Travelzoo 2003 Annual Report Download - page 53

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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Estimated future amortization expense related to intangible assets at December 31, 2003 is as follows:
2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 65,500
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 62,167
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19,126
$146,793
(g) Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with remaining maturities of less than three months
on the date of purchase. As of December 31, 2003 and 2002, cash equivalents are comprised of $2,540,395 and
$527,258, respectively, held in money market accounts.
(h) Advertising Costs
Advertising costs amounted to $6,745,769, $3,960,464 and $2,264,488 for the years ended December 31,
2003, 2002, and 2001, respectively. During the years ended December 31, 2003, 2002 and 2001, $429,296,
$546,214 and $492,672, respectively, of advertising services were purchased from the Company's clients under
non-barter arrangements.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to diÅerences between the Ñnancial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are
recognized for deductible temporary diÅerences, along with net operating loss carryforwards and credit
carryforwards, if it is more likely than not that the tax beneÑts will be realized. To the extent a deferred tax
asset cannot be recognized under the preceding criteria, valuation allowances must be established. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary diÅerences are expected to be recovered or settled.
(k) Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 144, Impairment of Long-Lived Assets. SFAS No. 144 requires an
impairment loss to be recognized on assets to be held and used if the carrying amount of a long-lived asset
group is not recoverable from its undiscounted cash Öows. The amount of the impairment loss is measured as
the diÅerence between the carrying amount and the fair value of the asset group. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.
(l) Stock-Based Compensation
As allowed under SFAS No. 123, Accounting for Stock-Based Compensation, the Company has elected
to follow Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations in accounting for Ñxed plan stock awards to employees. Deferred stock-based
compensation for options granted to employees is determined as the excess of the fair value of the common
stock over the exercise price on the date options were granted. Stock-based compensation is amortized over
the vesting period of the individual award.
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