Travelzoo 2014 Annual Report Download - page 93

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Although the Company has settled the states unclaimed property claims with all states, the Company may still receive
inquiries from certain potential Netsurfer promotional stockholders that had not provided their state of residence to the
Company by April 25, 2004. Therefore, the Company is continuing its voluntary program under which it makes cash payments
to individuals related to the promotional shares for individuals whose residence was unknown by the Company and who
establish that they satisfy the original conditions required for them to receive shares of Travelzoo.com Corporation, and who
failed to submit requests to convert their shares into shares of Travelzoo Inc. within the required time period. This voluntary
program is not available for individuals whose promotional shares have been escheated to a state by the Company, except those
individuals for which their residence was unknown to the Company. The accompanying consolidated financial statements
include a charge for payments under this voluntary program in general and administrative expenses of $6,000 for the year
ended December 31, 2014.
The total cost of this voluntary 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
potential 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. In
order to receive payment under this voluntary program, a person is required to establish that such person validly held shares in
Travelzoo.com Corporation.
(b) Revenue Recognition
The Company’s revenue consists primarily of advertising sales. Advertising revenues are principally derived from the
sale of advertising in North America and Europe on the Travelzoo website, in the Travelzoo Top 20 e-mail newsletter, in
Newsflash, from SuperSearch, from the Travelzoo Network, and from Fly.com. The Company also generates revenue from the
sale of vouchers through our Local Deals and Getaway e-mail alert services and providing hotel bookings.
Advertising revenues are recognized in the period in which the advertisement is displayed or the voucher sale has been
completed, provided that evidence of an arrangement exists, the fees are fixed or determinable and collection of the resulting
receivable is reasonably assured. The Company evaluates each of these criteria as follows:
• Evidence of an arrangement. The Company considers an insertion order signed by the advertiser or its agency to be
evidence of an arrangement.
• Delivery. Delivery is considered to occur when the advertising has been displayed, the click-throughs have been
delivered or the voucher sale has been completed, as applicable.
• Fixed or determinable fee. The Company considers the fee to be fixed or determinable if the fee is not subject to
refund or adjustment and payment terms are standard.
• Collection is deemed reasonably assured. The Company conducts a credit review for all advertising transactions at the
time of the arrangement to determine the creditworthiness of the advertiser. Collection is deemed reasonably assured if
it is expected that the advertiser will be able to pay amounts under the arrangement as payments become due.
Collection is deemed not reasonably assured when an advertiser is perceived to be in financial distress, which may be
evidenced by weak industry condition, bankruptcy filing, or previously billed amounts that are past due. If it is
determined that collection is not reasonably assured, then revenue is deferred and recognized upon cash collection.
Collection is deemed reasonably assured for our voucher sales to consumers as these transactions require the use of
credit cards subject to authorization.
The Company recognizes revenue for fixed-fee advertising arrangements ratably over the term of the insertion order as
described below, with the exception of Travelzoo Top 20 or Newsflash insertions, which are recognized upon delivery. The
majority of insertion orders have terms that begin and end in a quarterly reporting period. In the cases where at the end of a
quarterly reporting period the term of an insertion order is not complete, the Company allocates the total arrangement fee to
each element based on the relative estimated selling price of each element. The Company recognizes revenue for the period
based on elements delivered during the period. The Company uses prices stated on its internal rate card, which represents
stand-alone sales prices, to establish estimated selling prices. The stand-alone price is the price that would be charged if the
advertiser purchased only the individual insertion. Fees for variable-fee advertising arrangements are recognized based on the
number of impressions displayed, number of clicks delivered, number of emails sent or number of referrals generated during
the period.