Travelzoo 2003 Annual Report Download - page 51

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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
recognition have been met. If Ñxed-fee advertising is displayed over a term greater than one month, revenues
are recognized ratably over the period. To the extent that any minimum guaranteed impressions are not met
during the contract period, the Company defers recognition of the corresponding revenues until the guaranteed
impressions are achieved. Fees for banner advertising and other variable-fee advertising arrangements are
recognized based on the number of impressions displayed or clicks delivered during the period.
The Company had outsourced part of its advertising sales and production activities to DoubleClick, Inc.
(""DoubleClick''). Under the terms of the agreement with DoubleClick, the Company received a portion of
the revenue received by DoubleClick from customers for the display of advertising on the Travelzoo website.
The Company recorded these revenues on a net basis. The gross revenue received by DoubleClick from
advertising on the Travelzoo website was $-0-, $82,939 and $600,454 for the years ended December 31, 2003,
2002, and 2001 respectively. The Company's share of this income, which has been recorded as revenue, was
$-0-, $38,354 and $332,736 for the years ended December 31, 2003, 2002, and 2001 respectively. The
agreement with DoubleClick was canceled as of August 23, 2002.
Advertising sold to clients through agencies is generally reported at the net amount billed to the agency.
(c) Net Income Per Share
Net income per share has been calculated in accordance with SFAS No. 128, Earnings per Share.
Basic net income per share is computed using the weighted-average number of common shares outstanding for
the period, including shares reserved for issuance to former shareholders of Travelzoo.com Corporation
reported as outstanding. Diluted net income per share is computed by adjusting the weighted-average number
of common shares outstanding for the eÅect of potential common shares outstanding during the period.
Potential common shares included in the diluted calculation consist of incremental shares issuable upon the
exercise of outstanding stock options calculated using the treasury stock method.
The following table sets forth the calculation of basic and diluted income per share:
Year Ended December 31,
2003 2002 2001
Basic net income per share:
Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,050,126 $ 853,071 $ 363,735
Weighted average common shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19,425,147 19,425,147 19,425,147
Basic net income per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.11 $ 0.04 $ 0.02
Diluted net income per share:
Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,050,126 $ 853,071 $ 363,735
Weighted average common shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19,425,147 19,425,147 19,425,147
EÅect of potential common sharesÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,101,804 471,206 Ì
Weighted average common and potential common
sharesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,526,951 19,896,353 19,425,147
Diluted net income per share ÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.10 $ 0.04 $ 0.02
For the year ended December 31, 2001, all outstanding stock options were excluded from the calculation
of diluted earnings per share because their eÅect was antidilutive.
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