Travelzoo 2011 Annual Report Download - page 73

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The Company is continuing its program under which it makes cash payments to people who establish that they were former
stockholders of Travelzoo.com Corporation, and who failed to submit requests to convert their shares into shares of Travelzoo Inc.
within the required time period. The accompanying condensed consolidated financial statements include a charge in general and
administrative expenses of $153,000 for these cash payments for the twelve months ended December 31, 2011. The total cost of this
program is not reliably estimable because it is based on the ultimate number of valid requests received and future levels of the
Company’s common stock price. The Company’s common stock price affects the liability because the amount of cash payments under
the program is based in part on the recent level of the stock price at the date valid requests are received. The Company does not know
how many of the requests for shares originally received by Travelzoo.com Corporation in 1998 were valid, but the Company believes
that only a portion of such requests were valid. As noted above, in order to receive payment under the program, a person is required to
establish that such person validly held shares in Travelzoo.com Corporation. Since the total cost of the program is not reliably
estimable, the amount of expense recorded in a period is equal to the actual number of valid claims received during the period
multiplied by (i) the number of shares held by each individual former stockholder and (ii) the applicable settlement price based on the
recent price of our common stock at the date the claim is received as stipulated by the program. Assuming 100% of the requests from
1998 were valid, and after taking into account the settlement with the State of Delaware referred to above in Note 1, former
stockholders of Travelzoo.com Corporation holding approximately 1.0 million shares (representing approximately $24.6 million based
upon the Company’s stock price at the end of 2011) had not submitted claims under the program as of December 31, 2011.
(4) Other Balance Sheet Items
The details of prepaid expenses and other current assets as of December 31, 2010 and 2011 were as follows (in thousands):
December 31,
2010 2011
Prepaid expenses .......................................................................................
.
$ 1,384 $ 1,642
Other current assets ...................................................................................
.
105 481
Total prepaid expenses and other current assets ........................................
.
$ 1,489 $ 2,123
The details of changes to the allowance for doubtful accounts and reserve for subscriber refunds are as follows (in thousands):
Allowance
for doubtful
accounts
Reserve for
subscriber
refunds
Balance at December 31, 2008 ................................................................ $ 357 $ —
Additions — charged to costs and expenses, net ........................... 159 —
Additions — recoveries of amounts previously charged-off ......... 99 —
Deductions — write-offs ............................................................... (114) —
Balance at December 31, 2009 ................................................................ 501 —
Additions — charged to costs and expenses, net ........................... 139 70
Additions — recoveries of amounts previously charged-off ......... 60 —
Deductions — write-offs ............................................................... (314) —
Balance at December 31, 2010 ................................................................ 386 70
Additions — charged to costs and expenses, or contra revenue,
net ............................................................................................. 173 1,931
Additions — recoveries of amounts previously charged-off ......... (123) —
Deductions — write-offs ............................................................... (36) (1,108)
Balance at December 31, 2011 ................................................................ $ 400 $ 893
Local Deals and Getaway merchant payable included in accounts payable was zero and $16.0 million, as of December 31, 2010
and 2011, respectively.