Travelzoo 2002 Annual Report Download - page 48

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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
(f) Intangible Assets
Intangible assets consist of the following:
December 31,
2002 2001
Acquired amortized intangible assets:
Internet domain names ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $344,857 $414,286
Less accumulated amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 132,564 54,048
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $212,293 $360,238
Amortization expense was $78,518, $50,714, and $3,333 for the years ended December 31, 2002, 2001
and 2000, respectively.
In October 2001, the Company completed the acquisition of the Weekends.com domain name. As
consideration for the purchase, the Company paid the seller $125,000 and agreed to provide a minimum
number of clicks to the seller's other websites through advertising placed on the Travelzoo website. The fair
value of the advertising services of $89,286 was determined based on the cash price of similar advertising
services and recorded as deferred revenue. The revenue was recognized as the clicks were delivered. During
the years ended December 31, 2002 and 2001, $3,410 and $16,449 of revenues related to this arrangement
were recognized. The agreement with the seller to provide advertising services expired on September 30, 2002.
As such, $69,427 of advertising was not delivered and the carrying amounts of the intangible asset and related
deferred revenue were reduced accordingly.
Estimated future amortization expense related to intangible assets at December 31, 2002 is as follows:
2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 65,500
2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 65,500
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 62,167
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19,126
$212,293
(g) Advertising Costs
Advertising costs (including barter advertising) amounted to $3,960,464, $2,264,488 and $1,161,800 for
the years ended December 31, 2002, 2001, and 2000, respectively. During the years ended December 31, 2002,
2001 and 2000, $546,214, $492,672 and $256,920, respectively, of advertising services were purchased from
the Company's customers under non-barter arrangements.
(h) 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, 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.
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