Classmates.com 2008 Annual Report Download - page 65

Table of Contents
purport to be indicative of the results of future operations of the FTD segment or the results that would have actually been attained had the
acquisition taken place at the beginning of 2008. The pre-acquisition results of FTD should be read in conjunction with the historical
consolidated financial statements of FTD Group, Inc. and the related notes to those financial statements. Historical public filings of FTD
Group, Inc. are available at the SEC's Web site at www.sec.gov .
FTD Revenues. FTD revenues decreased by $9.9 million, or 1.6%, to $622.0 million for the year ended December 31, 2008, compared to
$631.9 million for the year ended December 31, 2007. Excluding the foreign currency exchange rate impact of $12.3 million due to a weaker
British Pound versus the U.S. Dollar, revenues increased $2.4 million primarily due to an increase in consumer order volume, partially offset by
a decrease in sales of products and services to our florist members. However, the increase in revenue, excluding the foreign currency exchange
rate impact, was attributable to increased revenues in the first six months of 2008 when compared to the first six months of 2007. Due primarily
to adverse economic conditions in the U.S. and the U.K., revenues during the latter part of 2008 declined when compared to the latter part of
2007. We expect that, at least in the near term, due to continuing adverse economic conditions and the impact of foreign currency exchange
rates, FTD revenues will decline in 2009 when compared to 2008.
FTD Cost of Revenues. FTD cost of revenues decreased by $3.2 million, or 0.8%, to $375.2 million, for the year ended December 31,
2008, compared to $378.4 million for the year ended December 31, 2007. Excluding the impact of the strengthening of the U.S. Dollar versus the
British Pound of $8.4 million, cost of revenues increased by $5.2 million compared to the prior year period. FTD cost of revenues as a
percentage of FTD revenues increased to 60.3% for the year ended December 31, 2008, compared to 59.9% for the prior year period. Cost of
revenues as a percentage of revenues was impacted by the British Pound to U.S. Dollar exchange rate, as well as a shift in the mix of products
and services sold.
FTD Sales and Marketing Expenses. FTD sales and marketing expenses decreased by $5.2 million, or 4.9%, to $100.3 million, for the
year ended December 31, 2008, compared to $105.5 million for the
63
Year Ended December 31,
2008
Combined
2007
Pre-Acquisition
% Change
(in thousands, except Average Order Value)
FTD segment revenues:
Products
$
470,825
$
478,579
(1.6
)%
Services
149,473
153,356
(2.5
)%
Advertising
1,705
—
N/A
Total FTD segment revenues
622,003
631,935
(1.6
)%
Operating expenses:
Cost of revenues
375,211
378,376
(0.8
)%
Sales and marketing
100,292
105,450
(4.9
)%
Technology and development
18,202
25,739
(29.3
)%
General and administrative
57,607
35,479
62.4
%
Amortization of intangible assets
13,610
4,145
187.3
%
Impairment of goodwill, intangible assets and long
-
lived assets
175,867
—
N/A
Total operating expenses
740,789
549,189
29.3
%
Consumer orders
6,548
6,423
2.0
%
Average order value
$
62.99
$
64.32
(2.0
)%