Travelzoo 2002 Annual Report Download - page 46

Download and view the complete annual report

Please find page 46 of the 2002 Travelzoo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 61

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61

TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
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 impres-
sions 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 $82,939, $600,454, and $430,130 for the years ended December 31,
2002, 2001, and 2000 respectively. The Company's share of this income, which has been recorded as revenue,
was $38,354, $332,736, and $231,885 for the years ended December 31, 2002, 2001, and 2000 respectively.
The agreement with DoubleClick was canceled as of August 23, 2002.
Revenues from advertising barter transactions are recognized in the period during which the advertise-
ments are displayed on the Travelzoo website. Expenses from barter transactions are recognized in the period
during which the advertisements are displayed on the barter partner's website. Barter transactions are recorded
at the fair value of the advertising provided based on cash received by the Company for transactions involving
similar types of advertising during the six months preceding the transaction in accordance with Emerging
Issues Task Force (EITF) Issue No. 99-17, Accounting for Advertising Barter Transactions. The amounts
included in advertising revenues and sales and marketing expenses for barter transactions were $-0-, $-0-, and
$37,000 for the years ended December 31, 2002, 2001, and 2000, respectively.
Commissions are recorded as the net amount received by the Company and are recognized in the period
in which the commissions earned are reported to the Company by the e-commerce partner.
(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. Diluted net income per share is computed by adjusting the weighted-average number of common
shares 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.
30