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UNITED ONLINE INC
FORM 10-K
(Annual Report)
Filed 02/23/10 for the Period Ending 12/31/09
Address 21301 BURBANK BOULEVARD
WOODLAND HILLS, CA 91367
Telephone 8182873000
CIK 0001142701
Symbol UNTD
SIC Code 7370 - Computer Programming, Data Processing, And
Industry Computer Services
Sector Technology
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2010, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ... ONLINE INC FORM 10-K (Annual Report) Filed 02/23/10 for the Period Ending 12/31/09 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 21301 BURBANK BOULEVARD WOODLAND HILLS, CA 91367 8182873000 0001142701 UNTD 7370 - Computer Programming, Data Processing, And Computer Services...

  • Page 2
    ... file number 000-33367 UNITED ONLINE, INC. (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 21301 Burbank Boulevard Woodland Hills, California (Address of principal executive office) (818) 287-3000 (Registrant's telephone...

  • Page 3
    ... by check mark whether the Registrant is a shell company (as defined in Rule 12b-2) of the Act). Yes 1 At June 30, 2009, the aggregate market value of voting stock held by non-affiliates of the Registrant, based on the last reported sales price of the Registrant's common stock on such date reported...

  • Page 4
    ... 84 85 Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services 86 86...

  • Page 5
    ...via our Internet Web sites and toll-free telephone numbers and, to a lesser extent, to our floral network members. We generally do not maintain physical inventory or bear the cost of warehousing our consumer product offerings, and we generally receive payment from consumers before paying florists or...

  • Page 6
    Table of Contents product orders. Our Classmates Media and Communications segments do not generate products revenues. • Advertising revenues. Advertising revenues are derived from a wide variety of advertising, marketing and media-related initiatives in each of our operating segments. Industry ...

  • Page 7
    ... business, including the ability to send, receive and deliver floral orders. Additional products and services offered by providers of floral network services include: point-of-sale technology systems and services, credit card processing services, ecommerce Web site services, and telephone answering...

  • Page 8
    ... well as our Classmates Web site and our international social networking Web sites, also generate revenues from paid subscriptions from members interested in premium services. Classmates Media Segment-Online Loyalty Marketing The Internet has been a growing channel for advertising and for consumers...

  • Page 9
    ...in Part II, Item 8 of this Annual Report on Form 10-K. Consumer Business. FTD is a leading 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...

  • Page 10
    ... network members include: access to the FTD and Interflora brands and the Mercury Man logo, supported by various marketing and advertising campaigns; access to the floral network; credit card processing services; e-commerce Web site services; online advertising tools; and telephone answering, order...

  • Page 11
    ... social networking pay accounts at December 31, 2009. During the quarter ended December 31, 2009, our average monthly revenue per social networking pay account was $2.53 per month. Basic Membership. Basic membership on our Classmates Web site is free and provides members with access to a number...

  • Page 12
    ... on schools. We offer free and pay memberships on all of our international Web sites, although certain features of our international social networking pay services differ from those of our Classmates pay services and pricing for our international social networking services is generally lower...

  • Page 13
    ... their name, zip code, gender, date of birth, and an email address to register. Members register to receive direct email marketing and other online loyalty promotions, and earn points for responding to email offers, taking market research companies' surveys, shopping online at the MyPoints Web site...

  • Page 14
    ... network, credit card processing services, e-commerce Web site services, online advertising tools, telephone answering, order-taking, transmission and clearing-house services. Classmates Media and Communications Classmates Media services revenues consist of amounts charged to pay accounts for social...

  • Page 15
    ...ftd.com , www.interflora.co.uk and www.interflora.ie Web sites. Classmates Media Our social networking services have historically generated advertising revenues primarily from providing third-party offers to Classmates paying members after they have completed the pay account registration process and...

  • Page 16
    ... pay services to the free member. We have also increased the number of social networking members who have signed up for our free services organically (without incurring online advertising expenditures to attract them) in recent years, primarily through enhancements to our Web sites to improve search...

  • Page 17
    ... for direct sales of floral and specialty gifts through our Web sites and toll-free telephone numbers. In the floral network services market, retail florists and supermarkets are our principal customers for memberships and subscriptions to our various floral network services, including access to the...

  • Page 18
    ... Web sites continue to grow, users may be able to locate individuals from their past, free of charge in certain cases, without having to use a niche Web site or other online search service. As a result of the growth of the social networking market and minimal barriers to entry, a number of companies...

  • Page 19
    ... on our online social networking services revenues. There can be no assurance that these seasonal trends will continue in the future. Billing Orders placed through FTD's consumer Web sites or toll-free telephone numbers typically are paid for using a credit card or a debit card; therefore, consumers...

  • Page 20
    ... to offer new pay services or alternative payment plans is dependent on our ability to customize our billing systems. Customer Support and Retention We believe reliable customer service and technical support are important to retaining our customers. Our businesses generally offer a variety of online...

  • Page 21
    ... information about executive officers of the Registrant. Available Information Our corporate Web site is www.unitedonline.com . On this Web site, we make available, free of charge, our annual, quarterly and current reports (including all amendments to such reports), changes in the stock ownership of...

  • Page 22
    ... , www.stayfriends.de , www.stayfriends.at , www.stayfriends.ch , www.trombi.com , and www.mypoints.com, we do not incorporate these Web sites or their contents into this Annual Report on Form 10-K. ITEM 1A. RISK FACTORS RISKS RELATING TO OUR BUSINESS GENERALLY Current or future economic conditions...

  • Page 23
    ... access pay accounts. In addition, our Communications segment has derived significant advertising revenues from search, and we are in the process of changing Internet search providers. Changes to the terms of our search agreement or difficulties or delays with the transition of our new search...

  • Page 24
    ... credit card processors. Key systems include, without limitation, billing; Web site and database management; order transmission, fulfillment and processing including the system for transmitting orders through the floral network; customer support; telecommunications network management; advertisement...

  • Page 25
    ... impairment of relationships with users, customers or vendors as a result of changes in management of the acquired business or other factors; large write-offs either at the time of the acquisition or in the future, the incurrence of restructuring charges, the amortization of identifiable intangible...

  • Page 26
    ...future, assert claims, institute legal actions, inquiries or investigations, or impose obligations relating to our business practices, such as our marketing, billing, customer retention, renewal, cancelation, refund, or disclosure practices. As discussed in the risk factor related to changes in laws...

  • Page 27
    ... a key reason why members use our online social networking services. Our FTD segment generates a significant portion of its consumer orders from the emails we send to customers who have previously ordered products from us. We also engage in a number of third-party email marketing campaigns in which...

  • Page 28
    ... growth rates of certain reporting units or other factors are not achieved or are revised downward, we may be required to record additional impairment charges in future periods. In addition, from time to time, we record tangible or intangible assets on our balance sheet that, due to changes in value...

  • Page 29
    ... our business, financial condition, results of operations, and cash flows. We are subject to a variety of international, federal, state, and local laws and regulations, including, without limitation, those relating to taxation, bulk email or "spam," advertising, user privacy and data protection...

  • Page 30
    ...our revenues and increase the costs of operating our business. To the extent that our services and business practices change as a result of claims or actions by governmental agencies, changes in laws and regulations, or claims or actions by private parties, our business, financial condition, results...

  • Page 31
    ... terms, our businesses and future prospects may suffer. We may stop paying, or reduce, quarterly cash dividends on our common stock. The payment of future dividends is discretionary and is subject to determination by our Board of Directors each quarter following its review of our financial condition...

  • Page 32
    ...and specialty gifts through our Web sites and toll-free telephone numbers. In the floral network services market, retail florists and supermarkets are our principal customers for memberships and subscriptions to our various floral network services including, among other things, access to the FTD and...

  • Page 33
    ...level of customer service. Our business depends, in part, on the ability of our independent floral network members and third-party suppliers who fulfill our orders to do so at high-quality levels. We work with our floral network members and third-party suppliers to develop best practices for quality...

  • Page 34
    ...with current industry practice by international floral and specialty gift direct marketers and our interpretation of applicable law, we collect and remit value-added taxes on certain consumer orders placed through Interflora. Future changes in the operation of our Interflora business could result in...

  • Page 35
    ... Web sites continue to grow, users may be able to locate individuals from their past, free of charge in certain cases, without having to use a niche Web site or other online search service. As a result of the growth of the social networking market and minimal barriers to entry, a number of companies...

  • Page 36
    ... registered or active free social networking members, or a decline in the activity of those members, could result in decreased pay accounts, decreased content on our Web sites and decreased advertising revenues. A decline in the number of registered or active online loyalty marketing service members...

  • Page 37
    ... our Communications services revenues, advertising revenues, and the profitability of this segment will continue to decline over time. The number of dial-up Internet access pay accounts has been adversely impacted by both a decrease in the number of new pay accounts signing up for our services as...

  • Page 38
    ...our corporate and operations facilities, customer support and technology centers or for any additional sales offices. For additional information regarding our obligations under leases, see Note 15-"Commitments and Contingencies" to our Consolidated Financial Statements included in this Annual Report...

  • Page 39
    ... 300 other suits filed against more than 300 issuers that conducted their initial public offerings between 1998 and 2000, their underwriters and an unspecified number of their individual corporate officers and directors. The parties in the approximately 300 coordinated class actions, including...

  • Page 40
    ... in accordance with the General Corporation Law of the State of Delaware. Common Stock Repurchases United Online, Inc.'s Board of Directors authorized a common stock repurchase program (the "program") that allows us to repurchase shares of our common stock through open market or privately negotiated...

  • Page 41
    ... of those shares with a fair market value equal to the amount of the employee withholding taxes due, which is accounted for as a repurchase of common stock. We then pay the applicable withholding taxes in cash. Common stock repurchases during the quarter ended December 31, 2009 were as follows (in...

  • Page 42
    ... of United Online, Inc. under the Securities Act of 1933, as amended, or the Exchange Act. The following graph compares, for the five-year period ended December 31, 2009, the cumulative total stockholder return for the Company's common stock, The Nasdaq Global Select Market (U.S. companies) Index...

  • Page 43
    ... statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report on Form 10-K. The following table presents the consolidated statements of operations data for the years ended December 31, 2009, 2008 and...

  • Page 44
    ... are online social networking and online loyalty marketing. Our primary Communications segment services are Internet access and email. On a combined basis, our Web properties attract a significant number of Internet users, and we offer a broad range of Internet marketing services for advertisers...

  • Page 45
    ... Canada, primarily from the www.ftd.com Web site and the 1-800-SEND-FTD telephone number, and in the U.K. and the Republic of Ireland, primarily from the www.interflora.co.uk and www.interflora.ie Web sites and a toll-free telephone number. Orders originating with a florist or other retail location...

  • Page 46
    ... online loyalty marketing members who have earned or redeemed points during such period. Communications segment active accounts include all Communications segment pay accounts as of the date presented combined with the number of free Internet access and email accounts that logged on to our services...

  • Page 47
    ... by international social networking pay accounts which, on average, have lower-priced subscription plans compared to U.S. social networking pay accounts, and the churn rate. Quarter Ended June 30, 2009 December 31, 2009 September 30, 2009 March 31, 2009 December 31, 2008 Consolidated: Revenues...

  • Page 48

  • Page 49
    ... Services revenues for our online social networking services and Communications services are recognized in the period in which fees are fixed or determinable and the related services are provided to the customer. Our pay accounts generally pay in advance for their service by credit card, and revenue...

  • Page 50
    ...and market comparison approaches. Some of the more significant estimates and assumptions inherent in the two approaches include: projected future cash flows (including timing); discount rate reflecting the risk inherent in the future cash flows; terminal growth rate; subscriber churn; terminal value...

  • Page 51
    ... Online, MyPoints, and Communications-for purposes of evaluating goodwill. These reporting units each constitute a business or group of businesses for which discrete financial information is available and is regularly reviewed by segment management. The goodwill related to our acquired businesses...

  • Page 52
    ... a number of factors, including projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions. Under the market approach, using the guideline company method, a reporting unit's fair value is estimated based on multiples of the cash-free market...

  • Page 53
    ... but are not limited to, future operating performance and cash flows, cost of capital, terminal values, and remaining economic lives of assets. Member Redemption Liability Member redemption liability for online loyalty marketing points represents the estimated costs associated with the obligation of...

  • Page 54
    ...card processing services, e-commerce Web sites services, online advertising tools, and telephone answering, order-taking, transmission, and clearing-house services. Classmates Media and Communications Classmates Media services revenues consist of amounts charged to pay accounts for social networking...

  • Page 55
    ...ftd.com , www.interflora.co.uk and www.interflora.ie Web sites. Classmates Media Our online social networking services have historically generated advertising revenues primarily from providing third-party offers to Classmates members after they have completed the pay account registration process and...

  • Page 56
    ... and promotion expenses; fees paid to distribution partners, third-party advertising networks and co-registration partners to acquire new pay and free accounts; personnel and overhead-related expenses for marketing, merchandising, customer service, and sales personnel; and telemarketing costs...

  • Page 57
    ... certain legal settlements or reserves. Amortization of Intangible Assets Amortization of intangible assets principally includes amortization of: acquired pay accounts and free accounts; certain acquired trademarks and trade names; purchased software and technology; acquired customer and advertising...

  • Page 58
    ... Media Communications Year Ended December 31, 2009 2008 2007 Year Ended December 31, 2009 2008 2007 Revenues: Services $ Products Advertising Total revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Restructuring charges...

  • Page 59
    assets Total operating expenses Segment income (loss) from operations - 175,867 - - - - 283 - 468,917 331,370 177,229 182,926 165,242 141,288 178,248 223,010 $ 76,928 $ (149,405) $ 58,793 $ 47,309 $ 28,177 56 69,945 $ 79,190 $ 97,074

  • Page 60
    ... was as follows for each period presented (in thousands): Year Ended December 31, 2008 2007 2009 Segment revenues: FTD Classmates Media Communications Intersegment eliminations Consolidated revenues $ 545,845 $ 181,965 $ - 236,022 230,235 193,419 211,233 257,438 320,084 (2,968) (235) - $ 990...

  • Page 61
    ... of consolidated revenues for the years ended December 31, 2009 and 2008. Year Ended December 31, 2009 2008 Revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Amortization of intangible assets Restructuring charges Impairment...

  • Page 62
    ... Communications segments constituted 79.4%, 8.6% and 12.0%, respectively, of our total segment cost of revenues for the year ended December 31, 2009, compared to 52.0%, 19.9% and 28.1%, respectively, for the year ended December 31, 2008. Sales and Marketing Expenses. Consolidated sales and marketing...

  • Page 63
    ... 31, 2009 whereas such expenses were included only from August 26, 2008 (date of acquisition) in the prior-year period. The increase was partially offset by decreases in general and administrative expenses associated with our Communications and Classmates Media segments. Consolidated general and...

  • Page 64
    ... public filings of FTD Group, Inc. are available at the SEC's Web site at www.sec.gov . Year Ended December 31, 2008 (Combined) 2009 % Change (in thousands, except average order value and average currency exchange rates) Revenues Operating expenses: Cost of revenues Sales and marketing Technology...

  • Page 65
    ... a decrease in sales of products and services to our floral network members. In the fourth quarter of 2009, the FTD segment achieved a year-over-year increase in revenues for the first time since the acquisition and, despite the expected decrease in advertising revenues due to the termination of the...

  • Page 66
    ... a percentage of Classmates Media revenues for the years ended December 31, 2009 and 2008. Year Ended December 31, 2009 2008 Revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Restructuring charges Total operating expenses Segment...

  • Page 67
    ...2009, this increase was largely due to an increase in our offerings of discounted pricing plans, with a significant number of the new pay accounts generated during the period under this promotional pricing, resulting in a decrease in the churn rate. The increase in Classmates Media services revenues...

  • Page 68
    ... December 31, 2009, compared to $257.4 million for the year ended December 31, 2008. The decrease in Communications revenues was primarily due to a $43.2 million decrease in services revenues as a result of a 24% decrease in our average number of dial-up Internet access pay accounts from 1.6 million...

  • Page 69
    ... costs. In addition, Communications cost of revenues decreased as a result of a $2.8 million decrease in customer support- and billing-related costs due to a decrease in the number of dial-up Internet access pay accounts, a $0.7 million decrease in costs associated with our Web hosting business...

  • Page 70
    ... of consolidated revenues for the years ended December 31, 2008 and 2007. Year Ended December 31, 2008 2007 Revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Amortization of intangible assets Restructuring charges Impairment...

  • Page 71
    ... August 26, 2008 (date of acquisition) and, to a lesser extent, an increase in sales and marketing expenses associated with our Classmates Media segment, partially offset by a decrease in expenses in the Communications segment. The decrease as a percentage of consolidated revenues was primarily due...

  • Page 72
    ...align the Communications segment's cost structure within a mature business for dial-up Internet access services. In addition, we recognized $0.4 million in restructuring charges in the year ended December 31, 2007 for termination benefits paid to certain employees associated with our Web hosting and...

  • Page 73
    ... online social networking pay accounts. The increase in Classmates Media revenues was also due to a $3.9 million increase in advertising revenues as a result of increased advertising revenues associated with our online loyalty marketing and international online social networking services, partially...

  • Page 74
    ...marketing costs related to acquiring new online social networking and online loyalty marketing members, partially offset by a $0.3 million decrease in personnel- and overhead-related expenses. The decrease as a percentage of Classmates Media revenues was mainly due to lower customer acquisition cost...

  • Page 75
    ... this business in the third quarter of 2007. These decreases were partially offset by a $6.0 million increase in costs associated with our broadband services due to an increase in the number of broadband pay accounts. Communications Sales and Marketing Expenses. Communications sales and marketing...

  • Page 76
    ... in consulting fees. The increase as a percentage of revenues was largely attributable to continued declines in revenues as a result of continuing declines in the number of dial-up Internet access pay accounts. Communications Restructuring Charges. Communications restructuring charges totaled...

  • Page 77
    .... Historical public filings of FTD Group, Inc. are available at the SEC's Web site at www.sec.gov . Year Ended December 31, 2008 2007 % Change (in thousands, except average order value and average currency exchange rates) Revenues Operating expenses: Cost of revenues Sales and marketing Technology...

  • Page 78
    ... million shares of United Online common stock, subject to the payment of cash in lieu of fractional shares of United Online, Inc. common stock. The FTD acquisition was funded, in part, with the net proceeds from (i) a $60 million term loan under a senior secured credit agreement with Silicon Valley...

  • Page 79
    ... million outstanding principal amount of FTDI Notes, which purchased FTDI Notes were canceled. Substantially concurrently with the closing of the FTD acquisition, we effected a covenant defeasance with respect to the balance of the FTDI Notes pursuant to the terms of the indenture governing the FTDI...

  • Page 80
    ...in deferred revenue in 2009, compared to the prior-year period, resulting from an increase in the number of pay accounts with discounted promotional pricing plans in our Classmates Media segment as well as a reduction in the number of pay accounts with longer-term plans in our Communications segment...

  • Page 81
    ... The payment of future dividends is discretionary and is subject to determination by United Online, Inc.'s Board of Directors each quarter following its review of our financial performance and other factors. In accordance with the terms of the FTD Credit Agreement, cash flows at FTD will, in general...

  • Page 82
    ... and stock awards to pay the employee withholding taxes due on vested restricted stock units and stock awards issued; the repurchase of our common stock under the program; and future capital expenditures. Under the terms of the UOL Credit Agreement and the FTD Credit Agreement, there are significant...

  • Page 83
    ... in excess tax benefits from equity awards. In 2008, prior to the closing of the FTD acquisition, we paid quarterly cash dividends of $0.20 per share of common stock for a total of $44.4 million. Following the closing of the FTD acquisition, United Online, Inc.'s Board of Directors decreased our...

  • Page 84
    ... at declining levels through the terms of the related leases. In addition, standby letters of credit are maintained by FTD to secure credit card processing activity. Other Commitments In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors...

  • Page 85
    ...or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources. Recent Accounting Pronouncements Revenue Recognition -In October 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-13, Revenue Recognition...

  • Page 86
    ... in an annual increase in our interest expense related to our debt of approximately $3.3 million. Prior to 2009, we had interest rate risk related to our short-term investments portfolio. As a result, we were exposed to the impact of interest rate changes and changes in the market values of our...

  • Page 87
    ... may negatively affect our consolidated revenues and expenses. A 10% adverse change in overall foreign currency exchange rates over an entire year would result in a reduction of reported annual revenues of approximately $17.1 million and a reduction of reported annual income before income taxes of...

  • Page 88
    ...at December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein. Changes in Internal Control Over Financial Reporting There have not been any changes in the Company's internal control over financial...

  • Page 89
    ...at Fiscal Year-End"; "Option Exercises and Stock Vested"; "Director Summary Compensation Table"; "Compensation Committee Interlocks and Insider Participation"; and "Compensation Committee Report". ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS...

  • Page 90
    ... are required to make the statements in this Form 10-K not misleading. Additional information about the Company may be found elsewhere in this Annual Report on Form 10-K and in the Company's other public filings, which are available without charge through the SEC's Web site at www.sec.gov. 87

  • Page 91
    ... this Form 10-K Incorporated by Reference to Form File No. Date Filed 2.1 Stock Purchase Agreement, dated as of April 9, 2006, by and between United Online, Inc. and UAL Corporation 2.2 Agreement and Plan of Merger, dated April 30, 2008, among United Online, Inc., UNOLA Corp. and FTD Group, Inc...

  • Page 92
    ... of Option Agreement for Classmates Online, Inc. 2004 Stock Plan 10.15 Amended and Restated United Online, Inc. Severance Benefit Plan 10.16 Employment Agreement between the Registrant and Mark R. Goldston 10.17 First Amendment to Employment Agreement between the Registrant and Mark R. Goldston 10...

  • Page 93
    ...Employment Agreement between the Registrant and Charles B. Ammann 10.39 Restricted Stock Unit Issuance Agreement(s) Amendment Agreement between United Online, Inc. and Mark R. Goldston 10.40 Restricted Stock Unit Issuance Agreement Amendment Agreement between United Online, Inc. and Mark R. Goldston...

  • Page 94
    ... Jordan 10.46 Restricted Stock Unit Issuance Agreement(s) Amendment Agreement between United Online, Inc. and Robert J. Taragan 10.47 United Online, Inc. 2009 Management Bonus Plan 10.48 Office Lease between LNR Warner Center, LLC and NetZero, Inc. 10.49 Commitment Letter, dated April 30, 2008, from...

  • Page 95
    ... Filed with this Form 10-K Incorporated by Reference to Form File No. Date Filed 31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the SarbanesOxley Act of 2002 32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the SarbanesOxley Act of 2002 32...

  • Page 96
    ... 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 23, 2010. UNITED ONLINE, INC. By: /s/ MARK R. GOLDSTON Mark R. Goldston Chairman, President and Chief Executive Officer KNOW ALL...

  • Page 97
    Table of Contents Signature Title Date /s/ KENNETH L. COLEMAN Director Kenneth L. Coleman /s/ DENNIS HOLT Director Dennis Holt /s/ HOWARD G. PHANSTIEL Director Howard G. Phanstiel /s/ CAROL A. SCOTT Director Carol A. Scott 94 February 23, 2010 February 23, 2010 February 23, 2010 February 23, 2010

  • Page 98
    ... found elsewhere in this Annual Report on Form 10-K and in the Company's other public filings, which are available without charge through the SEC's Web site at www.sec.gov. No. Exhibit Description Filed with this Form 10-K Incorporated by Reference to Form File No. Date Filed 2.1 Stock Purchase...

  • Page 99
    ...Option Agreement for Classmates Online, Inc. 2004 Stock Plan Amended and Restated United Online, Inc. Severance Benefit Plan Employment Agreement between the Registrant and Mark R. Goldston First Amendment to Employment Agreement between the Registrant and Mark R. Goldston...27/2009 2/27/2009 5/12/2008...

  • Page 100
    ... to Form File No. Date Filed 10.20 Amended and Restated Employment Agreement between Classmates Media Corporation and Mark R. Goldston 10.21 Employment Agreement between the Registrant and Jeremy E. Helfand 10.22 First Amendment to Employment Agreement between Registrant and Jeremy E. Helfand 10...

  • Page 101
    ...No. Date Filed 10.38 Employment Agreement between the Registrant and Charles B. Ammann 10.39 Restricted Stock Unit Issuance Agreement(s) Amendment Agreement between United Online, Inc. and Mark R. Goldston 10.40 Restricted Stock Unit Issuance Agreement Amendment Agreement between United Online, Inc...

  • Page 102
    ... 11, 2008, among United Online, Inc., the lenders party thereto from time to time and Silicon Valley Bank, as administrative agent 21.1 List of Subsidiaries 23.1 Consent of Independent Registered Public Accounting Firm 24.1 Power of Attorney (see signature page of this Annual Report on Form 10-K) 31...

  • Page 103
    ...Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial...

  • Page 104
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was...

  • Page 105
    ... of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree...

  • Page 106
    ... Deferred revenue Long-term debt, net of discounts Deferred tax liabilities, net Other liabilities Total liabilities Commitments and contingencies (see Note 15) Stockholders' equity: Preferred stock, $0.0001 par value; 5,000 shares authorized; no shares issued or outstanding at December 31, 2009 and...

  • Page 107
    ... of Contents UNITED ONLINE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Year Ended December 31, 2008 2007 2009 Revenues: Services Products Total revenues Operating expenses: Cost of revenues-services Cost of revenues-products Sales and marketing Technology...

  • Page 108
    ... of Contents UNITED ONLINE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2008 2007 2009 Net income (loss) Change in unrealized gain (loss) on short-term investments, net of tax of $0, $(102) and $184 for the years ended December 31, 2009, 2008...

  • Page 109
    ... of common stock in connection with acquisition Dividends paid on shares outstanding and restricted stock units Dividends payable on restricted stock units Stock-based compensation Change in unrealized loss on short-term investments, net of tax Change in unrealized loss on interest rate cap, net...

  • Page 110
    Net income Balance at December 31, 2009 - 84,958 $ - 8 $ - 518,580 $ - (26,963 ) $ 70,085 (58,974) $ 70,085 432,651 The accompanying notes are an integral part of these consolidated financial statements. F-7

  • Page 111
    ...debt issue costs Proceeds from exercises of stock options Proceeds from employee stock purchase plan Repurchases of common stock Payments for dividends Excess tax benefits from equity awards Net cash provided by (used for) financing activities Effect of foreign currency exchange rate changes on cash...

  • Page 112
    ...Company's primary Communications services are Internet access and email. On a combined basis, the Company's Web properties attract a significant number of Internet users and the Company offers a broad array of Internet marketing services for advertisers. United Online, Inc. is a Delaware corporation...

  • Page 113
    ... are derived primarily from revenue earned from advertising customers and floral network members located in the United States and the United Kingdom, and pay accounts. The Company extends credit based upon an evaluation of the customer's financial condition and, generally, collateral is not required...

  • Page 114
    ... available, the Company uses quoted market prices to measure fair value. If market prices are not available, fair value measurement is based upon models that use primarily market-based or independently-sourced market parameters. If market observable inputs for model-based valuation techniques are...

  • Page 115
    ...about Fair Value of Financial Instruments . Fair value of long-term debt is estimated based on the discounted cash flow method. Business Combinations -All of the Company's acquisitions occurred prior to the effective date of ASC 805, Business Combinations and, accordingly, have been accounted for as...

  • Page 116
    ... , which addresses financial accounting and reporting for the impairment and disposition of identifiable intangible assets and other long-lived assets. Intangible assets acquired in a business combination are initially recorded at management's estimate of their fair values. The Company evaluates the...

  • Page 117
    ...UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS (Continued) management or other personnel, significant negative industry or economic trends, changes in the Company...

  • Page 118
    ... Company's online social networking services and for Communications services are recognized in the period in which fees are fixed or determinable and the related services are provided to the customer. The Company's pay accounts generally pay in advance for their services by credit card, and revenue...

  • Page 119
    ...; costs related to providing telephone support; customer billing and billing support for the Company's pay accounts and floral network members; fees associated with the storage and processing of customer credit cards and associated bank fees; and domain name registration fees. Sales and Marketing...

  • Page 120
    ... in various office locations, and the costs associated with operating the Company's facility in India. Costs incurred by the Company to manage and monitor the Company's technology and development activities are expensed as incurred. Costs relating to the acquisition and development of internal-use...

  • Page 121
    ... fees for legal, accounting and financial services; insurance; occupancy and other overhead-related costs; office relocation costs; non-income taxes; and expenses incurred and credits received as a result of certain legal settlements or reserves. Stock-Based Compensation -The Company follows...

  • Page 122
    ... are generally not included in the initial lease term. Recent Accounting Pronouncements Revenue Recognition -In October 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-13, Revenue Recognition- Multiple Deliverable Revenue Arrangements, as codified in ASC 605. This update addresses...

  • Page 123
    ... on its consolidated financials statements. 2. SEGMENT INFORMATION Segment revenues and segment income (loss) from operations were as follows (in thousands): Year Ended December 31, 2009 Classmates Media Communications FTD Total Services Products Advertising Total segment revenues Segment income...

  • Page 124
    ... UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SEGMENT INFORMATION (Continued) A reconciliation of segment revenues to consolidated revenues was as follows for each period presented (in thousands): Year Ended December 31, 2008 2007 2009 Segment revenues: FTD...

  • Page 125
    ... (in thousands): December 31, 2008 2009 2007 United States Europe Total long-lived assets $ 71,280 $ 76,436 $ 47,054 9,204 6,952 399 $ 80,484 $ 83,388 $ 47,453 The Company manages its working capital on a consolidated basis. In addition, segment assets are not reported to, or used by, the...

  • Page 126
    ... The changes in goodwill by reportable segment for the years ended December 31, 2008 and 2009 were as follows (in thousands): Classmates Media Communications FTD Total Balance at January 1, 2008: Goodwill (excluding impairment charges) Accumulated impairment charges Goodwill FTD acquisition...

  • Page 127
    ... assets consisted of the following (in thousands): December 31, 2009 Accumulated Amortization Gross Value Net Pay accounts and free accounts Customer contracts and relationships Trademarks and trade names Software and technology Patents, domain names and other Total $ 100,825 $ 112,575 184,020...

  • Page 128
    ... UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. CREDIT AGREEMENTS (Continued) borrowed $60 million thereunder. The net proceeds of the term loan under the UOL Credit Agreement were used to finance, in part, the acquisition of FTD. The term loan under the UOL Credit...

  • Page 129
    ...UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. CREDIT AGREEMENTS (Continued) dividends, asset sales, and the incurrence of additional debt and liens. Impairment charges recorded by the Company do not impact covenants contained in the FTD Credit Agreement. The changes...

  • Page 130
    F-26

  • Page 131
    ...Contents UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. CREDIT AGREEMENTS (Continued) UOL Credit Agreement (commencing in the second quarter of 2009). Subject to certain exceptions, FTD Group, Inc. is required to make annual prepayments of a portion of the term loans...

  • Page 132
    ... at the close of business on that date. Each right entitles the registered holder to purchase from the Company one unit consisting of one one-thousandth of a share of its Series A junior participating preferred stock at a price of $25 per unit. On April 29, 2003, the Board of Directors voted to...

  • Page 133
    ... with a par value of $0.0001, of which 300,000 shares are designated as Series A junior participating preferred stock. At December 31, 2009 and 2008, the Company had no preferred shares issued or outstanding. Common Stock Repurchases United Online, Inc.'s Board of Directors authorized a common...

  • Page 134
    ... determination by United Online, Inc.'s Board of Directors each quarter following its review of the Company's financial performance and other factors. Dividends are declared and paid out of the Company's surplus, as defined and computed in accordance with the General Corporation Law of the State of...

  • Page 135
    ... of employment. Stock options granted to non-employee directors generally vest over a nine-month to three-year period, either monthly or annually. Stock option grants expire after ten years unless canceled earlier due to termination of employment or Board of Directors service. Certain stock option...

  • Page 136
    ... Committee of the Board of Directors of United Online, Inc. (the "Compensation Committee") approved grants of 1.0 million restricted stock units with a grant-date fair value equal to $6.5 million to certain members of the Company's senior management. Each restricted stock unit entitles the recipient...

  • Page 137
    ...of the Board of Directors of United Online, Inc. approved grants of 1.2 million restricted stock units with a grant-date fair value equal to $7.7 million to certain of the Company's non-executive officer employees. The restricted stock units will vest as to twenty-five percent of the total number of...

  • Page 138
    Table of Contents UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. STOCK-BASED COMPENSATION PLANS (Continued) Stock Options The following table summarizes stock option activity during the years ended December 31, 2007, 2008 and 2009: WeightedAverage Remaining ...

  • Page 139
    ... the expected term. The Company determines the expected dividend yield percentage by dividing the expected annual dividend by the closing market price of United Online, Inc. common stock at the date of grant. For the years ended December 31, 2009, 2008 and 2007, the Company recognized $2.8 million...

  • Page 140
    ... 31, 2008 2007 2009 Federal taxes at statutory rate of 35% State taxes, net Nondeductible executive compensation Goodwill impairment Effects of foreign income Foreign distribution Foreign tax credit Changes in uncertain tax positions Changes in valuation allowance Benefits of tax exempt income...

  • Page 141
    ...UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. INCOME TAXES (Continued) The significant components of net deferred tax balances were as follows (in thousands): December 31, 2009 2008 Deferred tax assets: Net operating loss and foreign tax credits carryforwards Stock...

  • Page 142
    Table of Contents UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. INCOME TAXES (Continued) The changes in gross unrecognized tax benefits for the years ended December 31, 2009, 2008 and 2007 were as follows, excluding interest and penalties (in thousands): Balance at ...

  • Page 143
    ... 2007, the Company eliminated 69 positions and recorded restructuring charges totaling $3.0 million for employee termination benefits within its Communications segment to better align the segment's cost structure within a mature business for dial-up Internet access services. All costs related to the...

  • Page 144
    ... international floral market experiencing growth in the Internet sector. Expanded Marketing Opportunities and Efficiencies, resulting from the Company's marketing expertise to attract consumers to FTD's Web sites and thousands of floral network members while cross-selling FTD products and services...

  • Page 145
    ... United Online, Inc.'s election to substitute additional cash in lieu of seller notes as merger consideration. The purchase price for the acquisition was allocated to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the Closing Date. The Company...

  • Page 146
    ...Charge As discussed in Note 13, the Company acquired the FTD and Interflora trademarks and trade names in the FTD acquisition. These were recorded at their estimated fair value of $229.8 million as of the Closing Date. Due to the proximity of the Closing Date to the annual impairment assessment date...

  • Page 147
    ... to the significant excess of fair value over carrying value of the Classmates Online, MyPoints and Communications reporting units at the annual impairment assessment date, the Company determined that an interim impairment assessment was not required for these reporting units. However, in order to...

  • Page 148
    ..., generally, at declining levels through the terms of the related leases. Certificates of deposit of $1.1 million and $1.9 million maintained by the Company in connection with certain of these standby letters of credit are included in other current assets and other assets in the consolidated balance...

  • Page 149
    ... clauses. Legal Contingencies In April 2001 and in May 2001, lawsuits were filed in the United States District Court for the Southern District of New York against NetZero, Inc. ("NetZero"), certain officers and directors of NetZero and the underwriters of NetZero's initial public offering, Goldman...

  • Page 150
    ... 300 other suits filed against more than 300 issuers that conducted their initial public offerings between 1998 and 2000, their underwriters and an unspecified number of their individual corporate officers and directors. The parties in the approximately 300 coordinated class actions, including...

  • Page 151
    ... of Contents UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 16. QUARTERLY FINANCIAL DATA (UNAUDITED) (in thousands, except per share data) Quarter Ended September 30, June 30, December 31, March 31, Year ended December 31, 2009: Revenues Cost of revenues Operating...

  • Page 152
    ...UNITED ONLINE, INC. SCHEDULE I-CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY BALANCE SHEETS (in thousands) December 31, 2009...Intercompany payables Long-term debt Total current liabilities Long-term debt Total liabilities ... notes are an integral part of these financial statements. F-48

  • Page 153
    ...Contents UNITED ONLINE, INC. PARENT COMPANY STATEMENTS OF OPERATIONS (in thousands) Year Ended December 31, 2008 2007 2009 Revenues Operating expenses: General and... 69,456 (98,312) 52,664 $ 70,085 $ (94,657) $ 57,777 The accompanying notes are an integral part of these financial statements. F-49

  • Page 154
    ... from sales of short-term investments Cash paid for acquisitions, net of cash acquired Net cash provided by (used for) investing activities Cash flows from financing activities: Proceeds from term loan Payments on term loan Payments for debt issue costs Proceeds from exercises of stock options...

  • Page 155
    ... position at December 31, 2009 and 2008. In these statements, the Parent Company's investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date the Parent Company began consolidating them ("date of acquisition"). The Parent Company's share of net...

  • Page 156
    ...UNITED ONLINE, INC. SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (in thousands) Charged (Credited) to Other Accounts Balance at Beginning of Period Additions Charged to Expense Charges Utilized (Write-offs) Balance at End of Period Allowance for doubtful accounts: Year ended December 31, 2009...

  • Page 157

  • Page 158
    Exhibit 10.15 AMENDED AND RESTATED UNITED ONLINE, INC. SEVERANCE BENEFIT PLAN AND SUMMARY PLAN DESCRIPTION Amended and Restated Effective January 1, 2010

  • Page 159
    ... Benefit Plan (the " Plan ") supersedes all obligations, agreements or policies regarding severance pay, except such terms as are set forth in a written agreement signed by an authorized officer of the Company or one of its subsidiaries and in effect at the time of the applicable termination...

  • Page 160
    ... the Internal Revenue Code of 1986, as amended from time to time. " Corporate Transaction " means either of the following stockholder-approved transactions to which United Online, Inc. is a party: (i) a merger or consolidation in which the record and beneficial ownership of securities possessing...

  • Page 161
    ... Period. Unless otherwise determined by the Chief Executive Officer of United Online, Inc., the Involuntary Termination provisions of the Plan shall only apply in the event of a Change in Control or Corporate Transaction with respect to United Online, Inc. " Misconduct " means the (i) commission of...

  • Page 162
    ... your employment termination date, to your Employer all Company and Employer documents created and received by you during your employment (electronic and paper) with the exception only of your personal copies of documents evidencing your hire, termination, compensation, benefits and stock options...

  • Page 163
    ...and failure to work through the termination date may render you ineligible for severance benefits. Vacation may be taken between the date you receive notice of termination and your termination date only with the prior written approval of senior management. 5. You are terminated for reasons unrelated...

  • Page 164
    ... prior notice of your termination under the terms of the Worker Adjustment and Retraining Notification Act (" WARN Act "). No Severance Payment Benefit will be paid to you if you fail to comply with or meet the eligibility conditions stated above, including (without limitation) the execution and...

  • Page 165
    ... as of the date of termination or, if during the Transaction Protection Period, the employee's highest title at any time during that period. It shall be solely in the Company's discretion to change employees' titles. 2. Severance Payment Benefit Guideline for Employees Entitled to Notice Under the...

  • Page 166
    ... and a notice that describes your rights to, and the terms and conditions of, temporary continuation coverage under COBRA. These documents will be provided separately. During the limited post-employment exercise period and pursuant to the procedures specified in the applicable stock option agreement...

  • Page 167
    ... receive under the Plan, you may submit a signed, written application to the Chief Personnel Officer of the Company within ninety (90) days after the effective date of your Layoff Termination or Involuntary Termination. 2. Denial of Application for Benefits . In the event that your application for...

  • Page 168
    ... arrangements, programs and plans which were previously offered by the Company to eligible employees of this Plan, except such terms as are set forth in a written agreement signed by an authorized officer of the Company or any subsidiary of the Company. This policy supplements any such written...

  • Page 169
    ... may order you to pay these costs and fees, for example, if it finds that your claim or suit is frivolous. If you have any questions about the Plan, this statement or your rights under ERISA, you should contact the Plan Administrator or the nearest Area Office of the Pension and Welfare Benefits 12

  • Page 170
    Administration, U.S. Department of Labor, listed in your local telephone directory or contact the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. 13

  • Page 171
    ...ONLINE, INC. HAS CAUSED THIS AMENDED AND RESTATED SEVERANCE BENEFIT PLAN AND SUMMARY PLAN DESCRIPTION TO BE EXECUTED ON ITS BEHALF BY ITS DULY AUTHORIZED OFFICER ON THE DATE AND YEAR INDICATED BELOW. UNITED ONLINE, INC. By: /s/ Mark R. Goldston Title: Chief Executive Officer Dated: December 22, 2009...

  • Page 172
    SCHEDULE A LIST OF COVERED SUBSIDIARIES PARTICIPATING IN THE PLAN AS OF JANUARY 1, 2010 NetZero, Inc. Juno Internet Services, Inc. United Online Advertising Network, Inc. Classmates Online, Inc. MyPoints.com, Inc. FTD.COM, Inc. Florists' Transworld Delivery, Inc.

  • Page 173
    ... (also dba Bluelight Internet Service) Opobox, Inc., a Delaware corporation Stayfriends GmbH Trombi Acquisition SARL United Online Advertising Network, Inc., a Delaware corporation (dba United Online Media Group) United Online Web Services, Inc., a Delaware corporation (dba 50 Megs, Bizhosting...

  • Page 174
    QuickLinks Exhibit 21.1

  • Page 175
    ... REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-70532, 333-88766, 333-106003, 333-114919, 333-121217, 333-123392, 333-140999, 333-149324, 333-155261, and 333-157599) of United Online, Inc. of our report dated...

  • Page 176
    QuickLinks Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  • Page 177
    ...31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Mark R. Goldston, certify that: 1. I have reviewed this Annual Report on Form 10-K of United Online, Inc.; 2. Based on my...

  • Page 178
    QuickLinks CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 179
    ... 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Scott H. Ray, certify that: 1. I have reviewed this Annual Report on Form 10-K of United Online, Inc.; 2. Based on my...

  • Page 180
    QuickLinks CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 181
    ... ACT OF 2002 I, Mark R. Goldston, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (a) The Annual Report on Form 10-K of United Online, Inc. for the year ended December 31, 2009, as filed with the Securities and...

  • Page 182
    QuickLinks CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 183
    ... Securities Exchange Act of 1934; and The information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company. (b) Date: February 23, 2010 /s/ SCOTT H. RAY Scott H. Ray Executive Vice President and Chief Financial Officer

  • Page 184
    QuickLinks CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002