Juno 2011 Annual Report Download

Download and view the complete annual report

Please find the complete 2011 Juno annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 172

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172

UNITED ONLINE INC
FORM 10-K
(Annual Report)
Filed 02/28/12 for the Period Ending 12/31/11
Address 21301 BURBANK BOULEVARD
WOODLAND HILLS, CA 91367
Telephone 8182873000
CIK 0001142701
Symbol UNTD
SIC Code 7370 - Computer Programming, Data Processing, And
Industry Computer Services
Sector Technology
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2012, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ...the Period Ending 12/31/11 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 21301 BURBANK BOULEVARD WOODLAND HILLS, CA 91367 8182873000 0001142701 UNTD 7370 - Computer Programming, Data Processing, And Computer Services Technology 12/31 http://www.edgar-online.com © Copyright 2012...

  • Page 2
    ... or organization) 21301 Burbank Boulevard Woodland Hills, California (Address of principal executive office) 77-0575839 (I.R.S. Employer Identification No.) 91367 (Zip Code) (818) 287-3000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the...

  • Page 3
    ... 1 Smaller reporting company 1 No 3 Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2) of the Act). Yes 1 At June 30, 2011, the aggregate market value of voting stock held by non-affiliates of the Registrant, based on the last reported sales price of the...

  • Page 4
    ...," "expect," "intend," "plan," "project," "projections," "business outlook," "estimate," or similar expressions constitute forward-looking statements. These forward-looking statements include, but are not limited to, statements about new business initiatives, products, services, features, and...

  • Page 5
    ... currency exchange rates; hedging arrangements; our ability to repay indebtedness, pay dividends and invest in initiatives; our products and services; pricing; competition; and strategies. Potential factors that could affect the matters about which the forward-looking statements are made include...

  • Page 6
    ....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, gift and related products and services to consumers and retail florists, as well as to other retail locations offering...

  • Page 7
    ... floral network services to provide incoming order volume to offset business lost to the Internet, supermarket and mass merchant channels; and Traditional retail florists and floral mass marketers have expanded their product offerings to include a larger selection of gift items. • • • Floral...

  • Page 8
    ...offered by providers of floral network services include point-of-sale and related technology systems and services, credit card processing services, e-commerce website services, online advertising tools, clearing-house services, order transmission, and after-hours telephone answering and order taking...

  • Page 9
    ... for products and services from participating vendors. Some online loyalty marketing programs use points as an incentive for members to opt in to receiving certain email offers or to update their personal interest profiles, which provide useful information that helps advertisers target consumer...

  • Page 10
    ... products, and other gift baskets. Consumers place orders at FTD's websites and, to a much lesser extent, over the telephone. Internet orders represented 89.0% of consumer order volume during the year ended December 31, 2011. Orders are transmitted to floral network members or third-party suppliers...

  • Page 11
    ... also provides point-of-sale and related technology services and systems that enable its floral network members to transmit and receive orders and manage several back office functions of a floral retailer's business, including accounting, customer relationship management, direct marketing campaigns...

  • Page 12
    ... on our website, including the sale of yearbook copies. All-Access Pass holders have access to a variety of premium features. We expect the features available to free users and All-Access Pass holders to continue to change from time to time. Premium features currently include, among others...

  • Page 13
    ...to members, when members respond to emails and when members complete online transactions. Communications Our principal Communications pay service is dial-up Internet access, offered under the NetZero and Juno brands. We also offer broadband Internet access, email, Internet security services, and web...

  • Page 14
    ... and the Mercury Man logo, access to the floral networks, credit card processing services, e-commerce website services, online advertising tools, clearing-house services, order transmission, and after-hours telephone answering and order taking services. Content & Media and Communications Content...

  • Page 15
    ... order to provide effective solutions for advertisers. Communications Our Communications services generate advertising revenues from search placements, display advertisements and online market research associated with our Internet access and email services. We host and customize the initial website...

  • Page 16
    ..., and loyalty programs such as airlines, credit card companies and hotel chains; database marketing to existing consumer customers featuring email promotions; direct mail and other forms of print advertising; an email-based reminder service that provides consumers with personalized reminders of...

  • Page 17
    ... the Mercury Man logo, access to the floral networks, credit card processing services, e-commerce website services, online advertising tools, clearing-house services, order transmission, and after-hours telephone answering and order taking services, as well as floral-related products, such as fresh...

  • Page 18
    ... money online, the competition for their time and engagement has continued to intensify. Consumers have a great number of options for online content and entertainment, including, by way of example, games, websites offering news and current events, movies, television shows, videos, information about...

  • Page 19
    ... designed to assist our members and customers in verifying and updating their account information. In addition, we offer traditional email support and certain of our services provide live telephone support as well. Our customer relationship management and support infrastructure includes employees...

  • Page 20
    ... processing and customer service systems which provide communication to our floral network members and third-party suppliers. We also have developed software to enhance the functionality of certain components of our services, including connectivity, web services, billing, email, customer support...

  • Page 21
    ... million for the years ended December 31, 2011, 2010 and 2009, respectively. For information regarding risks associated with our international operations, see "Risk Factors," which appears in Item 1A of this Annual Report on Form 10-K. For information regarding long-lived assets, see Note 2-"Segment...

  • Page 22
    ... planned NetZero 4G mobile broadband service and our high school yearbook initiatives related to the Classmates website. Such development and implementation involves a number of uncertainties, including unanticipated delays and expenses and technological problems. New business initiatives, products...

  • Page 23
    ...search providers, Internet advertising networks, co-registration partners, retailers, distributors, and direct marketers, to promote or distribute our products and services. In addition, in connection with the launch of new products or services, such as those related to the planned NetZero 4G mobile...

  • Page 24
    ... credit card processors. Key systems include, without limitation, order transmission, fulfillment and processing, including the system for transmitting orders through the floral network; billing; website and database management; customer support; telecommunications network management; advertisement...

  • Page 25
    ...and, in part, on the security of the network infrastructures of our thirdparty vendors. In connection with conducting our business in the ordinary course, we store and transmit customer and member information, including personally identifiable information. Unauthorized or inappropriate access to, or...

  • Page 26
    ... number of our members and customers authorize us to bill their payment card accounts (credit or debit) directly for all amounts charged by us. These members and customers provide payment card information and other personally identifiable information which, depending on the particular payment plan...

  • Page 27
    ... nostalgia services. Our FTD segment generates a significant portion of its consumer orders from the emails we send to customers who have previously ordered products from us. We also engage in a number of third-party email marketing campaigns in which such third parties include our marketing offers...

  • Page 28
    ... of identifiable intangible assets, and the impairment of amounts capitalized as goodwill, intangible assets and other long-lived assets; and lack of, or inadequate, controls, policies and procedures appropriate for a public company, and the time, cost and difficulties related to the implementation...

  • Page 29
    .... Our ability to apply excess FTD cash flow or proceeds from certain types of securities offerings, asset sales and other transactions to purposes other than the repayment of debt, as well as servicing of the debt, could be limited. The interest rates under the Credit Agreement will fluctuate and...

  • Page 30
    ... service providers. Such legislation or initiatives could result in the imposition of additional sales and use taxes, or the payment of state income or other taxes, on certain transactions conducted over the Internet. In addition, advertisers and other third parties may choose to not do business...

  • Page 31
    ... affect our businesses and results of operations. Our businesses operate in a number of countries outside the U.S. Conducting international operations involves risks and uncertainties, including adverse fluctuations in foreign currency exchange rates; potentially adverse tax consequences, including...

  • Page 32
    ... the Mercury Man logo, access to the floral networks, credit card processing services, e-commerce website services, online advertising tools, clearing-house services, order transmission, and after-hours telephone answering and order taking services, as well as floral-related products, such as fresh...

  • Page 33
    ... to provide our customers high-quality products and a high level of customer service. Our business depends, in part, on the ability of our independent floral network members and third-party suppliers who fulfill our orders to do so at high-quality levels. We work with our floral network members and...

  • Page 34
    ... strategic arrangements with third parties that have a fixed, and in certain cases greater, discount or other associated costs. We also offer discounts on our floral network service fees from time to time on a promotional basis. Shifts in the mix of products and services sold that have resulted...

  • Page 35
    ...of additional sales and use tax or other tax obligations. Additionally, in accordance with current industry practice by international floral and gift direct marketers and our interpretation of applicable law, we collect and remit value added taxes on certain consumer orders placed through Interflora...

  • Page 36
    ... services compete with major social networking websites such as Facebook and Google+ as well as Internet search engines such as Google. Many of our competitors offer their content and services free of charge. The market for online loyalty marketing services is highly competitive, and we expect...

  • Page 37
    ... visitors to our websites, register them as free members, encourage them to return to our websites, and convince them to become pay accounts in order to access the pay features of our websites. A number of our pay account subscriptions each month are not renewed or are canceled, which, for the...

  • Page 38
    ... broadband services will not experience significant growth. In order to compete effectively against other dial-up Internet access providers, we may have to make significant revisions to our pricing and marketing strategies. For example, we may have to lower our introductory rates, offer additional...

  • Page 39
    ... access pay accounts and revenues have been declining and are expected to continue to decline due to the continued maturation of the market for dial-up Internet access. Consumers continue to migrate to broadband access, primarily due to the faster connection and download speeds provided by broadband...

  • Page 40
    ..., as the dial-up Internet access market declines and new technologies emerge, we will be able to continue to effectively distribute and deliver our services. ITEM 1B. None. ITEM 2. PROPERTIES UNRESOLVED STAFF COMMENTS Our corporate headquarters are located in Woodland Hills, California and consist...

  • Page 41
    ... 300 issuers that conducted their initial public offerings between 1998 and 2000, their underwriters and an unspecified number of their individual corporate officers and directors. The parties in the approximately 300 coordinated class actions, including NetZero, the underwriter defendants in the...

  • Page 42
    ... of Columbia regarding the subsidiary's marketing, billing, and renewal practices, including, without limitation, its former post-transaction sales practices. In July 2011, United Online, Inc. received a civil investigative demand from the Federal Trade Commission regarding certain post-transaction...

  • Page 43
    Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has been quoted on The Nasdaq Global Select Market ("NASDAQ") under the symbol "UNTD" since September 26, 2001. Prior to that, NetZero ...

  • Page 44
    ...stock awards and upon the issuance of stock awards to pay applicable required employee withholding taxes are considered common stock repurchases, but are not counted as purchases against the Program. Upon vesting of most restricted stock units or issuance of stock awards, we currently do not collect...

  • Page 45
    ... common stock, The Nasdaq Global Select Market (U.S. companies) Index (the "Nasdaq Composite") and the Morgan Stanley Internet Index ("MS Internet Index"). Measurement points are the last trading day of each of the Company's fiscal years ended December 31, 2006, 2007, 2008, 2009, 2010, and 2011. The...

  • Page 46
    ...are not included in this Annual Report on Form 10-K. The following amounts are in thousands, except per share data: Year Ended December 31, 2009 2008(1) 2011 2010 2007 Consolidated Statements of Operations Data: Revenues Cost of revenues Operating income (loss) Net income (loss) Net income (loss...

  • Page 47
    ...service is Internet access. On a combined basis, our web properties attract a significant number of Internet users, and we offer a broad range of Internet marketing services for advertisers. Segment Definitions We report our businesses in three reportable segments: Segment Products and Services FTD...

  • Page 48
    ... value includes merchandise revenues and shipping and service fees paid by the consumer, less discounts and refunds (net of refund-related fees charged to floral network members). Average order values may fluctuate from period to period based on the average foreign currency exchange rates; product...

  • Page 49
    ...the monthly average for the period of all online loyalty marketing members who have earned or redeemed points during such period. Communications segment active accounts include all Communications segment pay accounts as of the date presented combined with the number of free Internet access and email...

  • Page 50
    Table of Contents The pay accounts and ARPU metrics for our Content & Media segment may fluctuate significantly from period to period due to various factors including, but not limited to, the extent to which discounted pricing is offered in prior and current periods, the percentage of pay accounts ...

  • Page 51

  • Page 52
    ... risk of loss for collection, delivery and returns; and (v) marketing the products and services. FTD also sells computer systems to its floral network members and recognizes revenue in accordance with ASC 985, Software . FTD recognizes revenue on hardware which is sold without software at the time...

  • Page 53
    ... recorded on the consolidated balance sheets as deferred revenue. We offer alternative payment methods to credit cards for certain pay service plans. These alternative payment methods currently include use of ACH, payment by personal check or money order, or payment through a local telephone company...

  • Page 54
    ... of the analyses. Such estimates include, but are not limited to, future operating performance and cash flows, royalty rate, terminal growth rate, and discount rate. We did not record any impairment charges related to our intangible assets in the year ended December 31, 2011. The fair value of our...

  • Page 55
    ... a number of factors, including projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions. Under the market approach, using the guideline company method, a reporting unit's fair value is estimated based on multiples of the cash-free market...

  • Page 56
    ... to redemption. MyPoints members may redeem points for third-party gift cards and other rewards. Members earn points when they respond to direct marketing offers delivered by MyPoints, purchase goods or services from advertisers, engage in certain promotional campaigns of advertisers, or engage in...

  • Page 57
    ... and service fees, less discounts and refunds, for FTD consumer orders as well as revenues generated from sales of branded and non-branded hard goods, software and hardware systems, cut flowers, packaging and promotional products, and a wide variety of other floral-related supplies to floral network...

  • Page 58
    ... of customers to third-party websites and services, for which revenue is recognized when the related performance criteria is met. Previously, FTD's advertising revenues were primarily from post-transaction sales generated when FTD and Interflora consumers were presented with third-party offers...

  • Page 59
    ... associated with promoting our brands, products and services include advertising and promotion expenses; fees paid to distribution partners, third-party advertising networks and co-registration partners to acquire new pay and free accounts; personnel and overhead-related expenses for marketing...

  • Page 60
    ... of intangible assets includes amortization of acquired pay accounts and free accounts; certain acquired trademarks and trade names; purchased software and technology; acquired customer and advertising contracts and related relationships; acquired rights, content and intellectual property; and other...

  • Page 61
    ...in this Annual Report on Form 10-K. Consolidated information was as follows (in thousands): Year Ended December 31, 2010 2009 2011 Revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Amortization of intangible assets Restructuring...

  • Page 62
    ... consolidated cost of revenues will continue to increase in 2012 compared to 2011. Sales and Marketing Year Ended Change December 31, 2011 2010 $ (in thousands, except percentages) % Sales and marketing Sales and marketing expenses as a percentage of total segment sales and marketing expenses: FTD...

  • Page 63
    ... offset by a $3.7 million increase in sales and marketing expenses associated with our FTD segment. Technology and Development Year Ended Change December 31, 2011 2010 $ (in thousands, except percentages) % Technology and development Technology and development expenses as a percentage of total...

  • Page 64
    ... connection with the acquisition of FTD in August 2008, as well as reduced interest expense as a result of lower average debt balances, partially offset by a $6.1 million loss on extinguishment of debt, which was recorded in the year ended December 31, 2011, related to such refinancing. Other Income...

  • Page 65
    ...-year discrete income tax benefits and reduced expense related to lower non-deductible stock-based compensation. FTD Segment Results FTD Revenues Year Ended Change December 31, 2011 2010 $ (in thousands, except percentages and average order value) % Products Services Advertising Total FTD Revenues...

  • Page 66
    ...and group-buying initiatives, as well as an increase in marketing expenses related to television advertising in the U.K., partially offset by decreased marketing expenditures related to television advertising in the U.S. FTD Technology and Development Year Ended Change December 31, 2011 2010 $ % (in...

  • Page 67
    ...revenues generated by our online loyalty marketing service due to a number of factors, including the loss of a major customer. These decreases were partially offset by $0.9 million in products revenues generated in the year ended December 31, 2011. We anticipate that Content & Media pay accounts and...

  • Page 68
    ... offset by $5.5 million in marketing costs in the year ended December 31, 2011 primarily related to television advertising supporting the launch of the Memory Lane website. Content & Media Technology and Development Year Ended December 31, Change 2011 2010 $ % (in thousands, except percentages...

  • Page 69
    ..., customer support and billingrelated costs due to the decrease in the number of dial-up Internet access accounts, a $1.0 million decrease in costs associated with our broadband Internet access services and a $1.6 million decrease in costs associated with our email, Internet security and web hosting...

  • Page 70
    .... We anticipate that Communications sales and marketing expenses will increase in 2012 as compared to 2011 due to the planned promotion of the NetZero 4G mobile broadband service. Communications Technology and Development Year Ended December 31, Change 2011 2010 $ (in thousands, except percentages...

  • Page 71
    ... other exit costs recorded during the year ended December 31, 2011 primarily related to the departure of United Online's former chief financial officer. Year Ended December 31, 2010 compared to Year Ended December 31, 2009 Consolidated Results Revenues Year Ended December 31, Change 2010 2009 $ (in...

  • Page 72
    ...increase in sales and marketing expenses associated with our FTD segment and a $0.3 million increase in depreciation expense. Technology and Development Year Ended December 31, Change 2010 2009 $ (in thousands, except percentages) % Technology and development Technology and development expenses as...

  • Page 73
    ... primarily due to certain intangible assets related to our acquisition of Classmates Online, Inc. and its subsidiaries in 2004 becoming fully amortized in 2009 and 2010. Restructuring and Other Exit Costs Year Ended December 31, Change 2010 2009 $ % (in thousands, except percentages) Restructuring...

  • Page 74
    ... for the year ended December 31, 2009 included non-operating income related to a non-income tax refund and a favorable legal settlement. Provision for Income Taxes Year Ended December 31, 2010 2009 (in thousands, except percentages) Provision for income taxes Effective income tax rate $ 36,228 40...

  • Page 75
    ... increase in FTD sales and marketing expenses was primarily due to higher marketing expenditures related to television advertising for the Valentine's Day and U.S. Mother's Day holidays in 2010 and higher customer service costs, partially offset by a decrease in print and other advertising expenses...

  • Page 76
    ... FTD technology and development expenses as a percentage of FTD revenues $ 11,190 $ 11,868 $ (678) 2.0% 2.2% (6)% The decrease in FTD technology and development expenses was primarily due to lower web hosting costs. FTD General and Administrative Year Ended December 31, Change 2010 2009...

  • Page 77
    ... due to minimal revenues generated from post-transaction sales in the year ended December 31, 2010, partially offset by an increase in revenues generated from our online loyalty marketing service. Content & Media Cost of Revenues Year Ended Change December 31, 2010 2009 $ % (in thousands, except...

  • Page 78
    ... associated with a reduction in headcount. Communications Segment Results Communications Revenues Year Ended December 31, Change 2010 2009 $ (in thousands, except percentages and ARPU) % Services Advertising Total Communications Revenues ARPU Average number of dial-up Internet access pay accounts...

  • Page 79
    ... associated with our dial-up Internet access services due to a decrease in the number of dial-up Internet access pay accounts and a decrease in hourly usage per pay account and a $3.1 million decrease in customer support and billing-related costs due to a decrease in the number of dial-up Internet...

  • Page 80
    ...(33)% The decrease in Communications technology and development expenses was the result of a decrease in personnel- and overhead-related expenses as a result of reduced headcount. Communications General and Administrative Year Ended December 31, Change 2010 2009 $ (in thousands, except percentages...

  • Page 81
    ... secured by a lien on substantially all of the assets of FTD Group, Inc., Holdings and the Subsidiary Guarantors (collectively, the "Loan Parties"), including a pledge of all (except with respect to foreign subsidiaries, in which case such pledges are limited to 66%) of the outstanding capital stock...

  • Page 82
    ... for the year ended December 31, 2011, compared to the year ended December 31, 2010. Net cash provided by operating activities is driven by our net income adjusted for non-cash items and changes in working capital including, but not limited to, depreciation and amortization, stock-based compensation...

  • Page 83
    ... 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...

  • Page 84
    ...as the terms at which such capital might be offered to us. We currently expect to have sufficient liquidity to fulfill our debt service obligations, at least in the next twelve months. FTD Group, Inc. was in compliance with all covenants under the Credit Agreement at December 31, 2011. If we need to...

  • Page 85
    ... year ended December 31, 2009. Net cash provided by operating activities is driven by our net income adjusted for changes in working capital and non-cash items, including, but not limited to, depreciation and amortization, stock-based compensation, impairment of goodwill, intangible assets and long...

  • Page 86
    ... terms to customers, vendors, lessors, sureties and insurance companies, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement...

  • Page 87
    ... market risks arising from transactions in the normal course of business, principally risk associated with interest rate and foreign currency exchange rate fluctuations. Interest Rate Risk We are exposed to interest rate risk on our cash and cash equivalents and the outstanding balance of the Credit...

  • Page 88
    ... such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by...

  • Page 89
    Table of Contents being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the ...

  • Page 90
    ... Equity Awards at Fiscal Year-End"; "Option Exercises and Stock Vested"; "Director Summary Compensation Table"; "Compensation Committee Interlocks and Insider Participation"; and "Compensation Committee Report". ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED...

  • Page 91
    ... to make the statements in this Annual Report on Form 10-K not misleading. Additional information about the Company may be found elsewhere in this Annual Report on Form 10-K and in the Company's other public filings, which are available without charge through the SEC's website at www.sec.gov. 88

  • Page 92
    ... 10.2 2001 Stock Incentive Plan 10.3 FTD Group, Inc. 2005 Equity Incentive Award Plan, Amended and Restated as of October 29, 2008 10.4 2010 Incentive Compensation Plan 10.5 Form of Restricted Stock Unit Issuance Agreement for 2001 Stock Incentive Plan and 2001 Supplemental Stock Incentive Plan 10...

  • Page 93
    89

  • Page 94
    ...) 10.14 Form of Stock Option Agreement for 2010 Incentive Compensation Plan (officers version I) 10.15 Form of Stock Option Agreement for 2010 Incentive Compensation Plan (officers version II) 10.16 Amended and Restated United Online, Inc. Severance Benefit Plan 10.17 Employment Agreement between...

  • Page 95
    Agreement(s) Amendment Agreement between United Online, Inc. and Frederic A. Randall, Jr. 90

  • Page 96
    ... Taragan 10.30 2011 Management Bonus Plan 10.31 2011 Special Bonus Plan 10.32 Office Lease between LNR Warner Center, LLC and NetZero, Inc. 21.1 List of Subsidiaries 23.1 Consent of Independent Registered Public Accounting Firm 24.1 Power of Attorney (see signature page of this Annual Report on Form...

  • Page 97

  • Page 98
    Table of Contents (b) Exhibits The exhibits filed as part of this report are listed in Item 15(a)(3) of this Annual Report on Form 10-K. (c) Financial Statement Schedules The financial statement schedules required by Regulation S-X and Item 8 of this Annual Report on Form 10-K are listed in Item ...

  • Page 99
    ... of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated below. Signature Title Date /s/ MARK R. GOLDSTON Mark R. Goldston Chairman, President, Chief Executive Officer and Director...

  • Page 100
    Table of Contents Signature Title Date /s/ DENNIS HOLT Director Dennis Holt /s/ HOWARD G. PHANSTIEL Director Howard G. Phanstiel /s/ CAROL A. SCOTT Director Carol A. Scott 94 February 28, 2012 February 28, 2012 February 28, 2012

  • Page 101
    ... 10.2 2001 Stock Incentive Plan 10.3 FTD Group, Inc. 2005 Equity Incentive Award Plan, Amended and Restated as of October 29, 2008 10.4 2010 Incentive Compensation Plan 10.5 Form of Restricted Stock Unit Issuance Agreement for 2001 Stock Incentive Plan and 2001 Supplemental Stock Incentive Plan 95...

  • Page 102
    ... Stock Incentive Plan and FTD Group, Inc. 2005 Equity Incentive Award Plan, Amended and Restated as of October 29, 2008 10.7 Form of Restricted Stock Unit Issuance Agreement for 2001 Stock Incentive Plan, 2001 Supplemental Stock Incentive Plan and FTD Group, Inc. 2005 Equity Incentive Award Plan...

  • Page 103
    the Registrant and Frederic A. Randall, Jr. 96

  • Page 104
    ... Taragan 10.30 2011 Management Bonus Plan 10.31 2011 Special Bonus Plan 10.32 Office Lease between LNR Warner Center, LLC and NetZero, Inc. 21.1 List of Subsidiaries 23.1 Consent of Independent Registered Public Accounting Firm 24.1 Power of Attorney (see signature page of this Annual Report on Form...

  • Page 105
    31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 000-33367 97

  • Page 106
    ... Contents No. Exhibit Description Filed with this Form 10-K Incorporated by Reference to Form File No. Date Filed 31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of the Chief Executive Officer pursuant to Section 906...

  • Page 107
    Table of Contents UNITED ONLINE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Statements of Stockholders' ...

  • Page 108
    ... on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company's internal control over financial reporting is a process designed to provide reasonable...

  • Page 109
    ... 31, 2011 and 2010, respectively Deferred tax assets, net Other current assets Total current assets Property and equipment, net Goodwill Intangible assets, net Other assets Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Member redemption...

  • Page 110
    ... amounts) Year Ended December 31, 2010 2009 2011 Revenues: Products Services Total revenues Operating expenses: Cost of revenues-products Cost of revenues-services Sales and marketing Technology and development General and administrative Amortization of intangible assets Restructuring and other...

  • Page 111
    Table of Contents UNITED ONLINE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended December 31, 2011 2010 2009 Net income Change in gains on derivatives designated as net investment hedging instruments, net of tax of $79 for the year ended December 31, 2011 Change in ...

  • Page 112
    ...dividend equivalents payable on restricted stock units Stock-based compensation Foreign currency translation Tax shortfalls from equity awards Net income Balance at December 31, 2009 Exercises of stock options Issuance of common stock through employee stock purchase plans Vesting of restricted stock...

  • Page 113
    ...dividend equivalents payable on restricted stock units Stock-based compensation Foreign currency translation Tax shortfalls from equity awards Net income Balance at December 31, 2010 Exercises of stock options Issuance of common stock through employee stock purchase plans Vesting of restricted stock...

  • Page 114
    ... Proceeds from employee stock purchase plans Repurchases of common stock Dividends and dividend equivalents paid on outstanding shares and restricted stock units Excess tax benefits from equity awards Net cash used for financing activities Effect of foreign currency exchange rate changes on cash...

  • Page 115
    F-7

  • Page 116
    ...'s web properties attract a significant number of Internet users and the Company offers a broad array of Internet marketing services for advertisers. The Company's corporate headquarters are located in Woodland Hills, California, and the Company also maintains offices in Downers Grove, Illinois...

  • Page 117
    ...insurance provided on such deposits. Accounts Receivable, including Financing Receivables -The Company's accounts receivable are derived primarily from revenues earned from advertising customers and floral network members located in the U.S. and the U.K., and pay accounts. The Company extends credit...

  • Page 118
    ... forward foreign currency exchange contracts to reduce the risk that its net investments in foreign subsidiaries, cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company records derivative instruments in either other current assets or accrued...

  • Page 119
    ...in a business combination are initially recorded at management's estimate of their fair values. The Company accounts for goodwill and indefinite-lived intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other , which among other things, addresses financial accounting and reporting...

  • Page 120
    ... with ASC 360, Property, Plant and Equipment , which addresses financial accounting and reporting for the impairment and disposition of identifiable intangible assets and other long-lived assets. Intangible assets acquired in a business combination are initially recorded at management's estimate of...

  • Page 121
    ... to redemption. MyPoints members may redeem points for third-party gift cards and other rewards. Members earn points when they respond to direct marketing offers delivered by MyPoints, purchase goods or services from advertisers, engage in certain promotional campaigns of advertisers, or engage in...

  • Page 122
    ... revenue. The Company offers alternative payment methods to credit cards for certain Communications pay service plans. These alternative payment methods currently include use of automated clearing-house, payment by personal check or money order, or payment through a local telephone company. In...

  • Page 123
    ... Company's brands, products and services include advertising and promotion expenses; fees paid to distribution partners, third-party advertising networks and co-registration partners to acquire new pay and free accounts; personnel and overhead-related expenses for marketing, merchandising, customer...

  • Page 124
    ... and 2010, the net book value of capitalized computer software costs related to the internal development and production of computer software to be sold, leased or otherwise marketed was $6.6 million and $9.5 million, respectively. During the years ended December 31, 2011, 2010 and 2009, the Company...

  • Page 125
    ...) associated with operating our corporate network systems. In addition, general and administrative expenses include, among other costs, professional fees for legal, accounting and financial services; insurance; occupancy and other overhead-related costs; office relocation costs; non-income taxes...

  • Page 126
    ... not to be realized. In evaluating the Company's ability to recover its deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. In...

  • Page 127
    ... of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standard Update No. 2011-05 , as codified in ASC 220. The amendments in this update supersede certain paragraphs in ASU No. 2011-05 to effectively defer only those changes in Update 2011-05 that relate to the...

  • Page 128
    ...INFORMATION Segment revenues and segment income from operations were as follows (in thousands): Year Ended December 31, 2011 Content & Media Communications FTD Total Products Services Advertising Total segment revenues Segment income...Year Ended December 31, 2010 2009 2011 Segment revenues: FTD ...

  • Page 129
    ... presented (in thousands): Year Ended December 31, 2010 2009 2011 Segment income from operations: FTD Content & Media Communications Total segment income from operations Depreciation Amortization of intangible assets Unallocated corporate expenses Consolidated operating income $ 78,660 $ 70,198...

  • Page 130
    Table of Contents UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SEGMENT INFORMATION (Continued) Geographic information for long-lived assets, which consist of property and equipment and other assets, was as follows (in thousands): December 31, 2010 2011 2009 ...

  • Page 131
    ...Other Current Assets Other current assets consisted of the following (in thousands): December 31, 2011 2010 Prepaid expenses Income taxes receivable Floral-related inventories Gift cards related to member redemption liability Prepaid floral catalog expenses Prepaid advertising and promotion expense...

  • Page 132
    ... consisted of the following (in thousands): December 31, 2011 2010 Employee compensation and related expenses Non-income taxes payable Reserves for pending legal settlements Income taxes payable Accrued restructuring and other exit costs Customer deposits Other Total $ 26,621 $ 23,411 4,932...

  • Page 133
    ...) 6,833 (217,976) $ 234,461 Gross Value December 31, 2010 Accumulated Amortization Net Pay accounts and free accounts Customer contracts and relationships Trademarks and trade names Software and technology Rights, content and intellectual property Total $ 100,873 $ 111,913 182,463 46,513 7,735...

  • Page 134
    ... secured by a lien on substantially all of the assets of FTD Group, Inc., Holdings and the Subsidiary Guarantors (collectively, the "Loan Parties"), including a pledge of all (except with respect to foreign subsidiaries, in which case such pledges are limited to 66%) of the outstanding capital stock...

  • Page 135
    ... loss on extinguishment of debt in connection with the refinancing, which was recorded in interest expense for the year ended December 31, 2011. The changes in the Company's debt balances, net of discounts, for the year ended December 31, 2011 under the Credit Agreement were as follows (in thousands...

  • Page 136
    ... Before Tax Year Ended December 31, 2011 2010 2009 Derivatives Designated as Net Investment Hedging Instruments Forward foreign currency exchange contracts $ 207 $ - $ - The effect of derivatives designated as cash flow hedging instruments on accumulated other comprehensive loss, other income...

  • Page 137
    ... Location Losses Recognized in Earnings on Derivatives (Amount Excluded from Effectiveness Testing) Year Ended December 31, 2011 2010 2009 Forward foreign currency exchange contracts Other income, net $ (52) $ - $ - Derivatives Designated as Cash Flow Hedging Instruments Location 2011...

  • Page 138
    ... rating. The Company estimated its credit rating as BB+/BB- for the long-term debt associated with the Credit Agreement, resulting in a discount rate of 6%. The table below summarizes the fair value estimates for long-term debt, net of discounts, including the current portion, at December 31, 2011...

  • Page 139
    ... a fair market value equal to the amount of the required employee withholding taxes due, which is accounted for as a repurchase of common stock. The Company then pays the applicable withholding taxes in cash. The amounts remitted in the years ended December 31, 2011, 2010 and 2009 were $7.7 million...

  • Page 140
    ... Compensation Plan (the "Plan"), under which, in general, the Company is authorized to grant restricted stock units, stock awards and stock options. Restricted stock units granted to employees generally vest over a one- to four-year period under a variety of vesting schedules and are canceled upon...

  • Page 141
    ...presented (in thousands): Year Ended December 31, 2011 2010 2009 Operating expenses: Cost of revenues-products Cost of revenues-services Sales and marketing Technology and development General and administrative Total stock-based compensation Tax benefit recognized Restricted Stock Units $ 46 $ 41...

  • Page 142
    ... 31, 2011, 2010 and 2009. Tax benefits realized from stock options exercised in the years ended December 31, 2011, 2010 and 2009 were $19,000, $0.8 million and $0.1 million, respectively. At December 31, 2011, total unrecognized compensation cost related to nonvested stock options, net of expected...

  • Page 143
    ... intervals of six months. The fair value of employee stock purchase plan shares was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions: Year Ended December 31, 2010 2009 2.69% 6.0 5.7% 47.0% 2011 Risk-free interest rate Expected term (in years...

  • Page 144
    ... by dividing the expected annual dividend by the closing market price of the common stock at the date of grant. For the years ended December 31, 2011, 2010 and 2009, the Company recognized $1.2 million, $1.4 million and $2.8 million, respectively, of stock-based compensation related to the employee...

  • Page 145
    ... federal rate to income before taxes as follows (in thousands): Year Ended December 31, 2011 2010 2009 Federal taxes at statutory rate of 35% State taxes, net Nondeductible executive compensation Effects of foreign income Foreign distribution Foreign tax credit Changes in uncertain tax positions...

  • Page 146
    ... penalties relating to uncertain tax positions at December 31, 2011 and 2010, respectively, all of which is included in income taxes payable. The Company recognized net interest and penalties totaling $0.5 million, $0.1 million and $(0.7) million for the years ended December 31, 2011, 2010 and 2009...

  • Page 147
    ... FINANCIAL STATEMENTS (Continued) 10. INCOME TAXES (Continued) undistributed earnings is not practicable. The Company provided for U.S. income taxes on the earnings of its U.K. and German subsidiaries. For the years ended December 31, 2011, 2010 and 2009, income tax shortfalls, net, attributable to...

  • Page 148
    ... facilities in the FTD segment, including employee termination costs, facility closure and relocation costs, and contract termination costs. Additionally, in the year ended December 31, 2010, the Company recorded $1.3 million of restructuring and other exit costs related to employee terminations...

  • Page 149
    ... FTD to secure credit card processing activity. Certificates of deposit totaling $0.3 million and $0.5 million at December 31, 2011 and 2010, respectively, were maintained by the Company in connection with certain of these letters of credit and were included in other current assets and other assets...

  • Page 150
    ... to customers, vendors, lessors, sureties and insurance companies, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company's breach of such agreements, services to be provided by the Company, or from intellectual property...

  • Page 151
    ...'s marketing, billing, and renewal practices, including, without limitation, its former post-transaction sales practices. In July 2011, United Online, Inc. received a civil investigative demand from the Federal Trade Commission regarding certain post-transaction sales practices in which the Company...

  • Page 152
    ...affect the Company's business, financial condition, results of operations, or cash flows. 14. QUARTERLY FINANCIAL DATA (UNAUDITED) (in thousands, except per share data) Quarter Ended September 30 June 30 December 31 March 31 Year ended December 31, 2011: Revenues Cost of revenues Operating income...

  • Page 153
    ... UNITED ONLINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. QUARTERLY FINANCIAL DATA (UNAUDITED) (in thousands, except per share data) (Continued) December 31 Quarter Ended September 30 June 30 March 31 Year ended December 31, 2010: Revenues Cost of revenues Operating income...

  • Page 154
    Table of Contents UNITED ONLINE, INC. SCHEDULE I-CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY BALANCE SHEETS (in thousands) December 31, 2011 2010 Assets Current assets: Cash and cash equivalents Total current assets Investments in subsidiaries Other assets Total assets Liabilities...

  • Page 155
    Table of Contents UNITED ONLINE, INC. PARENT COMPANY STATEMENTS OF OPERATIONS (in thousands) Year Ended December 31, 2011 2010 2009 Revenues Operating expenses: General and administrative Total operating expenses Operating loss Interest income Intercompany interest income Interest expense Other ...

  • Page 156
    Table of Contents UNITED ONLINE, INC. PARENT COMPANY STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2010 2009 2011 Net cash provided by operating activities Cash flows from investing activities: Net cash used for investing activities Cash flows from financing activities: Payments...

  • Page 157
    ... of the consolidated net assets of United Online, Inc. and its subsidiaries. 2. DIVIDENDS RECEIVED FROM SUBSIDIARIES During the year ended December 31, 2011, FTD Group, Inc. paid a $15.0 million dividend to the Parent Company. During the years ended December 31, 2010 and 2009, no dividends were paid...

  • Page 158
    ...Tax Valuation Allowance Charged to Income Tax Provision Charged to Other Accounts Tax Valuation Allowance Credited to Income Tax Provision Balance at End of Period Valuation allowance for deferred tax assets: Year ended December 31, 2011 Year ended December 31, 2010 Year ended December 31, 2009...

  • Page 159

  • Page 160
    ...dba Bluelight Internet Service) Opobox, Inc., a Delaware corporation StayFriends GmbH Trombi Acquisition SARL United Online Advertising Network, Inc., a Delaware corporation (also dba United Online Media Group) United Online Software Development (India) Private Limited, a corporation organized under...

  • Page 161
    UNOL Intermediate, Inc., a Delaware corporation

  • Page 162
    QuickLinks Exhibit 21.1 List of Subsidiaries

  • Page 163
    ... CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to...Online, Inc. of our report dated February 28, 2012 relating to the financial statements, financial statement schedules and the effectiveness of internal control over financial reporting, which appears in this Annual Report...

  • Page 164
    QuickLinks Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  • Page 165
    ... of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and...

  • Page 166
    QuickLinks Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 167
    ... of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and...

  • Page 168
    QuickLinks Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 169
    ... The Annual Report on Form 10-K of United Online, Inc. for the year ended December 31, 2011, as filed with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and The information contained in such report fairly...

  • Page 170
    QuickLinks Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 171
    ... The Annual Report on Form 10-K of United Online, Inc. for the year ended December 31, 2011, as filed with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and The information contained in such report fairly...

  • Page 172
    QuickLinks Exhibit 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002