Classmates.com 2010 Annual Report Download - page 6

Table of Contents
PART I
ITEM 1. BUSINESS
Overview
United Online is a leading provider of consumer products and services over the Internet through a number of brands including FTD,
Interflora, Memory Lane, Classmates, StayFriends, NetZero, and MyPoints.
United Online, Inc. is 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. (whose name was recently changed to Memory
Lane, Inc.), a provider of online nostalgia 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:
Prior to this Annual Report on Form 10-K, our Content & Media segment was referred to as the Classmates Media segment.
Our diversification efforts in recent years, primarily through acquisitions, have significantly reduced our exposure to the mature
Communications segment that has been experiencing declining revenues. In the past three years, revenue contributions from the
Communications segment have decreased from 38% of consolidated revenues in 2008, to 21% of consolidated revenues in 2009, to 18% of
consolidated revenues in 2010. In 2010, the FTD segment, the Content & Media segment and the Communications segment accounted for 60%,
22% and 18% 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-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 Content & Media and Communications segments are derived from selling subscriptions to consumers
who are typically billed in advance for the entire subscription term.
•
Products revenues.
Products revenues in our FTD segment are derived primarily from selling floral and related products to
consumers via our Internet websites and 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
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Segment Products and Services
FTD Floral and related products and services for
consumers, retail florists and other retail
locations
Content & Media
Online nostalgia services and online loyalty
marketing services
Communications Internet access, email, Internet security,
and web hosting services