Classmates.com 2010 Annual Report Download - page 64

Table of Contents
FTD Cost of Revenues. FTD cost of revenues increased by $20.4 million, or 6%, to $344.0 million for the year ended December 31,
2010, compared to $323.6 million for the year ended December 31, 2009. Excluding the impact of foreign currency exchange rates of
$0.3 million, cost of revenues increased by $20.7 million, or 6%, compared to the prior-year period, primarily as a result of an increase in
consumer order volume and increased shipping costs. FTD cost of revenues as a percentage of revenues increased to 62.0% for the year ended
December 31, 2010, compared to 59.3% for the prior-year period. Cost of revenues as a percentage of revenues was negatively impacted by an
increase in the volume and level of discounts on products sold to consumers, increased shipping costs, a shift in the mix of products and services
sold, and a decrease in post-transaction sales, which have minimal cost of revenues.
FTD Sales and Marketing Expenses. FTD sales and marketing expenses increased by $4.1 million, or 5%, to $93.8 million for the year
ended December 31, 2010, compared to $89.7 million for the year ended December 31, 2009. FTD sales and marketing expenses as a percentage
of revenues increased to 16.9% for the year ended December 31, 2010, compared to 16.4% for the prior-year period. The increase was primarily
due to higher marketing expenditures related to television advertising for the Valentine's Day and U.S. Mother's Day holidays in 2010 and higher
customer service costs, partially offset by a decrease in print and other advertising expenses.
FTD Technology and Development Expenses. FTD technology and development expenses decreased by $0.7 million, or 6%, to
$11.2 million for the year ended December 31, 2010, compared to $11.9 million for the year ended December 31, 2009. FTD technology and
development expenses as a percentage of revenues decreased to 2.0% for the year ended December 31, 2010, compared to 2.2% for the prior-
year period. The decrease was primarily due to lower web hosting costs.
FTD General and Administrative Expenses. FTD general and administrative expenses decreased by $0.3 million, or 1%, to $43.5 million
for the year ended December 31, 2010, compared to $43.7 million for the year ended December 31, 2009. FTD general and administrative
expenses as a percentage of revenues decreased to 7.8% for the year ended December 31, 2010, compared to 8.0% for the prior-year period. The
decrease in general and administrative expenses was largely attributable to decreases in bad debt expense and stock-based compensation. These
decreases were partially offset by higher personnel-related costs, a $0.7 million charge related to a potential transaction in the first quarter of
2010 that failed to consummate and a $0.4 million charge, net of an insurance reimbursement, related to the resolution of the investigation of the
Attorney General for New York in the third quarter of 2010, as well as an increase in professional fees associated with such matter.
FTD Restructuring Charges. FTD recorded restructuring charges of $1.6 million for the year ended December 31, 2010. These charges
were primarily related to the closure of certain call center facilities in the U.S. and the U.K. and primarily included lease termination costs and
employee termination benefits. There were no restructuring charges for FTD for the year ended December 31, 2009.
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