NetZero 2011 Annual Report Download - page 83

Table of Contents
be paid on February 29, 2012. The payment of future dividends is discretionary and is subject to determination by United Online, Inc.'s Board of
Directors each quarter following its review of our financial performance and other factors.
Future cash flows from financing activities may also be affected by our repurchases of our common stock. United Online, Inc.'s Board of
Directors authorized a common stock repurchase program (the "Program") that allows us to repurchase shares of our common stock through
open market or privately negotiated transactions based on prevailing market conditions and other factors. From August 2001 through
December 31, 2010, we repurchased a total of $150.2 million of our common stock under the Program, leaving $49.8 million of authorization
remaining under the Program. In February 2011, the Board of Directors extended the Program through December 31, 2011 and increased the
amount authorized to $80 million. In December 2011, the Board of Directors extended the Program through December 31, 2012. We did not
make any repurchases under the Program during the year ended December 31, 2011 and, at December 31, 2011, the authorization remaining
under the Program was $80.0 million.
Cash flows from financing activities may also be negatively impacted by the withholding of a portion of shares underlying the restricted
stock units and stock awards we grant to employees. In general, we currently do not collect the applicable required employee withholding taxes
from employees upon vesting of restricted stock units and upon the issuance of stock awards. Instead, we automatically withhold, from the
restricted stock units that vest and the stock awards that are issued, the portion of those shares with a fair market value equal to the amount of the
required employee withholding taxes due. We then pay the applicable withholding taxes in cash. The withholding of these shares, although
accounted for as a common stock repurchase, does not reduce the amount available under the Program. Similar to repurchases of common stock
under the Program, the net effect of such withholding will adversely impact our cash flows from financing activities. The amounts remitted in
the year ended December 31, 2011 and 2010 were $7.7 million and $9.6 million, respectively, for which we withheld 1.2 million and 1.6 million
shares of common stock, respectively, that were underlying the restricted stock units which vested and stock awards that were issued. The
amount we pay in future periods will vary based on our stock price and the number of applicable restricted stock units vesting and stock awards
being issued during the period.
Based on our current projections, we expect to continue to generate positive cash flows from operations, at least in the next twelve months.
We may use our existing cash balances and future cash generated from operations to fund, among other things, both contractual payments and
optional prepayments on the outstanding balance under the Credit Agreement; dividend payments, if declared by United Online, Inc.'s Board of
Directors; the development and/or acquisition of other services, businesses or technologies; the repurchase of our common stock underlying
restricted stock units and stock awards to pay the required employee withholding taxes due on vested restricted stock units and stock awards
issued; the repurchase of our common stock under the Program; future capital expenditures and future acquisitions of intangible assets, including
rights, content and intellectual property.
Under the terms of the Credit Agreement, FTD Group, Inc., a subsidiary of United Online, Inc., is generally restricted from transferring
funds and other assets to United Online, Inc., with certain exceptions including an annual basket of $15 million (subject to adjustment based on
excess cash flow calculations) which may be used to make cash dividends, loans and advances to United Online, Inc., provided certain terms and
conditions specified in the Credit Agreement are satisfied. These restrictions have resulted in restricted net assets (as defined in Rule 4-08(e)(3)
of Regulation S-X) of FTD Group, Inc. and its subsidiaries totaling $262.1 million at December 31, 2011. The Credit Agreement also includes
provisions which require us to make debt prepayments in the event that we generate consolidated excess cash flow, as defined in the Credit
Agreement, on an annual basis commencing in April 2013 for fiscal year 2012. The degree to which our assets are leveraged and the
80