Classmates.com 2010 Annual Report Download - page 71

Table of Contents
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.
Provision for Income Taxes. For the year ended December 31, 2009, we recorded a tax provision of $48.1 million on pre-tax income of
$118.2 million, resulting in an effective income tax rate of 40.7%. For the year ended December 31, 2008, we recorded a tax provision of
$23.3 million on a pre-tax loss of $71.4 million. The tax provision for the year ended December 31, 2008 reflects the impact of non-deductible
goodwill and impairment charges of $176.2 million. Excluding these charges, the effective income tax rate for the year ended December 31,
2008 would have been 43.5%. The current rate has declined primarily due to the effects of net benefits resulting from statute expirations of
uncertain tax positions offset partially by the limitation of foreign tax credits.
FTD Segment Results (Actual Results vs. Combined Results Discussion)
The results of operations for FTD for the year ended December 31, 2009 and unaudited combined results of operations for FTD for the year
ended December 31, 2008 (the "Combined Year Ended December 31, 2008 Results") are set forth below. The unaudited Combined Year Ended
December 31, 2008 Results were derived by adding (i) the unaudited pre-acquisition results of operations of FTD for the period from January 1,
2008 through August 25, 2008 and (ii) the post-acquisition results of operations of FTD for the period from August 26, 2008 through
December 31, 2008. Consistent with our definition of segment income (loss) from operations, the discussion of FTD segment results excludes
depreciation and amortization within segment operating expenses.
The Combined Year Ended December 31, 2008 Results set forth below have been included for informational purposes only and do not
purport to be indicative of the results of future operations of our FTD segment or the results that would have actually been attained had the FTD
acquisition taken place at the beginning of 2008. The Combined Year Ended December 31, 2008 Results should be read in conjunction with the
historical consolidated financial statements of FTD Group, Inc. and the related notes to those financial statements. The historical information
presented below has been revised to exclude depreciation and amortization from segment operating expenses and reflects certain
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