Travelzoo 2009 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2009 Travelzoo 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 100

  • 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

In January 2010, the FASB issued ASU 2010-06, a new accounting standard which requires reporting entities
to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers
into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and
settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The guidance is effective for
annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures that are
effective for annual periods beginning after December 15, 2010. We do not expect the adoption of this new
accounting standard to have a material impact on our consolidated results of operations or financial condition.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We believe that our potential exposure to changes in market interest rates is not material. The Company has no
outstanding debt and is not a party to any derivatives transactions. We invest in highly liquid investments with short
maturities. Accordingly, we do not expect any material loss from these investments.
Our operations in Canada expose us to foreign currency risk associated with agreements being denominated in
Canadian Dollars. Our operations in Europe expose us to foreign currency risk associated with agreements being
denominated in British Pound Sterling and Euros. We are exposed to foreign currency risk associated with
fluctuations of these currencies as the financial position and operating results of our operations in Canada and
Europe will be translated into U.S. Dollars for consolidation purposes. We do not use derivative instruments to
hedge these exposures. We are a net receiver of U.S. Dollars from our foreign subsidiaries and therefore benefit
from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to the foreign currency used
by the foreign subsidiary as their functional currency. We have performed a sensitivity analysis as of December 31,
2009, using a modeling technique that measures the change in the fair values arising from a hypothetical 10%
adverse movement in the levels of applicable foreign currency exchange rates relative to the U.S. dollar with all
other variables held constant. The foreign currency exchange rates we used were based on market rates in effect at
December 31, 2009. The sensitivity analysis indicated that a hypothetical 10% adverse movement in such foreign
currency exchange rates would have resulted in an incremental $296,000 foreign exchange loss for the twelve
month period ended December 31, 2009.
36