Classmates.com 2008 Annual Report Download - page 10

Table of Contents
Broadband Internet access services, once characterized by high prices and a limited coverage area, are now available to most of the U.S.
population at prices that, in some cases, are equivalent to or lower than dial-up Internet access services. However, broadband continues to have a
lower penetration in rural areas when compared to urban and suburban areas, and numerous sources suggest that broadband access may not be as
available or affordable in rural areas. Many broadband providers, including cable companies such as Comcast and local exchange carriers such
as AT&T, bundle their offerings with phone, entertainment or other services, which may result in lower prices than stand-alone services. Pricing
in the broadband market varies based on the geographic region and speed of the service, among other factors, with introductory pricing for
slower speed services as low as $10 per month in certain areas.
There are numerous dial-up Internet access providers in the U.S. although a small number of national providers account for a significant
majority of the U.S. dial-up market, with AOL being the largest provider of dial-up Internet access services. The dial-up market has historically
been divided into premium-priced services and value-priced services although the distinction has become less apparent in recent years as the
industry's largest providers of premium-priced Internet access, AOL and EarthLink, now also offer value-priced services, either directly or
through related entities. In general, premium-priced services usually incorporate, in addition to Internet access and email, a number of
complementary features, while value-priced services incorporate a more limited set of features. The maturity of the dial-up Internet access
market has led the largest service providers in the U.S. market, including AOL, EarthLink and United Online, to reduce marketing and
investment spending and operate their dial-up businesses primarily for profitability and cash flow contributions.
Segment Services
FTD
FTD is a leading provider of floral and related products and services to consumers and retail florists, as well as to other retail locations
offering floral and related products and services, in the U.S., Canada, the U.K., and The Republic of Ireland. The business uses the highly
recognized FTD and Interflora brands, both supported by the Mercury Man logo. FTD is a nationwide floral marketer, which we refer to as
FTD's consumer business, and a provider of floral network services, which we refer to as FTD's florist business. These businesses are
complementary, as most floral orders generated by the consumer business are delivered by FTD's network of florist members. FTD does not own
or operate any retail locations. For additional information regarding our FTD segment, see Note 3—"Segment Information" of the Notes to the
Consolidated Financial Statements, which appears in Part II, Item 8 of this Annual Report on Form 10-K.
Consumer Businesses. FTD is an Internet and telephone marketer of flowers and specialty gift items to consumers. FTD operates in the
U.S. and Canada, primarily through the www.ftd.com Web site and 1-800-SEND-FTD toll-free telephone number, and in the U.K. and The
Republic of Ireland through the www.interflora.co.uk Web site and a toll-free telephone number. While floral arrangements and plants are FTD's
primary offerings, FTD also markets and sells other specialty gift items including: gourmet food, holiday gifts, bath and beauty products,
jewelry, wine and gift baskets, dried flowers, chocolates, and stuffed animals.
Consumers place orders at FTD's Web sites or, to a lesser extent, over the telephone. Orders either are transmitted to florists or third-party
specialty gift providers for processing and delivery, or are fulfilled by shipment directly to the consumer by our third-party suppliers. The
majority of consumer orders are delivered by FTD's network of florist members and the remainder are shipped by third-parties. In general, FTD
does not maintain physical inventory or bear the cost of warehousing and distribution facilities. In addition, consumers generally pay for floral
and specialty gift orders before FTD pays florists and specialty gift providers to deliver them. Additionally, our members and direct
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