Travelzoo 2010 Annual Report Download - page 82

more likely than not that there will not be any assessment of penalties. A reconciliation of the beginning and ending
amount of unrecognized tax benefits is as follows (in thousands):
Unrecognized tax benefits balance at January 1, 2008 ............................. $1,145
Increase related to prior year tax positions ..................................... 6
Decrease related to prior year tax positions ..................................... —
Increase related to current year tax positions .................................... —
Settlements ............................................................ —
Lapse of statute of limitations .............................................. (363)
Unrecognized tax benefits balance at December 31, 2008 .......................... 788
Increase related to prior year tax positions ..................................... 44
Decrease related to prior year tax positions ..................................... —
Increase related to current year tax positions .................................... 1,210
Settlements ............................................................ —
Lapse of statute of limitations .............................................. (39)
Unrecognized tax benefits balance at December 31, 2009 .......................... 2,003
Increase related to prior year tax positions ..................................... —
Decrease related to prior year tax positions ..................................... (224)
Increase related to current year tax positions .................................... —
Settlements ............................................................ (413)
Lapse of statute of limitations .............................................. —
Unrecognized tax benefits balance at December 31, 2010 .......................... $1,366
At December 31, 2010, unrecognized tax benefits of approximately $156,000, if recognized, would favorably
affect the Company’s effective income tax rate. Unrecognized tax benefits of approximately $1.2 million, if
recognized, would be recorded in discontinued operations.
The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign
jurisdictions. The Company is no longer subject to U.S. federal and certain state tax examinations for years
before 2005 and are no longer subject to California tax examinations for years before 2004. In the third quarter of
2010, the Company reached a final settlement with the Internal Revenue Service with regard to the examination of
the Company’s 2005 and 2006 tax years, as a result of which the Company paid additional taxes of approximately
$544,000, including interest, which the Company had fully reserved, and recorded a tax benefit of approximately
$202,000 due to the release of previously established tax liabilities and related interest.
(6) Stockholders’ Equity
As of December 31, 2010, the authorized capital stock of Travelzoo Inc. was comprised of 40,000,000 shares
of $.01 par value common stock and 5,000,000 shares of $.01 par value preferred stock. As of December 31, 2010,
there were 16,443,828 shares outstanding of common stock and no shares of preferred stock issued or outstanding.
During January 2001, the Board of Directors of Travelzoo.com Corporation proposed that Travelzoo.com
Corporation be merged with Travelzoo Inc. whereby Travelzoo Inc. would be the surviving entity. On
March 15, 2002, the stockholders of Travelzoo.com Corporation approved the merger with Travelzoo Inc. On
April 25, 2002, the certificate of merger was filed in Delaware upon which the merger became effective and
Travelzoo.com Corporation ceased to exist. Each outstanding share of common stock of Travelzoo.com
Corporation was converted into the right to receive one share of common stock of Travelzoo Inc. Under and
subject to the terms of the merger agreement, stockholders were allowed a period of two years following the
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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)