Classmates.com 2007 Annual Report Download - page 66

activities was partially offset by a $3.6 million increase in the payment of dividends and a $2.9 million increase in repurchases of common stock
in connection with shares withheld upon vesting of restricted stock units to pay applicable employee withholding taxes.
In February, April, July, and October 2007, our Board of Directors declared a quarterly cash dividend of $0.20 per share of common stock.
The dividends were paid on February 28, 2007, May 31, 2007, August 31, 2007, and November 30, 2007 and totaled $13.7 million,
$14.4 million, $14.4 million, and $14.6 million, respectively.
In January 2008, our Board of Directors declared a quarterly cash dividend of $0.20 per share of common stock. The record date for the
dividend was February 14, 2008 and the dividend will be paid on February 29, 2008. The payment of future dividends is discretionary and is
subject to determination by our Board of Directors each quarter following its review of our financial performance and other factors. The payment
of dividends will negatively impact cash flows from financing activities.
Future cash flows from financing activities may also be affected by our repurchases of our common stock. Our Board of Directors
authorized a common stock repurchase program (the "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, 2008. From August 2001
through December 31, 2007, we had repurchased a total of $139.2 million of our common stock under the program. We did not repurchase any
shares of our common stock under the program in 2007, and at December 31, 2007, the remaining amount 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 restricted
stock units we award to employees. Upon vesting, we currently do not collect the applicable employee withholding taxes for restricted stock
units from employees. Instead, we automatically withhold, from the restricted stock units that vest, the portion of those shares with a fair market
value equal to the amount of the employee withholding taxes due. We then pay the applicable withholding taxes in cash. The withholding of
these shares, although accounted for as a common stock repurchase, does not reduce the amount available under the program. Similar to
repurchases of common stock under the program, the net effect of such withholding will adversely impact our cash flows from financing
activities. The amounts remitted in the years ended December 31, 2007 and 2006 were $5.6 million and $2.7 million, respectively, for which we
withheld 390,000 shares and 215,000 shares of common stock, respectively, that were underlying the restricted stock units. The amount we pay
in future quarters will vary based on our stock price and the number of restricted stock units vesting during the quarter.
On August 8, 2007, Classmates and MyPoints declared a dividend to us, which was evidenced by unsecured notes payable in the aggregate
principal amount of $50.0 million (the "Notes"). The Notes bear interest at an annual rate of 9.625%, payable quarterly in arrears. No principal is
due on the Notes until maturity on August 31, 2013, but the Notes may be repaid in whole or in part at any time prior to maturity without
penalty. Historically, our net cash provided by operating activities has been positively impacted by our Classmates and MyPoints businesses
which have been transferred to CMC. We attempted to effect an IPO of CMC in the fourth quarter of 2007. However, we withdrew CMC's
Form S-1 registration statement previously filed with the SEC for the proposed IPO in December 2007 due to then-current market conditions. It
remains our strategy to complete an IPO of CMC. If such an IPO occurs, the Notes may be repaid in whole or in part from the proceeds from the
offering, although there can be no assurance that the IPO will occur or that the Notes will be repaid. If the IPO were to occur, it is likely that the
net cash provided by operating, investing and financing activities associated with CMC will remain with CMC and will not be available for our
use. As such, cash flows available to us may significantly decrease if an IPO of CMC is consummated.
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