Expedia 2005 Annual Report Download - page 44

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Technology and Content
Year Ended December 31, % Change
2005 2004 2003 2005 vs 2004 2004 vs 2003
($ in thousands)
Technology and content ÏÏÏÏÏÏÏÏÏÏ $112,280 $85,020 $59,743 32% 42%
% of revenue (as reported)ÏÏÏÏÏÏÏÏ 5% 5% 3%
% of revenue (on a comparable net
basis)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5% 5% 4%
Technology and content expense consists of expenses for customizing our websites, amortization of
website and internal software development costs, localization of our websites, and product development
expenses such as personnel-related costs.
The year over year increases were primarily due to an increase in the number of personnel involved in
website development and engineering teams working on increasing our level of site innovation. In 2003,
technology and content expense includes a $4.7 million write-down related to the packaging technology
used by Hotels.com as a result of adopting Expedia.com's packaging technology.
Given the increasing complexity of our business, geographic expansion, initiatives in corporate travel,
increased supplier integration, service-oriented architecture improvements and other initiatives, we expect
absolute amounts spent on technology and content expenses to increase over time.
Amortization of Intangible Assets
Year Ended December 31, % Change
2005 2004 2003 2005 vs 2004 2004 vs 2003
($ in thousands)
Amortization of intangible assets ÏÏ $126,067 $125,091 $76,073 1% 64%
% of revenue (as reported)ÏÏÏÏÏÏÏ 6% 7% 3%
% of revenue (on a comparable net
basis)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6% 7% 5%
Amortization of intangible assets consists of amortization of intangible assets with definite lives
related to business acquisitions.
In 2005, amortization of intangibles expense was flat compared to 2004, because the amortization of
intangibles related to new business acquisitions was offset by the decrease in amortization related to
intangibles that were fully amortized.
In 2004, the increase in amortization of intangibles expense was primarily due to the addition of
intangible assets associated with IAC's acquisition of the minority interest in Expedia.com and Hotels.com
in 2003, as well as the acquisition of Hotwire.com in 2003.
For additional information about our acquisitions, see Note 5, Business Acquisitions, in the notes to
consolidated financial statements.
Stock-Based Compensation
Year Ended December 31, % Change
2005 2004 2003 2005 vs 2004 2004 vs 2003
($ in thousands)
Stock-based compensation ÏÏÏÏÏÏÏÏ $91,725 $171,400 $95,781 (46)% 79%
% of revenue (as reported)ÏÏÏÏÏÏÏÏ 4% 9% 4%
% of revenue (on a comparable net
basis)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4% 9% 7%
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