Classmates.com 2010 Annual Report Download - page 66

Table of Contents
$2.2 million decrease in personnel- and overhead-related costs as a result of reduced headcount, partially offset by a $1.4 million increase in
costs to acquire online loyalty marketing members and other sales and marketing costs.
Content & Media Technology and Development Expenses. Content & Media technology and development expenses decreased by
$2.7 million, or 11%, to $22.8 million for the year ended December 31, 2010, compared to $25.5 million for the year ended December 31, 2009.
Content & Media technology and development expenses as a percentage of Content & Media revenues increased to 11.3% for the year ended
December 31, 2010, compared to 10.8% for the prior-year period. The $2.7 million decrease was primarily due to a decrease in personnel- and
overhead-related costs as a result of reduced headcount.
Content & Media General and Administrative Expenses. Content & Media general and administrative expenses decreased by
$5.0 million, or 13%, to $34.8 million for the year ended December 31, 2010, compared to $39.7 million for the year ended December 31, 2009.
Content & Media general and administrative expenses as a percentage of Content & Media revenues increased to 17.2% for the year ended
December 31, 2010, compared to 16.8% for the prior-year period. The decrease of $5.0 million was primarily due to a $7.2 million decrease in
personnel- and overhead-related costs and a $0.3 million favorable non-income tax settlement in the third quarter of this year. These items were
partially offset by a $0.7 million increase in professional services and consulting fees, $0.7 million of expenses related to a potential transaction
in the first quarter of 2010 that failed to consummate, a $0.6 million charge, net of insurance reimbursement, related to the resolution of the
investigation of the Attorney General for New York in the third quarter of 2010, and a $0.4 million increase in a reserve for a pending lawsuit.
Content & Media Restructuring Charges. Content & Media restructuring charges totaled $(0.1) million for the year ended December 31,
2010, compared to $2.1 million for the year ended December 31, 2009 associated with a reduction in headcount in the fourth quarter of 2009.
Communications Segment Results
The following table presents the Communications segment's operating expenses and income from operations as a percentage of
Communications revenues for the years ended December 31, 2010 and 2009.
Communications Revenues. Communications revenues decreased by $44.1 million, or 21%, to $167.2 million for the year ended
December 31, 2010, compared to $211.2 million for the year ended December 31, 2009. The decrease was primarily due to a $39.9 million
decrease in services revenues as a result of a 27% decrease in our average number of dial-up Internet access pay accounts from
63
Year Ended December 31,
2010
2009
Revenues
100.0
%
100.0
%
Operating expenses:
Cost of revenues
23.7
23.0
Sales and marketing
12.3
18.8
Technology and development
7.3
8.7
General and administrative
17.4
15.6
Restructuring charges
0.8
0.6
Total operating expenses
61.5
66.9
Segment income from operations
38.5
%
33.1
%