January 8, 2010
Via EDGAR
Stephen G. Krikorian
Accounting Branch Chief
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street NE
Mail Stop 4561
Washington, DC 20549
| Re: | Spark Networks, Inc. |
Form 10-K for the Year Ended December 31, 2008, Filed March 26, 2009
Form 10-K/A for the Year Ended December 31, 2008, Filed July 21, 2009
File No. 001-32750
Dear Mr. Krikorian:
Based upon our research, discussions and correspondence with the SEC, we propose presenting our income statement in the manner appearing on page 3. We have identified those costs associated with our data center, including the personnel (and their related expenses) who maintain the equipment at our data center, and reclassified those expenses from Technical Operations to Cost of revenues. Additionally, we have reclassified credit card fees from General and Administrative to Cost of revenues. Separate from the cost of revenues matter, we have elected to remove our depreciation expense from each operating expense category and present depreciation expense in one distinct line item.
| 1/8/2010 Page 2 of 4 |
Before:
SPARK NETWORKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
| Years Ended December 31, | |||||||||||
| 2008 | 2007 | 2006 | |||||||||
Net revenues | $ | 57,266 | $ | 65,218 | $ | 68,853 | |||||
Direct marketing expenses | 15,010 | 21,095 | 24,574 | ||||||||
Contribution | 42,256 | 44,123 | 44,279 | ||||||||
Operating expenses: | |||||||||||
Sales & marketing | 4,236 | 3,626 | 2,890 | ||||||||
Customer service | 2,322 | 3,103 | 3,560 | ||||||||
Technical operations | 3,976 | 4,416 | 6,239 | ||||||||
Development | 4,513 | 4,249 | 4,766 | ||||||||
General & administrative | 15,748 | 21,848 | 18,923 | ||||||||
Amortization of intangible assets | 787 | 1,356 | 1,184 | ||||||||
Impairment of goodwill & long-lived assets | 1,354 | 1,894 | 114 | ||||||||
Total operating expenses | 32,936 | 40,492 | 37,676 | ||||||||
Operating income | 9,320 | 3,631 | 6,603 | ||||||||
Other (income)/expense and interest, net | 107 | (913 | ) | (696 | ) | ||||||
Income before income taxes | 9,213 | 4,544 | 7,299 | ||||||||
Provision (benefit) for income taxes | 4,425 | (4,434 | ) | 736 | |||||||
Net income | $ | 4,788 | $ | 8,978 | $ | 6,563 | |||||
Net income per share - basic and diluted | $ | 0.20 | $ | 0.31 | $ | 0.21 | |||||
Weighted average shares outstanding - basic | 23,637 | 29,218 | 30,580 | ||||||||
Weighted average shares outstanding - diluted | 23,640 | 29,250 | 31,248 | ||||||||
| 1/8/2010 Page 3 of 4 |
After:
SPARK NETWORKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
| Years Ended December 31, | |||||||||||
| 2008 | 2007 | 2006 | |||||||||
Net revenues | $ | 57,266 | $ | 65,218 | $ | 68,853 | |||||
Cost and expenses: | |||||||||||
Cost of revenues (exclusive of depreciation shown separately below) | 18,714 | 25,188 | 29,638 | ||||||||
Sales & marketing | 4,234 | 3,626 | 2,890 | ||||||||
Customer service | 2,319 | 3,018 | 3,214 | ||||||||
Technical operations | 1,917 | 1,893 | 2,317 | ||||||||
Development | 4,463 | 4,250 | 4,595 | ||||||||
General & administrative | 13,289 | 18,681 | 15,326 | ||||||||
Depreciation | 867 | 1,684 | 2,972 | ||||||||
Amortization of intangible assets | 787 | 1,356 | 1,184 | ||||||||
Impairment of goodwill & long-lived assets | 1,354 | 1,894 | 114 | ||||||||
Total operating expenses | 47,944 | 61,590 | 62,250 | ||||||||
Operating income | 9,322 | 3,628 | 6,603 | ||||||||
Other (income)/expense and interest, net | 106 | (912 | ) | (696 | ) | ||||||
Income before income taxes | 9,216 | 4,540 | 7,299 | ||||||||
Provision for income taxes | 4,425 | (4,434 | ) | 736 | |||||||
Net income | $ | 4,791 | $ | 8,974 | $ | 6,563 | |||||
Net income per share - basic and diluted | $ | 0.20 | $ | 0.31 | $ | 0.21 | |||||
Weighted average shares outstanding - basic | 23,637 | 29,218 | 30,580 | ||||||||
Weighted average shares outstanding - diluted | 23,640 | 29,250 | 31,248 | ||||||||
| 1/8/2010 Page 4 of 4 |
Should you have any questions or require any additional information, please contact the undersigned at (323) 658-3000 or by facsimile at (323) 658-3001.
Sincerely,
| Spark Networks, Inc. |
/s/ Joshua A. Kreinberg |
| Joshua A. Kreinberg, Esq. |
General Counsel
| cc: | Adam S. Berger, Spark Networks Inc., Chief Executive Officer |
Katherine J. Blair, Esq., K&L Gates LLP