Classmates.com 2009 Annual Report Download - page 63

Table of Contents
a $29.7 million increase in general and administrative expenses associated with our FTD segment as a result of including FTD general and
administrative expenses for the entire period in the year ended December 31, 2009 whereas such expenses were included only from August 26,
2008 (date of acquisition) in the prior-year period. The increase was partially offset by decreases in general and administrative expenses
associated with our Communications and Classmates Media segments. Consolidated general and administrative expenses as a percentage of
consolidated revenues decreased to 12.3% for the year ended December 31, 2009, compared to 13.8% for the prior-year period primarily as a
result of including FTD for the entire period for the year ended December 31, 2009 since our FTD segment has lower general and administrative
expenses as a percentage of its revenues compared to the other segments. General and administrative expenses related to our FTD, Classmates
Media and Communications segments constituted 37.5%, 34.1% and 28.4%, respectively, of total segment general and administrative expenses
for the year ended December 31, 2009, compared to 16.2%, 43.7% and 40.2%, respectively, for the year ended December 31, 2008.
Amortization of Intangible Assets.
Consolidated amortization of intangible assets increased by $16.4 million, or 89%, to $34.8 million for
the year ended December 31, 2009, compared to $18.4 million for the year ended December 31, 2008. The increase was primarily due to an
increase in amortization of intangible assets associated with our FTD segment as a result of including FTD amortization of intangible assets for
the entire period for the year ended December 31, 2009 whereas such expenses were included only from August 26, 2008 (date of acquisition) in
the prior-year period.
Restructuring Charges. Consolidated restructuring charges increased by $1.5 million, or 223%, to $2.1 million for the year ended
December 31, 2009, compared to $0.7 million for the year ended December 31, 2008. Restructuring charges for the year ended December 31,
2009 were primarily associated with a reduction in headcount in the fourth quarter in our Classmates Media segment. We eliminated 71 positions
within our Classmates Media segment. Restructuring charges for the year ended December 31, 2008 were primarily associated with the closure
of our Orem, Utah facility.
Impairment of Goodwill, Intangible Assets and Long-Lived Assets. There were no impairment charges for the year ended December 31,
2009, compared to $176.2 million for the year ended December 31, 2008. Impairment charges for the year ended December 31, 2008 were
primarily due to a reduction in the fair value of the FTD reporting unit compared to its carrying value and lower fair values in the FTD and
Interflora trademarks and trade names compared to their carrying values.
Interest Income. Interest income decreased by $3.0 million, or 66%, to $1.5 million for the year ended December 31, 2009, compared to
$4.5 million for the year ended December 31, 2008. The decrease in interest income was primarily due to the liquidation of our short-term
investments portfolio to partially fund the FTD acquisition in August 2008, as well as to a decline in interest rates as a result of the interest rate
environment in recent quarterly periods and to our decision in the fourth quarter of 2008 to presently invest in only cash and cash equivalents.
The decrease in interest income was partially offset by higher average cash and cash equivalents balances for the year ended December 31, 2009,
compared to the prior-year period.
Interest Expense. Interest expense increased by $20.4 million, or 155%, to $33.5 million for the year ended December 31, 2009,
compared to $13.2 million for the year ended December 31, 2008. The increase in interest expense was primarily a result of the indebtedness
incurred in connection with the FTD acquisition, which closed on August 26, 2008. Interest expense was primarily related to interest on our
credit facilities, including accretion of discounts and amortization of debt issue costs.
Other Income (Expense), net. Other income, net increased by $4.3 million to $4.2 million for the year ended December 31, 2009,
compared to other expense, net of $48,000 for the year ended December 31, 2008. Other income for the year ended December 31, 2009 included
non-operating income related to a non-income tax refund recovery and a favorable legal settlement.
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