Travelzoo 2004 Annual Report Download - page 57

TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Future amortization expense related to intangible assets at December 31, 2004 is as follows:
Year ended December 31,
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $62,705
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19,663
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 538
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 538
2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 119
$83,563
(g) Cash Equivalents and Short-Term Investments
Cash equivalents consist of highly liquid investments with remaining maturities of less than three months
on the date of purchase. As of December 31, 2004 and 2003, cash equivalents are comprised of $25,117,452
and $2,540,395, respectively, held in money market accounts.
Short-term investments consist of highly liquid investments with remaining maturities of greater than
three months on date of purchase and less than one year as of December 31, 2004. Short-term investments as
of December 31, 2004 comprise of treasury bonds in the amount of $10,031,738, which are classiÑed as held-
to-maturity and carried at amortized cost, which approximated the fair value of these investments due to their
short maturities. There were no material unrealized losses as of December 31, 2004.
(h) Advertising Costs
Advertising production costs are expensed as incurred. Online advertising is expensed as incurred over the
period the advertising is displayed. Advertising costs amounted to $11,770,246, $6,745,769 and $3,960,464 for
the years ended December 31, 2004, 2003, and 2002, respectively. During the years ended December 31, 2004,
2003 and 2002, $-0-, $429,296 and $546,214, 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.
(j) 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.
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