Travelzoo 2005 Annual Report Download - page 61

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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Revenues from advertising sold to clients through agencies are reported at the net amount billed to the
agency.
(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, including shares reserved for issuance to former stockholders of Travelzoo.com Corporation reported
as outstanding prior to April 25, 2004. Diluted net income per share is computed by adjusting the weighted-
average number of common shares outstanding 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.
The following table sets forth the calculation of basic and diluted net income per share:
Year Ended December 31,
2005 2004 2003
Basic net income per share:
Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 7,963,017 $ 6,037,377 $ 2,050,126
Weighted average common shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,249,231 16,879,227 19,425,147
Basic net income per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.49 $ 0.36 $ 0.11
Diluted net income per share:
Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 7,963,017 $ 6,037,377 $ 2,050,126
Weighted average common shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,249,231 16,879,227 19,425,147
EÅect of dilutive securities Ì stock options ÏÏÏÏÏÏ 1,481,645 1,595,548 1,101,804
Weighted average common and potential common
sharesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17,730,876 18,474,775 20,526,951
Diluted net income per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.45 $ 0.33 $ 0.10
(d) Use of Estimates
Management of the Company has made a number of estimates and assumptions relating to the reporting
of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare
these Ñnancial statements in conformity with accounting principles generally accepted in the United States of
America. Actual results could diÅer from those estimates.
(e) Property and Equipment
Property and equipment consisted of the following:
December 31,
2005 2004
Computer hardware and softwareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $351,564 $323,746
OÇce equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 351,859 226,587
703,423 550,333
Less accumulated depreciationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 544,656 441,934
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $158,767 $108,399
40