Travelzoo 2010 Annual Report Download - page 60

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Discontinued Operations
On October 31, 2009, we completed the sale of our Asia Pacific operating segment to Azzurro Capital Inc. and
its wholly-owned subsidiaries, Travelzoo (Asia) Limited and Travelzoo Japan K.K. The results of operations of the
Asia Pacific operating segment have been classified as discontinued operations for all periods presented. We
received $2.1 million, net of cash provided, and had a net receivable from Travelzoo (Asia) Limited and Travelzoo
Japan K.K. of $1.1 million, which was paid in 2010. For the year ended December 31, 2009, we realized a gain of
$3.4 million related to the sale of the net assets of the Asia Pacific business segment to Azzurro Capital Inc. The
resulting gain on the sale was reflected as an addition to additional paid-in capital as both the Company and Azzurro
Capital Inc. were under the common control of Ralph Bartel. For the year ended December 31, 2009, we recorded a
tax benefit of $4.4 million in discontinued operations for the tax benefit associated with the loss on investments in
our Asia Pacific subsidiaries as a result of their dissolution.
Liquidity and Capital Resources
As of December 31, 2010 we had $41.2 million in cash and cash equivalents. Cash and cash equivalents
increased from $19.8 million on December 31, 2009 primarily as a result of cash provided by operating activities
and financing activities as explained below. We expect that cash on hand will be sufficient to provide for working
capital needs for at least the next 12 months.
2010 2009 2008
Year Ended December 31,
(In thousands)
Net cash provided by (used in) operating activities.............. $23,925 $ 5,125 $(3,325)
Net cash used in investing activities ........................ (3,527) (3,752) (4,742)
Net cash provided by financing activities ..................... 1,076 4,219 185
Effect of exchange rate changes on cash and cash equivalents ..... (66) 5 (580)
Net increase (decrease) in cash and cash equivalents ............ $21,408 $ 5,597 $(8,462)
Cash provided by or used in operating activities is net income or net loss adjusted for certain non-cash items
and changes in assets and liabilities. Net cash provided by operating activities during the year ended December 31,
2010 increased by $18.8 million compared to the year ended December 31, 2009. The increase in cash provided by
operating activities was due primarily to an $8.0 million increase in net income and a $10.1 million decrease in
income tax receivable. Net cash provided by operating activities during the year ended December 31, 2009
increased by $8.5 million compared to the year ended December 31, 2008. The increase in cash provided by
operating activities was due primarily to a decrease in cash used in our operations in Europe and a decrease in cash
used in our operations in Asia Pacific during the first 10 months of the fiscal year ended December 31, 2009. As the
international expansion started to generate more revenue in the year ended December 31, 2009, net cash used in
operating activities in Europe and Asia Pacific started to decrease compared to the prior year.
Net cash used in investing activities was $3.5 million for the year ended December 31, 2010 compared
$3.8 million for the year ended December 31, 2009. The $225,000 decrease in net cash used in investing activities
was primarily due to a $713,000 decrease in purchases of property and equipment and we used $1.8 million to
purchase the fly.com domain name in the year ended December 31, 2009. These decreases were offset by a
$2.2 million increase in the purchase of restricted cash. Net cash used in investing activities was $3.8 million for the
year ended December 31, 2009 compared $4.7 million for the year ended December 31, 2008. The $1.0 million
decrease in net cash used in investing activities was primarily due to a $1.9 million decrease in purchases of property
and equipment and an $875,000 decrease in the purchase of restricted cash, offset by $1.8 million of cash used to
purchase the fly.com domain name. The $1.9 million decrease in purchases of property and equipment was
primarily due to decreases in capitalized internal-use software and website development costs associated with
Fly.com.
Net cash provided by financing activities was $1.1 million for the year ended December 31, 2010. Net cash
provided by financing activities was $4.2 million, and $185,000 for the years ended December 31, 2009 and 2008,
respectively. The net cash provided by financing activities in the year ended December 31, 2010 resulted from the
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