Travelzoo 2013 Annual Report Download - page 106

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In July 2012, the Company announced a stock repurchase program authorizing the repurchase of up to 1,000,000 shares
of the Company’s outstanding common stock. During the three months ended September 30, 2012, the Company repurchased
161,000 shares of common stock for an aggregate purchase price of $3.6 million. The 161,000 shares repurchased were retired
as of September 30, 2012. During the three months ended December 31, 2012, the Company repurchased 439,000 shares of
common stock for an aggregate purchase price of $7.9 million. The 439,000 shares repurchased were recorded as part of
treasury stock as of December 31, 2012.
During the year ended December 31, 2013, the Company repurchased 371,000 shares of common stock for an aggregate
purchase price of $7.8 million. The 371,000 shares repurchased were recorded as part of treasury stock as of December 31,
2013.
In January 2014, the Company announced a stock repurchase program authorizing the repurchase of up to 500,000 shares
of the Company’s outstanding common stock.
Note 11: Reverse/Forward Stock Split
On June 11, 2013, a Special Committee of the Company’s Board of Directors, consisting of three independent directors,
unanimously approved a reverse/forward stock split transaction (collectively referred to as the “reverse/forward split”), subject
to shareholder approval. The reverse/forward split was intended to reduce the Company’s shareholder account administration
costs by reducing the number of its shareholders.
On September 12, 2013, at the Company’s annual shareholders meeting, Travelzoo shareholders voted in favor of the
reverse/forward split, with the transaction receiving the votes of both (A) a majority of the issued and outstanding shares of
common stock and (B) a majority of the issued and outstanding shares of common stock that are not held or controlled, directly
or indirectly, by directors or officers of the Company, including, without limitation, the shares held by Azzurro Capital Inc., our
principal stockholder.
On November 6, 2013, the Special Committee approved the execution of the transaction after receiving an opinion from a
financial advisor regarding the fairness of the transaction from a financial point of view to the Company's shareholders whose
positions, individually considered, consisted of fewer than 25 shares, of the per-share consideration to be received by such
shareholders in the reverse/forward split. The Special Committee received legal counsel from Young Conaway Stargatt &
Taylor, LLP in connection with its review of the transaction. In addition, the Company received legal counsel from Skadden,
Arps, Slate, Meagher & Flom LLP and Bryan Cave LLP in connection with the transaction.
On November 6, 2013, based upon the Special Committee’s approval of the transaction and the receipt of a fairness
opinion from the financial advisor, the Company executed the shareholder approved reverse/forward split.
The reverse/forward split transaction consisted of a 1-for-25 reverse stock split of the Company's outstanding common
stock, followed immediately by a 25-for-1 forward stock split. Shareholders who held less than 25 shares immediately prior to
the reverse stock split received a right to cash payment based on and equal to their resulting fractional interest times the price of
a share equal to the higher of (a) the trailing ten day average trading price of the Company’s common stock immediately
preceding the consummation date of the reverse/forward split or (b) the average aggregate sales price received in the sale on the
open market of the shares resulting from aggregation of the fractionalized interests. Shareholders that held 25 or more shares
of common stock immediately before the reverse/forward split did not receive a right to cash payment; instead these
shareholders continued to hold the same number of shares after completion of the reverse/forward split as they held
immediately prior. A description of the terms and conditions of the reverse/forward split was set forth in the Company’s
definitive Proxy Statement for the 2013 annual shareholders meeting filed with the U.S. Securities and Exchange Commission
on July 25, 2013.
The reverse/forward split resulted in approximately 643,218 of the Company’s outstanding shares being fractionalized.
Shareholders holding less than 25 shares of common stock immediately prior to the reverse split did not receive fractional
shares in the reverse stock split; instead these shareholders had their shares converted into the right to receive a cash payment in
exchange for and in proportion to the fractional share interests resulting from the reverse stock split. To fund the cash payment
due to shareholders that held a right to receive cash from the transaction, the fractional share interests were aggregated by the
Company’s transfer agent, who sold the aggregated shares in the open market following the execution of the transaction.
As of December 31, 2013, the Company completed the sales of the aggregated fractional shares from the reverse/forward
split in the open market and the sales proceeds of $13.6 million are held by the Company’s transfer agent in anticipation of the
payment to be made to the fractionalized shareholders and are included in Funds Held for Reverse/Forward Stock Split on the
Company’s balance sheet. As of December 31, 2013, the total amount payable of $13.7 million to fractionalized shareholders as
a result of the execution of the reverse/forward split is reflected as a Payable to Shareholders for Reverse/Forward Stock Split
on the Company’s balance sheet.