Classmates.com 2006 Annual Report Download - page 48

The payment of dividends will negatively impact cash flows from financing activities. In 2006, our Board of Directors declared and paid
quarterly cash dividends of $0.20 per share of common stock for a total of $53.5 million. In February 2007, our Board of Directors declared and
paid a quarterly cash dividend of $0.20 per share of common stock totaling $13.7 million. 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 through December 31, 2007. At December 31, 2006, we had repurchased
$139.2 million of our common stock under the program, and the remaining available under the program was $60.8 million.
Cash flows from financing activities may also be negatively impacted by the withholding of a portion of shares underlying the RSUs we
award to employees. Upon vesting, we currently anticipate that we will not collect the applicable withholding taxes for RSUs from employees.
Instead, we will automatically withhold, from the RSUs that vest, the portion of those shares with a fair market value equal to the amount of the
withholding taxes due. We will then pay the applicable withholding taxes in cash. Similar to repurchases of common stock, the net effect of such
withholding will adversely impact our cash flows. The amount remitted in the year ended December 31, 2006 was $2.7 million for which we
withheld approximately 215,000 shares of common stock that were underlying the RSUs. The amount we pay in future quarters will vary based
on our stock price and the number of RSUs vesting during the quarter.
Based on our current projections, we expect to continue to generate positive cash flows from operations, at least in the near term. We intend
to use our existing cash balances and future cash generated from operations to fund dividend payments, if declared by the Board; to develop and
acquire complementary services, businesses or technologies; to repurchase shares of our common stock if we believe market conditions to be
favorable; to repurchase the common stock underlying RSUs and pay the withholding taxes due on vested RSUs; and to fund future capital
expenditures. We currently anticipate that our future cash flows from operations and existing cash, cash equivalent and short-term investment
balances will be sufficient to fund our operations over the next year, and in the near term we do not anticipate the need for additional financing to
fund our operations. However, we may raise additional debt or equity capital for a variety of reasons including, without limitation, developing
new or enhancing existing services or products, repurchasing our common stock, acquiring complementary services, businesses or technologies
or funding significant capital expenditures. If we need to raise additional capital through public or private debt or equity financings, strategic
relationships or other arrangements, it might not be available to us in a timely manner, on acceptable terms, or at all. Our failure to raise
sufficient capital when needed could have a material adverse effect on our business, financial position, results of operations and cash flows, and
could impair our ability to pay dividends. If additional funds were raised through the issuance of equity securities, the percentage of stock owned
by the then-current stockholders would be reduced. Furthermore, such equity securities might have rights, preferences or privileges senior to
holders of our common stock.
Year Ended December 31, 2005 compared to Year Ended December 31, 2004
Net cash provided by operating activities increased by $13.1 million, or 11%, for the year ended December 31, 2005 compared to the year
ended December 31, 2004. Cash provided by operating activities is driven by our net income adjusted for non-cash items, including depreciation
and amortization, stock-based compensation, deferred taxes and tax benefits from stock options, and changes in working capital.
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