Classmates.com 2008 Annual Report Download - page 59

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Table of Contents
A reconciliation of segment income (loss) from operations (which excludes depreciation and amortization of intangible assets) to
consolidated operating income (loss) was as follows for each period presented (in thousands):
Year Ended December 31, 2008 compared to Year Ended December 31, 2007
Consolidated Results
Revenues. Consolidated revenues increased by $155.9 million, or 30.4%, to $669.4 million for the year ended December 31, 2008,
compared to $513.5 million for the year ended December 31, 2007. The increase of $155.9 million was primarily related to $182.0 million of
revenues associated with our FTD segment, which are included in consolidated revenues from August 26, 2008 (date of acquisition) and, to a
lesser extent, an increase in revenues from our Classmates Media segment, partially offset by a decrease in revenues from our Communications
segment. Consolidated revenues related to our FTD, Classmates Media and Communications segments constituted 27.2%, 34.4% and 38.4%,
respectively, of our consolidated revenues for the year ended December 31, 2008, compared to 0%, 37.7% and 62.3%, respectively, for the year
ended December 31, 2007.
Cost of Revenues. Consolidated cost of revenues increased by $97.7 million, or 83.3%, to $214.9 million for the year ended
December 31, 2008, compared to $117.2 million for the year ended December 31, 2007. Consolidated cost of revenues increased to 32.1% of
consolidated revenues for the year ended December 31, 2008, compared to 22.8% for the prior year period. The increase of $97.7 million was
primarily related to $107.1 million of cost of revenues associated with our FTD segment, which is included in consolidated cost of revenues
from August 26, 2008 (date of acquisition) and, to a lesser extent, a slight increase in cost of revenues associated with our Classmates Media
segment, partially offset by a decrease in cost of revenues associated with our Communications segment. The increase in cost of revenues as a
percentage of revenues was primarily due to the addition of FTD which has higher cost of revenues as a percentage of its revenues, compared to
the other segments. Cost of revenues related to our FTD, Classmates Media and Communications segments constituted 52.0%, 19.9% and
28.1%, respectively, of our total segment cost of revenues for the year ended December 31, 2008, compared to 0%, 36.3% and 63.7%,
respectively, for the year ended December 31, 2007.
Sales and Marketing Expenses. Consolidated sales and marketing expenses increased by $9.6 million, or 5.9%, to $173.0 million, for the
year ended December 31, 2008, compared to $163.4 million for the year ended December 31, 2007. Consolidated sales and marketing expenses
as a percentage of consolidated revenues decreased to 25.9% for the year ended December 31, 2008, compared to 31.8% for the prior year
period. The increase of $9.6 million was primarily related to $30.6 million of sales and marketing expenses associated with our FTD segment,
which are included in consolidated sales and marketing expenses from August 26, 2008 (date of acquisition) and, to a lesser
57
Year Ended December 31,
2008
2007
2006
Segment income (loss) from operations:
FTD
$
(149,405
)
$
—
$
—
Classmates Media
47,309
28,177
19,938
Communications
79,190
97,074
93,011
Total segment income (loss) from operations
(22,906
)
125,251
112,949
Depreciation
(21,358
)
(20,150
)
(21,290
)
Amortization of intangible assets
(18,415
)
(12,800
)
(17,640
)
Consolidated operating income (loss)
$
(62,679
)
$
92,301
$
74,019