Travelzoo 2010 Annual Report Download - page 88

matters between the Company and Azzurro Capital Inc. As a member of the Company’s Board of Directors,
Mr. Bartel also agrees to abstain from all deliberations and decisions of the Board of Directors with respect to any
matters relating to any dealings, agreements or arrangements between the Company or any of its affiliates and
Azzurro Capital Inc. or any of its affiliates, including with respect to the exercise of the Option, as mentioned above,
except to the extent his vote shall be required to constitute a quorum or otherwise to permit the Board of Directors to
take action, in which case he shall vote with the majority of the other members of the Board of Directors (or shall
abstain in the case of a tie).
On October 31, 2009, the Company completed the sale of its Asia Pacific operating segment to Azzurro Capital
Inc. pursuant to the terms of the Asset Purchase Agreements. The results of operations of the Asia Pacific operating
segment have been classified as discontinued operations for all periods presented. The Company has not had
significant ongoing involvement with the operations of the Asia Pacific operating segment and has not had any
economic interests in the Asia Pacific operating segment since the completion of the sale. Accordingly, the sale of
the Asia Pacific operating segment is treated as a discontinued operation under the relevant accounting literature.
At the completion of the sale, the Company received $2.1 million, net of cash provided, and had a net
receivable from Travelzoo (Asia) Limited and Travelzoo Japan K.K. of $1.1 million, which was paid in 2010. The
Company realized a gain of $3.4 million related to the sale of the net assets of the Asia Pacific business segment to
Azzurro Capital Inc. The resulting gain on the sale is reflected as an addition to additional paid-in capital in the
accompanying Consolidated Statements of Stockholders’ Equity as both the Company and Azzurro Capital Inc. are
under the common control of Ralph Bartel. The Company recorded a tax benefit of $4.4 million in discontinued
operations for the tax benefit associated with the loss on investments in the Asia Pacific subsidiaries as a result of
their dissolution.
The following table presents the revenues and the components of loss from discontinued operations, net of tax
(in thousands):
2010 2009 2008
Twelve Months Ended December 31
Revenues .......................................... $ — $2,134 $ 586
Cost of revenues .................................... — 173 153
Gross profit ...................................... — 1,961 433
Operating expenses:
Sales and marketing ................................ — 3,821 5,837
General and administrative . .......................... — 3,828 4,797
Total operating expenses . .......................... — 7,649 10,634
Operating loss from discontinued operations ................ — (5,688) (10,201)
Other income and (expense) . . .......................... — (33) 20
Income tax benefit ................................... — 79 152
Loss from discontinued operations ....................... — (5,642) (10,029)
Income tax benefit related to dissolution of Asia Pacific business
segment ......................................... — 4,409 —
Loss from discontinued operations, net of tax ............... $ — $(1,233) $(10,029)
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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)