Orbitz 2011 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 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)
78
“more likely than not” standard on a tax jurisdiction by jurisdiction basis. We assessed the available positive and negative
evidence to estimate if sufficient future taxable income would be generated to utilize the existing deferred tax assets.
We currently have a valuation allowance for our deferred tax assets of $298.9 million, of which $192.1 million relates to
U.S. jurisdictions. As of December 31, 2011, we maintained full valuation allowances in all jurisdictions that had previously
established a valuation allowance. We will continue to assess the level of the valuation allowance required; if sufficient positive
evidence exists in future periods to support a release of some or all of the valuation allowance, such a release would likely have
a material impact on our results of operations. With respect to the valuation allowance established against our non-U.S.-based
deferred tax assets, a significant piece of objective negative evidence evaluated in our determination was cumulative losses
incurred over the three-year period ended December 31, 2011. This objective evidence limited our ability to consider other
subjective evidence such as future income projections. With respect to the valuation allowance established against our U.S.-
based deferred tax assets, the lack of a sustained trend of profitability along with other subjective factors outweighed the
available positive evidence at the present time. Due to expected continued improvement in the U.S. operations, management
believes a reasonable possibility exists that, within the next year, sufficient positive evidence may become available to reach a
conclusion that a significant portion of the U.S. valuation allowance will no longer be needed.
The tax provisions recorded for the years ended December 31, 2011, 2010 and 2009 were disproportionate to the amount
of pre-tax net loss incurred during each respective period primarily because we were not able to realize any tax benefits on the
goodwill and trademark and trade names impairment charges recorded during each of those years.
Our effective income tax rate differs from the U.S. federal statutory rate as follows:
Years Ended December 31,
2011 2010 2009
Federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . 35.0 % 35.0 % 35.0 %
State and local income taxes, net of federal benefit (1.8) (1.0) (0.2)
Taxes on non-U.S. operations at differing rates . . . (4.7) (5.4) (0.8)
Change in valuation allowance . . . . . . . . . . . . . . . . (4.7) (6.0) (10.5)
Goodwill impairment charges . . . . . . . . . . . . . . . . . (29.6) (25.9) (26.6)
Reserve for uncertain tax positions . . . . . . . . . . . . . 0.4 (0.1) (0.1)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.4) (0.9) 0.4
Effective income tax rate. . . . . . . . . . . . . . . . . . . . . (5.8)% (4.3)% (2.8)%