimate fair values of the relevant
trademarks and trade names.
We also determined the estimated fair values of certain of our finite-lived intangible assets as of
September 30, 2008, specifically certain of our customer relationships whose carrying values exceeded their
expected future cash flows on an undiscounted basis. We determined the fair values of these customer
relationships by discounting the estimated future cash flows of these assets. We then compared the estimated
fair values to the respective carrying values.
As a result of this testing, we concluded that the goodwill and trademarks and trade names related to both
our domestic and international subsidiaries as well as the customer relationships related to our domestic
subsidiaries were impaired. Accordingly, we recorded a non-cash impairment charge of $297 million during
the year ended December 31, 2008, of which $210 million related to goodwill, $74 million related to
trademarks and trade names and $13 million related to customer relationships. This charge is included in the
impairment of goodwill and intangible assets expense line item in our consolidated statements of operations.
85
ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)