Travelzoo 2010 Annual Report Download - page 77

new accounting standard did not have an impact on the Company’s consolidated results of operations or financial
condition.
In October 2009, the FASB issued ASU 2009-13, a new accounting standard update for revenue recognition
with multiple deliverables. The new accounting standard update defines when individual deliverables included in a
multiple-element arrangement may be treated as separate units of accounting. The update primarily provides two
significant changes: 1) eliminates the need for objective and reliable evidence of the fair value for the undelivered
element in order for a delivered item to be treated as a separate unit of accounting, and 2) eliminates the residual
method to allocate the arrangement consideration. In addition, the update also expands the disclosure requirements
for revenue recognition. Effective January 1, 2011, we adopted this new accounting standard. We do not expect that
the adoption of this new accounting standard will have a material impact on the Company’s consolidated results of
operations and financial condition.
(2) Financial Instruments
At December 31, 2010, restricted cash consisted of a certificate of deposit for $875,000 serving as collateral for
a standby letter of credit for the security deposit of our corporate headquarters and a $2.2 million deposit with our
bank in the U.K. for our merchant account. Cash equivalents consist of highly liquid investments with remaining
maturities of three months or less on the date of purchase held in money market funds. The Company believes that
the carrying amounts of these financial assets are a reasonable estimate of their fair value. The fair value of these
financial assets was determined using the following inputs at December 31, 2010 (in thousands):
Total (Level 1) (Level 2) (Level 3)
Quoted Prices in
Active Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Fair Value Measurements at Reporting Date Using
Assets:
Money market funds ................. $29,315 $29,315 $— $—
Total ............................ $29,315 $29,315 $— $—
(3) Commitments and Contingencies
The Company leases office space in Canada, France, Germany, Spain, the U.K., and the U.S. under operating
lease agreements which expire between February 28, 2011 and January 31, 2016. Rent expense was $4.0 million,
$3.8 million and $3.7 million for the years ended December 31, 2010, 2009, and 2008, respectively. We are
committed to pay a portion of the related operating expenses under certain of these lease agreements. These
operating expenses are not included in the table below. Certain of these lease agreements have free or escalating rent
payment provisions. We recognize rent expense under such arrangements on a straight line basis. The future
minimum rental payments under these operating leases as of December 31, 2010 were as follows (in thousands):
2011 2012 2013 2014 2015 2016 Total
Minimum rental payments ....... $3,602 $2,793 $2,350 $588 $427 $142 $9,902
It is possible that claims may be asserted against the Company in the future by former stockholders of
Travelzoo.com Corporation seeking to receive shares in the Company, whether based on a claim that the two-year
deadline for exchanging their shares was unenforceable or otherwise. In addition, one or more jurisdictions,
including the Bahamas or the State of Delaware, may assert rights to unclaimed shares of the Company under
escheat statutes. As indicated below, the Company is currently the subject of an unclaimed property review by
representatives of the State of Delaware. If such escheat claims are asserted, whether as a result of such unclaimed
property review or otherwise, the Company intends to challenge the applicability of escheat rights, in that, among
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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)