Travelzoo 2012 Annual Report Download - page 95

Europe
Europe revenues increased $2.6 million in 2012 compared to 2011 (see “Revenues” above). Europe expenses increased $500,000 from
2011 to 2012. This increase was primarily due to a $451,000 increase in cost of revenue primarily related to an increase in Local Deals and
Getaway credit card fees, customer service and certain subscriber refunds, a $2.1 million increase in salary and employee related expense due in
part to a headcount increase, offset by a $1.8 million decrease in subscriber acquisition cost.
Europe revenues increased $14.7 million in 2011 compared to 2010 (see “Revenues”
above). Europe expenses increased $8.3 million from
2010 to 2011. This increase was primarily due to a $1.3 million increase in cost of revenue primarily related to Local Deals and Getaway credit
card fees, customer service and certain subscriber refunds, a $1.7 million increase in Search traffic acquisition costs and a $5.1 million increase
in salary and employee related expense due in part to a headcount increase, offset by a $1.1 million decrease in subscriber acquisition cost.
Foreign currency movements relative to the U.S. dollar negatively impacted our income from our operations in Europe by approximately
$16,000, $119,000 and $71,000 for 2012, 2011 and 2010, respectively.
Liquidity and Capital Resources
As of December 31, 2012 , we had $61.2 million in cash and cash equivalents, of which $25.0 million was held outside the U.S. in certain
of our foreign operations. If these assets are distributed to the U.S., we may be subject to additional U.S. taxes in certain circumstances. Cash and
cash equivalents increased from $38.7 million as of December 31, 2011 primarily as a result of cash provided by operating activities, offset by
cash used in investing 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.
Net cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash
provided by operating activities increased $21.1 million in 2012 compared to 2011. The $21.1 million increase in cash provided by operating
activities was due primarily to a $14.9 million increase in net income, an $8.3 million increase in income tax receivable, offset by a $1.8 million
decrease in deferred income taxes. The $14.9 million increase in net income was primarily due to a $17.0 million decrease in expenses related to
unexchanged promotional merger shares. The increase in the unrecognized tax benefit is related to a deduction taken on the Company's 2011
U.S. federal and state income tax returns for the $ 20.0 million settlement with the State of Delaware.
Net cash provided by operating activities decreased $8.3 million in 2011 compared to 2010. This decrease in cash provided by operating
activities was primarily due to a $9.8 million decrease in net income, resulting primarily from a $20.0 million settlement to the State of Delaware
related to an unclaimed property review, and a $8.9 million decrease in our income tax receivable; offset by a $7.3 million increase in accounts
payable and accrued expenses and a $2.2 million increase in accounts receivable.
37
Year Ended December 31,
2012
2011 2010
( In thousands)
Revenues
$
42,381
$
39,793
$
25,123
Income from operations
$
7,008
$
4,912
$
(1,489
)
Income from operations as a % of revenues
17
%
12
%
(6
)%
Year Ended December 31,
2012
2011 2010
( In thousands)
Net cash provided by operating activities
$
36,700
$
15,631
$
23,925
Net cash used in investing activities
(3,693
)
(2,460
)
(3,527
)
Net cash used in financing activities
(11,509
)
(14,815
)
1,076
Effect of exchange rate changes on cash and cash equivalents
927
(796
)
(66
)
Net increase (decrease) in cash and cash equivalents
$
22,425
$
(2,440
)
$
21,408