Travelzoo 2010 Annual Report Download - page 31

Kimpton Hotels, Liberty Travel, Marriott Hotels, Royal Caribbean, Spirit Airlines, Starwood Hotels & Resorts
Worldwide, United Airlines, and Virgin Atlantic.
Our revenues are advertising revenues, consisting primarily of listing fees paid by travel companies,
entertainment companies and local businesses to advertise their offers on Travelzoo’s media properties. Listing
fees are based on audience reach, placement, number of listings, number of impressions, number of click-throughs,
number of referrals, or percentage of the face value of vouchers sold. Insertion orders are typically for periods between
one month and twelve months and are not automatically renewed. Merchant agreements for Local Deals advertisers
are typically for the period of the voucher redemption period. Our revenues have grown on an annual basis since we
began operations in 1998. Our revenues increased from approximately $84,000 for the period from May 21, 1998
(inception) to December 31, 1998, to approximately $113 million for the year ended December 31, 2010.
We have two operating segments based on geographic regions: North America and Europe. North America
consists of our operations in Canada and the U.S. Europe consists of our operations in France, Germany, Spain, and the
U.K. For the year ended December 31, 2010, European operations were 22% 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 66.2% of the outstanding shares
as of February 28, 2011.
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 corporation, 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
website. 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 28, 2011, there were 16,461,553 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.”
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