Vonage 2010 Annual Report Download - page 40

2009
compare
d
to
2008
M
ar
k
et
i
ng
.
T
he decrease in marketing expense of
$
25,380
,
o
r 10%, was primaril
y
related to a decrease in alternative media
o
f
$
8,055, in online advertising of
$
19,831, in retail advertising o
f
$
7
,
030
,
and in direct mail costs of
$
4
,
084. These decrease
s
were offset by an increase in television advertisin
g
of
$
13,919
.
F
or year ended December 31, 2009, we reduced marketin
g
s
pendin
g
as we completed the transition to our new a
g
encie
s
a
nd continued the development of new advertisin
g
and elimi
-
nated inefficient non-media spendin
g
.
D
eprec
i
at
i
on an
dA
mort
i
zat
i
o
n
F
or the Years Ended December 31
,
D
o
ll
ar
C
hang
e
20
1
0
vs.
2009
D
o
ll
ar
C
hang
e
2009
vs.
2008
P
ercent
C
hange
20
1
0
vs
.
2009
P
ercent
C
hang
e
2009
vs.
2008
(
in thousands, except percentages
)
20
1
0 2009 2008
Depreciation and amortization $53,073 $53,391 $48,612 $(318) $4,779 (1%) 10
%
20
1
0
compare
d
to
2009
D
eprec
i
at
i
on an
d
amort
i
zat
i
on
.
Th
e
d
ecrease
i
n
d
eprec
i
a
-
tion and amortization of
$
318, or 1%, was primaril
y
due to lower
impairment charges of
$
2,235, lower depreciation of network
e
quipment, computer hardware, and furniture of
$
1,045, an
d
lower patent amortization of
$
174, partiall
y
offset b
y
an increase
in software amortization of
$
3
,
184.
2009
compare
d
to
2008
D
eprec
i
at
i
on an
d
amort
i
zat
i
on
.
Th
e
i
ncrease
i
n
d
eprec
i
at
i
o
n
a
nd amortization of
$
4,779, or 10%, was primaril
y
due to an
increase in software amortization of
$
6,725, including lowe
r
impairment charges of
$
835. These increases were offset by a
d
ecrease in depreciation of network equipment and computer
e
quipment of
$
449, including higher impairment charges of
$
12
3
a
nd less amortization related to patents of
$
1,496.
Other Income (Expense
)
F
or t
h
e
Y
ears
E
n
d
e
dD
ecem
b
er
3
1
,
D
o
ll
a
r
C
hange
20
1
0
vs
.
2009
D
o
ll
ar
Chang
e
2009
vs.
2008
P
ercent
C
hange
20
1
0
vs
.
2009
P
ercent
Chang
e
2009
vs.
2008
(in thousands, except percentages
)
20
1
0 2009 2008
Interest income $ 519 $ 277 $ 3,236 $ 242 $ (2,959) 87% (91%
)
Interest expense (48,541) (54,192) (29,878) 5,651 (24,314) 10% (81%)
C
hange in fair value of embedded features within notes payable an
d
stock warrant
(
99,338
)(
49,933
)
—
(
49,405
)(
49,933
)(
99%
)*
G
ain
(
loss
)
on extin
g
uishment of notes
(
31,023
)
4,041
(
30,570
)(
35,064
)
34,611
(
868%
)
113
%
O
ther income
(
ex
p
ense
)
, net
(
18
)
843
(
247
)(
861
)
1,090
(
102%
)
441
%
$(178,401) $(98,964) $(57,459)
2010 com
p
ared to 2009
I
nt
e
r
es
tin
co
m
e.
T
he increase in interest income of $242, o
r
87
%
, was due to an increase in cash and cash e
q
uivalents i
n
2010
.
I
nterest ex
p
ense
.
The decrease in interest ex
p
ense was du
e
to lower interest on our
p
rior senior secured
f
irst lien credit
f
acility due to reduced principal and on our convertible note
s
d
ue to conversions, partially o
ff
set by hi
g
her interest on our prior
senior secured second lien credit
f
acilit
y
due to an increase in
t
h
epr
i
nc
i
pa
lb
a
l
ance as
i
nterest was pa
id
-
i
n-
ki
n
d.
Change in fair value of embedded features within notes
p
aya
bl
ean
d
stoc
k
warran
t
.
The change in
f
air value o
f
th
e
e
mbedded conversion option within our convertible notes
f
luc
-
tuated with changes in the price o
f
our common stock and was
$
7,308 during 2010 compared to
$
49,380 in 2009. The chang
e
in the fair value of our stock warrant fluctuates with changes i
n
the price of our common stock and was
$
344 in 2010 compared
to
$
553 in 2009. An increase in our stock price results i
n
e
xpense w
hil
ea
d
ecrease
i
n our stoc
k
pr
i
ce resu
l
ts
i
n
i
ncome.
This account is also impacted due to the fact that we had fewer
c
onvert
ibl
e notes outstan
di
ng
d
ur
i
ng 2010 compare
d
to 200
9
d
ue to convers
i
ons.
All
convert
ibl
e notes
h
ave
b
een converte
d
a
s of December 31, 2010. In addition, the make-whole pre
-
m
iums in our prior senior secured first lien credit facilit
y
an
d
prior senior secured second lien credit facilit
y
were ascribed a
value of $91,686 at the time the make-whole
p
remiums wer
e
p
aid in December 2010
.
Gain (loss) on extin
g
uishment of notes. Th
e
in
c
r
e
m
e
nt
a
ll
oss
o
n extin
g
uishment o
f
notes was due to the acceleration o
f
u
namortized debt discount, debt related costs, administrative
ag
ent
f
ees, and other
f
ees associated with the prepayments an
d
e
xtin
g
uishment o
f
our senior secured
f
irst lien credit
f
acility, ou
r
senior secured second lien credit
f
acility, and our convertible
no
t
es
.
Other. We reco
g
nized $792 in other income for the yea
r
ended December 31, 2009
f
or the net proceeds we received
f
rom a key-man term li
f
e insurance policy related to the passin
g
o
f
a
f
ormer executive
.
2009 com
p
ared to 2008
I
nt
e
r
es
tin
co
m
e.
T
he decrease in interest income of $2,959,
or 91
%
, was due to the decrease in cash, cash e
q
uivalents an
d
m
a
rk
e
t
ab
l
e secu
riti
es a
n
d
l
o
w
e
r int
e
r
es
tr
a
t
es.
I
nterest ex
p
ense
.
T
he increase in interest ex
p
ense o
f
$
24,314, or 81%, was primarily related to an increase in interest
e
x
p
ense on the new credit
f
acilities and convertible note
s
c
om
p
ared to the convertible notes that we re
f
inanced i
n
November 2008 of $25,088, which was offset by a decrease in
o
ther interest ex
p
ense of $774
.
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3