Classmates.com 2008 Annual Report Download - page 147

Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. RESTRUCTURING CHARGES (Continued)
related to the elimination of these positions were recognized and incurred in the December 2007 quarter. In addition, the Company recognized
restructuring charges totaling $0.4 million for termination benefits paid to certain employees associated with its Web hosting and photo sharing
businesses.
In the year ended December 31, 2006, the Company recorded restructuring charges totaling $0.6 million primarily for lease termination
costs and termination benefits paid to certain employees.
14. POTENTIAL SUBSIDIARY INITIAL PUBLIC OFFERING OF CLASSMATES MEDIA CORPORATION
CMC was formed in August 2007 for the purposes of consolidating the Company's Classmates, The Names Database and MyPoints
business units in preparation of an IPO by CMC. The businesses were contributed to CMC by the Company on August 9, 2007. In August 2007,
CMC filed a Form S-1 registration statement with the SEC for the IPO of its common stock.
In December 2007, the Company determined that proceeding with the IPO under then-current market conditions was not in the best
interests of its stockholders and CMC withdrew its Form S-
1 registration statement previously filed with the SEC. Approximately $0.5 million of
transaction costs were determined not to have continuing value after the withdrawal of the IPO and were expensed in the quarter ended
December 31, 2007. Because it remained the Company's strategy to complete an IPO of CMC during 2008, certain IPO transaction-
related costs
incurred during 2007 and the first quarter of 2008 totaling $3.9 million were deferred and were included in other assets on our condensed
consolidated balance sheet at March 31, 2008. During the second quarter of 2008, the Company concluded that it was unlikely that an IPO would
be completed before 2009. As such, the Company determined, on June 23, 2008, that the $3.9 million in deferred transaction-related costs
relating to the IPO would be expensed in the quarter ended June 30, 2008, and its financial results and the financial results of the Classmates
Media segment for the year ended December 31, 2008 were negatively impacted.
15. COMMITMENTS AND CONTINGENCIES
Leases
Future minimum lease payments at December 31, 2008 under noncancelable operating leases, and related sublease income, with initial lease
terms in excess of one year were as follows (in thousands):
Operating leases consist primarily of facility leases. The Company leases its facilities and certain operating equipment under operating
leases expiring at various periods through 2014. Certain of the Company's operating leases include rent holidays as well as escalation clauses
that periodically adjust rental expense. The Company records rent expense on a straight-line basis over the lease term. Rental
F-52
Year Ending December 31,
2009
2010
2011
2012
2013
Thereafter
Total
Operating leases
$
16,424
$
12,301
$
9,286
$
7,412
$
6,745
$
12,568
$
64,736
Operating sublease income
(1,113
)
(424
)
—
—
—
—
(
1,537
)
Total
$
15,311
$
11,877
$
9,286
$
7,412
$
6,745
$
12,568
$
63,199