Travelzoo 2007 Annual Report Download - page 75

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3 years for computer hardware and software and office equipment. The Company depreciates leasehold improve-
ments over the life of the lease or the asset, whichever is shorter.
Depreciation expense was $181,000, $111,000, and $104,000 for the years ended December 31, 2007, 2006
and 2005, respectively.
(f) Intangible Assets
Intangible assets consist of the following (in thousands):
2007 2006
December 31,
Acquired amortized intangible assets:
Internet domain names ............................................... $418 $382
Less accumulated amortization ......................................... 360 348
Total ............................................................ $ 58 $ 34
Intangible assets have a useful life of 5 years.
Amortization expense was $12,000, $20,000 and $64,000 for the years ended December 31, 2007, 2006 and
2005, respectively.
Future amortization expense related to intangible assets at December 31, 2007 is as follows (in thousands):
Year ended December 31,
2008 . .................................................................. $13
2009 . .................................................................. 13
2010 . .................................................................. 13
2011 . .................................................................. 13
2012 . .................................................................. 6
$58
(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, 2007 and 2006, cash equivalents are comprised of $18.3 million and
$13.5 million, respectively, held in money market accounts.
(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 $28.0 million, $20.5 million and $20.3 million
for the years ended December 31, 2007, 2006, and 2005, respectively. In the year ended December 31, 2007
approximately $410,000 of advertising services was purchased from the Company’s clients under non-barter
agreements and recorded in sales and marketing expense. In the years ended December 31, 2006 and 2005 there
were no advertising services that were purchased from the Company’s clients under any 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 differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for
43
TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)