Travelzoo 2009 Annual Report Download - page 74

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(l) Stock-Based Compensation
The Company accounts for its employee stock options under the fair value method, which requires stock-based
compensation to be estimated using the fair value on the date of grant using an option-pricing model. The value of
the portion of the award that is expected to vest is recognized as expense over the related employees’ requisite
service periods in the Company’s Condensed Consolidated Statements of Income.
The Company recorded $94,000 stock-based compensation expense for fiscal year 2009 and did not record any
stock-based compensation expense in fiscal years 2008 or 2007. See Note 7 for a further discussion on stock-based
compensation.
(m) Foreign Currency
All foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets
and liabilities are translated into U.S. dollars at exchange rates prevailing at the balance sheet dates. Revenues, costs
and expenses are translated into U.S. dollars at average exchange rates for the period. Gains and losses resulting
from translation are recorded as a component of accumulated other comprehensive income (loss).
Realized gains and losses from foreign currency transactions are recognized as gain or loss on foreign currency
in the consolidated statements of operations.
(n) Certain Risks and Uncertainties
The Company’s cash, cash equivalents and accounts receivable are potentially subject to concentration of
credit risk. Cash and cash equivalents are placed with financial institutions that management believes are of high
credit quality. The accounts receivable are derived from revenue earned from customers located in the U.S. and
internationally. None of the Company’s customers accounted for 10% or more of gross receivable at December 31,
2009. One of the Company’s customers accounted for 16% of gross accounts receivable at December 31, 2008.
The Company maintains an allowance for doubtful accounts based upon its historical experience, the age of the
receivable and customer specific information. Determining appropriate allowances for these losses is an inherently
uncertain process, and ultimate losses may vary from the current estimates. The allowance for doubtful accounts
was $501,000 and $357,000 at December 31, 2009 and 2008, respectively.
(o) Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard
which establishes a framework for measuring the fair value of assets and liabilities. This framework is intended to
provide increased consistency in how fair value determinations are made under various existing accounting
standards which permit, or in some cases require, estimates of fair market value. The new accounting standard
became effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.
Effective January 1, 2009, the Company adopted a new FASB Staff Position (“FSP”) which delayed the effective
date of fair value measurement for all non-financial assets and non-financial liabilities, except those recognized or
disclosed at fair value in the financial statements on a recurring basis, until the beginning of the first quarter of fiscal
2009. The adoption of the new FASB staff position did not have a material impact on the Company’s consolidated
results of operations or financial condition.
Effective January 1, 2009, the Company adopted a new FASB Staff Position relating to determination of the
useful life of intangible assets, which amends the factors an entity should consider in developing renewal or
extension assumptions used in determining the useful life of recognized intangible assets. This guidance applies
prospectively to intangible assets that are acquired individually or with a group of other assets in business
combinations and asset acquisitions. Under this new FASB Staff Position, entities which estimate the useful life of a
recognized intangible asset must consider their historical experience in renewing or extending similar arrangements
or, in the absence of historical experience, must consider assumptions that market participants would use about
renewal or extension. The adoption of this standard did not have an impact on the Company’s consolidated results of
operations or financial condition.
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