Expedia 2005 Annual Report Download - page 74

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Expedia, Inc.
Notes to Consolidated Financial Statements Ì (Continued)
The following table present a summary of the amounts as reported and as reclassified in our
consolidated statements of income for the years ended December 31, 2004 and 2003.
December 31, 2004 December 31, 2003
As As As As
Reported Reclassified Reported Reclassified
(In thousands)
Revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,843,013 $1,843,013 $2,339,813 $2,339,813
Cost of revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 412,701 390,318 1,199,414 1,233,743
Gross profitÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,430,312 1,452,695 1,140,399 1,106,070
Operating expenses:
Selling and marketing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 608,618 653,018 416,492 463,684
General and administrative ÏÏÏÏÏÏÏÏÏÏÏ 236,439 160,965 227,315 113,633
Technology and content ÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 85,020 Ì 59,743
Amortization of intangiblesÏÏÏÏÏÏÏÏÏÏÏ 125,091 125,091 76,073 76,073
Stock-based compensation ÏÏÏÏÏÏÏÏÏÏÏ 171,400 171,400 95,781 95,781
Amortization of non-cash distribution
and marketingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,728 16,728 41,974 41,974
Depreciation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31,563 Ì 27,582 Ì
Merger costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 11,664 11,664
Operating incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 240,473 $ 240,473 $ 243,518 $ 243,518
Consolidated Balance Sheets. We reclassified $13.3 million from cash and cash equivalents to
restricted cash and cash equivalents as of December 31, 2004.
Consolidated Statements of Cash Flows. In our consolidated statements of cash flows, we reclassified
the following items:
‚Transfers to IAC Ì We reclassified $1.3 billion and $548.4 million of transfers to IAC from
financing activities to investing activities for the years ended December 31, 2004 and 2003. We
previously reported these transfers to IAC with contribution from (distribution to) IAC, net in
financing activities of the consolidated statements of cash flows.
‚Restricted Cash and Cash Equivalents Ì We reclassified $13.3 million, $11.0 million and
$10.4 million as of December 31, 2004, 2003 and 2002, of restricted cash and cash equivalents from
cash and cash equivalents to changes in restricted cash and cash equivalents in financing activities
in the consolidated statements of cash flows.
NOTE 4 Ì New Accounting Pronouncements
Stock-Based Compensation
In December 2004, the FASB issued SFAS No. 123(R) ""Share-Based Payment''
(""SFAS 123(R)''), and related guidance, which are revisions of SFAS 123. Generally, the approach in
SFAS 123(R) is similar to the approach described in SFAS 123; however, SFAS 123(R) requires that
companies record all share-based payments to employees, including grants of employee stock options, in
the statement of income based on their fair values. SFAS 123(R) also requires the benefits of tax
deductions in excess of recorded compensation cost to be reported as a financing cash flow, rather than as
an operating cash flow as required under current literature. We expect to continue using the Black-Scholes
option valuation model upon the required adoption of SFAS 123(R) on January 1, 2006.
F-17