Travelzoo 2006 Annual Report Download - page 75

consideration of $28.6 million and completed the share repurchase under this program. There were no shares
repurchased during the years ended December 31, 2005 and 2004.
(6) Stock-based Compensation
Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R, using the
modified prospective transition method and therefore has not restated prior periods’ results. Prior to the adoption of
SFAS 123R, the Company presented all tax benefits of deductions resulting from the exercise of stock options as
operating cash flows in the Consolidated Statements of Cash Flows. SFAS 123R requires the cash flows resulting
from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options
(excess tax benefits) to be reclassified as financing cash flows. For fiscal 2006, no excess tax benefit was recorded.
As described in Note 1(a), as part of the consideration exchanged for the outstanding shares of Silicon
Channels Corporation, the Company also issued to the majority stockholder in January 2001 fully vested and
exercisable options to acquire 2,158,349 shares of common stock. The options have an exercise price of $1.00 per
share, are outstanding as of December 31, 2006, and expire in January 2011.
In October 2001, the Company granted to each director fully vested and exercisable options to purchase
30,000 shares of common stock with an exercise price of $2.00 per share for their services as a director in 2000 and
2001. A total of 210,000 options were granted. The options expire in October 2011. 150,000 options and 17,275
options were exercised during the years ended December 31, 2004 and 2005, respectively. As of December 31,
2006, 42,725 options are vested and remain outstanding.
In March 2002, Travelzoo Inc. granted to each director options to purchase 5,000 shares of common stock with
an exercise price of $3.00 per share that vested in connection with their services as a director in 2002. A total of
35,000 options were granted. In October 2002, 1,411 options were cancelled upon the resignation of a director. The
options expire in March 2012. 23,589 of these options were exercised during the year ended December 31, 2004. As
of December 31, 2006, 10,000 options are vested and remain outstanding.
The Company did not provide any stock-based compensation in fiscal years 2004, 2005, or 2006. In addition,
all previously issued options vested prior to January 1, 2003.
Option activity as of December 31, 2006 and changes during the fiscal year ended December 31, 2006 were as
follows:
Shares
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual Life
Aggregate
Intrinsic Value
(In thousands)
Outstanding at December 31, 2005 ........... 2,211,074 $1.03
Outstanding at December 31, 2006 ........... 2,211,074 $1.03 4.11 years $63,948
Exercisable and fully vested at December 31,
2006 ............................... 2,211,074 $1.03 4.11 years $63,948
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference
between the Company’s closing stock price on the last trading day of fiscal 2006 and the exercise price, multiplied
by the number of in-the-money options) that would have been received by the option holders had all option holders
exercised their options on December 31, 2006. This amount changes based on the fair market value of the
Company’s stock. The Company’s policy is to issue shares from the authorized shares to fulfill stock option
exercises.
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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)