Classmates.com 2005 Annual Report Download - page 55

These decreases were partially offset by:
• a $9.1 million increase in capital equipment purchases and capitalized software costs in connection with the development of new
products and the ongoing operations of our business; and
•
a $4.6 million increase in purchases of rights, patents and trademarks, primarily related to the purchase of proprietary rights associated
with the NetZero trademark for $6.0 million, $5.5 million of which was paid in the March 2005 quarter. The remaining $0.5 million was
paid in January 2006.
We have invested significantly in our network infrastructure, software licenses, leasehold improvements, and computer equipment and we
will need to make further significant investments in the future. Capital expenditures for the year ended December 31, 2005 were $21.7 million.
We anticipate that our total capital expenditures for 2006 will be in the range of $23 million to $28 million. The actual amount of future capital
expenditures may fluctuate due to a number of factors including, without limitation, potential future acquisitions and new business initiatives,
which are difficult to predict and could change significantly over time. Additionally, technological advances may require us to make capital
expenditures to develop or acquire new equipment or technology in order to replace aging or technologically obsolete equipment.
Net cash used for financing activities increased by $121.3 million for the year ended December 31, 2005 to $89.6 million compared to the
year ended December 31, 2004. The increase is primarily the result of the following:
• the borrowing of $100 million in December 2004 through a four-year term loan facility;
• payments of $45.8 million on the term loan in the year ended December 31, 2005, including voluntary prepayments of $28.8 million. In
January 2006, we paid, in full, the outstanding balance of the term loan of approximately $54.2 million; and
•
payments of $38.1 million for dividends in the year ended December 31, 2005.
The increases were offset by:
•
a $60.3 million decrease in repurchases of common stock in the year ended December 31, 2005 compared to the year ended
December 31, 2004.
The payment of dividends will negatively impact cash flows from financing activities. In May, August and October of 2005 and
February of 2006, our Board of Directors declared a quarterly cash dividend of $0.20 per share of common stock. The quarterly dividends were
paid on May 31, 2005, August 31, 2005, November 30, 2005 and February 28, 2006 and totaled $12.6 million, $12.7 million, $12.8 million and
$12.9 million, respectively. The payment of future dividends is discretionary and will be subject to determination by the Board of Directors each
quarter following its review of our financial performance.
Future cash flows from financing activities may also be affected by repurchases of common stock. Our Board of Directors authorized a
common stock repurchase program that allows us to repurchase shares of our common stock through open market or privately negotiated
transactions based on prevailing market conditions and other factors. From time to time, the Board of Directors has increased the amount
authorized for repurchase under this program. On April 22, 2004, the Board of Directors authorized us to purchase up to an additional
$100 million of our common stock through May 31, 2005 under the program, bringing the total amount authorized under the program to
$200 million. On April 29, 2005, the Board of Directors extended the program through December 31, 2006. At December 31, 2005, we had
repurchased $139.2 million of our common stock under the program, and the remaining available under the program was $60.8 million.
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