Orbitz 2011 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2011 Orbitz annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
66
equity-based compensation expense recorded each period is net of estimated forfeitures based on historical forfeiture rates.
Hotel Occupancy Taxes
Some states and localities impose a tax on the use or occupancy of hotel accommodations (“hotel occupancy tax”).
Generally, hotels collect hotel occupancy tax based on the amount of money they receive for renting their hotel rooms and
remit the tax to the appropriate taxing authorities. Using the travel services our websites offer, customers are able to make
hotel room reservations. While applicable tax laws vary among different taxing jurisdictions, we generally believe that these
laws do not require us to collect and remit hotel occupancy tax on the compensation that we receive for our travel services.
Some tax authorities have initiated lawsuits or administrative proceedings asserting that we are required to collect and remit
hotel occupancy tax on the amount of money we receive from customers for facilitating their reservations. The ultimate
resolution of these lawsuits and proceedings in all jurisdictions cannot be determined at this time. We establish an accrual for
legal proceedings (tax or otherwise) when we determine that a loss is both probable and can be reasonably estimated. See Note
9 - Commitments and Contingencies.
Recently Issued Accounting Pronouncements
In September 2009, the Financial Accounting Standards Board (“FASB”) issued guidance that allows companies to
allocate arrangement consideration in a multiple element arrangement in a way that better reflects the transaction economics. It
provides another alternative for establishing fair value for a deliverable when vendor specific objective evidence or third party
evidence for deliverables in an arrangement cannot be determined. When this evidence cannot be determined, companies will
be required to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using
the relative selling price method. The guidance also expands disclosures to require that an entity provide both qualitative and
quantitative information about the significant judgments made in applying this guidance. This guidance is effective on a
prospective basis for revenue arrangements entered into or materially modified on or after January 1, 2011. The adoption of this
guidance did not have a material impact on our consolidated financial statements.
In May 2011, the FASB issued guidance modifying fair value measurement principles and adding expanded disclosures
about fair value measurements. This guidance clarifies the application of existing fair value measurement and disclosure
requirements. This guidance is effective for interim periods beginning after December 15, 2011. We do not anticipate that the
adoption of this guidance will have a material impact on our consolidated financial statements.
In September 2011, the FASB issued guidance to allow companies the option of performing a qualitative assessment
before calculating the fair value of the reporting unit in a goodwill impairment test. If entities determine, on the basis of
qualitative factors, that the fair value of the reporting unit is more likely than not greater than the carrying amount, further
testing of goodwill for impairment would not be performed. This guidance does not change how goodwill is calculated or
assigned to reporting units, nor does it revise the requirement to test goodwill annually for impairment. The guidance is
effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We
do not anticipate that the adoption of this guidance will have a material impact on our consolidated financial statements.
3. Property and Equipment, Net
Property and equipment, net, consisted of the following:
December 31, 2011 December 31, 2010
(in thousands)
Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 285,277 $ 252,968
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . 78,157 72,941
Leasehold improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,650 13,352
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,868 14,310
Gross property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . 390,952 353,571
Less: accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . (249,250)(195,508)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . $ 141,702 $ 158,063