Juno 2012 Annual Report Download - page 93

Table of Contents
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, 2012 and 2011 were $2.6 million
and $7.7 million, respectively, for which we withheld 0.5 million and 1.2 million shares of common stock, respectively, that were underlying the
restricted stock units which vested. 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 for the next twelve months. If we
complete the FTD Spin-Off Transaction, we will be a substantially smaller company than we were prior to the FTD Spin-Off Transaction, and we
anticipate that our consolidated cash flows will be substantially smaller when compared to periods prior to the FTD Spin-Off Transaction. 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 $277.6 million, including cash of $67.3 million, at December 31, 2012. In May 2012, FTD Group, Inc. made a
voluntary debt prepayment of $17.0 million on the outstanding borrowings under the Credit Agreement, which has eliminated all future scheduled
mandatory principal payments. The Credit Agreement also includes provisions which require us to make debt prepayments in the event that we generate
consolidated excess cash flow and the net leverage ratio is higher than a threshold level, as defined in the Credit Agreement, on an annual basis
commencing in April 2013 for fiscal year 2012. The excess cash flow payment due in April 2013 is $10.9 million. The degree to which our assets are
leveraged and the terms of our debt could materially and adversely affect our ability to obtain additional capital, as well 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, 2012.
If we need to raise additional capital through public or private debt or equity financings, strategic relationships or other arrangements, this capital
might not be available to us in a timely manner, on acceptable terms, or at all. Our failure to raise sufficient capital when needed could severely constrain
or prevent us from, among other factors, developing new or enhancing existing services or products,
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