Classmates.com 2009 Annual Report Download - page 9

Table of Contents
result in lower prices than stand-alone services. As a result of these factors, it is anticipated that the number of dial-
up pay accounts will continue
to decrease.
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. AOL, EarthLink and our Internet access subsidiaries, NetZero and Juno, on a combined basis reported
approximately 7.2 million dial-up pay accounts at December 31, 2009. Some dial-up pay accounts also have a separate broadband connection,
but choose to maintain their dial-
up pay account as a secondary, or back up, means of connecting to the Internet for use when traveling or if their
broadband connection should fail for any reason. The maturity of the dial-up Internet access market has led the largest service providers in the
U.S., including AOL, EarthLink, NetZero, and Juno, to reduce marketing and investment spending and operate their dial-up Internet access
businesses primarily for profitability and cash flow contributions. As the industry has matured, the average tenure of dial-up Internet access pay
accounts has increased significantly which has generally resulted in a reduction in subscriber churn since longer tenured pay accounts, on
average, exhibit greater retention characteristics than new pay accounts.
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 floral network business. These businesses are
complementary, as the majority of floral orders generated by the consumer business are fulfilled and hand-delivered by the members of the FTD
network. FTD does not own or operate any retail locations. For additional information regarding our FTD segment, see Note 2—"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 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 Republic of Ireland
through the www.interflora.co.uk and www.interflora.ie Web sites and various toll-free telephone numbers. FTD also operates mobile Web sites
that are optimized for mobile phones with Internet connections. While floral arrangements and plants are FTD's primary offerings, FTD also
markets and sells other specialty gift items including: gourmet food, special occasion gifts, bath and beauty products, jewelry, wine and gift
baskets, chocolates, and stuffed animals.
Consumers place orders at FTD's Web sites or, to a much lesser extent, over the telephone. Internet orders represented 85.9% of consumer
order volume during the year ended December 31, 2009. Orders are transmitted to floral network members or third-
party suppliers for processing
and delivery. The majority of consumer orders are hand-delivered by FTD's floral network members, offering same-day delivery (subject to
certain limitations) of bouquets. A smaller percentage of consumer orders are fulfilled and shipped by third parties direct to the consumer in an
elegant gift box, principally offering next-day delivery. Consumer orders are backed by a seven day satisfaction guarantee.
Consumers typically pay for floral and specialty gift orders before FTD pays its floral network members or third-party suppliers to fulfill
and deliver them. In general, FTD does not maintain physical inventory or bear the cost of warehousing and distribution facilities because its
floral network members and third-party suppliers maintain substantially all floral and specialty gift physical inventory and facilities, and
therefore bear the cost of warehousing and distribution. FTD's distribution networks
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