EX-99.1 2 exh99-1.htm PRESS RELEASE

Exhibit 99.1

 

Travelzoo
590 Madison Avenue

37th Floor
New York, NY 10022


Media Contact:

Mindy Joyce

(212) 521-4218
mjoyce@travelzoo.com

 

FOR IMMEDIATE RELEASE

 

Travelzoo Reports Fourth Quarter 2007 Results

 

NEW YORK, February 5, 2008 -- Travelzoo Inc. (NASDAQ: TZOO):

 

 

•

Fourth quarter revenue of $19.1 million, up 8% year-over-year

 

•

Fourth quarter operating profit of $2.5 million

 

•

Fourth quarter earnings per share of $0.00, down from $0.26 in the prior-year period

 

•

Fourth quarter income tax rate of 98.3%

 

Travelzoo Inc., a global Internet media company, today announced financial results for the fourth quarter ended December 31, 2007, with revenue of $19.1 million, an increase of 8% year-over-year. Net income was $46,000, with diluted earnings per share (EPS) of $0.00, down from $0.26 in the prior-year period.

 

“Travelzoo’s latest results were impacted by non-tax deductible losses from our foreign operations in Asia Pacific and Europe,” said Ralph Bartel, chairman and chief executive officer, Travelzoo. “As announced frequently in our investor communications over the last twelve months, our strategy of investing in Asia Pacific and Europe affects our reported earnings. We believe that going global is an opportunity to create attractive shareholder value in the future and we want to seize this opportunity.”

 

North America

North America business segment revenue grew 6% year-over-year to $17.7 million. North America reported operating income of $6.4 million, or 36.3% of revenue, down from operating income of $8.0 million, or 47.9% of revenue, in the prior-year period.

 

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Asia Pacific

The Asia Pacific business segment reported an operating loss of $2.1 million, compared to an operating loss of $706,000 in the prior quarter. Travelzoo began operations in Hong Kong in April 2007, in Japan in September 2007, in China in October 2007 and in Australia and Taiwan in December 2007.

 

Europe

Europe business segment revenue grew 52% year-over-year to $1.5 million. Europe reported an operating loss of $1.9 million, compared to an operating loss of $356,000 in the prior-year period. The increase in operating loss was primarily attributable to increased spending on subscriber acquisition and increased salary expense and office expense associated with the start up of operations in Germany and France. Travelzoo began operations in the U.K. in May 2005, in Germany in September 2006, and in France in March 2007.

 

Income Taxes

Travelzoo’s effective income tax rate was 98.3%, up from 46.3% in the prior-year period. The effective tax rate was impacted by operating losses from our Asia Pacific business segment and Europe business segment. These operating losses were treated as having no recognizable tax benefit.

 

Full Year 2007

Revenue for the year ended December 31, 2007 was $78.9 million, an increase of 14% from the prior year. Operating profit for the year was $20.6 million, or 26.1% of revenue, down from $29.8 million, or 42.8% of revenue, in the prior year. Net income for the year was $9.1 million, compared to $16.8 million in the prior year. Diluted EPS for the year was $0.57, down from $1.01 in the prior year.

 

Asset Management

Travelzoo used $129,000 of cash for operating activities. Accounts receivable increased $561,000 sequentially and increased $2.7 million over the prior-year period to $10.0 million. Accounts payable decreased $790,000 sequentially and increased $2.1 million over the prior-year period to $5.0 million. Travelzoo exited the quarter with $22.6 million in cash and cash equivalents.

 

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Product Update

Travelzoo’s focus in 2008 will be on further developing its Web sites and expanding the Travelzoo Network™, an affiliate network of Web sites that list travel deals published by Travelzoo. Further, Travelzoo plans to expand its Shows & Events section and plans to continue testing the publishing of non-travel deals. Travelzoo plans to launch the next generation of SuperSearch™.

 

Conference Call

Travelzoo will host a conference call to discuss fourth quarter results at 5:00 p.m. ET today. A live Web cast can be accessed through the company’s investor relations Web site at www.travelzoo.com/ir.

 

About Travelzoo

Travelzoo is a global Internet media company. Travelzoo’s media properties, which reach more than 12 million travel enthusiasts in the U.S., Canada, China, France, Germany, Hong Kong, Japan, Taiwan and the U.K., include the Travelzoo® Web site (www.travelzoo.com), the Top 20® list, the Newsflash™ e-mail alert service, the Travelzoo Network™ and SuperSearch™, a travel search engine. Travelzoo publishes offers from more than 900 advertisers. Travelzoo’s deal experts review each offer to find the best travel deals and confirm their true value. Travelzoo is headquartered in New York City.

 

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.

 

###

 

3/7

 

 

Travelzoo Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

Three months ended
December 31,

 

Year ended
December 31,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

19,114

 

$

17,652

 

$

78,911

 

$

69,525

 

Cost of revenues

 

 

738

 

 

256

 

 

2,097

 

 

1,038

 

Gross profit

 

 

18,376

 

 

17,396

 

 

76,814

 

 

68,487

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

10,425

 

 

7,331

 

 

41,440

 

 

29,378

 

General and administrative

 

 

5,496

 

 

2,394

 

 

14,750

 

 

9,356

 

Total operating expenses

 

 

15,921

 

 

9,725

 

 

56,190

 

 

38,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

2,455

 

 

7,671

 

 

20,624

 

 

29,753

 

Other income and expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

205

 

 

323

 

 

1,309

 

 

1,249

 

Gain (loss) on foreign currency

 

 

76

 

 

(10

)

 

178

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

2,736

 

 

7,984

 

 

22,111

 

 

31,005

 

Income taxes

 

 

2,690

 

 

3,699

 

 

13,002

 

 

14,202

 

Net income

 

$

46

 

$

4,285

 

$

9,109

 

$

16,803

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

0.00

 

$

0.28

 

$

0.61

 

$

1.08

 

Diluted net income per share

 

 

0.00

 

 

0.26

 

 

0.57

 

 

1.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing
basic net income per share

 

 

14,250

 

 

15,250

 

 

14,847

 

 

15,503

 

Shares used in computing
diluted net income per share

 

 

15,484

 

 

16,459

 

 

16,074

 

 

16,712

 

 

4/7

 

 

Travelzoo Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

 

 

December 31,
2007

 

December 31,
2006

 

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,641

 

$

33,415

 

Accounts receivable, net

 

 

9,969

 

 

7,274

 

Deposits

 

 

272

 

 

177

 

Prepaid expenses and other current
assets

 

 

1,982

 

 

506

 

Deferred tax assets

 

 

1,393

 

 

1,980

 

Total current assets

 

 

36,257

 

 

43,352

 

 

 

 

 

 

 

 

 

Deposits, less current portion

 

 

349

 

 

142

 

Property and equipment, net

 

 

622

 

 

172

 

Intangible assets, net

 

 

58

 

 

34

 

Total Assets

 

$

37,286

 

$

43,700

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Accounts payable

 

 

4,960

 

 

2,839

 

Accrued expenses

 

 

4,608

 

 

2,149

 

Deferred revenue

 

 

450

 

 

750

 

Deferred rent

 

 

37

 

 

—

 

Income tax payable

 

 

—

 

 

1,142

 

Total current liabilities

 

 

10,055

 

 

6,880

 

 

 

 

 

 

 

 

 

Other non-current liabilities

 

 

1,329

 

 

3

 

 

 

 

 

 

 

 

 

Common stock

 

 

143

 

 

153

 

Additional paid-in capital

 

 

—

 

 

2,076

 

Accumulated other comprehensive
income (loss)

 

 

(180

)

 

22

 

Retained earnings

 

 

25,939

 

 

34,566

 

Total Stockholders’ Equity

 

 

25,902

 

 

36,817

 

 

 

 

 

 

 

 

 

Total Liabilities and
Stockholders’ Equity

 

$

37,286

 

$

43,700

 

 

 

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Travelzoo Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

 

Three months ended
December 31

 

Year ended
December 31,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

46

 

$

4,285

 

$

9,109

 

$

16,803

 

Adjustments to reconcile net income to net
cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

62

 

 

28

 

 

193

 

 

131

 

Deferred income taxes

 

 

584

 

 

(932

)

 

584

 

 

(929

)

Provision for losses on accounts receivable

 

 

4

 

 

75

 

 

(48

)

 

304

 

Accrued income on short-term investments

 

 

—

 

 

—

 

 

—

 

 

(449

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(596

)

 

1,508

 

 

(2,614

)

 

1,511

 

Deposits

 

 

(204

)

 

(3

)

 

(300

)

 

(95

)

Prepaid expenses and other current assets

 

 

(894

)

 

73

 

 

(1,465

)

 

136

 

Accounts payable

 

 

(771

)

 

340

 

 

2,110

 

 

440

 

Accrued expenses

 

 

1,511

 

 

(1,007

)

 

2,404

 

 

(1,278

)

Deferred revenue

 

 

(20

)

 

168

 

 

(302

)

 

449

 

Deferred rent

 

 

38

 

 

—

 

 

109

 

 

—

 

Income tax payable

 

 

—

 

 

937

 

 

3

 

 

285

 

Other non-current liabilities

 

 

111

 

 

—

 

 

111

 

 

—

 

Net cash provided by (used in) operating
activities

 

 

(129

)

 

5,472

 

 

9,894

 

 

17,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(292

)

 

(23

)

 

(627

)

 

(119

)

Purchase of short-term investments

 

 

—

 

 

—

 

 

—

 

 

(14,663

)

Sale of short-term investments

 

 

—

 

 

—

 

 

—

 

 

35,000

 

Purchase of intangible assets

 

 

(31

)

 

(34

)

 

(36

)

 

(34

)

Net cash provided by (used in) investing
activities

 

 

(323

)

 

(57

)

 

(663

)

 

20,184

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of common stock

 

 

—

 

 

—

 

 

(19,823

)

 

(28,579

)

Net cash used in financing activities

 

 

—

 

 

—

 

 

(19,823

)

 

(28,579

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate on cash and cash
equivalents

 

 

(160

)

 

23

 

 

(182

)

 

33

 

Net increase (decrease) in cash and cash
equivalents

 

 

(612

)

 

5,438

 

 

(10,774

)

 

8,946

 

Cash and cash equivalents at beginning of
period

 

 

23,253

 

 

27,977

 

 

33,415

 

 

24,469

 

Cash and cash equivalents at end of period

 

 

22,641

 

 

33,415

 

 

22,641

 

 

33,415

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes net of refunds
received

 

$

2,930

 

$

3,694

 

$

13,334

 

$

14,845

 

 

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Travelzoo, Inc.

Segment Information

(Unaudited)

(In thousands)

 

 

Three months ended
December 31, 2007

North
America

 

Europe

 

Asia
Pacific

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers

$       17,656

 

$        1,450 

 

$           8 

 

$             — 

 

$          19,114

Intersegment revenue

20

 

9 

 

— 

 

(29)

 

—

 

 

 

 

 

 

 

 

 

 

Total net revenues

17,676

 

1,459 

 

8 

 

(29)

 

19,114

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$         6,420

 

$       (1,906)

 

$   (2,060)

 

$               1 

 

$           2,455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
December 31, 2006

North
America

 

Europe

 

Asia
Pacific

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers

$     16,695

 

$          957 

 

$           — 

 

$             — 

 

$         17,652

Intersegment revenue

56

 

4 

 

— 

 

(60)

 

—

 

 

 

 

 

 

 

 

 

 

Total net revenues

16,751

 

961 

 

— 

 

(60)

 

17,652

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$        8,026

 

$         (356)

 

$           — 

 

$             1 

 

$           7,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended
December 31, 2007

North
America

 

Europe

 

Asia
Pacific

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers

$      73,061

 

$       5,842 

 

$            8 

 

$             — 

 

$         78,911

Intersegment revenue

171

 

14 

 

— 

 

(185)

 

—

 

 

 

 

 

 

 

 

 

 

Total net revenues

73,232

 

5,856 

 

8 

 

(185)

 

78,911

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$      28,959

 

$      (5,171)

 

$    (3,167)

 

$              3 

 

$        20,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended
December 31, 2006

North
America

 

Europe

 

Asia
Pacific

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers

$      66,303

 

$      3,222 

 

$           — 

 

$             — 

 

$        69,525

Intersegment revenue

206

 

10 

 

— 

 

(216)

 

—

 

 

 

 

 

 

 

 

 

 

Total net revenues

66,509

 

3,232 

 

— 

 

(216)

 

69,525

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$      31,337

 

$     (1,586)

 

$           — 

 

$             2 

 

$        29,753

 

 

 

 

 

 

 

 

 

 

 

 

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