Travelzoo 2009 Annual Report Download - page 29

the U.K. For the year ended December 31, 2009, European operations were 17% of revenues. Financial information
with respect to our business segments and certain financial information about geographic areas appears in Note 8
“Segment Reporting and Significant Customer Information,” to the accompanying consolidated financial
statements.
Our principal business office is located at 590 Madison Avenue, 37th Floor, New York, New York 10022.
Travelzoo is controlled by Ralph Bartel, who held beneficially approximately 66.3% of the outstanding shares
as of February 26, 2010.
The Company was formed as a result of a combination and merger of entities founded by the Company’s
majority stockholder, Ralph Bartel. In 1998, Mr. Bartel founded Travelzoo.com Corporation, a Bahamas corpo-
ration, which issued 5,155,874 shares via the Internet to approximately 700,000 “Netsurfer stockholders” for no
cash consideration. In 1998, Mr. Bartel also founded Silicon Channels Corporation, a California corporation, to
operate the Travelzoo Web site. During 2001, Travelzoo Inc. was formed as a subsidiary of Travelzoo.com
Corporation, and Mr. Bartel contributed all of the outstanding shares of Silicon Channels Corporation to Travelzoo
Inc. in exchange for 8,129,273 shares of Travelzoo Inc. and options to acquire an additional 2,158,349 shares at
$1.00.
During January 2001, the Board of Directors of Travelzoo.com Corporation proposed that Travelzoo.com
Corporation be merged with Travelzoo Inc. whereby Travelzoo Inc. would be the surviving entity. On March 15,
2002, the stockholders of Travelzoo.com Corporation approved the merger with Travelzoo Inc. On April 25, 2002,
the certificate of merger was filed in Delaware upon which the merger became effective and Travelzoo.com
Corporation ceased to exist. Each outstanding share of common stock of Travelzoo.com Corporation was converted
into the right to receive one share of common stock of Travelzoo Inc. Under and subject to the terms of the merger
agreement, stockholders were allowed a period of two years following the effective date of the merger to receive
shares of Travelzoo Inc. The records of Travelzoo.com Corporation showed that, assuming all of the shares applied
for by the Netsurfer stockholders were validly issued, there were 11,295,874 shares of Travelzoo.com Corporation
outstanding. As of April 25, 2004, two years following the effective date of the merger, 7,180,342 shares of
Travelzoo.com Corporation had been exchanged for shares of Travelzoo Inc. Prior to that date, the remaining shares
which were available for issuance pursuant to the merger agreement were included in the issued and outstanding
common stock of Travelzoo Inc. and included in the calculation of basic and diluted earnings per share. After
April 25, 2004, the Company ceased issuing shares to the former stockholders of Travelzoo.com Corporation, and
no additional shares are reserved for issuance to any former stockholders, because their right to receive shares has
now expired. On April 25, 2004, the number of shares reported as outstanding was reduced from 19,425,147 to
15,309,615 to reflect actual shares issued as of the expiration date. Earnings per share calculations reflect this
reduction of the number of shares reported as outstanding. As of February 26, 2010, there were 16,443,828 shares of
common stock outstanding.
In October 2004, the Company announced a program under which it would make cash payments to persons
who establish that they were stockholders of Travelzoo.com Corporation, and who failed to submit requests for
shares in Travelzoo Inc. within the required time period. See Note 3 to the accompanying consolidated financial
statements.
Travelzoo is listed on the NASDAQ Global Select Market under the symbol “TZOO.”
Our Industry
While our mission is to provide our subscribers and users the highest quality information about the best travel
and entertainment deals, our revenues are generated from advertising fees. According to Kantar Media, travel
companies in the U.S. spent $2.8 billion in 2009 on advertising, with $815 million in 2009 being spent on
advertising in newspapers (source: Kantar Media, 2010). We believe that newspapers are currently the main
medium for travel companies to advertise their offers though the percentage spent on advertising in newspapers has
been decreasing.
4