Expedia 2007 Annual Report Download - page 84

Download and view the complete annual report

Please find page 84 of the 2007 Expedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

NOTE 4 — Property and Equipment, Net
Our property and equipment consists of the following:
2007 2006
December 31,
(In thousands)
Capitalized software development ............................... $230,168 $ 176,751
Computer equipment ......................................... 74,569 61,203
Furniture and other equipment .................................. 40,706 33,676
Leasehold improvements . . . ................................... 30,746 24,431
376,189 296,061
Less: accumulated depreciation ................................. (250,094) (195,126)
Projects in progress.......................................... 53,395 36,209
Property and equipment, net ................................... $179,490 $ 137,144
As of December 31, 2007 and 2006, our recorded capitalized software development costs, net of
accumulated amortization, were $113.4 million and $92.4 million. For the years ended December 31, 2007,
2006 and 2005, we recorded amortization of capitalized software development costs of $35.9 million,
$28.3 million and $38.6 million, most of which is included in technology and content expenses.
NOTE 5 — Goodwill and Intangible Assets, Net
The following table presents our goodwill and intangible assets as of December 31, 2007 and 2006:
2007 2006
December 31,
(In thousands)
Goodwill ................................................ $6,006,338 $5,861,292
Intangible assets with indefinite lives ........................... 867,246 866,523
Intangible assets with definite lives, net ......................... 103,511 162,251
$6,977,095 $6,890,066
We perform our annual assessment of possible impairment of goodwill and indefinite-lived intangible
assets as of October 1, or more frequently if events and circumstances indicate that impairment may have
occurred. We performed our annual impairment assessment for goodwill and intangible assets as of October 1,
2007 and had no impairments.
Our indefinite-lived intangible assets relate principally to trade names and trademarks acquired in various
acquisitions. Based on lower than expected year-to-date revenue growth, we determined that our indefinite-
lived trade name intangible asset related to Hotwire might be impaired during the third quarter of 2006.
Accordingly, we performed a valuation of that asset and determined that its carrying amount exceeded its fair
value and recognized an impairment charge of $47.0 million in Impairment of intangible asset in our
consolidated statements of income. We based our measurement of fair value of the trade name intangible asset
using the relief-from-royalty method. This method assumes that a trade name has value to the extent that its
owner is relieved of the obligation to pay royalties for the benefits received therefrom.
F-18
Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)