Classmates.com 2010 Annual Report Download - page 73

Table of Contents
the decline in products and services revenues noted above. FTD cost of revenues as a percentage of revenues decreased to 59.3% for the year
ended December 31, 2009, compared to 60.2% for the prior-year period. Cost of revenues as a percentage of revenues was positively impacted
by a shift in the mix of products and services sold as well as by cost reductions, primarily related to shipping costs.
FTD Sales and Marketing Expenses.
FTD sales and marketing expenses decreased by $13.3 million, or 13%, to $89.7 million for the year
ended December 31, 2009, compared to $103.0 million for the year ended December 31, 2008. FTD sales and marketing expenses as a
percentage of revenues decreased to 16.4% for the year ended December 31, 2009, compared to 16.6% for the prior-year period. Excluding the
impact of foreign currency exchange rates of $2.8 million, sales and marketing expenses decreased by $10.5 million, or 10%, compared to the
prior-year period. The decrease was due to reduced marketing expenditures for online marketing and print advertising, a decrease in floral
network member incentives, and a decrease in personnel-related costs, partially offset by an increase in expenses related to second quarter 2009
television advertising for the Mother's Day holiday.
FTD Technology and Development Expenses. FTD technology and development expenses decreased by $0.9 million, or 7%, to
$11.9 million for the year ended December 31, 2009, compared to $12.8 million for the year ended December 31, 2008. FTD technology and
development expenses as a percentage of revenues increased slightly to 2.2% for the year ended December 31, 2009, compared to 2.1% for the
prior-year period. Excluding the impact of foreign currency exchange rates of $1.0 million, technology and development expenses increased by
$0.1 million, or 1%, compared to the prior-year period.
FTD General and Administrative Expenses. FTD general and administrative expenses decreased by $12.4 million, or 22%, to
$43.7 million for the year ended December 31, 2009, compared to $56.2 million for the year ended December 31, 2008. FTD general and
administrative expenses as a percentage of revenues decreased to 8.0% for the year ended December 31, 2009, compared to 9.0% for the prior-
year period. Excluding the impact of foreign currency exchange rates of $0.6 million, general and administrative expenses decreased by
$11.9 million, or 21%, compared to the prior-year period. The decrease was primarily due to $16.2 million of expenses in the prior-year period
related to the acquisition of FTD by the Company and $2.0 million of charges related to acquisition opportunities that were abandoned in light of
the then-pending acquisition of FTD by the Company. The decrease was largely offset by an increase in allocated stock-based compensation and
allocated corporate costs as well as increased bad debt expense for the year ended December 31, 2009.
FTD Impairment of Goodwill, Intangible Assets and Long-Lived Assets. FTD recorded impairment charges of $175.9 million for the year
ended December 31, 2008 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. There were no such impairments in the year ended
December 31, 2009.
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