Classmates.com 2010 Annual Report Download - page 10

Table of Contents
spending and operate their dial-up Internet access businesses primarily for profitability and cash flow contributions.
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 businesses, NetZero and Juno, on a combined basis reported
approximately 5.5 million dial-up Internet access pay accounts at December 31, 2010. 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 Group, Inc. (together with its subsidiaries, "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 floral mass
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 floral network, with the remaining orders delivered via direct shipment. 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 gift items to consumers. FTD operates in the U.S. and Canada, primarily
through the www.ftd.com website and 1-800-SEND-FTD telephone number, and in the U.K. and the Republic of Ireland through the
www.interflora.co.uk and www.interflora.ie websites and various telephone numbers. FTD also operates mobile websites that are optimized for
mobile phones with Internet connections. While floral arrangements and plants are FTD's primary offerings, FTD also markets and sells gift
items including: special occasion gifts, bath and beauty products, jewelry, wine, fruit and other gift baskets, chocolates, and stuffed animals.
Consumers place orders at FTD's websites and, to a much lesser extent, over the telephone. Internet orders represented 87.1% of consumer
order volume during the year ended December 31, 2010. 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. The other
consumer orders are fulfilled and shipped by third parties direct to the consumer in an elegant gift box, principally offering next-day delivery.
Consumers typically pay for floral and 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 gift physical inventory and facilities, and therefore bear the cost of
warehousing and distribution. FTD's distribution networks also allow its consumer businesses to process peak order flow substantially above that
of its average daily order flow.
Floral Network Business. FTD provides a comprehensive suite of products and services that promote revenue growth and enhance the
operating efficiencies of its floral network members, including services that enable such members to receive, send and deliver floral orders.
Floral network members include traditional retail florists, as well as other retailers offering floral and related products and services, that are
located primarily in the U.S., Canada, the U.K., and the Republic of Ireland. The
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