TRAVELZOO - FORM 8-K - EX-99.01 - PRESS RELEASE

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8-K - TRAVELZOO FORM 8-K - TRAVELZOO	travelzoo8k.htm

Exhibit 99.1

Travelzoo

590 Madison Avenue

37th Floor

New York, NY 10022

Media Contact:

Christie McConnell

+1 (212) 484-4912

cmcconnell@travelzoo.com

FOR IMMEDIATE RELEASE

Travelzoo Reports Third Quarter 2011 Results

NEW YORK, October 20, 2011 -- Travelzoo Inc. (NASDAQ: TZOO):

·	Revenue of $38.7 million, up 40% year-over-year

·	Operating profit of $9.2 million, up 62% year-over-year

·	Net income of $5.9 million, up 62% year-over-year

·	Earnings per share of $0.36, compared to $0.22 in the prior year period

Travelzoo Inc., a global Internet media company, today announced financial results for the third quarter ended September 30, 2011, with revenue of $38.7 million, an increase of 40% year-over-year. Operating profit was $9.2 million, up 62% year-over-year. Net income was $5.9 million, with diluted net income per share (EPS) of $0.36, up from $0.22 in the prior-year period.

“In a typically slow third quarter, Travelzoo's growth accelerated; revenues grew at the fastest pace in five years and reached record levels in both North America and Europe," said Chris Loughlin, chief executive officer of Travelzoo. "Our expansion into local deals focuses on growing both the top and the bottom line. Operating margins improved, and operating income and earnings per share increased even more than revenues."

North America

North America business segment revenue grew 32% year-over-year to $28.1 million. Operating profit was $7.8 million, or 28% of revenue, up from $5.5 million, or 26% of revenue, in the prior-year period.

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Europe

Europe business segment revenue grew 65% year-over-year to $10.7 million. In local currency terms, revenue grew 59% year-over-year. Operating profit was $1.4 million, compared to an operating profit of $248,000 in the prior-year period.

Subscribers

Travelzoo had a total unduplicated number of newsletter subscribers in North America and Europe of 21.3 million as of September 30, 2011, up 14% from September 30, 2010, and up 3% from June 30, 2011. In North America, total unduplicated number of subscribers was 15.6 million as of September 30, 2011, up 10% from September 30, 2010 and up 2% from June 30, 2011. In Europe, total unduplicated number of subscribers was 5.7 million as of September 30, 2011, up 27% from September 30, 2010 and up 5% from June 30, 2011.

Asset Management

During the third quarter, Travelzoo generated $9.1 million of cash from operating activities. Accounts receivable decreased by $1.9 million quarter-over-quarter and decreased by $86,000 over the prior-year period to $14.1 million. Accounts payable increased by $1.5 million quarter-over-quarter and increased by $9.8 million over the prior-year period to $17.2 million. Capital expenditures were $847,000, up from $356,000 in the prior quarter and up from $391,000 in the prior-year period. Travelzoo exited the third quarter with $32.4 million in cash and cash equivalents.

Conference Call

Travelzoo will host a conference call to discuss third quarter results at 11:00 a.m. ET today. Please visit http://www.travelzoo.com/earnings to

·	download the management presentation (PDF format) to be discussed in the conference call;

·	access the webcast.

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About Travelzoo

Travelzoo Inc. is a global Internet media company. With more than 24 million subscribers in North America, Europe, and Asia Pacific and 24 offices worldwide, Travelzoo® publishes deals from more than 2,000 travel and entertainment companies. Travelzoo’s deal experts review offers to find the best deals and confirm their true value. In Asia Pacific, Travelzoo is independently owned and operated by Travelzoo (Asia) Ltd. and Travelzoo Japan K.K. under a license agreement with Travelzoo Inc.

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					Nine months ended
	September 30,					September 30,
	2011			2010		2011			2010
		---------			---------		---------			---------
Revenues		$ 38,661			$ 27,693		$ 113,186			$ 84,317
Cost of revenues		4,221			1,742		9,603			5,012
		---------			---------		---------			---------
Gross profit		34,440			25,951		103,583			79,305
Operating expenses:
Sales and marketing		16,737			13,630		51,569			42,671
General and administrative		8,478			6,616		25,167			19,833
Settlement with State of Delaware		-			-		20,000			-
		---------			---------		---------			---------
Total operating expenses		25,215			20,246		96,736			62,504
		---------			---------		---------			---------
Income (loss) from operations		9,225			5,705		6,847			16,801
Other income and expense:
Interest income and other income		52			45		128			132
Gain (loss) on foreign currency		(52	)		20		(24	)		(190	)
		---------			---------		---------			---------
Income (loss) before income taxes		9,225			5,770		6,951			16,743
Income taxes		3,299			2,120		10,061			7,373
		---------			---------		---------			---------
Net income (loss)		$ 5,926			$ 3,650		$ (3,110	)		$ 9,370
	========			========		=========			========

Basic net income (loss) per share		$ 0.36			$ 0.22		$ (0.19	)		$ 0.57
Diluted net income (loss) per share		$ 0.36			$ 0.22		$ (0.19	)		$ 0.57

Shares used in computing basic net income (loss)per share		16,396			16,444		16,434			16,444
Shares used in computing diluted net income (loss)per share		16,504			16,453		16,434			16,453

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Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

	September 30,			December 31,
	2011			2010
		---------			---------
ASSETS
Cash and cash equivalents		$ 32,433			$ 41,184
Accounts receivable, net		14,066			13,290
Income taxes receivable		2,563			264
Deposits		210			129
Prepaid expenses and other current assets		2,278			1,489
Deferred tax assets		1,362			1,411
		---------			---------
Total current assets		52,912			57,767
		---------			---------
Deposits, less current portion		753			279
Deferred tax assets, less current portion		349			349
Restricted cash		3,102			3,124
Property and equipment, net		3,519			3,425
Intangible assets, net		792			1,058
		---------			---------
Total assets		$ 61,427			$ 66,002
	=========			=========
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		17,177			9,931
Accrued expenses		11,000			6,080
Deferred revenue		1,587			1,325
Deferred rent		108			218
Income tax payable		294			650
		---------			---------
Total current liabilities		30,166			18,204
		---------			---------
Deferred tax liabilities		160			-
Long-term tax liabilities		2,109			1,449
Deferred rent, less current portion		734			460

Common stock		160			164
Treasury stock		(15,119	)		-
Additional paid-in capital		7,468			6,598
Accumulated other comprehensive loss		(1,306	)		(1,038	)
Retained earnings		37,055			40,165
		---------			---------
Total stockholders' equity		28,258			45,889
		---------			---------
Total liabilities and
stockholders' equity		$ 61,427			$ 66,002
	==========			=========

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Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
		---------			---------			---------			---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$ 5,926			$ 3,650			$ (3,110	)		$ 9,370
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		746			619			2,054			1,766
Deferred income taxes		49			64			209			64
Stock-based compensation		187			187			562			562
Provision for losses on accounts receivable		(67	)		107			(25	)		106
Tax benefit of stock option exercises		-			-			(268	)		-
Net foreign currency effects		52			(20	)		24			190
Changes in operating assets and liabilities:
Accounts receivable		1,734			(414	)		(722	)		(2,982	)
Deposits		92			(24	)		(568	)		(109	)
Income tax receivable		359			(984	)		(2,031	)		4,280
Prepaid expenses and other current assets		(668	)		(238	)		(785	)		(278	)
Accounts payable		1,840			863			7,454			594
Accrued expenses		(2,192	)		(239	)		4,992			1,416
Deferred revenue		170			127			268			348
Deferred rent		83			(55	)		179			(20	)
Income tax payable		165			140			(353	)		496
Other non-current liabilities		659			(733	)		673			(704	)
		---------			---------			---------			---------
Net cash provided by (used in) operating activities		9,135			3,050			8,553			15,099
		---------			---------			---------			---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(847	)		(391	)		(1,902	)		(1,142	)
		---------			---------			---------			---------
Net cash used in investing activities		(847	)		(391	)		(1,902	)		(1,142	)
		---------			---------			---------			---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		-			-			40			-
Repurchase of common stock		(15,124	)		-			(15,124	)		-
Tax benefit of stock option exercises		-			-			268			-
Proceeds from sale of Asia Pacific business segment		-			-			-			1,073
		---------			---------			---------			---------
Net cash provided by financing activities		(15,124	)		-			(14,816	)		1,073
		---------			---------			---------			---------
Effect of exchange rate on cash and cash equivalents		(817	)		183			(586	)		(89	)
		---------			---------			---------			---------

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Net increase (decrease) in cash and cash equivalents		(7,653	)		2,842		(8,751	)		14,941
Cash and cash equivalents at beginning of period		40,086			31,875		41,184			19,776
		---------			---------		---------			---------
Cash and cash equivalents at end of period		$ 32,433			$ 34,717		$ 32,433			$ 34,717
	=========			=========		=========			=========
Supplemental disclosure of cash flow information:
Cash paid (received) for income taxes, net		$ 2,096			$ 3,632		$ 11,572			$ 3,264
		---------			---------		---------			---------

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Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)

Three months ended September 30, 2011	North America		Europe			Elimination			Consolidated
		-------		-------			-------			--------
Revenue from unaffiliated customers		$ 27,944		$ 10,717			$ -			$ 38,661
Intersegment revenue		130		30			(160	)		-
		-------		---------			--------			--------
Total net revenues		28,074		10,747			(160	)		38,661
		-------		---------			--------			--------
Operating income (loss)		$ 7,811		$ 1,414			$ -			$ 9,225
		-------		---------			--------			--------

Three months ended September 30, 2010	North America		Europe			Elimination			Consolidated
		-------		---------			-------			--------
Revenue from unaffiliated customers		$ 21,196		$ 6,497			$ -			$ 27,693
Intersegment revenue		57		14			(71	)		-
		-------		---------			--------			--------
Total net revenues		21,253		6,511			(71	)		27,693
		-------		---------			--------			--------
Operating income (loss)		$ 5,457		$ 248			$ -			$ 5,705
		-------		---------			--------			--------

Nine months ended September 30, 2011	North America		Europe			Elimination			Consolidated
		-------		---------			--------			--------
Revenue from unaffiliated customers		$ 83,048		$ 30,138			$ -			$113,186
Intersegment revenue		342		92			(434	)		-
		-------		---------			--------			--------
Total net revenues		83,390		30,230			(434	)		113,186
		-------		---------			--------			--------
Operating income (loss)		$ 3,605		$ 3,242			$ -			$ 6,847
		-------		---------			--------			--------

Nine months ended September 30, 2010	North America		Europe			Elimination			Consolidated
		-------		---------			-------			--------
Revenue from unaffiliated customers		$ 65,716		$ 18,601			$ -			$ 84,317
Intersegment revenue		128		79			(207	)		-
		-------		---------			--------			--------
Total net revenues		65,844		18,680			(207	)		84,317
		-------		---------			--------			--------
Operating income (loss)		$ 18,310		$ (1,511	)		$ 2			$ 16,801
		-------		---------			--------			--------

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