Priceline 2015 Annual Report Download - page 66

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Information Technology
Year Ended December 31,
(in thousands)
2014
2013
Change
Information Technology $ 97,498
$ 71,890
35.6%
% of Total Gross Profit 1.3%
1.3%
Information technology expenses consist primarily of: (1) software license and system maintenance fees; (2) data communications and other expenses
associated with operating our services; (3) outsourced data center costs; and (4) payments to outside consultants. Information technology expense increased during
the year ended December 31, 2014, compared to the year ended December 31, 2013, due primarily to growth in our worldwide operations. The inclusion of
OpenTable and KAYAK in our consolidated results since their acquisitions on July 24, 2014 and May 21, 2013, respectively, contributed to the increase in
information technology expenses for the year ended December 31, 2014 compared to the year ended December 31, 2013.
Depreciation and Amortization
Year Ended December 31,
(in thousands)
2014
2013
Change
Depreciation and Amortization $ 207,820
$ 117,975
76.2%
% of Total Gross Profit 2.7%
2.1%
Depreciation and amortization expenses consist of: (1) amortization of intangible assets with determinable lives; (2) depreciation on computer equipment;
(3) depreciation of internally developed and purchased software; and (4) depreciation of leasehold improvements, furniture and fixtures and office equipment. For
the year ended December 31, 2014, depreciation and amortization expense increased from the year ended December 31, 2013 due primarily to increased intangible
amortization from the OpenTable and KAYAK acquisitions and increased depreciation expense due to capital expenditures for additional data center capacity and
office build outs to support growth and geographic expansion, principally related to our Booking.com business.
Other Income (Expense)
Year Ended December 31,
(in thousands)
2014
2013
Change
Interest Income $ 13,933
$ 4,167
234.4 %
Interest Expense (88,353)
(83,289)
6.1 %
Foreign Currency Transactions and Other (9,444)
(36,755)
(74.3)%
Total $ (83,864)
$ (115,877)
(27.6)%
For the year ended December 31, 2014, interest income on cash and marketable securities increased compared to the year ended December 31, 2013,
primarily due to an increase in the average invested balance and higher yields. Interest expense increased for the year ended December 31, 2014, compared to the
year ended December 31, 2013, primarily due to interest expense attributable to our Senior Notes issued in August 2014 and September 2014 and interest expense
attributable to our Senior Convertible Notes issued in May 2013, partially offset by early conversions of our 1.25% Convertible Senior Notes due March 2015.
Derivative contracts that hedge our exposure to the impact of currency fluctuations on the translation of our international operating results into U.S.
Dollars upon consolidation resulted in foreign exchange gains of $13.7 million for the year ended December 31, 2014 compared with foreign exchange gains of
$0.3 million for the year ended December 31, 2013, which are recorded in "Foreign currency transactions and other" in the Consolidated Statements of Operations.
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