Vonage 2010 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2010 Vonage annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 97

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97

>
R
ent an
d
re
l
ate
d
expenses
.
>
P
rofessional fees for le
g
al, accountin
g
, tax, public relations,
lobbyin
g
, and development activities
.
>
L
iti
g
ation settlements.
M
arketin
g
expense
.
Marketin
g
expense consists of
:
>
A
dvertisin
g
costs, which comprise a majority o
f
our market
-
in
g
expense and include online, television, direct mail
,
a
lternative media,
p
romotions, s
p
onsorshi
p
s, and inboun
d
a
nd outbound telemarketin
g.
>
C
reative and
p
roduction costs
.
>
The costs to serve and track our online advertisin
g.
>
C
ertain amounts we pay to retailers for activation commis
-
s
i
o
n
s.
>
The cost associated with our customer re
f
erral pro
g
ram.
D
e
p
reciation and amortization ex
p
enses
.
D
e
p
reciation an
d
a
mortization ex
p
enses include
:
>
De
p
reciation o
f
our network e
q
ui
p
ment,
f
urniture and
f
ix
-
t
ures, an
d
emp
l
oyee computer equ
i
pment.
>
A
mortization o
f
leasehold improvements and purchase
d
and developed so
f
tware
.
>
A
mortization of intangible assets (patents and trademarks).
>
Loss on disposal or impairment o
f
propert
y
and equipment.
OTHER INCOME (EXPENSE)
O
ther Income
(
Expense
)
consists of:
>
I
nterest
i
ncome on cas
h
an
d
cas
h
equ
i
va
l
ents.
>
I
nterest expense on notes paya
bl
e, patent
li
t
i
gat
i
on
j
u
d
g
-
m
ents an
d
sett
l
ements, an
d
cap
i
ta
ll
eases.
>
A
mortization of debt related costs
.
>
A
ccretion of notes.
>
Debt conversion expense relating to the conversion of note
s
pa
y
a
bl
e to equ
i
t
y
.
>
G
ain
(
loss
)
on extinguishment of notes
.
>
C
hange in fair value of embedded features within note
s
pa
y
a
bl
ean
d
stoc
k
warrant.
>
Life insurance proceeds.
RESULTS OF OPERATIONS
T
he following table sets forth, as a percentage of consolidated operating revenues, our consolidated statement of operations fo
r
t
he
p
eriods indicated
:
F
or t
h
e
Y
ears
E
n
d
e
dD
ecem
b
er
3
1
,
2010 2009 2008
Operating Revenues
:
Telephony services
9
9
%
97
%
96
%
C
ustomer equipment and shippin
g
134
100 100 100
O
peratin
g
Expenses
:
Direct cost of telephony services
(
excludin
g
depreciation and amortization
)
28 24 2
5
Direct cost of
g
oods sol
d
689
S
ellin
g
,
g
eneral and administrative
2
7
30 33
M
arketin
g
22 26 28
D
e
p
reciation and amortizatio
n
665
89 94 100
Income from o
p
erations
11 6
—
O
ther Income
(
Ex
p
ense
):
I
nterest
i
ncome
———
I
nterest expens
e
(
5) (6) (3
)
C
hange in fair value of embedded features within notes payable and stock warrant (11) (6)
—
G
ain (loss) on extinguishment of notes
(
4) 1 (4
)
Other income (expense), net
———
(20) (11) (7)
L
oss be
f
ore income tax expense (9) (5) (7)
I
ncome tax expense
———
N
et
l
os
s
(9) % (5) % (7)%
30
VO
NA
G
E ANN
U
AL REP
O
RT 2010