Travelzoo 2002 Annual Report Download - page 49

Download and view the complete annual report

Please find page 49 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)
(i) Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 144, Impairment of Long-Lived Assets. SFAS No. 144 requires an
impairment loss to be recognized on assets to be held and used if the carrying amount of a long-lived asset is
not recoverable from its undiscounted cash Öows. The amount of the impairment loss is measured as the
diÅerence between the carrying amount and the fair value of the asset. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell.
(j) Stock-Based Compensation
As allowed under SFAS No. 123, Accounting for Stock-Based Compensation, the Company has elected
to follow Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations in accounting for Ñxed plan stock awards to employees. Deferred stock-based
compensation for options granted to employees is determined as the excess of the fair value of the common
stock over the exercise price on the date options were granted. Stock-based compensation is amortized over
the vesting period of the individual award.
Had all stock-based compensation awards granted to employees and directors been accounted for using
the fair value based method net income and net income share would have been adjusted to the amounts
reported in the following table.
Year Ended December 31,
2002 2001 2000
Net income as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $853,071 $363,735 $361,686
Stock-based compensation included in determination of net
income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 9,221
Stock-based compensation determined under the fair-value
based method ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,908) (56,182) (11,765)
Pro-forma net income as if the fair value based method had
been applied to all awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $851,163 $307,553 $359,142
Pro-forma basic and diluted net income per share as if the
fair value based method had been applied to all awards ÏÏÏ $ 0.04 $ 0.02 $ 0.02
The fair value of options granted was calculated as of the grant date using the Black-Scholes method with
the following assumptions:
2002 2001 2000
Numbers of options granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 33,589 210,000 70,000
Grant date fair value of options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.06 $ 0.27 $ 0.17
Grant date fair value of the common stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.56 $ 0.39 $ 0.18
Expected life of the option (in years) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5 10 10
Annual volatility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 51% 85% 85%
Risk-free interest rates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.5% 4.5% 4.5%
Dividend Rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì
(k) Website Development Costs
Prior to June 30, 2000, website development costs were expensed as incurred. The Company adopted
EITF Issue No. 00-02, Accounting for Website Development Costs, on June 30, 2000. The adoption of EITF
33