Classmates.com 2003 Annual Report Download - page 13

access services for an additional $5.00 per month, or a total monthly charge of $14.95. Our accelerated dial-up services utilize compression,
caching and other technologies that reduce the time for certain Web pages to download to users' computers when compared to our standard
dial-up access services. At December 31, 2003, subscribers to our accelerated dial-up services comprised approximately 22% of our total pay
subscriber base. Recently, NetZero and Juno began offering two premium email services with expanded features and storage capabilities for
$9.95 or $24.95 per year.
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United Online commenced operations in September 2001, following the merger of NetZero and Juno into two of its wholly-owned
subsidiaries (the "Merger"). The Merger was accounted for under the purchase method of accounting for business combinations as an
acquisition of Juno by NetZero, which is considered the predecessor company to United Online.
Results of Operations
The following table sets forth (in thousands, except percentages), for the periods presented, selected historical statements of operations
data. The information contained in the table below should be read in conjunction with Liquidity and Capital Resources, Critical Accounting
Policies and Financial Commitments included in this Item 7 as well as the consolidated financial statements and notes thereto included
elsewhere in this Transition Report on Form 10-K. The results reflect only the results of operations of NetZero and its subsidiaries prior to
September 25, 2001, as predecessor to United Online. The results reflect the financial impact of the Merger subsequent to September 25, 2001
and the acquisition of the Internet access assets of BlueLight subsequent to November 4, 2002. For additional information related to our
acquisitions, see Note 2 to our consolidated financial statements contained elsewhere in this report.
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Six Months Ended December 31, Year Ended June 30,
2003
% of
Revenue 2002
% of
Revenue 2003
% of
Revenue 2002
% of
Revenue 2001
% of
Revenue
(unaudited)
Statements of Operations Data:
Revenues:
Billable services $
167,639
90
%
$
109,343
88
%
$
247,790
89
%
$
141,005
84
% $
6,662
12
%
Advertising and commerce
18,099
10
14,525
12
29,505
11
26,510
16
50,555
88
Total revenues
185,738
100
123,868
100
277,295
100
167,515
100
57,217
100
Operating expenses:
Cost of billable services
46,182
25
42,690
34
89,293
32
74,227
44
8,944
16
Cost of free services
3,953
2
6,897
6
12,603
5
33,129
20
79,416
139
Sales and marketing
70,526
38
36,530
30
86,623
31
40,220
24
62,176
109
Product development
10,488
6
11,661
9
23,054
8
24,779
15
27,534
48
General and administrative
14,022
7
12,740
10
27,805
10
30,722
18
28,775
50
Amortization of goodwill and
intangible assets
7,928
4
8,483
7
16,411
6
14,156
8
16,837
29
Restructuring charges
—
—
—
—
(
215
)
—
4,228
3
—
—
Impairment of goodwill and
intangible assets — — — — — — — —
48,622
85
Total operating expenses
153,099
82
119,001
96
255,574
92
221,461
132
272,304
476
Operating income (loss)
32,639
18
4,867
4
21,721
8
(53,946
)
(32
)
(215,087
)
(376
)
Interest income, net
2,407
1
2,061
2
4,290
1
5,070
2
9,331
16
Other income, net — — — — — —
1,066
1
— —
Income (loss) before income
taxes
35,046
19
6,928
6
26,011
9
(47,810
)
(29
)
(205,756
)
(360
)
Provision (benefit) for income
taxes
1,719
1
692
1
(1,781
)
(1
) — — — —
Net income (loss)
$
33,327
18
%
$
6,236
5
%
$
27,792
10
%
$
(47,810
)
(29
)%
$
(205,756
)
(360
)%