Expedia 2011 Annual Report Download - page 96

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We classify our cash equivalents and investments within Level 1 and Level 2 as we value our cash
equivalents and investments using quoted market prices or alternative pricing sources and models utilizing
market observable inputs. Valuation of the foreign currency forward contracts is based on foreign currency
exchange rates in active markets, a Level 2 input.
As of December 31, 2011 and 2010, our cash and cash equivalents consisted primarily of prime institutional
money market funds with maturities of 90 days or less, time deposits as well as bank account balances.
We invest in investment grade corporate debt securities, all of which are classified as available for sale. As
of December 31, 2011, we had $57 million of short-term and $212 million of long-term available for sale
investments and the amortized cost basis of the investments approximated their fair value with gross unrealized
gains of $2 million and gross unrealized losses of $1 million. As of December 31, 2010, we had $81 million of
short-term and $163 million of long-term available for sale investments and the amortized cost basis of these
investments approximated their fair value with gross unrealized gains of $1 million and gross unrealized losses of
less than $1 million.
We also hold time deposit investments with financial institutions. Time deposits with original maturities of
less than 90 days are classified as cash equivalents and those with remaining maturities of less than one year are
classified within short-term investments. Of the total time deposit investments, $228 million and $88 million as
of December 31, 2011 and 2010 related to balances held by our majority-owned subsidiaries.
We use foreign currency forward contracts to economically hedge certain merchant revenue exposures and
in lieu of holding certain foreign currency cash for the purpose of economically hedging our foreign currency-
denominated operating liabilities. As of December 31, 2011, we were party to outstanding forward contracts
hedging our liability and revenue exposures with a total net notional value of $219 million. We had a net forward
asset of $1 million as of December 31, 2011 recorded in prepaid expenses and other current assets and a net
forward liability of $1 million as of December 31, 2010 recorded in accrued expenses and other current
liabilities. We recorded $(1) million, $6 million, and $32 million in net gains (losses) from foreign currency
forward contracts in 2011, 2010, and 2009.
NOTE 6 — Property and Equipment, Net
Our property and equipment consists of the following:
December 31,
2011 2010
(In thousands)
Capitalized software development $ 473,916 $ 387,228
Computer equipment 157,219 121,792
Furniture and other equipment 98,631 78,809
Leasehold improvements 85,735 64,154
815,501 651,983
Less: accumulated depreciation (552,241) (434,296)
Projects in progress 57,022 28,630
Property and equipment, net $ 320,282 $ 246,317
As of December 31, 2011 and 2010, our recorded capitalized software development costs, net of
accumulated amortization, were $184 million and $133 million. For the years ended December 31, 2011, 2010,
and 2009, we recorded amortization of capitalized software development costs of $73 million, $61 million, and
$57 million, most of which is included in technology and content expenses.
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