Classmates.com 2010 Annual Report Download - page 132

Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. CREDIT AGREEMENTS (Continued)
Future minimum principal payments based upon scheduled mandatory debt payments under the FTD Credit Agreement, excluding required
prepayments based on excess cash flows, were as follows at December 31, 2010 (in thousands):
At December 31, 2010, the borrowing capacity under the FTD revolving credit facility, which was reduced by $1.1 million in outstanding
standby letters of credit, was $48.9 million.
At December 31, 2010, the interest rate on the FTD Credit Agreement term loan A was 5.75% and the interest rate on the FTD Credit
Agreement term loan B was 6.75%.
Subject to certain exceptions, FTD Group, Inc. is required to make annual prepayments of a portion of the term loans under the FTD Credit
Agreement based on excess cash flow as defined in the FTD Credit Agreement. Based on the Company's current projections, under the
provisions of the credit facilities, the Company does not expect to make excess cash flow debt prepayments in the next twelve months.
Under the terms of the FTD Credit Agreement, FTD Group, Inc. is significantly restricted from making dividend payments, loans or
advances to United Online, Inc. and its subsidiaries. These restrictions have resulted in the restricted net assets (as defined in Rule 4-08(e)(3) of
Regulation S-X) of FTD exceeding 25% of the consolidated net assets of the Company. FTD's restricted net assets at December 31, 2010 and
2009 were $256.4 million and $250.5 million, respectively.
6. FAIR VALUE MEASUREMENTS
The provisions of ASC 820, Fair Value Measurements and Disclosures, related to nonfinancial assets and liabilities became effective for
the Company on January 1, 2009, and did not have a material impact on the Company's consolidated financial statements.
ASC 820 establishes a three-tiered hierarchy that draws a distinction between market participant assumptions based on (i) quoted prices
(unadjusted) in active markets for identical assets and liabilities (Level 1), (ii) inputs other than quoted prices in active markets that are
observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation
techniques in the determination of fair value (Level 3). The following table presents information about assets at December 31, 2010 that are
required to be measured at fair value on a recurring basis (in thousands):
The Company estimated the fair value of its long-term debt using a discounted cash flow technique that incorporates a market interest yield
curve with adjustments for duration and risk profile. In
F-26
Year Ending December 31,
Total Gross Debt
2011
2012
2013
2014
FTD Credit Agreement, term loan A
$
50,258
$
—
$
7,120
$
43,138
$
—
FTD Credit Agreement, term loan B
214,367
—
2,216
2,216
209,935
Total
$
264,625
$
—
$
9,336
$
45,354
$
209,935
Description Level 1
Fair Value
Money market funds
$
67,150