EX-99.1 2 exh99-1.htm PRESS RELEASE

Exhibit 99.1

Travelzoo Inc.
590 Madison Avenue

21st Floor
New York, NY 10022


Media Contact:

Bonnie Bastian, YPB&R

407-838-1743
bonnie_bastian@ypbr.com

 

 

 

FOR IMMEDIATE RELEASE

 

Travelzoo Reports Fourth Quarter and Year-End 2005

Financial Results

 

NEW YORK, February 2, 2006 -- Travelzoo Inc. (NASDAQ: TZOO), the Internet media company that publishes outstanding travel offers to more than nine million subscribers, today reported financial results for the fourth quarter and year ended December 31, 2005. Basic and diluted earnings per share (EPS) for the fourth quarter ended December 31, 2005 were $0.10.

 

Fourth Quarter 2005 Financial Highlights:

 

 

•

Revenues of $13.9 million, up 32% year-over-year

 

•

Income from operations of $3.5 million

 

•

Operating margin of 25.2%

 

•

Net income of $1.7 million

 

“Travelzoo’s Q4 2005 results were impacted by Sarbanes-Oxley Act (SOX) Section 404 compliance costs of $571,000, a loss of $584,000 from our new U.K. business, and reported revenues were impacted by the bankruptcy filings of two airline advertisers,” said Ralph Bartel, chairman and chief executive officer, Travelzoo. “In the future, we do not expect SOX compliance costs to remain at this high of a level. Our reported loss for the U.K. business for Q4 2005 increased because of the hiring of additional staff and the acquisition of additional subscribers. With a large reach of 9.7 million subscribers in the U.S. and the U.K., a strong media brand, and a robust business model, we believe that we are well positioned to take advantage of future growth opportunities.”

 

Travelzoo reported revenues of $13.9 million for the fourth quarter ended December 31, 2005, an increase of 32% over revenues of $10.5 million for the prior-year period, and a quarterly sequential increase of 4% over revenues of $13.4 million for the third quarter ended September 30, 2005. All revenues were generated from the sale of online advertising to travel companies.

 

Income from operations for the fourth quarter ended December 31, 2005 was approximately $3.5 million or 25.2% of revenues, compared to approximately $3.7 million, or 35.2% of revenues, for the prior-year period.

 

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Travelzoo reported a net income of approximately $1.7 million for the fourth quarter ended December 31, 2005 compared to approximately $1.7 million for the prior-year period.

 

Cash flow from operations in the fourth quarter 2005 was $2.0 million.

 

Reported net income for the fourth quarter of 2005 included a loss of $584,000 from Travelzoo’s U.K. business. The loss was treated as having no recognizable tax benefit. Travelzoo U.K. began operations in May 2005.

 

Travelzoo’s U.K. business generated revenues of $380,000 in the fourth quarter 2005, up from $368,000 in the third quarter 2005.

 

Travelzoo’s revenues for the year ended December 31, 2005 were $50.8 million compared to $33.7 million for 2004, a 51% increase.

 

Income from operations for the year 2005 was approximately $14.9 million, compared to $11.0 million for the year 2004.

 

Net income for the year 2005 was approximately $8.0 million, compared to $6.0 million for the year 2004. Diluted earnings per share for the year 2005 were $0.45, compared to $0.33 for the year 2004.

 

Travelzoo will host a conference call to discuss fourth quarter results at 11:00 a.m. Eastern Time today. A live Web cast can be accessed through the company's investor relations Web site at www.travelzoo.com/ir.

 

About Travelzoo

Travelzoo Inc. is a leading Internet media company. Travelzoo’s media properties, which reach more than nine million subscribers in the U.S. and the U.K., include the Travelzoo® Web site (www.travelzoo.com), the Top 20® e-mail newsletter, the Newsflash™ e-mail alert service and SuperSearch™, a travel search engine. Travelzoo publishes offers from more than 500 advertisers. Travelzoo’s deal experts review each offer to find the best travel deals and confirm their true value.

 

Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words “expect,” “predict,” “project,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “seek” and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.

 

Travelzoo and Top 20 are registered trademarks of Travelzoo Inc. All other company and product names mentioned are trademarks of their respective owners.

 

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Travelzoo Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months ended
December 31

 

Year ended
December 31,

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

Revenues

 

$ 13,901 

 

$ 10,509 

 

$ 50,772 

 

$ 33,679 

Cost of revenues

 

249 

 

166 

 

878 

 

695 

 

 

 

 

 

 

 

 

 

Gross profit

 

13,652 

 

10,343 

 

49,894 

 

32,984 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

7,632 

 

4,268 

 

25,915 

 

15,731 

General and administrative

 

2,496 

 

2,348 

 

9,109 

 

6,220 

 

 

 

 

 

 

 

 

- 

Total operating expenses

 

10,128 

 

6,616 

 

35,024 

 

21,951 

 

 

 

 

 

 

 

 

 

Income from operations

 

3,524 

 

3,727 

 

14,870 

 

11,033 

Other income and expense:

 

 

 

 

 

 

 

 

Interest income

 

304 

 

106 

 

961 

 

126 

Gain (loss) on foreign currency

 

(6)

 

- 

 

(15)

 

- 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

3,822 

 

3,833 

 

15,816 

 

11,159 

 

 

 

 

 

 

 

 

 

Income taxes

 

2,168 

 

2,104 

 

7,853 

 

5,122 

 

 

 

 

 

 

 

 

 

Net income

 

$  1,654 

 

$  1,729 

 

$  7,963 

 

$ 6,037 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$   0.10 

 

$   0.11 

 

$   0.49 

 

$ 0.36 

Diluted net income per share

 

0.10 

 

0.09 

 

0.45 

 

0.33 

 

 

 

 

 

 

 

 

 

Shares used in computing
  basic net income per share

 


16,250 

 


16,222 

 


16,249 

 


16,879 

Shares used in computing
  diluted net income per share

 


17,409 

 


18,252 

 


17,731 

 


18,475 

 

 

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Travelzoo Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

December 31,
2005

 

December 31,
2005

 

 

 

 

ASSETS

 

 

 

Cash and cash equivalents

$  24,469 

 

$  26,435 

Short term investments

19,887 

 

10,032 

Accounts receivable, net

9,020 

 

5,327 

Deposits

28 

 

163 

Prepaid Expenses and other current

Assets

631 

 

674 

Deferred tax assets

1,020 

 

391 

 

 

 

 

Total current assets

55,055 

 

43,022 

 

 

 

 

Deposits, less current portion

190 

 

- 

Deferred tax assets, less current

Portion

28 

 

43 

Property and equipment, net

159 

 

108 

Intangible assets, net

20 

 

84 

 

 

 

 

Total Assets

$  55,452 

 

$  43,257 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Accounts payable

2,373 

 

440 

Accrued expenses

3,394 

 

2,464 

Deferred revenue

296 

 

91 

Income tax payable

856 

 

- 

 

 

 

 

Total Liabilities

6,919 

 

2,995 

 

 

 

 

Common stock

163 

 

162 

Additional paid-in capital

30,645 

 

30,300 

Accumulated other comprehensive income

(38)

 

- 

Retained earnings

17,763 

 

9,800 

 

 

 

 

Total Stockholders' Equity

48,533 

 

40,262 

 

 

 

 

Total Liabilities and

 

 

 

Stockholders' Equity

$  55,452 

 

$  43,257 

 

 

 

 

 

 

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Travelzoo Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Three months ended
December 31,

 


Year ended December 31,

 

 

2005

 

2004

 

2005

 

2004

CASH FLOWS FROM OPERATING

ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$  1,654 

 

$  1,729 

 

$  7,963 

 

$  6,037 

Adjustments to reconcile net income to net cash
  provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

41 

 

40 

 

167 

 

161 

Deferred income taxes

 

(697)

 

(181)

 

(676)

 

(181)

Provision for losses on accounts receivable

 

212 

 

9 

 

291 

 

121 

Tax benefit of stock option exercises

 

39 

 

989 

 

435 

 

1,932 

Accrued income on short-term investments

 

220 

 

- 

 

(49)

 

- 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

(943)

 

(492)

 

(3,993)

 

(3,078)

Deposits

 

(3)

 

(1)

 

(55)

 

(24)

Prepaid expenses and other current assets

 

(256)

 

(388)

 

40 

 

(543)

Accounts payable

 

1,674 

 

131 

 

1,940 

 

216 

Accrued expenses

 

(250)

 

725 

 

938 

 

1,136 

Deferred revenue

 

(16)

 

(86)

 

205 

 

69 

Income tax payable

 

300 

 

(205)

 

919 

 

(1,311)

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

1,975 

 

2,270 

 

8,125 

 

4,535 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING
  ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(39)

 

(1)

 

(156)

 

(40)

Purchase of short-term investments

 

(19,809)

 

(10,032)

 

(49,500)

 

(10,032)

Sale of short-term investments

 

19,620 

 

- 

 

39,693 

 

- 

Purchase of intangible assets

 

- 

 

(2)

 

- 

 

(2)

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(228)

 

(10,035)

 

(9,963)

 

(10,074)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING
ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of common
    stock, net of related costs

 

 

- 

 

 

27,751 

 

 

(124)

 

28,047 

Proceeds from stock option exercises

 

- 

 

371 

 

35 

 

371 

Recovery of profit from purchase
    and sale of stock by employees

 

 

- 

 

 

- 

 

 

- 

 

 

34 

 

 

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Net cash provided by financing activities

 

- 

 

28,122 

 

(89)

 

28,452 

 

 

 

 

 

 

 

 

 

Effect of exchange rate on cash

 

(13)

 

- 

 

(39)

 

- 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

1,734 

 

20,357 

 

(1,966)

 

22,913 

Cash and cash equivalents at beginning of
     period

 

22,735 

 

6,078 

 

26,435 

 

3,522 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of
     period

 

24,469 

 

26,435 

 

24,469 

 

26,435 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow
     information:

 

 

 

 

 

 

 

 

Cash paid for income taxes net
     of refunds received

 

 

2,526 

 

 

1,502 

 

 

7,176 

 

 

4,683 

 

 

 

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