Travelzoo 2003 Annual Report Download - page 43

In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Guarantees of Indebtedness of Others (""FIN 45''). FIN 45 requires
us to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in the
issuance of the guarantee. The disclosure requirements eÅective for the year ending December 31, 2002,
expand the disclosures required by a guarantor about its obligation under a guarantee. The accounting
requirements for the initial recognition of guarantees became applicable for guarantees issued or modiÑed
after December 31, 2002. The adoption of FIN 45 did not have a material impact on our consolidated Ñnancial
statements.
In December 2002, the Emerging Issues Task Force reached a consensus on Issue No. 00-21, Accounting
for Revenue Arrangements with Multiple Deliverables (""EITF Issue 00-21''). ETTF Issue 00-21 mandates
how to identify whether goods or services, or both, that are to be delivered separately in a bundled sales
arrangement should be accounted for as separate units of accounting. The consensus is eÅective prospectively
for our third quarter of 2003. We evaluated the guidance in EITF Issue 00-21 and concluded that our
advertising arrangements should continue to be accounted for as a single unit of accounting. As a result, the
adoption of EITF Issue 00-21 did not have a material impact on our revenue recognition policies or
consolidated Ñnancial statements.
In December 2003, the FASB issued Interpretation No. 46 (""FIN 46R'') (revised December 2003),
Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51
(""ARB 51''), which addresses how a business enterprise should evaluate whether it has a controlling interest
in an entity through means other than voting rights and accordingly should consolidate the entity. FIN 46R
replaces FASB Interpretation No. 46 (""FIN 46'') , which was issued in January 2003. Before concluding that
it is appropriate to apply ARB 51 voting interest consolidation model to an entity, an enterprise must Ñrst
determine that the entity is not a variable interest entity (VIE). As of the eÅective date of FIN 46R, an
enterprise must evaluate its involvement with all entities or legal structures created before February 1, 2003, to
determine whether consolidation requirements of FIN 46R apply to those entities. There is no grandfathering
of existing entities. Public companies must apply either FIN 46 or FIN 46R immediately to entities created
after December 15, 2003 and no later than the end of the Ñrst reporting period that ends after March 15, 2004
for all other entities. The adoption of FIN 46R is not expected to have an eÅect on our consolidated Ñnancial
statements.
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity (""SFAS 150'') that establishes standards on how an issuer
classiÑes and measures certain Ñnancial instruments with characteristics of both liabilities and equity.
SFAS No. 150 was eÅective for Ñnancial instruments entered into or modiÑed after May 31, 2003, and
otherwise was eÅective at the beginning of the Ñrst interim period beginning after June 15, 2003. On
November 7, 2003, Financial Accounting Standards Board StaÅ Position 150-3 was issued, which indeÑnitely
deferred the eÅective date of SFAS 150 for certain mandatory redeemable non-controlling interests. The
adoption of SFAS 150 had no eÅect on our consolidated Ñnancial statements.
The Company adopted the new disclosure requirements of SFAS No. 148, Accounting for Stock-Based
Compensation Ì Transition and Disclosure, during the quarter ended March 31, 2003. The adoption of the
disclosure requirements of this statement did not have an impact on the Company's Ñnancial position, results
of operations or cash Öows.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company has no outstanding debt, is not a party to any derivatives transactions, and does not have
any other material liabilities or assets which are subject to risks relating to interest rates, currency exchange
rates, commodity price risks or other market risks.
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