Classmates.com 2009 Annual Report Download - page 5

Table of Contents
PART I
ITEM 1. BUSINESS
Overview
United Online is a leading provider of consumer products and services over the Internet. Our offerings feature highly recognized brands
including FTD, Interflora, Classmates, NetZero and MyPoints.
We are a Delaware corporation, headquartered in Woodland Hills, California, that commenced operations in 2001 following the merger of
dial-up Internet access providers NetZero, Inc. ("NetZero") and Juno Online Services, Inc. ("Juno"). In 2004, our Internet access revenues began
to decline and we began diversifying our business to include other consumer Internet offerings in an effort to provide new growth opportunities
for the Company. In November 2004, we acquired Classmates Online, Inc. (together with its subsidiaries, "Classmates Online"), a provider of
online social networking services, and in April 2006, we acquired MyPoints.com, Inc. ("MyPoints"), a provider of online loyalty marketing
services. In August 2008, we acquired FTD Group, Inc. (together with its subsidiaries, "FTD"), a 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 under the FTD and
Interflora brands.
We report our businesses in three reportable operating segments:
Our acquisition of FTD in August 2008, combined with revenues within our Classmates Media segment, has significantly reduced our
exposure to the mature Communications segment that is experiencing declining revenues. In 2009, the Communications segment represented the
smallest revenue contributor among our operating segments. In 2009, the FTD segment, the Classmates Media segment, and the
Communications segment accounted for 55%, 24% and 21% of consolidated revenues, respectively. In 2008, the FTD segment, the Classmates
Media segment, and the Communications segment accounted for 27%, 34% and 38% of consolidated revenues, respectively.
We generate revenues from three primary sources:
•
Services revenues.
Services revenues in our FTD segment are derived from membership fees, order
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related fees and services,
and subscription and other fees generated from independent members of the FTD and Interflora networks, which we also refer to
as our floral network members. Our floral network members include independent traditional retail florists and other retailers.
Services revenues in our Classmates Media and Communications segments are derived from selling subscriptions to consumers
who are typically billed in advance for the entire subscription term. This enhances our cash flows and the predictability of future
revenues.
•
Products revenues.
Products revenues in our FTD segment are derived primarily from selling floral and related products to
consumers 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 other third parties to fulfill
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Segment Products and Services
FTD
Floral and related products and services for consumers, retail florists and other retail locations
Classmates Media
Online social networking and online loyalty marketing services
Communications
Internet access, email, Internet security, and Web hosting services